3.11.217 Form 1120-S Corporation Income Tax Returns

Manual Transmittal

November 04, 2022

Purpose

(1) This transmits revised IRM 3.11.217, Returns and Documents Analysis, Form 1120-S Corporation Income Tax Returns.

Material Changes

(1) IRM 3.11.217.2.3(1) - Replaced paragraph with the approved and negotiated TAS and Chief Counsel TAS Standard Language for IRMs.

(2) IRM 3.11.217.2.3(4) - Moved "Same Day Resolution by Operations" from IRM 13.1.7.5 to IRM 13.1.7.6 per IPU 22U0048 issued 01-05-2022.

(3) IRM 3.11.217.2.3(4) - Removed IRM 13.1.7 and added new paragraph six with IRM 13.1.7, Taxpayer Advocate Service (TAS) Case Criteria, as the reference per IPU 22U0498 issued 04-14-2022.

(4) IRM 3.11.217.2.8(3) - Reworded frivolous information per Revenue Ruling (Rev. Rul.) 2004-34, Rev. Rul. 2004-12, and the Internal Revenue Bulletin 619.

(5) IRM 3.11.217.3.4.5(1) - Removed the information for the Memo Clarification of Policy for Use of Fax because it expired.

(6) IRM 3.11.217.3.4.5(5) - Removed IRM 11.3.1 because Disclosure no longer owns the policy for fax transmissions. Added IRM 10.8.1, Information Technology (IT) Security, Policy and Guidance per IPU 22U0048 issued 01-05-2022.

(7) IRM 3.11.217.3.5(1)b - Deleted instruction to issue Letter 105-C, Claim Disallowed - Letter disallowing claims, explaining appeal rights and procedures, for use when disallowing Credit for Federal Telephone Excise Tax. Renumbered remaining alphalist.

(8) IRM 3.11.217.5.7(5)d - Added "country" to the list per BMF CE Consistency Template.

(9) IRM 3.11.217.11(1) - Initial Return Code Table - Updated the 24 Month Cutoff Date for processing year 2023.

(10) IRM 3.11.217.13.7 - Added Return Processing Code (RPC) "G" and RPC "H" per Unified Work Request (UWR) 436014.

(11) IRM 3.11.217.13.7(3) - Added Return Processing Code (RPC) "G" and RPC "H" to the Table per Unified Work Request (UWR) 436014.

(12) IRM 3.11.217.15.1(1) - Updated the "Sequencing of Return" instructions for Form 1120-S attachments as follows:

  • Form 4797, Sales of Business Property - added it is not necessary to sequence this form if no transcription lines are present per IPU 22U0282 issued 02-17-2022.

  • Form 8050, Direct Deposit of Corporate Tax Refund - added new Note stating it is not necessary to sequence Form 8050 if blank.

  • Form 5884-B, New Hire Retention Credit - added valid tax period due to the form historical status.

  • Schedule K-1, (Form 1120-S), Shareholder’s Share of Income, Deductions, Credits, etc - Updated tax years for Schedule K-1 processing

  • Deleted the 2nd Note regarding unnecessary sequencing of forms or schedules if there are no transcription line entries.

(13) IRM 3.11.217.15.1(2) - Added new paragraph stating it is not necessary to sequence the forms or schedules listed above if there are no transcription line entries. Renumbered remaining paragraph.

(14) IRM 3.11.217.15.2(1) - Added Line 3 to the list of income items that can have positive or negative amounts.

(15) IRM 3.11.217.16.3 - Added "2021 and later revisions" per IPU 22U0282 issued 02-17-2022.

(16) IRM 3.11.217.19(3) Note - Added Form 8879-CORP, E-file Authorization for Corporations, which replaces Form 8879-S, IRS e-file Signature Authorization for Form 1120-S, for Tax Year 2022 (Process year 2023) and subsequent years per Work Request Notification (WRN) dated 04-12-2022.

(17) IRM 3.11.217.19(5)c - Added Form 8879-CORP, E-file Authorization for Corporations, which replaces Form 8879-S, IRS e-file Signature Authorization for Form 1120-S, for Tax Year 2022 (Process year 2023) and subsequent years per Work Request Notification (WRN) dated 04-12-2022. Also added a "Note" for prior year filings of Form 8879-S.

(18) IRM 3.11.217.21.1(3) - Deleted paragraph that referenced the preparer’s SSN per feedback from Chief Counsel. Renumbered remaining paragraph accordingly.

(19) IRM 3.11.217.24.7(2), (2)a and (2)b - Deleted line numbers for Form 6478 that were for 2012 and prior tax years.

(20) IRM 3.11.217.24.7(3) - Deleted paragraph with instruction to edit Action Code 343 that applied to 2009 tax year only.

(21) IRM 3.11.217.24.8 - Updated subsection title for Schedule K, Line 14 from "International Tax Reporting Checkbox" to "International Checkbox" per Form 1120-S Work Request Notification (WRN) for dated 05-11-2022.

(22) IRM 3.11.217.27.10(1) - Corrected the Tax Year (TY) date on Schedule N, Line 8 - Form 8938, Statement of Specified Foreign Assets, per OSPC review. IPU 22U0138 issued 01-21-2022.

(23) IRM 3.11.217.28(2) Table - Added a new instruction for Form 8825, Rental Real Estate Income and Expenses of a Partnership or an S Corporation, when multiple Forms 8825 are attached.

(24) IRM 3.11.217.31(3) - Added "sequence order if significant entries are present on a 2021 and later form revisions" per IPU 22U0282 issued 02-17-2022.

(25) IRM 3.11.217.35(5) - Deleted "Exception" for Credit Reference Numbers (CRNs) for prior years 2000 through 1997.

(26) IRM 3.11.217.37(3) - Removed 2011 and 2010 "Prior Year Revision" information from the Form 8941 Prior Year Revision Chart.

(27) IRM 3.11.217.38(1)(2) - Revised instructions for Form 5884-B, New Hire Retention Credit, because the form status is historical.

(28) IRM 3.11.217.42(4) - Added a Note and Exhibit for prior year conversion instructions for Form 8938, Statement of Specified Foreign Financial Assets, per IPU 22U0928 issued 09-02-2022.

(29) IRM 3.11.217.43(1) - Removed "Prior Year Conversion - 2011" and "Prior Year Conversion - 2010" tables.

(30) Exhibit 3.11.217-2 - Updated Tax Periods, Return Due Dates, Delinquent Dates, and Extended Due Dates in Due Date Chart per annual requirements.

(31) Exhibit 3.11.217-3 Routing Guide for Attachments Table - Added "2021 and later form revisions" to Form 4797, Sales of Business Property, per IPU 22U0282 issued 02-17-2022.

(32) Exhibit 3.11.217-3 Routing Guide for Attachments Table - Corrected routing information for Form 8870, Information Return for Transfers Associated With Certain Personal Benefit Contracts (Under section 170 (f) (10)), per SERP Feedback #3425. IPU 22U0498 issued 04-14-2022.

(33) Exhibit 3.11.217-3 - Routing Guide for Attachments Table:

  • Schedule K-1 - Form 1120-S - Updated tax years for Schedule K-1 processing.

  • Form 5471, Schedule G-I, Cost Sharing Arrangement, - Added RPC "G" .

  • Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business (Under Sections 6038A and 6038C of the Internal Revenue Code), - Added RPC "H" .

  • Form 5884-B, New Hire Retention Credit, - Added valid tax period to the Routing Guide instruction because the form status is historical.

  • Form 6478, Biofuel Producer Credit, - Removed old instructions for prior year tax forms.

  • Added Schedule K-2, Shareholders’ Pro Rata Share Items - International, to Routing Guide for Attachments.

  • Added Schedule K-3, Shareholders’ Share of Income, Deductions, Credits, etc. - International, to Routing Guide for Attachments.

(34) Exhibit 3.11.217-4 - Added a new exhibit for Form 8938, Statement of Specified Foreign Financial Assets, with prior year conversion instructions per IPU 22U0928 issued 09-02-2022. Renumbered remaining exhibits.

(35) Exhibit 3.11.217-8, Form 4136 Prior Year Conversion Chart - Deleted exhibit with conversion instructions for Form 4136 that were for tax year 2000 and prior tax years.

(36) Editorial changes made throughout the IRM include:

  • Corrected spelling and grammatical errors

  • Corrected references, citations and links

  • Updated Figures and Exhibits

  • Updated dates including Tax Periods and Received Dates

  • Updated form titles

  • Updated capitalization per IRS Style Guide (e.g., Revenue Officer to revenue officer)

  • Deleted old line numbers throughout

  • Deleted 2011 and prior line revision numbers

  • Plain Language changes include:
    Used simpler words
    Deleted unnecessary words
    Changed consistency sections per BMF Consistency template

Effect on Other Documents

IRM 3.11.217, Returns and Documents Analysis, Form 1120-S Corporation Income Tax Returns, dated November 9, 2021, effective January 1, 2022, is superseded. The following IRM Procedural Updates (IPU’s), issued on January 5, 2022, through September 2, 2022, have been incorporated into this IRM: 22U0048, 22U0138, 22U0282, 22U0498 and 22U0928.

Audience

Wage and Investment (W&I) Submission Processing Code and Edit (C&E) personnel are the intended audience for this IRM.

Effective Date

(01-01-2023)

James L Fish
Director, Submission Processing
Wage and Investment Division

Program Scope and Objectives

  1. This section has instructions for Form 1120-S, U.S. Income Tax Return for an S Corporation. Form 1120-S is used to report the income, gains, losses, deductions, credits, etc., of a domestic corporation or other entity for any tax year covered by an election to be an S Corporation.

  2. Purpose: This section gives instructions for Document Perfection Operation (DPO) Code and Edit (C&E) for coding and editing (perfecting) returns and other documents.

  3. Audience: These procedures apply to Wage and Investment (W&I) Submission Processing (SP) Code and Edit (C&E) personnel:

    • Supervisory Tax Technician

    • Lead Tax Technician

    • Tax Examining Technician

    • 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 are not limited to):

    • Accounts Management (AM)

    • Chief Counsel

    • Compliance

    • Information Technology (IT) Programmers

    • Large Business and International (LB&I)

    • Modernized Electronic Filing (MeF) or Modernized e-file (MeF)

    • Small Business Self-Employed (SBSE)

    • Statistics of Income (SOI)

    • Submission Processing (SP)

    • Tax Exempt and Government Entities (TEGE)

    • Taxpayer Advocate Service (TAS)

Background

  1. Document Perfection codes and edits (perfects) returns and documents for input to Master File (MF) through the Integrated Submission and Remittance Processing System (ISRP) and the Service Center Recognition Image Processing System (SCRIPS).

  2. Document Perfection forwards documents and attachments not related to the processing of the returns to the function responsible for handling.

  3. Code and Edit does not mathematically verify or check the validity of returns and other documents being processed unless otherwise specified in the applicable section.

Authority

  1. Authority for these procedures is found in the following sections of the Internal Revenue Code and their corresponding Treasury Regulations:

    • IRC 6201(a)

    • IRC 6213(b)

  2. Policy Statements for Submission Processing are contained in IRM 1.2.1, Servicewide Policies and Authorities, Servicewide Policy Statements.

Responsibilities

  1. The Campus Director monitors operational performance for the Submission Processing campus.

  2. The Operations Manager monitors operational performance for their operation.

  3. The Team Manager/Lead conducts performance monitoring and ensures employees have the tools to perform their duties.

  4. The Team Employees follow the instructions contained in this IRM and maintaining updated IRM procedures.

Program Management and Reviews

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

  2. Program Reports: The Batch Block Tracking System (BBTS) captures and stores a vast amount of data which can be used in performance monitoring and production projections.

  3. Program Effectiveness: The program goals are measured by using the following tools:

    • Embedded Quality Submission Processing (EQSP)

    • Balanced Measures

    • Managerial Reviews

  4. Annual Review: The processes outlined in this IRM should be reviewed annually to make sure accurate and promote consistent tax administration.

Program Controls

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

Terms/Definitions/Acronyms

  1. The table below lists Interpretation Words and their definitions.

    Interpretation Words

    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. Per the Taxpayer Bill of Rights (TBOR), taxpayers have the right to expect a fair and just tax system which gives taxpayers the opportunity to have their facts and circumstances considered when it might affect their underlying liabilities, ability to pay, or ability to give information timely.
    Significant Entry Any entry other than zero or blank. Place Form 8941, Credit for Small Employer Health Insurance Premiums, in sequence order if significant entries are present.
    Timely Coming early or at the right time. Taxpayers have the right to receive help 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. See Exhibit 3.11.217-1, Acronyms and Abbreviations, for a list of commonly used acronyms and abbreviations.

Related Resources

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

    • Servicewide Electronic Research Program (SERP)

    • Integrated Data Retrieval System (IDRS)

    • Submission Processing Design Center (SPDC)

General Information

  1. The purpose of this section is to give instructions for general required processing actions on Form 1120-S, U.S. Income Tax Return for an S Corporation, to eliminate repetition of the same instructions in different subsections.

  2. In case of a conflict of instruction between this general subsection and the subsequent specific subsection, the specific subsection will govern.

  3. This IRM can’t address every possibility that occurs while perfecting returns or documents. Take taxpayer intent into consideration. Refer issues not addressed in this IRM to the Subject Matter Expert (SME), lead or manager to determine the corrective action.

♦Business Master File (BMF) Consistency♦

  1. The purpose of this initiative is to achieve consistency in the Business Master File (BMF) Code and Edit (C&E) processing IRMs.

  2. Ogden, Kansas City, and Paper Processing Branch, BMF Code and Edit and Error Resolution System (ERS) identified and developed topics for BMF Consistency.

  3. A ♦ (diamond) before and after the subsection title shows BMF Consistency subsections.

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

♦IRM Deviation Procedures♦

  1. Submit IRM deviations in writing following instructions from IRM 1.11.2.2.4, When Procedures Deviate from the IRM, and elevate through proper channels for executive approval.

♦Taxpayer Advocate Service (TAS)♦

  1. The Taxpayer Advocate Service (TAS) is an independent organization within the Internal Revenue Service (IRS), led by the National Taxpayer Advocate. Its job is to protect taxpayers’ rights by striving to ensure that every taxpayer is treated fairly and knows and understands their rights under the Taxpayer Bill of Rights (TBOR). TAS offers free help to taxpayers, including when taxpayers face financial difficulties due to an IRS problem, when they are unable to resolve tax problems they haven’t been able to resolve on their own, or when they need assistance to address an IRS system, process, or procedure that is not functioning as it should. TAS has at least one taxpayer advocate office located in every state, the District of Columbia, and Puerto Rico.

  2. TAS uses Form 12412, Operations Assistance Request (OAR), to start the OAR process of referring a case to the Wage and Investment (W&I) Division, to affect the resolution of the taxpayer’s problem. For more information, refer to IRM 13.1.19, TAS Operations Assistance Request (OAR) Process.

  3. Refer taxpayers to TAS when the contact meets TAS criteria, or when Form 911, Request for Taxpayer Advocate Service Assistance (And Application for Taxpayer Assistance Order), is attached and steps cannot be taken to resolve the taxpayer's issue the same day..

  4. The definition of "same day resolution" is within 24 hours. The following two situations meet the definition of "same day resolution" :

    • The issue can be resolved within 24 hours.

    • IRS takes steps within 24 hours to resolve the taxpayer’s issue.

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

  6. See IRM 13.1.7, Taxpayer Advocate Service (TAS) Case Criteria, for more information.

♦TAS Service Level Agreements (SLAs)♦
  1. The National Taxpayer Advocate reached agreements with the Commissioners of the Wage and Investment (W&I) Division, Small Business/Self Employed (SBSE) Division, Tax Exempt Government Entities (TEGE), Criminal Investigation (CI), Appeals, and Large Business and International (LB&I), that outline the procedures and responsibilities for processing 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).

  2. The SLAs are found at https://irssource.web.irs.gov/TAS/SitePages/SLA.aspx.

Business Master File (BMF) Identification (ID) Theft

  1. BMF Identification (ID) Theft is increasing. If a case is found with attachments or correspondence showing the taxpayer is a victim of "ID Theft" , give the entire case to the manager/lead.

  2. The manager/lead expedites the case to the Planning and Analysis (P&A) staff for referral to one of the Submission Processing (SP) BMF ID Theft liaisons. The taxpayer must show they are a victim of "ID Theft" ; do not send cases subject to Criminal Investigation (CI), Examination (Exam), or Fraud review.

  3. Effective January 1, 2017, Computer Condition Code "E" may be edited on Form 1120-S (any year) by the BMF ID Theft Liaison to identify a potential identity theft filing. See IRM 3.11.217.14.3, CCC "E" - Potential Identity Theft Filing, for more information.

♦Criminal Investigation (CI) Referral♦

  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 effort 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. If CI stamped the return, do not send for further CI action.

  3. For returns with refund claims ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, do the following:

    Criminal Investigation (CI) Referral

    Refund Claim Ogden and Kansas City
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    1. Make a copy of the first two pages of the return along with any page of the return that appears suspicious

    2. Attach Form 4227, Intra-SC Reject or Routing Slip, to the copy.

    3. Route the copy to Ogden, 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. Edit Action Code 341 on the return. See IRM 3.11.217.3.11, Refund Returns 45 Day Jeopardy and High Dollar Refunds.

    6. Continue processing the return.

     

  4. Because of the repetitive nature of the Code and Edit (C&E) function, C&E Tax Examining Technicians often recognize income tax return data that is outside of the norm for data found on similar returns for each income tax return type. If C&E finds return characteristics not meeting Audit Code or Exam referral criteria it considered suspicious, CI is available to review the referral.

  5. If you find a suspicious return, do the following:

    1. Make a copy of the first two pages of the return along with any page of the return that appears suspicious.

    2. Attach Form 4227, Intra-SC Reject or Routing Slip, to the copy.

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

      CI Referral Criteria Routing

      Submission Processing Campus/Center Route the copy to:
      Ogden Mail Stop 9001, Criminal Investigation (CI)
      Kansas City Mail Stop S2 9000, 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.

