IRS Logo

3.11.154  Unemployment Tax Returns (Cont. 2)

3.11.154.6 
Form 940 and Form 940-PR - Code and Edit Return Procedures

3.11.154.6.5 
Part 4, Line 12 through 15 - Determine Your FUTA Tax and Balance Due or Overpayment

3.11.154.6.5.2  (01-01-2017)
Line 13 - FUTA Tax Deposit

  1. The amount in Line 13 should be the total amount of FUTA tax deposited for the year of the return. This amount should also include any credit elect applied from a prior tax year.

    IF THEN
    Line 13 is blank (zero, dash, none, illegible, etc), Search return and attachments for the Line information:
    • If Line 13 can be perfected from return or attachment, enter amount to Line 13.

    • If Line 13 cannot be perfected from return or attachment, leave blank.

    The entry is a negative number, Enter an asterisk (*) as closely as possible to the left of the entry on Line 13.
  2. If the return shows excess credit (remittance or FTD) and the taxpayer requests the credit tp be transferred to another type of tax do the following:

    • Edit CCC “X”.

    • Prepare Form 3465. (Part 4, Line 13 (2006 and Subsequent)) or (Part II, Line 8 (2005 and prior)).

    • Photocopy related materials and attach to Form 3465.

    • Route to BMF Accounts Management.

3.11.154.6.5.3  (01-01-2017)
Line 14 - Balance Due

  1. If any amounts are or are not present on lines 12, 13, or 14, do the following:

    IF THEN
    Line 12, Line 13, and Line 14 are the same amount, Edit an asterisk (*) to the left of the entry on line 13.
    Line 12 is more than line 13, and line 14 is blank or illegible,
    1. Perfect line 14 by subtracting line 13 from line 12.

    2. If line 13 is blank, dash, zero, None, etc., edit line 12 to line 14.

    The return shows an FTD Penalty, Subtract the FTD penalty amount from the Line 14 balance due amount.

3.11.154.6.5.4  (01-01-2017)
Line 15 - Overpayment

  1. If an amount is or is not present on line 15, do the following:

    IF THEN
    Line 13 is more than Line 12, The difference should be entered on Line 15.
    Line 15 is zero (0), blank, dash, None, N/A, or illegible, and line 13 is more than line 12,
    1. Subtract line 13 from line 12.

    2. Edit the difference to line 15.

    The return shows a FTD Penalty, Add the FTD penalty to the overpayment.

3.11.154.6.6  (01-01-2017)
Part 5, Line 16 through Line 17 - Reporting of Quarterly Federal Unemployment Tax Liability (ROFTL)

  1. Part 5 of Form 940 and Form 940-PR consists of Lines 16a through 16d, the Record of Tax Liability (ROFTL) quarterly liability amounts, and Line 17, "Total Tax Liability for the Year" amount. The quarterly amounts on Lines 16a through Line 16d are transcribed, and Line 17 is generated by the system (e.g., not transcribed).

    IF AND THEN
    The SIC 1 has been edited,   No further editing is necessary to Part 5, Form 940 or Form 940-PR.
    Line 16d (fourth quarter is blank, Line 12 is larger than the sum of Lines 16a through 16c, Edit the difference between Line 12 and the sum of Lines 16a through 16c to Line 16d.
    The taxpayer entered a negative figure in any quarter of the liability fields on Lines 16a through 16d,   Enter SIC "1" and see IRM 3.11.154.6.6.1, Schedule Indicator Code (SIC).
    The taxpayer entered FUTA wages on Lines 16a through 16d and/or the Total FUTA Wages on Line 17, Line 7 (Rev 2012 - 2016 or 2006 - 2010) or Line 7a, (Rev 2011) is the same amount as Line 17, (or the total of Lines 16a through 16d), and

    Line 12 is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ,
    1. For Tax Year 2016 - 2012 or 2010 - 2006:

      • Multiply each wage amount on Line(s) 16a through 16d by .006 (.008 for TY2010 - 2006).

      • Enter an asterisk (*) to the left of the taxpayer entry and enter the corrected figure to the left of the asterisk (*). Figure 3.11.154-9, U.S. Possession Zip Codes.

    2. Tax Year 2011:

      • Enter an asterisk (*) to the left of the taxpayer entry on Line 16a and Line 16b. Multiply the wage amounts on Line 16a and Line 16b by .008.

      • Enter an asterisk (*) to the left of the taxpayer entry on Line 16c and Line 16d. Multiply those wage amounts on Line 16c and Line 16d by .006. See Figure 3.11.154-10, Foreign Country Codes.

      • Do not calculate a new amount for Line 17. It is not a transcribed line. The total deposits are generated.

    Figure 3.11.154-9
    This image is too large to be displayed in the current screen. Please click the link to view the image.

    Figure 3.11.154-10
    This image is too large to be displayed in the current screen. Please click the link to view the image.

    Figure 3.11.154-11
    This image is too large to be displayed in the current screen. Please click the link to view the image.

3.11.154.6.6.1  (01-01-2017)
Schedule Indicator Code (SIC)

  1. The Schedule Indicator Code (SIC) is used to notify the computer that the quarterly federal tax liability for Unemployment Tax (ROFTL) in Part 5 is incomplete or unnecessary.

  2. Edit SIC Code "1" when:

    1. Line 12 is ≡ ≡ ≡ ≡ ≡ ≡ .

    2. The ROFTL total is ≡ ≡ ≡ ≡ ≡ ≡ .

    3. There is a ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ in the ROFTL.

    4. The ROFTL is blank.

    5. Line 17 ROFTL total has an entry, but there are no quarterly liability amounts present.

    6. The difference between Line 12 and the Total ROFTL Line 17 is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

  3. When SIC "1" is edited, the computer determines if a Federal Tax Deposit (FTD) penalty should be assessed based on a quarterly average of the total liability for the year. Edit the SIC Code in the following locations:

    FORM TYPE LOCATION
    Form 940 (Revision 2006 and subsequent) On Page 1, to the right of the Part 1 line. See Exhibit 3.11.154-1, Form 940 (Revision 2016) and Form 940 Schedule A (Revision 2016).
    Form 940-PR (Revision 2006 and subsequent) On Page 1, to the right of the Parte 1 (Part 1) line. See Exhibit 3.11.154-2, IRB 940-PR (Revision 2016) and Form 940 Schedule A-PR (Revision 2016).

3.11.154.6.7  (01-01-2017)
Part 6 - Third Party Designee

  1. See IRM 3.11.154.2.16, Third Party Designee.

3.11.154.6.8  (01-01-2017)
Part 7 - Signature Area

  1. Part 7 of Form 940 and Form 940-PR- consists of an area on Page 2 for the taxpayer to sign the return, date the return, indicate their title, and provide a daytime phone number. The signature must appear in the "Sign your name here" box, or on the "Signature" line. See IRM 3.11.154.2.18, Signature.

  2. Below the signature area on Page 2, Form 940 and Form 940-PR is a designated area for Paid Preparer information. See IRM 3.11.154.2.17, Paid Preparer Section.

3.11.154.6.9  (01-01-2017)
Form 940 Schedule A and Form 940 Schedule A-PR(Puerto Rican Version), Multi - State Employer and Credit Reduction Information

  1. Form 940 Schedule A shows the amount of taxable FUTA Wages paid to employees by state, provides the State taxable Credit Reduction rate, if any and provides a way for the employer to determine the total Credit Reduction amount for Line 11 of Form 940 and Form 940-PR. See Exhibit 3.11.154-14, Credit Reduction States and Rates (TY2004 - 2016).

    Exception:

    Credit Reduction should not be computed for non-taxable returns, (e.g., line 5 equals line 3), IRC 6020(b) returns, early filed returns, or returns claiming Line 9.

  2. On Form 940 Schedule A, if the box to the left of the state abbreviation is not checked, then check the box. Do not compute the Credit Reduction amount. Allow the return to fall out to ERS who will compute any Credit Reduction.

    IF THEN
    The entire Form 940 Schedule A should be deleted, Edit a slash (/) across the Form 940 Schedule A.
    The Form 940 Schedule A is attached for a single state, and Box 1a contains an entry,
    1. Compare the Box 1a entry to the Form 940 Schedule A to ensure the same state is shown. Correct any transcription errors made in Box 1a. See Exhibit 3.11.154-14, Credit Reduction States and Rates (2004 - 2016) to determine if its a valid Credit Reduction state.

    2. If the state is not a Credit Reduction state, and no other states are marked, draw a slash (/) across the Form 940 Schedule A to delete it.

    3. If the state code shown or entered in Box 1a is not the state marked on Form 940 Schedule A, then place an asterisk (*) to the left of the state checked on Form 940 Schedule A, and mark the box for the correct state.

    4. If the state is a Credit Reduction state, mark Box 2, if blank.

    5. If the same state is indicated on Form 940 Schedule A, continue to process.

    An attached Form 940 Schedule A indicates a single state, but Box 1a is blank or illegible,
    1. Enter the correct state code for the state indicated on Form 940 Schedule A in Box 1a.

    2. Determine if the state on Form 940 Schedule A is a Credit Reduction state for the Form 940 tax year being filed. See Exhibit 3.11.154-14, Credit Reduction States and Rates (2004 - 2016):

      • If the state is a Credit Reduction state, mark Box 2, if blank.

      • If the state is not a Credit Reduction state, and no other states are marked, draw a slash (/) across the Form 940 Schedule A to delete it.

