3.11.106 Estate and Gift Tax Returns

Manual Transmittal

November 07, 2017

Purpose

(1) This transmits revised IRM 3.11.106, Returns and Documents Analysis - Estate and Gift Tax Returns.

Material Changes

(1) Minor editorial changes have been made throughout this IRM (e.g., line number updates, spelling, punctuation, unspan, cells, links, etc.). Other significant changes to this IRM are shown below

(2) IRM 3.11.106.2 Added (2) instruction for processing Early File Form 706 January 1 through June 15 of each year.

(3) IRM 3.11.106.2.8 Updated chart to include instructions for Form 14039-B.

(4) IRM 3.11.106.3.1 Update examples of due dates with current filing year dates.

(5) IRM 3.11.106.4.8(2) Added instruction #5 to the current table. IPU 17U0080 issued 01-11-2017

(6) IRM 3.11.106.4.8(3) Updated information so that it showed restricted. The information is the same but it was not restricted. IPU 17U0080 issued 01-11-2017

(7) IRM 3.11.106.4.8(4) Added (3) to the instruction. IPU 17U0080 issued 01-11-2017

(8) IRM 3.11.106.4.4 Updated (2) and (3) to restricted OUO consistency. (2) was OUO (3) had the same information and was not OUO..

(9) IRM 3.11.106.4.8 Deleted refund claim amount in sentence of (2).

(10) IRM 3.11.106.4.11.1 Updated (2) (b) Revenue Officers Signature information.

(11) IRM 3.11.106.9.2 Added new table (7)

(12) IRM 3.11.106.9.2 Added new table (7) to Action Codes.

(13) IRM 3.11.106.11.1 Placed IRC into a citation updated wording to match BMF consistency IRM. IPU 17U0080 issued 01-11-2017

(14) IRM 3.11.106.11.3 Updated (1) Fax information by added Website. IPU 17U0397 issued 03-01-2017

(15) IRM 3.11.106.10.8 Added Note to (5) (b) that CCC "R" cannot be used with CCC "4"

(16) IRM 3.11.106.12.1 Added "example" to table in the first row, Edit Marks editing the "X" when correcting taxpayer entries. IPU 17U0397 issued 03-01-2017

(17) IRM 3.11.106.11.1 Updated (1) to match BMF consistencies and added Note.

(18) IRM 3.11.106.13 Added Note to (4) table defining deliver services. IPU 17U0397 issued 03-01-2017

(19) IRM 3.11.106.12.1 Updated description portion of "X" to be consistent with BMF consistency IRM.

(20) IRM 3.11.106.13 Updated the years in the examples for the Received Dates.

(21) IRM 3.11.106.14 Updated (1) (a) added prepared by collections.

(22) IRM 3.11.106.17.1 Added to Bankruptcy route to Entity Control following local procedures using Form 13934, Merge Sheet) as part of local procedures.(07-13-2017)

(23) IRM 3.11.106.18.3 Start-up 2017 Updated the Gift Tax Amounts for Applicable Credit Amounts and Basic Exclusion Amounts. IPU 17U0031 issued 01-03-2017

(24) IRM 3.11.106.18.7 Start-up 2017 Updated the Gift Tax Amounts for Applicable Credit Amounts and Basic Exclusion Amounts. IPU 17U0031 issued 01-03-2017

(25) IRM 3.11.106.18.7 Start-up 2017 Updated the Gift Tax Amounts for Applicable Credit Amounts and Basic Exclusion Amounts. IPU 17U0031 issued 01-03-2017

(26) IRM 3.11.106.17.7 Added additional instruction to If/Then chart (1) step 2 for Canadian Province.

(27) IRM 3.11.106.18.7.2 Start-up 2017 Updated the Gift Tax Amounts for Applicable Credit Amounts and Basic Exclusion Amounts. IPU 17U0031 issued 01-03-2017

(28) IRM 3.11.106.18.7.1 Added note to (14) for updates to lines 9 and lines 11 per WRN issued March 31, 2017.

(29) IRM 3.11.106.18.7.1 Added to (15) wording Restored Exclusion Amount removed Applicable Exclusion Amount.

(30) IRM 3.11.106.18.7.1 Added to (15) line 9c.

(31) IRM 3.11.106.18.7.1 Added to (18) line 9e and removed line 9d.

(32) IRM 3.11.106.18.7.1 Added to (18) wording Restored Exclusion Amount Removed Applicable Exclusion Amount.

(33) IRM 3.11.106.19.8 Start-up 2017 Updated the Gift Tax Amounts for Applicable Credit Amounts and Basic Exclusion Amounts. IPU 17U0031 issued 01-03-2017

(34) IRM 3.11.106.20.7 Start-up 2017 Updated the Gift Tax Amounts for Applicable Credit Amounts and Basic Exclusion Amounts. IPU 17U0031 issued 01-03-2017

(35) IRM 3.11.106.21.7 Start-up 2017 Updated the Gift Tax Amounts for Applicable Credit Amounts and Basic Exclusion Amounts. IPU 17U0031 issued 01-03-2017

(36) IRM 3.11.106.23.11 Start-up 2017 Updated the Gift Tax Amounts for Applicable Credit Amounts and Basic Exclusion Amounts. IPU 17U0031 issued 01-03-2017

(37) IRM 3.11.106.23.12.3 Start-up 2017 Updated the Gift Tax Amounts for Applicable Credit Amounts and Basic Exclusion Amounts. IPU 17U0031 issued 01-03-2017

(38) IRM 3.11.106.23.12.4 Start-up 2017 Updated the Gift Tax Amounts for Applicable Credit Amounts and Basic Exclusion Amounts. IPU 17U0031 issued 01-03-2017

(39) IRM 3.11.106.14 Updated chart to match IRM reference 3.11.106.11.1 for consistency.

(40) Exhibit 3.11.106-27 Start-up 2017 Updated the Gift Tax Amounts for Applicable Credit Amounts and Basic Exclusion Amounts. IPU 17U0031 issued 01-03-2017

(41) Exhibit 3.11.106-25 Updated spelling to mis-spelled countries.

Effect on Other Documents

IRM 3.11.106, Returns and Documents - Estate and Gift Tax Returns dated November 1, 2016 (effective January 1, 2017) is superseded. The following IRM Procedural Updates (IPUs) have been incorporated: IPU 17U0397 issued 3/1/2017, IPU 17U0080 issued 1/11/2017, IPU 17U0031 issued 1/03/2017

Audience

Wage and Investment (W&I), Submission Processing - Document Perfection Operation, Code and Edit

Effective Date

(01-01-2018)

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

Program Scope and Objectives

  1. This IRM cannot address every possibility that may arise while correcting returns or documents. Taxpayer intent must be taken into consideration. In some cases, it may be necessary to refer the issue to your Subject Matter Expert (SME), lead and/or manager to determine the proper corrective action.

  2. Purpose: This section provides instructions for perfecting tax returns filed by taxpayers using. This subsection contains instructions for coding and editing Estate and Gift Tax Returns (Form 706, United States Estate Tax Return, Form 706-NA, United States Estate (and Generation - Skipping Transfer) Tax Return, Form 706-A, United States Additional Estate Tax Return, Form 706-D, United States Additional Estate Tax Return - Under Code Section 2057, Form 709, United States Gift (and Generation - Skipping Transfer) Tax Return, Form 706-GS(D), Generation - Skipping Transfer Tax Return for Distribution, Form 706-GS(D–1 ), Notification of Distribution from a Generation - Skipping Transfer, Form 706-GS(T), Generation - Skipping Transfer Tax Return for Termination, and Form 706-QDT, United States Estate Tax Return for Qualified Trusts. Tax examiners will code and edit returns. It is not the intent of these instructions for tax examiners to audit the returns. These instructions apply to the Submission Processing Pipeline, Document Perfection Branch to Code and Edit (perfect) documents.

  3. Audience:

    • Supervisory Tax Technician

    • Lead Tax Technician

    • Tax Examining Technicians

    • Supervisory Clerk

    • Lead Clerk

    • Clerk

  4. Policy Owner:, Director, 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)

    • Small Business (Self/Employer (SB/SE)

    • Large Business and International (LB&I)

    • Chief Financial Officer (CFO)

    • Taxpayer Advocate Service (TAS)

    • Statistics of Income (SOI)

    • Tax Exempts/Government Entities (TEGE)

    • Compliance, Modernized E-File (MEF)

    • Submission Processing (SP)

Background

  1. The purpose of Document Perfection is to code and edit (perfect) returns and other documents for input to the Master File (MF) through the Integrated Submission and Remittance Processing System (ISRP) or the Service Center Recognition Image Processing System (SCRIPS). In addition, Document Perfection forwards any other documents or attachments not related to the processing of the returns to the function responsible for handling them. It is not the purpose of Code and Edit to mathematically verify or to check the validity of the returns and other documents being processed unless otherwise specified in the applicable section. The computer and/or Error Correction (Resolution) will perform these functions if the returns and other documents are coded and edited as prescribed in the applicable subsections of this section

Authority

  1. Authority for these procedures is found in the following sections of the Internal Revenue Code IRC and their corresponding treasury regulations IRC 6201 (a), and other regulations such as the following:

    • Foreign Account Tax Compliance Act (FATCA)

    • Revenue Reconciliation Act of 1998 (RRA 98)

    • Technical and Miscellaneous Revenue Act of 1988 (TAMRA)

    Note:

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

  2. All Policy Statements for Submission Processing are contained in IRM 1.2.12

Responsibilities

  1. The Campus Director, is responsible for monitoring operational performance for the Submission Processing campus

  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 Goal:, Ensure documents are code and edit ready for transcription.

  2. Program Reports:, The Batch Block Tracking System (BBTS) captures and stores a vast amount of inventories used for processing.

  3. Program Effectiveness:

    • Embedded Quality Submission Processing (EQSP)

    • Balance Measures

    • Managerial Reviews

  4. Annual Review: Review the processes included in this manual annually to ensure accuracy and promote consistent tax administration.

  5. Federal Managers Financial Integrity Act (FMFIA)

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. The table lists commonly used acronyms and abbreviations and their definitions

    Acronyms and Abbreviations Definition
    ADP Automated Data Processing
    APO Army Post Office
    BMF Business Master File
    c/o Care of
    C&E Code and Edit
    CC Command Code
    CCC Computer Condition Code
    CDP Collection Due Process
    CI Criminal Investigation
    CIS Correspondence Imaging System
    CP Computer Paragraph
    CSPC Cincinnati Submission Processing Center or Cincinnati Submission Processing Campus
    DLN Document Locator Number
    DPO Diplomatic Post Office
    EEFax Enterprise Electronic Fax
    e.g. For Example
    EIN Employer Identification Number
    ERS Error Resolution System
    etc. Et Cetera
    Exam Examination
    Fax Facsimile
    FedEx Federal Express Corporation
    FPO Fleet Post Office
    FRP Frivolous Return Program
    ID Identification or Identity
    IDRS Integrated Data Retrieval System
    ISRP Integrated Submission and Remittance Processing
    IMF Individual Master File
    IPU Interim Procedural Update
    IRC Internal Revenue Code
    IRS Internal Revenue Service
    LB&I Large Business and International
    MCC Major City Code
    MFT Master File Transaction
    N/A Not Applicable
    OAR Operations Assistance Request
    OID Original Issue Discount
    OMB Office of Management and Budget
    OSPC Ogden Submission Processing Center or Ogden Submission Processing Campus
    P&A Planning and Analysis
    PTIN Preparer Tax Identification Number
    QDT Qualified Domestic Trust
    R&C Receipt and Control
    Rev. Proc. Revenue Procedure
    RO Revenue Officer
    RRA98 Restructuring and Reform Act of 1998
    SBSE Small Business Self-Employed
    SCRS Service Center Replacement System
    SERP Servicewide Electronic Research Program
    SFR Substitute for Return
    SLA Service Level Agreement
    SOI Statistics of Income
    SP Submission Processing
    SPDC Submission Processing Design Center
    SSN Social Security Number
    TAS Taxpayer Advocate Service
    TBOR Taxpayer Bill of Rights
    TC Transaction Code
    TE Tax Examiner
    TEGE Tax Exempt and Government Entities
    TETR Telephone Excise Tax Refund
    TIN Taxpayer Identification Number
    TPNC Taxpayer Notice Code
    U.S. United States
    UCC Uniform Commercial Code
    URL Unidentified Remittance File
    USPS United States Postal Service
    W&I Wage and Investment
    YYYYMMDD Year Year Year Year Month Month Day Day
    ZIP Zone Improvement Plan (Zip code) processing

    Note:

    The above list may not be all inclusive

Interpretation Words

  1. The table lists Interpretation Words and their definitions.

    Word Definition Example of using a word that is open to interpretation

    Note:

    This column is for illustration purposes only.

    Fair Provide accurate and professional service to all persons without regard to personal bias. For example: 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.
    Significant Entry Any entry other than zero or blank. For example: Copy any significant amount on Line 1d to Line 2d, when the amount on Line 2d is blank and the Common Parent’s Name and EIN are blank.
    Timely Provide the time frame to consider what is or is not timely. For example: A Final return is received after the short period due date but received timely.

Related Resources

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

    • Servicewide Electronic Research Program (SERP)

    • Submission Processing Design Center (SPDC)

General Information

  1. This section contains instructions for coding and editing Estate and Gift Tax (Form 706, United States Estate Tax Return and Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, series) returns.

  2. Hold any Form 706, United States Estate Tax Return with a date of death for current January to June of said year (January 1, 2018 to June 15, 2018).

  3. Code and Edit If a form 706 with a Date of Death for current year is received (January 1, 2018 to June 15, 2018) do the following:

    • Do Not Process

    • HoldForm 706, United States Estate Tax Return on a batch cart in Code and Edit

    • Label Batch cart “EXT” so they will be ready to be released to ISRP Upon notification from Headquarter

    • Notify Campus Planning and Analysis (P & A) daily and/or weekly of the count on documents received to provide to headquarters when requested

    • Batch Form 706, United States Estate Tax Return in refund/non-refund batches so 45 day jeopardy refund returns can be closely monitored.

♦Business Master File (BMF) Consistency♦

  1. The purpose of the BMF Consistency initiative is to achieve consistency in the BMF Code and Edit processing IRM’s.

  2. Topics for BMF Consistency have been identified and developed as a coordinated effort between Cincinnati, Ogden, and Wage and Investment (W&I) (Paper Processing Branch, BMF Code and Edit/ERS (Error Resolution System) Section).

  3. BMF Consistency sections are identified by a "♦" (diamond) before and after the section title.

  4. The text in normal print within a consistency section signifies the common processes to be used for all BMF returns. The text in bold print is form specific and applies to this IRM only.

♦IRM Deviation Procedures♦

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

♦IRS Employee Contacts - RRA98, IRC Section 3705(a)♦

  1. The Restructuring and Reform Act of 1998 (RRA98), IRC 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, in the field, national, and regional offices, who communicate, by telephone, correspondence, or face to face, with taxpayers, or their personal representatives, on tax-related matters, are required to provide (at a minimum) the following information:

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

    2. Face to Face: This information should be their title (e.g., Mr., Mrs., Ms., Miss), their last name, and their badge number provided as appropriate during their conversation.

    3. Correspondence: All correspondence must include a telephone number where the taxpayer's question can be answered. In addition, manually–generated and handwritten correspondence must include their title (e.g., Mr., Mrs., Ms., Miss), their last name, and their Integrated Data Retrieval System (IDRS), letter system, or ID Card (badge) 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 ID Card (badge) number must be used. Toll-Free employees may also provide their location for identification purposes. E-mail and facsimiles to taxpayers on tax-related matters are considered manually-generated correspondence and must include the required 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 insists on speaking 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 to provide 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 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 ID Card number on the first contact.

      Note:

      The Taxpayer Bill of Rights adopted by IRS in June 2014 provide 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, 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. 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.

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

    Note:

    If the W&I Submission Processing Liaison for TAS issues walks a return through Code and Edit; then, in addition to normal editing: (1) Edit CCC "O" to freeze the refund and (2) Edit CCC "Y" to route the return to ERS.

  3. The following subsection provides information for TAS cases.

♦Taxpayer Advocate Service (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 and Government Entities (TE/GE) Division, Criminal Investigation (CI), Appeals and Large Business and International (LB&I, formerly LMSB) Division, that outline the procedures and responsibilities for the processing of Taxpayer Advocate Service (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).

♦BMF Identification (ID) Theft♦

  1. BMF Identification Theft is increasing. If a tax examiner in Submission Processing (SP) Code and Edit finds a case with attachments or correspondence indicating the taxpayer is a victim of ID Theft, provide the whole case to your senior/lead. Your senior/lead will expedite the case to the Planning and Analysis staff for referral to one of the SP BMF ID Theft liaisons. The taxpayer must indicate that they are a victim of "ID Theft" ; do not send cases that are subject to Criminal Investigation (CI), Examination (Exam) or "Fraud" review.

♦National Disaster/Emergency Relief Operating Procedures♦

  1. See IRM 25.16, Disaster Assistance and Emergency Relief, for specific conditions that qualify a taxpayer for relief.

    If Then
    A taxable return qualifies and is received within the timeframe prescribed.

    Note:

    No penalty or interest is assessed on non-taxable returns, therefore, no action needs to be taken.

    1. Prepare Form 4227, Intra-SC Reject or Routing Slip, to alert Cincinnati Compliance Services, Estate and Gift Tax Campus Operation that Computer Condition Code (CCC) "R" determination is requested.

    2. Route copy of Page 1 and letter requesting CCC "R" to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation to determine use of CCC "R" to suppress failure to file penalty.

    A qualifying return is "R" coded. Change the IRS received date and edit to reflect timely filing.
    Form 706, United States Estate Tax Return, is annotated at the top of Page 1 of the return "IRC Section 2201" or has any indications the return is the result of legislation impacting victims of terrorist attacks (April 19, 1995 - Oklahoma City bombing; September 11, 2001 - World Trade Center bombing; or references to deaths resulting from anthrax that occurred on or after September 11, 2001, and before January 1, 2002)
    1. Edit CCC "B" .

    2. A special tax rate schedule will apply to victims of terrorist attacks. Error Resolution System (ERS)/Rejects will verify the appropriate tax computation.

    3. All other credits against the estate tax (including unified/applicable credit) apply to these returns.

Correspondence Imaging System (CIS) Returns

  1. Correspondence Imaging System (CIS) is an inventory system for scanning all Accounts Management (AM) receipts into digital images and working cases from those images.

  2. CIS returns are identified with "CIS Image-Do not correspond for Signature" stamped below the signature line or "CIS" is annotated on the front of the return.

  3. Estate and Gift returns should not be going through this inventory system, but if you have a CIS return in your batch of work, prepare Form 4227, Intra-SC Reject or Routing Slip, and send to Compliance Services, Estate and Gift Tax Campus Operation.

♦Forms/Routing Guide♦

  1. The following table contains instructions for forms used with Estate and Gift Tax Returns:

    Note:

    Attachment must contain name, address, Social Security Number (SSN) and IRS received date. Enter, if missing. Do not detach any unsigned returns or attachments from the original return.

    1. Attachments should only be detached when specifically instructed.

      Note:

      Consider a return or document an "original" if it has an original signature or has been stamped "Process as Original" .

    2. Edit Action Trail(s) (e.g., "Form 2848 DETACHED" , Power of Attorney and Declaration of Representative) in the lower left corner going vertically up the side of the return.

    Form/ Document Title Detach Action
    56 Notice Concerning Fiduciary Relationship Yes Prepare Form 4227, Intra-SC Reject or Routing Slip, include Letter of Appointment or pertinent information, and route to Entity.
    637 Application for Registration (For Certain Excise Tax Activities) Yes Route to Stop 5701G, ATTN: Gene Neal
    706 United States Estate (and Generation-Skipping Transfer) Tax Return Yes If original return, or copy with original signature, process as directed (See IRM 3.11.106.18Processing Form 706, United States Estate Tax Return).
    706-A United States Additional Estate Tax Return Yes If original return, or copy with original signature, process as directed (See IRM 3.11.106.20, Processing Form 706-A, United States Additional Estate Tax Return).
    706-CE Certificate of Payment of Foreign Death Tax No If filed separately, route to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.
    706-D United States Additional Estate Tax Return Under Code Section 2057 Yes If original return, or copy with original signature, process as directed (See IRM 3.11.106.21, Processing Form 706-D, United States Additional Estate Tax Return -Under Section 2057).
    706-GS(D) Generation-Skipping Transfer Tax Return For Distribution Yes If original return, or copy with original signature, process as directed (See IRM 3.11.106.25, Processing Form 706-GS(D), Generation-Skipping Transfer Tax Return for Distribution).
    706-GS(D-1) Notification of Distribution From a Generation-Skipping Trust Yes If original return, or copy with original signature, process as directed (See IRM 3.11.106.26, Processing Form 706-GS(D-1), Notification of Distribution from a Generation-Skipping Transfer). (Forward all separate D-1s to Files.)
    706-GS(T) Generation-Skipping Transfer Tax Return For Terminations Yes If original return, or copy with original signature, process as directed (See IRM 3.11.106.27, Processing Form 706-GS(T),Generation-Skipping Transfer for return for Terminations).
    706-NA United States Estate (and Generation-Skipping Transfer) Tax Return Yes If original return, or copy with original signature, process as directed (See IRM 3.11.106.19Processing Form 706-NA, United States Estate (and Generation - Skipping Transfer) Tax Return).
    706-QDT U.S. Estate Tax Return for Qualified Domestic Trusts   See IRM 3.11.106.28, Processing Form 706-QDT, United States Tax Return for Qualified Trusts.
    706 Sch PC Protective Claim for Refund No Make a copy of Sch PC, prepare Form 4227, Intra-SC Reject or Routing Slip, and send to Compliance Services, Estate and Gift Tax Campus Operation. Notate on original that a copy has been sent.
    706 Sch S Increased Estate Tax on Excess Retirement Accumulations No  
    709 United States Gift (and Generation-Skipping Transfer) Tax Return Yes If original return, or copy with original signature, process as directed (See IRM 3.11.106.23, Processing Form 709 United States Gift (and Generation-Skipping Transfer) Tax Return).
    709-A United States Short Form Gift Tax Return Yes If original return, or copy with original signature, process as directed (See IRM 3.11.106.24, Processing Form 709-A, United States Short Form Gift Tax Return). If copy, leave attached as supporting document.
    712 Life Insurance Statement No Leave attached as supporting document.
    843 Claim for Refund and Request for Abatement Yes Send Form 843, Claim for Refund and Request for Abatement to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation on Form 4227, Intra-SC Reject or Routing Slip, ( Form 706, United States Estate Tax Return and Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, series returns).
    1127 Application for Extension of Time for Payment of Tax Due to Undue Hardship Yes Prepare Form 4227, Intra-SC Reject or Routing Slip, and send to Compliance Services, Estate and Gift Tax Campus Operation

    Note:

    Attach a photocopy of the envelope to the original return before routing to Compliance. It may be needed to determine the received date.

    1310 Statement of Person Claiming Refund Due a Deceased Taxpayer Yes Prepare Form 4227, Intra-SC Reject or Routing Slip, and route to Accounts Management.
    1332 Block and Selection Record No  
    2350 Application for Extension of Time To File U.S. Income Tax Return No  
    2848 Power of Attorney and Declaration of Representative Yes
    1. Edit taxpayer name and SSN on Form 2848, Power of Attorney and Declaration of Representative, if missing.

    2. Edit received date on Form 2848, Attorney and Declaration of Representative.

    3. Domestic address

      • Route to Memphis CAF (Centralized Authorization File) at:
        Internal Revenue Service
        PO Box 268, Stop 8423
        Memphis, TN 38101-0268.

      • For Private Delivery Carriers:
        Internal Revenue Service
        5333 Getwell Road Stop 8423
        Memphis, TN 38118

      • Foreign (International) address - Route to Philadelphia CAF.

    4. Edit action trail on tax return. See IRM 3.11.106.8, Tax Information Authorization (TIA) - Form 706 Only.

    3198 Special Handling Notice for Examination Case Processing No  
    3233 Report of Gift Tax Examination No  
    3465 Adjustment Request No  
    3696 Correspondence Action Sheet No  
    3696A IDRS Correspondence Action Sheet No  
    3753 Manual Refund Posting Voucher No See IRM 3.11.106.10.7, CCC O-Module Freeze.
    3893 Re-entry Document Control No Stays on the front of return
    4349 Computation of Estate Tax Due With Return and Annual Installment Yes See IRM 3.11.106.18.8.2, IRC Section 6166.
    4422 Application for Certificate Discharging Property Subject to Estate Tax Lien No
    1. If attached to Form 706, United States Estate Tax Return,

      • prepare Form 4227,Intra-SC Reject or Routing Slip;

      • attach copies of Form 4422, Application for Certificate Discharging Property Subject to Estate Tax Lien,

      • and Pages 1, 2, and 3 of Form 706, United States Estate Tax Return;

      • and route to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.

    2. If attached to Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return,

      • prepare Form 4227, Intra-SC Reject or Routing Slip;

      • attach copies of Form 4422, Intra-SC Reject or Routing Slip

      • and Pages 1 and 2 of Form 709United States Gift (and Generation-Skipping Transfer) Tax Return;

      • and route to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.

    4768 Application for Extension of Time To File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes Yes
    (Balance Due Return with Original Form 4768, Application for Extension of Time To File a Return and/or Pay United States. Estate (and Generation-Skipping Transfer) Taxes only)
    Route to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.
    4810 Request for Prompt Assessment Under Internal Revenue Code Section 6501(d) Yes (Form 709 series returns only) Send original Form 4810, Request for Prompt Assessment, and copy of Page 1, Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, on Form 4227, Intra-SC Reject or Routing Slip, to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.
    4868 Application for Automatic Extension of Time To File U.S. Individual Income Tax Return No  
    5347 Examination Multiple Request Master File Yes Route on Form 4227, Intra-SC Reject or Routing Slip, to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.
    5495 Request for Discharge from Personal Liability Under Internal Revenue Code Section 2204 or 6905 No Form 5495, Request for Discharge from Personal Liability should stay attached to the return. If the form comes in by itself, then is should be sent to Estate and Gift Tax Mail Stop 824G using route Form 4227.
    5792 Request for IDRS Generated Refund (IGR) No See IRM 3.11.106.10.7, CCC O-Module Freeze.
    6459 Return Preparer’s Checksheet ( IRC Section 6694 and IRC Section 6695) No  
    6800 Request for Missing Information or Papers To Complete Your Tax Return or Form 8038-CP No  
    7004 Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns No  
    6882 IDRS/Master File Information Request Yes Route on Form 4227, Intra-SC Reject or Routing Slip, to Customer Service.
    8821 Tax Information Authorization (TIA) Yes
    1. Edit taxpayer name and Social Security Number (SSN) on Form 8821, Tax Information Authorization (TIA), if missing.

    2. Edit received date on Form 8821, Tax Information Authorization (TIA).

    3. Domestic address -

      • Route to Memphis CAF at:
        Internal Revenue Service
        PO Box 268, Stop 8423
        Memphis, TN 38101-0268.

      • For Private Delivery Carriers:
        Internal Revenue Service
        5333 Getwell Road Stop 8423
        Memphis, TN 38118

      • Foreign (International) address - Route to Philadelphia CAF.

    4. Edit action trail on tax return.

    8833 Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b) No Edit CCC "L" . See IRM 3.11.106.10.6.
    8886 Reportable Transaction Disclosure Statement No  
    8892 Application for Automatic Extension of Time To File Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, and/or Payment of Gift/Generation-Skipping Transfer Tax No  
    8939 Allocation of Increase in Basis for Property Acquired from a Decedent Yes Route on Form 4227, Intra-SC Reject or Routing Slip, to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.
    8971 Information Regarding Beneficiaries Acquiring Property from a Decedent Yes Route on Form 4227, Intra-SC Reject or Routing Slip, to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.
    9465 Installment Agreement Request Yes Route to Collection, using Form 4227, Intra-SC Reject or Routing Slip.
    13133 Expedite Processing Cycle No Used to flag special returns for processing on an expedite basis (replaces 6469, Expedite Processing Request). See IRM 3.11.106.4.11.3, Examination Prepared and IRM 3.11.106.4.11.4, Examination Secured.
    Form 14039-B, Business Identity Theft Affidavit No If the envelope is addressed to a specific function or a specific function is indicated by an IRS CP notice or IRS letter, place the Form 14039-B on top and route Form 14039-B and the return to the specific function.

    If either center, Cincinnati or Ogden, receives a Form SS-4, Application of Employer Identification Number and Form 14039-B route the returns to BMF Entity:
    201 W. Rivercenter Blvd.
    Mail Stop 343
    Covington, KY 41011.

    For the following returns:
    • Loose Form 14039-B.

    • No correspondence attached (e.g., no IRS CP notice or IRS letter).

    • The envelope is not addressed to a specific function.


    Place the Form 14039-B on top of the return and route to the local Image Control Team (ICT).
    Cincinnati - Mail Stop 318G.
    Ogden - Mail Stop 6552.
    Sch R-1 Generation- Skipping Transfer Tax (Direct Skips From a Trust Payment Voucher) Yes (If Schedule R-1 has money amounts other than zero on Page 1, Lines 1 through 6; and there is an original signature.) Rebatch as Program 75700 to Accounting Non-Master File (NMF).
    Petitions in opposition of tax law provisions   Yes

    Note:

    No Action Trail needs to be edited when detaching a petition.