  6. If the return fits other criteria (for example Frivolous Argument), take proper action.

♦Examination (Exam) "Funny Box" ♦

  1. The primary goal in identifying tax returns for Examination (Exam) is to promote the highest degree of voluntary compliance. Examination gives support and helps Submission Processing (SP) with any questionable return found during processing. Exam has a vast multitude of programs and tolerance criteria already found in several IRM sections. SP can refer any questionable return to Exam, unless prohibited by instructions currently found in several IRMs.

♦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. Enter edit marks in brown, red, orange, purple, or green pencil or pen.

  2. Only edit items on the return that are for transcription except where specific instructions require editing of a non-transcribed item. Leave lines blank if the entry would be a zero amount unless otherwise instructed.

  3. Do not obliterate, alter, or erase the original entry on a return when deleting or correcting an entry. Always exercise care to make sure that the original entry remains legible. Perfected entries provide a legible "edit trail" for anyone who may work with the return later.

  4. Do not re-edit edit marks entered by other areas, such as Collections, Entity or Accounts Management, except to place the marks in the correct area or perfect for legibility.

    Exception:

    Photocopied Returns.

  5. Photocopied Returns - Re-edit or underline any valid, black edit marks. See IRM 3.11.217.3.4.3, Correspondence Imaging System (CIS) Returns, and IRM 3.11.217.3.8, Re-Entry Document Procedures.

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

    Edit Marks

    Edit Mark Description
    "X" Deletes tax data or shows do not transcribe an item. For example, if deleting an original entry, edit an "X" to the left of the entry to delete. Edit the correct entry to the left or above the "X" .
    "/" (slash) Indicates do not transcribe a form or schedule.
    "//$" Identifies the beginning and ending of a foreign country code in the entity area. For example, "/EI/$" is edited for "Ireland" or "/GM/$" is edited for "Germany" .
    "%" or "c/o" Indicates an "in-care-of" name for transcription.
    Circle Indicates do not transcribe an entry. Also, deletes entity data or a Received Date.

    Note:

    If the taxpayer circles an entry, edit the entry.

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

    Note:

    Use a double arrow to identify the same figure for transcription in two different places (along with any required transcription data between the two arrows).

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

    Note:

    Code and Edit (C&E) is not required to bracket negative amounts when brackets are preprinted on the form or schedule or when the taxpayer clearly shows a negative amount with brackets "()" , or "-" sign. Bracket negative amounts when editing negative entries on transcription lines (e.g., computing and entering a line entry, entering a missing line entry, etc.).

    Vertical Line or Decimal Point Indicates the separation of dollars and cents.
    Zero, Dash, None, or N/A "ZERO" , "DASH" , "NONE" , or "N/A" are valid entries except when specific instructions require editing of an entry.
    Rocker Indicates the amount paid when drawn under a remittance amount.
     

♦Frivolous Arguments♦

  1. Businesses use frivolous arguments for expressing dissatisfaction with the substance, form or administration of the tax laws by trying to illegally avoid or reduce tax liabilities. See IRM 25.25.10, Frivolous Return Program, and Exhibit 3.11.217-6, Potential Frivolous Arguments for Examination Review, for a list of recognized frivolous arguments made by businesses.

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

    Frivolous Arguments

    If Then
    The return meets any of the conditions shown as a frivolous return. See Exhibit 3.11.217-6, Potential Frivolous Arguments for Examination Review.

    Exception:

    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 Program (FRP) for review.
    Examination has selected the return as frivolous, shown 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 3.11.217. However, do not circle or void the Action Code showing a frivolous return.
     

  3. Do not consider the following returns as frivolous, unless there is other evidence of a frivolous argument:

    • Returns that have only zeros, blanks, or no entries.

    • Returns showing "None" , "Not Liable" , etc.

♦Foreign Currency♦

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

♦Protective Claims♦

  1. Remove returns marked as "Protective Claim" , "Protective Refund" , "Protective Claim for Refund" , or similar statement from the batch and route to Accounts Management. Notate "Protective Claim" in the remarks box of Form 4227, Intra-SC Reject or Routing Slip.

    Exception:

    If the return is amended, do not remove from batch. Edit Computer Condition Code "G" and follow normal processing procedures.

Section 965 Returns (201712 through 202012)

  1. Section 14103 of the Tax Cuts and Jobs Act (TCJA) of 2017 overhauled Section 965 of the Internal Revenue Code. As a result of Section 965, now titled "Treatment of deferred foreign income upon transition to participation exemption system of taxation" , US shareholders must pay a transition tax on the untaxed foreign earnings of certain specified foreign corporations as if those earnings had been repatriated to the United States.

  2. Identify a Section 965 return when the tax period is 201712 through 202012 and any of the following are present:

    • "Section 965" or "965 Tax" (or similar language) notated on the return, schedules, attachments, or, statements.

    • IRC 965 Transition Tax Statement (or similar 965 statement) is attached.

    • Form 965, Inclusion of Deferred Foreign Income Upon Transition to Participation Exemption System, is attached.

    • Form 965, Schedule A, U.S. Shareholder’s Section 965(a) Inclusion Amount, is attached.

    • Form 965, Schedule B, Deferred Foreign Income Corporation’s Earnings and Profits (E&P), is attached.

    • Form 965, Schedule C, U.S. Shareholder’s Aggregate Foreign Earnings and Profits Deficit, is attached.

    • Form 965, Schedule D, U.S. Shareholder’s Aggregate Foreign Cash Position, is attached.

    • Form 965, Schedule E, U.S. Shareholder’s Aggregate Foreign Cash Position - Detail, is attached.

    • Form 965, Schedule F, Foreign Taxes Deemed Paid by Domestic Corporation, is attached.

    • Form 965, Schedule G, Foreign Taxes Deemed Paid by Domestic Corporation for U.S. Shareholder Tax Year Ending in 2017, is attached.

    • Form 965, Schedule H, Disallowance of Foreign Tax Credit and Amounts Reported on Forms 1116 and 1118, is attached. Before 2019, the title was Form 965, Schedule H, Amounts Reported on Forms 1116 and 1118 and Disallowed Foreign Taxes.

    • Form 965-B, Corporate and Real Estate Investment Trust (REIT) Report of Net 965 Tax Liability and Electing REIT Report of 965 Amounts, is attached.

    • Form 1120-S, Schedule K, Line 10, Other income (loss), shows a significant entry with the notation "Section 965" or similar language (202012 - 201712 form revisions). See IRM 3.11.217.24.3, Schedule K, Line 10 – Other income (loss), for more information.

    • Form 1120-S, Schedule K, Line 12d, Other deductions, shows a significant entry with the notation "Section 965" or similar language (202012 - 201712 form revisions). See IRM 3.11.217.24.4, Schedule K, Line 12d, Other deductions, for more information.

    • Form 1120-S, Schedule K, Line 14r, Other foreign tax information, shows a significant entry with the notation "Section 965" or similar language (202012 - 201712 form revisions). See IRM 3.11.217.24.10, Schedule K, Line 14r - other foreign tax information, for more information.

    • Form 1120-S, Schedule K, Line 17d, Other items and amounts, shows a significant entry with the notation "Section 965" or similar language. See IRM 3.11.217.24.12, Schedule K, Line 17d - Other items and amounts, for more information.

    Note:

    A significant entry is defined as any amount other than zero.

  3. When a return is identified as a Section 965 return, edit as follows:

    1. Completely edit the return.

    2. Edit CCC "J" . See IRM 3.11.217.14.7, CCC "J" - Section 965 Tax.

    3. Edit Action Code 460 (Management Suspense). See IRM 3.11.217.3.1, Action Codes.

    4. Do not correspond on the return. ERS will take care of any correspondence needed.

      Caution:

      Notate "K-1 Missing" (or similar language) in the lower left margin (Action Trail) of the return, if correspondence is needed for missing Schedules K-1.

Unprocessable Documents - Error Resolution System

  1. The Document Perfection tax examiner will have the first opportunity to identify a return requiring correspondence, research, or other action to make the return processable. An Action Code is edited to identify these unprocessable returns.

  2. The tax examiner decides the kind of action required and assigns an Action Code to the return which will force it to the Error Resolution System (ERS) (on-line correction system). The code indicates whether correspondence, research, or other action is needed.

Action Codes

  1. Action Codes are used to show whether correspondence, research, or other action is needed. The Action Code sets the suspense period for the return and places the return in the workable or unworkable suspense inventory.

  2. When necessary, assign a three-digit Action Code.

  3. Edit the Action Code in the bottom left margin of the return.

    Caution:

    Do not edit (or write) over another area's edit marks or action trail.

  4. Assign Action Codes in the following priority:

    1. Action Code 310 (Statute Control)

    2. Action Code 320 (Entity Control)

    3. Action Code 4XX

    4. Action Code 6XX

    5. Action Code 3XX

    6. Action Code 2XX (Correspondence)

  5. Temporary Guidance - Due to processing delays, more suspense time is needed in Rejects for correspondence. Use the table below and replace current Action Codes 211, 215, 225 and 226 with Action Codes 231 and 232 whenever they are listed throughout the IRM:

    Current Action Code New Action Code
    211 231
    215 231
    225 232
    226 231

    Note:

    These changes are temporary. When processing time frames return to normal, an IPU will be issued to revert Action Codes to their previous uses.

  6. Use the following table if more than one Action Code is needed on Form 1120-S:

    Action Codes

    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 1120-S.

    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 1120-S.

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

    3. See IRM 3.11.217.3.1(9) for suspense periods.

    Action Codes have different priority,
    1. Edit the Action Code with the higher priority on the Form 1120-S.

      Exception:

      Use Action Code 211, 215, 225, or 226 before Action Code 341 to make sure 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.

    3. See Figure 3.11.217-1, Example of Editing Return When More Than One Action Code is Needed.

     

    Figure 3.11.217-1

    This is an Image: 51221501.gif

    Please click here for the text description of the image.

  7. Edit the following Action Codes when a return can’t be perfected:

    Action Codes

    Action Code Description
    211 (First Correspondence) or 215 (International Correspondence)
    • Return is illegible, incomplete, or contradictory and therefore unprocessable.

    • 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) Unsigned returns (only issue for correspondence).
    226 (Missing Signature International Correspondence) Unsigned foreign returns (only issue for correspondence).
    460 (Management Suspense) Section 965, Treatment of Deferred Foreign Income upon Transition to Participation Exemption System of Taxation (Tax Period 201712 through 202012).
    480 (Early Filed Suspense) Early filed return.
    610 (Renumbered Non-Remittance) or
    611 (Renumbered with Remittance)
    • Mis-batched return (e.g., Form 1065 is found in an Form 1120-S batch of work).

    640 (Void) To delete the assigned Document Locator Number (DLN) on the return (e.g., Re-entry Returns).
    650 (International)
    • An International return, processed in Ogden Submission Processing Campus (OSPC).

     

  8. Continue perfecting the return after editing the Action Codes.

  9. Valid Action Codes are listed below:

    Action Codes

    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 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 Other Accounting

    Note:

    This Action Code is also used for "Black Liquor" claims on Form 6478, Biofuel Producer Credit (Credit for Alcohol Used as Fuel for 2012 - 2007). See IRM 3.11.217.24.7, Schedule K, Line 13f, - Biofuel Producer Credit.

    10
    347 Form 2553, Election by a Small Business Corporation, attached to Form 1120-S, U.S. Income Tax Return for an S Corporation, and/or taxpayer indicates "Revenue Procedure (Rev. Proc.) 2013-30" (effective September 3, 2013) or "Rev. Proc. 2007-62" on Form 1120-S.

    Note:

    Action Code 347 is used to route Form 1120-S to Entity Control for review of the Form 2553 or Rev. Proc. 2013-30 or Rev. Proc. 2007-62.

    Exception:

    Do not edit Action Code 347 if the return has already been to Entity Control.

    20
    352 Name Research 3
    360 Other-in-House Research 10
    370 Examination - Prompt Assessment - Form 4810, Request for Prompt Assessment Under Internal Revenue Code Section 6501(d) 10
    420 Management Suspense A

    Note:

    Action Code 420 was used for tax periods 200612 to 200711 when claiming credit on Form 8913, Credit for Federal Telephone Excise Tax Paid Only Tax Return.

    5
    440 Management Suspense 15
    450 Management Suspense 20
    460 Management Suspense

    Note:

    Used for "Section 965" identification (Tax Period 201712 through 202012).

    25
    480 Early Filed Suspense 150
    610 Renumber - Non-Remittance 0
    611 Renumber - Remittance 0
    640 Void 0
    650 International 0
     

    Reminder:

    Beginning with tax returns for periods ending 12-31-2007 and later, Form 2553, Election by a Small Business Corporation, may be filed as an attachment to Form 1120-S requesting to be considered an S Corporation. Edit Action Code (AC) 347 when a Form 2553 is attached to Form 1120-S or taxpayer shows "Revenue Procedure (Rev. Proc.) 2013-30" or "Rev. Proc. 2007-62" on Form 1120-S.

  10. For more information and applicable Action Codes, see IRM 3.12.38.3.4, Error Resolution System (ERS) Action Codes, and the exhibit in IRM 3.12.38-1, Action Codes.

Unprocessable Conditions and Rejection of Documents

  1. A tax return is an Ogden Submission Processing Campus (OSPC) only return if at least one of the following conditions exists:

    1. The tax return has a foreign address.

    2. There is a refund credit claimed because of U.S. income tax paid or withheld at source because of the Foreign Investors in Real Property Tax Act whether or not Form 8288-A, Statement of Withholding on Certain Dispositions by Foreign Persons, is attached.

Treatment of All Unprocessable Tax Returns

  1. Kansas City Submission Processing Campus (KCSPC) - If the Form 1120-S is an "OSPC only" return:

    1. Discontinue perfection of the return.

    2. Prepare Letter 86-C, Referring Taxpayer Inquiry/Forms to Another Office, to inform the taxpayer IRS sent the return to Ogden Submission Processing Campus (OSPC).

    3. Edit an Action Trail (e.g., "86-C Sent" or similar language) in the lower left corner going vertically up the side of the return.

  2. If the Form 1120-S is other than an "OSPC only" return, perfect the return.

    1. Examine schedules and other attachments for necessary information and edit the return as needed for processing.

    2. If perfection is not possible, perfect to the extent possible and proceed as set forth in (3) below.

  3. Action to Secure Perfection:

    1. Where shown, prepare Form 4227, Intra-SC Reject or Routing Slip, indicating the reason for rejecting the document and that the taxpayer should resubmit for processing when it is perfected.

    2. Attach the Form 4227, Intra-SC Reject or Routing Slip, below the entity area.

    3. If the tax return is not numbered, withdraw it from processing and forward it to the proper area.

    4. If the tax return is numbered, edit the proper Action Code in the bottom left margin of the return and leave it in the block.

♦Correspondence♦

  1. There are two types of correspondence that Code and Edit may encounter:

    1. Correspondence received from taxpayers, and

    2. Correspondence issued to taxpayers.

♦Definition of Correspondence from Taxpayers♦
  1. Correspondence is all written communications from a taxpayer or his/her representative, excluding tax returns, whether solicited or unsolicited. This includes:

    1. Written communications in response to IRS requests for information or data.

    2. Written communications, including annotated notice responses that provide more information or dispute a notice.

    3. A telephone call that results in a written referral or research (Form e-4442, Inquiry Referral).

  2. The key to identifying taxpayer’s correspondence is to ask the following questions:

    1. Is the taxpayer waiting for a response from IRS?

    2. Is the taxpayer waiting for IRS to take action?

    3. Is the taxpayer asking a question?

    Note:

    A Post-It-Note, Sticky Note, or some other type of note stuck on the return by another function, "Taxpayer (TP) requests penalties be waived" , does not constitute correspondence from the taxpayer.

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

    Exception:

    Section 965 Returns - Do not correspond on the return. ERS will take care of any correspondence needed. Notate "K-1 Missing" (or similar language) in the lower left margin (Action Trail) of the return, if correspondence is needed for missing Schedules K-1. See IRM 3.11.217.2.11, Section 965 Returns (201712 through 202012), for more information.

    Exception:

    Do not correspond on returns prepared by Collections, IRC 6020(b), or by Examination, "Substitute for Return" (SFR).

  2. If the return is incomplete and doesn't appear to be a return meant for filing or is a conduit for providing information (e.g., indicates "payment only" ), give the return to the lead. The lead must determine the correct course of action. The lead researches for a Transaction Code (TC) 150 and any other information necessary to determine if the return should continue processing, is an amended return, or must be routed to another function. An incomplete return could include any of the following:

    • A one-page return, with or without a signature.

    • Incomplete returns indicating "Payment Only" .

    • Incomplete returns indicating they have previously e-filed.

    Note:

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

  3. Examine the return for all unprocessable conditions before initiating correspondence.

    Correspondence

    If And Then
    The return needs correspondence, Requires a response,
    1. Complete an approved Correspondence Action Sheet indicating the letter number (e.g., 86-C, 118-C, 319-C, etc.), Master File Tax (MFT), and the proper paragraphs.

      Note:

      Some paragraphs may require fill-ins to enter, such as tax period, form number, Document Locator Number (DLN), etc.

    2. Attach the approved Correspondence Action Sheet to the front of the return below the entity area.

    3. Edit Action Code 211 (First Correspondence) or 215 (International Correspondence) on the return.

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

    The return needs correspondence, Does not require a response,
    1. Complete an approved Correspondence Action Sheet indicating the letter number (e.g., 86-C, 118-C, 319-C, etc.), Master File Tax (MFT), and the proper paragraphs.

      Note:

      Some paragraphs may require fill-ins to enter, such as tax period, form number, DLN, etc.

    2. Photocopy first page of return and attach the approved Correspondence Action Sheet below the entity area on the front of the return copy. Be sure the name and address clearly show above the approved Correspondence Action Sheet.

    3. Forward the copy to the Correspondence Area.

    4. Edit an Action Trail (e.g., "1382-C Sent" or similar language) in the lower left corner going vertically up the side of the return.

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

     

    Note:

    There are more campus exclusive letters. They are for processing specific forms or conditions. Go to the lead or manager for copies of these letters.

♦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 the cases from those images.

  2. "CIS" returns show a "CIS Image-Do not correspond for Signature" stamp below the signature line or a "CIS" annotation on the front of the return.

  3. Verify all edit marks and make sure placement is correct on a "CIS" return.

    Correspondence Imaging System (CIS) Return

    If Then
    The edit marks are black, Underline the edit mark if correct or circle if incorrect.
    The edit marks are red or green, Circle if incorrect.
    The edit marks are missing or incorrect, Perfect as necessary.
     