    Form 940 Schedule A is attached, and multiple states are marked, Mark box 1b if not marked.
    Form 940 Schedule A is not attached, but Form 940 or an attachment indicates the taxpayer is a multi-state filer, e.g., Box 1b checked, multiple states are listed for the current tax year on a Form 940 page from a prior year revision, an attachment to a correct revision Form 940 indicating the multiple states, etc. See IRM 3.11.154.6.9.1, Preparing a "Dummy" Form 940 Schedule A.
    Box 1a contains a valid state code and Box 1b is checked,
    1. If the only state checked on Form 940 Schedule A is the state shown in Box 1a:

      • Determine if the state on Form 940 Schedule A is a Credit Reduction state for the return tax year (See Exhibit 3.11.154-14, Credit Reduction States and Rates (2004 - 2016)

      • If the state is a Credit Reduction state, no action is needed on the Form 940 Schedule A. Edit an asterisk (*) to the left of the entry in Box 1b. If Box 2 was not checked, check Box 2.

      • If the state marked on Form 940 Schedule A is not a Credit Reduction state, edit a slash through the entire Form 940 Schedule A. Also, edit an asterisk (*) to the left of the entry in Box 1b and Box 2 on the return, if checked.

    2. Edit an asterisk (*) to the left of the state code in Box 1a.

    3. If Form 940 Schedule A shows multiple states:

      • Check that the state initially shown in Box 1a was also checked on Form 940 Schedule A. If not checked, then check the box of the state on Form 940 Schedule A.

      • Check Box 2 on the return, if not checked.

    4. If Form 940 Schedule A is not attached, but the return or attachments indicate the return is a multi-state filer:

      • See IRM 3.11.154.6.9.1, Preparing a "Dummy" Form 940 Schedule A.

    There is no entry in Box 1a or Box 1b.
    1. Examine the return, Form 940 Schedule A, and all attachments.

    2. If no states are listed:

      • Consider the taxpayer to be a single state filer. Edit the valid state code from the entity section of the return to Box 1a.

      • Determine if the state in the entity is a Credit Reduction state.

      • If the state is not a Credit Reduction state for the return tax year, no action is needed.

    3. If multiple Credit Reduction states are listed on an attachment see IRM 3.11.154.6.9.1, Preparing a "Dummy" Form 940 Schedule A (Rev 2016)

3.11.154.6.9.1  (01-01-2017)
Preparing a "Dummy" Form 940 Schedule A

  1. Use the following instructions to prepare a “dummy” Form 940 Schedule A when required:

    Note:

    If a loose Form 940 Schedule A is received without a Form 940, forward the Form 940 Schedule A to Accounts Management.

    IF AND THEN
    The taxpayer is a Multi-State employer (i.e., multiple states are found listed on an attachment or elsewhere),

    Note:

    States can be any combination of Credit Reduction and non-Credit Reduction states.

     
    1. Dummy a current Form 940 Schedule A (2016 Rev.) as follows:

      • Enter the last 4 digits of the taxpayer’s EIN.

      • Check a box for each state indicated on the attachment, including the state shown in Box 1a if present.

      • Enter the FUTA Wage amounts, if available to the applicable column on Form 940 Schedule A for each state. Do not compute any credit reduction amounts.

    2. Edit Form 940 as follows:

      • Edit an asterisk (*) to the left of the state code in Box 1a if present.

      • Mark Box 1b if not marked.

      • Mark Box 2 if not marked.

    The taxpayer is a Single-State employer AND The state is subject to Credit Reduction,

    Note:

    If multiple Credit Reduction states are present, see the Multi-State employer instructions above.

    None of the following conditions exist:
    • has a valid entry on Line 9 see IRM 3.11.154.6.4.1, Line 9 - All Wages Paid Excluded From Sate Unemployment Tax.
    • is a non-taxable return see IRM 3.11.154.3.4, Non-Taxable Returns.
    • is an early-filed return see IRM 3.11.154.2.20, Early Filed Returns.
    • is filed as an IRC 6020(b) see IRM 3.11.154.3.8.1, IRC 6020(b) Prepared by Collections.
    1. Edit Form 940 as follows:

      • Edit an asterisk (*) to the left Box 1b if marked.

      • Mark Box 2 if not marked.

    2. Do not dummy a Form 940 Schedule A; it is not required.

    3. Do not calculate or edit Credit Reductions amounts or information.

    The taxpayer is a Single-State employer AND The state is subject to Credit Reduction,

    Note:

    If multiple Credit Reduction states are present, see the Multi-State employer instructions above.

    One or more of the following conditions exist:
    • has a valid entry on Line 9 see IRM 3.11.154.6.4.1, Line 9 - All Wages Paid Excluded From Sate Unemployment Tax.
    • is a non-taxable return see IRM 3.11.154.2.20, Non-Taxable Returns.
    • is an early-filed return see IRM 3.11.154.2.20, Early Filed Returns.
    • is filed as an IRC 6020(b) see IRM 3.11.154.3.8.1, IRC 6020(b) Prepared by Collections.
    1. Do not dummy a Form 940 Schedule A (2016 Rev.); it is not required.

    2. Do not calculate or edit Credit Reduction amounts or information.

    3. Edit Form 940 as follows:

      • Edit an asterisk (*) to the left of Line 11 if it contains an entry.

      • Edit an asterisk (*) to the left of Box 1b if marked.

      • Edit an asterisk (*) to the left of Box 2 if marked.

    4. If the return is non-taxable, also edit the following on Form 940:

      • If Line 1a is blank, edit "ZZ" in Box 1a.

      • If the taxpayer completed Box 1a, edit an asterisk (*) to the left of the entry in Box 1a and edit "ZZ" to the left of the asterisk.

    The taxpayer is a Single-State employer AND The state is NOT a Credit Reduction state,  
    1. Do not dummy a Form 940 Schedule A; it is not required.

    2. Edit Form 940 as follows:

      • Edit an asterisk (*) to the left of Box 1b if marked.

      • Edit an asterisk (*) to the left of Box 2 if marked.

    A Revision 2010 or prior Form 940 Schedule A is attached, The return has conditions requiring a Form 940 Schedule A, Replace the 2010 or prior Form 940 Schedule A Revision with a current Form 940 Schedule A 2016 Revision:
    1. On the Form 940 Schedule A 2016 revision to be dummied:

      • Enter the last 4 digits of the taxpayer’s EIN.

      • Mark the box to the left of each state which was indicated on the 2010 or prior Form 940 Schedule A revision.

      • Enter the FUTA Wage amounts, if available to the applicable column on Form 940 Schedule A for each state.

    2. On the 2010 or prior Form 940 Schedule A revision:

      • Delete the Form 940 Schedule A by editing a slash ( / ) through the entire page.

      • Place the deleted Form 940 Schedule A in order behind the dummied Form 940 Schedule A.

3.11.154.7  (01-01-2017)
Form 940 - Revision 2005 and Prior

  1. General guidelines for editing returns.

3.11.154.7.1  (01-01-2017)
Part I, Line 1 through Line 7 - Computation of Taxable Wages

  1. Form 940 - Part I should be completed by all filers. If Part I does not contain sufficient information to determine Line 5, Total taxable wages, correspond.

    Exception:

    It is not necessary to correspond to obtain Part I information from the taxpayer when they indicate "not liable" , zero, dash, all blank entries or "final return" and the return has been signed. We should consider taxpayer intent.

3.11.154.7.1.1  (01-01-2017)
Line 1 - Total Payments

  1. Form 940 - Part I, Line 1 - Total Payments for Services of Employees

    1. After editing the line number to current year line number format see IRM 3.11.154.6.3.1, Line 3 - Total Payments to All Employees.

    2. If the taxpayer does not respond, disallow the entry on Line 3.

3.11.154.7.1.2  (01-01-2017)
Line 2 - Exempt Payments

  1. Form 940 - Part 1, Line 2, Exempt Payments:

    1. After editing the line number to current year line number format see IRM 3.11.154.6.3.2, Line 4 - Payments Exempt from FUTA Tax.

3.11.154.7.1.3  (01-01-2017)
Line 3 - Excess Payment of More Than $7,000

  1. Form 940 - Part 1, Line 3, Excess Payment:

    1. After editing the line number to current year line number see IRM 3.11.154.6.3.3, Line 5 - Total Payments to Employees in Excess of $7,000.

3.11.154.7.1.4  (01-01-2017)
Line 4 - Total Exempt Payments

  1. Form 940 - Part 1, Line 4, Total Exempt Payments:

    1. After editing the line number to current year line number see IRM 3.11.154.6.3.4, Line 6 - Subtotal.

3.11.154.7.1.5  (01-01-2017)
Line 5 - Total Taxable Wages

  1. Form 940 - Part 1, Line 5, Total Taxable Wages:

    1. After editing the line number to current year line number format see IRM 3.11.154.6.3.5, Line 7 (Line 7a Revision 2011) - Total Taxable FUTA Wages.

3.11.154.7.1.6  (01-01-2017)
Line 6 - Credit Reduction

  1. See IRM 3.11.154.6.9, Form 940 Schedule A and Form 940 Schedule A-PR (Puerto Rican Version), Multi-State Employer and Credit Reduction Information.

3.11.154.7.1.7  (01-01-2017)
Line 7 - Total Credit Reduction

  1. See IRM 3.11.154.6.9, Form 940 Schedule A and Form 940 Schedule A-PR (Puerto Rican Version), Multi-State Employer and Credit Reduction Information (Puerto Rican Version) (Revision 2011 and Subsequent).

3.11.154.7.2  (01-01-2017)
Part II, Line 1 through Line 10 - Tax Due or Refund

  1. This section contains instructions for Form 940, Part II.

3.11.154.7.2.1  (01-01-2017)
Line 3(a) - Name of State

  1. If the state name is written out in its entirety, or shown in a format other than as a valid state code, edit the correct two character state code.