    Route to:
    IRS
    ≡ ≡ ≡ ≡ ≡
    1111 Constitution Avenue, NW
    Washington, DC 20224
    Other Business Returns (Originals) (Various return types and titles) Yes (if the return has an original signature) Process as directed per code and edit instructions used for processing of that form type.
    Copies of Other Business Returns (various return types and titles) No Leave attached to Form 706 and Form 709 series returns.
    Request for Acknowledgment   No No action required.
    Request for adjustment to another document   Yes Prepare Form 4227, Intra-SC Reject or Routing Slip, and route to Accounts Management for subsequent action. Include: action required, name, address, Social Security Number (SSN) of the taxpayer, and IRS received date.
    Other unrelated documents (i.e., requests for tax forms, or letters requiring a reply)   Yes Prepare Form 4227, Intra-SC Reject or Routing Slip, and route to appropriate area. Include: action required, name, address, Social Security Number (SSN) of the taxpayer, and IRS received date.
    The taxpayer writes a question or request for assistance on the return itself     Photocopy the question/request and the taxpayer's Taxpayer Identification Number (TIN), name, and address. Forward this information to the appropriate area via Form 4227, Intra-SC Reject or Routing Slip
    Data from any removed attachment is necessary to process the return     Copy the removed attachment and attach the copy to the return being processed.
    Taxpayer has requested part of the refund be applied to another account     See IRM 3.11.106.10.11, CCC X - Return Settlement Frozen.
    Remittance is attached     Take to your manager. See IRM 3.8.46.1, Deposit Activity - Discovered Remittance.
    An attachment indicates the taxpayer has included tax liability for more than one type of tax on a numbered or unnumbered return    
    1. Adjustment action is needed, therefore, prepare Form 3465, Adjustment Request; photocopy Page 1 of return, and route to Accounts Management.

      • Leave action trail on left side of return.

    2. Edit CCC X on return. (See IRM 3.11.106.10.11, CCC X - Return Settlement Frozen.)

    3. Continue processing return.

    An attachment indicates the taxpayer has included more than one tax period on a numbered return (Form 709 series only)    
    1. Edit Action Code 351.

    2. Attach Form 4227, Intra-SC Reject or Routing Slip notating Multiple Tax Periods.

    An attachment indicates the taxpayer has included more than one tax period on an unnumbered return (Form 709 series only)     Correspond using Form 3696, Correspondence Action Sheet, or other approved Correspondence Action Sheet.
    An attachment to a tax return indicates that this is the final return for which the taxpayer will be liable     Enter CCC "F" on Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, only. The Date of Death must be in the same year as the gift was given.
    An attachment to a return establishes reasonable cause for delinquent filing    
    1. See IRM 3.11.106.10.8, CCC R - Reasonable Cause for Delinquency.

    2. Attach the envelope to the back of the return. It may be needed to determine the received date.

    Attachment to a return establishes reasonable cause for failure to pay    
    1. See IRM 3.11.106.10.3, CCC D - Reasonable Cause for Failure to Pay Taxes Timely.

    2. Attach the envelope to the back of the return. It may be needed to determine the received date.

    Reminder:

    Do not detach any unsigned returns or attachments from the original return.

♦Document Control Instructions♦

  1. The following instructions pertain to Document Control.

♦Blocking♦

  1. Sort Estate tax returns (Form 706 United States Estate Tax Return, Form 706-NA, United States Estate (and Generation-Skipping Transfer) Tax Return) into blocks of 15 or less.

  2. Sort Gift tax returns Form 709, United States Gift (and Generation - Skipping Transfer) Tax Return, Form 706-GS(D)Generation - Skipping Transfer Tax Return for Distribution and Form 706-GS(T), Generation - Skipping Transfer Tax Return for Terminations, into blocks of 50 or less. See IRM 3.10.72,Campus Mail and Work Control - Extracting, Sorting, and Numbering.

  3. Separate accounting controls are established for each block created.

♦Numbered Returns♦
  1. The following information pertains to numbered returns:

    If Then
    The document is a different type than the numbered block in which it is found Use either CCC "U" or Action Code 610, whichever is applicable.
    The numbered return is in an unnumbered batch of documents Give it to your manager for inclusion in the correct batch.

    Note:

    A re-input document may have 2 different DLNs stamped on it because of reblocking. When this occurs, determine the correct Document Locator Number (DLN) from the Form 3893, Re-Entry Document Control, and line through the old DLN on the return.

    The first eleven digits of the DLN on the documents in a block do not agree with the DLN stamped on Form 1332, Block and Selection Record, and on the face of the Block Jacket
    1. Bring any difference to the attention of your manager.

    2. Check only the DLN of the first document in the block.

    3. Circle the number on the Form 1332, Block and Section Record, which represents the number of documents in the block.

  2. Numbered returns will be received in Document Perfection after blocking, numbering, and listing in Deposit Activity.

  3. Any returns requiring subsequent action for perfection cannot be withdrawn from the block in Document Perfection. They can be coded for later withdrawal.

♦Unnumbered Returns♦
  1. Unnumbered returns that are blocked should be withdrawn from the batch and appropriate action taken to perfect the returns.

♦Document Control♦
  1. A Document Locator Number (DLN) is assigned to each document processed in the Automatic Data Processing (ADP) System and is used to locate the document.

  2. Examine the documents to ensure that all documents in a block are the same type and are in DLN order. (See Figure 3.11.106-1.)

    Figure 3.11.106-1

    This is an Image: 33575001.gif
     

    Please click here for the text description of the image.

  3. The type of document is defined as a specific tax class and document code explained in Document 6209, IRS Processing Codes and Information.

♦Block Control Document♦
  1. A block of documents must be controlled by a Block Control Document.

  2. The Block Control Documents are as follows:

    • Form 1332, Block and Selection Record, for no-remittance documents.

      Note:

      Generally, no-remittance returns will be processed through Code and Edit unnumbered. There should be no occasion for a block of no-remittance returns to be examined under Form 1332, Block and Selection Record, control.

    • Form 3893, Re-Entry Document Control, for re-entry of document(s) under original DLN.

    If Then
    A block does not have a control document Send back to the originating unit, routed through Accounting.
    More than one document is being re-entered from the "same" original block
    1. Attach Form 3893, Re-Entry Document Control, to the first document in the re-entry block.

    2. If more than one document is in the block, enter the number of documents in the document count box of Form 3893, Re-Entry Document Control.

    3. Leave Form 3893, Re-Entry Document Control, attached to the front of the return.

♦Unprocessable Conditions - Form 706, United States Estate Tax Return, and Form 706-NA, United States Estate (and Generation - Skipping Transfer) Tax Return♦

  1. The following table pertains to unprocessable conditions for Form 706, United States Estate Tax Return, and Form 706-NA, United States Estate (and Generation-Skipping Transfer) Tax Return (Estate of nonresident not a citizen of the United States):

    If Then
    Name, address, and/or SSN is illegible, incomplete or contradictory so that it is not acceptable for computer processing
    1. Research IDRS.

    2. If no data found, use Form 4227, Intra-SC Reject or Routing Slip, to route to Entity.

    3. If return is numbered, edit Action Code 230.

    Taxpayer indicates on documents or attachments that the documents represent liability for more than one tax period or more than one type of tax
    1. Use Action Code 211 for correspondence.

    Tax data entries on documents are incomplete, illegible, or contradictory so that tax liability cannot be determined Edit Action Code 211 for correspondence.
    Entity cannot be perfected on amended returns with remittance
    1. Research IDRS.

    2. If no data found, use Form 4227, Intra-SC Reject or Routing Slip, to route to Entity.

    3. If return is numbered, edit Action Code 320.

    Numbered returns (Form 706-NA, United States Estate (and Generation-Skipping Transfer) Tax Return (Estate of nonresident not a citizen of the United States) of taxpayers who file Form 706-NA, United States Estate (and Generation-Skipping Transfer) Tax Return (Estate of nonresident not a citizen of the United States) instead of Form 706, United States Estate Tax Return, (U.S. citizens by reason of birth, who established residence in a possession of the U.S. and died after September 2, 1958) Edit Action Code 610.

♦More Than One Tax Period♦

  1. The following table pertains to unprocessable conditions for more than one tax period:

    Note:

    Form 706, United States Estate Tax Return, are one-time filers.

    If Then
    A remittance return and information for preparation of dummy return(s) is available Edit Action Code 351 and route to the Rejects Function to prepare a dummy return.
    Information is not available Edit Action Code 351 and correspond for information.
    An unnumbered return Correspond using Form 3696, Correspondence Action Sheet or other approved Correspondence Action Sheet.
    Non-remittance document is unprocessable because of an illegible name or erroneous SSN Route the document to Entity Control.
    Remittance document is unprocessable because the name is illegible or the SSN is missing CCC "U" or use Action Code 320 (if name is illegible) or 351 (if SSN is missing), and route to Entity Control.
    No reply to a request for additional information on an unprocessable, incomplete or invalid return Edit "3" in the Computer Condition Code (CCC) area. This suppresses credit interest.
    The taxpayer's TIN and/or name cannot be determined from attachments or after research per local Service procedures, and the return cannot be sent back to the taxpayer for lack of name, and/or address The return is considered as an unprocessable return. The following instructions should be followed:
    1. Numbered

      • Edit the appropriate CCC or Action Code.

    2. Prepare a Form 4227, Intra-SC Reject or Routing Slip, indicating to the Rejects Unit to void the DLN and destroy the return in accordance with IRM 1.15.29, Records Control Schedule for Submission Processing Campus Records.

    3. Unnumbered

      • Pull from the batch and give to your manager for disposition in accordance with IRM 1.15.29, Records and Information Management Records Control Schedule for Submission Processing Campus Records.

♦Estate Tax Returns♦

  1. Estate Tax Returns need the following information:

    • Decedent's Name

    • Social Security Number

    • Executor's Address

    • Signature of executor or one coexecutor

  2. If any of the above items are missing or cannot be perfected, prepare Form 4227, Intra-SC Reject or Routing Slip and route to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation. Exception: Correspond for signature of executor or one coexecutor.

    Note:

    DO NOT correspond for death certificates.

♦Gift Tax Returns♦

  1. Gift Tax Returns need the following information:

    • Donor's Name

    • Social Security Number

    • Address

    • Signature of donor

    • Spouse's Name, if applicable

    • Spouse's SSN, if applicable

  2. If the return is incomplete (i.e., only page 1 and/or 2 are present with money amounts), continue processing.

  3. The Internal Revenue Code required quarterly gift tax returns for tax periods 197012 to 198012. If Form 709, United States Gift (and generation-skipping transfer) Tax Return, for these periods are received, route the returns to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation on Form 4227, Intra-SC Reject or Routing Slip.

♦Frivolous Arguments♦

  1. A frivolous argument is used for the purpose of expressing dissatisfaction with the substance, form or administration of the tax laws by attempting to illegally avoid or reduce tax liabilities.

  2. Review the return to determine whether it appears to be a frivolous return.

    If Then
    The return meets any of the conditions in the table below

    Caution:

    If the return shows Action Code 331 and has a Form 4227, Intra-SC Reject or Routing Slip, attached with the remarks: "Refer to Exam FRP for audit after processing" , continue to next procedure.

    Remove return from the batch and place the return in the locally designated basket for Examination, Frivolous Return Processing (FRP) for review.

    Note:

    IRM 25.25.10, Frivolous Return Program, requires Examination to expedite the return and make a determination whether it qualifies as a frivolous return within 2 business days. If a determination is not made within the allowed timeframe, the Examination examiner will edit Action Code 331 in the lower left margin of Form 706, United States Estate Tax Return, or Form 709, United States Gift (and generation skipping transfer) Tax Return, preceded with the letters "AC" .

    Examination has selected the return as frivolous, e.g., indicated by an Action Code 331 and a Form 4227, Intra-SC Reject or Routing Slip, with the remarks: "Refer to Exam FRP for audit after processing" , but sends the return for processing Continue processing the return using procedures in IRM 3.11.106. However, do not circle or void the Action Code indicating a frivolous return.

    Note:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ " ≡ ≡ "≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  3. Recognized frivolous arguments made by businesses include, but are not limited to, the examples in IRM 25.25.10, Frivolous Return Program, shown below:

    Reason Description
    Alleged Churches/First Amendment Income from non-religious sources and may claim a vow of poverty.
    Altered Form Altering any or all line items with the intent of facilitating non-compliance with the tax laws.
    Altered Jurat/Uniform Commercial Code (UCC) 1-207 or UCC 1-308 Return contains income and deductions but the jurat has been altered or stricken. May include reference to UCC 1-207, UCC 1-308 or a statement that the return was not signed under penalties of perjury.
    Amended Returns/ Form 843Claim for Refund and Request for Abatement. Amended return or a Form 843, Claim for Refund and Request for Abatement, filed to obtain a total refund of all taxes paid in prior years, based on a tax avoidance argument.
    C-Filings This frivolous position includes the following 4 categories:
    1. Files a return claiming various types of deductions, credits, or overpayments/refunds that have no relation to reality and because of their outrageous character, qualify as frivolous returns.

    2. Files a return containing the filers identifying information but does not request a refund, often lacking sufficient information to determine a tax liability.

    3. Files a return with various types of rambling dialogue and/or crazy arguments that no one could reasonably view as a good faith attempt to comply with the law.

    4. Files a return that attempts to send some type of message or protest to the IRS, but fails to include sufficient identifying information for the Service to either determine the identity of the taxpayer or correspondent or return address.

    Challenges to Authority/Due Process Questions various administrative authorities such as delegation orders, summons authority, privacy act, etc. Argues that they must be afforded a hearing or a trial before taxes can be assessed or before property can be seized.
    Challenged to Authority/Title 26 or "law" in other documents Argues that Title 26 of the United States Code is not law because it was never enacted as named.
    Collections Issues Files frivolous documents contending that various collections issues are invalid (e.g. Offers in Compromise, Collection Due Process Requests, Installment Agreements, Appeals Requests, etc.) because they are not filed and/or signed by someone with delegated authority. They may have no certificate of assessment attached, do not comply in form or content with a State or Local law, are not in a certain format or lack a valid OMB (Office of Management and Budget) number or other frivolous positions.
    Disclaimer Submits a disclaimer stating, "disclaims the liability for the tax due" , making the liability on the return zero.
    Fifth Amendment Assertion of the Fifth Amendment right against self-incrimination as a basis for not providing any financial information.
    IRS is a Private Organization/Collects Tribute, Not Taxes Argues that the IRS is an entity named the Internal Revenue and Tax Service, Inc., which was incorporated in Delaware in 1933, it is a collection agency for the Federal Reserve Bank, or is part of the United Nations and is clandestinely leading the taxpaying public into a "new world order" .
    Not a Person Argues that a taxpayer is not a "person" within the meaning of IRC Section 7701(a)(14).
    Obscene, Vulgar, Harassing Submits documents or other materials indicating that non-filing is due to dissatisfaction with tax policies or taxation in general. Often, this argument is expressed with obscene, vulgar, or crude language and characters in an extremely demeaning manner.
    Protest Against Government Action/Inaction Argues that refusal to file or pay is justified because they disagree with government policies or spending plans.
    Sixteenth Amendment Argues the Sixteenth Amendment was not properly ratified and therefore the federal government does not have the legal authority to collect an income tax without apportionment.
    Straw Men Argues the government has created an entity separate and distinct from the taxpayer - a "straw man" and any tax obligations are exclusively those of the "straw man" .
    Taxes are Voluntary/Law Does Not Require Submits a return, amended return, or correspondence that argues income taxes are voluntary.
    U.S. v. Long Submits a return with zero money amounts much the same as the "Zero Return" category and "U.S. v. Long" is referenced. (See Note in Zero Returns below.)
    Unsigned Returns The individual completes a return but fails to sign. A statement indicating disagreement with the tax system is attached or added to the return.
    Valuation Income is not taxable because of the declining fair market value of the dollar, because the dollar is not backed by gold/silver, because the value of services is offset by the value of the labor (barter income), etc.
    Zero Returns Submits a return with zero money amounts. A statement is attached claiming there is no section of the Internal Revenue Code that established an income tax liability. The statement may also contain arguments regarding the definition of income. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ " ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    Other All others including those listed in Notice 2010-33 or any subsequent notice. This category includes non-filer accounts resulting from initial compliance check such as cross-reference TINs.

    Note:

    Frivolous arguments citing "Collection Due Process" (CDP) should be reviewed by Collections for possible referral to Appeals. Refer to IRM 5.19.8,Collection Appeal Rights, for additional information.

♦No Entry Return♦

  1. A "Tentative" estate or gift tax return on the appropriate form showing only the taxpayer's name, address, and estimated amount of tax due is not considered a complete return since it does not contain a signature, information about the decedents gross estate (Form 706), U.S. Estate Tax Return, or the total gifts of donor (Form 709), United States Gift (and generation-skipping transfer) Tax Return, and allowable deductions, credits and prepayments.

  2. An estate or gift tax return containing only the taxpayer's name and referring to various constitutional provisions which are said to excuse filing a return should be treated as a "no entry return" , invalid, and unprocessable.

  3. A bare statement of gross/net estate (Form 706), United States Estate Tax Return, or total gifts ( Form 709),United States Gift (and generation-skipping transfer) Tax Return constitutes an invalid and unprocessable return.

  4. An estate or gift tax return which is blank, except for the heading and the signature, is considered as a "no entry return" , invalid and unprocessable.

  5. If correspondence is not needed for unprocessable items, the statute begins when IRS receives the return. If correspondence is needed, the statute begins when the reply is received.

    If Then
    An unprocessable estate or gift tax return is received in the mail and indicates tentative, undetermined, etc. (numbered or unnumbered)
    1. Enter zeros on all transcription lines, Page 1, except Line 9 (Form 706, United States Estate Tax, and enter the Unified/Applicable Credit amount for Date of Death (DOD) on Lines 9 and 11.

    2. For estate and gift tax returns, process as incomplete using the best available information.

    Note:

    The statute begins with the earliest received date.

♦Foreign Currency♦

  1. For returns completed in other than U.S. currency, process as filed. However, if corresponding for missing/incomplete items, include in the letter to resubmit in U.S. currency.

♦Protective Claims♦

  1. Returns marked as “Protective Claim”, “Protective Refund”, “Protective Claim for Refund”, or similar statement will be removed from the batch and routed to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation. Notate “Protective Claim” in the remarks box of Form 4227, Intra-SC Reject or Routing Slip.

    Exception:

    A new Schedule PC, Protective Claim for Refund, has been added (August 2012 revision) to Form 706, United States. Estate Tax, If Schedule PC is attached, copy the schedule and route to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation. Leave the original with the return notating a copy was sent and continue processing.

♦Criminal Investigation (CI) Re-Entry Document Control ♦

  1. Criminal Investigation (CI) investigates potential criminal violations of the Internal Revenue Code (IRC) and related financial crimes. Criminal violations of the IRC include willful attempts to evade or defeat the income tax. Criminal tax violations also include the willful failure to collect or pay over tax and false claims for refunds based on bogus return information.

  2. For returns with refund claims do the following:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

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

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

    4. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

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

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

  3. Other CI Referral Criteria:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ,

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ,

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

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

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
  4. For all other CI Referral criteria listed in paragraph (3),do the following:

    1. Make a copy of the return.

    2. Attach Form 4227 to the copy.

    3. Route the copy as indicated in the table below.

      Cincinnati Ogden
      Mail Stop 83G, Criminal Investigation (CI) Mail Stop 9001, Criminal Investigation (CI)
    4. Edit an action trail "Copy to CI" , or "CI Referral" , or similar language in the lower left corner going vertically up the side of the return.

    5. Continue processing the return.

  5. If CI has stamped the return, no further CI action is required.

  6. If the return fits other criteria (e.g., Frivolous Argument), take appropriate action.

♦Examination (Exam) "Funny Box" ♦

  1. The primary objective in identifying tax returns for Examination (Exam) is to promote the highest degree of voluntary compliance. Exam will provide support and assist Submission Processing (SP) with any questionable return identified during processing. Exam has a vast multitude of programs and tolerance criteria already identified in various IRM sections. Exam does not restrict SP with the flexibility to refer questionable returns other than what is currently identified in various IRMs.

♦Re-Entry Documents♦

  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. This will indicate to the examiner that special handling is required.

    • Form 3893, Re-Entry Document Control, is used to re-input documents that have not posted to an account or module.

    • Form 13596, Reprocessing Returns, is used to reprocess documents to the correct account or module that had previously posted to the wrong account or module.

  3. Always leave a Form 3893, Re-Entry Documents, or Form 13596, Reprocessing Returns, on the front of the return. It must remain as a permanent part of the return.

  4. Examine Form 3893, Re-Entry Documents, or Form 13596, Reprocessing Returns, to determine the action needed to make the return processable.

    Caution:

    If the IRS received date is 2 years and 9 months or more after the return due date, refer to statute procedures before re-entering or reprocessing the return.

♦Re-Entry Documents - Form 3893♦
  1. Form 3893, Re-Entry Document Control, is used to re-input a return that has not been posted to an account or module.

  2. If more than one return is in the batch and only the top Form 3893, Re-Entry Document Control, has an entry in Box 1 (Alpha/Numeric block control number), edit all returns using current processing procedures and keep all returns clipped together.

  3. Circle the CCC "G" if present.

  4. Do not edit CCC "G" on an amended return.

  5. Do not send Letter 1382CPenalty Removal Request Incomplete if a request for reasonable cause is attached.

  6. If the return was not edited according to current processing procedures, circle any Action Codes, CCCs, and any other edit marks that are no longer applicable. Re-edit according to current processing procedures.

  7. If the return was edited according to current processing procedures, ensure that the information from Form 3893, Re-Entry Document Control, is edited on the return.

    Form 3893 Action Taken
    Box 14 (Remarks) Ensure that the information is edited to the return.
    Box 15 (Process as)
    1. Circle out the green rocker and edit marks that may indicate a receipt of remittance.

    2. Do not change any tax due amounts.

  8. Examine returns that have any color other than red editing in the tax data section to determine if the corrections are the result of improper perfection or taxpayer error.

    If Then
    Improper perfection Edit the same correction in red to the appropriate area.
    Taxpayer error Leave the entries as shown on the document.
  9. An IRS received date must be present on all Re-Entry returns:

    If Then
    IRS received date is not present Edit a received date to the middle of the return.
    Multiple IRS received dates are present Circle out all but the earliest date.
  10. When additional information is still needed to make the return processable, prepare Form 3696, Re-Entry Document Control, Correspondence Action Sheet, orForm 4227Intra-SC Reject or Routing Slip for the appropriate action (e.g., correspondence, research, etc.).

  11. When perfection is not possible, edit Action Code 640 on the return and attach Form 4227, Intra-SC Reject or Routing Slip, noting, "Perfection Not Possible" and leave in batch.

♦Reprocessing Returns - Form 13596♦
  1. Form 13596, Reprocessing Returns, is used to reprocess a return to the correct account or module that had previously posted to the wrong account or module.

  2. Circle CCC "G" if present.

  3. Do not edit CCC "G" on an Amended returns.

  4. Do not send Letter 1382C, Penalty Removal Request Incomplete if a request for reasonable cause is attached.

  5. If the return was not edited according to current processing procedures, circle out any action codes, CCCs and any other edit marks that are no longer applicable. Re-edit according to current processing procedures.

  6. If the return was edited according to current processing procedures, ensure that the information from Form 13596, Reprocessing Returns, is edited on the return.

    Form 13596 Action Taken
    TIN correction Edit correct TIN on return.
    Tax period correction Edit correct tax period ended on return.
    Reasonable cause Edit appropriate CCC.
    1. Edit CCC "R" if the "FTF" box is checked.

    2. Edit CCC "D" if the "FTP" box is checked.

  7. Examine returns that have any color other than red edited in the tax data section to determine if the corrections are the result of improper perfection or taxpayer error.

    If Then
    Improper perfection Edit the same correction in red to the appropriate area.
    Taxpayer error Leave the entries as shown on the document.
  8. An IRS received date must be present on all reprocessed returns.

    If Then
    IRS received date is not present Edit a received date to the middle of the return.
    Multiple IRS received dates are present Circle out all but the earliest date.
  9. Circle out the green rocker and edit marks that may indicate a receipt of remittance.

  10. When additional information is still needed to make the return processable, prepare Form 3696, Correspondence Action Sheet, or Form 4227, Intra-SC Reject or Routing Slip, for the appropriate action (e.g., correspondence, research, etc.).

♦Compliance Secured/Prepared Returns♦

  1. Compliance functions (Collections and Exam) secure returns from the taxpayer and also prepare returns if the taxpayer does not provide them.

    1. Prepared tax returns are notated with "IRC 6020(b)" or "Substitute for Return" (SFR).

    2. Secured tax returns are notated with Transaction Code 59X ("TC 59X" ) or "ICS" (Integrated Collections System) or notated "Process as Original" with an attached Form 13133, Expedite Processing Cycle. The "Delinquent Return" box on Form 13133 Expedite Processing Cycle should be checked.

      Note:

      If "RD" is notated on the front of the return and not circled, remove from the batch and route to Collections.

♦IRC Section 6020(b) - Prepared by Collection♦
  1. When the taxpayer fails to file a required return, IRC Section 6020(b) of the Internal Revenue Code is the authority for the IRS to prepare the return.

  2. These returns are identified by the notation "PREPARED AND SIGNED UNDER THE AUTHORITY OF SECTION 6020(b) OF THE INTERNAL REVENUE CODE" which is located in the center bottom of Page 1 of the return.

    1. Returns must have an IRS received date. If no received date is present per the Compliance Function, follow the normal procedures for editing the IRS received date.

    2. Returns must be signed by a Compliance Function representative. If not signed, route to Compliance using Form 4227, Intra-SC Reject or Routing Slip.

      Note:

      Starting July 1, 2013, the Revenue Officers (RO) electronic or typed signature or typed signature will be accepted as a valid signature on the return.

    3. ≡ ≡ ≡ ≡ ≡ "≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ " ≡ ≡ ≡

    4. Do not send the return back or correspond with the taxpayer for unprocessable conditions. If the return is unprocessable, edit CCC "3" and continue processing.

    5. Edit CCC "W" if the IRS received date is more than 2 years and 9 months after the return due date. Do not route the return to Statute Control.

♦Collection Secured♦
  1. These returns are identified by the notations "TC 59X" or "ICS" .

    1. Do not edit CCC "G" on these returns.

    2. Correspond for conditions that cannot be processed (e.g., missing signatures, missing schedules, etc.).

    3. Edit CCC "W" if the IRS received date is more than 2 years and 9 months after the return due date. Do not route the return to Statute Control.

      Reminder:

      If there is indication a penalty or penalties should be suppressed, edit the appropriate CCC(s).

♦Examination Prepared♦
  1. These returns are identified by the notation "SUBSTITUTE RETURN" or "SFR" on Page 1.

    1. Return must have an IRS received date. If no IRS received date is present, follow the normal procedures for editing the received date.

    2. Do not send the return back or correspond with the taxpayer for unprocessable conditions. If the return is unprocessable, edit CCC "3" and continue processing.

    3. If Form 13133,Expedite Processing Cycle, is attached, edit the CCCs that are checked on the form.

    4. Edit CCC "W" if the IRS received date is more than 2 years and 9 months after the return due date. Do not route the return to Statute Control.

♦Examination Secured♦
  1. These returns are identified by the notation "Process as Original" on Page 1 of the return and a Form 13133, Expedite Processing Cycle, attached with the "Delinquent Return" box checked.

    1. Do not edit CCC "G" on these returns.

    2. Correspond for conditions that cannot be processed (e.g., missing signatures, missing schedules, etc.).

    3. If Form 13133, Expedite Processing Cycle, is attached, edit the CCCs that are checked on the form.

    4. Edit CCC "W" if the IRS received date is more than 2 years and 9 months after the return due date. Do not route to Statute Control.

♦Obsolete Forms♦

  1. The following information pertains to obsolete returns:

    If Then
    Taxpayer uses an obsolete form as a current year return or files on an improper form, but computer program has been changed to accommodate current revision of form (e.g., Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, for tax periods prior to 7701), and line entries differ from the current year form
    1. Renumber form to current year revision, if possible.

    2. Copy data to be input to the BMF on current year return.

    3. Staple current year return with necessary code and edit markings to the face of taxpayer's prior year return.

    4. Use entity data on taxpayer's return, if possible, by cutting off or folding entity portion of the dummy return before stapling to taxpayer's return.

    5. NEVER destroy, mutilate, obliterate, or throw away any part or portion of return submitted by taxpayer.

♦Refund Returns/45 Day Jeopardy and 10 Million Dollar Refunds♦

  1. Document Perfection will identify refund returns and initiate requests for manual refunds in the following instances.

    Note:

    Expeditious processing of refund returns is critical if the 45 day period is about to expire.

    If Then
    A refund return is batched in a non-refund batch
    1. Completely edit the return.

    2. Pull the return from the non-refund batch and merge into a refund batch using local procedures.

    Note:

    Follow the instructions below when the processing date is more than 20 days after the IRS received date or the return due date or the refund is $10,000,000 or more.

    The processing date is more than 20 days after IRS received date or the return due date (whichever is later) and the refund amount is $25,000 or more.

    Note:

    Refund in this instruction means only the amount requested to be refunded to the taxpayer, not overpayments transferred to other periods.

    • Unnumbered Returns:

      1. Pull the return from the batch.

      2. Code and edit the return as completely as possible.

      3. Edit Action Code 341 or CCC U (whichever is applicable).

        Note:

        For returns with CCC U, attach Form 4227, Intra-SC Reject or Routing Slip, and check the "Reject Correction" box.

      4. Give the return to the manager for expedite processing.

    • Numbered Returns:

      1. Code and edit the return as completely as possible.

      2. Edit Action Code 341 (or CCC U as applicable) and leave in batch.

        Note:

        For returns with CCC U, attach Form 4227, Intra-SC Reject or Routing Slip and check the "Reject Correction" box.

    The refund is $10,000,000 or more

    Note:

    Refund in this instruction means only the amount requested to be refunded to the taxpayer not overpayments transferred to other periods.

    • Unnumbered Returns:

      1. Pull the return from the batch.

      2. Code and edit the return as completely as possible.

      3. Edit Action Code 341 or CCC U (whichever is applicable).

        Note:

        For returns with CCC U, attach Form 4227, Intra-SC Reject or Routing Slip, and check the "Reject Correction" box.