  4. Follow the instructions below for processing "CIS" returns.

    Correspondence Imaging System (CIS) Return

    If And Then
    The "CIS" return has a Form 13596, Reprocessing Returns, attached, The return is incomplete (e.g., missing signature, schedules, or forms),
    1. Do not correspond.

    2. Remove the return from the batch and route to Accounts Management (AM).

    3. If the return comes back from AM with the information still incomplete, send the return to AM again to secure all the missing information. Indicate "Additional information needed to process incomplete CIS return," or similar language on Form 4227 (or other proper routing slip).

    The "CIS" return has a Form 13596, Reprocessing Returns, attached and the return is incomplete (e.g., missing signature, schedules, or forms), The return shows correspondence was sent (e.g., CCC "3" is edited on the return), Do not route the return to Accounts Management (AM). Continue processing the return.
    The "CIS" return does not have a Form 13596, Reprocessing Returns, attached, The return is incomplete (e.g., missing signature, schedules, or forms), Follow normal correspondence procedures.
     

♦Internal Revenue Service (IRS) Employee Contacts♦
  1. The Internal Revenue Service (IRS) Restructuring and Reform Act of 1998 (RRA 98), Section 3705(a), gives identification requirements for all IRS employees working tax-related matters.

  2. All IRS employees who communicate by telephone, or face-to-face, or any other method of correspondence with taxpayers or their personal representatives, on tax-related matters must give (at minimum) the following information:

    1. Telephone Contact - Their title (e.g., Mr., Mrs., Ms., Miss), last name, and badge identification (ID Card) number. Toll-free employees may also give their location for identification purposes. Treat faxes to taxpayers on tax-related matters as correspondence and include the required information.

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

    3. Correspondence (sent to the taxpayer and authorized representatives) - A telephone number that taxpayers can call for answers to questions. In addition, manually generated correspondence must have the employee’s title (e.g., Mr., Mrs., Ms., Miss), last name, Integrated Data Retrieval System (IDRS) number, and letter system number, which are systemically generated by IDRS. Treat faxes to taxpayers on tax-related matters as correspondence and include the required information.

    4. Correspondex letters - Specific employee name and telephone number if the employee initiating the correspondence is in the best position to respond to any questions the taxpayer may have or if the taxpayer is being asked to give more case-related information. If the taxpayer does not need to contact a specific employee, the correspondence needs only an IRS telephone number and standard signature.

  3. When a taxpayer requests to speak with a specific employee who previously worked their inquiry or request, or complains about the level of service previously given, make every effort to resolve the taxpayer's inquiry. If unable to resolve the issue, refer the inquiry using established procedures to the manager.

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

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

♦Use of Fax for Taxpayer Submissions♦
  1. Taxpayers may send tax return information via fax as part of return perfection even when submitting a signature. In circumstances where contact with the taxpayer was made and documented, faxed signatures are acceptable.

  2. Contact the taxpayer by telephone or correspondence. Follow local procedures to decide which method of contact to use.

  3. Indicate the fax paragraph on the approved Correspondence Action Sheet to inform the taxpayer of the fax options.

  4. Use the following resources to make sure you are speaking with the taxpayer or authorized representative before disclosing any tax information:

    • IRM 21.1.3.2.3, Required Taxpayer Authentication

    • IRM 21.1.3.2.4, Additional Taxpayer Authentication

  5. Before leaving any messages on a taxpayer's answering machine, review:

    • IRM 10.5.1.6.7.2, Answering Machine or Voicemail

    • IRM 10.8.1, Information Technology (IT) Security, Policy and Guidance

C/SC Letters

  1. Listed below are letters which are provided by Headquarters for Submission Processing Campus use in corresponding for items listed in this IRM. It is expected that tax examiners or their supervisors (or delegates) will have access to and be familiar with the Submission Processing Center Correspondex for selection of proper letters. The list is not all-inclusive.

    1. Letter 86-C, Referring Taxpayer Inquiry/Forms to Another Office - Letter referring taxpayer inquiry/forms to another office.

    2. Letter 118-C, Corporate Return Incomplete for Processing: Form 1120, Form 1120 Series, Form 1120-S - Letter requesting missing schedules or documents.

    3. Letter 143-C, Signature Missing - Letter advising taxpayer that we have received tax form and need more information to complete action on it.

    4. Letter 319-C, Return Covers Other Than 12-Month Accounting Period - Letter advising taxpayer that IRS can’t process return because it shows an improper tax period, or a period of more than 12 months, or a period less than 12 months without an explanation.

    5. Letter 1382-C, Penalty Removal Request Incomplete - Letter requesting taxpayer to resubmit request for penalty relief after receiving notice of penalty assessment.

    6. Letter 3463-C, Missing Information Request to Process Business Returns - Letter requesting missing information to process business returns.

♦Compliance Secured/Prepared Returns♦

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

  2. Compliance notates:

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

    2. Secured tax returns with "TC 59X" or "ICS" or "Process as Original" with a Form 13133, Expedite Processing Cycle, attached with the "Delinquent Return" box checked.

    Note:

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

♦IRC 6020(b) Prepared by Collections♦
  1. When the taxpayer doesn’t file a required return, IRC 6020(b) is the authority for IRS to prepare the return.

  2. These returns are identified by the notation: "PREPARED AND SIGNED UNDER 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 missing, follow the normal procedures for editing the IRS Received Date. See IRM 3.11.217.7, Received Date.

    2. Compliance Function representatives must sign returns. If not signed, route to Compliance using Form 4227, Intra-SC Reject or Routing Slip.

      Note:

      Accept revenue officer (RO) typed or electronic signatures as valid signatures on the return.

    3. Edit CCC "D" if the Compliance Function representative notates: "DO NOT ASSESS FAILURE TO PAY PENALTY" and the Return Due Date (without regard to extensions) is July 30, 1996 or prior.

      Note:

      Do not edit CCC "D" if the Return Due Date is after July 30, 1996 (without regard to extensions) even if the Compliance Function representative notates "DO NOT ASSESS FAILURE TO PAY PENALTY" .

    4. Do not 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 two years and nine months after the Return Due Date. Do not send the return to Statute Control See IRM 3.11.217.14.16, CCC "W" = "Cleared by Statute" and IRM 3.11.217.3.7, Statute Returns.

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

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

    2. Use approved Correspondence Action Sheet to correspond for conditions that are unprocessable (e.g., missing signatures, missing schedules, etc.).

    3. Edit CCC "W" if the received date is more than two years and nine months after the Return Due Date. Do not send to Statute Control. See IRM 3.11.217.3.7, Statute Returns.

      Reminder:

      If there is an indication penalties require suppression, edit the proper Computer Condition Code(s). See IRM 3.11.217.14, Computer Condition Codes - General, for more information.

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

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

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

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

      Note:

      Do not enter CCC "D" unless the Return Due Date (without regard to extensions) is July 30, 1996, or prior, even if the CCC “D” box is checked on Form 13133.

    4. Edit CCC "W" if the received date is more than two years and nine months after the Return Due Date. Do not send to Statute Control. See IRM 3.11.217.3.7, Statute Returns.

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

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

    2. Use approved Correspondence Action Sheet to correspond for conditions that are unprocessable (e.g., missing signatures, missing schedules, etc.).

    3. Edit the Computer Condition Codes that are checked on Form 13133.

    4. Edit CCC "W" if the received date is more than two years and nine months after the Return Due Date. Do not send to Statute Control. See IRM 3.11.217.3.7, Statute Returns.

    Reminder:

    If Form 13133 (or something similar) shows penalties require suppression, edit the proper Computer Condition Code(s). Please refer to IRM 3.11.217.14, Computer Condition Codes - General, for more information.

♦Statute Returns♦

  1. Any return with a received date that is two years and nine months or more after the Return Due Date is a potential Statute Control return.

  2. Route Statute returns to the Statute Control Unit daily or more often if needed.

  3. If any of the conditions listed below are present, do not route to Statute Control Unit for clearance. Instead, edit CCC "W" and continue processing.

    • Compliance IRC 6020(b) returns.

    • Secured by Examination/Collections, secured by TEGE, secured by TEGE Employee Plan (EP) Exam.

    • Returns with Transaction Code (TC) 59X or Integrated Collection System "ICS" notated on the face of the return.

    • Returns showing "substitute returns prepared by Examination (SFR)" in top margin of the return.

    • Returns with a stamp indicating a previous clearance by Statute Control within the last 90 days.

  4. If a return has any of the following computer paragraphs (CPs) or letters attached, do not route to Statute Control Unit for clearance. Edit CCC "W" if the return needs processing. See Exhibit 3.11.217-3, Routing Guide for Attachments, for more information.

    • CP 259, Master File Generated 1st TDI Notice.

    • CP 959, Master File Generated 1st TDI Notice (Spanish version).

    • CP 518, Final Notice - Return Delinquency.

    • Letter 112-C, Payment/Overpayment/Credit Applied; No Record of Return Filed.

    • Letter 282-C, Return Not Received: Copy Requested/Received.

    • Letter 2255-C, Delinquent Return (Forms 720, 1041, 1065, 1120).

    • Letter 2284-C, Delinquent Return (Form 940, 941, 942, 943).

  5. If a return has a Form 12412, Operations Assistance Request (OAR), from TAS and is a potential statute control return but is not stamped "Cleared by Statute" , give it to lead. The lead contacts the TAS employee listed on the OAR for rejection of the return and sends it back to TAS for clearance by the Statute Control 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 Control for clearance.

  6. Statute returns are unprocessable until cleared by Statute Control.

    Statute Returns

    If Then
    The return is numbered,
    1. Edit Action Code 310 on the return.

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

    The return is unnumbered,
    1. Do not continue processing the return.

    2. Pull the return from the batch.

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

     

  7. Edit CCC "W" if the Statute Control Unit stamps or shows clearance on the front of the return. Exhibit 3.11.217-2, Due Date Chart.

  8. Statute stamps "No Statute Issue" or shows clearance on the front of the return. Follow the chart below to determine if a CCC "W" is needed:

    Statute Returns

    If And Then
    The return received date is two years and nine months or more after the Return Due Date, The return is stamped, "No Statute Issue" or a similar statement indicating there is no statute issue (e.g., "Statute N/A" ), Edit CCC "W" .
    The return received date is less than two years and nine months from the Return Due Date, The return is stamped, "No Statute Issue" or a similar statement indicating there is no statute issue (e.g., "Statute N/A" ), Do not edit CCC "W" .
     

♦Re-Entry Document Procedures♦

  1. Reprocess a return posted to the wrong account or module to post it to the correct account module.

  2. Some re-entry returns may have originally been filed electronically through Modernized E-file (MeF). These returns may be identified by the presence of MeF printouts in lieu of an actual return.Do not correspond for missing signatures on these documents.

  3. Each re-entry return must have a Form 3893, Re-Entry Document Control, or Form 13596, Reprocessing Returns, attached.

    • Form 3893 is used to re-input documents that have not posted to an account or module.

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

  4. Always leave the Form 3893 or Form 13596 on the front of the return. It must remain as a permanent part of the document.

  5. Examine Form 3893 or Form 13596 to determine the action needed to make the return processable.

    Caution:

    If the received date is two years and nine months or more after the Return Due Date, refer to Statute procedures before re-entering or reprocessing the return. See IRM 3.11.217.3.7, Statute Returns.

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

  2. If more than one return is in the batch and only the top Form 3893 has an entry in Box 1 (Alpha/Numeric block control no.), edit all returns using current processing instructions and keep all returns clipped together.

  3. Circle CCC "G" if present.

  4. Do not edit CCC "G" on Amended returns.

  5. Do not send Letter 1382-C, Penalty Removal Request Incomplete, if a request for penalty relief is attached.

  6. If the return is not edited according to current processing instructions, circle any Action Codes, Computer Condition Codes, and any other edit marks that are no longer applicable. Re-edit according to current processing instructions.

  7. If the return is edited according to current processing instructions, make sure that the information from Form 3893 is edited to the return.

    Form 3893

    Form 3893 Action Taken
    Box 14 (Remarks) Make sure that the information is edited to the return.
    Box 15 (Process as)
    1. Circle any green rocker and edit marks that may show 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.

    Form 3893

    If Then
    Improper perfection, Edit the same correction in red/green (per local procedure) to the proper area.
    Taxpayer error, Leave the entries as shown on the document.
     

  9. A received date must be present on all Re-input returns.

    Re-input Returns

    If Then
    IRS Received date is not present, Edit an IRS Received Date to the middle of the return. See IRM 3.11.217.7, Received Date.
    Multiple IRS Received Dates present, Circle all but the earliest date.
     

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

    Exception:

    Do not correspond for missing Schedules K-1, Shareholder's Share of Income, Deduction, Credits, 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.

♦Form 13596 - Reprocessing Returns♦
  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 Amended returns.

  4. Do not send Letter 1382-C, Penalty Removal Request Incomplete, if a request for penalty relief is attached.

  5. If the return is not edited according to current processing instructions, circle any Action Codes, Computer Condition Codes, and any other edit marks that are no longer applicable. Re-edit according to current processing instructions.

    Caution:

    If you receive a Form 1120-S converted from Form 1120, make sure that the following items are present: EIN, Name Control, NAICS, Received Date, Audit Code "4" , tax period (prior year returns), CCC "3" (if applicable for "No Replies" ), and CCC "F" (if applicable for Final returns). If not, then edit the needed items. Do not detach Form 1120.

  6. If the return is edited according to current processing instructions, make sure that the information from Form 13596 is edited on the return.

    Form 13596

    Form 13596 Action Taken
    Taxpayer Identification Number (TIN) correction, Edit the correct TIN on return.
    Tax period correction, Edit the correct tax period ending on the return.
    Reasonable cause, Edit proper Computer Condition Code(s).
    1. Edit CCC "R" if the Failure to File "FTF" box is checked.

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

     

  7. 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.

    Form 13596

    If Then
    Improper perfection, Edit the same correction in red/green (per local procedure) to the proper area.
    Taxpayer error, Leave the entries as shown on the document.
     

  8. A received date must be present on all reprocessed returns.

    Reprocessed Returns

    If Then
    Received date is not present, Edit a received date to the middle of the return. See IRM 3.11.217.7, Received Date.
    Multiple received dates are present, Circle all but the earliest date.
     

  9. Circle any green rocker and edit marks that may show a receipt of remittance.

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

    Exception:

    Do not correspond for missing Schedules K-1, Shareholder's Share of Income, Deduction, Credits, etc.

♦Amended Returns♦

  1. A return is considered amended based on the following:

    • The Amended box is checked.

    • Words such as "Supplemental" , "Corrected" , "Superseded" , or "Additional" are present.

    • Any indication from the taxpayer that a previous return was filed.

      Note:

      Words such as "Copy" or "Duplicate" are not sufficient indicators and must be accompanied by a statement from the taxpayer that a previous return was filed.

  2. Examine the return for attachments:

    • Do not separate any related attachments submitted to explain the reason for the Amended Return. Accounts Management may use the information.

    • Detach any unrelated documents and route them to the correct function using Form 4227, Intra-SC Reject or Routing Slip, and edit the Action Trail on the return.

    Note:

    Pull any amended Form 1120-S, U.S. Income Tax Return for an S Corporation, with Case Base Reasoning "CBR" notated and route to Accounts Management.

  3. Follow the instructions in the chart below when there is an indication of an amended return:

    Amended Returns

    If Then
    Compliance Services entered "TC 59X" or "ICS" was edited on the return by Compliance Services, Do not edit CCC "G" . Process the return as an original.
    Statute Control stamped the return "Delinquent Original Cleared for Processing" , Do not edit CCC "G" . Process the return as an original.
    Form 3893 or Form 13596 is attached, Do not edit CCC "G" . See IRM 3.11.217.3.8.1, Form 3893 - Re-Entry Document Control, and IRM 3.11.217.3.8.2, Form 13596 - Reprocessing Returns.
    None of the above are present, Edit CCC "G" . No other codes may be used with CCC "G" .

    Exception:

    CCC "S" , CCC "T" , CCC "W" , CCC "3" and/or Error Resolution System (ERS) Action Codes may be used with CCC "G" .

     

  4. The following data must be edited on all Amended returns:

    1. Name Control - See IRM 3.11.217.5.4, Entity Perfection - Name Control.

    2. Employer Identification Number (EIN) - See IRM 3.11.217.5.3, Entity Perfection - Employer Identification Number (EIN).

    3. Tax Period - See IRM 3.11.217.6, Tax Period.

    4. CCC "G" - See Exception above.

    5. Received Date - See IRM 3.11.217.7, Received Date.

    6. Signature - See IRM 3.11.217.19, Signature.

    Note:

    No further editing is required.

  5. Detach Schedules K-1 for current year (TY2022), two preceding years (TY2021 and TY2020), and future Schedules K-1. See IRM 3.0.101, Schedule K-1 Processing, for complete instructions to edit and process Schedules K-1.

Prompt Assessment or Prompt Determination - Form 4810

  1. A "Prompt Assessment" , Internal Revenue Code (IRC) Section 6501 is requested, either in the form of a letter or on Form 4810, Request for Prompt Assessment Under Internal Revenue Code Section 6501(d). A "Prompt Determination" is requested under Section 505 of the U.S. Bankruptcy Code.

    Prompt Assessment or Prompt Determination - Form 4810

    If And Then
    A Prompt Assessment or Prompt Determination request is not attached to a tax return,   Forward the Prompt Assessment/Prompt Determination request to Examination.
    A Prompt Assessment or Prompt Determination is attached to a tax return, A Transaction Code (TC) 150 has not posted for that return, Process the return and forward the Prompt Assessment/Prompt Determination request to Examination with a copy of the tax return.
    A Prompt Assessment or Prompt Determination is attached to a tax return, A TC 150 has posted for that return, Route the return and Prompt Assessment/Prompt Determination request to Examination.

    Note:

    If return is numbered, edit Action Code 370 and continue processing the return.

     

♦Refund Returns (45 Day Jeopardy and High Dollar Refunds)♦

  1. Document Perfection identifies refunds in jeopardy and requests manual refunds.

    Note:

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

    Refund Returns

    If Then
    A refund return is batched in a non-refund batch,
    1. Pull the return from the non-refund batch using local procedures.