  2. If more than one state code is present on the return or attachments, attach a Form 940 Schedule A and mark the applicable state code boxes.

  3. Valid state codes, for purposes of unemployment tax, include all fifty states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands. See Exhibit 3.11.154-7, State Abbreviations.

  4. "G" coded returns (Amended) are not edited.

  5. When processing a non - taxable return from a single state filer subject to credit reduction state, edit a "ZZ" State Code to Part II, Line 3(a).

  6. If the State Code is missing or illegible, edit the State used in the entity section of the return to Part II, Line 3(a).

  7. Edit a State Code only once, even if the taxpayer has entered it more than once.

  8. Do not edit any data listed for foreign countries including:

    • American Samoa

    • Federated States of Micronesia

    • Guam

    • Marshall Islands

    • Northern Mariana Islands

    • Palau

    Note:

    Only Puerto Rico and U.S. Virgin Islands will be edited to Part II, Line 3(a) or Form 940 Schedule A.

3.11.154.7.2.2  (01-01-2017)
Line 7 - Total FUTA Tax

  1. Form 940 - Part II, Line 7, Total FUTA Tax

    1. After editing the line numbers to current year format see IRM 3.11.154.6.5.1, Line 12 - Total FUTA Tax After Adjustments and follow all procedures that apply.

3.11.154.7.2.3  (01-01-2017)
Line 8 - Total FUTA Federal Tax Deposit (FTD)

  1. Form 940 - Part II, Line 8, Total FUTA FTD

    1. After editing the line numbers to current year format see IRM 3.11.154.6.5.2, Line 13 - FUTA Tax Deposit.

3.11.154.7.2.4  (01-01-2017)
Line 9 / Line 10 - Balance Due/Overpayment

  1. Form 940 - Part II, Line 9, Balance Due / Line 10, Overpayment

    1. After editing the line numbers to current year format see IRM 3.11.154.6.5.3, Line 14 - Balance Due.

    2. Also see IRM 3.11.154.6.5.4, Line 15 - Overpayment.

3.11.154.7.3  (01-01-2017)
Part III - Record of Quarterly Federal Unemployment Tax Liability (ROFTL)

  1. After editing the line numbers to current year format see IRM 3.11.154.6.6, Part 5 - Reporting of Quarterly Federal Unemployment Tax Liability (ROFTL).

3.11.154.7.3.1  (01-01-2017)
Schedule Indicator Code (SIC)

  1. The Schedule Indicator Code (SIC) is used to notify the computer that the Quarterly Federal Tax Liability for Unemployment Tax (ROFTL), Part III is incomplete or unnecessary. When the SIC 1 is edited the computer will determine if a Federal Tax Deposit penalty should be assessed based on a quarterly average of the total liability for the year. The SIC code will be edited in the right margin, next to the line that separates the entity information from the ABCD Questions.

  2. Edit SIC Code "1" when:

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

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

    3. There is a ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ in the ROFTL.

    4. The ROFTL is blank.

    5. There is a total in the ROFTL, but there are no Quarterly Liability Amounts present.

    6. The difference between Line 7 Part II and the Total ROFTL is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

3.11.154.8  (01-01-2017)
Form 940-EZ - General Guidelines for Converting and Editing Returns

  1. Form 940-EZ was filed between Tax Years 2005 and 2009. If filed now, they are converted to a current year Form 940.

  2. All Form 940-EZ returns are converted to a current year Form 940 for processing see Exhibit 3.11.154-4, Form 940-EZ Conversion Table. If correspondence is needed to resolve unprocessable conditions, first convert the return to a Form 940.

  3. If credit reduction applies to a state on a filed Form 940-EZ, transfer the information to a current Form 940 revision and/or Form 940 Schedule A. See IRM 3.11.154.6.9, Form 940 Schedule A, Form 940 Schedule A-PR) (Puerto Rican Version), Multi - State Employer and Credit Reduction Information and, Multi - State Employer and Credit Reduction Information.

  4. This section provides instructions for processing Form 940-EZ in the Code and Edit function.

    1. See IRM 3.11.154.2.1, Coding and editing Procedures

    2. See IRM 3.11.154.2.16, Third Party Designee

    3. See IRM 3.11.154.2.18, Signature

    4. See IRM 3.11.154.2.19, Tax Period

    5. See IRM 3.11.154.3.3, Received Date

    6. See IRM 3.11.154.3.5, Indian Tribal Government Procedures

    7. See IRM 3.11.154.3.6, Statute Returns

    8. See IRM 3.11.154.5, Entity Perfection

3.11.154.8.1  (01-01-2017)
Question B(1) - Valid State Code

  1. Valid - State Code - Question B(1)

    1. Question B(1) of the Form 940-EZ is converted to Line 1a on the Form 940 (current revision)

    2. See IRM 3.11.154.6.2.1, Box "1a" (Single State Filer), Box "1b" (Multi Sate Filer), Box "2" (Subject to Credit Reduction)

    3. For a list of valid state codes see Exhibit 3.11.154-7, State Abbreviation.

3.11.154.8.2  (01-01-2017)
Part I, Line 1 through Line 9 - Taxable Wages and FUTA Tax

  1. Form 940-EZ, Part I should be completed by all filers.

    1. If Part I does not contain sufficient information to determine Total Taxable Wages, correspond.

    2. It is not necessary to correspond to obtain Part I information from the taxpayer when they indicate "not liable" , zero, dash, all blank entries or "final return" and the return has been signed. We should consider taxpayer intent.

3.11.154.8.2.1  (01-01-2017)
Line 1 - Total Payments

  1. Form 940-EZ - Part I, Line 1 - Total Payments

    1. Line 1 of the Form 940-EZ is converted to Line 3 of the Form 940.

    2. See IRM 3.11.154.6.3.1, Line 3 - Total Payments to All Employees.

3.11.154.8.2.2  (01-01-2017)
Line 2 - Exempt Payments

  1. Form 940-EZ - Line 2, Exempt Payments

    1. Line 2 of the Form 940-EZ is converted to Line 4 of the Form 940.

    2. See IRM 3.11.154.6.3.2, Line 4 - Payments Exempt from FUTA Tax.

3.11.154.8.2.3  (01-01-2017)
Line 3 - Excess Payment More Than $7,000

  1. Form 940-EZ - Line 3, Excess payment

    1. Line 3 of the Form 940-EZ is converted to Line 5 of the Form 940.

    2. See IRM 3.11.154.6.3.3, Line 5 - Total Payments to Employees in Excess of $7,000.

3.11.154.8.2.4  (01-01-2017)
Line 4 - Total Exempt Payments

  1. Form 940-EZ - line 4, Total Exempt Payments

    1. Line 4 of the Form 940-EZ is converted to Line 6 of the Form 940.

    2. See IRM 3.11.154.6.3.4, Line 6, - Subtotal.

3.11.154.8.2.5  (01-01-2017)
Line 5 - Total Taxable Wages

  1. Form 940-EZ - Line 5, Total Taxable Wages

    1. Line 5 of the Form 940-EZ is converted to Line 7 of the Form 940.

    2. See IRM 3.11.154.6.3.5, Line 7 (Line 7a Revision 2011) - Total Taxable FUTA Wages.

3.11.154.8.2.6  (01-01-2017)
Line 6 - FUTA Tax

  1. Form 940-EZ - Line 6, FUTA Tax

    1. Line 6 of the Form 940-EZ is converted to Line 12 of the Form 940.

    2. See IRM 3.11.154.6.5.1, Line 12 - Total FUTA Tax After Adjustments for processing procedures.

3.11.154.8.2.7  (01-01-2017)
Line 7 - Total FUTA Tax Deposits

  1. Form 940-EZ, Total FUTA Tax Deposits

    1. Line 7 of the Form 940-EZ is converted to Line 13 of the Form 940.

    2. See IRM 3.11.154.6.5.2, Line 13 - FUTA Tax Deposit.

3.11.154.8.2.8  (01-01-2017)
Line 8 - Balance Due

  1. Form 940-EZ - Line 8, Balance Due

    1. Line 8 of the Form 940-EZ is converted to Line 14 of the Form 940.

    2. See IRM 3.11.154.6.5.3, Line 14 - Balance Due.

3.11.154.8.2.9  (01-01-2017)
Line 9 - Overpayment

  1. Form 940-EZ - Line 9 Overpayment

    1. Line 9 of the Form 940-EZ is converted to Line 15 of the Form 940.

    2. See IRM 3.11.154.6.5.4, Line 15 - Overpayment.

3.11.154.8.3  (01-01-2017)
Part II - Record of Quarterly Federal Unemployment Tax Liability (ROFTL)

  1. Form 940-EZ Part II - Liability for Quarter

    1. Part II, First, Second, Third and Fourth Quarter Liability boxes will be converted to Line 16a, 16b, 16c, and 16d.

    2. See IRM 3.11.154.6.6, Part 5 - Reporting of Quarterly Federal Unemployment Tax Liability (ROFTL).

3.11.154.8.3.1  (01-01-2017)
Schedule Indicator Code (SIC)

  1. See IRM 3.11.154.6.6.1, Schedule Indicator Code (SIC).

3.11.154.9  (01-01-2017)
Form 940-PR - General Guidelines for Editing Returns (OSPC Only) (Revision 2005 and Prior)

  1. Procedures for editing Form 940-PR in the Code and Edit function.

  2. See Publication 850 (EN/SP)(Revised May 2011)"English-Spanish Glossary of Tax Words and Phrases used in Publications by the IRS" which may be used as a resource tool for processing Form 940-PR returns.