      4. Place the return in the CI box.

      5. When cleared, expedite processing.

    • Numbered Returns:

      1. Code and edit the return as completely as possible.

      2. Edit Action Code 331 (or CCC U as applicable)

      3. Attach Form 4227, Intra-SC Reject or Routing Slip to the return, edit Action Code 341 on Form 4227, Intra-SC Reject or Routing Slip, and leave in batch.

        Note:

        For returns with CCC U, attach Form 4227, Intra-SC Reject or Routing Slip, and check the "Reject Correction" box.

    The W&I Submission Processing Liaison for TAS issues walks a return through Code and Edit
    • In addition to normal editing:

      1. Edit CCC "O" to freeze the refund.

      2. Edit CCC "Y" to route the return to ERS.

♦Precomputed Penalties Other Than Delinquency or Failure to Pay♦

  1. The following information pertains to penalties other than delinquency to pay:

    Type of Penalty What to Do
    Penalty other than delinquency or failure to pay is present (e.g., fraud, negligence, etc.)
    1. Prepare Form 3465, Adjustment Request, requesting assessment of penalty.

    2. If return remittance includes penalty amount, request on Form 3465, Adjustment Request, requesting assessment of penalty that this portion of remittance be applied to assessment.

    3. Note on return Form 3465, Adjustment Request, requesting assessment of penalty. prepared and route Form 3465, Adjustment Request, requesting assessment of penalty. to Adjustment function.

      • (See Figure 3.11.106-2, Form 3465 Adjustment Request, requesting assessment of penalty.)

    Penalties and interest are imposed by Service Enforcement Officers and reasonable cause is given and accepted per documents attached Enter necessary CCC in condition code area of return (as determined by Exam).

    Figure 3.11.106-2

    This is an Image: 33575002.gif
     

    Please click here for the text description of the image.

♦Penalty and Interest (P&I) Code♦

  1. The following information pertains to penalty and interest.

  2. Edit Code "1" when the return reflects a precomputed delinquency penalty and/or interest and the return is received ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ . If only interest is shown, enter CCC "R" and Penalty and Interest (P&I) Code "1" . If only penalty is shown, enter P&I Code "1" .

    If Then
    The return has precomputed penalty or interest, but no IRS received date Determine received date and edit it. See IRM 3.11.106.13, Received Date.
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Enter P&I Code "1" .
    A Form 706, United States Estate Tax Return, Form 706-GS(D), Generation-Skipping Transfer Tax Return For Distributions; Form 706-GS(T), Generation-Skipping Transfer Tax Return For Terminations; and Form 706-NA, United States Estate (and Generation-Skipping Transfer) Tax Return (Non-Resident Alien). Edit the P&I Code in the upper right margin. (See Figure 3.11.106-3.) Penalty and Interest Code.
    Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return Enter the P&I Code between Lines 2 and 3 of the Tax Computation Section.
    A precomputed penalty, other than delinquency or failure to pay (i.e., IRC Section 6660 penalty) is shown on the return Prepare Form 3465, Adjustment Request.

    Note:

    Delete penalty and interest from the total and edit the Balance Due to the left of the original entry. Otherwise, accept taxpayer's entry.

    Figure 3.11.106-3

    This is an Image: 33575003.gif
     

    Please click here for the text description of the image.

♦Tax Information Authorization (TIA) - Form 706 Only♦

  1. A valid Form 8821, Tax Information Authorization or Form 2848, Power of Attorney, attached to Form 706, United States Estate Gift Tax Return, takes precedence over a TIA. If detaching and routing a Form 8821, Tax Information Authorization or Form 2848, Power of Attorney do not edit a TIA.

    Note:

    A valid Form 8821, Tax Information Authorization or Form 2848, Power of Attorney must contain: an IRS received date, taxpayer's name and SSN, signature and date.

  2. The following information pertains to TIA for Form 706, United States Estate Gift Tax Return, only:

    If Then
    A TIA declaration on Page 2 of Form 706, United States Estate Gift Tax Return, is signed by someone other than the Executor
    1. Edit "TIA" on Form 706, United States Estate Gift Tax Return, in the bottom margin and also in the top margin, left side, of Page 1.

    2. If Page 2 of Form 706 states, See attached for TIA Information, flag attachment page.

    3. Place return behind the batch when finished.

      Note:

      Clerks will copy TIAs and attachment pages.

    4. Route TIAs (domestic address) to Memphis CAF function and TIAs (foreign (international) address) to Philadelphia CAF function.

♦Error Resolution System (ERS) Coding (Form 706, Form 706-NA, and Form 709 Only)♦

  1. The following sections contain information pertaining to ERS coding.

Background for Error Resolution System (ERS) Coding (Form 706, Form 706-NA and Form 709 Only)

  1. The Error Resolution System (ERS) replaced the input perfection procedures for manual corrections to paper Error Register.

  2. ERS displays data on terminal display screens with corrections made and integrity verified in a real time environment.

  3. The Document Perfection tax examiner will have the first opportunity to identify a record having a problem which requires correspondence, research or other action in order to make the return processable.

♦Action Codes (General)♦

  1. Action Codes are used to indicate whether correspondence, research, or some other action is needed. The Action Code will set the suspense period to be assigned to the return and place the return in the workable or unworkable suspense inventory.

  2. When necessary, a 3 digit Action Code will be assigned by the tax examiner.

  3. Action codes are valid on Form 706, U.S. Estate Gift Tax Return, Form 706-NA, United States Estate(and Generation-Skipping Transfer) Tax Return (Non-Resident Alien) and Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return. Any other returns are processed through a manual correction system. Use CCC "U" on these returns when action such as correspondence is needed.

  4. Edit Action Codes in the bottom left margin of the return for Form 706, United States Estate Gift Tax Return and Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, (See Figure 3.11.106-4, Action Code and Form 3696, Correspondence Action Sheet.)

    Figure 3.11.106-4

    This is an Image: 33575006.gif
     

    Please click here for the text description of the image.

  5. Edit Action Codes for Form 706-NA, United States Estate (and Generation-Skipping Transfer) Tax Return, (Non-resident Alien),in the bottom center margin of the return.

  6. Assign Action Codes in the following priority order:

    • Action Code 310 (Statute Control)

    • Action Code 320 (Entity Control)

    • Action Code 4XX

    • Action Code 6XX

    • Action Code 3XX

    • Action Code 2XX (Correspondence)

  7. Use the following table if more than one Action Code is needed:

    If Then
    Action Codes include 211, 215, 225 or 226 and Action Code 341,
    1. Edit the Action Code 211, 215, 225 or 226 on the Form 706 and 709 families.

    2. Edit Action Code 341 on the Form 4227, Intra-SC Reject or Routing Slip.

    Action Codes have the same priority,
    1. Edit the Action Code with the shorter suspense period on the Form 706 and 709 families.

    2. Edit the second Action Code on the Form 4227, Intra-SC Reject or Routing Slip.

    3. See IRM 3.11.106.9.2 (8), Action Codes for suspense periods.

    Action Codes have different priorities,
    1. Edit the Action Code with the higher priority on the Form 706 and 709 families.

      Exception:

      Use Action Code 211, 215, 225 or 226 before Action Code 341 to ensure the return is complete before a manual refund is issued.

    2. Edit the second Action Code on the Form 4227, Intra-SC Reject or Routing Slip.

  8. Attach Form 4227, Intra-SC Reject or Routing Slip when more than one Action Code is needed. Edit the Action Code with the shortest suspense period on the form and edit the second Action Code on Form 4227, Intra-SC Reject or Routing Slip.

  9. Edit the following Action Code when a return cannot be perfected:

    Action Code Description
    211 (First Correspondence) or 215 (International Correspondence)
    1. Return is illegible, incomplete, or contradictory and therefore cannot be processed.

    2. The taxpayer notates 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)
    1. Unsigned return (only issue for correspondence).

    2. Signature is not original or has been photocopied.

    226 (Missing Signature International Correspondence)
    1. Unsigned foreign (international) return (only issue for correspondence).

    2. Signature is not original or has been photocopied.

    480 (Early Filed-Suspense) Early filed return. See IRM 3.11.106.16.1, Tax Period-Early Filed Returns.
    610 (Renumbered Non Remittance) or
    611 (Renumbered with Remittance)
    A return is mis-blocked (e.g., Form 706-NA, United States Estate (and Generation-Skipping Transfer) Tax Return (Non-resident Alien),found in a Form 706, United States. Estate Gift Tax Return batch of work, orForm 706, United States Estate Gift Tax Return, is found in a batch of Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, etc.).
    640 (Void) To delete the assigned Document Locator Number (DLN) on the return (e.g., Re-entry returns).
  10. Continue perfecting the return after editing the Action Codes.

  11. Valid Action Codes are listed below:

    Action Code Description Workday Suspense Period
    211 First Taxpayer Correspondence 40
    212 Second Correspondence 25
    215 International Correspondence 45
    225 Taxpayer Correspondence (Signature Only) 40
    226 International Taxpayer Correspondence (Signature Only) 40
    310 Statute Control 10
    320 Entity Control 10
    331 Frivolous Review 3
    341 Manual Refund 10
    342 Credit Verification 10
    343 Black Liquor 10
    352 Name Research 3
    360 Other in-house Research 10
    410 Assistance Needed/Special Handling 3
    420 Manager's Suspense 5
    480 Early Filed Suspense 150
    610 Renumber - Non-remit 0
    611 Renumber - Remit 0
    640 Void 0
    650 International 0
♦Numbered Return♦
  1. The following information pertains to numbered returns:

    If Then
    A numbered return cannot be perfected
    1. Edit Action Code 211.

    2. This code applies only to numbered returns (Form 706, United States. Estate Gift Tax Return, Form 706-NA, United States Estate ( and Generation-Skipping Transfer) Tax Return (Non-resident Alien) and Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return), and will cause a record to print on the SC New Suspense List.

      • However, continue to perfect the document to the extent possible as though it did not contain an Action Code.

♦Action Codes (AC) - Form 706, Form 706-NA, and Form 709♦

  1. Some of the conditions in which Form 706, United States. Estate Gift Tax Return, Form 706-NA, United States Gift (and Generation Skipping Transfer) Tax Return (Non-resident Alien) and Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, would be assigned an Action Code (AC) are described in the following: See IRM 3.11.106.9.3.1, AC 610/611, and IRM 3.11.106.9.3.2, AC 620.

♦AC 610/611♦
  1. The document has been misblocked (the DLN is not the proper one to be assigned to the document), but it is an ADP document.

    • AC 610 - Non-Remittance

    • AC 611 - Remittance

♦AC 620♦
  1. The document is for a tax period prior to the beginning of ADP Processing for that type of document. Also, if the document is of a type not prescribed to be input to the ADP System.

♦Additional Action Codes♦

  1. The Action Codes used throughout the handbook are the codes to be edited for those specific situations. The following is a list of codes that are valid for Document Perfection use and may be used for other situations that may arise during processing. The codes, their meanings, suspense periods, and function are as follows:

    Note:

    * CE = Code and Edit, EC = Error Correction, S = Suspense, GEN = Computer Generated.

    Action Code Description Workday Suspense Period Function *
    211 First Taxpayer Correspondence 40 CE, EC, S
    212 Second Taxpayer Correspondence 25 CE, EC, S
    213 Correspondence to Other than Taxpayer 40 CE, EC
    215 International Correspondence 45 CE, EC, S
    225 Signature Only 40 CE, EC, S
    226 Signature Only (International) 45 CE, EC, S
    310 Statute Control 10 CE, EC, S
    320 Entity Control 10 CE, EC, S
    331 Frivolous Review 3 CE, EC
    332 Questionable Refund Detection Team (QRDT) Review 3 CE, EC
    333 Prompt Audit 10 CE, EC
    334 Joint Committee 10 CE, EC, S
    335 Frivolous Case 10 CE, EC, S
    336 QRDT 10 CE, EC, S
    337 Other Criminal Investigation Division (CID) 10 CE, EC, S
    341 Manual Refund 10 CE, EC, S
    342 Credit Verification 10 CE, EC, S
    343 Other Accounting 10 CE, EC, S
    351 TIN Research 0 EC, S
    352 Name Research 3 CE, EC, S
    353 Address Research 3 CE, EC, S
    354 Filing Requirements Research 3 CE, EC, S
    355 Other Research 3 CE, EC, S
    360 Other In House Research 10 CE, EC, S
    370 Examination 10 CE, EC, S
    410 Assistance Needed/Special Handling 3 CE, EC, S
    420 Management Suspense A 5 CE, EC, S
    430 Management Suspense B 10 CE, EC, S
    440 Management Suspense C 15 CE, EC, S
    450 Management Suspense D 20 CE, EC, S
    460 Management Suspense E 25 CE, EC, S
    480 Early Filed Suspense 150 CE, EC, S
    510 Missing Document 0 CE
    511 Missing Document 1st Suspense 25 EC, S
    512 Missing Document 2nd Suspense 20 S
    513 Missing Document 3rd Suspense 20 S
    515 Missing Document Short Term 5 EC, S
    550 Magnetic Tape Attachment 3 CE
    551 Magnetic Tape Inconsistent Data 3 CE
    610 Renumber 0 CE, EC
    611 Remittance Renumber 0 S
    620 NMF/Non-ADP 0 CE, EC, S
    630 Re-input 0 EC
    640 Void 0 CE, EC, S
    650 International 0 CE, EC
    660 Data Control Delete
    (Tape Edit Processing (TEP) Delete)
    0 GEN
    670 Deleted Missing Document 0 GEN
    700 Duplicate Block 0 GEN
    711 Duplicate Document DLN from CE NA GEN
    712 Duplicate Document DLN from EC NA GEN
    713 Duplicate Document DLN from Unpostables NA GEN
    714 Duplicate Document DLN from Unworkable Suspense NA GEN
    715 Duplicate Document DLN from Workable Suspense NA GEN
    900 Unpostable Record 0 GEN

♦Computer Condition Codes (CCCs)♦

  1. Computer Condition Codes (CCCs) are used to identify a special condition or computation to post to the master file.

  2. CCCs are edited in the upper left corner of the return for all Estate and Gift Tax (Form 706, United States Estate Gift Tax Return, and Form 709, United States Gift ( and Generation-Skipping Transfer) Tax Return series) returns.

  3. The following common CCCs will be used on all documents input to the BMF:

    Code Explanation
    A 2010 (ONLY) revision (with a 2010 tax period) of Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return.
    B Victims of Terrorism Relief
    D Reasonable Cause For Failure to Pay Taxes Timely
    F Final Return
    G Amended, superseding, duplicate, tentative, revised, substitute
    L Treaty based positions. IRC Section 6114 written on Form 706, United States Estate Gift Tax Return, Form 706-NA, United States Estate (and Generation-Skipping Transfer) Tax Return (Non-resident Alien) and Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return.
    O Form 3753, Manual Refund Posting Voucher and Letter 5792, Request for IDRS generated record. Module Freeze - indicates a manual refund was issued
    R Reasonable cause for delinquency
    U Unprocessable document
    W Indicates the return has been cleared by Statute Control
    X Credit freeze
    Y Combat zone return, early filed return, Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, returns under Revenue Ruling 71-132 and Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, returns filed by non-residents who are not citizens
    3 No reply to correspondence
    7 Reasonable Cause Statement Denied
  4. Since all CCCs are not valid for each (and every) Form 706, United States Estate Gift Tax Return, and Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return series return, consult the following sections, as appropriate, before editing a code for the specific (type of) return being processed. Tax examiners code various documents for input to the BMF.

♦CCC "A" - 2010 (ONLY) revision (with a 2010 tax period) of Form 709♦

  1. Edit CCC "A" to identify 2010 (ONLY) revisions (with a 2010 tax period) of Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, if there are any dollar amount entries (other than zero) anywhere on Page 2, Schedule A, Parts 2 or 3, or on Page 4, Schedule C (other than Exemption amounts (only) shown in Part 2, Lines 1, 3, and/or 8).

    Caution:

    DO NOT edit CCC "A" if return is other than 2010 revision of Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return.

♦CCC "B" - Victims of Terrorism Relief♦

  1. Edit this code to identify Form 706, United States Estate Gift Tax Return, containing references or indications the return was for the estate of a victim killed in a terrorism attack.

  2. If a Form 706, United States Estate Gift Tax Return, return is annotated at the top of Page 1 of the return "IRC Section 2201" or has any indications the return is the result of legislation impacting victims of terrorist attacks (April 19, 1995 - Oklahoma City bombing; September 11, 2001 - World Trade Center bombing; or references to deaths resulting from anthrax that occurred on or after September 11, 2001, and before January 1, 2002):

    1. Edit CCC "B" .

    2. A special tax rate schedule will apply to victims of terrorist attacks. ERS/Rejects will verify the appropriate tax computation.

    3. Apply all other credits against the estate tax (including unified/applicable credit) to these returns.

♦CCC "D" - Reasonable Cause For Failure to Pay Taxes Timely♦

  1. We will no longer code CCC "D" if the taxpayer requests abatement for Failing to Timely Pay Taxes when the return is submitted.

    Note:

    In the case of a disaster, specific instructions for the use of this code will be provided at that time.

  2. For Form 706, United States Estate Gift Tax Return, and Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, series returns, the Cincinnati Compliance Services, Estate and Gift Tax Campus Operation will make a determination regarding reasonable cause and assess any penalty(ies), etc., against the account, if applicable. They have determined the return(s) should be processed through the pipeline (without delay) while they are making their determination of reasonable cause and assessments of applicable penalties.

  3. The following instructions apply for handling of Form 706 and Form 709 series returns:

    1. Make a photocopy of Pages 1 and 2 of the return.

    2. Detach the taxpayer's statement from the return.

    3. Attach the photocopy of the return and the taxpayer's statement to Form 4227, Intra-SC Reject or Routing Slip, and route to the Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.

    4. Continue normal processing of the (original) return.

  4. If a Cincinnati Compliance Services, Estate and Gift Tax Campus Operation representative visits Code and Edit for an on-site review for determination(s) of reasonable cause, proceed as follows:

    1. Edit the appropriate CCC on the return per Compliance Services' instructions.

    2. Continue normal processing of the return.

♦CCC "F" - Final Return♦

  1. Edit CCC "F" when the taxpayer:

    1. States "final" on the return or attachments.

    2. Gives a positive indication that they are not liable for filing future returns. Notations such as (but not limited to):

    • Final

    • Deceased

    • Out-of-Business

    • Liquidation

    • Exempt under IRC Section 501(c)(3)

    • Dissolved

  2. CCC "F" on Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, indicates this is the last return of a donor who died.

♦CCC "G" - Amended Return♦

  1. See IRM 3.11.106.10.5.1, Amended Returns.

♦Amended Returns♦
  1. Form 706 and Form 709 series returns do not contain "amended boxes" . However, the return might include some written indication by the taxpayer (or their representatives) that there has been a change since the original return was submitted. Examples of this are such words as "Supplemental" , "Duplicate" , "Additional" , or any other positive indication that the taxpayer has filed previously.

  2. Examine the return for attachments. Do not separate any related attachments from the return that the taxpayer has submitted to explain the reason for the amended return. This information will be useful by Accounts Management. Detach any unrelated documents and route them to the appropriate function using Form 4227, Intra-SC Reject or Routing Slip. Edit Action Trail on the return.

    Note:

    For Form 706 and Form 709 series returns, do not detach any attachments.

  3. There is an indication the return is amended and:

    If Then
    "TC 59X" or "ICS" was entered on the return by Compliance Services Do not edit CCC G. Process the return as an original.
    The return is stamped "Delinquent Original Cleared for Processing" by Statute Do not edit CCC G. Process the return as an original.
    Form 3893, Re-Entry Document Control or Form 13596, Reprocessing Returns is attached
    1. Do not edit CCC "G" .

    2. See IRM 3.11.106.4.10.2, Form 13596, Reprocessing Returns.

    None of the above are present Edit CCC "G" . No other codes may be used with CCC "G" except CCC "U" , "W" , "3" and/or ERS Action Code.
  4. Form 706, United States Estate Gift Tax Return and Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return series returns: Receipt and Control will sort non-remittance amended Form 706, United States Estate Gift Tax Return, and Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return series tax returns and forward returns with a domestic or foreign (international) address to Cincinnati Compliance Services, Estate and Gift Tax Campus Operations. The following instructions pertain to Form 706, United States Estate Gift Tax Return, Form 706-GS(D), United States Additional Estate Tax Return Under Section 2057, Form 706-GS(T), Generation-Skipping Transfer Tax Return for Terminations, Form 706-QDT, United States Estate Tax Return for Qualified Trusts, Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return.

    If And Then
    Return (without remittance) is marked "Amended" , "Revised" , "Adjusted" , "Subsequent" , "Substitute" , "Corrected" , etc. Domestic or foreign (international) address (Block 3a, Form 706, United States Estate Gift Tax Return, or Block 5, Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return. )
    1. Consider the return as amended.

    2. Route to Cincinnati Compliance Services, Estate and Gift Tax Campus Operations.

    Return (with remittance) is marked "Amended" , "Revised" , "Adjusted" , "Subsequent" , "Substitute" , "Corrected" , etc. Unnumbered return with domestic or foreign (international) address
    1. Consider the return as amended.

    2. Route to Cincinnati Compliance Services, Estate and Gift Tax Campus Operations.

    3. Hand carry return and remittance to supervisor.

    Return (with remittance) is marked "Amended" , "Revised" , "Adjusted" , "Subsequent" , "Substitute" , "Corrected" , etc. Numbered return with domestic or foreign (international) address
    1. Route to Cincinnati Compliance Services, Estate and Gift Tax Operations.

    2. Use Action Code 370 (Exam).

    3. Leave the return in the batch.

  5. See IRM 3.11.106.19.7, for processing amended Form 706-NA, United States Estate (and Generation-Skipping Transfer) Tax Return (Non-resident Alien).

  6. The following data must be edited on all amended returns:

    • Name Control

    • Social Security Number (SSN)

    • Date of Death (or, Tax Period)

    • CCC "G"

    • IRS received date

    • Signature

♦CCC "L" - Treaty Based Positions♦

  1. Edit CCC "L" when the taxpayer has written "IRC Section 6114" on the top of the return or Form 8833, Treaty-Based Return Position Disclosure Under IRC Section 6114 or 7701(b), is attached to the return.

    Note:

    This applies only to Form 706, United States. Estate Gift Tax Return, Form 706-NA, United States Estate(and Generation-Skipping Transfer) Tax Return (Non-resident Alien) and Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return.

♦CCC "O" - Module Freeze♦

  1. CCC "O" is edited when a Pre-Settlement Manual Refund will be made and a Form 3753, Manual Refund Posting Voucher; Form 5792, Request for IDRS Generated Refund (IGR); or Form 12857, Refund Transfer Posting Voucher, is attached. Verify that the Name Control, SSN, and Tax Period on the return is the same as the data on the form.

  2. When issuing CCC "O" :

    1. Research to determine if TC 840 (Manual Refund Transaction) has posted.

    2. If TC 840 has posted, enter CCC "O" and process as usual.

    3. If TC 840 has not posted, enter Action Code 341 to issue a manual refund.

    If Then
    A completed Form 3753, Manual Refund Posting Voucher; Form 5792, Request for IDRS Generated Refund (IGR); or Form 12857, Refund Transfer Posting Voucher, is attached to the return. (These indicate that a pre-settlement manual refund was made.) Edit CCC "O" .
    • (The freeze is released by posting Transaction Code 840.)

♦CCC "R" - Reasonable Cause for Delinquency♦

  1. We will no longer code CCC "R" if the taxpayer requests abatement for Failing to Timely File when the return is submitted.

    Note:

    In the case of a disaster, specific instructions for the use of this code will be provided at that time.

  2. See IRM 3.11.106.18.3.2 if a Form 706, United States Estate Gift Tax Return, is received with an original Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, with an approved extension of time to file.

  3. For Form 706 and Form 709, series returns, the Cincinnati Compliance Services, Estate and Gift Tax Campus Operation will make a determination regarding reasonable cause and assess any penalty(ies), etc., against the account, if applicable. They have determined the return(s) should be processed through the pipeline (without delay) while they are making their determination of reasonable cause and assessments of applicable penalties.

  4. The following instructions apply for handling of Form 706 and Form 709 series returns:

    1. Make a photocopy of Pages 1 and 2 of the return.

    2. Detach the taxpayer's statement from the return.

    3. Attach the photocopy of the return and the taxpayer's statement to Form 4227, Intra-SC Reject or Routing Slip, and route to the Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.

    4. Continue normal processing of the (original) return.

    Note:

    All "R" coded returns must have an IRS received date. If one is not present, enter the date in the middle of the return.

  5. If a Cincinnati Compliance Services, Estate and Gift Tax Campus Operation representative visits Code and Edit for an on-site review for determination(s) of reasonable cause, proceed as follows:

    1. Edit the appropriate CCC on the return per Cincinnati Compliance Services, Estate and Gift Tax Campus Operation instructions.

    2. Continue normal processing of the return.

    Note:

    CCC "R" cannot be used with CCC "4"

♦CCC "U" - Unprocessable Conditions♦

  1. Edit CCC "U" on any return that has an unprocessable condition. This applies only to the Form 706-GS(D),Generation-Skipping Transfer Tax Return for Distribution, and Form 706-GS(T), Generation-Skipping transfer Tax Return for Terminations.

    Note:

    All returns will receive CCC "U" except Form 706, United States Estate Tax Return, Form 706-NA, United States Estate (and Generation-Skipping Transfer) Tax Return (Non-resident Alien), and Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return.

  2. For Form 706, United States Estate Tax Return, Form 706-NA, United States Estate( and Generation-Skipping Transfer)Tax Return (Non-resident Alien) and Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, see IRM 3.11.106.9, ERS Coding (-Form 706, United States Estate Tax Return, Form 706-NA, United States Estate (and Generation-Skipping Transfer)Tax Return (Non-Resident Alien), and Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, Only) for the appropriate Action Code to use for unprocessable conditions.

♦CCC "W" - Return "Cleared by Statute" ♦

  1. CCC "W" is used when the return has been cleared by Statute Control. (See IRM 3.11.106.10.10.1, Statute Returns.)

♦Statute Returns♦
  1. Any return with an IRS received date that is 2 years and 9 months or more after the return due date is a potential statute control return.

  2. Statute returns must be routed to the Statute Control Unit daily or more often if needed.

    Exception:

    Do not route to Statute Control Unit for clearance, edit a CCC "W" and continue processing, if any of the following conditions are present:

    • Compliance ( IRC Section 6020(b)) returns.

    • Secured by Examination/Collections.

    • A return with TC 59X or ICS notated on the face of the return.

    • Returns that are substitute returns prepared by Exam (SFR) in top margin of the return.

    • The return has a stamp that indicates a previous clearance by Statute Control within the last ninety days.

  3. If a Form 12412, Operations Assistance Request (OAR) is received from TAS and the return is a potential statute control return but is not stamped "Cleared by Statute" , give the return to your lead. The lead will contact the TAS employee listed on the OAR for rejection of the OAR and then send back to TAS for clearance by the Statute Unit.

    Note:

    If the return is within 90 days of the statute expiration date, advise the TAS employee of such and route the return directly to statute for clearance.

  4. Statute returns are unprocessable until they are cleared by Statute Control:

    If Then
    The return is numbered
    1. Edit Action Code 310 on the return (Form 706, United States Estate Tax Return, Form 706-NA, United States Estate ( and Generation-Skipping Transfer) Tax Return (Non-resident Alien), and Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return).

      • For all other forms (including, but not limited to Form 706-A, United States Estate Tax Return, Form 706-D, United States Additional Estate Tax Return- Under Code Section 2057, Form 706-QDT, United States Estate Tax Return for Qualified Trusts, Form 706-GS(D), United States Additional Estate Tax Return- Under Code Section 2057 and Form 706-GS(T), Generation- Skipping Transfer Tax Return for Terminations,

      • edit CCC U on the return.

    2. Leave the return in the batch and continue processing.

    3. Edit Action Code 211, 215, 225 or 226 on Form 706, Form 706-NA and Form 709. Use CCC U for all other returns.

    The return is unnumbered
    1. Do not continue processing.

    2. Pull the return from the batch.

    3. Attach Form 4227, Intra-SC Reject or Routing Slip and route to Statute Control Unit.

  5. Edit CCC "W" if the return has been cleared by Statute Control Unit. Statute will stamp or indicate clearance on the front of the return.

  6. Statute may stamp a return as "No Statute Issue" . Follow the table below to determine if a CCC "W" is needed:

    If And Then
    The return received date is 2 years and 9 months or more after the return due date The return is stamped, “No Statute issue”, "Statute N/A" , or a similar statement indicating there is no statute issue Edit a CCC W.
    The return received date is less than 2 years and 9 months from the return due date The return is stamped, “No Statute issue”, "Statute N/A" , or a similar statement indicating there is no statute issue Do not edit a CCC W.

♦CCC "X" - Return Settlement Frozen♦

  1. Edit CCC "X" :

    If Then
    Taxpayer has requested part of the refund be applied to another account
    1. Edit CCC "X" .

    2. Photocopy Pages 1 and 2 of the return.

    3. Prepare Form 3465, Adjustments Request.

      • Attach photocopy and forward to Accounts Management.

    4. Notate "Form 3465" , Adjustment Request Prepared on original return.

    There is "no reply" to a correspondence and a refund is due Edit CCC "3" as well.

♦CCC "Y" - Designates a Yield Condition♦

  1. The CCC "Y" is used by different programs to designate a "yield" condition (and is used by other BMF programs to represent a change in the accounting period). However, for the Form 706, United States Estate Tax Return and Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, CCC "Y" designates a yield condition for 4 entirely different reasons.

  2. Edit a CCC "Y" when either of the following conditions apply:

    • It is an "Assistance Needed/Special Handling" return. (2011 Form 706, United States Estate Tax Return with a Date of Death in 2011 only.)