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

    Note:

    Follow the instructions below when the processing date is more than 20 days after the received date or the Return Due Date (2nd If box)or the refund amount is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡(3rd If box).

    The processing date is more than 20 days after the received date or the Return Due Date (whichever is later) and the refund amount is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡,

    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. See Figure 3.11.217-2, Example of Editing Action Code 341.

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

    • Numbered Returns:

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

      2. Edit Action Code 341 and leave in the batch.

    The refund is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    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.

      4. Make a copy of the first two pages of the return along with any page of the return that appears suspicious for Criminal Investigation (CI). See IRM 3.11.217.2.5, Criminal Investigation (CI) Referral.

      5. 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.

      6. Expedite processing.

    • Numbered Returns:

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

      2. Edit Action Code 341.

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

      4. Make a copy of the first two pages of the return along with any page of the return that appears suspicious for Criminal Investigation (CI). See IRM 3.11.217.2.5, Criminal Investigation (CI) Referral.

      5. 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.

     

    Figure 3.11.217-2

    This is an Image: 51221503.gif

    Please click here for the text description of the image.

Credit for Federal Telephone Excise Tax Paid Only Tax Return (Tax Year 2006 revision)

  1. This credit was used for tax periods 200612 to 200711 when claiming credit on Form 8913, Credit for Federal Telephone Excise Tax Paid Only Tax Return. No editing is required.

Examination of Tax Data

  1. This subsection provides instructions for editing general tax data.

Non-Standard or Prior Year Format

  1. All prior year returns must be reformatted to current year format. Refer to Code and Edit BMF Job Aids for specific year coding.

  2. If the return is on other than current form format (may be either a prior year or non-standard form) and the transcription lines can’t be numbered to agree with the current year return:

    1. Edit all available transcribed tax data items to the tax data part of a blank current year form.

    2. Place a large "X" across the tax data entries of the prior year (or non-standard) form.

    3. Staple the forms together, attaching the dummied form (current format) on top so that ISRP can enter the entity data from the prior year (or non-standard) form.

Conversion of Form 1120 to Form 1120-S

  1. If a taxpayer filed Form 1120 and the Entity Control Unpostable Unit has determined the taxpayer has a valid Small Business Election (Form 2553, Election by a Small Business Corporation) on file, Rejects function will convert Form 1120 to a Form 1120-S, U.S. Income Tax Return for an S Corporation. No action is required of Document Perfection. Do not detach Form 1120.

  2. If you receive a Form 1120-S converted from Form 1120 and the Form 13596, Reprocessing Returns, is attached for reprocessing, see IRM 3.11.217.3.8.2, Form 13596 - Reprocessing Returns, for more information.

Significant Entries

  1. Reference is made throughout this IRM to "significant entries" . A significant entry is defined as any amount other than zero.

    Note:

    "Blank" , "Dash" , "None" , "N/A" , or "Zero" are not significant entries unless otherwise specified.

Incomplete Return

  1. When the return serves only as a transmittal for statements, schedules, and other attachments, or is otherwise incomplete, analyze the supporting documents and edit the missing entries on the form itself.

  2. Examine attachments and edit the information to proper transcription lines of both the income and deduction sections.

    1. Edit the income section if Line 6 is the only entry in the income section.

    2. Edit the deduction section if Line 21 is the only entry in the deduction section.

    3. Edit the income or deduction sections if blank and there is an indication the income or deduction items are included on an attachment (e.g., a notation such as "See attached" , "See Schedule F" , "Statement attached" , etc.).

    Note:

    When a doubt exists concerning placement of an income or deduction item because of terminology used by the taxpayer, edit income items as "other income" and deduction items as "other deductions" .

  3. Secured Delinquent Returns are returns secured by compliance personnel. If information is missing from one of these returns, do not send the return back to the taxpayer; correspond using approved Correspondence Action Sheet.

Editing Dollars and Cents

  1. Document Perfection is not required to edit a vertical line, 00, dash, or decimal point to show dollars and cents.

    Editing Dollars and Cents

    If Then
    The taxpayer has entered money amounts showing dollars and cents separated by a decimal point, No editing is required.
    The taxpayer has entered dollars only where dollars only should be entered, No editing is required.
    The taxpayer has entered dollars only where dollars and cents should be entered, No editing is required.
     

Negative Entries

  1. Edit negative entries as follows:

    Negative Entries

    If Then
    Brackets "[ ]" or parentheses "( )" are pre-printed on the form, No editing is required.
    The taxpayer shows a negative amount with brackets "[ ]" or parentheses "( )" or a minus "–" sign, No editing is required.
    Editing a negative amount to a transcription line (e.g., computing a line entry, entering a missing entry, etc.), Bracket "[ ]" (or "( )" ) the negative amount.
     

♦Entity Perfection♦

  1. This subsection provides instructions related to taxpayer identification for Form 1120-S, U.S. Income Tax Return for an S Corporation.

♦Entity Perfection - General♦

  1. The entity of a tax return identifies the taxpayer on the Business Master File (BMF). The entity area of the return contains the following:

    • Employer Identification Number (EIN)

    • Name

    • "In-care-of" Name

    • Address

♦Bankruptcy♦

  1. If the Form 1120-S, U.S. Income Tax Return for an S Corporation, shows bankruptcy (e.g., shows "RECEIVER" , "TRUSTEE" , or "DEBTOR IN POSSESSION" ) in the entity area or on an attachment, route to Entity Control. Follow local procedures using Form 13934, Entity Document/C&E Merge Transmittal.

    Exception:

    Do not route Amended returns to Entity.

  2. Completely edit the return except the name control prior to routing to Entity Control.

    Exception:

    Do not route to Entity if there is an indication Entity has already edited the return, usually orange/purple editing of the EIN and name control.

♦Entity Perfection - Employer Identification Number (EIN)♦

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

  2. Determine the EIN as follows:

    1. Employer Identification Number (EIN)

      If And Then
      EIN is missing, You can determine the correct EIN from the attachments or schedules, Edit the EIN to the proper location.
      The EIN is either a Practitioner Tax Identification Number (PTIN) or Individual Taxpayer Identification Number (ITIN), Unnumbered/Numbered,
      • Unnumbered

        1. Remove return from batch.

        2. Route to Entity Control following local procedures using Form 13934, Entity Document/C&E Merge Transmittal, for EIN assignment.

      • Numbered

        1. Edit Action Code 320.

        2. Leave return in batch.

      Multiple EINs are present, Unnumbered/Numbered,
      • Unnumbered

        1. Remove return from batch.

        2. Route to Entity Control following local procedures using Form 13934, Entity Document/C&E Merge Transmittal, for EIN assignment.

      • Numbered

        1. Edit Action Code 320.

        2. Leave return in batch.

      The EIN contains any of the following conditions and can’t be determined from attachments or schedules:
      • Illegible

      • Missing

      • Other than nine digits

      • All zeros

      • All nines

      Unnumbered/Numbered,
      • Unnumbered

        1. Circle out all illegible EINs, zeros, or nines.

        2. Research IDRS.

        3. If found, edit to the proper location.

        4. If not found, route to Entity Control following local procedures using Form 13934, Entity Document/C&E Merge Transmittal.

      • Numbered

        1. Circle out all illegible EINs, zeros, or nines.

        2. Edit Action Code 320.

        3. Leave return in batch.

      "Pending" , "applied for" , etc., is shown in the EIN area, Unnumbered/Numbered,
      • Unnumbered

        1. Research Integrated Data Retrieval System (IDRS).

        2. If found, edit to the proper location.

        3. If not found, route to Entity Control following local procedures using Form 13934, Entity Document/C&E Merge Transmittal.

      • Numbered

        1. Edit Action Code 320.

        2. Leave return in batch.

♦Entity Perfection - Name Control♦

  1. The Name Control consists of four characters or less.

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

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

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

  3. If Box H(2) "Name Change" is checked, route the return to Entity Control following local procedures using Form 13934, Entity Document/C&E Merge Transmittal.

  4. Edit the Name Control as follows:

    1. Name Control

      If And Then
      Able to determine the Name Control,   Underline the Name Control. See Figure 3.11.217-3, Example of Editing a Name Control.
      Unable to determine the Name Control, Unnumbered/Numbered,
      • Unnumbered

        1. Research Integrated Data Retrieval System (IDRS).

        2. If found, edit to the proper location.

        3. If not found, route to Entity Control following local procedures using Form 13934, Entity Document/C&E Merge Transmittal.

      • Numbered

        1. Edit Action Code 352 (Name Research).

        2. Leave return in batch.

    Figure 3.11.217-3

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    Please click here for the text description of the image.

♦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. Make sure the "in-care-of" name is in the proper location.

    "In-Care-Of" Name

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

    2. Continue editing the return.

    The street address for the "in-care-of" name is different from the street address of the S Corporation,
    1. Arrow the "in-care-of" street address below the "in-care-of" name or edit the "in-care-of" street address below the "in-care-of" name if located on an attachment.

    2. Circle the S Corporation's street address and input Transaction Code "TC 014" . See IRM 3.11.217.5.6, Entity Perfection-Domestic Addresses.

      Caution:

      See IRM 3.13.2.4, BMF Addresses, for more information regarding address changes on large corp.

    3. Continue editing the return.

     

    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.

  3. Determine a change in the in-care-of name by any of the following:

    • A check mark in Box H(2) "Name Change" , or

    • A check mark in Box H(3) "Address Change" , or

    • Taxpayer edits or added to the "in-care-of" ” name (e.g., original "in-care-of" name crossed out, new name added, etc.)

    "In-Care-Of" Name

    If Then
    An "in-care-of" name is changed but there is no sign of an address change,
    1. Edit the "in-care-of" name as shown above.

    2. Continue editing the return.

    An "in-care-of" name is present and Box H(3) "Address Change" is checked (or there is a sign of an address change),
    1. Edit the "in-care-of" name as shown above.

    2. Correct the address.

    3. Continue editing the return.

     

♦Entity Perfection - Domestic Addresses♦

  1. Perfect the address when the mailing address (Street or P.O. Box) is not easily identified.

    Exception:

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

  2. A business may have two addresses. One is the mailing address and the other is the location address or physical location of the business.

  3. Perfect the address as follows:

    Domestic Addresses

    If And Then
    An attachment shows the address has been changed,   Edit the new address in the entity section of the return. See Figure 3.11.217-4, Example of a Return With a Change of Address.
    Form 8822, Change of Address, or Form 8822-B, Change of Address or Responsible Party - Business, is attached, All apply:
    • Mailing address information is the same,

    • Form 8822 or Form 8822-B, Line 7, does not list a location address,

    • No entry on Form 8822-B, Lines 8 or 9,

    Take no action.
    Form 8822, Change of Address, or Form 8822-B, Change of Address or Responsible Party - Business, is attached, Any applies:
    • Mailing address information is different,

    • Form 8822 or Form 8822-B, Line 7, lists a location address,

    • Form 8822-B, Lines 8 or 9, have an entry,

    Detach Form 8822 or Form 8822-B and route to Entity Control following local procedures using Form 13934, Entity Document/C&E Merge Transmittal.
    Both a P.O. Box and a street address are shown,  
    1. Notate Transaction Code "TC 014" in the upper left margin. See Figure 3.11.217-5, Example of a Return With a P.O. Box and Street Address.

    2. Input "TC 014" .

    Two street addresses are shown,  
    1. Underline the second street address.

    2. Notate the "TC 014" in the upper left margin.

    3. Input "TC 014" .

    One street address is shown, The taxpayer changed the address to a P.O. Box,
    1. Notate the "TC 014" 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 Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries to determine the ZIP Code.

    Note:

    Edit the three digits followed by "01" of the first ZIP Code listed for the applicable state (e.g., "99501" for Alaska).

    Only the first three digits of the ZIP Code can be determined,   Edit "01" for the fourth and fifth digits.
    Box H(3) "Change of Address" is checked, An "in-care-of" name is present,
    1. Edit the "%" (percent sign) or "c/o" to the left of the "in-care-of name" (in the first position) followed by the correct name.

    2. Correct the address.

    3. Continue editing the return.

    It is necessary to edit the street address,   See Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries, for current Address/Street Abbreviations.
    The address contains information other than a street address or P.O. Box,   Do not perfect. ISRP will enter the complete address.
     

    Note:

    Always circle 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. See Figure 3.11.217-6, Example of a Return with In-Care-Of on the Address Line.

    Figure 3.11.217-4

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    Figure 3.11.217-5

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    Figure 3.11.217-6

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  4. The U.S. Postal Service established new address requirements for Army Post Office (APO), Diplomatic Post Office (DPO), and Fleet Post Office (FPO) addresses. If the old address appears, convert to the new state code abbreviation based on the ZIP Code (e.g., APO New York, NY 091XX would be converted to APO AE 091XX). Consider APO/DPO/FPO addresses as domestic addresses. Refer to APO/DPO/FPO Conversion Chart below:

    APO/DPO/FPO Addresses

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

♦Entity Perfection - Foreign Address (OSPC)♦

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

  2. Consider returns with Army Post Office (APO), Diplomatic Post Office (DPO), and Fleet Post Office (FPO) addresses as domestic addresses. See IRM 3.11.217.5.6, Entity Perfection - Domestic Addresses.

  3. Route returns with a foreign address to Ogden Submission Processing Campus (OSPC) for processing. Prepare Letter 86-C, Referring Taxpayer Inquiry/Forms to Another Office, to inform the taxpayer IRS sent the return to Ogden. Edit an Action Trail (e.g., "86-C Sent" or similar language) in the lower left corner going vertically up the side of the return.

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

    1. Edit a two-character alpha code for the Possession/Territory name.

      U.S. Possession/Territory

      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 for U.S. Possessions/Territories. Edit the correct ZIP Code if one is not provided. See Exhibit 3.11.217-8, U.S. Possessions ZIP Codes.

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

    1. Ensure the foreign country is the last entry in the address.

    2. Circle the foreign country and edit the Country Code preceded by a "/" and followed by "/$" (e.g., "/GM/$" is edited for Germany). See Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries, for acceptable Foreign Country Codes.

    3. Edit a unique country code for returns filed with an address in Canada. See IRM 3.11.217.5.7.1, Country Code - Canada.

      Note:

      Coding and Editing BMF Tax Returns, Foreign Addresses Job Aid (Number 2324-002) provides examples for editing foreign addresses.

    4. If the foreign address is from Australia, Brazil, Canada, Cuba, Italy, Mexico, or The Netherlands, check if the address has a province, state, or territory: .

      Note:

      There may be other countries with provinces, states, and territories not listed above, see Coding and Editing BMF Tax Returns, Foreign Addresses Job Aid (Number 2324-002) for more information.

      Province, State or Territory

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

      2. Enter the correct abbreviation. See Exhibit 3.11.217-7, Province, Foreign State and Territory Abbreviations.

      A province, state, or territory name is not present, Continue editing the return.
      A province, state, or territory is shown in abbreviated format, Continue editing the return.
       

    5. A ZIP Code or state is not required on a foreign address. Foreign addresses use a postal code that is entered before the city or foreign country and is part of the address.

♦Country Code - Canada♦
  1. To help Compliance with workload assignment, returns filed with an address in Canada will be edited using a unique Country Code based on the province/territory.

    Country Code - Canada

    If Then
    The foreign address contains a Canadian Province/Territory name, or abbreviation shown in the table below,
    1. See table below to make sure the correct Canadian Province/Territory is present or edited to the return.

    2. Circle the country name.

    3. Edit the correct Country Code based on the province/territory 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 shown in the table below,
    1. Circle the country name.

    2. Edit the Country Code "/CA/$" as the last entry in the address.

     

    Canadian Province/Territory Abbreviations, Postal Codes, and Canadian Country Codes Table

    Canadian Province/Territory Province Abbreviation Postal Code Beginning

    Note:

    If the Canadian Postal Code begins with one of the following, use the corresponding Country Code abbreviation in the right most column.

    Country Code
    Alberta AB T XA
    British Columbia BC V XB
    Manitoba MB R XM
    New Brunswick NB E XN
    Newfoundland and Labrador NL A XL
    Northwest Territories NT X XT
    Nova Scotia NS B XS
    Nunavut NU X XV
    Ontario ON K, L, M, N, or P XO
    Prince Edward Island PE C XP
    Quebec QC G, H, or J XQ
    Saskatchewan SK S XW
    Yukon YT Y XY
     

  2. The rest of the foreign address is edited using procedures in IRM 3.11.217.5.6, Entity Perfection - Domestic Addresses.

Tax Period

  1. This subsection provides instructions for editing the tax period.

Tax Period - General

  1. Form 1120-S must have a tax period.

    Exception:

    Form 1120-S is for the current processing calendar year (e.g., 20222).

  2. Edit the tax period to the right of the title area of Form 1120-S in YYMM format following the instructions below.

    Tax Period

    If Then
    The return is for the current processing calendar year (e.g., 202212), Do not edit the tax period.
    The return is for a prior year, Edit the tax period to the right of the form title in YYMM format.
    The taxpayer has notated a tax period other than the preprinted year on the return, Edit the tax period to the right of the form title in YYMM format based on the taxpayer’s indication, per paragraph (3).
    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 title in YYMM format.

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

     

  3. A tax period should end on the last day of a month. (Ignore a minor discrepancy such as October 30 instead of October 31). The exceptions are a 52-53 week filer, and final or short period returns. The table below identifies examples of tax periods.

    Tax Period

    Tax Period Ends Tax Period
    Oct. 3, 2022 (52-53 week document) 2209
    Oct. 3, 2022 (Final short period return) 2210
    Oct. 25, 2022 (52-53 week document) 2210
    Oct. 25, 2022 (Final short period return) 2210
    Nov. 30, 2022 2211
    Dec. 31, 2022 2212 (no editing is required)
    Feb. 28, 2023 2302
     

  4. Tax periods reported under the 52-53 week rule may end not more than six days before, and not more than three days after, the end of a month. In the edit format, use the numeric designation of the month, the last day of which is closest to the actual ending date.

    Tax Period

    If Then
    The tax period ending is not more than three days after the beginning of the month, Edit the previous month (e.g., October 3, use the numeric designation for September, YY09).
    The tax period ending is not more than six days before the end of the month, Edit the month shown on the return (e.g., October 25, use the numeric designation for October, YY10).
    Tax period ending is more than six days before the end of the month or three days after the beginning of the month, and is not a Final, Correspond to determine the correct tax period ending.
     