    IF AND THEN
    The taxpayer completes Parte I, Parte II, Parte III, and Parte IV,  
    1. Examine the return and attachments.

    2. Delete the incorrect used Parte.

    Wages were paid in Puerto Rico only, Unemployment payments were made timely, Only Parte I and Parte II should be completed by the taxpayer. It is not necessary for the taxpayer to complete Parte III or Parte IV.
    The taxpayer completed both Parte II and Parte III,  
    1. Examine the return and attachments.

    2. If only Puerto Rico is shown in both Parte II and Parte III, delete Parte III.

    3. If Puerto Rico and any other possession or state is shown in Parte III, delete Parte II.

    The taxpayer completes Parte I, Parte III, and Parte IV,   Take no action. The taxpayer is indicating that their unemployment tax payments were not made timely or that wages were paid in other states, the District of Columbia or the Virgin Islands.

3.11.154.9.1  (01-01-2017)
Procedures for Coding and Editing Returns

  1. For Code and Editing Form 940-PR, follow instructions below:

    1. See IRM 3.11.154.2.1, Code and Editing Returns

    2. See IRM 3.11.154.2.16, Third Party Designee

    3. See IRM 3.11.154.2.18, Signature

    4. See IRM 3.11.154.2.19, Tax Period

    5. See IRM 3.11.154.3.3, Received Date

    6. See IRM 3.11.154.3.5, Indian Tribal Government Procedures

    7. See IRM 3.11.154.3.6, Statute Returns

    8. See IRM 3.11.154.5, Entity Perfection

3.11.154.9.2  (01-01-2017)
Credit Reduction States

  1. For some Tax Year(s) 2005 and prior, the taxpayer may be required to use Form 940 to report the FUTA wages paid in a Credit Reduction state. Form 940-PR cannot be used if credit reduction applies. Convert to Form 940. If conversion is not possible, correspond with the taxpayer.

3.11.154.9.3  (01-01-2017)
Parte I, Line 1 through Line 5 - Computation of Taxable Wages

  1. Form 940-PR, Parte I, should be completed by all filers.

    1. If Parte I does not contain sufficient information to determine Line 5, Total Taxable Wages, correspond.

      Exception:

      It is not necessary to correspond to obtain Parte I information from the taxpayer when they indicate "not liable" , zero, dash, all blank entries or "final return" and the return has been signed. We should consider taxpayer intent.

3.11.154.9.3.1  (01-01-2017)
Line 1 - Total Payments for Services of Employees

  1. Parte I, Line 1 - Total Compensation Paid to Employees:

    1. If Line 1 and Line 3 have the same line entries, edit an asterisk (*) on Line 3 to make the return generate to Error Resolution.

3.11.154.9.3.2  (01-01-2017)
Line 2 - Exempt Payments

  1. Parte 1, Line 2, Exempt Payments No action is necessary.

3.11.154.9.3.3  (01-01-2017)
Line 3 - Excess Payments More Than $7,000

  1. Parte 1, Line 3, Excess Payment.

    1. If Line 3 equals Line 1, edit an asterisk (*) on Line 3 to make the return generate to Error Resolution.

3.11.154.9.3.4  (01-01-2017)
Line 4 - Total Exempt Payments

  1. Parte I, Line 4 - Total Exempt Payments:

    1. If there is no entry in Parte I, Line 2 and Line 3, accept the taxpayer's entry on Line 4. Do not correspond.

    2. If Line 4 is greater than Parte I, Line 1, correspond. (Total exempt payments cannot exceed total payments.)

3.11.154.9.3.5  (01-01-2017)
Line 5 - Total Taxable Wages

  1. Line 5, Total Taxable Wages:

    1. If there is an entry on Line 1 (Total Payments) and Lines 2 through Line 5 shows a significant entry such as a "0" (zero), blank, dash "-" , or the word "NONE" written on the line, edit the amount on Line 1 to Line 5 or compute and enter Line 1 less Line 4.

    2. If Parte I, Line 1 and 5 have no entries, correspond to obtain the total taxable wages, except:

      IF THEN
      Line 1, Parte II has an entry, Determine the wages by dividing this amount by .008 (for tax years 2010 and prior, or .006 for tax year 2016 -2012. (For tax year 2011, see Form 940, Rev 2011)
      The state in Parte III, Line 3, Column (a) has a taxable state wage base of $7,000 and there are no exempt payments, Edit the amount from Parte II, Line 3, Column (c) - Taxable payroll to Line 5.
    3. If Line 5 is "blank" or "zero" because Line 3 equals Line 1, edit an asterisk (*) on Line 3 to make the return generate to Error Resolution.

3.11.154.9.4  (01-01-2017)
Parte II, Line 1 through 4 - Balance Due/Overpayment

  1. Form 940-PR - Parte II, Line 3, Balance Due/Line 4, Overpayment:

    1. If these lines are blank or illegible, perfect from the return or attachments if possible.

    2. Perfect the Balance Due/Overpayment by subtracting Line 4 from Line 1 of Part II, Form 940-PR.

      IF THEN
      The Balance Due amount on Line 3 contains Failure to Deposit (FTD), Failure to File (FTF), or Failure to pay (FTP) penalty and/or interest,
      1. Circle out the Line 3 amount.

      2. Subtract the FTD, FTF, FTP penalty and interest from the Balance Due amount.

      3. Edit the Balance Due amount to the left.

      4. Edit a Received Date, if necessary.

      The Overpayment amount on Line 4 is reduced by FTD, FTF, FTP penalty and/or interest,
      1. Circle out the Line 4 amount.

      2. Add the FTD, FTF, FTP penalty and interest to the Overpayment amount.

      3. Edit the Overpayment amount to the left.

      4. Edit a Received Date, if necessary.

3.11.154.9.5  (01-01-2017)
Parte III, Line 1 through Line 10 - Tax Owed (due) or Refund

  1. The taxpayer will complete Part III and Parte IV, if applicable.

3.11.154.9.5.1  (01-01-2017)
Line 3(a) - State Codes

  1. All returns must have at least one State Code.

  2. The only exception is a "G" coded return (amended return).

  3. The word "State" as used here, pursuant to IRC 3306(j)(1), includes the fifty U.S. States plus the District of Columbia, Puerto Rico, and the U.S. Virgin Islands, participating by the Federal Unemployment Tax Act.

  4. The State Code can only be edited in two locations:

    1. On the Form 940-PR, Parte III, Line 3, Column (a), or

    2. On the Form 940 Schedule A.

  5. If there are one or two state codes, ISRP will capture the 2 character state code in Parte III, Line 3, Column (a) of the form.

  6. If there are three or more state Codes, enter the states on Form 940 Schedule A

  7. A non-taxable return will be given a " ZZ" State Code when the state is subject to credit reduction.

  8. If a State Code(s) cannot be determined from Parte III or attachments to the return, use the Entity State Code of the taxpayer's mailing address.

  9. If the State Code cannot be determined, correspond.

  10. Edit a State Code only once, even if the taxpayer has entered it more than once on the return.

  11. OSPC Only - The only countries that should be listed on Form 940-PR, or should be edited will be Puerto Rico and the U.S. Virgin Islands. You may sometimes see the following countries listed in Parte III. They should not be listed on Form 940-PR and should not be edited because they do not participate in our unemployment system. Asterisk (*) to the left of any data listed for foreign countries, including the following:

    • American Samoa

    • Federated States of Micronesia

    • Guam

    • Marshall Islands

    • Northern Mariana Islands

    • Palau

    Note:

    Remember only Puerto Rico or the U.S. Virgin Islands can qualify for Credit Reduction.

3.11.154.9.5.2  (01-01-2017)
Line 7 - Total FUTA Tax

  1. Form 940-PR - Parte III, Line 7, Total FUTA Tax

    IF THEN
    Line 7 is blank or illegible,
    1. Perfect it from the return or attachments if possible.

    2. Do not compute the Gross FUTA Tax, Line 1 of Parte III, or the Maximum Credit, Line 2 of Parte III, in order to perfect Line 7.

    Lines 1 through 3 of Parte III have been completed by the taxpayer or perfected from information on the return, Perfect Line 7 by subtracting Line 3 from the amount on Line 1, Parte III.

3.11.154.9.5.3  (01-01-2017)
Line 8 - Total FUTA Tax Deposits

  1. If Form 940-PR - Parte III, Line 8, Total FUTA Tax Deposits is blank, perfect it from the following areas on the return:

    1. Enter the amount from Parte II, Line 4, if you can determine it is a misplaced entry.

    2. The taxpayer may have the FTD amount erroneously entered in the amount line of Question A or on an attachment.

    3. If you can determine the correct FTD amount from this area, enter it on Line 8, Parte III.

  2. If the return shows excess credit (remittance or FTD) and the taxpayer requests the credit to be transferred to another type of tax do the following:

    • Edit CCC “X”.

    • Prepare Form 3465. (Part III, Line 8 (2005 and prior)).

    • Photocopy related materials and attach to Form 3465.

    • Route to BMF Accounts Management.

3.11.154.9.5.4  (01-01-2017)
Line 9/10 - Balance Due Overpayment

  1. Form 940-PR - Parte III, Line 9, Balance Due/Line 10, Overpayment

    1. If Line 9 or Line 10 are blank or illegible, perfect from the return or attachments if possible.

    2. Perfect the balance due/overpayment by subtracting Line 8 from Line 7.

      IF THEN
      The Balance Due amount on Line 9 contains Failure to Deposit (FTD), Failure to File (FTF), or Failure to Pay (FTP) penalty and/or interest,
      1. Circle out the Line 9 amount.