    • It is a "Combat Zone" return. (Form 706 series only.)

    • It is an "Early Filed" return. (Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, only.) See (4) below.

    • It is a "Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, from a non-resident alien taxpayer" .

    • If the W&I Submission Processing Liaison for TAS issues walks a return through Code and Edit; then, in addition to normal editing: (1) Edit CCC "O" to freeze the refund and (2) Edit CCC "Y" to route the return to ERS. See IRM 3.11.106.2.4, Taxpayer Advocate Service (TAS).

  3. The following information pertains to Combat Zone returns:

    If Then
    A decedent is killed in action or died as a result of wounds, disease or injury received while serving in a Combat Zone
    1. Edit CCC "Y" .

    2. The decedent is entitled to lower estate tax per IRC Section 2201 and 2011(d).

    3. The tentative tax equals 125% of the maximum allowable state death tax credit.

    4. All other credits against estate tax (including unified/applicable credit) apply to these returns.

  4. The following information pertains to "Early Filed remittance returns" :

    If Then
    A gift was given the same year the return is filed, but is not due until April 15th of the following year (e.g., a gift is given in 2015, the return was filed in 2016, and the return is due April 18, 2016)
    1. Edit CCC "Y" .

    2. The return cannot be processed until after December 31, 2015; post it as the month actually received. For example, if the return is received in January 2016, post it as 1601, etc.

    3. This applies to remittance returns. (See Figure 3.11.106-5.) Computer Command Code

    Figure 3.11.106-5

    This is an Image: 33575007.gif
     

    Please click here for the text description of the image.

  5. Edit a CCC "Y" on Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, filed by non-residents who are not United States citizens.

♦CCC "3" - No Reply to Correspondence-Suppress Credit Interest♦

  1. Edit CCC "3" when either the taxpayer fails to respond to correspondence or when correspondence is returned undeliverable. It will suppress credit interest from being generated.

♦CCC "7" - Reasonable Cause Statement Denied♦

  1. The Cincinnati Compliance Services, Estate and Gift Tax Campus Operation, will make all determinations of reasonable cause for all Form 706, United States Estate Tax Return. and Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, tax returns.

  2. If a Compliance Services representative visits Code and Edit for an on site review for determination(s) of reasonable cause, proceed as follows:

    1. Edit the appropriate CCC on the return per Compliance Services instructions.

    2. Continue normal processing of the return.

    Note:

    Unless Examination has determined that an on site visit by Compliance Services personnel is needed, there will be no need to determine whether a CCC "7" is appropriate or not.

♦Taxpayer Correspondence General♦

  1. All Taxpayer Correspondence is governed by the following guidelines:

    1. All written communication from a taxpayer or his/her representative, excluding tax returns, whether solicited or unsolicited.

    2. Written communication which requests information, including requests attached to tax return.

    3. Written communication, including annotated notice responses, that provide additional information or dispute a notice.

  2. A written referral resulting from taxpayer telephone contact or walk-in inquiry (although not included in the definition of taxpayer correspondence) should be handled in adherence to the guidelines contained in IRM 1.10.1, The IRS Correspondence Manual.

  3. Timeliness guidelines for acknowledging and working taxpayer correspondence as outlined in IRM 3.30.123, Processing Timeliness: Cycles, Criteria and Critical Dates, must be followed.

♦Issuing Correspondence♦

  1. Issue correspondence to resolve any conditions causing the return to be unworkable or unprocessable.

    Note:

    Do Not correspond on returns prepared by Collections, Section 6020(b) or by Examination "Substitute for Return" SFR

  2. Examine the return so that all of the conditions can be included in the same correspondence.

  3. Follow the instructions below when correspondence is needed.

    Note:

    This list is not all inclusive, Tax examiners may see other unusual documents that are not addressed in this subsection or in other areas of the IRM.

    If And Then
    Correspondence is needed requires a response
    1. Complete Form 3696, Correspondence Action Sheet, or other approved Correspondence Action Sheet indicating the letter number (e.g., Letter 180C, Gift Tax Return Incomplete for Processing Form 709, 709A, or Letter 3463C, Missing Information to Process EO Return), Master File Tax (MFT), and the appropriate paragraphs.

      Note:

      Within these paragraphs there may be fill-ins that the tax examiner will be required to enter, such as tax period, form number, DLN, etc.

    2. Attach Form 3696, Correspondence Action Sheet or other approved Correspondence Action Sheet to the front of the return below the Entity area.

    3. Edit Action Code 211 on Form 706, Form 706-NA, United States Estate Tax Return, and Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return.

      • Use CCC "U" for all other returns.

    4. Finish editing the return and leave the return in the batch.

    Correspondence is needed does not require a response
    1. Complete Form 3696, Correspondence Action Sheet or other approved Correspondence Action Sheet indicating the letter number, MFT, and the appropriate paragraphs.

      Note:

      Within these paragraphs, there may be fill-ins that the tax examiner will be required to enter, such as tax period, form number, DLN, etc.

    2. Photocopy and attach Form 3696, Correspondence Action Sheet, or other approved Correspondence Action Sheet below the Entity areas on the front of the return. Be sure the name and address shows clearly above the Form 3696, Correspondence Action Sheet or other approved Correspondence Action Sheet.

    3. Forward the copy to the Correspondence area.

    4. Edit an Action Trail (e.g., Letter 180C, Gift Tax Return Incomplete for Processing Form 709, 709A SENT) in the lower left corner going vertically up the side of the return.

    5. Finish editing the return and leave in batch.

    Note:

    There may be additional letters that are exclusive to the Tax Examiner's campus. These letters are for specific forms or conditions where it was deemed necessary for ease of processing. The Tax Examiner should go to their lead or manager for copies of these letters to facilitate processing.

♦Fact of Filing - Transaction Code 59X♦

  1. The following information pertains to TC 59X:

    If Then
    An unnumbered return is withdrawn from the workflow for correspondence
    1. Input through IDRS, (no later than 3 weeks before the delinquency check) a fact of filing to alter the normal delinquency check.

    2. Annotate the transaction and closing codes input in the middle left margin of the return.

    3. Using Command Code FRM49BB, the codes are as follows:

      1. TC 599-17 Unprocessable Tax Return.

      2. TC 599-18 Return in progress on or after the program completion date.

    The return is being sent back to the taxpayer The above instructions do not apply. TC 599 is not necessary.

♦Use of Fax for Taxpayer Submissions♦

  1. Tax return information can be received via fax as part of return perfection even if a taxpayer signature is required. In circumstances where contact with the taxpayer has been made and documented, fax signatures are acceptable. For information about accepting signed taxpayer documents by fax, see the most recent revision of the IRS Policy for Use of Fax, available at: http://irweb.irs.gov/AboutIRS/co/dese/memo/48254.aspx

  2. Contact with the taxpayer may be by telephone or correspondence. Follow local procedures to determine which method of contact will be used.

  3. Code and Edit examiners will indicate the fax paragraph on the Form 3696, Correspondence Action Sheet, to advise taxpayers of the option to fax their response.

    Caution:

    Before disclosing any tax information, you must be sure you are speaking with the taxpayer or authorized representative. See the Taxpayer Authentication guidelines in IRM 21.1.3, Operational Guidelines Overview. Also, before leaving any messages on a taxpayer's answering machine, review IRM 11.3.2.6.1, Leaving Information on Answering Machines/Voice Mail. Fax procedures contained in IRM 11.3.1.11, Facsimile Transmission of Tax Information, must be reviewed prior to faxing confidential information to the taxpayer.

General Editing Guidelines

  1. General instructions eliminate repetition of the same instructions for each return. If the general instructions and the specific instructions conflict, follow the specific instructions.

  2. Do not edit a vertical line, 00, dash or decimal point in a dollars and cents field when the taxpayer has entered dollars only.

  3. Do not edit brackets or parentheses around amounts clearly indicated to be negative by the presence of a minus sign (-).

    Reminder:

    It will be necessary to bracket negative amounts when editing negative entries on transcription lines (i.e., computing and entering a line entry, entering a missing line entry, etc.).

  4. Received date is edited in MMDDYY format.

  5. Document Perfection should arrange Pages 1, 2, 3, and 4 of Form 706, United States Additional Estate Tax Return, in sequential order to facilitate transcription entry.

  6. If a current/prior year return is filed on a tax form for other than the appropriate tax year, convert the tax return to the current year format using the prior year conversion tables.

  7. If a current year return is filed on a 2005 or prior year tax form, renumber the prior year return to comply with current year line numbers.

  8. If a current year tax form is used to report prior year tax information, edit the tax period to reflect the prior year.

  9. If the prior year return is filed on the correct/incorrect tax form, renumber the prior year form to current year format.

♦Edit Marks♦

  1. Edit marks are edited on the return for transcription to the Automated Data Processing (ADP) System through Integrated Submission and Remittance Processing (ISRP) system. The editing can be entered in brown, red, 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. Lines are left blank if the entry would be a zero amount unless otherwise instructed.

  3. The original entry on a return is never obliterated, altered or erased 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" The "X" is used to delete tax data or to indicate that an item is not to be transcribed. For example, If deleting an original taxpayer entry, edit an X to the left of the entry to be deleted. Edit the correct entry to the left or above the X
    "/" A "/" can be used when deleting a form or schedule not being transcribed.
    "//$" The "//$" is used in the entity area to identify the beginning and ending of a foreign country code. For example, "/EI/$" is edited for Ireland and "/GM/$" is edited for Germany.
    "c/o" or "%" Indicates an "in-care-of" name for transcription.
    Circle Indicates that an entry is not to be 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 and a received date that is other than an IRS stamped date).
    Arrow Indicates the correct placement of a misplaced entry. An arrow may be used if the misplaced item is close to the correct line and there is no question where the entry belongs.

    Note:

    A double arrow may be used if the same figure is to be transcribed in two different places (along with any required transcription data between the two arrows).

    Check Mark Indicates that an entry has been manually math verified and is correct.
    Bracket/Parenthesis Indicates a negative numerical amount.

    Note:

    Code and Edit is not required 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 (-). It will be necessary to bracket negative amounts when editing negative entries on transcription lines (i.e., computing and entering a line entry, entering a missing line entry, etc.).

    Vertical Line or Decimal Point Indicates the separation of dollars and cents if no distinction has been made by the taxpayer.
    Zero, Dash, None or N/A "ZERO" , "DASH" "NONE" or "N/A" are considered valid entries except when specific instructions require editing of an entry.
    Edit Marks Made by Other IRS Functions Edit marks entered by another area, such as Collections, Entity, or Accounts Management, are not to be re-edited except to place the marks in the correct area or to perfect for legibility. Do not edit (or write) over another area's edit marks.
    Rocker Indicates the amount paid when drawn under a remittance amount.

♦Received Date♦

  1. The date a document is received in the Campus or IRS Office is the date stamped as the "IRS Received Date" .

  2. An IRS received date is required on all Form 706 and Form 709 series tax returns.

  3. When a Form Specific is delinquent and the taxpayer explains the return is late due to the rejection of a timely filed electronic return, check the return for a MeF rejection notification.

    Note:

    Taxpayers are instructed to notate in red in the top margin of the return "REJECTED ELECTRONIC RETURN" to indicate the timely filed return cannot be filed electronically. The notation could be anywhere on the return and is not required, but they should attach a copy of the MeF rejection notification.

  4. If a MeF rejection notification is not attached, perfection of the Received Date is not necessary. If a notification is attached, edit the IRS Received Date in MMDDYY format as follows:

    Note:

    The taxpayer has 10 days to resubmit an electronically filed return after being rejected and 10 days to submit a paper return after the last rejection.

    If And Then
    The postmark date is within 10 days of the date of the rejection,   Edit the IRS Received Date to be the date of the rejection.
    • For example, postmark date is 03-22-2018 and first rejection is 03-12-2018. Change Received Date to 031218.

    Note:

    The postmark or shipment date includes returns delivered by:

    • US Postal Service (USPS)

    • Private Deliver Service, e.g. Federal Express Corporation (FedEx) or United Parcel Service (UPS) or

    • Returns with Foreign Postmark.

    The postmark date is more than 10 days after the date of the rejection,   Leave the IRS Received Date as is.

    Example:

    Postmark date is 03-23-2018 and first rejection is 03-12-2018. Leave the Received Date as is.

    Exception:

    Change the Received Date to the postmark date if the postmark date makes the return timely.

    There are two rejections, Within 10 days of one another and one is within 10 days of the postmark date, Edit the IRS Received Date to be the date of the first rejection.

    Example:

    Postmark date is 03-22-2018, the second rejection is 03-12-2018. The first rejection is 03-09-2018 Change the Received Date to 030918.

    There are two rejections with the time between the first rejection and the second rejection greater than 10 days, The second rejection is within 10 days of the postmark date, Edit the IRS Received Date to be the date of the second rejection.

    Example:

    Postmark date is 03-22-2018, the second rejection is 03-12-2018. The first rejection is 03-01-2018 Change the Received Date to 031218.

    There are two rejections, Not within 10 days of one another and not within 10 days of the postmark date, Leave the IRS Received Date as is.

    Example:

    Postmark date is 03-23-2018, the second rejection is 03-12-2018. The first rejection is 03-01-2018. Leave the Received Date as is.

    Exception:

    Change the Received Date to the postmark date if the postmark date makes the return timely.

  5. The IRS Received Date may or may not be stamped on the face of the return.

  6. A valid IRS Received Date Stamp may consist of the following:

    • The word "Received" ,

    • Month (alpha or numeric),

    • Day (for example "1" or "01" ),

    • Year -4 digits,

    • "Area Office" , "Campus" , "Field Office" , "Taxpayer Assistance Center" (TAC), plus the city, location, or functional area within one of these sites (e.g., Compliance Services Collection Operations (CSCO), Examination, Image Control Team (ICT). Correspondence Imaging System (CIS), Accounts Management (AM), etc.)..

    Exception:

    Not all IRS offices are designated places for filing, and not all IRS employees are authorized to accept a tax return for processing. If a return contains a received date stamp from other than a Taxpayer Assistance Center (TAC), Lockbox, or IRS campus (Compliance, Accounts Management, or Submission Processing (SP)), circle out the invalid received date and edit the correct received date according to instructions below. For example, returns received by the Taxpayer Advocate Service (TAS) or the IRS Office of Chief Counsel are not properly filed and a received date by that office is not the "IRS Received Date" .

  7. If the IRS Received Date stamp is not present or the date is illegible or invalid, edit the IRS Received Date in MMDDYY format in the middle of page 1 of the return. Edit the IRS Received Date according to the following priority:

    1. The earliest legible Postmark Date (United States Postal Service, Foreign Postmark, or Private Delivery Service) on the envelope. Rules for using the United States. Postal Service (USPS) Postmark, Foreign Postmark date, or Private Delivery Service are as follows:

      If Then
      An envelope is not attached, Use the postmark date stamped on the face of the return.
      A document was returned for insufficient postage, Use the postmark date that coincides with the correct delivery of the return.
      The postmark is missing and the envelope is certified,
      • Look for the "USPS.com Track & Confirm" record that has been attached to the return (should be before the envelope).

      • Use the "Acceptance" date on the record to determine timeliness and follow normal editing procedures.

      • See Figure 3.11.106-8, Received Date

      • If the "USPS.com Track & Confirm" record is not attached, no action is required.

      An envelope has a USPS and private metered postmark, Always use the USPS postmark.
      An envelope has foreign and private metered postmark, Always use the foreign postmark.
      An envelope has two private metered postmarks, Always use the latest private metered postmark.
      An envelope has only one private metered postmark, Use the private metered postmark.
    2. Service Center Automated Mail Processing System (SCAMPS) digital date.

    3. Revenue Officer's signature date.

    4. Signature date only if within current year.

    5. Julian Control Date minus 10 days.

    6. Current date minus 10 days.

  8. Edit the IRS Received Date as follows:

    If Then
    A timely IRS Received Date is the only received date stamped on the return, No editing is required.
    Two or more dates stamped on the return,
    1. Use the earliest IRS Received Date stamped on the return. See Figure 3.11.106-8, Received Dates

    2. Circle all other dates (handwritten or stamped) not needed for transcription.

    Note:

    Received dates that have been circled out by another function should be treated as if they are not present.

    A Federal return is addressed to the IRS but delivered to a State agency, Use the postmark date as the IRS Received Date.
    A Federal return is addressed to a State agency, Use the IRS Received Date stamp as the IRS Received Date.
    The only Received Date on the return is a TAS or chief Counsel received date, Circle out the TAS or Chief Counsel received date and edit the IRS received date according to instructions.

    Reminder:

    If an envelope is attached to the return, check the envelope for remittance. If found, hand carry remittance to manager.

  9. If a return has been faxed to another area of the service and then sent to Submission Processing for processing, do not edit the Enterprise Electronic Fax (EEFax) Date as the IRS Received Date. Edit a Received Date according to normal procedures.

    Caution:

    The EEFax Date cannot legally be used as an IRS Received Date.

    A valid IRS received date stamp may consist of the following:

    1. The word "Received" .

    2. Month (alpha or numeric)

    3. Day (for example, "1" or "01" ).

    4. Year - 4 digits.

    5. "Area Office" , Campus, "Field Office" , "Taxpayer Assistance Center (TAC)" Site, plus the City location or a functional area within one of these sites (e.g., Exam, AM, etc.).

      Exception:

      Not all IRS offices are designated places for filing, and not all IRS employees are authorized to accept a tax return for processing. If a return contains a received date stamp from an office that is not a proper place for filing, that date stamp is not the "IRS Received Date" , and you must circle out the invalid received date and edit the correct received date according to instructions below. For example, returns received by the Taxpayer Advocate Service (TAS) or the IRS Office of Chief Counsel are not properly filed and a received date by that office is not the "IRS Received Date" .

  10. If a return has been faxed to another area of the service and then sent to Submission Processing for processing, do not edit the Enterprise Electronic Fax (EEFax) Date as the IRS Received Date. Edit a Received Date according to normal procedures.

    Caution:

    The EEFax Date cannot legally be used as an IRS Received Date.

≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  1. A grace period is administratively granted for receiving most tax returns after the last day prescribed for filing such returns. This grace period applies to a return filed under an extension of time as well as to returns subject to regular filing requirements, except that interest is not exempt for the extension period of time.

≡ ≡ ≡ ≡ ≡ ≡
  1. All received dates on every Form 706, United States Estate Tax Return, with an amount greater than zero on Line 18, Page 1, Part 2, must be verified using the following table:

    Note:

    Form 706, United States Estate Tax Return, is due exactly 9 months to the day of the Date of Death.

    Reminder:

    The Treasury Department and IRS believe it is reasonable to grant the estates of 2010 Decedents an automatic extension of time to file the estate tax return and an extension of time to pay the estate tax. Accordingly, the Treasury Department and IRS grant the Executor of a 2010 Estate who files a Form 4768by the due date for filing Form 706, United States Estate Tax Return or Form 706-NA, United States Estate (and Generation-Skipping Transfer)Tax Return (Non-resident Alien)both an automatic six month extension of time to file Form 706, United States Estate Tax Return or Form 706-NA, United States Estate (and Generation-Skipping Transfer)Tax Return, (Non-resident Alien), pursuant to IRC Section 6081, and a six month extension of time to pay the estate tax. The Executor of a 2010 Estate is not required to substantiate on the Form 4768, Application for Extension of Time to File a Return and/or Pay U.S. Estate and (Generation-Skipping Transfer) Taxes the reason for requesting an extension of time for payment of the estate tax to receive the six month extension of time to pay the estate tax due. If the Executor (of a 2010 decedent) requests an extension of time to pay for more than six months (on Form 4768, Application for Extension of Time to File a Return and/or Pay U.S. Estate and (Generation-Skipping Transfer) Taxes), justification needs to be provided.

    If Then
    Return is received ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ envelope postmark was on or before the due date of the return Consider the return timely and change the IRS received date to the postmark date.
    • For example: If the return is due July 1, and:

      1. Received stamped ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ or

      2. Received stamped ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ June 30, return is timely filed.)

    Estate and Gift Tax returns are erroneously addressed to state agencies Returns will be date stamped when received with current IRS received date.
    Returns that were correctly addressed but erroneously delivered by the U.S. Postal Service to a state agency If original envelope bears timely postmark or timely date stamp by the state agency, return will be considered timely filed.
    Envelope was erroneously addressed DO NOT change the IRS date stamp.
    More than one date is stamped
    1. Use the earliest date.

    2. Circle out all other dates.

    Entering received date on return See exhibits for where to enter received date
    1. Form 706, United States Estate Tax Return, see Exhibit 3.11.106-1, Form 706, United States Estate (and generation skipping transfer) tax return.

    2. Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return see Exhibit 3.11.106-4, Form 709, United States Estate (and generation skipping transfer) tax return.

♦Signature♦

  1. A signature and jurat is required on all returns except the following:

    1. Returns prepared under IRC Section 6020(b), Prepared by Collections. These returns must be signed by a Compliance Function Representative.

      Note:

      Starting July 1, 2013, the Revenue Officers (RO) electronic signature or typed signature will be accepted as a valid signature on the return.

    2. Returns prepared by Examination, i.e., Substitute For Return (SFR).

    3. Dummy returns prepared by IRS.

    4. Correspondence containing a signature and jurat is attached showing that the taxpayer is responding to an IRS notice or letter.

  2. Do not correspond for a signature on "CIS" returns that have Form 13596, Reprocessing Returns attached.

  3. If a signature is missing correspond:

    If Then
    The return is not signed on the line designated for the taxpayer's signature
    1. Edit Action Code 225 or Action Code 226 if corresponding for signature only.

    2. Leave in batch and continue processing.

    The jurat is not present on the line designated for the taxpayer's signature (non-standard return)
    1. Edit Action Code 225 or Action Code 226 if corresponding for signature only.

    2. Leave in batch and continue processing.

    The return is photocopied with a photocopied signature (not original/ink signature)
    1. Edit Action Code 225 or Action Code 226 if corresponding for signature only.

    2. Attach a Letter 3463C requesting an original/ink signature.

      Note:

      Leave a correspondence action trail in lower left hand margin indicating Letter 3463C, Missing Information to process EO Return letter sent.

    3. Leave in batch and continue processing.

  4. See IRM 3.11.106.4.4, Unprocessable Conditions From 706, United States Estate Tax Return and From 706-NA United States Estate (and Generation-Skipping Transfer) Tax Return for frivolous returns instructions if the jurat is altered or stricken (crossed out).

  5. Accept a "signature declaration" (a signature with jurat obtained through IRS correspondence) if attached to the return.

    1. See IRM 3.11.106.4.4, Unprocessable Conditions From 706, United States Estate Tax Return and From 706-NA United States Estate (and Generation-Skipping Transfer) Tax Return for frivolous returns instructions if the "signature declaration" is altered or stricken (crossed out).

    2. If the taxpayer responds with a self-prepared signature declaration, it must contain the same language as the jurat on the tax return; i.e., "UNDER PENALTIES OF PERJURY, I DECLARE THAT I HAVE EXAMINED THIS RETURN, INCLUDING ACCOMPANYING SCHEDULES AND STATEMENTS, AND TO THE BEST OF MY KNOWLEDGE AND BELIEF, IT IS TRUE, CORRECT AND COMPLETE. DECLARATION OF PREPARER OTHER THAN THE EXECUTOR (Form 706),United States Estate Tax Return, DONOR (Form 709),United States Gift (and Generation-Skipping Transfer) Tax Return, IS BASED ON ALL INFORMATION OF WHICH PREPARER HAS ANY KNOWLEDGE" .

  6. Since tax examiners are not expected to be handwriting experts, IRC Section 6064 of the Regulations allows the Service to presume that the signature on a return, statement or other document is the true signature of the person who actually signed the document.

    Note:

    A check mark ("✓" ) or "X" used to designate where the taxpayer should sign the return is not considered a valid signature.

  7. Only one correspondence attempt is required for a signature.

♦Paid Preparer Section♦

  1. The Paid Preparer section is located below the Signature area at the bottom of Form 706, United States Estate Tax Return, Form 706-NA, United States Estate (and Generation-Skipping Transfer)Tax Return (Non-resident Alien), Form 706-GS(D), United States Additional Estate Tax Return under Section 2057, 706-GS(T), Generation-Skipping Transfer Tax Return for Terminations, and Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return.

♦Paid Preparer Checkbox Indicator (Form 709 only)♦

  1. The Paid Preparer Checkbox is located next to the taxpayer signature area on Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, It indicates whether the taxpayer has elected to allow the Paid Preparer to answer questions about the return as it is processed.

  2. No action is required on amended returns.

  3. Take the following actions when an entry is present in the Paid Preparer Checkbox on Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return:

    If Then
    The "Yes" box is checked Take no action.
    The "No" box is checked; neither box is checked; or, both boxes are checked Circle the Paid Preparer's Phone Number, if present.

♦Paid Preparer's Tax Identification Number (PTIN)♦

  1. The Preparer's Social Security Number (SSN) (2009 and prior revisions) or Preparer Tax Identification Number (PTIN) is located to the right of the Preparer's signature in the PTIN box (Preparer's SSN or PTIN box for 2009 and prior revisions) at the bottom right corner of Form 706, United States Estate Tax Return, Form 706-NA, United States Estate (and Generation-Skipping Transfer)Tax Return (Non-Resident Alien), Form 706-GS(D), Generation-Skipping Transfer Tax Return for Distribution, Form 706-GS(T), Generation-Skipping Transfer Tax Return for Terminations, and Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, (Page 1).

  2. No action is required on amended returns.

  3. A valid PTIN begins with the alpha "P" followed by an eight digit number (e.g., PXXXXXXXX). Circle the SSN/PTIN if it is invalid, all zeros or nines.

♦Firm's EIN♦

  1. The Firm's EIN (EIN for 2009 and prior revisions) is located below the Preparer's PTIN box (Preparer's SSN or PTIN box for 2009 and prior revisions) at the bottom right corner of Form 706, United States Estate Tax Return, Form 706-NA, United States Estate Tax Return ( and Generation-Skipping Transfer) Tax Return (Non-resident Alien, Form 706-GS(D), United States Addition Estate Tax Return-Under Code Section 2057, Form 706-GS(T), Generation-Skipping Transfer Tax Return for Terminations, and Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, (Page 1).

  2. No action is required on amended returns.

  3. The Firm's EIN is a 9 digit number. Circle the EIN if all zeros or nines.

♦Paid Preparer Phone Number♦

  1. The Paid Preparer's Phone Number is located below the Firm's EIN (EIN for 2009 and prior revisions) at the bottom right corner of Form 706, United States Estate Tax Return, Form 706-NA, United States Estate Tax Return ( and Generation-Skipping Transfer) Tax Return (Non-resident Alien, Form 706-GS(D), United States Addition Estate Tax Return-Under Code Section 2057, Form 706-GS(T), Generation-Skipping Transfer Tax Return for Terminations, and Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return.

  2. No action is required on amended returns or if the number is more than 10 digits.

  3. If the Paid Preparer's Phone Number is illegible or less than 10 digits, circle the phone number.

♦Tax Period♦

  1. All returns must have a tax period. Edit the tax period at the top of the form for Form 706-GS(D), United States Addition Estate Tax Return-Under Code Section 2057, Form 706-GS(T), Generation-Skipping Transfer Tax Return for Terminations; and Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, only, in YYMM format.

    If Then
    The return is for the current processing year No editing is necessary.
    The taxpayer has notated a tax period other than the preprinted year on the return (this is not a current year return) Edit the tax period based on the taxpayer's indication.
    The tax period is missing, incomplete, or illegible
    1. Review the return or attachments for the correct period.

    2. If found, edit the tax period to the right of the form (in the area under the form title) in YYMM format.

    3. If unable to determine the tax period after searching the return and attachments, process the return for year currently being processed.

  2. The following information pertains to tax period editing for Form 706-GS(D), United States Additional Estate Tax Return Under Code Section 2057, Form 706-GS(T), Generation-Skipping Transfer Tax Return for Terminations and Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return.

    If Then
    Editing tax period
    1. Do not edit the tax period on Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, Form 706-GS(D),) and Form 706-GS(T), Generation-Skipping Transfer Tax Return for Terminations, if it is for the current tax period.

    2. If editing is required (for other than the current tax period), edit at the top of the return in YYMM format.

♦Tax Period - Early Filed Returns♦

  1. An Early Filed Return is defined as a return whose IRS received date is prior to the tax period ending date.

  2. Never send back an Early Filed return to the taxpayer.

    If Then
    The return is early filed and is not a "Final"
    1. Edit CCC "U" or Action Code 480.

    2. Route the return to Rejects, using Form 4227, Intra-SC Reject/Routing Slip, to suspend the return.

    The return is early filed and a "Final" Edit CCC "F" .
    Early Filed Return Without Remittance
    1. Edit CCC "U" or Action Code 480 on the return.

    2. Attach Form 4227, Intra-SC Reject or Routing Slip and note "Early Filed" .

    3. If unable to determine tax period, prepare Form 3696, Correspondence Action Sheet or other approved Correspondence Action Sheet, to correspond for the correct tax period.

      1. If the taxpayer replies that the tax period is correct as it was originally filed, (i.e., Form 706-GS(D) or Form 706-GS(T) suspend the return until January of the year due.

      2. If there was NO reply to correspondence, suspend the return until January of the year due.

      3. If the taxpayer replies that the form (i.e., Form 706-GS(D) or Form 706-GS(T)was for the previous year, correct the tax period 0X12, delete CCC "U" or Action Code, and process the return.

    Early Filed Return With Remittance
    1. Edit CCC "U" or Action Code 480 on the return.

    2. Attach Form 4227, Intra-SC Reject or Routing Slip and note Early Filed.

    3. If unable to determine tax period, prepare Form 3696, Correspondence Action Sheet or other approved Correspondence Action Sheet. Attach to the front of the form (i.e., Form 706-GS(T)Form 706-GS(D) or and leave it in the block to correspond for the correct tax period.