  5. If the tax period is for more than 12 months or 53 weeks, correspond.

  6. On a "Final" return, if the month and year is equal to or later than the received date month and year (future return) or the taxpayer has not shown in which month the business ended, edit the tax period to be one month before the received date. See Figure 3.11.217-7, Example of Editing an Early Filed Final Return.

    Figure 3.11.217-7

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    Please click here for the text description of the image.

  7. On a "Final" return, if the received date is after the short period due date but on or before the regular full tax period due date ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, edit CCC "R" and CCC "F" . See IRM 3.11.217.6.3(2) for more information. See Figure 3.11.217-8, Example of Editing CCC “F” and CCC “R” on Form 1120-S.

    Note:

    Also edit CCC "D" if the return is a Balance Due.

    Figure 3.11.217-8

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  8. The separate short period return of a subsidiary which became affiliated with a "consolidated" group may end on the day preceding such affiliation. As a practical matter, do not question the ending date on any change-of-accounting period return.

  9. Check all tax periods for the Statute of Limitation (two years and nine months from the normal due date of the return). For statute instruction, see IRM 3.11.217.3.7, Statute Returns.

Tax Period Beginning - Final, Initial, or Short Period Return

  1. Edit the Tax Period Beginning to the left of the title area of Form 1120-S in MMDDYY format following the instructions below: (See Figure 3.11.217-9, Example of Editing the Tax Period Beginning.)

    Tax Period Beginning

    If And Then
    The return is a final, initial, or a short period, Tax Period Beginning is present, Edit the Tax Period Beginning (MMDDYY).
    The return is a final, initial, or a short period, The day is not present in the Tax Period Beginning, Edit "01" for the day. For example, taxpayer writes May 2022, edit Tax Period Beginning as 050122.
    The return is a final, initial, or a short period, Tax Period Beginning is not present, No editing is required.
     

    Note:

    See IRM 3.11.217.6.1, Tax Period - General, for more information.

    Figure 3.11.217-9

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    Please click here for the text description of the image.

Early Filed Return

  1. Never send an early filed return back to the taxpayer.

  2. If the month of the tax period is the same or after the month of the received date, determine how early the return was filed:

    Tax Period

    If Then
    The Tax Period Ending (TPE) is equal to or later than the received date by four months or less (e.g., the received date is in April but the TPE is April, May, June, or July),
    1. Edit Action Code 480 (Early Filed - Suspense). See Figure 3.11.217-10, Example of Early Filed Return – Editing Action Code 480 vs Action Code 211.

    2. Leave return in batch.

    The Tax Period Ending (TPE) is later than the received date by more than four months (e.g., the received date is in April but the TPE is in September),
    1. Edit Action Code 211 or 215 and attach approved Correspondence Action Sheet to request confirmation of the Tax Period Ending. See Figure 3.11.217-10, Example of Early Filed Return – Editing Action Code 480 vs Action Code 211.

    2. Completely edit the return. Edit the future tax period shown by the taxpayer. Leave return in batch.

    On a "Final" return, the received date is after the short period due date, but on or before the regular full tax period due date ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡,
    1. Edit CCC "R" .

    2. Edit CCC "F" .

    3. Edit CCC “D” if the return is a Balance Due.

    4. See IRM 3.11.217.6.1, Tax Period - General, for more information.

     

    Note:

    See IRM 3.11.217.6.1, Tax Period - General, for more information.

    Figure 3.11.217-10

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    Please click here for the text description of the image.

Short Period - Editing Proof of Entitlement

  1. A Short Period Return is one which covers a period of less than 12 months or 52-53 weeks.

    • If the Short Period Return is marked "Final" , see instructions for editing the tax period in IRM 3.11.217.6.1, Tax Period - General.

    • If the Short Period Return is marked "Initial" , "First Return" , "New Corporation" , etc., or meets any of the identifying conditions in the instructions for "Initial Return Code" , see IRM 3.11.217.11, Initial Return Code - Page 1, Box G, Is the corporation electing to be an S corporation beginning with this tax year?

    • Process all other Short Period Returns as a "Change of Accounting Period" . In such cases, proof of entitlement to the change is required.

    Reminder:

    Edit the Tax Period Beginning in MMDDYY format on short period returns per IRM 3.11.217.6.2, Tax Period Beginning - Final, Initial, or Short Period Return.

  2. Use the Proof of Entitlement Table below to identify and edit proof of entitlement.

    Proof of Entitlement

    If And Then
    A statement the S Corporation is changing tax period under:
    1. National Office "Grant Letter" or

    2. Revenue Procedure 2006-46,

    Command Code BMFOLE shows a Transaction Code (TC) 053 or TC 054,

    Note:

    This is an indication that the Form 1128, Application to Adopt, Change, or Retain a Tax Year, or National Office "Grant Letter" was approved.

    Continue processing the return. See Figure 3.11.217-11, Example of a Short Period Return with Proof of Entitlement.

    Note:

    No CCC "Y" is needed.

    A statement the S Corporation is changing tax period under:
    1. National Office "Grant Letter" or

    2. Revenue Procedure 2006-46,

    Command Code BMFOLE shows a TC 059,

    Note:

    This is an indication that the Form 1128, Application to Adopt, Change, or Retain a Tax Year, or National Office "Grant Letter" has not been approved.

    The return is unprocessable. Follow the instructions for "Short Period Returns - Editing a Disapproved Application" . See IRM 3.11.217.6.6, Short Period Returns - Editing a Disapproved Application (Form 1128).
    Statement referring to "S" (1120-S) Status Termination or revocation under Section 1362, or Form 1120-S, Page 1, Item H, Box 5, S Election termination or revocation is checked,   Edit CCC "R" .

    Note:

    No CCC "Y" is needed.

    Caution:

    If return reflects tax, or if return was filed after the due date based on a full year, prepare Form 3465, Adjustment Request, and route Form 3465 and a copy of Form 1120-S, Page 1 to Accounts Management (AM) requesting review of interest and/or Failure To File (FTF) penalty.

    Statement referring to Termination of Shareholders Interest under Section 1377(a)(2) and Regulations Section 1.1377-1(b),   Continue processing the return.

    Note:

    No CCC "Y" is needed.

    Statement referring to "S" Status Election and a National Office "Grant Letter" is attached allowing the fiscal year (other than 12/31/XX),   Continue processing the return.

    Note:

    No CCC "Y" is needed.

    Notation referring to:
    1. Section 444 or

    2. Reference to Revenue Procedure 2006-46,

    Command Code BMFOLE shows a Transaction Code (TC) 053, TC 054, or TC 055,

    Note:

    This is an indication that the Form 1128, Application to Adopt, Change, or Retain a Tax Year, or Form 8716, Election To Have a Tax Year Other Than a Required Tax Year, was approved.

    Continue processing the return.

    Note:

    No CCC "Y" is needed.

    Notation referring to:
    1. Section 444 or

    2. Reference to Revenue Procedure 2006-46,

    Command Code BMFOLE shows a TC 058 or TC 059,

    Note:

    This is an indication that the Form 8716, Election To Have a Tax Year Other Than a Required Tax Year, or Form 1128, Application to Adopt, Change, or Retain a Tax Year, has not been approved.

    The return is unprocessable. Follow the instructions for "Short Period Returns - Editing a Disapproved Application" . See IRM 3.11.217.6.6, Short Period Returns - Editing a Disapproved Application (Form 1128).
    Form 1128, Application to Adopt, Change, or Retain a Tax Year, Command Code BMFOLE shows a Transaction Code (TC) 053 or TC 054,

    Note:

    This is an indication that the Form 1128 was approved.

    Continue processing the return.

    Note:

    No CCC "Y" is needed.

    Form 1128, Application to Adopt, Change, or Retain a Tax Year, Command Code BMFOLE shows a TC 059,

    Note:

    This is an indication that the Form 1128 has not been approved.

    The return is unprocessable. Follow the instructions for Short Period Returns - Editing a Disapproved Application. See IRM 3.11.217.6.6, Short Period Returns - Editing a Disapproved Application (Form 1128).
    Form 1128, Application to Adopt, Change, or Retain a Tax Year, Command Code BMFOLE does not show Transaction Code (TC) 053, TC 054, or TC 059, See IRM 3.11.217.6.7, Editing Form 1128 With No Indication of Approval or Disapproval.
    Statement referring to Qualifying Disposition under Regulations Section 1.1368-1(g)(2)(i),   Edit CCC "Y" .
    Statement referring to "S" Status Election and taxpayer is changing to required tax year (12/31/XX),   Edit CCC "Y" .
    Statement the S Corporation is coming out of consolidation,   Edit CCC "Y" .
    Statement the corporation is a qualified sub chapter S subsidiary,   Edit CCC "Y" .
    Notation referring to:
    1. "Section 1398 election" (Bankruptcy Petition was filed), or

    2. "Second Short Year after Section 1398 Election" ,

      Edit CCC "Y" . Do not correspond.
     

    Note:

    The following table is a list of transaction codes and meanings.

    Transaction Code (TC)

    Transaction Code (TC) Meaning
    053 A TC 053 identifies a Fiscal Year Month (FYM) change from Form 1128, Application to Adopt, Change, or Retain a Tax Year, (other than Revenue Procedure 2006-46).
    054 A TC 054 identifies a FYM change from Form 1128, Application to Adopt, Change, or Retain a Tax Year, or Form 2553, Election by a Small Business Corporation, approved under Revenue Procedure 2006-46.
    055 A TC 055 identifies a FYM change from Form 8716, Election To Have a Tax Year Other Than a Required Tax Year.
    058 A TC 058 identifies a DeniedForm 8716, Election To Have a Tax Year Other Than a Required Tax Year.
    059 A TC 059 identifies a DeniedForm 1128, Application to Adopt, Change, or Retain a Tax Year.
     

    Reminder:

    Edit the Tax Period Beginning in MMDDYY format on short period returns according to IRM 3.11.217.6.2, Tax Period Beginning - Final, Initial, or Short Period Return.

    Figure 3.11.217-11

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    Please click here for the text description of the image.

Short Period - Missing Proof of Entitlement

  1. If proof of entitlement is missing or the taxpayer says on the return or an attachment that the S Corporation has filed an application but has not received a response, research IDRS using Command Code BMFOLE (or other applicable Command Code) for approval or disapproval information and proceed as follows:

    Proof of Entitlement

    If Then
    Command Code BMFOLE shows a Transaction Code (TC) 053, TC 054, or TC 055,

    Note:

    This is an indication that the Form 1128, Application to Adopt, Change, or Retain a Tax Year or Form 8716, Election To Have a Tax Year Other Than a Required Tax Year, was approved.

    Continue processing the return.

    Note:

    No CCC "Y" is needed.

    Reminder:

    Edit the Tax Period Beginning on short period returns according to IRM 3.11.217.6.2, Tax Period Beginning - Final, Initial, or Short Period Return.

    Command Code BMFOLE shows a TC 058 or TC 059,

    Note:

    This is an indication that the Form 8716, Election To Have a Tax Year Other Than a Required Tax Year, or Form 1128, Application to Adopt, Change, or Retain a Tax Year, has not been approved.

    The return is unprocessable. Follow the instructions for "Short Period Returns - Editing a Disapproved Application" . See IRM 3.11.217.6.6, Short Period Returns - Editing a Disapproved Application (Form 1128).
    Command Code BMFOLE does not show a TC 053, TC 054, TC 055, TC 058, or TC 059, Correspond with the taxpayer using Letter 319-C, Return Covers Other Than 12-month Accounting Period.
     

    Reminder:

    Edit the Tax Period Beginning in MMDDYY format on short period returns per IRM 3.11.217.6.2, Tax Period Beginning - Final, Initial, or Short Period Return.

    Note:

    See IRM 3.11.217.6.4(2) for the list of transaction codes and meanings.

Short Period Returns - Editing a Disapproved Application (Form 1128)

  1. If Form 1128, Application to Adopt, Change, or Retain a Tax Year, is disapproved, the return is considered unprocessable:

    1. Edit Action Code 211 or 215 and correspond.

    2. In the correspondence, instruct the taxpayer to file a return for the next regular full period due. Request a disposition of any remittance paid with the return or other credits which have posted to the short period module.

    Reminder:

    Edit the Tax Period Beginning in MMDDYY format on short period returns per IRM 3.11.217.6.2, Tax Period Beginning - Final, Initial, or Short Period Return.

Short Period Returns - Editing Form 1128 With No Indication of Approval or Disapproval

  1. When a Form 1128, Application to Adopt, Change, or Retain a Tax Year, is attached with no indication of approval or disapproval and no proof of entitlement is present, research Integrated Data Retrieval System (IDRS) using Command Code BMFOLE (or other applicable Command Code) for approval or disapproval and proceed as follows:

    Form 1128

    If Then
    Command Code BMFOLE shows a Transaction Code (TC) 053 or TC 054,

    Note:

    This is an indication that the Form 1128, Application to Adopt, Change, or Retain a Tax Year, was approved.

    Continue processing the return.

    Note:

    No CCC "Y" is needed.

    Reminder:

    Edit the Tax Period Beginning on short period returns according to IRM 3.11.217.6.2, Tax Period Beginning - Final, Initial, or Short Period Return.

    Command Code BMFOLE shows a TC 059,

    Note:

    This is an indication that the Form 1128, Application to Adopt, Change, or Retain a Tax Year, has not been approved.

    The return is unprocessable. Follow the instructions for "Short Period Returns - Editing a Disapproved Application" . See IRM 3.11.217.6.6, Short Period Returns - Editing a Disapproved Application (Form 1128).
    Command Code BMFOLE does not show TC 053, TC 054, or TC 059, Take the actions in (2) below.
     

    Reminder:

    Edit the Tax Period Beginning in MMDDYY format on short period returns per IRM 3.11.217.6.2, Tax Period Beginning - Final, Initial, or Short Period Return.

    Note:

    See IRM 3.11.217.6.4(2) for the list of transaction codes and meanings.

  2. Form 1128, Application to Adopt, Change, or Retain a Tax Year, with neither approval nor disapproval, stop processing Form 1120-S, U.S. Income Tax Return for an S Corporation. Route Form 1120-S and Form 1128 to Entity Control as directed in the paragraphs below.

    1. If Form 1128, Application to Adopt, Change, or Retain a Tax Year, is attached to a numbered return, enter Action Code 320. Attach Form 4227, Intra-SC Reject or Routing Slip, and check the box for Entity Control. Edit the Form 1120-S received date to Form 1128. Leave the return in the batch and continue processing the return.

      Note:

      Do not detach Form 1128.

    2. If Form 1128 is attached to an unnumbered return, edit the Form 1120-S received date to Form 1128, attach Form 4227, Intra-SC Reject or Routing Slip, and route the return to Entity Control. See Figure 3.11.217-12, Example of Form 1128 Attached With No Indication of Approval or Disapproval.

      Note:

      Do not detach Form 1128.

    3. Entity will process the Form 1128 and route the return back to Code and Edit with a Form 4227, Intra-SC Reject or Routing Slip, attached. The Form 4227 will show if the Form 1128 is approved, denied, or returned and the words "Process Return" or "Let Unpost" .

    Figure 3.11.217-12

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Short Period Return with Prepaid Credits

  1. Route to Accounting for possible adjustment action any return meeting both conditions below.

    1. A prepaid credit, Line 23a or Line 23b is claimed.

    2. The return is a short period (an initial return, a final return, or one with a change of accounting period).

  2. Take the following action when routing these returns to Accounting:

    1. Enter Action Code 342 on the return.

    2. Attach Form 4227, Intra-SC Reject or Routing Slip, check the "Accounting" box and notate "Short period return with ES Credits" .

    3. Continue normal processing.

    4. If the return shows a refund, follow "Refund Returns" instructions in IRM 3.11.217.3.11, Refund Returns 45 Day Jeopardy and High Dollar Refunds.

    5. See Figure 3.11.217-13, Example of Short Period Return With ES Credits.

    Reminder:

    Edit the Tax Period Beginning in MMDDYY format on short period returns per IRM 3.11.217.6.2, Tax Period Beginning - Final, Initial, or Short Period Return.

    Figure 3.11.217-13

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♦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. All Form 1120-S returns require an IRS Received Date.

  3. A return is considered timely if the envelope in which the return is contained is postmarked on or before the due date.

    Received Date

    If Then
    The return is received within ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ the extended due date ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, The return is considered timely. See Exhibit 3.11.217-2, Due Date Chart, for more information.
    The due date falls on a weekend or legal holiday, The return is timely if postmarked by the first business day following the weekend or legal holiday.
    The IRS Received Date stamp is after ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ of the legal or extended due date, the postmark date or shipment date is on or before the legal or extended due date, Edit the received date to agree with the postmark date or shipment date. See Figure 3.11.217-14, Example of Editing a Timely Received Date.

    Note:

    The postmark date or shipment date includes returns delivered by:

    • U.S. Postal Service (USPS)

    • Private Delivery Services (PDS), e.g., Federal Express Corporation (FedEx) or United Parcel Service (UPS)"designated" by the IRS. See IRM 3.10.72, Receiving, Extracting and Sorting, for a list of designated private delivery services, or

    • Returns with a Foreign Postmark

    Caution:

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

    Note:

    For certified mail only - If a postmark is not present, look for a "USPS.com Track & Confirm" record attached to the return (should be in front of the envelope). Use the "Acceptance" date on the record to determine timeliness and follow normal editing procedures. See Exhibit 3.11.217-9, USPS.com Track & Confirm Record. If the "USPS.com Track & Confirm" record is not attached, take no action.

     

    Figure 3.11.217-14

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  4. When a Form 1120-S 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 Modernized Electronic Filing (MeF) rejection notification.

    Note:

    Taxpayers are instructed to notate in red in the top margin of the return REJECTED ELECTRONIC RETURN to show the timely filed return can’t be filed electronically. The notation could be anywhere on the return and is not required, but they are required to attach a copy of the MeF rejection notification in order to show they qualify for an edited Received Date.

  5. If a MeF rejection notification is not attached, perfection of the received date is not necessary. If a MeF rejection 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. The first transmission of any rejected return must have been filed before the due date of the relevant form for this rule to apply.