      2. Subtract the FTD, FTF, FTP penalty and interest from the Balance Due amount.

      3. Edit the Balance Due to the left.

      4. Edit a received date, if necessary.

      The Overpayment amount on Line 10 is reduced by FTD, FTF, FTP penalty and/or interest,
      1. Circle out the Line 10 amount.

      2. Add the FTD, FTF, FTP penalty and interest to the Overpayment amount.

      3. Edit the Overpayment amount to the left.

      4. Edit a Received Date, if necessary.

    3. If the taxpayer has entered the same amounts in Lines 7, 8, and 9, the amount is equal to total amount of the ROFTL, delete the entry on Line 8.

    4. Do not edit if the computation on Line 9 or 10 is less than ≡ ≡ ≡ .

3.11.154.9.6  (01-01-2017)
Parte IV - Record of Quarterly Federal Unemployment Tax Liability

  1. Form 940-PR -Liability for the Quarter:

    1. IF AND THEN
      Parte II and Parte III are completed and the remittance or ROFTL does not agree, The taxpayer's intent cannot be determined, Correspond with the taxpayer.
      Blank,   Edit from attachments.
      Only the fourth quarter is blank, The taxpayer indicates a larger amount on Line 7, Parte III,
      1. Edit an amount to the fourth quarter that would allow the total of all quarters to equal total FUTA tax.

      2. Edit a Received Date, if necessary to keep a penalty from being charged.

      The taxpayer entered wages instead of tax in Parte IV,  
      1. Compare Parte I, Line 5 with the Total for Year, Parte IV.

      2. If the amounts agree, and Parte II, Line 1 or Parte III, Line 7 is more than ≡ ≡ , multiply the wage amount shown for each quarter by .008 for tax years 2010 or prior, or .006 for 2016 - 2012. Edit the correct entries. (For tax year 2011, see Form 940, Rev 2011.) See Figure 3.11.154-12.

      The taxpayer has entered a negative figure in any quarter of the ROFTL fields,   Enter SIC "1" to the right margin next to the line that separates the entity information from the ABC Questions.

    Figure 3.11.154-12

    This image is too large to be displayed in the current screen. Please click the link to view the image.

3.11.154.9.7  (01-01-2017)
Schedule Indicator Code (SIC)

  1. The Schedule Indicator Code (SIC) is used to notify the computer that the Quarterly Federal Tax Liability for Unemployment Tax (ROFTL), Parte IV is incomplete or unnecessary. When the SIC "1" is edited, the computer will determine if a Federal Tax Deposit penalty should be assessed based on a quarterly average of the total liability for the year. The SIC code is edited in the right margin next to the line that separates the entity information from the ABC Questions.

  2. Edit SIC Code "1" when:

    1. Line 1, Parte II, is ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    2. Line 7, Parte III, is ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    3. The ROFTL Total is ≡ ≡ ≡ ≡ ≡ ≡ .

    4. There is a ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ in the ROFTL.

    5. The ROFTL is blank.

    6. There is a total in the ROFTL, but there are no Quarterly Liability Amounts present.

    7. The difference between Line 1, Parte II and the Total ROFTL is ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    8. The difference between Line 7, Parte III and the Total ROFTL is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

Exhibit 3.11.154-1 
Form 940 (Revision 2016) and Form 940 Schedule A (Revision 2016)

This image is too large to be displayed in the current screen. Please click the link to view the image.
This image is too large to be displayed in the current screen. Please click the link to view the image.
This image is too large to be displayed in the current screen. Please click the link to view the image.

Exhibit 3.11.154-2 
Form 940, Form 940-PR (Revision 2016) and Form 940 Schedule A (Revision 2016)

This image is too large to be displayed in the current screen. Please click the link to view the image.
This image is too large to be displayed in the current screen. Please click the link to view the image.
This image is too large to be displayed in the current screen. Please click the link to view the image.

Exhibit 3.11.154-3 
Form 940 Conversion Table - Revision 2012 - 2016 and 2006 - 2010

2012 - 2016 and 2006 - 2010 Revisions - Part 2

Part 2 Line Name Part 2 Line Number
Total Taxable FUTA Wages 7

2012 - 2016 and 2010 - 2006 Revisions - Part 3

Part 3 Line Name Part 3 Line Number
If Credit Reduction applies, enter the total from Form 940 Schedule A. 11

2012 - 2016 and 2010 - 2006 Revisions - Part 4

Part 4 Line Name Part 4 Line Number
Total FUTA Tax After Adjustments 12
FUTA tax deposited for the year 13
Balance Due 14
Overpayment 15

2012 - 2016 and 2010 - 2006 Revisions - Part 5

Part 5 Line Name Part 5 Line Number
FUTA Tax Liability- 1st Quarter 16a
FUTA Tax Liability- 2nd Quarter 16b
FUTA Tax Liability- 3rd Quarter 16c
FUTA Tax Liability- 4th Quarter 16d

2003 - 2005 Revisions - Part I

Part 2
Line Name
Part 2
Line Number
2005
Part I
Line Number
2004
Part I
Line Number
2002- 2003
Part I
Line Number
Total Taxable FUTA Wages 7 5 5 5

2003 - 2005 Revisions - Part I

Part 3
Line Name
Part 3
Line Number
2005
Part I
Line Number
2004
Part I
Line Number
2002- 2003
Part I
Line Number
If Credit Reduction applies, enter the total from Form 940 Schedule A 11 7 6 N/A

2003 - 2005 Revisions - Part II

Part 4
Line Name
Part 4
Line Number
2005
Part II
Line Number
2004
Part II
Line Number
2002- 2003
Part II
Line Number
Total FUTA Tax After Adjustments 12 7 7 7
FUTA tax deposited for the year 13 8 8 8
Balance Due 14 9 9 9
Overpayment 15 10 10 10

2003 - 2005 Revisions - Part III

Part 5
Line Name
Part 5
Line Number
2005
Part III
Line Number
2004
Part III
Line Number
2002- 2003
Part III
Line Number
FUTA Tax Liability- 1st Quarter 16a First First First
FUTA Tax Liability- 2nd Quarter 16b Second Second Second
FUTA Tax Liability- 3rd Quarter 16c Third Third Third
FUTA Tax Liability- 4th Quarter 16d Fourth Fourth Fourth

Exhibit 3.11.154-4 
Form 940-EZ Conversion Table

Line Item Description Form 940-EZ Current Form 940 Line Numbers Transcription Line
Contributions Paid to Sate Unemployment Fund A Not Applicable NO
Name of State Where Contributions are Paid B(1) 1a Yes
Total Payments to Employees 1 3 NO
Exempt Payments 2 4 NO
Payments of More than $7,000 3 5 NO
Add Lines 2 and 3 4 6 NO
Total Taxable Wages 5 7 Yes
FUTA Tax 6 12 Yes
Total FUTA Tax Deposited 7 13 Yes
Balance Due 8 14 Yes
Overpayment 9 15 Yes
First Quarter Liability First Box in Part II 16a Yes
Second Quarter Liability Second Box in Part II 16b Yes
Third Quarter Liability Third Box in Part II 16c Yes
Fourth Quarter Liability Fourth Box in Part II 16d Yes

Exhibit 3.11.154-5 
Form 940(PR)-PR Conversion Table (2005 and Prior)

Parte 1 - Computo De Salarios Sujetos A La Contribucion

Line Name Parte I Line number Current Year Parte II Line Number Conversion
Total de Salarios a la contribucion 5 7

Parte II - Contribucion Adeudada O Reembolso

Line Name Parte II Line number Current Year Part IV Line Number Conversion
Contribucion federal bruta el desempleo 1 12
Menos El total de la contribucion 2 13
Balance adedado 3 14
Cantidad pegada de mais 4 15

Parte III - Contribucion Adeudada O Reembolso

Line Name Parte III Line number Current Year Line Number Conversion
Totales 3a Box 1a, Parte I
Contribucion federal para el desemplo total 7 12, Parte IV
Total de la contribucion federal para desempleo depositada para el ano 8 13, Parte IV
Balance adedado 9 14, Parte IV
Cantidad pegada de mais 10 15, Parte IV

Part IV - Registero De La Obligacio Trimestral

Line Name Parte IV Line number Current Year Parte V Line Number Conversion
Primero Obilgacion contribucion pare el trimestre Primero 16a
Segundo Obilgacion contribucion pare el trimestre Segundo 16b
Tercero Obilgacion contribucion pare el trimestre Tercero 16c
Cuarto Obilgacion contribucion pare el trimestre Cuarto 16d

Exhibit 3.11.154-6 
Correspondence Action Table

Form TYPE Correspondence is required when the following conditions exists Suggested Correspondence Action required on "No Reply" , "Undeliverable" , and Insufficient Response
Form 940 or Form 940-PR Signature missing on an Unnumbered overpaid or zero/even return Edit AC 225 (AC 226 for International)
  1. Edit CCC "3" on all returns with this condition.

  2. Edit CCC "X" on overpaid returns.

Form 940 or Form 940-PR Signature missing on an Unnumbered balance due or Numbered return Edit AC 225 (AC 226 for International)
  1. Edit CCC "3" on all returns with this condition.

  2. Edit CCC "X" on overpaid returns.

  3. Edit an asterisk (*) in the left most position in the "Sign your name here" box.

Form 940 or Form 940-PR Return indicating tax liability for more than one type of tax:
  • Unnumbered overpaid or zero/even returns

  • Unnumbered balance due and numbered returns

Correspond:
  • Complete Form 12522 for Letter 142C. (or local letter as permitted by campus.)

  • Edit AC 211.