      1. If the taxpayer replies that the tax period is correct as it was originally filed, (i.e., Form 706-GS(D) ), or Form 706-GS(T)) suspend the return until January of the year due.

      2. If there was NO reply to correspondence, suspend the return until January of the year due.

      3. If the taxpayer replies that the return was for the previous year, correct the tax period 0X12, delete CCC "U" or Action Code, and process the return.

    4. If a remittance is attached, give to your manager.

  3. See IRM 3.11.106.23.6Tax Period-Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, for instructions for tax period editing of Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return.

♦Entity Perfection - General♦

  1. The entity of a tax return identifies the taxpayer on the business master file. The entity area of the return contains the following:

    1. Social Security Number (SSN)

    2. Name

    3. "In-care-of" name

    4. Address

♦Bankruptcy♦

  1. If the Form Specific indicates bankruptcy (e.g. shows RECEIVER, TRUSTEE, or DEBTOR IN POSSESSION) in the entity area or on an attachment, route to Entity Control using local procedures Form 13934, Merge Sheet.

♦Entity Perfection - Social Security Number (SSN)♦

  1. The SSN is a 9 digit number (XXX-XX-XXXX) assigned to identify the taxpayer.

  2. Determine the SSN as follows:

    If And Then
    SSN is missing You can determine the correct SSN from the attachments and/or schedules Edit the SSN to the appropriate location.
      Unnumbered
    1. Remove return from batch.

    2. Attach Form 4227, Intra-SC Reject or Routing Slip, or follow local procedures.

    3. Forward to Entity Control for SSN assignment.

    The SSN is either a PTIN or Individual Taxpayer Identification Number (ITIN) Numbered
    1. Edit Action Code 320.

    2. Attach Form 4227, Intra-SC Reject or Routing Slip for routing to Entity Control and leave document in batch.

    Multiple SSNs are present Unnumbered
    1. Remove return from batch.

    2. Attach Form 4227, Intra-SC Reject or Routing Slip or follow local procedures.

    3. Forward to Entity Control for SSN assignment.

    Multiple SSNs are present Numbered
    1. Edit Action Code 320.

    2. Attach Form 4227, Intra-SC Reject or Routing Slip and leave in the batch.

    The SSN contains any of the following conditions and cannot be determined from attachments and/or schedules:
    • Illegible

    • Missing

    • Other than 9 digits

    • All zeroes or,

    • All nines

    Unnumbered
    1. Research IDRS.

    2. If not found, route to Entity.

    The SSN contains any of the following conditions and cannot be determined from attachments and/or schedules:
    • Illegible

    • Missing

    • Other than 9 digits

    • All zeroes or,

    • All nines

    Numbered
    1. Circle out all illegible SSNs, zeroes or nines.

    2. Edit Action Code 320.

    3. Attach Form 4227, Intra-SC Reject or Routing Slip, and leave in the batch.

    PENDING, APPLIED FOR, etc., is indicated in the SSN area Unnumbered
    1. Research IDRS.

    2. If not found, route to Entity.

    PENDING, APPLIED FOR, etc., is indicated in the SSN area. Numbered
    1. Edit Action Code 320.

    2. Attach Form 4227, Intra-SC Reject or Routing Slip and leave in the batch.

    Note:

    Action Code 320 is valid on Form 706, Form 706-NA, Form 706-GS(D), Form 706-GS(T), and Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return. All other returns (Form 706-A, Form 706-D, Form 706-CE, Form 706-GS(D-1), and Form 706-QDT) are processed through a manual correction system and CCC "U" should be used on these returns.

♦Entity Perfection - Name Control♦

  1. The name control consists of 4 characters or less:

    1. Valid characters are alpha, numeric, ampersand (&), hyphen (-) and blank. However, blanks are only valid in the last 3 positions.

    2. Disregard the word "THE" in the name control only when followed by more than one word.

  2. See Document 7071A, BMF Name Control Job Aid, to determine the name control.

  3. Edit the name control as follows:

    If And Then
    Able to determine the name control   Underline the name control.
    Unable to determine the name control Unnumbered
    1. Research IDRS.

    2. If found, edit to the proper location.

    3. If not found, route to Entity Control following local procedures.

    Unable to determine the name control Numbered
    1. Edit Action Code 352.

    2. Attach Form 4227, Intra-SC Reject or Routing Slip, and leave in the batch.

    Note:

    Action Code 352 is valid on Form 706, 706-NA, 706-GS(D), 706-GS(T), and 709. All other returns ( Form 706-A, 706-D, 706-CE, 706-GS(D-1), and Form 706-QDT are processed through a manual correction system and CCC "U" should be used on these returns.

Entity Perfection - "In-Care-of" Name

  1. An "in-care-of" name can be identified by the words "in care of" or the symbols "c/o" or "%" (percent).

  2. Ensure that the "in-care-of" name is located above the street address:

    If Then
    The "in-care-of" name is located below the street address Arrow the "in-care-of" name above or before the street address. Do Not arrow the "in-care-of" name to the Primary name line area.
    The "in-care-of" name is shown on an attachment Edit the in-care-of name above the street address beginning with the "%" or "c/o" in the first position.
    An "in-care-of" name is changed but there is no indication of an address change Edit the in-care-of name as shown above.

    Note:

    Always circle out the in-care-of symbol (% or c/o) if it is present with an address. Do not use the ampersand (&) and the percent sign (%) when editing address information.

♦Entity Perfection - Domestic Address♦

  1. Perfection of the address is necessary when the mailing address (Street or PO Box) is not easily identified.

    Exception:

    Do not perfect the address on amended returns (CCC "G" ).

  2. The procedures for perfection of addresses indicating an address change are as follows:

    If And Then
    The address contains information other than a street address or PO Box   No perfection is necessary Integrated Submission and Remittance Process (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, Change of Address, is attached Information is the same Take no action.
    Form 8822, Change of Address, is attached Information is different Detach Form 8822, Change of Address and route to Entity Control following local procedures.
    Both a PO Box and a street address are shown  
    1. Notate "TC 014" in the upper left margin. See Figure 3.11.106-6, Entity Edit Marks.

    2. Input TC 014.

    Two street addresses are shown  
    1. For Form 706 and Form 709 series returns, underline the first street address.

    2. Notate "TC014" in the upper left margin.

    3. Input TC 014.

    Two PO Boxes are shown  
    1. For Form 706 and Form 709 series returns, underline the first PO Box.

    2. Notate "TC014" in the upper left margin.

    3. Input "TC 014" .

    One street address is shown The taxpayer changed the address to a PO Box
    1. Notate TC014 in the upper left margin.

    2. Input "TC 014."

    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 return.
    The ZIP code is missing or illegible Is not available from the return or attachments See Exhibit 3.11.106-22, State Codes and Zip Codes for determining ZIP code. See Figure 3.11.106-6, Entity Edit Marks.
    Only the first 3 digits of the ZIP code can be determined   Edit "01" for the fourth and fifth digits.
    It is necessary to edit the street address   See Exhibit 3.11.106-21, Address and Street Address for current Address/Street Abbreviations.

    Note:

    Always circle out the "in-care-of" symbol ("c/o" or "%" ) if it is present with an address. Do not use the ampersand (&) and the percent symbol (%) when editing address information.

  3. The U.S. Postal Service established new address requirements for Army Post Office (APO), Domestic Post Office (DPO), and Fleet Post Office (FPO) addresses. If an address appears in the old format, such as APO New York, NY 091XX, convert to the new state code abbreviation (APO AE 091XX) based on the following ZIP codes:

    ZIP Code Address Abbreviation
    340XX APO/DPO/FPO AA
    090XX-098XX APO/DPO/FPO AE
    962XX-966XX APO/DPO/FPO AP

    Figure 3.11.106-6

    This is an Image: 33575012.gif
     

    Please click here for the text description of the image.

♦Entity Perfection - Foreign (International) Address♦

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

  2. Returns with APO, DPO, or FPO addresses are considered domestic addresses.

  3. Route returns with a foreign (international) address (Form 706 and Form 709 series returns) to Cincinnati Submission Processing Campus (CSPC) for processing. Prepare Letter 86C Referring Taxpayer Inquiry/Forms to another Office, to inform the taxpayer that the return has been sent to CSPC.

    Note:

    The legal residence (domicile) of the decedent on Form 706(Box 3a) or donor on Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, (Box 5) determines whether the return is a domestic or foreign (international) address return.

  4. Returns with addresses in the following U.S. Possessions/Territories are considered to be a foreign (international) address for processing purposes but are edited in the same way as domestic addresses.

    1. A two character alpha code must be edited for the possession name:

      U.S. Possession 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
    2. A ZIP code must be present. Edit the appropriate ZIP code if one is not provided. See Exhibit 3.11.106-23, U.S. Possessions and Zip Codes.

  5. All other foreign (international) addresses are edited the same as a domestic address with the following exceptions:

    1. The foreign country must be the last entry in the address.

    2. Circle out the foreign country and edit the country code preceded by a "/" and followed by "/$" as the last entry in the address. See Exhibit 3.11.106-24, Foreign Country Codes for official foreign country codes.

      Note:

      Submission Processing BMF Foreign Address Job Aid (Number 2324-002) provides examples for editing foreign (international) addresses.

    3. If the foreign (international) address is from Australia, Brazil, Cuba, Italy, Mexico or The Netherlands, check if the address contains a province, state or territory name.

      If Then
      A province, state or territory name is present
      1. Circle out province, state or territory name.

      2. Enter appropriate abbreviation. See Exhibit 3.11.106-25, Province, State and Territory Abbreviation.

      A province, state or territory name is not present Continue editing the return.
      Province, state or territory is shown in abbreviated format Continue editing the return.
    4. A ZIP code is not required on a foreign (international) address. Foreign (International) addresses use a postal code that is entered before the city or foreign country and is part of the address.

♦Foreign Address - Canada Only♦

  1. In an effort to assist Compliance with workload assignment, returns filed with an address in Canada will be edited using a unique country code based on the province/territory.

    If Then
    The foreign address contains a Canadian province/territory name or abbreviation
    1. See table below to ensure the correct Canadian province abbreviation is present or edited to the return.

    2. Circle out and Edit the appropriate country code based on the province preceded by a "/" and followed by a "/$" as the last entry in the address.

    The foreign address does not contain a Canadian province/territory name or abbreviation
    1. Circle the country name.

    2. Edit the country code /CA/$ as the last entry in the address.

    Canadian Province/Territory Abbreviation and Country Code

    Canadian Province/Territory Province/Territory Abbreviation Country Code
    Alberta AB XA
    British Columbia BC XB
    Manitoba MB XM
    New Brunswick NB XN
    Newfoundland and Labrador NL XL
    Northwest Territories NT XT
    Nova Scotia NS XS
    Nunavut NU XV
    Ontario ON XO
    Prince Edward Island PE XP
    Quebec QC XQ
    Saskatchewan SK XW
    Yukon YT XY

♦Processing Form 706, United States Estate (and Generation - Skipping Transfer) Tax Return♦

  1. The following information pertains to processing Form 706.

    Note:

    Form 706, Page 1, Parts 1 and 2, Page 2, Part 4, Page 3, Part 5, and new Part 6 have changed for tax year 2012 (PY2013) per Work Request Notification (WRN) received 6/29/2012. Many new lines have been added as well as new Part 6 which contains all of the Portability information. All of these new lines have been requested to be transcribed by E&G Policy, Chief Counsel and Treasury. Because of this transcription request, tax examiners (TEs) will now be responsible for making sure pages 1 through 4 are identified to facilitate transcription entry. If the return is not in sequential order (pages 1, 2, 3, 4), please identify pages 2, 3, and 4 by stapling a Post-It (sticky) with the page number on it within the return. We are using this method so large returns with several pages (perhaps a will or trust) between page 2, 3, and 4 can be identified quickly by ISRP. Stapling the Post-It (sticky) to the respective page will relieve the burden of having to disassemble the returns.

  2. In the past, Form 706 was only coded and edited on Page 1 of the return. Beginning in tax year 2013 (PY2014), Page 4, Part 6, Section C of the return will also need to be coded and edited. Changes were made to the DSUE (Deceased Spousal Unused Exclusion) calculation in a circulation of Form 706 received on September 23, 2013. As a result of the increase in the tax rates under ATRA (American Taxpayer Relief Act), dividing the total gift tax paid or payable by 40% caused an error in the DSUE calculation (due to the increase in the tax rate). Additional changes were also incorporated into the instructions, specifically the Line 7 worksheet which is submitted with the Form 706 (the worksheet is NOT edited or transcribed). Line 2 was changed to "Reserved" , so Code and Edit should enter a zero on Line 2 of Form 706, Page 4, Part 6, Section C. Due to budget constraints, programming was not able to be completed so this is the work around. ISRP is going to be instructed to field release through the line (so "0" will populate on the Error Resolution System (ERS) screens. Error Resolution System (ERS) is instructed to make sure the line shows zero.

♦Entity - Form 706♦

  1. The Entity portion of the Form 706 includes the following:

    • Decedent's Name

    • Decedent's Social Security Number (SSN)

    • Executor's address

♦Decedent's Name♦
  1. The name control consists of the first 4 alpha characters of the Decedent's last name.

    1. Blanks may be present only in the last 2 positions of the name control.

    2. Ampersand (&), and hyphens (-) are the only valid non-alphabetic characters in a name control.

    3. Underline the first 4 characters of the Decedent's last name. (See Figure 3.11.106-6.),Entity Edit Marks.

    4. See Document 7071-A, BMF Name Control Job Aid.

    5. If name control cannot be determined, research IDRS. If no data found, use Action Code 320, use Form 4227, Intra-SC Reject or Routing Slip, and route to Entity.

♦Decedent's Social Security Number (SSN)♦
  1. Nine numeric characters of the SSN must be present for all estate and gift tax returns; all nines (999999999) and zeros (000000000) will be invalid.

    If Then
    Return is unnumbered and SSN is different from death certificate Research IDRS for correct SSN.
    Return is numbered and SSN is different from death certificate Edit Action Code 320 and route to Entity for determination.
    Return is unnumbered and other than 9 digits, multiple SSNs, missing SSN or in EIN format Research IDRS for correct SSN.
    Return is numbered and other than 9 digits, multiple SSNs, missing SSN or in EIN format Edit Action Code 320 and route to Entity for determination.
    Return is unnumbered and no SSN is found, or the correct SSN cannot be determined Withdraw the return, use Form 4227, Intra-SC Reject or Routing Slip, and forward to Entity Control.
    SSN is on return when return is sent back from Entity Control Continue processing the return.
♦Executor's Name♦
  1. When there are 2 or more executors' names listed on the return, underline the first name and circle out the others.

  2. Edit the executors name from attachments if not present in Box 6a.

♦Executor's Address♦
  1. The Executor's address is found on Page 1, Box 6b, of Form 706; also check Page 2, Part 4.

    Note:

    If more than one executor and more than one executor address is listed on the return, underline the address that belongs to the first executor and circle out the others.

  2. See IRM 3.11.106.17.5, Entity Perfection-Domestic Address, for instructions to perfect domestic addresses.

  3. See IRM 3.11.106.17.6, Entity Perfection-Foreign (International) Address, for instructions to perfect foreign (international) addresses.

    Note:

    Always circle out the "in care of" symbol ("c/o" or "%" ) if it is present with an address. Do not use the ampersand (&) and the percent symbol (%) when editing address information.

♦Decedent's Residence (Domicile)♦
  1. The decedents residence (domicile) at time of death is found on Page 1, Part 1, Box 3a. See IRM 3.11.106.18.6.8, for further instruction.

    Note:

    The legal residence (domicile) of the decedent in Box 3a determines whether the return is a domestic or foreign (international) address return.

  2. CSPC will process all domestic domicile address returns and all foreign (international) address returns (any address that is not in 1 of the 50 states or the District of Columbia).

  3. All U.S. Possessions are considered foreign:

    • American Samoa (AS)

    • Federated States of Micronesia (FM)

    • Guam (GU)

    • Northern Mariana Islands (MH)

    • Marshall Islands (MH)

    • Palau (PW)

    • Puerto Rico (PR)

    • Virgin Islands (U.S.) - (VI)

  4. APO/DPO/FPO addresses are not considered to be foreign (international) addresses.

    1. The Postal Service established new address requirements for APO/DPO/FPO addresses.

    2. If the old address appears (i.e., APO New York, NY 091XX) it must be converted to the new state code abbreviation based on the ZIP code (i.e., the previous example would be converted to APO AE 091XX).

      ZIP Code Address Abbreviation
      340XX APO/DPO/FPO AA
      090XX-098XX APO/DPO/FPO AE
      962XX-966XX APO/DPO/FPO AP

♦Computer Condition Codes (CCCs) - Form 706♦

  1. CCCs B, D, G, L, O, R, W, Y, X, 3 and 7 are valid for Form 706

  2. See IRM 3.11.106.10, Computer Condition Codes, for specific definitions.

♦Filing Requirements - Form 706♦

  1. Form 706, tax returns are filed at Cincinnati Submission Processing Center (CSPC).

  2. Form 706, must be filed for estates that have a Total Gross Estate of $5,490,000 and over for individuals who died in 2017, $5,450,000 and over for individuals who died in 2016; $5,430,000 and over for individuals who died in 2015; $5,340,000 and over for individuals who died in 2014; $5,250,000 and over for individuals who died in 2013; $5,120,000 and over for individuals who died in 2012; and $5,000,000 for individuals who died between January 1, 2010, and December 31, 2011.

♦Due Date - Form 706♦
  1. The following information pertains to the due date of Form 706

    If Then
    Decedents died after December 31, 1970

    Caution:

    See Exception in next row for dates of death between January 1, 2010, and December 17, 2010 (inclusively).

    Form 706, is due the day of the ninth calendar month after the decedents death.

    Exception:

    If the date of death is between January 1, 2010, and December 17, 2010 (inclusively)

    The return due date is September 19, 2011, as mandated in the Extender's legislation (PL 111-312).

    Exception:

    If there is no numerically corresponding day in such ninth month

    The last day of the ninth month is the due date.

    Example:

    If the decedent died on May 31 of the current year, the due date is February 28 of the following year.

    Exception:

    If February 28 falls on a Saturday or Sunday the due date would be the following Monday.

    • (See the due date table below.)

    Exception:

    Executors of Estates of decedents dying after October 22, 1986

    They must report all direct skips occurring at death on November 1987 or subsequent revision of Form 706.
  2. An application for extension of time for filing (Form 4768) Application for Extension of Time to File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer)may be granted. An approved Form 4768, Application for Extension of Time to File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer)is a six month extension making the extended due date 15 months from the date of death.

    Reminder:

    The Treasury Department and IRS believe it is reasonable to grant the estates of 2010 Decedents an automatic extension of time to file the estate tax return and an extension of time to pay the estate tax. Accordingly, the Treasury Department and IRS grant the Executor of a 2010 Estate who files a Form 4768by the due date for filing Form 706 or Form 706-NA both an automatic six month extension of time to file Form 706 or Form 706-NA pursuant to IRC section 6081, and a six month extension of time to pay the estate tax. The Executor of a 2010 Estate is not required to substantiate on the Form 4768 the reason for requesting an extension of time for payment of the estate tax to receive the six month extension of time to pay the estate tax due. If the Executor (of a 2010 decedent) requests an extension of time to pay for more than six months (on Form 4768), justification needs to be provided.

  3. The following table lists the due dates of Form 706 returns:

    Exception:

    Other than 2010 revision forms.

    Month of Death Month Due
    January October
    February November
    March December
    April January
    May February
    June March
    July April
    August May
    September June
    October July
    November August
    December September
  4. The following table provides examples of due dates:

    If Then
    DOD is 01-01-10 thru 12-16-10 Due date is 09-19-2011
    (per Extender's Legislation the date should be 09-17-2011, but that is a Saturday)
    DOD is 12-17-10 thru 12-31-10 Due date is 09-30-11
    DOD is 05-31-15 Due date is 02-28-16
    DOD is 07-31-15 Due date is 04-30-16
    DOD is 10-31-15 Due date is 07-31-16
    DOD is 06-30-16 Due date is 03-31-17
    DOD is 08-31-16 Due date is 05-31-17
    DOD is 11-30-16 Due date is 08-31-17
    DOD is 07-30-17 Due Date is 04-30-18
    DOD is 09-30-17 Due Date is 06-30-18
    DOD is 11-30-17 Due Date is 08-31-18
    DOD is 07-30-18 Due Date is 04-30-19
    DOD is 09-30-18 Due Date is 06-30-19
    DOD is 11-30-18 Due Date is 08-31-18
♦Extension - Form 706 with Form 709 Attachment♦
  1. If a Form 706, United States Estate Tax Return is received with an original Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, attached to it (for the same period in which the decedent died) with an approved extension of time to file, then:

    1. Pull the Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return.

    2. Enter the received date, and note on the return, "Extension Form 706, granted to MMDDYY. Do not assess penalties" .

    3. Edit CCC "R" on the return so that a penalty will not be assessed on the Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, if the Form 706, posts after the Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return. (See IRM 3.11.106.23, Processing Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return.)

♦Form 706 Conversion♦
  1. All Form 706, Returns must be converted to the current year tax form revision. See Exhibit 3.11.106-9, Renumber Guide (2002, 2003 and 2004) and Exhibit 3.11.106-10, Renumber Guide (2001 and Prior).

♦Payment of Taxes - Form 706♦

  1. Tax is due when return is due, unless deferred payment under IRC Section 6161(a) or 6163 has been granted, or unless executor has properly elected to pay by installments under IRC Section 6166.

    Note:

    Check non-remit Form 706 returns for presence of a remittance before releasing to Numbering.

  2. See Form 706, Lines 5 and 6 of Page 2 on 1985 and prior revisions, or Lines 3 and 4 on subsequent revisions.

  3. Form 4768, Application for Extension of Time To File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes, (Part III) can be used to apply for an Extension of Time To Pay estate tax.

  4. Form 4768, Application for Extension of Time to File a Return and /or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes, (Part II) only applies to Extension of Time To File.

    Reminder:

    The Treasury Department and IRS believe it is reasonable to grant the estates of 2010 Decedents an automatic extension of time to file the estate tax return and an extension of time to pay the estate tax. Accordingly, the Treasury Department and IRS grant the Executor of a 2010 Estate who files a Form 4768by the due date for filing Form 706 or Form 706-NA both an automatic six month extension of time to file Form 706 or Form 706-NA pursuant to IRC Section 6081, and a six month extension of time to pay the estate tax. The Executor of a 2010 Estate is not required to substantiate on the Form 4768 the reason for requesting an extension of time for payment of the estate tax to receive the six month extension of time to pay the estate tax due. If the Executor (of a 2010 decedent) requests an extension of time to pay for more than six months (on Form 4768 ), justification needs to be provided.

♦Blocking Numbered and Unnumbered Forms 706♦

  1. All numbered Forms 706, will be assigned Document Locator Numbers (DLNs) and blocked before sending to Document Perfection.

  2. All unnumbered Form 706 will be numbered after Code and Edit.

♦Preliminary Examination♦

  1. Expedite processing of estate tax returns so that executors can obtain discharge from personal liabilities and final distribution can be made to beneficiaries, examination of the returns is necessary.

♦Signature - Form 706 ♦
  1. Examine for signature of executor indicated on return.

  2. If there are Co-Executors, it is sufficient for only one of the Co-Executors to sign the return.

  3. Letter 501CS may be used to request executors missing signature.

  4. Use Action Code 225 or 226 for missing or photocopied signature.

    If Then
    Signed jurat (declaration) is received Attach it to the return.
♦Attachments - Form 706♦
  1. Review and search attachments for any required information, (i.e., POAs, extensions, etc.).

♦Amended or Supplemental Returns - Form 706♦
  1. The following information pertains to amended returns, Entity cannot be perfected:

    Note:

    For Form 706 series returns, do not detach any attachments.

    If Then
    Return is marked,
    • "Amended" ,

    • "Revised" ,

    • "Adjusted" ,

    • "Subsequent" ,

    • "Substitute" ,

    • "Corrected" , etc.

    See IRM 3.11.106.10.5.1, Amended Returns.
    Document is unnumbered with remittance
    1. Research IDRS.

    2. If no data found, route to Entity on Form 4227, Intra-SC Reject or Routing Slip.

    Document is numbered Use Action Code 320 and route to Entity on Form 4227, Intra-SC Reject or Routing Slip.
♦Received Date - Form 706♦
  1. See IRM 3.11.106.13, Received Date, for information regarding received date editing.

  2. The following information pertains to the received date:

    If Then
    The IRS received date has not been stamped on the first page of the return
    1. A received date must appear on every Form 706.

    2. Enter in MMDDYY format near the dotted lines on Line 8.

    3. Make sure the envelope with the postmark date is stapled to the back of the return.

    4. Determine received date from return or attachments in the following priority (see IRM 3.11.106.13, Received Date.

♦Date of Birth (DOB)♦
  1. The following information pertains to editing Date of Birth:

    If Then
    The Date of Birth is missing
    1. Check death certificate for correct date.

    2. If correct date is unobtainable, leave blank or circle incorrect date.

    Date of Birth is found Edit in MMDDYY format.
♦Date of Death (DOD)♦
  1. The following information pertains to editing the Date of Death which can be found on Form 706, Page 1, Box 5:

    If Then
    Date of Death is missing
    1. Check death certificate for Date of Death.

    2. Edit Date of Death in MMDDYY format.

    No death certificate is attached Research IDRS. If DOD cannot be found, continue processing.
♦Prior Year Revisions - Form 706♦
  1. If the location of transcription lines on a prior year revision is different from the current year revision, change the transcription lines to correspond with the current year tax form revision. See Exhibit 3.11.106-9, Renumbering Guide (2002, 2003 and 2004)and Exhibit 3.11.106-10, Renumbering Guide (2001 and Prior)

♦County/State of Residence at Time of Death♦
  1. The decedents residence at time of death is found on Page 1, Part 1, Box 3a.

  2. The following information pertains to county/state of residence at time of death:

    If Then
    Box 3a is blank and it cannot be determined after research of the death certificate Do not correspond with the executor for county/state. If it is missing from the death certificate, edit "Unknown" .
    Box 3a has other information (i.e., street address, PO Box, city, etc.) Circle out erroneous information in Box 3a. One or any combination of the following can be present:
    1. County

    2. City

    3. State

    4. Zip Code

    Box 3a has a foreign (international) address See Exhibit 3.11.106-24, Foreign Country Codes, for the 2 digit Country Code to be edited in Box 3a.

♦Mathematical Verification - Form 706♦

  1. Manual math verification of the return is not required. The computer will check the transcribed totals and any changes or corrections will be performed by ERS (Error Resolution System) examiners.

  2. Cincinnati Compliance Services, Estate and Gift Tax Campus Operations will correspond for supporting schedules, if missing, for estates that have a Total Gross Estate of $ 5,490,000 and over for individuals who died in 2017, $5,450,000 and over for individuals who died in 2016; $5,430,000 and over for individuals who died in 2015; $5,340,000 and over for individuals who died in 2014; $5,250,000 and over for individuals who died in 2013; $5,120,000 and over for individuals who died in 2012; and $5,000,000 for individuals who died between January 1, 2010, and December 31, 2011.

♦Tax Computation - Page 1, Part 2, Form 706♦
  1. All money entries on Form 706, Page 1, can contain up to twelve numeric characters and are edited in dollars and cents. All money entries must be positive.

    Exception:

    Balance Due/Overpayment-negative amounts should be edited with brackets only if the taxpayer does not indicate a negative amount with brackets or a minus (-) sign. Also, Taxable estate (Line 3c) can be a negative amount as well as a positive amount.

    Note:

    Zero is not considered a significant entry unless specifically stated.

  2. Line 1 - Total gross estate. This figure is carried forward from Page 3, Part 5, Line 13 Accept taxpayer's entry.

    Note:

    If blank, zero, dash, or none but there is an entry on Page 3, Part 5, Line 13 edit the appropriate amount to Line 1.

  3. Line 2 - Tentative total allowable deductions. This figure is carried forward from Page 3, Part 5, Line 24 (2012 form revision), Line 22 (2011 form revision). Accept taxpayer's entry.

    Note:

    If blank, zero, dash, or none but there is an entry on Page 3, Part 5, Line 24, edit the appropriate amount to Line 2.

  4. Line 3a - Tentative taxable estate. Accept taxpayer's entry.

  5. Line 3b - State death tax deduction. Accept taxpayer's entry.

    Note:

    For tax year 2005 and subsequent, the credit for State death taxes has been replaced by the State death tax deduction. For returns with dates of death in 2005 or subsequent filed on a 2004 or prior year return, "X" the figure on Line 13.

  6. Line 3c - Taxable estate. If Line 3c is a negative entry, bracket the amount only if the taxpayer does not indicate a negative amount with brackets or a minus (-) sign.

  7. Line 4 - Adjusted taxable gifts. Accept taxpayer's figures.

  8. Line 5 - Net Taxable Estate - Totals of Lines 3 and 4. If this entry is a negative amount, place an "X" to the left of taxpayer's entry. Otherwise, accept taxpayer's entry.

  9. Line 6 - Tentative tax on Line 5. Accept taxpayer's entry.

  10. Line 7 - Total gift tax. Accept taxpayer's entry.

    Exception:

    If Line 7 is greater than Line 6, place an "X" to the left of the taxpayer's entry and enter the amount from Line 6.

    Note:

    If taxpayer brackets entry or uses a minus (-) sign, delete brackets and/or minus sign and continue processing return.

  11. Line 8 - Gross estate tax amount. Accept taxpayer's entry.

  12. Line 9 - (2011 and prior revisions) Maximum unified credit. Verify taxpayer's entry on Line 9 with Unified/Applicable Credit Table below. See IRM 3.11.106.18.7.2, Maximum Unified/Applicable Credit-Form 706, to make sure entry is correct to decedents year of death. If entry does not match decedents year of death, edit correct amount.