    Received Date

    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 03-22-2023 and first rejection is 03-12-2023. Change received date to 031223.
    The postmark date is more than 10 days after the date of the rejection,   Leave the IRS Received Date as is. For example, postmark date is 03-25-2023 and first rejection is 03-12-2023. 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. For example, postmark date is 03-22-2023, the second rejection is 03-12-2023. The first rejection is 03-09-2023. Change the received date to 030923.
    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. For example, postmark date is 03-22-2023, the second rejection is 03-12-2023. The first rejection is 03-01-2023. Change the received date to 031223.
    There are two rejections, Not within 10 days of one another and second rejection not within 10 days of the postmark date, Leave the IRS Received Date as is. For example, postmark date is 03-25-2023, the second rejection is 03-12-2023. The first rejection is 03-01-2023. Leave the received date as is.

    Exception:

    Change the received date to the postmark date if the postmark date makes the return timely.

     

  6. The received date may or may not be stamped on the face of the return.

  7. A valid received date stamp may consist of the following:

    • The word "Received"

    • Month (alpha or numeric)

    • Day (for example "1" or "01" )

    • Year - four digits

    • "Area Office" , Campus, Field Office, "Taxpayer Assistance Center (TAC) Site" 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" .

  8. If the received date stamp is not present or the date is illegible or invalid, edit the received date in "MMDDYY" format in the middle of Page 1 of the return. See Figure 3.11.217-15, Example of Editing the Received Date. Edit the received date according to the following priority:

    1. The earliest legible postmark date (U. S. Postal Service (USPS), foreign postmark, or Private Delivery Service (PDS)) on the envelope. Rules for using the U. S. Postal Service (USPS) postmark or foreign postmark date are as follows:

      Received Date

      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 was attached to the return (should be in front of the envelope). Use the "acceptance" date on the record to determine timeliness and follow normal editing procedures. See Exhibit 3.11.217-9, USPS.com Track & Confirm Record. If the "USPS.com Track & Confirm" record is not attached, take no action.
      An envelope has both a USPS and private metered postmark, Always use the USPS postmark.
      An envelope has a 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 Date of the Document Locator Number (DLN) minus 10 days.

    6. Current Date minus 10 days.

    Figure 3.11.217-15

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    Please click here for the text description of the image.

  9. Edit the received date as follows:

    Received Date

    If And Then
    A timely received date is the only received date stamped on the return,   No editing is required.
    Two or more dates are stamped on the return,  
    1. Use the earliest IRS received date stamped on the return.

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

    3. See Figure 3.11.217-16, Example of a Multiple Valid Received Date.

    Note:

    Treat received dates that are circled out by another function as if they are not present.

    A Federal return is addressed to the IRS, Delivered to a state agency, Use the postmark date as the received date.
    A Federal return is addressed to a State agency,   Use the IRS date stamp as the received date.
    The only received date on the return is a Taxpayer Advocate Service (TAS) Received Date or Chief Counsel Received Date,   Circle out the TAS or Chief Counsel Received Date and edit the received date according to instructions.
     

    Reminder:

    Check any envelope attached to the return for remittance. If found, hand carry remittance to manager.

    Figure 3.11.217-16

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    Please click here for the text description of the image.

  10. If a return is faxed to another area of IRS and then sent to Submission for processing, do not enter the Enterprise Electronic Fax (EEFax) Date as the IRS Received Date. Enter a received date according to normal procedures.

    Caution:

    Do not use the EEFax Date as the IRS Received Date.

North American Industry Classification System (NAICS) Code - Page 1, Box B

  1. The Principal Business Activity (PBA) Code is based on the North American Industry Classification System Code (NAICS). These codes are a high priority to IRS. It is critical data for Statistics of Income, Examination, Research, and other Service organizations.

  2. The NAICS Code is a four-digit (prior year) or six-digit code on Page 1, Box B of Form 1120-S.

  3. A NAICS Code is required on Form 1120-S.

    Exception:

    Do not edit NAICS Code on an Amended (CCC "G" ) return.

  4. Only one NAICS Code can be used on the return. Edit the NAICS Code as follows:

    North American Industry Classification System (NAICS) Code

    If Then
    A legible six-digit NAICS Code is shown on Page 1, Box B,

    Note:

    The number may not have all repeating numbers, e.g., "000000" , "333333" , "666666" , "999999" , etc.

    No editing is required.
    A legible four-digit NAICS Code is shown on Page 1, Box B,

    Note:

    The number may not have all repeating numbers, e.g., "0000" , "3333" , "6666" , "9999" , etc.

    No editing is required.
    Page 1, Box B is blank and Schedule B, Line 2a has a legible four-digits or six-digits NAICS code, Edit the NAICS code to Page 1, Box B.
    There is more than one NAICS Code on Page 1, Box B, Circle all but the first NAICS Code listed.
    Page 1, Box B is blank or illegible, Refer to Page 2, Schedule B, Line 2a and Line 2b, if present. If the NAICS Code can’t be determined, then edit NAICS Code "999000" .
    The code is other than four-digits or six-digits, Refer to Page 2, Schedule B, Line 2a and Line 2b, if present. If the NAICS Code can’t be determined, then edit NAICS Code "999000" .
    A NAICS Code with all repeating number is present, e.g., "000000" , "333333" , "666666" , "999999" , etc., Refer to Page 2, Schedule B, Line 2a and Line 2b, if present. If the NAICS Code can’t be determined, then edit NAICS Code "999000" .
     

Schedule M-3 Attached - Page 1, Box C

  1. Edit Computer Condition Code "B" when the box on Form 1120-S, Line C, "Check if Schedule M-3 is attached" is marked or Schedule M-3 (Net Income (Loss) Reconciliation for S Corporations With Total Assets of $10 Million or More) is attached to the return.

    Note:

    Edit Audit Code "8" if Schedule M-3 is attached. See IRM 3.11.217.13.1, Audit Codes.

Total Assets - Page 1, Box F

  1. The first source for this entry is Form 1120-S, Page 1, Box F, Total Assets,.

  2. Compare Box F amount with Schedule L, Balance Sheets per Books, Line 15, Column (d), or an equivalent entry on a schedule(s) or attachment(s).

  3. If Box F and Schedule L, Balance Sheets per Books, Line 15, Column (d), differ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, use the amount on Schedule L, Line 15, Column (d). Edit the amount to Box F. Bracket if negative.

  4. If Schedule L, Balance Sheets per Books, Line 15, Column (d), is blank, then compute Lines 1 through 14, Column (d), and compare it with Box F. If there is only one entry in Column (d), Lines 1 through 14, use that figure to compare to Box F.

  5. If Box F is blank, enter the amount from Schedule L, Line 15, Column (d) to Box F, in dollars only. Bracket if negative.

  6. If Schedule L, Balance Sheets per Books, is blank, or missing, and there is an amount in Box F, place an "X" to the left of the entry.

  7. If the amount in Box F is for cents only (e.g., $.89, -$.99), place an "X" to the left of the entry.

Initial Return Code - Page 1, Box G

  1. Edit an Initial Return Code "2" in the margin to the right of Page 1, Box E, "DATE INCORPORATED" if any of the following conditions are met:

    1. Form 1120-S, Page 1, Box E, Date incorporated, has a date which is within 12 months from the tax period ending date.

      Reminder:

      Edit the Tax Period Beginning on initial returns according to IRM 3.11.217.6.2, Tax Period Beginning - Final, Initial, or Short Period Return.

    2. Page 1, Box G, "Is the corporation electing to be an S corporation beginning with this tax year?" is checked "Yes" .

    3. There is a taxpayer notation of initial filing, such as, "First Return" , "New Corporation" , etc.

    4. The date incorporated is within 24 months from the Tax Period Ending (or is not shown) and the taxpayer’s Balance Sheet, "Beginning of tax year" (first two columns of Schedule L, Balance Sheets per Books,) is blank or zeros (see Initial Return - 24 Month Rule Table below). See Figure 3.11.217-17, Example of Editing the Initial Return Code With 24 Month Rule.

      Note:

      Do not edit Initial Return Code "2" if the Balance Sheet is missing or the Balance Sheet was dummied.

    Initial Return Code

    Tax Period Ending 24 Month Cutoff Date
    2312 01/01/2022
    2311 12/01/2021
    2310 11/01/2021
    2309 10/01/2021
    2308 09/01/2021
    2307 08/01/2021
    2306 07/01/2021
    2305 06/01/2021
    2304 05/01/2021
    2303 04/01/2021
    2302 03/01/2021
    2301 02/01/2021
    2212 01/01/2021
    2211 12/01/2020
    2210 11/01/2020
    2209 10/01/2020
    2208 09/01/2020
    2207 08/01/2020
    2206 07/01/2020
    2205 06/01/2020
    2204 05/01/2020
    2203 04/01/2020
    2202 03/01/2020
    2201 02/01/2020
    2112 01/01/2020
    2111 12/01/2019
    2110 11/01/2019
    2109 10/01/2019
    2108 09/01/2019
    2107 08/01/2019
    2106 07/01/2019
    2105 06/01/2019
    2104 05/01/2019
    2103 04/01/2019
    2102 03/01/2019
    2101 02/01/2019
    2012 01/01/2019
    2011 12/01/2018
    2010 11/01/2018
    2009 10/01/2018
    2008 09/01/2018
    2007 08/01/2018
    2006 07/01/2018
    2005 06/01/2018
    2004 05/01/2018
    2003 04/01/2018
    2002 03/01/2018
    2001 02/01/2018
    1912 01/01/2018
     

    Figure 3.11.217-17

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    Please click here for the text description of the image.

Number of Shareholders - Page 1, Line I

  1. Follow the instructions below for editing Form 1120-S, Page 1, Line I, Number of Shareholders.

    Note:

    If the entry on Line I is written in a non-numeric fashion ("two" instead of "2" ), edit the numeric equivalent on Line I and circle the non-numeric characters.

    Number of Shareholders

    If And Then
    Form 1120-S, Page 1, Line I, Number of Shareholders, is zero or blank, No Schedule(s) K-1 are attached and Schedule(s) K-1 are required,
    1. Leave zero or blank. Do not edit Line I, Number of Shareholders

    2. Correspond for the Schedules K-1. See IRM 3.11.217.41, Schedule K-1, for corresponding information.

      Exception:

      Do not correspond on Section 965 Returns. ERS will take care of any correspondence needed. See IRM 3.11.217.2.11, Section 965 Returns (201712 through 202012), for more information.

    Page 1, Line I, Number of Shareholders, is zero or blank, Schedule(s) K-1 are attached, Edit the number of Schedules K-1 to Page 1, Line I, Number of Shareholders. See Figure 3.11.217-18, Example of Editing Number of Shareholders.
    Page 1, Line I, Number of Shareholders, is zero or blank, No Schedule(s) K-1 are attached and correspondence is not necessary according to IRM 3.11.217.41(2), Edit a "1" to Page 1, Line I, Number of Shareholders.
     

    Note:

    See IRM 3.11.217.41, Schedule K-1, for more information.

    Figure 3.11.217-18

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    Please click here for the text description of the image.

Additional Form 1120-S Perfection

  1. This subsection provides instructions for editing more Form 1120-S information.

  2. Entries previously entered on the Form 3892, Corporation Edit Sheet, are edited in the left margin near Line 9 (Deductions area) of Form 1120-S.

  3. Edit entries in numeric order (e.g., 1-2, 4-1). Edited information will be preceded by the applicable number as follows:

    Additional Form 1120-S Perfection

    If Then
    Editing an Audit Code, Edit "1 -" followed by the correct Audit Code(s). (e.g., "1 - 2" ). See IRM 3.11.217.13.1, Audit Codes.
    Editing a Penalty and Interest Code, Edit "2 -" followed by the Penalty and Interest Code. (e.g., "2 - 1" ). See IRM 3.11.217.13.2, Penalty and Interest Code.
    Editing an Installment Sale Indicator, Edit "3 -" followed by the correct Installment Sale Indicator. (e.g., "3 - 2" ). See IRM 3.11.217.13.3, Installment Sale Indicator.
    Editing a Tax Preference Code, Edit "4 -" followed by the Tax Preference Code. (e.g., "4 - 1" ). See IRM 3.11.217.13.4, Tax Preference Code.
    Editing Form 8586, Low Income Housing Credit, Edit "5 -" followed by the Form 8586 credit in dollars only. (e.g., "5 - 357" ). See IRM 3.11.217.13.5, Low-Income Housing Credit.
    Editing Form 8611, Recapture of Low-Income Housing Credit, Edit "6 -" followed by the Form 8611 credit in dollars only (e.g., "6 - 753" ). See IRM 3.11.217.13.6, Form 8611, Recapture of Low-Income Housing Credit and Form 8693, Low-Income Housing Credit Disposition Bond.
     

  4. The Return Processing Code (RPC) is edited on Page 1, in the right margin next to Line 1c (Total, Add Lines 1a and 1b) of Form 1120-S. See IRM 3.11.217.13.7, Return Processing Code (RPC), for more information.

Audit Codes

  1. Up to nine (9) Audit Codes may be used at one time.

    Note:

    Audit Codes do not need to be edited in a specific order on the return.

  2. Edit Audit Codes in the left margin near Line 9 (Deductions area) of Form 1120-S.

  3. Edit as "1 -" followed by the correct code(s).

  4. Audit Code "1" :

    1. Form 8082, Notice of Inconsistent Treatment or Administrative Adjustment Request, is attached.

    2. Form 8275 or Form 8275R, Disclosure Statement, is attached or statement referring specifically to IRC 6662, (Disclosure).

    3. Form 8886, Reportable Transaction Disclosure Statement, is attached. See IRM 3.11.217.14.15, CCC T - Form 8886, Reportable Transaction Disclosure Statement.

  5. Audit Code "2" :

    1. Form 1120-S, Schedule K, Line 16f*, Foreign taxes paid or accrued, has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ *(Prior year line numbers: 2020 - 2018: Line 14p, 2017 - 2004: Line 14l.

    2. Form 926, Return by a U.S. Transferor of Property to a Foreign Corporation, is attached.

    3. Schedule N (Form 1120), Foreign Operations of U.S. Corporations, is attached and Questions 1a, 3, 4a (2019 and prior revisions), 5, or 7a are answered "Yes" .

    4. Form 5471, Information Return of U.S. Persons With Respect To Certain Foreign Corporations, is attached or Schedule N (Form 1120), Foreign Operations of U.S. Corporations, Question 4a is checked "Yes" .

    5. Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business (Under Sections 6038A and 6038C of the Internal Revenue Code), is attached.

    6. Form 5713, International Boycott Report, is attached and both Questions in 7(f) are answered "Yes" .

    7. Form 8621, Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund, is attached and Part V (Distributions From and Dispositions of Stock of a Section 1291 Fund), Lines 15a through Line 16f has an entry of ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

    8. Form 8832, Entity Classification Election, is attached and Box 6(d), (e), or (f) is checked.

    9. Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b), is attached.

    10. Form 8858, Information Return of U.S. Persons With Respect To Foreign Disregarded Entities (FDEs) and Foreign Branches (FBs), is attached or Schedule N (Form 1120), Foreign Operations of U.S. Corporations, Question 1a is checked "Yes" .

    11. Form 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships, is attached.

  6. Audit Code "3" :

    1. Form 8283, Noncash Charitable Contributions, is attached and Page 1, Part I, Question 2 (a), Art (contribution of $20,000 or more) is checked.

    2. Form 8283, Noncash Charitable Contributions, is attached and Page 1, Part I, Question 3, Column (c) has an entry of ≡ ≡ ≡ ≡ ≡ ≡ or more.

    3. Form 8883, Asset Allocation Statement Under Section 338, is attached and the amount in Box 5a, Stock Price is ≡ ≡ ≡ ≡ ≡ ≡ ≡ or more. See IRM 3.11.217.14.14, CCC S - Form 8883, Asset Allocation Statement Under Section 338 for more information.

    4. Form 8594, Asset Acquisition Statement Under Section 1060, is attached and the amount in Box 3 is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ or more.

  7. Audit Code "4" :

    1. Entity Control Unpostable Unit determines that a valid Form 2553, Election by a Small Business Corporation, is on file, the Form 1120, U.S. Corporation Income Tax Return, must be converted to Form 1120-S, U.S. Income Tax Return for an S Corporation.

      Caution:

      If you receive a Form 1120-S converted from Form 1120 and the Form 13596, Reprocessing Returns, is attached for reprocessing, see IRM 3.11.217.3.8.2, Form 13596 - Reprocessing Returns, for more information.

  8. Audit Code "5" :

    1. Form 1120-S, Schedule K, Line 10, Other Income (Loss), reflects a loss of ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

  9. Audit Code "6" :

    1. Presence of Form 3115, Application for Change in Accounting Method.

  10. Audit Code "7" :

    1. Form 1120-S, Schedule K, Line 16f*, Foreign taxes paid or accrued, has an entry equal to or less than ≡ ≡ ≡ ≡ ≡ ≡. *(Prior year line numbers: 2020 - 2018: Line 14p, 2017 - 2004: Line 14l)

    2. Form 5713, International Boycott Report, is attached and both questions in 7(f) are not answered "Yes" .

    3. Form 8621, Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund, is attached and Part V (Distributions From and Dispositions of Stock of a Section 1291 Fund), Lines 15a through Line 16f has an entry of less than ≡ ≡ ≡ ≡ ≡ ≡ ≡.

  11. Audit Code "8" :

    1. Edit Audit Code "8" if the following schedule is attached: Schedule M-3, Net Income (Loss) Reconciliation for S Corporations With Total Assets of $10 Million or More.

      Reminder:

      See IRM 3.11.217.14.1, CCC "B" - Schedule M-3 for more information.

  12. Audit Code "9" :

    1. The date shown in Box A falls during the tax year for which the S Corporation return is being filed and the Date Incorporated in Box E is more than one year earlier than the Date of Election as an S Corporation in Box A. See Figure 3.11.217-19, Example of Editing Audit Code "9" .

    Figure 3.11.217-19

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    Please click here for the text description of the image.