  1. Edit CCC "3" on all returns with this condition.

  2. Edit CCC "X" on overpaid returns.

Form 940 or Form 940-PR Taxpayer enters non-calendar year Tax Period:
  • Unnumbered overpaid or zero/even returns

  • Unnumbered balance due and numbered returns.

Correspond:
  • Complete Form 12522 for Letter 142C, (or local letter as permitted by campus.)

  • Edit AC 211.

  1. Edit CCC "3" on all returns with this condition.

  2. Edit CCC "X" on overpaid returns.

Form 940 or Form 940-PR Information provided not complete or not sufficient to determine Total Taxable Wages:
  • Unnumbered overpaid or zero/even returns

  • Unnumbered balance due and numbered returns.

Take no Action and continue to process the return.
  1. If possible, determine Total Taxable Wages from information provided on the return or attachments.

  2. If unable to determine the Total Taxable Wages, allow return to generate to ERS.

Form 940 or Form 940-PR Taxpayer’s amount for payments of more than $7,000.00 is the same amount as total payments for services to employees:
  • Unnumbered overpaid or zero/even returns

  • Unnumbered balance due and numbered returns.

Take no Action and continue to process the return. Edit asterisk (*) to disallow the entry on line 5.
Form 940 or Form 940-PR Taxpayer has not given taxable wage breakdown for credit reduction states:
  • Unnumbered overpaid or zero/even returns

  • Unnumbered balance due and numbered returns.

Take no Action and continue to process the return. Take no Action and continue to process the return.
Form 940 or Form 940-PR Early Filed Return (Do not return to taxpayer):
  • Non-final, and it cannot be determined the reason for filing a future year

  • Final and complete (Not a correspondence condition.)

  • Final and incomplete

  1. f final and complete, Edit AC 480 and CCC "F"

  2. Other than final and complete:

    • Complete Form 12522 for Letter 142C, (or local letter as permitted by campus)

    • Edit AC 211.

When correspondence is received, Rejects will suspend the return until the upcoming January.
Form 940 or Form 940-PR Taxpayer’s intent cannot be determined. (Not covered by previous conditions):
  • Unnumbered overpaid or zero/even returns

  • Unnumbered balance due and numbered returns.

Correspond:
  • Complete Form 12522 for Letter 142C, (or local letter as permitted by campus.)

  • Edit AC 211.

  1. Edit CCC "3" on all returns with this condition.

  2. Edit CCC "X" on overpaid returns.

Exhibit 3.11.154-7 
State Abbreviations

State Code State State Code State
AL Alabama MT Montana
AK Alaska NE Nebraska
AZ Arizona NV Nevada
AR Arkansas NH New Hampshire
CA California NJ New Jersey
CO Colorado NM New Mexico
CT Connecticut NY New York
DC District of Columbia NC North Carolina
DE Delaware ND North Dakota
FL Florida OH Ohio
GA Georgia OK Oklahoma
HI Hawaii OR Oregon
ID Idaho PA Pennsylvania
IL Illinois RI Rhode Island
IN Indiana SC South Carolina
IA Iowa SD South Dakota
KS Kansas TN Tennessee
KY Kentucky TX Texas
LA Louisiana UT Utah
ME Maine VT Vermont
MD Maryland VA Virginia
MA Massachusetts WA Washington
MI Michigan WV West Virginia
MN Minnesota WI Wisconsin
MS Mississippi WY Wyoming
MO Missouri *ZZ Used for Zero Liability Tax in Credit Reduction State(s) only

Exhibit 3.11.154-8 
Entity State Codes and ZIP Codes

State Code State ZIP Code
AA America-Atlantic 34001
AE America-Europe 09001
AP America-Pacific 96201
AL Alabama 35001
AK Alaska 99501
AZ Arizona 85001
AR Arkansas 71601
CA California 90001
CO Colorado 80001
CT Connecticut 06001
DC District of Columbia 20001
DE Delaware 19701
FL Florida 32001
GA Georgia 30001
HI Hawaii 96701
ID Idaho 83201
IL Illinois 60001
IN Indiana 46001
IA Iowa 50001
KS Kansas 66001
KY Kentucky 40001
LA Louisiana 70001
ME Maine 03901
MD Maryland 20601
MA Massachusetts 01001
MI Michigan 48001
MN Minnesota 55001
MS Mississippi 38601
MO Missouri 63001
MT Montana 59001
NE Nebraska 68001
NV Nevada 88901
NH New Hampshire 03001
NJ New Jersey 07001
NM New Mexico 87001
NY New York 00501
NC North Carolina 27001
ND North Dakota 58001
OH Ohio 43001
OK Oklahoma 73001
OR Oregon 97001
PA Pennsylvania 15001
RI Rhode Island 02801
SC South Carolina 29001
SD South Dakota 57001
TN Tennessee 37001
TX Texas 75001
UT Utah 84001
VT Vermont 05001
VA Virginia 20101
WA Washington 98001
WV West Virginia 24701
WI Wisconsin 53001
WY Wyoming 82001

Exhibit 3.11.154-9 
U.S. Possession ZIP Codes

American Samoa (AS)

American Samoa (AS) City American Samoa (AS) Zip Code
Faga'itua 96799
Leone 96799
Olosega Manua' 96799
Pago Pago 96799

Federated States of Micronesia (FM):

Federated States of Micronesia (FM) City Federated States of Micronesia (FM) Zip Code
Chuuk 96942
Kosrae 96944
Pohnpei 96941
Yap 96943

Guam (GU)

Guam (GU) City Guam (GU) Zip Code
Agana 96910
Inarajan 96917
Merizo 96916
Tamuning 96931
Umatac 96915
Yona 96915

Marshall Islands (MH)

Marshall Islands (MH) City Marshall Islands (MH) Zip Code
Ebeye 96970
Majuro 96960

Northern Mariana Islands (MP)

Northern Mariana Islands (MP) City Northern Mariana Islands (MP) Zip Code
Capitol Hill 96950
Rota 96951
Saipan 96950
Tinian 96952

Palau (PW)

Palau (PW) City Palau (PW) Zip Code
Koror 96940
Palau 96940

U. S. Virgin Islands (VI)

U. S. Virgin Islands (VI) City U. S. Virgin Islands (VI) Zip Code
Charlotte Amalie 00802
Christiansted 00820
Cruz Bay 00830
Downtown 00840
Frederiksted 00840
Kingshill 00850
Saint Croix 00820
Saint John 00830
Saint Thomas 00805
Sunny Isle 00850
Veterans Annex 00820

Puerto Rico (PR)

Puerto Rico (PR) City Puerto Rico (PR) Zip Code
Adjuntas 00601
Aquada 00602
Aquadilla 00603
Aguas Buenas 00703
Aguirre 00704
Aibonito 00705
Añasco 00610
Angeles 00611
Arecibo 00612
Arroyo 00714
Bajadero 00616
Barceloneta 00617
Barraquitas 00794
Barrio Obrero Station 00935
Bayamon 00956
Boqueron 00622
Cabo Rojo 00623
Caguas 00725
Camuy 00627
Canovanas 00729
Caparra Heights 00920
Carolina 00982
Catano 00962
Cayey 00736
Ceiba 00735
Cerro Gordo 00754
Ciales 00638
Cidra 00739
Coamo 00769
Comerio 00782
Condado 00907
Corozal 00783
Coto Laurel 00780
Culebra 00775
Dorado 00646
Ensenada 00647
Esperanza 00765
Fajardo 00738
Fernandez Juncos 00936
Florida 00650
Fort Buchanan 00934
Garrachales 00652
Guanica 00653
Guayama 00784
Guayanilla 00656
Guaynabo 00965
Gurabo 00778
Hatillo 00659
Hato Rey 00936
Hormigueros 00660
Humacao 00791
Isabela 00662
Jayuya 00664
Juana Diaz 00795
Juncos 00777
La Cumbre 00926
Lajas 00667
Laplata 00786
Lares 00669
Las Marias 00670
Las Piedras 00771
Levittown 00949
Loiza 00772
Loiza Street Station 00936
Luquillo 00773
Manati 00674
Maricao 00606
Maunabo 00707
Mayaquez 00680
Mercedita 00715
Minillas Center 00936
Moca 00676
Morovis 00687
Naguabo 00718
Naranjito 00719
Orocovis 00720
Palmer 00721
Patillas 00723
Penuelas 00624
Ponce 00731
Puerta de Tierra 00936
Puerta Real 00740
Punta Santiago 00741
Quebradillas 00678
Ramey 00603
Rincon 00677
Rio Blanco 00744
Rio Grande 00721
Rio Piedras 00927
Rosario 00636
Sabana Grande 00637
Sabana Hoyos 00688
Sabana Seca 00952
Saint Just 00978
Salinas 00751
San Antonio 00690
San Francisco 00927
San German 00683
San Juan 00936
San Lorenzo 00754
San Sebastian 00685
Santa Isabel 00757
Santurce 00936
Toa Alta 00953
Toa Boa 00949
Trujillo Alto 00976
University 00936
Utuado 00641
Vega Alta 00692
Vega Baja (box 1-9049) 00694
Vieques 00765
Villalba 00766
Yabucoa 00767
Yauco 00698

Exhibit 3.11.154-10 
Foreign Country Codes

Foreign Country Country Code
Afghanistan AF
Akrotiri AX
Albania AL
Algeria AG
Andorra AN
Angola AO
Anguilla AV
Antarctica AY
Antigua and Barbuda AC
Argentina AR
Armenia AM
Aruba AA
Ashmore and Cartier Islands AT
Australia AS
Austria AU
Azerbaijan AJ
The Bahamas BF
Bahrain BA
Baker Island FQ
Bangladesh BG
Barbados BB
Barbuda AC
The Bahamas BF
Belgium BE
Belarus BO
Belize BH
Benin (Dahomey) BN
Bermuda BD
Bhutan BT
Bolivia BL
Bosnia and Herzegovina BK
Botswana BC
Bouvet Island BV
Brazil BR
British Indian Ocean Territory IO
British Virgin Islands VI
Brunei BX
Bulgaria BU
Burkina Faso UV
Burma BM
Burundi BY
Cambodia CB
Cameroon CM
Canada CA

Note:

See Exhibit 3.11.154-11, Province, Foreign State, and Territory Abbreviations for Canadian province abbreviations.