    Note:

    See paragraph 12a above for 2011 and subsequent Form 706 (with a Date of Death in 2011, 2012, etc.). 2011 and subsequent amounts can be greater than table amount because of the Portability election. Allow the greater amount and continue processing.

    1. The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (also known as TRUIRJCA) included provisions affecting the 2011 Form 706 (with a Date of Death in 2011). They include (but are not limited to): The applicable exclusion amount now may consist of (1) a basic exclusion amount of $5,000,000 and, (2) in the case of a surviving spouse, the unused exclusion amount (DSUE), of a predeceased spouse (who died after 12/31/2010). While there is nothing indicated on the 2011 Form 706, the taxpayer is instructed to make a note of the section 2010 election (or state something like, “see statement attached”) and attach copies of the predeceased spouse's timely/completed return, even if there was no tax due, to allow the surviving spouse to use the predeceased spouse's unused exclusion amount.

      Example:

      Taxpayer husband died 1/3/2011.
      Taxpayer wife died 8/5/2011.
      Husband reported estate tax of $607,529, so his unused credit would be $1,123,271. (That's the maximum unified/applicable credit amount of $1,730,800 - $607,529 tax).
      Wife reports estate tax of $2,044,738, so she opts to use the deceased spouse's unused portion of $1,123,271, making her total unified/applicable credit amount $2,854,071.(That's the maximum unified/applicable credit of $1,730,800 + $1,123,271 DSUE, which is more than her estate tax due), thus bringing her to $.00 estate tax due.

    2. If a taxpayer reports a Date of Death in 2012, but files on a 2011 or prior form, edit a "d" to the right of Line 9 and continue processing.

  13. Line 9a - (2012 and subsequent) Basic exclusion amount. Accept taxpayer's entry.

  14. Line 9b - (2012 and subsequent) Deceased spousal unused exclusion (DSUE) amount from predeceased spouse(s). This figure is carried forward from Part 6 - Portability of Deceased Spousal Unused Exclusion, Section D.

    Note:

    Line 9c is Restored exclusion amount and Line 11 includes amount from line 9c. Per WRN issued March 31, 2017

  15. Line 9d - (2016 and subsequent) Restored exclusion amount. This figure is the total of Line 9a, Line 9b and Line 9c.

  16. Line 9e - (2016 and subsequent) Applicable credit amount. Verify taxpayer's entry on Line 9d with the Unified/Applicable Credit Table below. See IRM 3.11.106.18.7.2, Maximum Unified/Applicable Credit-Form 706, to make sure entry is correct to decedents year of death. If entry does not match decedents year of death, edit correct amount.

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

    Note:

    See paragraph 12a above for 2011 and subsequent Forms 706 (with a Date of Death in 2011, 2012, etc.). 2011 and subsequent amounts can be greater than table amount because of the Portability election. Allow the greater amount and continue processing.

  17. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  18. Line 11 - Allowable unified/applicable credit. This is computed by subtracting Line 10 (Adjusted unified/applicable credit) from the Line 9e (Restored exclusion amount/applicable credit amount). Accept the taxpayer's entry.

    Note:

    If blank, zero, dash, or none but there are entries on Line 9e and/or 10, edit the appropriate amount to Line 11, based on the date of decedents death. See IRM 3.11.106.18.3.1, Due Date-Form 706.

  19. Line 12 - Balance after unified/applicable credit. Accept taxpayer's entry.

  20. Line 13 - Credit for foreign death taxes. Accept taxpayer's entry.

  21. Line 14 - Credit for tax on prior transfers. Accept taxpayer's entry.

  22. Line 15 - Total credits. Accept taxpayer's entry.

  23. Line 16 - Net estate tax. Accept taxpayer's entry.

  24. Line 17 - Generation-skipping transfer (GST) tax. Accept taxpayer's entry.

  25. Line 18 - Total transfer tax. If Line 18 on the form is blank and there are entries on Lines 16 through 17, compute and enter Line 18.

  26. Line 19 - Prior payments. Accept taxpayer's entry.

  27. Line 20 - Balance due (or overpayment). Edit negative amounts in brackets (refunds) only if the taxpayer does not indicate a negative amount with brackets or a minus (-) sign.

    Note:

    Delete penalty and interest from the total and edit the balance due to the left of the original entry. Otherwise, accept taxpayer's entry.

♦Maximum Unified/Applicable Credit - Form 706♦
  1. The following table contains information for the unified/applicable credit and exemption equivalent for estates of citizens and residents:

    Year of Death Applicable Credit Amount Basic Exclusion Amount
    1987 thru 1997 192,800 600,000
    1998 202,050 625,000
    1999 211,300 650,000
    2000 and 2001 220,550 675,000
    2002 and 2003 345,800 1,000,000
    2004 and 2005 555,800 1,500,000
    2006 thru 2008 780,800 2,000,000
    2009 1,455,800 3,500,000
    2010 and 2011* 1,730,800* 5,000,000
    2012* 1,772,800* 5,120,000
    2013* 2,045,800* 5,250,000
    2014* 2,081,800* 5,340,000
    2015* 2,117,800* 5,430,000
    2016* 2,125,800* 5,450,000
    2017* 2,141,800* 5,490,000

    Note:

    See paragraph 12a above for 2011 and subsequent Form 706, (with a Date of Death in 2011, 2012, etc.). 2011 and subsequent amounts can be greater than table amount because of the Portability election. Allow the greater amount and continue processing.

♦Schedule T, Qualified Family-Owned Business Interest Deduction - Form 706, (2003 and Prior)♦
  1. The Qualified Family-Owned Business Interest Deduction was repealed for decedents dying on or after January 1, 2004. The following information and instructions pertain to returns with dates of death prior to January 1, 2004.

  2. Under IRC Section 2057, taxpayers may elect to deduct the value of certain family-owned business interests from the gross estate. Schedule T should be filed with the taxpayer attaching all required statements and deducting the value of the qualifying business interests on Part 5, Recapitulation, Page 3, Line 22. Lines 17 through 22 are totaled on Line 23 and entered by the taxpayer on Line 2 of the tax computation, Part 2.

  3. The Taxpayer Relief Act of 1997 replaced the unified credit amount with an applicable credit amount, effective for the estates of decedents dying, and gifts made, after December 31, 1997. If the estate is claiming a Qualified Family-Owned Business Interest deduction (QFOBI), the Unified Credit and the amount of Schedule T will be coordinated before the taxpayer completes computing his/her Line 11 (Page 1) entry. This may result in a lower Allowable unified credit amount (applicable credit amount) on Line 11 than the amount listed. (See IRM 3.11.106.18.7.1, Tax Computation-Page 1, Part 2, Form 706.

  4. DO NOT attempt to compute the Coordinated Applicable Credit or Schedule T amount. If the Schedule T is attached to the return, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

♦Green-Rocker Amount - Line 20♦
  1. Green-Rocker Money Amount on Line 20. The purpose of green rocker tax due amounts is to show that money was received with the return. If the amount contains penalty and/or interest:

    1. X-out the rocker amount.

    2. Delete the penalty and interest from the total.

    3. Edit the balance due to the left of the original entry.

    4. Edit a received date if one is not present (must have a received date, especially if it's a Federal Tax Deposit (FTD)).

      Note:

      The return MUST have a received date (especially if an FTD penalty is involved).

♦Deferment of Payment (Extension of Time to Pay) - Form 706♦

  1. Under certain conditions, the IRC provides relief from immediate payment of estate tax due on returns of deficiency determinations. The deferred portion can constitute all or only a portion of tax due. Form 4768, Application for Extension of Time to File a Return and/or Pay U.S. Estate (or Generation-Skipping Transfer) Taxes. is used to apply for an extension of time to file and/or time to pay.

    If Then
    Balance due return is filed with an original Form 4768, Application for Extension of Time to File a Return and/or Pay U.S. Estate (or Generation-Skipping Transfer) Taxes attached (Form 4768, Application for Extension of Time to File a Return and/or Pay U.S. Estate (or Generation-Skipping Transfer) Taxes, signed date is same date, or within a short timeframe of Form 706 signed date and no indication of approval or disapproval)
    1. Indicate at the top of the return "Extension Pending" .

    2. Forward original Form 4768, Application for Extension of Time to File a Return and/or Pay U.S. Estate (or Generation-Skipping Transfer) Taxes, along with the explanation for requesting the extension, to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.

      • Keep a copy of the Form 4768, Application for Extension of Time to File a Return and/or Pay U.S. Estate (or Generation-Skipping Transfer) Taxes, and explanation with the Form 706,

    Reminder:

    The Treasury Department and IRS believe it is reasonable to grant the estates of 2010 Decedents an automatic extension of time to file the estate tax return and an extension of time to pay the estate tax. Accordingly, the Treasury Department and IRS grant the Executor of a 2010 Estate who files a Form 4768, Application for Extension of Time to File a Return and/or Pay U.S. Estate (or Generation-Skipping Transfer) Taxes, by the due date for filing Form 706, or Form 706-NA, both an automatic six month extension of time to file Form 706 or Form 706-NA, pursuant to IRC Section 6081, and a six month extension of time to pay the estate tax. The Executor of a 2010 Estate is not required to substantiate on the Form 4768, Application for Extension of Time to File a Return and/or Pay U.S. Estate (or Generation-Skipping Transfer) Taxes the reason for requesting an extension of time for payment of the estate tax to receive the six month extension of time to pay the estate tax due. If the Executor (of a 2010 decedent) requests an extension of time to pay for more than six months (on Form 4768),Application for Extension of Time to File a Return and/or Pay U.S. Estate (or Generation-Skipping Transfer) Taxes, justification needs to be provided.

♦IRC Section 6163♦
  1. The following information pertains to IRC Section 6163:

    If Then
    Balance due return is filed with statement attached requesting an extension of time to pay under IRC Section 6163 reversionary or remainder interest Photocopy Pages 1, 2, and 3 of Form 706 and route to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.
    Balance due return is filed with no statement attached and the box (Page 2, Part 3, Line 4) is checked "YES" Photocopy Pages 1, 2, and 3 of Form 706 and route to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.
    Balance due return is filed with approved Form 4768, Application for Extension of Time to File a Return and/or Pay U.S. Estate (or Generation-Skipping Transfer) Taxes filed under IRC Section 6166 or 6163, and a PIC (Payment Indicator Code) 1 Photocopy the first page of the return, Form 4768, Application for Extension of Time to File a Return and/or Pay U.S. Estate (or Generation-Skipping Transfer) Taxes and route to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.
♦IRC Section 6166♦
  1. The following information pertains to a taxpayer's request for installment payments under IRC 6166:

    If Then
    There is a balance due on Line 20, Page 1, of Form 706, and either of the following conditions are present:
    1. "Yes" box on Line 3 and/or Line 4, Part 3, Page 2, of Form 706, is checked

    2. IRC Section 6166 is noted anywhere on the return or an attachment

    Edit Action Code 370 and route the return to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation on Form 4227, Intra-SC Reject or Routing Slip. (See Figure 3.11.106-7.), Installment Agreement.

    Note:

    Cincinnati Compliance Services, Estate and Gift Tax Campus Operation will prepare Form 4349, Computation of Estate Tax Due With Return and Annual Installment.

    Figure 3.11.106-7

    This is an Image: 33575019.gif
     

    Please click here for the text description of the image.

♦Payment Indicator Code (PIC) - Form 706♦

  1. A one digit code called "Payment Indicator Code (PIC)" is used to identify the various types of payments. Edit this code in the right margin of Line 20, Part 2, Page 1.

  2. Valid codes are "0" and "1" . This is a required entry on every Form 706.

    Exception:

    Do not edit a PIC on amended Form 706,

    Type of Return Code Payment Indicator
    Any 0 No Installment Privileges. Payment Indicator will follow normal BMF settlement procedures and will generate a CP -191.
    Balance Due Only 1 Requests IRC Section 6166 or 6163.Form 706, Page 2, Part 3, Line 3 or Line 4 checked "YES" .
  3. Edit a PIC on every Form 706, in the following priority:

    Type of Return IRC Section 6166 or 6163 (Page 2, Part 3, Line 3 or Line 4 or attachment) Code
    Balance Due Only Yes 1
    Any No 0
  4. Code "1" (Balance due return only) when:

    1. Taxpayer requests installment privileges under IRC Section 6166.

    2. Taxpayer requests payment postponed under IRC Section 6163.

  5. Code "0" when (4) above does not apply.

    Note:

    The only PICs now used will be "0" or "1" . With the new transaction code used by Cincinnati Compliance Services, Estate and Gift Tax Campus Operation, there will no longer be a need for PIC "2" or "3" .

♦Penalty and Interest Codes (P&I) - Form 706♦

  1. See IRM 3.11.106.7, Penalty and Interest Code, for description of codes.

  2. See IRM 3.11.106.18.3.1, Due Date-Form 706, for description of due dates.

♦Form 706, Page 4, Part 6, Section 6 correction procedures♦

  1. In the past, Form 706, was only coded and edited on Page 1 of the return. Beginning in tax year 2013 (PY2014), Page 4, Part 6, Section C of the return will also need to be coded and edited. Changes were made to the DSUE calculation in a circulation of Form 706 received on September 23, 2013. As a result of the increase in the tax rates under ATRA, dividing the total gift tax paid or payable by 40% caused an error in the DSUE calculation (due to the increase in the tax rate). Additional changes were also incorporated into the instructions, specifically the Line 7 worksheet which is submitted with the Form 706 (the worksheet is NOT edited or transcribed). Line 2 was changed to "Reserved" , so Code and Edit should enter a zero on Line 2 of Form 706 Page 4, Part 6, Section C. Due to budget constraints, programming was not able to be completed so this is the work around. ISRP is going to be instructed to field release through the line (so "0" will populate on the Error Resolution System (ERS) screens. Error Resolution System (ERS) is instructed to make sure the line shows zero.

♦Processing Form 706-NA♦

  1. These instructions cover the processing of Form 706-NA.

♦Filing Requirements - Form 706-NA♦

  1. Form 706-NA returns are filed at Cincinnati Submission Processing Center (CSPC).

  2. The following information pertains to filing requirements:

    1. If the decedent died prior to November 1, 1966, Form 706-NA was required for gross estates exceeding $2,000.

    2. If the decedent died prior to December 31, 1976, Form 706-NA, was required for the estate of a nonresident (not a citizen of the U.S.) whose gross estate situated in the U.S. exceeded $30,000 at Date of Death.

    3. If the decedent died after December 31, 1976, Form 706-NA, is required for estate of nonresident (not a citizen of the U.S.) if part of the gross estate situated in the U.S. exceeded $60,000 at Date of Birth reduced by $60,000 at Date of Death (DOD) reduced by amount of adjusted taxable gifts per IRC Section 2001(b) made by decedent after December 31, 1976, or aggregate amount allowed as a specific exemption per IRC Section 2521(b) (before its repeal by the Tax Reform Act of 1976) with respect to gifts made by decedent after September 8, 1976.

  3. If a pre-1977 Form 706-NA, has been filed, attach current revision of form to return and enter data for transcription lines onto current form.

  4. Examiners will perform the following preliminary examination:

    If Then
    Decedent is an "expatriate" The return is not subject to tax rates of a nonresident not a citizen of the U.S., but subject to Table A, Form 706, "expatriate" is one who lost U.S. citizenship within 10 years before Date of Death (DOD) and for whom it is reasonable to assume that the main purpose in doing so was to avoid U.S. taxes.
    Page 2, Line 6b is checked "yes" See IRM 3.11.106.19.11, Expatriate Indicator- Form 706-NA,.
    A person who is a citizen of the U.S., by reason of birth in the U.S., established residence in a possession of the U.S. and died after September 2, 1958
    1. Under IRC Section 2208, this person is considered a U.S. citizen.

    2. His/her estate is subject to tax imposed by IRC Section 2001 and the Form 706, should be used instead of Form 706-NA.

    3. Edit Action Code 610.

    4. If it is a numbered return, use Form 4227, Intra-SC Reject or Routing Slip, and indicate the return should be renumbered as a Form 706,.

    5. If it is an unnumbered return, give it to your manager for inclusion in the Form 706 batch. Delete -NA from title of the form.

    6. This can be verified by checking (Nationality) and "Citizenship Domicile at time of death" blocks.

♦Death Tax Treaty Countries♦

  1. Death tax treaties (or, for Canada, an income tax treaty with a death tax protocol) are in effect with Australia, Austria, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, Netherlands, Norway, South Africa, Sweden, Switzerland, and United Kingdom.

  2. If items on the return are based on the provisions of a death tax treaty or protocol, it may be necessary for the filer to attach a statement disclosing that it is treaty based. However, if a statement is not attached, continue processing.

♦Due Date - Form 706-NA♦

  1. The following information pertains to the due date of Form 706-NA,

    1. If decedent died before January 1, 1971, the return is due the 15th calendar month after decedents death.

    2. If decedent died after December 31, 1970, the return is due the day of the ninth calendar month after the decedents death.

      Exception:

      If the date of death is between January 1, 2010, and December 17, 2010 (inclusively); the return due date is September 19, 2011, as mandated in the Extender's Legislation (PL 111-312).

    3. An application for extension of time for filing (Form 4768, Application for Extension of Tme to File a Return and/or Pay U. S. Estate (and Generation-Skipping Transfer) Taxes) may be granted even if application is made later than 9 months after Date of Death. Unless executor is abroad, extended due date for filing estate tax return may not be later than 15 months from date of decedents death.

      Reminder:

      The Treasury Department and IRS believe it is reasonable to grant the estates of 2010 Decedents an automatic extension of time to file the estate tax return and an extension of time to pay the estate tax. Accordingly, the Treasury Department and IRS grant the Executor of a 2010 Estate who files a Form 4768, by the due date for filing Form 706, or Form 706-NA, both an automatic six month extension of time to file Form 706, or Form 706-NA, pursuant to IRC Section 6081, and a six month extension of time to pay the estate tax. The Executor of a 2010 Estate is not required to substantiate on the Form 4768, the reason for requesting an extension of time for payment of the estate tax to receive the six month extension of time to pay the estate tax due. If the Executor (of a 2010 decedent) requests an extension of time to pay for more than six months (on Form 4768), justification needs to be provided.

      Note:

      Receipt and Control will sort and forward Form 4768, directly to the Cincinnati Compliance Services, Estate and Gift Tax Campus Operation. If a Form 4768, is received in Code and Edit, route to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.

♦Payment Of Tax - Form 706-NA♦

  1. The following information pertains to payment of tax:

    1. Unless deferred payment under IRC Section 6161(a) or 6163(b) has been granted, tax is due when the return is filed.

    2. Form 706-NA filers do not have the same privilege that Form 706, filers have for installment payment of balance due under IRC Section 6166.

♦Entity Perfection - Form 706-NA♦

  1. The entity of the return includes the name, address and Taxpayer ID Number.

♦Name Control♦
  1. Underline the name control as stated below. Refer to Document 7071-A, Name Control Job Aid for Individual Master File (IMF) Taxpayers, for specific instructions.

    If Then
    Form 706-NA, valid characters are: alpha, hyphen or blank Underline the decedents last name.
    Blanks are present Blanks may be present only in the last 2 positions of name control.
♦Executor's Name♦
  1. The following information pertains to the executors name:

    If Then
    There are 2 or more executors names listed on the return Underline the first executors name. Circle out remaining name(s).
    Editing the name of executor
    1. Edit the name of executor on Box 9a if the executor is in the U.S.

    2. Edit the name of the executor on Box 11a if the executor is outside the U.S.

    3. If 1. and 2. above do not apply, edit the attorneys name for the estate on Box 10a if inside the U.S. and Box 12a if outside the U.S.

♦Executor's Address♦
  1. The following information pertains to the executors address:

    If Then
    Editing the address
    1. Edit the address on Box 9b if the executor is in the U.S.

    2. Edit the executors address on Box 11b if the executor is outside the U.S.

    A PO Box and street address are present
    1. Perfect the address.

    2. Input TC014.

    More than one street address is present Underline the first address, City, State and ZIP Code. Circle out remaining address(es).
    Address contains information other than a street address or PO Box
    1. Underline the complete address, abbreviate as much as possible.

    2. Edit Major City Codes, if applicable.

    3. See Exhibit 3.11.106-22, State Codes and Zip Codes for determining ZIP code.

♦Return Examination - Form 706-NA♦

  1. The following information pertains to examining the return:

♦Decedent's Identity♦
  1. Name of decedent and minimum address of decedent (name of country) at time of death.

♦Taxpayer ID Number (SSN, TIN, or ITIN)♦
  1. The following information pertains to the Taxpayer Identification (ID) Number (Social Security Number (SSN), Taxpayer Identification Number (TIN), or Individual Taxpayer Identification Number (ITIN)):

    If Then
    A return does not contain an SSN, TIN, or ITIN
    1. Check with Entity to secure temporary numbers for all returns without SSNs, TINs, or ITINs in the block.

    2. Most returns will be blank or have invalid numbers (such as a Canadian SSN).

    Return is numbered
    1. Edit Action Code 320.

    2. Attach Form 4227, Intra-SC Reject or Routing Slip, and route to Entity.

    Return is unnumbered Remove from the pack, attach Form 4227, Intra-SC Reject or Routing Slip and route to Entity.
♦Executor's Identity♦
  1. The following information pertains to the executors identity:

    If Then
    U.S. executor is not present (name and complete address of executor in the U.S. should be shown on all returns) 1. Check attachments for missing information. If not found:
    1. Use the foreign executor

    2. If there is not a foreign executor, use the U.S. Attorney.

    3. If no U.S. Attorney, use the foreign attorney.

    4. If missing, use Action 211 for correspondence.

    5. If no reply, use CCC 3 - Enter this code when no reply is received for taxpayer correspondence to suppress credit interest from being generated.

♦Signature♦
  1. The following information pertains to examining signatures on returns:

    If Then
    Examining for missing signature There must be at least one executor signature for property held in the U.S.
    Attorney's name and address are shown in block of entity section of return
    1. Attorney must also sign the return.

    2. Accept foreign executors signature.

    3. Use Action code 225 and Letter 501CS, Correspondex Letter for missing signature. Request that reply be sent to Examination Division.

♦Date of Birth♦
  1. The following information pertains to Date of Birth (DOB):

    If Then
    Date of Birth is 1900 or earlier
    1. Enter "1900" for year and enter month and date of month.

    2. Edit DOB in MMDDYYYY format.

    Date of Birth is missing, or obviously wrong
    1. Check attachments for correct date.

    2. If correct date is unobtainable, leave blank and circle incorrect date.

♦Date of Death♦
  1. The following information pertains to Date of Death (DOD):

    If Then
    Date of Death is missing
    1. Check death certificate for Date of Death.

    2. Edit Date of Death in MMDDYY format.

    No death certificate is attached
    1. Research IDRS.

    2. If DOD cannot be found, continue processing.

♦Received Date♦
  1. See IRM 3.11.106.13, Receive date. For information regarding received date editing.

♦Attachments♦
  1. Documents and letters will be enclosed with Form 706-NA. Correspond on numbered returns using Action Code 211 and approved Campus Correspondex. Examine Page 2, Part III of Form 706-NA for the following items:

♦Copy of Will♦
  1. If Question 1a, "Did the decedent die testate?" , is checked "Yes" and a copy of the will is not attached, continue processing.

♦Balance Sheet and Profit & Loss Statement♦
  1. The following information pertains to balance sheets and profit and loss statement:

    If Then
    Page 2, Part III, answer to Box 3 is checked "Yes"
    1. Balance Sheet and Profit & Loss Statement must be submitted.

    2. Correspond using approved Campus Correspondex only if requesting other information.

    3. Otherwise, notate at the top of the return.

    4. Examination will initiate action to obtain missing documents, if necessary.

♦Transfers♦
  1. The following information pertains to transfers:

    If Then
    Page 2, Part III, answer to box 7 or 8 is checked "Yes" Schedule G (Form 706, must be attached.
    Schedule G (Form 706, is not attached Correspond.
♦Expatriate Source♦
  1. The following information pertains to expatriates:

    • If the box on Page 2, Part III, Line 6b, is checked Yes, the decedent is considered an Expatriate and is not subject to the rates of a nonresident (not a citizen of the U.S.) if the decedent died prior to November 11, 1990.

♦Missing Documents♦
  1. The following information pertains to missing documents:

    If Then
    Documents are missing
    1. Initiate action, prepare Form 3696, Correspondence Action Sheet.

    2. Use Action Code 211, if a numbered return.

    3. Request missing document using approved Campus Correspondex.

    4. Prepare Form 3696, Correspondence Action Sheet and attach to the front of the return in the entity area.

    5. Continue processing return and do not float return to top of block.

♦Amended Returns - Form 706-NA♦

  1. See IRM 3.11.106.10.5.1, Amended Returns.

♦Mathematical Verification - Form 706-NA♦

  1. Manual math verification of the return is not required. The computer will check the transcribed totals and any changes or corrections will be performed by Error Resolution System (ERS) examiners.

  2. Cincinnati Compliance Services, Estate and Gift Tax Campus Operations will correspond for supporting schedules, if missing, for estates that have a Total Gross Estate of $5,490,000 and over for individuals who died in 2017; $5,450,000 and over for individuals who died in 2016; $5,430,000 and over for individuals who died in 2015; $5,340,000 and over for individuals who died in 2014; $5,250,000 and over for individuals who died in 2013; $5,120,000 and over for individuals who died in 2012; and $5,000,000 for individuals who died between January 1, 2010, and December 31, 2011.

♦Tax Computation - Form 706-NA♦
  1. All money entries on Form 706-NA, Page 1, can contain up to twelve numeric characters and are edited in dollars and cents. All money entries must be positive.

    Exception:

    Balance Due/Overpayment-negative amounts should be edited with brackets. Also, Line 3 can be a negative amount as well as a positive amount.

  2. Line 1 - Taxable estate. Verify that the amount is carried forward from Schedule B, Line 9, correctly.

  3. Line 2 - Total taxable gifts. Accept taxpayer's entry.

  4. Line 3 - Total. Add Lines 1 and 2. If Line 3 is a negative entry, bracket the amount only if the taxpayer does not indicate a negative amount with brackets or a minus (-) sign.

  5. Line 4 - Tentative tax on Line 3. Accept taxpayer's entry.

  6. Line 5 - Tentative Tax on Line 2. Accept taxpayer's entry.

  7. Line 6 - Gross estate tax. Accept taxpayer's entry.

  8. Line 7 - Unified/Applicable credit. Accept taxpayer's entry.

  9. Line 8 - Balance after unified/applicable credit. Accept taxpayer's entry.

  10. Line 9 - Other credits. Verify that the amount brought over from the schedule is correct.

  11. Line 10 - Credit for tax on prior transfers. Verify that amount on Line 10 is correctly brought forward from Schedule Q, Form 706, U.S. Estate Tax Return, Accept taxpayer's entry.

  12. Line 11 - Total credits. Accept taxpayer's entry.

  13. Line 12 - Net estate tax. Accept taxpayer's entry.

  14. Line 13 - Total generation-skipping transfer tax. Verify that amount is correctly brought forward from Schedule R, Form 706 (Part 2, Line 10). Accept taxpayer's entry.

  15. Line 14 - Total transfer taxes. Accept taxpayer's entry.

  16. Line 15 - Earlier payments. If blank, leave blank; otherwise, accept taxpayer's entry.

  17. Line 16 - Balance Due/Overpayment. Edit negative amounts in brackets (refunds) only if the taxpayer does not indicate a negative amount with brackets or a minus (-) sign.

♦Payment Indicator Code (PIC) - Form 706-NA♦

  1. Deferment of payment will be granted similar to Form 706 (See IRM 3.11.106.18.8, Deferment of Payment (Extension of Time to Pay)-Form 706).

  2. Use a one digit Payment Indicator Code (PIC) to identify returns where a deferment was submitted.

  3. If the taxpayer has no balance due or made a request for installment payments or has not requested an extension or a refund, edit code "0" .

  4. Since there cannot be any IRC Section 6166 installments and Treasury Bonds are no longer being accepted as payment of estate tax by Examination, the only payment indicator codes applicable to Form 706-NA, are 0 and 6.

  5. Enter code to the right of Line 16-Balance due on Form 706-NA, This is a required entry on Form 706-NA.

    Exception:

    Do not edit a PIC on amended Form 706-NA.

  6. Payment Indicator Codes:

    Code Condition
    0 If there is no entry on Line 15.
    6 If there is an entry on Line 15.

♦Penalty and Interest Code (P&I) - Form 706-NA♦

  1. Insert P&I Code in upper right margin of the return. See IRM 3.11.106.7, Penalty and Interest Code, for description of codes. See IRM 3.11.106.19.3, Due Date- Form 706-NA, for due dates.

♦Expatriate Indicator - Form 706-NA♦

  1. The following information pertains to the expatriate indicator:

    If Then
    The box on Page 2, Line 6b is checked "Yes" Place a code "1" preceded by "Exp" in the lower left hand margin of Page 1.

    Exception:

    IRC Section 2208 or 2001 is notated

    The Form 706-NA, must be converted to a Form 706,
    A numbered return
    1. Edit Action Code 610.

    2. Attach Form 4227, Intra-SC Reject or Routing Slip, and route to be batched and renumbered as a Form 706.

    An unnumbered return Convert Form 706-NA, to a Form 706 and route to be batched and processed as a Form 706,

♦Processing Form 706-A ♦

  1. The following information pertains to processing Form 706-A,:

♦Processing Background for Form 706-A United States Additional Estate Tax Return

  1. As a result of the Tax Reform Act of 1976, Public Law 81-666, IRC Section 2032A permits the executor of an estate, if the decedent died after December 31, 1976, to make an election to value the decedents real property on the basis of its actual use, rather than its fair market value determined according to its highest and best, or most valuable use.