Penalty and Interest Code

  1. Edit the Penalty and Interest Code in the left margin near Line 9 (Deductions area) of Form 1120-S.

  2. Edit as "2 - 1" if pre-computed interest or delinquency penalty is shown on a return with a received date ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

  3. This code is valid only within the unextended (original) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. When the pre-computed interest does not pertain to the ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ but to some other situation, such as an Estimated Tax Penalty, do not code "1" and do not edit Computer Condition Code "R" .

    Note:

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

Installment Sale Indicator

  1. Form 6252, Installment Sale Income, is used to report the sale of property on the installment plan.

  2. Codes are based solely on the S Corporation's response to Question 3 on Form 6252.

  3. Edit the Installment Sale Indicator in the left margin near Line 9 (Deductions area) of Form 1120-S.

  4. Edit as "3 -" followed by the correct code.

  5. Valid codes for installment Sale Indicator are as follows:

    Installment Sale Indicator

    Code One Form 6252 Multiple Forms 6252
    1 "Yes" response to Question 3. At least one form has a "Yes" response.
    2 "No" response to Question 3. All "No" responses or a combination of "No" or blank responses.
    3 "Yes" and "No" are checked or Question 3 is blank. Question 3 is blank on all returns.
     

  6. See IRM 3.11.217.39Form 6252, Installment Sale Income, for more information.

Tax Preference Code

  1. Edit the Tax Preference Code in the left margin near Line 9 (Deductions area) of Form 1120-S as "4 - 1" if

    • Form 4626, Alternative Minimum Tax - Corporations, for tax periods ending November 30, 2018 (201811) and prior, is attached and an amount is present on Lines 3, 6, or 11.

    • Schedule K-1, Shareholder's Share of Income, Deduction, Credits, etc., Line 15, Alternative Minimum Tax (AMT) Items, sum equals an amount of more than ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ after computing positive or negative amounts.

      Note:

      Entries on Form 1120-S, Schedule K, Lines 15a through Line 15f are an indication that the Schedule K-1 may have Tax Preference Items.

    • See Figure 3.11.217-20, Example of Editing the Tax Preference Code.

      Figure 3.11.217-20

      This is an Image: redimage.gif

Form 8586, Low-Income Housing Credit

  1. Edit the Form 8586, Low-Income Housing Credit, in the left margin near Line 9 (Deductions area) of Form 1120-S.

  2. Edit as "5 -" followed by the credit amount in dollars only.

  3. When editing Form 1120-S, Schedule K, Line 13a or Line 13b for Form 8586, Low-Income Housing Credit, take the following actions:

    Form 8586, Low-Income Housing Credit

    If Then
    Form 8586 is attached with an entry on Lines 1 through Line 3 Enter CCC "9" .
    Form 8609-A (prior year Schedule A Form 8609) is attached, Enter CCC "9" .
    Schedule K ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡Form 8586 is not attached, Correspond with the taxpayer for the missing Form 8586.
    Form 8586 is attached, In the left margin near Line 9 (Deductions area) of Form 1120-S, edit "5 -" followed by the amount on Line 5 in dollars only. See Figure 3.11.217-21, Example of Editing Low-Income Housing Credit (Form 8586).

    Note:

    If the taxpayer attaches Form 8586 or shows the credit on Schedule K, but has not entered a significant entry on Line 13a or Line 13b, do not enter the amount from Form 8586 Line 5 in the left margin.

     

    Figure 3.11.217-21

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    Please click here for the text description of the image.

Form 8611, Recapture of Low-Income Housing Credit and
Form 8693, Low-Income Housing Credit Disposition Bond

  1. Edit the Form 8611, Recapture of Low-Income Housing Credit, in the left margin near Line 9 (Deductions area) of Form 1120-S.

  2. Edit as "6 -" followed by the credit amount in dollars only.

  3. Form 8611 is required if Schedule K-1, Line 13, Code A or B shows a Form 8611 credit ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

  4. Edit Form 8611 as follows:

    Form 8611 and Form 8693

    If Then
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡Form 8611 is not attached, Correspond with the taxpayer for the missing Form 8611.
    Form 8611 is attached, In the left margin near Line 9 (Deductions area) of Form 1120-S, edit "6 -" followed by the Line 14, Form 8611 amount (in dollars only).
    Multiple Forms 8611 are attached, In the left margin near Line 9 (Deductions area) of Form 1120-S, edit "6 -" followed by the total amount (in dollars only) of all Forms 8611, Line 14* ).
    Form 8611 is reported on Schedule K-1, Line 13, Code A or B or Form 8611 is attached, Enter CCC "9" .
     

  5. If Form 8693, Low-Income Housing Credit Disposition Bond, is attached to Form 1120-S, enter CCC "9" .

Return Processing Code (RPC)

  1. A Return Processing Code (RPC) is an alpha character (e.g., A, B, C, D, E, F) or numeric character (e.g., 2, 4, 6, 7) used to alert the computer to a special condition.

  2. The RPC is edited on Page 1, in the right margin next to Line 1c (Total, Add Lines 1a and 1b) of Form 1120-S. Thirty-five characters may be edited.

    Note:

    RPCs do not have to be edited in any specific order.

  3. The table below lists the RPC and explanation when to edit each RPC.

    Return Processing Code (RPC)

    RPC Explanation
    A Form 5471, Schedule E, Income, War Profits, and Excess Profits Taxes Paid or Accrued, is attached.
    B Form 5471, Schedule H, Current Earnings and Profits, is attached.
    C Form 5471, Schedule I-1, Information for Global Intangible Low-Taxed Income, is attached.
    D Form 5471, Schedule P, Previously Taxed Earnings and Profits of U.S. Shareholder of Certain Foreign Corporations, is attached.
    E Form 8865, Schedule G, Statement of Application of the Gain Deferred Method Under Section 721(c), is attached.
    F Form 8865, Schedule H, Acceleration Events and Exceptions Reporting Relating to Gain Deferral Method Under Section 721(c), is attached.
    G Form 5471, Schedule G-1, Cost Sharing Arrangement, is attached.
    H Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business, Part VIII has an entry (e.g., description, checkbox marked, percent, or an amount).
    1 Not Applicable (N/A) at this time
    2 Form 8992, U.S. Shareholder Calculation of Global Intangible Low-Taxed Income (GILTI), is attached.
    3 Not Applicable (N/A) at this time.
    4 Form 8994, Employer Credit for Paid Family and Medical Leave, is attached.
    6 Form 8996, Qualified Opportunity Fund, is attached.

    Note:

    See IRM 3.11.217.23.2, Form 8996, Qualified Opportunity Fund Checkbox, and IRM 3.11.217.33Form 8996, Qualified Opportunity Fund, for more information.

    7 Form 8990, Limitation on Business Interest Expense Under Section 163(j), is attached.
    8 Not Applicable (N/A) at this time
    9 Form 8997, Initial and Annual Statement of Qualified Opportunity Fund (QOF) Investments, is attached.
     

Computer Condition Codes

  1. Computer Condition Codes (CCCs) identify special conditions or computations for the computer. CCCs post to the Master File.

  2. CCCs are edited in the center of Lines 1 and 2 of the Form 1120-S.

CCC "B" - Schedule M-3

  1. Edit CCC "B" when any of the following conditions are met:

    1. Schedule M-3 (Net Income (Loss) Reconciliation for S Corporations With Total Assets of $10 Million or More) box on Form 1120-S, Page 1, Box C is checked, or

    2. Schedule M-3 is attached.

  2. Edit Audit Code "8" if Schedule M-3 is attached. See IRM 3.11.217.13.1, Audit Codes.

♦CCC "D" - Reasonable Cause for Failing to Pay Timely♦

  1. Do not edit CCC "D" if the taxpayer requests abatement for "Failing to Pay Timely" when the return is submitted. Send Letter 1382-C, Penalty Removal Request Incomplete, to inform the taxpayer of the proper procedure to follow to request penalty abatement when a penalty is assessed.

  2. Edit CCC "D" when the return is stamped: "DO NOT ASSESS FAILURE TO PAY PENALTY" .

    Note:

    Do not enter CCC "D" if the return was prepared by IRS under IRC 6020(b) and the Return Due Date (without regard to extensions) is after July 30, 1996.

  3. Edit CCC "D" on a "Final" , Balance Due return if the received date is after the short period due date but before the regular tax period due date ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

  4. Edit CCC "D" if an S Corporation attaches a statement indicating the S Corporation qualifies for an automatic 3-month extension under Regulations Section 1.6081-5 or shows one of the following:

    • The domestic S Corporation transacts its business and keeps its books and records of account outside the United States and Puerto Rico, or

    • The domestic S Corporation's principal income is from sources within the possessions of the United States.

      Exception:

      Do not edit CCC "D" if the balance due is paid after the 15th day of the 6th month following the tax period ending date.

  5. Do not edit CCC "D" when pre-computed penalty is shown on the return.

CCC "E" - Potential Identity Theft Filing

  1. Effective January 1, 2017, the BMF ID Theft Liaison may edit Computer Condition Code "E" on Form 1120-S (any year) to identify a potential identity theft filing. If CCC "E" was edited, take no action.

    Note:

    CCC "E" may be edited by other functions. C&E will continue to follow procedures below.

  2. If a tax examiner in Submission Processing (SP) Code and Edit (C&E) finds a case with attachments or correspondence indicating the taxpayer is a victim of ID Theft, give the return to your manager/lead. Your manager/lead will expedite the return to the Planning and Analysis (P&A) staff for referral to one of the SP BMF ID Theft liaisons. The taxpayer must show that they are a victim of "ID Theft" ; do not send cases that are subject to "Criminal Investigation (CI)" , "Examination (Exam)" , or "Fraud" review.

  3. If the SP Theft Liaison says the return is "ID Theft" , the tax examiner may (upon request) edit CCC "E" .

CCC "F" - Final Return

  1. Edit CCC "F" when the "Final Return" box is checked or there is another indication the S Corporation is not liable for filing future returns. Notations such as (but not limited to):

    • Final

    • Deceased

    • Out-of-Business

    • Liquidation

    • Exempt under IRC 501(c)(3)

    • Dissolved

    • Cites IRC 708(b)(1)(B)

    • Notates "Filed in accordance with Rev. Proc. 2003-84"

  2. The presence of Form 966, Corporate Dissolution or Liquidation, is an indication of a possible dissolution. If Form 966 is attached, compare tax periods in Box 7a to the Form 1120-S being edited. If the tax periods are the same and the entity section of Form 966 is for the S Corporation, edit CCC "F"

    Exception:

    If "Filed Pursuant to Notice 97-4" is written on Form 966, do not use Form 966 as an indication that this is a final return.

  3. If a prepaid credit is claimed (Lines 23a and 23b) on a short period "Final" return, enter Action Code 342 on the return. See IRM 3.11.217.6.8, Short Period Return with Prepaid Credits.

  4. Edit the Tax Period Beginning on final returns according to IRM 3.11.217.6.2, Tax Period Beginning - Final, Initial, or Short Period Return.

♦CCC "G" -
Amended Returns♦

  1. See IRM 3.11.217.3.9, Amended Returns.

CCC "I" -
Tax Straddles
and Future
Contracts
(Form 6781)

  1. Edit CCC "I" when Form 6781, Gains and Losses from Section 1256 Contracts and Straddles, is attached.

    Note:

    CCC "I" should be edited as a capital in block style to distinguish it from CCC "1" .

CCC "J" -
Section 965 Tax

  1. The instructions in this section only apply to tax periods 201712 through 202012.

  2. CCC "J" shows Section 965 (Repatriation Provision), Treatment of deferred foreign income upon transition to participation exemption system of taxation for U.S. Shareholders of Specified Foreign Corporations per Tax Cuts and Jobs Act of 2017, Provision Section 14103, Public Law 115-97 (H.R. 1).

  3. Edit CCC "J" and Action Code 460 (Management Suspense) when:

    • "Section 965" or "965 Tax" (or similar language) notated on the return, schedules, attachments, or statements.

    • IRC 965 Transition Tax Statement (or similar 965 statement) is attached.

    • Form 965, Inclusion of Deferred Foreign Income Upon Transition to Participation Exemption System, is attached.

    • Form 965, Schedule A, U.S. Shareholder’s Section 965(a) Inclusion Amount, is attached.

    • Form 965, Schedule B, Deferred Foreign Income Corporation’s Earnings and Profits, is attached.

    • Form 965, Schedule C, U.S. Shareholder’s Aggregate Foreign Earnings and Profits Deficit, is attached.

    • Form 965, Schedule D, U.S. Shareholder’s Aggregate Foreign Cash Position, is attached.

    • Form 965, Schedule E, U.S. Shareholder’s Aggregate Foreign Cash Position - Detail, is attached.

    • Form 965, Schedule F, Foreign Taxes Deemed Paid by Domestic Corporation, is attached.

    • Form 965, Schedule G, Foreign Taxes Deemed Paid by Domestic Corporation, is attached.

    • Form 965, Schedule H, Amounts Reported on Forms 1116 and 1118 and Disallowed Foreign Taxes, is attached.

    • Form 965-B, Corporate and Real Estate Investment Trust (REIT) Report of Net 965 Tax Liability and Electing REIT Report of 965 Amounts, is attached.

    • Form 1120-S, Schedule K, Line 10, Other income (loss), shows a significant entry with the notation "Section 965" or similar language (202012 - 201712 form revisions).

    • Form 1120-S, Schedule K, Line 12d, Other deductions, shows a significant entry with the notation "Section 965" or similar language (202012 - 201712 form revisions).

    • Form 1120-S, Schedule K, Line 14r, Other foreign tax information, shows a significant entry with the notation "Section 965" or similar language (202012 - 201712 form revisions).

    • Form 1120-S, Schedule K, Line 17d, Other items and amounts, shows a significant entry with the notation "Section 965" or similar language.

    Note:

    A significant entry is defined as any amount other than zero.

CCC "L" -
Treaty Based
Positions

  1. Edit CCC "L" when:

    1. Taxpayer writes "Section 6114 Election" on the return or,

    2. Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b), is attached.

      Note:

      Edit Audit Code "2" if Form 8833 is attached to Form 1120-S. See IRM 3.11.217.13.1, Audit Codes.

CCC "M" - Form 8949
Sales and Other Dispositions of Capital Assets

  1. Edit CCC "M" when:

    • Tax period ending is 201712 and later, and

    • Form 8949, Sales and Other Dispositions of Capital Assets, contains a code "Z" or code "Y" is present in Column (f).

  2. CCC "M" is for Form 8949 per Tax Cuts and Jobs Act of 2017, P.L. 115-97 (H.R. 1), Section 13823, Opportunity Zones. Taxpayers who elect to defer gain on the sale of an asset by investing in an Opportunity Zone Fund will show that they are deferring the gain by entering code "Z" or "Y" in Column (f).

CCC "O" -
Module Freeze

  1. CCC "O" is entered 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, EIN, and Tax Period on the return is the same as the data on the form.

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

    Manual Refund

    If Then
    "TC 840" has posted, Enter CCC "O" and continue processing the return.
    "TC 840" has not posted, Enter Action Code 341 to issue Manual Refund.
     

  2. TAS manual refund returns, see IRM 3.11.217.3.11, Refund Returns 45 Day Jeopardy and High Dollar Refunds, for processing instructions.

CCC "P" - BMF Mail Indicator

  1. No editing is required.

CCC "Q" -
Return Filed Claiming TETR Only
(Credit for Federal Telephone Excise Tax Paid, Form 8913)

  1. No editing is required.

    Note:

    This credit was used for tax periods 200612 to 200711 when claiming credit on Form 8913, Credit for Federal Telephone Excise Tax Paid Only Tax Return.

♦CCC "R" -
Reasonable Cause for Failing to Timely File Return♦

  1. Do not edit CCC "R" when a reason is given by the taxpayer for the delay in filing a return. Issue Letter 1382-C, Penalty Removal Request Incomplete, and continue editing the return.

    Exception:

    Do not send Letter 1382-C, Penalty Removal Request Incomplete, if the taxpayer has notated "Late filed return due to CCH software outage" or similar language.

  2. Edit CCC "R" if an S Corporation attaches a statement indicating the S Corporation qualifies for an automatic 3-month extension under Regulations Section 1.6081-5 or shows one of the following:

    • The domestic S Corporation transacts its business and keeps its books and record of account outside the United States and Puerto Rico, or

    • The domestic S Corporation's principal income is from sources within the possessions of the United States

      Exception:

      Do not edit CCC "R" if the return is filed after the 15th day of the 6th month following the tax period ending date.

  3. Edit CCC "R" on a "Final" return if the received date is after the short period due date but before the regular full tax period due date ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

  4. Edit CCC "R" on the return when there is an indication such as "DO NOT ASSESS FAILURE TO FILE PENALTY" on a secured return annotated with "599" .

  5. Edit CCC "R" on the short period return when the Statement referring to "S" (1120-S) Status Termination or revocation under Section 1362, or Form 1120-S, Page 1, Item H, Box 5, S Election termination or revocation is checked. See IRM 3.11.217.6.4, Short Period - Editing Proof of Entitlement, for more information.

  6. Edit CCC "R" on the return if an internal use form or routing slip is attached and shows do not assess failure to file penalty.

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

CCC "S" -
Form 8883, Asset Allocation Statement Under Section 338

  1. Edit CCC "S" when Form 8883, Asset Allocation Statement Under Section 338, is attached to Form 1120-S.

CCC "T" -
Form 8886, Reportable Transaction Disclosure Statement

  1. Edit CCC "T" when Form 8886, Reportable Transaction Disclosure Statement, is attached to Form 1120-S. Edit Audit Code "1" when Form 8886 is attached. See IRM 3.11.217.13.1, Audit Codes.

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

  1. Edit CCC "W" when Statute Control cleared the return. See IRM 3.11.217.3.7, Statute Returns.

CCC "X" - Refund/Settlement Freeze

  1. Edit CCC "X" when the taxpayer shows on the tax return a request that any balance left over after paying tax or penalties to be applied to another account. Take the following actions to route the request to Accounts Management (AM).

    1. Prepare Form 3465, Adjustment Request, and show in the "Routing" box "Adjustments" .

    2. Notate the requested action in the "Remarks" box.

    3. Attach a copy of Page 1 of the tax return to Form 3465.

    Reminder:

    Subtract the tax, penalties, and interest amounts from the remittance amount if available.