Cape Verde CV
Cayman Islands CJ
Central African Republic CT
Chad CD
Chile CI
China, People's Republic of (Including Inner Mongolia, Tibet and Manchuria CH
Christmas Island KT
Clipperton Islands IP
Cocos (Keeling) Islands CK
Columbia CO
Comoros CN
Congo, Republic of (Brazzaville) CF
Congo, Democratic Republic of (Kinshasa) (formerly Zaire) CG
Cook Islands CW
Coral Sea Islands Territory CR
Costa Rica CS
Cote d'Ivoire (Ivory Coast) IV
Croatia HR
Cuba CU
Cyprus CY
Czech Republic EZ
Dem. Rep. of Congo (Kinshasa) CG
Denmark DA
Dhekelia DX
Djibouti DJ
Dominica DO
Dominican Republic DR
Ecuador EC
Egypt EG
El Salvador ES
Eleuthera Island BF
Equatorial Guinea EK
Eritrea ER
Estonia EN
Ethiopia ET
Falkland Islands (Isla Malvinas) FK
Faroe Islands FO
Fiji FJ
Finland FI
French Southern and Antarctic Lands FS
France FR
French Polynesia FP
Gabon GB
The Gambia GA
Georgia GG
Georgia Island and South Sandwich Island SX
Germany GM
Ghana GH
Gibraltar GI
Greece GR
Greenland GL
Grenada GJ
Guatemala GT
Guernsey GK
Guinea GV
Guinea-Bissau PU
Guyana GY
Haiti HA
Heard Island and McDonald Island HM
Holy See VT
Honduras HO
Hong Kong HK
Howland Island HQ
Hungary HU
Iceland IC
India IN
Indonesia (Including Bali, Belitung, Flores, Java, Moluccas and Sumatra) ID
Iran IR
Iraq IZ
Ireland, Republic of EI
Isle of Man IM
Israel IS
Italy IT
Jamaica JM
Jan Mayen JN
Japan JA
Jarvis Island DQ
Jersey JE
Johnston Atoll JQ
Jordan JO
Kazakhstan KZ
Kenya KE
Kingman Reef KQ
Kiribati KR
Korea, Dem. People's Republic of (North) KN
Korea, Republic of (South)

Note:

Use when only "Korea" is present.

KS
Kosovo KV
Kuwait KU
Kyrgyzstan KG
Laos LA
Latvia LG
Lebanon LE
Lesotho LT
Liberia LI
Libya LY
Liechtenstein LS
Lithuania LH
Luxembourg LU
Macau MC
Macedonia MK
Madagascar MA
Malawi MI
Malaysia MY
Maldives MV
Mali ML
Malta MT
Mauritania MR
Mauritius MP
Mayotte MF
Mexico MX
Midway Islands MQ
Moldova MD
Monaco MN
Mongolia MG
Montserrat MH
Morocco MO
Mozambique MZ
Namibia WA
Nauru NR
Navassa Island BQ
Nepal NP
The Netherlands NL
Netherlands Antilles NT
New Caledonia NC
New Zealand NZ
Nicaragua NU
Niger NG
Nigeria NI
Niue NE
Norfolk Island NF
Norway NO
Oman MU
Pakistan PK
Palmyra Atoll LQ
Panama PM
Papua New Guinea PP
Paracel Islands PF
Paraguay PA
Peru PE
Philippines RP
Pitcairn Islands PC
Poland PL
Portugal PO
Qatar QA
Republic of Korea (North) KN
Republic of Korea (South) KS
Republic of Singapore SN
Romania RO
Russia RS
Rwanda RW
Ryukyu Islands JA
Samoa WS
San Marino SM
Sao Tome and Principe TP
Saudi Arabia SA
Senegal SG
Serbia YI
Seychelles SE
Sierra Leone SL
Singapore SN
Slovakia LO
Slovenia SI
Solomon Islands BP
Somalia SO
South Africa SF
Spain SP
Spratly Islands PG
Sri Lanka CE
St. Barthelemy TB
St. Helena SH
St. Kitts and Nevis (Includes St. Christopher) SC
St. Lucia ST
St. Martin RN
St. Pierre and Miquelon SB
St. Vincent and Grenadines VC
Sudan SU
Suriname NS
Svalbard SV
Swaziland WZ
Sweden SW
Switzerland SZ
Syria SY
Tahiti (French Polynesia) FP
Taiwan TW
Tajikistan TI
Tanzania, Republic of TZ
Thailand TH
Timor-Leste TT
Togo TO
Tokelau TL
Tonga TN
Trinidad and Tobago TD
Tunisia TS
Turkey TU
Turkmenistan TX
Turks and Caicos Islands TK
Tuvalu TV
Uganda UG
Ukraine UP
United Arab Emirates AE
United Kingdom UK
Uruguay UY
Uzbekistan UZ
Vanuatu NH
Venezuela VE
Vietnam VM
Wake Island WQ
Wallis and Futuna WF
Western Sahara WI
Yemen YM
Zambia ZA
Zimbabwe ZI

Exhibit 3.11.154-11 
Province, Foreign State and Territory Abbreviations

Australia State

Australia State Abbreviation
Australian Capital Territory ACT
New South Wales NSW
Northern Territory NT
Queensland QLD
South Australia SA
Tasmania TAS
Victoria VIC
Western Australia WA

Brazil State

Brazil State Abbreviation
Acre AC
Alagoas AL
Amapa AP
Amazonas AM
Bahia BA
Ceara CE
Distrito Federal DF
Esperito Santo ES
Goias GO
Maranhao MA
Mato Grosso MT
Mato Grosso do Sul MS
Minas Gerais MG
Parana PR
Paraiba PB
Para PA
Pernambuco PE
Piaui PI
Rio Grande do Norte RN
Rio Grande do Sul RS
Rio de Janeiro RJ
Rondonia RO
Roraima RR
Santa Catarina SC
Sergipe SE
Sao Paulo SP
Tocantins TO

Canada Provinces/Territories

Canada Provinces/Territories 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

Cuba Provinces

Cuba Provinces Abbreviation
Camaguey CG
Ciego de Avila CA
Cienfuegos CF
Ciudad di La Habana CH
Gramma (Bayamo) GR
Guantanamo GT
Holguin HO
La Habana HA
Matazas MT
Municipio Especial Isla de la Juventud IJ
Pinar del Rio PR
Sancti Spiritus SS
Santiago de Cuba SC
(Victoria de) Las Tunas LT
Villa Clara VC

Italy Provinces

Italy Provinces Abbreviation
Agrigento AG
Alessandria AL
Ancona AN
Aosta/Aoste AO
Arezzo AR
Ascoli Piceno AP
Asti AT
Bari BA
Belluna BL
Beneveto BN
Bergamo BG
Biella BI
Bologna BO
Bolozano Bolzen BZ
Brescia BS
Brindisi BR
Cagliari CA
Caltanisetta CL
Campobasso CB
Caserta CE
Catania CT
Catanzaro CZ
Chieti CH
Como CO
Cosenza CS
Cremona CZ
Crotone KR
Cuneo CN
Enna EN
Ferrara FE
Firenze FI
Foggia FG
Forli FO
Frosinone FR
Genova GE
Gorizia GO
Grosseto GR
Imperia IM
Isernia IS
L'Aquila AQ
La Spezia SP
Latina LT
Lecce LE
Livorno LI
Lodi LO
Lucca LU
Macerata MC
Mantova MN
Massa-Carrara MS
Matera MT
Messina ME
Milano MI
Modena MO
Napoli NA
Novara NO
Nuoro NU
Oristano OR
Padova PD
Palermo PA
Parma PR
Pavia PV
Perugia PG
Pesaro-Urbino PS
Pescara PE
Piacenza PC
Pisa PI
Pistoia PT
Pordenone PN
Potenza PZ
Prato PO
Ragusa RG
Pavenna RA
Peggio de Calabria RC
Reggio nell'Emilia RE
Rieti RI
Rimini RN
Roma RM
Rovigo RO
Salerno SA
Sassari SS
Savona SV
Siena SI
Siracusa SR
Sondrio SO
Taranto TA
Teramo TE
Terni TR
Torino TO
Trapani TO
Trento TN
Treviso TV
Trieste TS
Udine UD
Varese VA
Venezia VE
Verbania VB
Vercelli VC
Verona VR
Vibo Valentia VV
Vincenza VI
Viterbo VT

Mexico State

Mexico State Abbreviation
Aguascalientes AGS
Baja California Norte BCN
Baja California Sur BCS
Campeche CAM
Chiapas CHIS
Chihuahua CHIH
Coahuila COAH
Colima COL
Distrito Federal DF
Durango DGO
Guanajuato GTO
Guerrero GRO
Hidalgo HGO
Jalisco JAL
Mexico MEX
Michoacan MICH
Morelos MOR
Nayarit NAY
Nuevo Leon NL
Oaxaca OAX
Puebla PUE
Queretaro QRO
Quintana ROO QROO
San Luis Potosi SLP
Sinaloa SIN
Sonora SON
Tabasco TAB
Tamaulipas TAMPS
Tlaxcala TLAX
Veracruz VER
Yucatan YUC
Zacatecas ZAC