  2. IRC Section 2032A also provides that all persons with an interest in the property must enter into a written agreement consenting to personal liability for any additional tax imposed in the event the property is sold or disposed of, or no longer qualifies for the special farm or business use.

  3. An additional estate tax is imposed if the disposition or cessation was within 15 years after the decedents death, if the decedent died before January 1, 1982, or within 10 years of decedents death if the decedent died after December 31, 1981 (and before the death of the qualified heir), the qualified heir disposes of any interest in the specially valued real property (other than to a member of his/her family), or the qualified heir ceases to use the specially valued real property. The tax is not imposed more than once for any one interest.

  4. The qualified heir must file Form 706-A, United States Additional Estate Tax Return if any additional estate tax is due. Form 706-A, United States Additional Estate Tax Return must be filed within 6 months after the taxable disposition or cessation of the qualified use unless an extension of time has been granted.

  5. For tax periods after 8112 all taxpayers who have exchanges or involuntary conversions, even if they are nontaxable, must file Form 706-A, United States Additional Estate Tax Return

  6. The 15 year rule for the estates of decedents dying before 1982 expired in 1997. Lines 16 through 19 that were on the March 1997 Form 706-A, United States Additional Estate Tax Return have been deleted. These lines were used only if the decedent died before January 1, 1982, and the taxable event occurred more than 120 months after the commencement date. The lines on the Form 706-A, United States Additional Estate Tax Return have been re-numbered.

  7. Form 4768, Application for Extension of Time to File a Return and/or Pay U.S. Estate (and Generation Skipping Transfer) Taxes may be filed to apply for an extension of time to file.

♦Filing Requirements - Form 706-A♦

  1. Form 706-A, United States Additional Estate Tax Return returns are filed at CSPC.

♦Examination - Form 706-A♦

  1. Examine all returns for timeliness, completeness, name and address, Social Security Number (SSN) of heir, decedents name, social security number and Date of Death. Document Code 84 and MFT 53 have been assigned for use with Form 706-A, United States Additional Tax Return.

  2. Any adjustment to the original return which is disclosed either by a corrected return or in letter form will be forwarded to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation for its review.

♦Due Date - Form 706-A♦

  1. Form 706-A, United States Additional Estate Tax Return should be filed within 6 months after the specially valued property ceases to qualify for the reduced valuation. This is the time when the payment is required to be made.

♦Tax Period - Form 706-A♦

  1. The tax period is determined by the date on which the qualified heir disposed of any interest in the specially valued property.

  2. Check the return and attached documents for date on which the qualified heir disposed of any interest in the specially valued property, or ceased to use (for the qualified use) the specially valued real property.

  3. Edit the date of disposition (from Page 2, Schedule A, Column (C)) in the top center of the form in YYYYMM format.

    Note:

    If the tax period cannot be determined, route the return to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.

♦Entity Verification - Form 706-A♦

  1. The following information pertains to entity verification:

    If Then
    Part I-Entity Data Verify that the heir's name, address, and social security number and the decedents name, social security number and Date of Death was entered in Part I of Form 706-A,
    Heir's name, address or social security number or the decedents name, social security number or Date of Death is missing on the return and cannot be found on attachments
    1. Research IDRS for missing information.

    2. If information not found on IDRS, send return to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.

♦Mathematical Verification - Form 706-A♦

  1. Form 706-A, United States Additional Estate Tax Return should be reviewed to determine if the return and schedules were accurately completed. Manual math verification of the return is not required.

  2. Cincinnati Compliance Services, Estate and Gift Tax Campus Operation will correspond for supporting schedules, if missing, for estates that have a Total Gross Estate of $5,490,000 and over for individuals who died in 2017, $5,545,000 and over for individuals who died in 2016; $5,430,000 and over for individuals who died in 2015; $5,340,000 and over for individuals who died in 2014; $5,250,000 and over for individuals who died in 2013; $5,120,000 and over for individuals who died in 2012; and $5,000,000 for individuals who died between January 1, 2010, and December 31, 2011.

    If Then
    Schedule A-Disposition of Specially Valued Property or Cessation of Qualified Use Verify that the total amounts of Columns D and E were entered on Page 1, Part II, Lines 12 and 13 respectively.
    Schedule B-Involuntary Conversions or Exchanges Verify that the total amount from Column C was entered on Page 1, Part II, Line 16.
♦Part II-Tax Computation - Form 706-A♦
  1. Line 1c - Subtract Line 1b from Line 1a.

  2. Line 2c - Subtract Line 2b from Line 2a.

  3. Line 3c - Subtract Line 3b from Line 3a.

  4. Divide Line 1c by Line 2c and enter as a percent (%).

  5. Line 5 - Multiply Line 3c by percent (%) on Line 4.

  6. Line 7 - Divide Line 6 by Line 1a and enter the result as a percent (%).

  7. Line 8 - Multiply Line 5 by percent (%) on Line 7.

  8. Line 14 - Subtract Line 13 from Line 12.

  9. For 1/1/99 - Form 706-A, Part II - Lines 16, 17, 18 and 19 were deleted. Renumber the following lines:

    • Change Line 20 to 16,

    • Line 21 to 17,

    • Line 22 to 18, and

    • Line 23 to 19.

  10. Line 17 - Divide Line 16 by Line 12 and enter as a percent (%).

    Note:

    If there are no entries on Lines 16, 17 or 18, enter Line 15 on Line 19.

♦Penalty and Interest - Form 706-A♦

  1. The following information pertains to penalty and interest:

    If Then
    There is a green-rocker amount stamped or printed on the form (indicating that a remittance was submitted with the form) Compare it against the amount on Line 19. If that amount is greater than Line 19 (additional estate tax due), it is possible that the amount may be interest at the underpayment rate established under IRC Section 6621 for the period beginning on the date the estate tax liability was due and ending on the date such additional estate tax is due.
    The green-rocker amount is greater than the amount on Line 19
    1. Edit on the dotted line, to the left of Line 19, "TC-340" and the amount totaling the difference.

      Example:

      If the green-rocker amount is $455.00, and the amount on Line 19 is $405.00, then you would edit "TC-340 - $50.00" to indicate a restricted interest assessment of $50.00.

    2. After editing, follow the procedures in IRM 3.11.106.21.5, Tax Period - Form 706-D.

♦Routing - Form 706-A ♦

  1. After all entries have been examined and verified, and if no correspondence is needed for the taxpayer to complete the return, route to Numbering.

♦Processing Form 706-D ♦

  1. The following information pertains to processing Form 706-D,

♦Processing Background for Form 706-D, United States Additional Estate Tax Return-Under Code Section 2057

  1. A provision within the Internal Revenue Service Restructuring and Reform Act of 1998 requires a qualified heir to report and to pay additional estate tax, if:

    1. Any "taxable event" occurs to the qualified family owned business interest within 10 years of the decedents death, and

    2. The decedents death was later than December 31, 1997.

  2. The additional tax is computed on Form 706-D, United States Additional Estate Tax Return-Under Code Section 2057. The tax is due 6 months after the taxable disposition, disqualifying act, or cessation of qualified use of the Qualified Family Owned Business Interest (QFOBI).

    Note:

    IRC Section 2057 is repealed for individuals dying after January 1, 2004.

  3. A "taxable event" is defined as follows:

    1. The qualified heir disposes of any portion of his/her interest in the family owned business, other than by disposition to a member of the qualified heir's family or through a qualified condition contribution under IRC Section 170(h).

    2. The qualified heir ceases to meet material participation requirements, i.e., if neither the qualified heir nor any member of his or her family has materially participated in the trade or business for at least 5 years or any 8 year period.

    3. The principal place of business of the qualified family owned business ceases to be located in the United States.

    4. The qualified heir loses United States citizenship and neither a qualified trust was created nor a security arrangement made.

  4. Form 4768, may be filed to apply for an extension of time to file.

♦Filing Requirements - Form 706-D ♦

  1. Form 706-D, United States Additional Estate Tax Return-Under Code Section 2057 returns are filed at CSPC.

♦Examination - Form 706-D♦

  1. Examine all returns for timeliness, completeness, name and address, social security number of heir, decedents name, social security number and Date of Death. Document Code 84, MFT 53, and a blocking range of 650-699 have been assigned for use with Form 706-D, United States Additional Estate Tax Return-Under Code Section 2057.

  2. Any adjustment to the original return that is disclosed either by a corrected return or in letter form will be forwarded to the Cincinnati Compliance Services, Estate and Gift Tax Campus Operation for its review.

♦Due Date - Form 706-D♦

  1. Form 706-D, United States Additional Estate Tax Return-Under Code Section 2057, should be filed within 6 months after the taxable disposition, disqualifying act, or cessation of qualified use of the Qualified Family Owned Business Interest (QFOBI). This is the time when the payment is required to be made.

♦Tax Period - Form 706-D♦

  1. The tax period is determined by the date on which the qualified heir disposed of any interest in the real property.

  2. Check the return and attached documents for date on which the qualified heir disposed of any interest in the real property, or ceased to use (for the qualified use) the real property, or performed a disqualifying act of the real property. Usually, this date can be found on Page 2, Schedule A, Column (C).

  3. Edit the date of disposition (from Page 2, Schedule A, Column (C)) in the top center of the form in YYYYMM format.

    Note:

    If the tax period cannot be determined, route the return to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.

♦Entity Verification - Form 706-D♦

  1. The following information pertains to entity verification:

    If Then
    Part I - Entity Verify that the heir's name, address, and social security number and the decedents name, social security number and Date of Death was entered in Part 1 of Form 706-D, United States Additional Estate Tax Return-Under Code Section 2057.
    If the heir's name, address or social security number or the decedents name, social security number or Date of Death is missing on the return and cannot be found on attachments
    1. Research IDRS for missing information.

    2. If information not found on IDRS, send return to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.

♦Mathematical Verification - Form 706-D♦

  1. Form 706-D, United States Additional Estate Tax Return-Under Code Section 2057 should be reviewed to determine if the return and schedules were accurately completed. Manual math verification of the return is not required.

  2. Cincinnati Compliance Services, Estate and Gift Tax Campus Operations will correspond for supporting schedules, if missing, for estates that have a Total Gross Estate of $5,490,000 and over for individual who died in 2017, $5,450,000 and over for individual who died in 2016; $5,430,000 and over for individuals who died in 2015; $5,340,000 and over for individuals who died in 2014; $5,250,000 and over for individuals who died in 2013; $5,120,000 and over for individuals who died in 2012; and $5,000,000 for individuals who died between January 1, 2010, and December 31, 2011.

    If Then
    Schedule A-Disposition of Qualified Family-Owned Business Interest, Failure to Materially Participate, or Disqualifying Act (Taxable Under IRC Section 2057(f)(1)) Verify that the total amounts were entered correctly from Column (D) to Page 1, Part II, Line 12.
    Schedule B- Involuntary Conversions or Exchanges Verify that the total amount was entered from Column (C) to Page 1, Part II, Line 11.
♦Part II- Tax Computation - Form 706-D♦
  1. Line 3c - Subtract Line 3b from Line 3a.

  2. Line 4 - Divide Line 1 by Line 2 and enter result as a percentage (%).

  3. Line 5 - Multiply Line 3c by Line 4.

  4. Line 7 - Divide Line 6 by Line 1 and enter the result as a percentage (%).

  5. Line 8 - Multiply Line 5 by the percentage (%) on Line 7.

  6. Line 9 - Use Applicable percentage (%) as entered by taxpayer.

  7. Line 10 - Multiply Line 8 by the Applicable percentage (%) on Line 9.

  8. Line 13 - Divide Line 11 by Line 12 and enter result as a percentage (%).

  9. Line 14 - Multiply Line 10 by the percentage (%) on Line 13.

  10. Line 15 - Subtract Line 14 from Line 10.

    Note:

    If there are no entries on Lines 11, 12, 13 or 14, enter Line 10 on Line 15.

♦Penalty and Interest - Form 706-D♦

  1. The following information pertains to penalty and interest:

    If Then
    There is a green-rocker amount stamped or printed on the form (indicating that a remittance was submitted with the form) Compare it against the amount on Line 15. If that amount is greater than Line 15 (additional estate tax due), the amount should be interest at the underpayment rate established under IRC Section 6621 for the period beginning on the date the estate tax liability was due and ending on the date such additional estate tax is due.
    1. Edit on the dotted line, to the left of Line 15, "TC-340" and the amount totaling the difference.

      Example:

      If the green-rocker amount is $455.00, and the amount on Line 15 is $405.00, then you would edit "TC-340 - $50.00" to indicate a restricted interest assessment of $50.00.

    2. After editing, follow the procedures in IRM 3.11.106.21.5, Tax Period-Form 706-D.

    If no interest is included in the payment Route the return to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.

♦Routing - Form 706-D♦

  1. After all entries have been examined and verified, and if no correspondence is needed for the taxpayer to complete the return, route to Numbering.

♦Processing Schedule R-1 (Form 706), Generation-Skipping Transfer Tax (Direct Skips From a Trust Payment Voucher)♦

  1. IRC Section 20603 (a) (2) provides that the Generation-Skipping Transfer (GST) tax imposed on a direct skip from a trust is to be paid by the trustee. Schedule R-1 (Form 706) serves as a payment voucher for the trustee to remit the GST tax to the Internal Revenue Service.

  2. Examine all returns for timeliness and completeness of all entity data. Schedule R-1 will be processed as a non-master file account using Document Code 85, MFT 53 and blocking series 590 through 599.

♦Due Date - Schedule R-1 (Form 706)♦

  1. The Schedule R-1 (Form 706) is due 9 months after the decedents Date of Death.

    Exception:

    If the date of death is between January 1, 2010, and December 17, 2010 (inclusively); the return due date is September 19, 2011, as mandated in the Extender's Legislation (PL 111-312).

♦Mathematical Verification - Schedule R-1 (Form 706)♦

  1. The following information pertains to math verification:

    If Then
    Information is missing
    1. Contact executor of the estate.

    2. Where possible, verify amounts on Lines 1 through 8 on the schedule against the items listed in Part I. Computation of the GST Tax on the Direct Skip (Description of property interests subject to the direct skip).

♦Penalty and Interest - Schedule R-1 (Form 706)♦

  1. The following information pertains to penalty and interest:

    If Then
    Using the due date to determine timeliness Decide whether penalties and interest need to be assessed.
    It is determined that penalty and interest assessments (or any other adjustment actions) are required Prepare Form 3465, Adjustment Request, as instructed. Route the return to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.

♦Routing - Schedule R-1 (Form 706)♦

  1. Receipt and Control will send all Schedule R-1s (Form 706) with remittance to Deposit Activity, who will stamp the schedule with an Non Master File (NMF) number and deposit the remittance. After numbering, the return will be sent to Code and Edit for math verification and then to Accounting for further processing.

♦Processing Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return♦

  1. New transcription has been requested for processing year 2013 and subsequent. Staple a Post-It (sticky) to pages 1 through 4 in sequential order to facilitate transcription entry. We are using this method so large returns with several pages (perhaps a will or trust) between page 2, 3, and 4 can be identified quickly by Integrated Submission and Remittance Processing (ISRP). Stapling the Post-It (sticky) to the respective page will relieve the burden of having to disassemble the returns. If page 4 is blank, no action is necessary.

  2. A tax is imposed on the lifetime transfer of property by an individual. It is imposed upon the donor, the person making the transfer. The chief purpose of the gift tax is to deter the making of gifts to avoid estate taxes. Before December 31, 1976, gift tax rates were only three-fourths of estate tax rates; however, there is now a unified rate for both taxes.

  3. A gift is a voluntary transfer of property by one to another without consideration or compensation. The tax law applies when the donor has parted with possession and control and has no power to change the disposition.

  4. Only individuals are required to file gift tax returns. If a trust, estate, partnership, or corporation makes gifts to the individual beneficiaries, partners, or stockholders, they are considered donors and may be liable for gift tax.

    Note:

    Trusts file Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, using an EIN. If Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, is filed with an EIN, continue processing.

♦Due Date - Form 709♦

  1. The due date for the 2017 Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, (without extensions) is April 17, 2018. The due date for the 2016 Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, (without extensions) is April 18, 2017. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

♦Entity Perfection - Form 709♦

  1. The entity area of the Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, consists of the following:

    • Donor's name,

    • Donor's Address, and

    • Donor's Social Security Number (SSN).

  2. On Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, underline the first 4 letters of the donors last name. Underline the address, if any of the following apply:

    1. Line 11a box is checked "No" .

    2. Line 11b box is checked "Yes" .

    3. If both boxes on Line 11a or 11b are blank.

    4. Both boxes or neither box is checked for Line 11b.

    5. Deceased donor with CCC "F" .

    6. If the "in care of" name begins with % or c/o.

    If Then
    There is any reference to Reg. 25.2511-2 (incomplete gifts) on Page 1 of Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return.
    1. Edit the return.

    2. Remove the return from the block and give to your manager to hold for Examination's review.

    An amended ("G" coded) return See IRM 3.11.106.23.2.2, Amended Returns-Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return.
    Both a PO Box and a street address are shown on the return
    1. Perfect the address.

      Note:

      PO Box will always take precedence over a street address.

    2. Underline the PO Box.

    3. Input the street address, with a TC 014.

    Joint return with 2 names on Line 1 and gift to any one donee is over $28,000 Correspond to secure separate Forms 709.
    Joint return with 2 names on Line 1 and gift to any one donee is $28,000 or less Circle out spouses name and continue processing.

    Note:

    Always circle out the "in care of" symbol ("c/o" or "%" ) if it is present with an address. Do not use the ampersand (&) and the percent symbol (%) when editing address information.

♦Donor's Residence (Domicile)♦
  1. The donors residence (domicile) is found on Page 1, Part 1, Box 5.

    Note:

    The legal residence (domicile) of the donor (Box 5) determines whether the return is a domestic or foreign (international) address return.

  2. CSPC will process all domestic domicile address returns and all foreign (international) address returns (any address that is not in 1 of the 50 states or the District of Columbia).

    Note:

    CSPC will edit the Citizenship Code.

  3. All U.S. Possessions are considered foreign (international):

    • American Samoa (AS)

    • Federated States of Micronesia (FM)

    • Guam (GU)

    • Northern Mariana Islands (MP)

    • Marshall Islands (MH)

    • Palau (PW)

    • Puerto Rico (PR)

    • Virgin Islands (U.S.) - (VI)

  4. APO/FPO addresses are not considered to be foreign (international) addresses.

    1. The Postal Service established new address requirements for APO/DPO/FPO addresses.

    2. If the old address appears (for example - APO New York, NY 091XX) it must be converted to the new state code abbreviation based on the ZIP code (for example, the previous example would be converted to APO AE 091XX).

      ZIP Code Address Abbreviation
      340XX APO/DPO/FPO AA
      090XX-098XX APO/DPO/FPO AE
      962XX-966XX APO/DPO/FPO AP
♦Amended Returns - Form 709♦
  1. The following information pertains to amended returns:

    If Then
    Return is marked "Amended" , "Revised" , "Adjusted" , "Subsequent" , "Substitute" , "Supplemental" , etc. See IRM 3.11.106.10.5.1, Amended Returns.
    Entity cannot be perfected on amended return and document is numbered Edit Action Code 320 to the return and route to Entity.
    Entity cannot be perfected on amended return and document is unnumbered after IDRS research Attach Form 4227, Intra-SC Reject or Routing Slip, and route to Entity.

♦Received Date - Form 709♦

  1. See IRM 3.11.106.13, Received Date, for information regarding received date editing.

  2. An IRS received date must be edited to all Form 709 returns whether timely or delinquent. See IRM 20.1, Penalty Handbook, for reasonable causes for delinquency.

  3. The received date is edited MMDDYY format in Part 2 of the return to the left of Lines 6 and 7. See Figure 3.11.106-8, Receive Date.

    Figure 3.11.106-8

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  4. The IRS received date must be stamped on all returns. Caution should be taken to determine when a return was filed or became processable. Determine the received date from return, envelope, or attachments. (See Figure 3.11.106-8. Received Date)

♦Penalty and Interest Code - Form 709♦

  1. Place penalty and interest code between Lines 2 and 3 of Page 1, Part 2-Tax Computation. (See Figure 3.11.106-9.) See IRM 3.11.106.7, Penalty and Interest Code, for description of codes.

    Figure 3.11.106-9

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♦Social Security Number (SSN)♦

  1. An SSN is a 9 digit number which is assigned to an individual by the Social Security Administration.

  2. An SSN is valid if it contains 9 numeric characters, all nines and/or all zeros will be considered invalid.

  3. The Donor's SSN must be present on Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return.

    If Then
    Other than 9 digits or multiple SSN's Check attachments and schedules for current SSNs.
    Missing SSN and return is unnumbered
    1. Research IDRS.

    2. If SSN not found, prepare Form 4227, Intra-SC Reject or Routing Slip, and route to Entity Control.

    Missing SSN and return is numbered
    1. Edit Action Code 320 on the return.

    2. Prepare Form 4227, Intra-SC Reject or Routing Slip and route to Entity Control.

♦Tax Period - Form 709♦

  1. Verify Schedule A, Column E, Date of gift to determine tax period.

    If Then
    Gift was made in current year
    1. Do not edit tax period to Calendar Year at top of Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return.

    2. The current tax period is automatically generated.

    Other than current tax period It must be edited in YYMM format. (See Figure 3.11.106-10.), Tax Periods
    Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, is for a tax year 197012 to 198012.

    Note:

    Internal Revenue Code required quarterly gift tax returns for these periods.

    Send returns to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation on Form 4227, Intra-SC Reject or Routing Slip.
    Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return. "Calendar Year" is blank Determine tax period ending from latest "Date of gift" listed in Schedule A.
    No dates are listed on Schedule A or attachments Process as the year indicated on the form/return.
    Multiple years are filed on 1 return
    1. Correspond using Form 3696, Correspondence Action Sheet or other approved Correspondence Action Sheet.

    2. Prepare dummy return if tax data can be determined for each year.

    3. Continue processing.

    Exception:

    Do not correspond for multiple tax years if Box B on Schedule A is checked or if there is an indication on Schedule A (or on an attachment) that the gift is a contribution to a section 529(c)(2)(B) - Qualified State Tuition Program.

    More than one return for the same tax period and the same taxpayer
    1. Staple all returns together.

    2. Code top return completely.

    3. Correspond using Form 3696, Correspondence Action Sheet or other approved Correspondence Action Sheet.

    Unable to determine tax data for multiple years Correspond. See IRM 3.11.106.11, Taxpayer Correspondence General.

    Figure 3.11.106-10

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♦Early Filed Returns - Form 709♦
  1. For early filed returns (for example, 2018 returns filed in 2018 but due on or before April 15, 2019; or 2017 returns filed in 2017 but due on or before April 17, 2018), proceed as follows:

    1. Completely code the return using current IRM procedures. Initiate any needed correspondence before suspending the return. Use Action Code 2XX for correspondence, then attach Form 4227, Intra-SC Reject or Routing Slip, and annotate Action Code 480 as secondary action required.

    2. Leave returns in batch for processing.

    If Then
    Unnumbered return
    1. Do not send the return back to taxpayer.

    2. Edit Action Code 480 on the return.

    3. Edit tax period.

    4. Attach Form 4227, Intra-SC Reject or Routing Slip, marked "Early Filed--Hold" to the return and route to Rejects.

    Unnumbered return
    (remittance only)
    1. Do not send return back to taxpayer.

    2. Remittance will be deposited to the taxpayer's account.

    3. Edit CCC "Y" for remittance returns only.

    4. Post the return as the month actually received. For example, if the return is received in April, 2017, post it as 1704.

    Numbered return
    (no remittance)
    1. Do not send return back to taxpayer.

    2. Edit Action Code 480 on the return.

    3. Edit tax period.

    4. Attach Form 4227, Intra-SC Reject or Routing Slip marked "Early Filed--Hold" to the return and route to Rejects.

    Numbered return
    (remittance only)
    1. Do not send return back to taxpayer.

    2. Remittance will be deposited to the taxpayer's account.

    3. Edit CCC "Y" for remittance returns only.

    4. Post the return as the month actually received. For example, if the return is received in April, 2017, post it as 1704.

♦Computer Condition Codes - Form 709♦

  1. Valid codes are A (2010 only), D, F, G, L, O, R, W, X, Y, 3 and 7. See IRM 3.11.106.10, Computer Condition Codes-CCCs, for description of codes.

    Reminder:

    Edit CCC "A" to identify 2010 (ONLY) revisions (with a 2010 tax period) of Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, if there are any dollar amount entries (other than zero) anywhere on Page 2, Schedule A, Parts 2 or 3, or on Page 4, Schedule C (other than Exemption amounts (only) shown in Part 2, Lines 1, 3, and/or 8). DO NOT edit CCC "A" if other than 2010. See Figure 3.11.106-11, Example of when to edit CCC "A" .

    Figure 3.11.106-11

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♦Citizenship Code - Form 709♦

  1. For Citizenship Code, follow these procedures:

    If Then
    On Page 1, Part 1, Box 5, taxpayer indicates that his legal residence is not in the U.S. and that he is not a citizen of the U.S. on Page 1, Part 1, Box 7, of the return
    1. Edit a code "1" at the right end of Line 7, Part 1, Page 1. (See Figure 3.11.106-12), Citizenship Code.

    2. Edit CCC "Y" .

    3. If blank or there is an indication the donor is an American, leave blank.

    Figure 3.11.106-12

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♦Extension of Time to File and Deferment of Payment - Form 709♦

  1. All gift tax extension information has been removed from Form 2350, Application for Extension of Time To File U.S. Income tax Return, and Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. A separate gift tax extension Form 8892, Application for Automatic Extension of Time To File Form 709 and/or Payment of Gift/Generation-Skipping Transfer Tax, will be processed beginning January 1, 2005 and is a 6 month extension. Processing instructions for the form are in, IRM 3.11.212, Applications for Extension of Time to File, Returns and Documents Analysis.

  2. The following information pertains to extension of time to file and deferment of payment:

    If Then
    Timely filed return with attachments (Balance due returns only)
    1. Any timely filed return with attachments requesting extension of time to pay under IRC Section 6161 which has not been approved will be processed as a tentatively allowed deferment.

    2. Annotate top of return, "Hardship Extension Tentatively Allowed" and requested extended date.

    3. Forward extension request to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.

    Untimely filed return (Balance due returns only)
    1. Any untimely filed hardship requests will also be routed to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.

    2. Accept and note on return "Hardship Tentatively Disallowed, Withhold Issuance of Notice to Taxpayer" .

♦Consent Information/Consent of Spouse♦

  1. The following information pertains to the spouses SSN:

    If Then
    Consent is given to split gifts
    1. The spouses SSN must be present.

    2. (The return will be coded with Consent Code "1" .)

    Spouse's SSN is missing
    1. Search attachments, if not found, research IDRS.

    2. See IRM 3.11.106.23.10, Consent Information/Consent of Spouse, for further explanation of Consent Codes.

    Primary and secondary SSNs are identical Check through attachments and schedules. If present, enter the correct SSN.
    Unable to locate within attached documents Research for the SSN, using local Submission Processing Center procedures.
    No record of spouses SSN is found in any taxpayer directory (numbered return)
    1. Edit Action Code 320 on the return.

    2. Prepare Form 4227, Intra-SC Reject or Routing Slip, and route to Entity Control.

  2. The following pertains to consent of spouse:

    1. IRC Section 2513 states that if husband and wife consent, all gifts made to third parties will, for purposes of gift tax, be considered as made one-half by each provided that the husband and wife are either U.S. citizens or U.S. residents.

    2. The consent is effective only for those gifts made while the husband and wife are actually married.

  3. If there is any indication of taxpayer intent to split gifts on the return, allow the consent.

  4. Any of the following conditions constitute a valid consent:

    1. The taxpayer/spouse checks "Yes" on Page 1, Part 1, Line 12.

    2. The spouses signature is present on Page 1, Part 1, Line 18.

    3. A timely signed jurat (a signed statement containing the same language found in Line 18) from the spouse is received.

    4. The consent of the husband is indicated (signified) on the wife's return and the wife's consent is signified on the husband's return.

    5. The consent of each spouse is signified on his or her own return.

    6. The consents of both spouses are signified on one of the returns.

    7. If Page 2, Part 1, 2, or 3, column G (Schedule A Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return) indicates Gifts by Spouse Information, consider this a valid consent by spouse.

    If Then
    Consent Code is "1" and spouses SSN is missing, incomplete, or not a valid SSN
    1. Search attachments for spouses SSN.

    2. If not found, research IDRS.

    No consent to split Edit Consent Code "0" .
    The taxpayer/spouse checked "No" on Line 12, but signed the consent
    1. Allow the consent.

    2. Edit Consent Code "1" .

    If Then
    Once you have determined that a valid consent has been made Edit Consent Code "1" in the left margin, on Page 1, Part 1, Line 18. (See Figure 3.11.106-13, Consent Code).
    Once you have determined that a valid consent has not been made Edit "0" and "X" Line 14 if present.

    Note:

    The spouses return may be in-house, therefore, do not correspond for spouses signature.

    Figure 3.11.106-13

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♦Tax Computation - Page 1, Part 2, Form 709♦

  1. Effective January 1, 2004, the Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, program was modified to accept dollars-only transcription for all lines on Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, except for the following, which must be entered in dollars and cents:

    • Line 17 - Total Tax Amount

    • Line 18 - Prepaid Taxes

    • Line 19 - Balance Due

    • Line 20 - Refunded Amount

  2. Any lines in (1) above that have a vertical bold line, decimal, dash, or denominations clearly indicated will be treated as dollars and cents. No further editing is required.

  3. If not clearly indicated, edit dollars and cents.

  4. See Exhibit 3.11.106-4 Form 709, United States Gift (and generation skipping Transfer) Tax Return for a display of Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, transcription lines (including Schedule A).

  5. Line 1 - Taxable gifts Current Period Amount. This amount is carried forward from Schedule A, Part 4, Line 11. Accept taxpayer's figures.