The Netherlands Provinces

The Netherlands Provinces Abbreviation
Drenthe DR
Flevoland FLD
Friesland FR
Gelderland GLD
Groningen GN
Lemburg LB
North Brabant NB
North Holland NH
Overijssel OV
South Holland ZH
Utrecht UT
Zeeland SLD

Exhibit 3.11.154-12 
Action Code Chart

Function Codes and Descriptions

Function Code Function Description
CE Code and Edit
EC Error Correction
S Suspense Correction
GEN Computer Generated

Input Document

Action Code Description Workday Suspense Period Function Used In
001 Input Document 0 GEN

Correspondence

Action Code Description Workday Suspense Period Function Used In
210 EPMF (Employee Master Plan File) Correspondence 60 EC, S
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, S
215 International Correspondence 45 CE, EC, S
225 Signature Only 40 CE, EC, S
226 Signature Only (International) 40 CE, EC, S

In House Research

Action Code Description Workday Suspense Period Function Used In
300 Examination (Fuel Tax Credit 10 CE, EC, S
310 Statute Control 10 CE, EC, S
320 Entity Control 10 CE, EC, S

Criminal Investigation Division

Action Code Description Workday Suspense Period Function Used In
331 Frivolous Review 3 CE, EC
332 QRDT ( Questionable Refund Detection Team) Review 3 CE, EC
333 Prompt Audit 10 CE, EC, S
334 Joint Committee 10 CE, EC, S
335 Frivolous Case 10 CE, EC, S
336 QRDT Case 10 CE, EC, S
337 Other CID (Criminal Investigation Division) 10 CE, EC, S

Accounting

Action Code Description Workday Suspense Period Function Used In
341 Manual Refund 10 CE, EC, S
342 Credit Verification 10 CE, EC, S
343 Other Accounting 10 CE, EC, S
344 Manual Refund (ERS) 0 EC

MFTRA Research

Action Code Description Workday Suspense Period Function Used In
351 TIN Research 0 EC, S
352 Name Research 3 CE, EC, S
353 Address Research 3 CE, EC, S
354 Filing Requirement Research 3 CE, EC, S
355 Other MFTRA Research 5 CE, EC, S
360 Other In-House Research 10 CE, EC, S
370 Examination 10 CE, EC, S

Management Suspense

Action Code Description Workday Suspense Period Function Used In
410 Assistance Needed 0 EC
420 Management Suspense A 5 CE, EC, S
430 Management Suspense B 10 CE, EC, S
450 Management Suspense D 20 CE, EC, S
460 Management Suspense E 25 CE, EC, S
470 Complex Error Code 0 EC
480 Early Filed Suspense 150 CE, EC, S
490 System Problem 5 CE, EC, S

Missing Document

Action Code Description Workday Suspense Period Function Used In
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

Magnetic Tape

Action Code Description Workday Suspense Period Function Used In
550 Magnetic Tape Return- Check for Attachments 0 CE
551 Magnetic Tape Return- Inconsistent Data 0 CE

Rejects

Action Code Description Workday Suspense Period Function Used In
610 Renumber - Non-Remit 0 CE, EC
611 Renumber - Remit 0 CE, EC
620 NMF/Non-ADP 0 CE, EC
630 Reinput 0 EC, S
640 Void 0 CE, EC, S
650 International 0 CE, EC, S
660 Data Control Delete -TEP (Team Exam Program) 0 S
670 Rejected Missing Document 0 S

Duplicate DLN

Action Code Description Workday Suspense Period Function Used In
700 Duplicate Block DLN 0 GEN
711 Duplicate Document DLN from Code and Edit 0 GEN
712 Duplicate Document from Error Correction 0 GEN
713 Duplicate Document from Unpostables 0 GEN
714 Duplicate Document from Unworkable Suspense 0 GEN
715 Duplicate Document from Workable Suspense 0 GEN
800 NAP (National Account Profile) Linkage Problem 2 EC, S
900 Unpostable Record 0 GEN

Exhibit 3.11.154-13 
♦Potential Frivolous Return for Examination Review♦

Potential Frivolous Return for Examination Review 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/UCC (Uniform Commercial Code) 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 843 Amended return or a Form 843 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 four 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.
Challenges 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 Stat 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.
Foreign Income Argues that United States citizens and residents are not subject to tax on their wages or other income derived from sources within the United States, as only foreign-based income or income received by nonresident aliens and foreign S Corporations from sources within the United States is taxable.
Form 1099-OID (Original Issue Discount) An individual files a return reporting false amounts of income (generally "Other" or "Miscellaneous" income) and all of them claim a false amount of income tax withholding approximately equal to the amount of falsely reported income. Although the returns report income, they do not calculate any tax due. Some of the returns have Form 1099-OID (Original Issue Discount) attached and some have Form 1096. Other false financial instruments may be filed in the place of or in addition to the Form 1099-OID such as Form 2439, promissory notes, bonds sight drafts etc.

Caution:

Some returns will need special care. If the withholding is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , attach Form 4227 and place in the locally designated basket for Examination, Frivolous Return Processing (FRP) for review. Pay particular attention to returns with Form 1099-OID attached.

IRC 861, Business Employment Tax (BMF 861) Argument targets employers and advises them that wages are exempt from withholding. Based on 26 Code of Federal Regulations (CFR) Section 1.861, promoters of this scheme advise employers to stop withholding and paying payroll taxes on their employee’s wages. In addition, some employers file amended payroll tax returns and request refunds of previously paid payroll taxes.
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 tax-paying public into a "new world order" .
Not a Person Argues that a taxpayer is not a "person" within the meaning of section 7701 (a)(14) of the Internal Revenue Code.
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 that 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 on all or most of the line items on the form ( e.g., IRC 861, Form 2439, OID and other BMF filings that claim no income and requests refunds). See Rev. Rul. 2004-34. 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. There are several variations on this type of filling such as those bearing the words "nunc pro tunc" and "not liable"

Note:

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

Other All others. All others including those listed in Notice 2010-33 or any subsequent superseding notice. See also http://www.irs.gov/Tax-Professionals/The-Truth-About-Frivolous-Tax-Arguments-Introduction on irs.gov. 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 5.19.8.4, Collection Appeal Rights Procedures, for additional information.

Exhibit 3.11.154-14 
Credit Reduction States and Rates (TY 2004-2016)

2016 Credit Reduction States and Rates

State Rate State Rate
       
       
       
       
       
       
       

Tax Year 2015 Credit Reduction States and Rates

State Rate State Rate
California .015 Ohio .015
Connecticut .021 Virgin Island (U.S.) .015

Tax Year 2014 Credit Reduction States and Rates

State Rate State Rate
California .012 New York .012
Connecticut .017 North Carolina .012
Indiana .015 Ohio .012
Kentucky .012 Virgin Island (U.S.) .012

Tax Year 2013 Credit Reduction States and Rates

State Rate State Rate
ARKANSAS (AR) .009 MISSOURI (MS) .009
CALIFORNIA (CA) .009 NEW YORK (NY) .009
CONNECTICUT (CT) .009 NORTH CAROLINA (NC) .009
DELAWARE (DE) .006 OHIO (OH) .009
GEORGIA (GA) .009 RHODE ISLAND (RI) .009
INDIANA (IN) .012 U.S. VIRGIN ISLANDS (VI) .012
KENTUCKY (KY) .009 WISCONSIN (WI) .009

Tax Year 2012 Credit Reduction States and Rates

State Rate State Rate
ARIZONA (AZ) .003 NEVADA (NV) .006
ARKANSAS (AR) .006 NEW JERSEY (NJ) .006
CALIFORNIA (CA) .006 NEW YORK (NY) .006
CONNECTICUT (CT) .006 NORTH CAROLINA (NC) .006
DELAWARE (DE) .003 OHIO (OH) .006
FLORIDA (FL) .006 RHODE ISLAND (RI) .006
GEORGIA (GA) .006 VERMONT (VE) .003
INDIANA (IN) .009 U.S. VIRGIN ISLANDS (VI) .015
KENTUCKY (KY) .006 WISCONSIN (WI) .006
MISSOURI (MS) .006    

Tax Year 2011 Credit Reduction States and Rates

State Rate State Rate
ARKANSAS (AR) .003 NORTH CAROLINA (NC) .003
CALIFORNIA (CA) .003 NEW JERSEY (NJ) .003
CONNECTICUT (CT) .003 NEVADA (NV) .003
FLORIDA (FL) .003 NEW YORK (NY) .003
GEORGIA (GA) .003 OHIO (OH) .003
ILLINOIS (IL) .003 PENNSYLVANIA(PA) .003
INDIANA (IN) .006 RHODE ISLAND (RI) .003
KENTUCKY (KY) .003 VIRGINIA (VA) .003
MICHIGAN (MI) .009 U.S. VIRGIN ISLANDS (VI) .003
MINNESOTA (MN) .003 WISCONSIN (WI) .003
MISSOURI (MO) .003    

Tax Year 2010 - 2004 Credit Reduction States and Rates

Tax Year State Rate
2010 SOUTH CAROLINA (SC) .003
2010 INDIANA (IN) .003
2010 MICHIGAN (MI) .006
2009 MICHIGAN (MI) .003
2006- 2008 NONE  
2005 NEW YORK (NY) .006
2004 NEW YORK (NY) .003

Exhibit 3.11.154-15 
"Track and Confirm" Receipt

This image is too large to be displayed in the current screen. Please click the link to view the image.

More Internal Revenue Manual