  6. Line 2 - Taxable gifts Prior Period Amount. This amount is carried forward from Schedule B, Line 3. Accept taxpayer's figures.

  7. Line 3 - Total taxable gifts. Accept taxpayer's figures.

  8. Line 4 - Total tax taxpayer (current). Accept taxpayer's figures.

  9. Line 5 - Total tax taxpayer (prior). Accept taxpayer's figures.

  10. Line 6 - Balance. Accept taxpayer's figures.

  11. Line 7 - Restored Exclusion Amount. Accept taxpayer's figures. If blank and there is no amount on Schedule C, line 5, edit the appropriate amount from the table below in (13)a.

  12. Line 8 - Total tax settlement gifts. Accept taxpayer's figures.

  13. Line 9 - Balance. Subtract line 8 from line 7. Accept taxpayer's figures. If blank, follow through with the math from line 7 edit.

    1. The following table contains information for the unified/applicable credit and exemption equivalent for citizens and residents (Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return):

    Year Applicable Credit Amount Basic Exclusion Amount
    1987 thru 1997 $192,800 $600,000
    1998 $202,050 $625,000
    1999 $211,300 $650,000
    2000 and 2001 $220,550 $675,000
    2002 thru 2009 $345,800 $1,000,000
    2010 $330,800 $1,000,000
    2011 $1,730,800 $5,000,000
    2012 $1,772,800 $5,120,000
    2013 $2,045,800 $5,250,000
    2014 $2,081,800 $5,340,000
    2015 $2,117,800 $5,430,000
    2016 $2,125,800 $5,450,000
    2017 $2,141,800 $5,490,000
  14. Line 10 - Adjustment to unified/applicable credit. Accept taxpayer's figures.

  15. Line 11 - Balance. Subtract line 10 from line 9. Accept taxpayer's figures. If blank, follow through with the math from lines 7 through 10.

  16. Line 12 - Applicable credit. Accept taxpayer's figures.

  17. Line 13 - Credit for foreign gift taxes. Accept taxpayer's figures.

  18. Line 14 - Total credits. Accept taxpayer's figures.

  19. Line 15 - Balance. Subtract line 14 from line 6. Accept taxpayer's figures.

  20. Line 16 - Generation-Skipping Transfer Tax (GST). Accept taxpayer's figures.

  21. Line 17 - Total tax. Accept taxpayer's figures.

  22. Line 18 - Prior payments. Accept taxpayer's figures.

  23. Line 19 - Balance due. Accept taxpayer's figures.

    Note:

    Check non-remit Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, for presence of a remittance (i.e., check attached) before releasing to Numbering.

  24. Line 20 - Overpayment. Accept taxpayer's figures.

♦Green-Rocker Amount - Line 19♦
  1. The purpose of green rocker Tax Due amounts is to show that money was received with the return. If the amount contains penalty and/or interest:

    1. X-out the rocker amount.

    2. Delete the penalty and/or interest.

    3. Edit the Balance Due to the left of the original entry.

    4. Edit a received date if one is not present.

    Note:

    See Figure 3.11.106-9, Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return (Prior Year - 2002 through 2004 Revisions)

♦Schedule A - Form 709♦

  1. If more than one Schedule A on return, staple all Schedules A together and continue processing.

    Note:

    Do not math verify Schedule A.

♦IRC Section 529(c)(2)(B) - Qualified State Tuition Programs♦
  1. Taxpayers are allowed a contribution to a qualified state tuition plan on behalf of a designated beneficiary. If the taxpayer's total contributions to a qualified state tuition program on behalf of any individual beneficiary exceeded $14,000, then for purposes of the annual exclusion the taxpayer may elect under IRC Section 529(c)(2)(B) to treat up to $70,000 of his/her total contributions as having been made ratably over a 5 year period beginning in 2003. These are considered gifts of a present interest.

  2. The following information pertains to IRC Section 529(c)(2)(B) - Qualified State Tuition Programs:

    If Then
    The taxpayer checked box B, Schedule A, and entered the amounts of gifts on Schedule A;
    • or if there is an indication on Schedule A (or an attachment) that the gift is a contribution to a IRC Section 529(c)(2)(B) - Qualified State Tuition Program,

    • or other similar statement such as state tuition plan or college tuition

    1. Accept taxpayer's figures.

    2. ERS/Rejects will compute the allowable tax computation.

♦Donor's Adjusted Basis of Gift♦
  1. The following information pertains to Donor's adjusted basis of gift:

    If Then
    There is more than one entry anywhere in Column D (Donor's adjusted basis of gift) Edit the amount of $1.00 to top middle portion of Page 2 on all returns, except amended returns. (See Figure 3.11.106-14), Number of Donees
    Blank, zero, "see attached" , or "etc." is notated with no amounts in Column D Do not edit $1.00 to the top of Column D, Part 1, Page 2.

    Figure 3.11.106-14

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♦Number of Donees Page 1, Part 1, Line 10♦
  1. Verify that there is an entry. A donee can be: an individual, a charitable organization, or the beneficiaries of a trust.

  2. Each individual to whom a gift is directly given is a donee. It does not matter how many times a gift is given; the individual accounts for only one donee.

  3. Trust - A trust can be set up for one or a number of beneficiaries. They can be individuals or charitable organizations.

    Note:

    The number of beneficiaries of the trust determines the number of donees, not the existence or number of the trusts.

  4. Follow these procedures:

    If Then
    Page 1, Part 1, Line 10 is blank or zero
    1. Enter the correct number of donees from Schedule A, Column B, or from an attachment with Schedule A information or allow the number of donees necessary to offset the annual exclusion being claimed. by dividing the amount on Schedule A, Line 2 by the appropriate annual exclusion amount.

      • The annual exclusion is $14,000 for 2013 through 2017;

      • $13,000 for 2009 through 2012;

      • $12,000 for 2006 through 2008;

      • $11,000 for 2002 through 2005;

      • and $10,000 for 2001 and prior returns.

    2. Leave an action trail on Page 1 (left side between Lines 11-20) stating: "Schedule A" or "Line 2" .

    Page 1, Part 1, Line 10 is shown as alpha and numeric Edit by circling out the alpha; leaving the numeric.
    Page 3, Part 4, Line 2 is blank, zero, or missing "X" out the number of donees. (See Figure 3.11.106-14.), Number of Donees.

    Note:

    The spouses return may be in-house, therefore, do not correspond.

♦Foreign Spouse Indicator - Form 709♦
  1. Edit the Foreign Spouse Indicator on Page 2, Schedule A, left margin. Edit a "1" for foreign spouse and leave blank for domestic spouse. (See Exhibit 3.11.106-4.), Form 709, United States Gift (and generation skipping Transfer) Tax Return.

    If Then
    There is a foreign spouse present

    Note:

    This information is only identifiable to the TE by a foreign exclusion amount included on Schedule A, Line 2,

    .
    1. Verify that the amount on Page 3, Part 4, Line 2 includes the $149,000 (for tax year 2017):

      • $148,000 for 2016

      • $147,000 fir 2015

      • $145,000 for 2014;

      • $143,000 for 2013;

      • $139,000 for 2012;

      • $136,000 for 2011;

      • $134,000 for 2010;

      • $133,000 for 2009;

      • $128,000 for 2008;

      • $125,000 for 2007;

      • $120,000 for 2006;

      • $117,000 for 2005;

      • $114,000 for 2004,

      • $112,000 for 2003,

      • $110,000 for 2002,

      • $106,000 for 2001,

      • $103,000 for 2000,

      • $101,000 for 1999

      • and $100,000 for 1998.

    2. The annual exclusion for a foreign spouse cannot exceed $148,000 (for tax year 2016) or $147,000 (for tax year 2015).

    The foreign spouse indicator is not present but Line 2 includes the $148,000 (2016) or $147,000 (2015) exclusion
    1. Edit a "1" .

    2. Do not correspond.

♦Form 709 with Deceased Donor♦

  1. Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, with deceased donors will be processed as a regular return.

    If Then
    The donor died in the year the gift was made, indicating that this is a final return Edit CCC "F" .
    Page 1, Part 1, Line 8 block is checked and the donor died in the year the gift was made Edit a "1" next to the DOD block. (See Figure 3.11.106-15, Deceased Donor.
    The donor died after the tax period (i.e., a gift was given in February 2016 and the donor died in January 2017)
    1. Do not enter CCC "F" .

    2. Do not enter deceased donor code "1" .

    Page 1, Part 1, Line 8 block is checked
    1. DOD must also be present.

    2. If not present, research the return and attachments.

    DOD cannot be found
    1. Research IDRS for DOD.

    2. If DOD not found, route to Entity Control on Form 4227, Intra-SC Reject or Routing Slip.

    Figure 3.11.106-15

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♦Unsigned Forms 709♦

  1. An original signature is required on all Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return.

  2. Process unsigned returns as follows:

    If Then
    Unnumbered, Numbered or Balance Due Returns
    1. Correspond for signature using Form 3696, Correspondence Action Sheet, or Form 3696-A, IDRS Correspondence Action Sheet, or other in-house letter.

    2. Edit Action Code 225 or AC 226 to correspond for signature.

    Note:

    Numbered returns should remain in block of work.

    Replies to Correspondence When signed jurat (declaration) is received, attach it to the return.
    The return is photocopied with a photocopied signature (not original/ink signature)
    1. Edit Action Code 225 or Action Code 226 if corresponding for signature only.

    2. Attach a Letter 3463C requesting an original/ink signature.

      Note:

      Leave a correspondence action trail in lower left hand margin indicating Letter 3463C, Missing Information to process EO Return letter sent.

    3. Leave in batch and continue processing.

♦Processing Form 709-A, United States Short Form Gift Tax♦

  1. Form 709-A, United States Short Form Gift Tax Return, was obsoleted effective October 2003.

    1. If Form a 709-A, United States Short Form Gift Tax Return is received, send back to taxpayer on Form 6800, Request for Missing Information or Papers To Complete Your Tax Return or Form 8038-CP, Credit for Qualified Bond Allowed to Issuer or other appropriate letter, and request that the taxpayer file on Form 709.

    2. If a Form 709-A is received from another function (i.e., Compliance, 6020(b), etc.), send back to originator stating that Form 709-A were obsolete effective October 2003.

♦Processing Form 706-GS(D), Generation-Skipping Transfer Tax For Distribution♦

  1. The following information pertains to Form 706-GS(D),Generation-Skipping Transfer Tax Return for Distribution.

♦Background for Form 706-GS(D) Generation-skipping Transfer Tax Return for Distributions

  1. As a result of the Tax Reform Act of 1986, Public Law 99-514, IRC Section 2601-2663, anyone who received a taxable distribution from a trust made after October 22, 1986, must file a Form 706-GS(D)Generation-Skipping Transfer Tax Return for Distribution. Under certain circumstances, the tax applies to distributions made after September 25, 1985. This tax is paid by the distributee.

  2. Trustees are required to report generation-skipping distributions on Form 706-GS(D-1), Generation-Skipping Transfer Tax Return for Distribution, Copy B is sent to the distributee to use in preparing a Form 706-GS(D), Generation-Skipping Transfer Tax Return for Distribution.

  3. A Form 706-GS(D), Generation-Skipping Transfer Tax Return for Distribution, and Form 706-GS(D-1), Generation-Skipping Transfer Tax Return for Distribution. Copy A must be filed and processed at CSPC.

  4. All taxable generation-skipping distributions received during the year will be reported in Part II of a Form 706-GS(D), Generation-Skipping Transfer Tax Return for Distribution. The transferee will receive a Form 706-GS(D-1), Notification of Distribution from a Generation-Skipping Transfer, copy of each trust from which a taxable distribution is received. The Form D-1, Part II, Column f will provide the tentative transfer amount since this is calculated with trust information.

♦Processing Background for Form 706-GS(D)♦

  1. All RemittanceForm 706-GS(D), Generation-Skipping Transfer Tax Return for Distribution, will be assigned document locator numbers and blocked before sending to Document Perfection.

  2. No RemittanceForm 706-GS(D), Generation-Skipping Transfer Tax Return for Distribution, will be numbered after examination.

  3. Perfected returns will be forwarded through normal BMF pipeline processing. These returns will be numbered as follows:

    • Tax Class - 5

    • Doc Code - 59

    • Blocking Series - 000-499

    • MFT 78

    • Abstract - 217

    • Program Code - 12403

♦Filing Requirements - Form 706-GS(D)♦

  1. Form 706-GS(D), Generation-Skipping Transfer Tax Return for Distribution, returns are filed at CSPC.

  2. The generation-skipping transfer tax on distributions is computed and filed on a calendar year basis, regardless of the income tax accounting period.

♦Due Date - Form 706-GS(D)♦

  1. Form 706-GS(D), Notification of Distribution from a Generation Skipping Transfer, must be filed on or after January 1 but not later than April 15 of the year following the year in which the distributions were made.

    Exception:

    The return due date for calendar year 2010 returns is September 19, 2011, as mandated in the Extender's Legislation (PL 111-312).

♦Early Filed Returns - Form 706-GS(D)♦

  1. The following information pertains to early filed returns:

    If Then
    Unnumbered returns
    1. Do not send return back to taxpayer.

    2. Hold return in suspense until January 1 of the following year.

    3. Send letter notifying taxpayer of action taken.

    Numbered returns
    1. Do not send return back to taxpayer.

    2. Remittance will be deposited to the taxpayer's account and the return will be held in suspense until January of the following year.

    3. Send letter notifying taxpayer of action taken.

    A numbered return and information for preparation of dummy return(s) is available Edit CCC "U" and route to Rejects function.
    Information is not available Edit CCC "U" and correspond for information.

♦Penalties and Interest - Form 706-GS(D)♦

  1. See IRM 3.11.106.7, Penalty and Interest (P&I) Code.

♦Extensions - Form 706-GS(D)♦

  1. An extension of time may be granted for filing Form 706-GS(D),Generation-Skipping Transfer Tax Return for Distribution and/or Form 706-GS(T), Generation Skipping Transfer Tax Return for terminations.

  2. The extension is requested using Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns.

  3. In no event will an extension of more than 6 months be granted to an applicant living in the United States.

♦Signature - Form 706-GS(D)♦

  1. Form 706-GS(D),Generation-Skipping Transfer Tax Return for Distribution, must be signed by the distributee whose name appears on Part 1, Line 1, or by an authorized representative.

  2. Use Letter 501CS, Correspondex Letter to request missing signature.

♦Unprocessable Document - Form 706-GS(D)♦

  1. Conditions which cause the document to be unprocessable are:

    1. Name illegible or so incomplete that the name control cannot be determined.

    2. SSN is other than 9 valid digits.

    3. Taxpayer indicates on document or attachments that the document represents liability for more than one tax period or more than one type of tax.

    4. Tax data entries on documents are incomplete, illegible or contradictory so that the tax liability cannot be determined.

    5. Any conditions that may be set forth as unprocessable in specific subsections for that document.

  2. Perfect all documents if possible. Use all available aids (including IDRS) to perfect the document.

  3. Perfecting liability for more than one tax period:

    If Then
    A remittance return and information for preparation of dummy return(s) is available Edit CCC "U" and route to Rejects function for the preparation of a dummy return.
    Information is not available Edit CCC "U" and correspond for information.
    An unnumbered return and information for preparation of dummy return(s) is available
    1. Prepare dummy returns.

    2. If information is not available, correspond.

    Document is unnumbered Attach Form 3696, Correspondence Action Sheet, to "FACE" of the withdrawn document and route to the Correspondence function.
    A no-remittance document is unprocessable because the name is illegible or the SSN is missing or invalid
    1. Edit CCC "U" to the return for subsequent correction by Entity Control.

    2. Use the most expeditious means to resolve the problem (routing sequence to be determined by the Director).

    No reply to a request for additional information on an unprocessable, incomplete, or invalid return For Form 706-GS(D), Generation-Skipping Transfer Tax Return for Distribution, use CCC "3" . Enter this code when no reply is received for taxpayer correspondence.
♦Special Unprocessable Documents - Form 706-GS(D)♦
  1. Generation-Skipping Transfer (GST) Tax Returns for Distributions must contain all the essential information to determine the tax due:

    1. A GST for Distributions must contain the name of the skip-person distributee, Social Security Number (SSN) of individual distributee, EIN of trust distributee, name and title of person filing.

    2. These returns will contain tentative taxes, allowable expenses, gross generation-skipping transfer taxes, payments and net GST.

    3. These items must be shown in sufficient detail to permit the accurate assessment of tax.

  2. A "tentative" generation-skipping tax return on the appropriate form showing only the taxpayer's name, address, and estimated amount of tax due is not considered a complete return because it does not contain a signature necessary for the distribution of estates, etc. Such returns are considered invalid, "no-entry returns" , and are treated as unprocessable.

  3. A generation-skipping tax return containing only the taxpayer's name and reference to various constitutional provisions which are said to excuse filing a return are considered invalid, "no-entry returns" , and are treated as unprocessable.

  4. A simple statement of gross/net estate/total tax constitutes an invalid, "no-entry return" , and are treated as unprocessable.

  5. If a return is blank, except for the heading and the signature, it is considered an invalid, "no-entry return" , and is treated as unprocessable.

  6. If an unprocessable return (as indicated above) is received, send it back to the preparer/trustee/distributee and request that the return be completed with the necessary information and mailed back to CSPC for processing. Leave the return in the block if it is a non-RPS with remittance or delinquent with balance due. If it is a protest case, see (8) below.

  7. If an unprocessable return (as indicated above) is received, but it has already been numbered, attach Form 3696, Correspondence Action Sheet, enter CCC "U" , and leave the document in the block.

  8. If an unprocessable return (as indicated above) contains a protest statement, or an indication that the tax return is in protest, prepare Form 4227, Intra-SC Reject or Routing Slip, and refer to Criminal Investigation.

    Note:

    Consider this a frivolous return.

  9. In general, if correspondence is not needed for unprocessable items, the statute begins when IRS receives the return. If correspondence is needed, the statute begins when the reply is received. When additional information is requested, and no answer is received, generation-skipping transfer tax returns will be processed as incomplete using the best available information.

♦Preliminary Examination - Form 706-GS(D)♦

  1. Entity - Follow instructions in IRM 3.13.2, BMF Account Numbers, for more in-depth instructions.

    1. The primary name line must contain the name of the skip person distributee and must be edited to a maximum of 35 positions.

    2. Subsequent name lines (sort name/in care of) will consist of the name of the trust.

  2. Name control - The name control consists of the first 4 significant characters of the surname. Alphas, numerics, and hyphens are the only valid characters. Blanks are valid only at the end of the name control. Underline the name control.

  3. Address - Perfect the address in the following instances:

    If Then
    Both a PO Box and a street address are shown
    1. Perfect the address in Part 1, Line 2b.

    2. Input TC 014.

    The address contains information other than a PO Box or street address Underline the complete address including building names, floor numbers, suites, etc.
    "In care of" (%) symbol Always circle the symbol if it is shown with an address.
    There is a major city and no ZIP code See Exhibit 3.11.106-22, State Codes and Zip Codes for determining ZIP code.
    The major city code is present The state code must be blank.
    SSN of individual distributee (Part 1, Line 1b and EIN of trust distributee (Part 1, Line 1c) is received
    1. A Form 706-GS(D, Generation-Skipping Transfer Tax Return for Distribution,) must be received with Part 1, Line 1b or Line 1c filled out.

    2. Part 1, Line 1b of the Form 706-GS(D), Generation-Skipping Transfer Tax Return for Distribution, is used for skip person distributees who are individuals.

    3. The distributee's Social Security Number (SSN) should be in Part 1, Line 1b.

    The skip person's distributee is a trust
    1. The trust's Employer Identification Number (EIN) should be in Part 1, Line 1c.

    2. For those returns using EIN, no TIN type will be present.

    3. For those returns using an SSN (in Part 1, Line 1c), a zero (0) will be edited after the number.

    4. Nine numeric characters must be present; all nines or zeros will be invalid.

    Other than 9 digits, multiple EINs, missing EIN or in SSN format
    1. Check any attachments, schedules and the return for the EIN.

    2. If found, enter in the appropriate area.

    The return is numbered and an EIN is not found or cannot be determined
    1. On Form 4227, Intra-SC Reject or Routing Slip, edit CCC U to the Form 706-GS(D), Generation-Skipping Transfer Tax Return for Distribution, return and route to Entity.

    2. Continue perfection.

    Unnumbered, and no EIN is found or the correct EIN cannot be determined
    1. Withdraw the return and route to Entity.

    2. When the return is sent back from Entity with an EIN, continue processing.

    SSN or EIN is illegible, missing, etc. Follow the guidelines above to secure a valid number.
    Amended Returns
    1. Any adjustment to an original return which is indicated by either a corrected return or in letter form will be reviewed by the District Examination Division.

    2. Consider returns marked, "Amended" , "GST" , "Supplemental" , "Tentative" , etc., as amended returns.

    3. Edit CCC "G" .

    4. Underline name control and verify EIN or SSN.

    5. Verify IRS received date.

    6. Do not perfect address and do not math verify.

    7. Verify signature.

    IRS received date
    1. The IRS received date must appear on every Form 706-GS(D),Generation-Skipping Transfer Tax Return for Distribution.

    2. If the IRS received date is not stamped on the first page, enter it in MMDDYY format. See IRM 3.11.106.13, Received Date.

    No response is received or the correspondence undeliverable
    1. Use CCC "3" - Enter this code when no reply is received for taxpayer correspondence to suppress credit interest from being generated.

    2. Do not enter the CCC "3" in the following situations:

      1. The original IRS received date is prior to January 1, 1992.

      2. The correspondence reply was received prior to the due date of the return, and

      3. The correspondence was required because of an IRS processing error.

♦Computer Condition Codes (CCCs) - Form 706-GS(D)♦

  1. The valid condition codes for Form 706-GS(D),Generation-Skipping Transfer Tax Return for Distribution, are D, F, G, O, R, U, W, X, 3 and 7.

  2. Edit the CCCs in the upper left corner of the return.

  3. If the return is coded incorrectly, determine the correct code and enter it on the return.

♦CCC "D" - Reasonable Cause For Failure to Pay Taxes Timely♦
  1. See IRM 3.11.106.10.3, Computer Condition Codes.

♦CCC "F" - Final Return♦
  1. If the return or attachment(s) indicates this is the final return from the taxpayer by such statements as "final" , etc., edit CCC "F" .

♦CCC "G" - Amended Return♦
  1. The following information pertains to CCC "G" :

    If Then
    Returns are marked "Amended" , "Corrected" , "Superseding" , etc. See IRM 3.11.106.10.5.1, Amended Returns.
    The original does not reach the BMF within a specified time, after the amended return has posted The computer will print out a notice stating that an amended return is on file without an original.
♦CCC "R" - Reasonable Cause for Delinquency♦
  1. See IRM 3.11.106.10.8, CCC R - Reasonable Cause for Delinquency.

♦CCC "U" - Unprocessable Document♦
  1. The following information pertains to CCC "U" :

    If Then
    A numbered return cannot be perfected for input to the system based on information present on the return
    1. Edit CCC "U" .

    2. To obtain needed information, use all available means, including research and/or referral to Entity Control.

    3. Continue perfecting the document to the extent possible, as if it were processable.

    Document is illegible, incomplete, contradictory, or cannot be perfected Edit CCC "U" .
    Information is not available on the document or attachment that is necessary for processing Edit CCC "U" .
    Return is misblocked - not the appropriate DLN Edit CCC "U" .
    Numbered return is identified for Statute Control Edit CCC "U" .
    Taxpayer indicates that the liability on the return is for more than one tax period or more than one type of tax Edit CCC "U" .
    EIN is missing, or other than 9 valid digits Edit CCC "U" .
    Tax period is prior to 9012 on Form 706-GS(D), Generation-Skipping Transfer Tax Return for Distribution.
    1. Edit CCC "U" .

    2. Route to NMF for processing.

♦CCC "W" - Cleared by Statute♦
  1. Edit CCC "W" when the return has been stamped "Cleared by Statute" .

♦CCC "X" - Return Settlement Frozen♦
  1. Edit CCC "X" if taxpayer indicates that excess remittance with return or overpayment be applied to another account.

♦CCC "3" - No Reply to Correspondence - Suppress Credit Interest♦
  1. Enter CCC "3" when no reply is received for correspondence sent to the taxpayer to suppress credit interest from being generated.

♦Processing Form 706-GS(D-1), Notification of Distribution From a Generation-Skipping Trust (INFORMATION RETURN ONLY)♦

  1. Form 706-GS(D-1), Notification of Distribution from a Generation-Skipping Transfer, Notification of Distribution From a Generation-Skipping Trust, is a 2 part form consisting of Copy A and Copy B.

    1. A Form 706-GS(D-1), Notification of Distribution from a Generation-Skipping Transfer, Copy A is used by a trustee to report to the Internal Revenue Service distributions from a trust which are subject to the generation-skipping transfer tax,

    2. Form 706-GS(D-1), Notification of Distribution from a Generation-Skipping Transfer, Copy B is used by a trustee to report distributions to the distributee from a trust which are subject to the generation-skipping transfer tax. The skip person distributee uses information on Form 706-GS(D-1), Notification of Distribution from a Generation-Skipping Transfer Copy B to complete Form 706-GS(D).

  2. If Form 706-GS(D-1), Notification of Distribution from a Generation-Skipping Transfer, Copy A or B is attached to Form 706-GS(D), Generation-Skipping Transfer Tax Return For Distributions, leave attached.

  3. If Form 706-GS(D-1), Notification of Distribution from a Generation-Skipping Transfer, Copy A or B is received without a Form 706-GS(D), route it to Files.

♦Processing Form 706-GS(T), Generation-Skipping Transfer Tax Return For Terminations♦

  1. The following information pertains to Form 706-GS(T), Generation-Skipping Transfer Tax Return for Terminations.

♦Background for Form 706-GS(T)♦

  1. As a result of Tax Reform Act of 1986, Public Law 99-514, IRC Section 2601-2663"in the case of a taxable termination or a direct skip from a trust, the tax shall be paid by the trustee" . The trustee is required to file this form on a calendar year basis to report taxable terminations from a single trust. Since certain partial terminations can be taxable events, there may be multiple terminations from a single trust during the year. In this event, there may be multiple terminations from a single trust during the year and the trustee will file separate Schedule As.

  2. Schedule A will be used to report information about each termination and calculate the tax for each separate Schedule A if they have the same inclusion ratio. Terminations with different inclusion ratios must be reported on separate schedules.

  3. A Schedule B(1) or B(2) will be filed for every Schedule A for which there are corresponding deductions. On Schedule B(1) they must be prorated in the case of partial terminations. On Schedule B(2), taxpayers will report items related solely to termination reported on any given Schedule A.

♦Processing Background for Form 706-GS(T)♦

  1. All remittanceForm 706-GS(T), Generation-Skipping Transfer Tax Return for Terminations, will be assigned DLNs and blocked before sending to Document Perfection. No remittance Form 706-GS(T), Generation-Skipping Transfer Tax Return for Terminations will be numbered after examination.

  2. Perfected returns will be forwarded through normal BMF pipeline processing. These returns will be numbered as follows:

    • Tax Class - 5

    • Doc Code - 29

    • Blocking Series - 500-999

    • MFT 77

    • Abstract - 218

    • Program Code - 12404

♦Filing Requirements - Form 706-GS(T)♦

  1. Form 706-GS(T), Generation-Skipping Transfer Tax Return for Terminations, returns are filed at CSPC.

  2. The generation-skipping transfer tax on terminations is computed and filed on a calendar year basis.

♦Due Date - Form 706-GS(T)♦

  1. The Form 706-GS(T), Generation-Skipping Transfer Tax Return for Terminations, must be filed on or after January 1st and not later than April 15th of the year following the termination.

    Exception:

    The return due date for calendar year 2010 returns is September 19, 2011, as mandated in the Extender's Legislation (PL 111-312).

♦Penalty and Interest - Form 706-GS(T)♦

  1. The following information pertains to Penalty and Interest:

    If Then
    The return reflects a precomputed delinquency penalty and/or interest and the return is received ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Enter Code "1" .
    Only interest is shown Edit "CCC R" and the P and I Code "1" .
    Only penalty is shown Enter P and I Code "1" .
    Return has precomputed penalty or interest, but no IRS received date Determine the received date and enter it.
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    1. Enter P and I Code "1" .

    2. Enter P and I Code in the upper right margin of Form 706-GS(T), Generation-Skipping Transfer Tax Return for Terminations.

    It is a precomputed penalty, other than delinquency or failure to pay (i.e., IRC Section 6660 penalty) that is shown on the return Prepare Form 3465, Adjustment Request, as instructed. Route the return to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.

♦Extensions - Form 706-GS(T)♦

  1. A request for extension of time to file Form 706-GS(T), Generation-Skipping Transfer Tax Return for Terminations, should be requested on Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information and Other Returns.

  2. Extension of time to file will be approved if the request is filed on or before the due date of the return.

  3. The extended due date for filing the return may not be more than 6 months for a taxpayer living in the United States.

♦Signature - Form 706-GS(T)♦

  1. Form 706-GS(T),Generation-Skipping Transfer Tax Return for Terminations, must be signed by the trustee or by an authorized representative. Use Letter 501CS, Correspondex Letter to request missing signature.

♦Unprocessable Documents - Form 706-GS(T)♦

  1. Conditions which cause the document to be unprocessable:

    1. Name illegible or so incomplete that the name control cannot be determined.

    2. SSN is other than 9 valid digits.

    3. Taxpayer indicates on document or attachments that the document represents liability for more than one tax period or more than one type of tax.

    4. Tax data entries on documents are incomplete, illegible or so contradictory that the tax liability cannot be determined.

    5. Any conditions that may be set forth as unprocessable in specific subsections for that document.

  2. Perfect all documents, if possible. Use all available aids (including IDRS) to perfect the document.

  3. Perfecting liability for more than one tax period:

    If Then
    A remittance return and information for preparation of dummy return(s) is avai