CCC "Y" -
Short Period Return for Change of Accounting Period

  1. Edit CCC "Y" for Change of Accounting Period. Enter only for short period returns due to change of accounting period (not due to initial or final filing). See "Short Periods" in IRM 3.11.217.6.4, Short Period-Editing Proof of Entitlement, through IRM 3.11.217.6.8, Short Period Return with Prepaid Credits.

  2. Edit CCC "Y" on a Short Period Form 1120-S when the taxpayer shows any of the following:

    • Statement referring to Qualifying Disposition under Regulations Section 1.1368-1(g)(2)(i).

    • Statement referring to “S” Status Election and taxpayer is changing to required tax year (12/31/XX).

    • Statement the S Corporation is coming out of consolidation.

    • Statement the corporation is a qualified sub chapter S subsidiary.

    • Notation referring to “Section 1398 election” (Bankruptcy Petition was filed) or “Second Short Year after Section 1398 Election”.

    Note:

    See IRM 3.11.217.6.4, Short Period-Editing Proof of Entitlement, through IRM 3.11.217.6.8, Short Period Return with Prepaid Credits for more information.

  3. If a prepaid credit is claimed on a short period return (Lines 23a and 23b), enter Action Code 342 on the return. See IRM 3.11.217.6.8, Short Period Return with Prepaid Credits.

  4. Edit the Tax Period Beginning on short period returns according to IRM 3.11.217.6.2, Tax Period Beginning - Final, Initial, or Short Period Return.

CCC "1" -
Like-Kind Exchanges

  1. Edit CCC "1" if Form 8824, Like-Kind Exchanges (and section 1043 conflict-of-interest sales), is attached.

CCC "2" -
Form 8938,
Statement of Specified Foreign Financial Assets

  1. Edit CCC "2" if Form 8938, Statement of Specified Foreign Financial Assets, is attached to Form 1120-S.

  2. See IRM 3.11.217.27.10, Schedule N (Form 1120), Line 8 - Statement of Specified Foreign Financial Assets, and IRM 3.11.217.42, Form 8938, Statement of Specified Foreign Financial Assets, for more information.

♦CCC "3" -
No Reply to
Correspondence♦

  1. Edit CCC "3" if the return is unprocessable and there is a sign that correspondence was sent, but no reply received.

CCC "8" -
Waiver of
Estimated
Tax Penalty

  1. Edit CCC "8" when any of the following is present:

    1. Form 2220, Underpayment of Estimated Tax by Corporations, is attached and Part II, Box 6 or Box 7 is checked.

    2. Form 2220 is attached and any column on Form 2220, Schedule A, Page 4, Line 38 has entries.

CCC "9" -
Low-Income
Housing Forms

  1. Edit CCC "9" when any of the following are attached:

    • Form 8611, Recapture of Low-Income Housing Credit

    • Form 8693, Low-Income Housing Credit Disposition Bond

    • Form 8609-A, Annual Statement for Low-Income Housing Credit (prior year Form 8609, Schedule A)

    • Form 8586, Low-Income Housing Credit, with entries on any of Lines 1 or Line 3 (2016 and prior revisions)

  2. Edit CCC "9" whenever recapture tax for Low-Income Housing Credit is reported on Schedule K-1, Line 13, Code A or B.

Return Processing

  1. This subsection provides instructions for processing Form 1120-S, U.S. Income Tax Return for an S Corporation. Form 1120-S can be filed for a calendar year or a fiscal year.

Sequencing of Return

  1. Document Perfection is responsible for arranging Form 1120-S in the following order when transcription line entries are present:

    • Pages 1, 2, 3, 4, 5

    • Schedule N, Foreign Operations of U.S. Corporations, - See IRM 3.11.217.27, Schedule N (Form 1120) - Foreign Operations of U.S. Corporations.

    • Schedule D, (Form 1120-S) Capital Gains and Losses and Built-in Gains, - See IRM 3.11.217.30, Schedule D (Form 1120-S) - Capital Gains and Losses and Built-in Gains.

    • Form 4797, Sales of Business Property, - See IRM 3.11.217.31, Form 4797, Sales of Business Property.

    • Form 8949, Sales and other Dispositions of Capital Assets, - See IRM 3.11.217.32, Form 8949, Sales and other Dispositions of Capital Assets.

    • Form 8996, Qualified Opportunity Fund, - See IRM 3.11.217.33, Form 8996, Qualified Opportunity Fund.

    • Form 8825, Rental Real Estate Income and Expenses of a Partnership or an S Corporation, - See IRM 3.11.217.28, Form 8825, Rental Real Estate Income and Expenses of a Partnership or an S Corporation.

    • Form 1125-A, Cost of Goods Sold, - See IRM 3.11.217.34, Form 1125-A, Cost of Goods Sold.

    • Form 8050, Direct Deposit of Corporate Tax Refund.

      Note:

      It is not necessary to sequence Form 8050 if blank.

    • Form 4136, Credit for Federal Tax Paid on Fuels, - See IRM 3.11.217.35, Form 4136, Credit for Federal Tax Paid on Fuels.

    • Form 8941, Credit for Small Employer Health Insurance Premiums, - See IRM 3.11.217.37, Form 8941, Credit for Small Employer Health Insurance Premiums.

    • Form 5884-B, New Hire Retention Credit (Tax Periods 2010 and 2011).

    • Form 6252, Installment Sale Income, - See IRM 3.11.217.39Form 6252, Installment Sale Income.

    • Form 8997, Initial and Annual Statement of Qualified Opportunity Fund (QOF) Investments, - See IRM 3.11.217.40, Form 8997, Initial and Annual Statement of Qualified Opportunity Fund (QOF).

    • Schedule K-1 (Form 1120-S), Shareholder’s Share of Income, Deductions, Credits, etc. - Place all Schedules K-1 (Form 1120-S), filed as attachments to Form 1120-S, as the last attachment in the package or follow local agreement. Detach Schedules K-1 for current year (TY2022), two preceding years (TY2021 and TY2020), and future Schedules K-1. See IRM 3.0.101, Schedule K-1 Processing, for complete instructions to edit and process Schedule K-1. See IRM 3.11.217.41, Schedule K-1 - Shareholder’s Share of Income, Deductions, Credits, etc. and IRM 3.11.217.12, Number of Shareholders - Page 1, Line 1, for more editing instructions.

    • Form 8938, Statement of Specified Foreign Financial Assets - Sequence Form 8938 to the back of the last page of Form 1120-S (after schedules and attachment pages), attaching the Form 8938 so that it is back-to-back with the parent return.

      Note:

      Form 8938 should only be sequenced if Form 8938 meets the requirements in IRM 3.11.217.42, Form 8938, Statement of Specified Foreign Financial Assets.

  2. It is not necessary to sequence the forms or schedules listed above if there are no transcription line entries.

  3. It is not necessary to sequence an Amended return. See IRM 3.11.217.3.9, Amended Returns, for more information.

Positive/Negative Figures

  1. Income Items - Lines 1a, 1b, 1c, 2, 3, 4, 5, and 6 can have positive or negative amounts.

  2. Deduction Items - All lines in the deduction section can have positive or negative amounts.

  3. Tax and Payment Items - Following lines are positive only amounts:

    • Line 22c - Total tax (Add Lines 22a and 22b)

    • Line 23a - Estimated tax payments and overpayment credited

    • Line 23b - Tax Deposited with Form 7004

    • Line 23c - Credit for Federal Tax Paid on Fuels (attach Form 4136)

    • Line 23d - Total Payments (Add Line 23a through Line 23c)

      Note:

      Prior year line numbers: 2019 - 2020 revision: Line 23d - Reserved, 2018 revision: Line 23d - Refundable Credit from Form 8827; 2007 - 2017 revision: Line 23d - Total Payments.

    • Line 24 - Estimated Tax Penalty

  4. Do not bracket any negative entries on Lines 25, 26, and 27.

Income Items - Lines 1 through 6, Page 1

  1. All line items are edited in dollars only and all the line items are either positive or negative.

Line 1 - Gross Receipts or Sales

  1. Line 1a is Gross Receipts or Sales and Line 1b is Returns and Allowances. Do not bracket or "X" amount on Line 1b if negative.

  2. Edit Lines 1a, 1b, and 1c as follows:

    Line 1 - Gross Receipts or Sales

    If And Then
    Line 1a is blank, Amounts are present on Line 1b or Line 1c, Add Line 1b and Line 1c, and edit the total amount to Line 1a. Bracket if negative.
    Lines 1a, 1b, and 1c are blank, The taxpayer shows “Gross Profit” on Line 3, Add Lines 2 and 3, and edit the amount to Line 1a. Bracket if negative.

    Exception:

    If Line 2 is blank, determine from Form 1125-A, Line 8 amount, before computing Line 1a. If cost of goods sold is zero or blank on Form 1125-A, edit the Line 3 amount to Line 1a. Bracket if negative.

    Line 1b is blank, check attachments. If found,   Edit the amount to Line 1b. Do not bracket if negative.
    Line 1b is blank, check attachments. If not found, Line 1a is greater than Line 1c, Compute Line 1b (Line 1a minus Line 1c) and edit the amount to Line 1b.
     

Line 2 - Cost of Goods Sold

  1. Follow instructions below for editing Cost of Goods Sold (Line 2):

    Line 2 - Cost of Goods Sold

    If And Then
    Line 2 is blank, An amount is present on Form 1125-A, Line 8, Edit the amount from Form 1125-A, Line 8. Bracket if negative.
    Line 2 is blank, Form 1125-A, Line 8 is blank and Line 6 has an entry, Edit the amount from Line 6, minus any amount on Line 7. Bracket if negative.
    Line 2 is blank, Form 1125-A, Lines 6 and 8 are blank and there are entries on Lines 1 through 5, Edit the total of Lines 1 through 5 minus any amount on Line 7. Bracket if negative.
     

Line 4 - Net Gain (Loss)

  1. Correspond with the taxpayer for the missing Form 4797, Sales of Business Property, if there is an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ on Line 4, Page 1 and Form 4797 is not attached.

  2. Form 4797 is a transcribed form. Place Form 4797 in sequence order if Line 1b or Line 1c (2021 and later revisions) has significant entries. See IRM 3.11.217.31, Form 4797, Sales of Business Property, for more information.

    Note:

    A significant entry is defined as any amount other than zero.

Line 5 - Other Income (Loss)

  1. Accept taxpayer's entry.

Line 6 - Total Income (Loss)

  1. Edit Line 6 as follows:

    Line 6 - Total Income (Loss)

    If Then
    Line 6 is blank,
    1. Compute Lines 3 through 5 and edit to Line 6.

      Note:

      If Line 3 is blank, compute Line 3 by subtracting Line 2 from Line 1c.

    2. Bracket if negative.

    Line 6 is the only entry in the Income Section,
    1. Enter the amount from Line 6 to Line 5.

    2. Bracket if negative.

Deduction Items and Computation of Ordinary Income - Lines 7 through 21, Page 1

  1. This subsection provides instructions for editing the Deduction area of Form 1120-S, including the Salary and Wage Code. All line items are edited in dollars only and all the line items are positive or negative unless otherwise stated.

Line 7 - Compensation of Officers

  1. Accept taxpayer's entry.

Line 8 - Salaries and Wages

  1. Accept taxpayer's entry.

Salary and Wage Code

  1. Edit a "1" in the right margin of Page 1, Line 8 Form 1120-S if an entry greater than zero is present on any of the following:

    • Form 1120-S, U.S. Income Tax Return for an S Corporation, Page 1, Line 8.

    • Form 1125-A, Cost of Goods Sold, Line 3. See Figure 3.11.217-22, Example of Editing Salary and Wage Code from Form 1125-A.

    • Form 8825, Rental Real Estate Income and Expenses of a Partnership or an S Corporation, Page 1, Line 13, Columns A through D or Page 2, Line 13, Columns E through H.

    • Schedule F, Profit or Loss From Farming, Line 22.

    • Form 4835, Farm Rental Income and Expenses (Crop and Livestock Shares (Not Cash) Received by Landowner (or Sub-Lessor)), Line 20, or

    • An attachment shows an entry for salaries, wages, labor, or payroll. See Figure 3.11.217-23, Example of Editing Salary and Wage Code from an Attachment.

  2. Do not code for any of the following entries:

    • Contract, outside, custom, or miscellaneous labor

    • Temporary help

    • Management fees

    • Janitorial services

    • Maintenance fees

    • Commissions

    • Payroll taxes

    • Casual labor

    Figure 3.11.217-22

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    Please click here for the text description of the image.

    Figure 3.11.217-23

    This is an Image: 51221580.gif

    Please click here for the text description of the image.

Line 9 - Repairs

  1. Accept taxpayer's entry.

Line 10 - Bad Debts

  1. Accept taxpayer's entry.

Line 11 - Rents

  1. Accept taxpayer's entry.

Line 12 - Taxes

  1. Accept taxpayer's entry.

Line 13 - Interest

  1. Accept taxpayer's entry.

Line 14 - Depreciation

  1. Accept taxpayer's entry.

Line 15 - Depletion

  1. Accept taxpayer's entry.

Line 16 - Advertising

  1. Accept taxpayer's entry.

Line 17 - Pension Profit Sharing Plan

  1. Accept taxpayer's entry.

Line 18 - Employee Benefit Plan

  1. Accept taxpayer's entry.

Line 19 - Other Deductions

  1. Edit Page 1, Line 19 as follows:

    Line 19 - Other Deductions

    If Then
    If the taxpayer uses "Other Deduction" items on Lines 7 through 18,
    1. Add the "Other Deduction" items and edit the total to Line 19.

    2. Bracket if negative.

    3. "X" the Other Deductions items from Lines 7 through 18.

     

Line 20 - Total Deductions

  1. Edit Page 1, Line 20 as follows:

    Line 20 - Total Deductions

    If Then
    Line 20 is blank,
    1. Add Lines 7 through 19 and edit this amount to Line 20.

    2. Bracket if negative.

    If Line 20 is the only entry in the "Deduction" section (Lines 7 through 20),
    1. Edit the Line 20 amount to Line 19.

    2. Bracket if negative.

     

Line 21 - Ordinary Income

  1. Edit Page 1, Line 21 as follows:

    Line 21 - Ordinary Income

    If Then
    Line 21 is blank, Subtract Line 20 (Total Deductions) from Line 6 (Total Income) and edit this amount to Line 21. Bracket if negative.
    If Line 21 is the only entry on Page 1 of the return and the amount is positive, Edit the Line 21 amount to both Lines 5 and 6.
    If Line 21 is the only entry on Page 1 of the return and the amount is negative, Edit the Line 21 amount to both Lines 19 and 20 as a positive amount.
     

    Note:

    Correspond with the taxpayer if ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ no Schedule K-1 is attached. See IRM 3.11.217.41, Schedule K-1.

    Exception:

    Do not correspond on Section 965 Returns. ERS will take care of any correspondence needed. See IRM 3.11.217.2.11, Section 965 Returns (201712 through 202012), for more information.

Tax and Payments - Lines 22 through 27, Page 1

  1. This subsection provides instructions for editing the Tax and Payments section of Form 1120-S.

Line 22b - Tax from Schedule D (Form 1120-S)

  1. If there is a significant entry on Line 22b and Schedule D, (Form 1120-S) Capital Gains and Losses and Built-in Gains, is not attached, correspond.

    Note:

    A significant entry is defined as any amount other than zero.

Line 22c - Total Tax

  1. Total Tax (Line 22c) can only be a positive amount. If blank, edit as follows:

    Line 22c - Total Tax

    If Then
    There is no entry on Line 22c (Total Tax), Compute and edit the total of Lines 22a and 22b to Line 22c (Total Tax).
    There is no entry on any of Lines 22a, 22b, and 22c (Total Tax), and Schedule D, (Form 1120-S) Capital Gains and Losses and Built-in Gains, is present, Edit the amount from Schedule D, Line 23 to Form 1120-S, Page 1, Line 22c.
     

  2. If Lines 22a and 22b are blank, and a significant amount is present on Line 22c (Total Tax), edit as follows:

    Line 22c - Total Tax

    If Then
    Line 22c includes pre-computed interest, delinquency penalty, or other charge,
    1. "X" the Line 22c (Total Tax) amount.

    2. Delete the interest, penalty, or other charge from the Total Tax.

    3. Edit the correct Total Tax to the left of the original entry, if other than “0” (zero).

    Line 22c includes "Tax From Form 4255" , Section 47 Recapture of Investment Credit (or similar language),
    1. Accept the taxpayer’s entry.

    2. Do not correspond with the taxpayer for the missing Form 4255, Recapture of Investment Credit, if not present.

    Line 22c includes "Last In First Out (LIFO) Tax" (or similar language), Accept the taxpayer’s entry.
    No supporting form, schedule, or statement is attached to explain the entry on Line 22c (Total Tax), Correspond with the taxpayer using Letter 118-C, Corporate Return Incomplete for Processing: Form 1120, Form 1120 Series, Form 1120-S.
     

    Note:

    A significant entry is defined as any amount other than zero (0).

Line 23a - Estimated Tax Payments

  1. Accept taxpayer's entry.

Line 23b - Tax Deposited with Form 7004

  1. Accept taxpayer's entry.

Line 23c - Credit for Federal Tax Paid on Fuels – Form 4136

  1. If Line 23c has a significant entry and Form 4136, Credit for Federal Tax Paid on Fuels, is not present, correspond with the taxpayer for the missing Form 4136.

    Note:

    A significant entry is defined as any amount other than zero.

Line 23d - Add lines 23a through 23c (2021 revision and 2017 - 2007 revision Form 1120-S)

  1. If Line 23d (Prior year line numbers: 2020 - 2018 revisions: Line 23e) is blank or illegible and there are entries on any of Lines 23a, 23b or 23c, compute the total of Lines 23a, 23b and 23c and edit the total to Line 23d (Prior year line numbers: 2020 - 2018 revisions: Lines 23a, 23b, 23c and 23d).

  2. If Line 23d (Prior year line numbers: 2020 - 2018 revisions: Line 23e) has an entry, but there are no entries on Lines 23a through Line 23c, double arrow or edit the amount to Line 23a (Prior year line numbers: 2020 - 2018 revisions: Lines 23a, 23b, 23c and 23d).

Line 23d - Reserved (2020 - 2019 revision Form 1120-S)

  1. If Line 23d has a significant entry, then "X" the entry.

    Note:

    A significant entry is defined as any amount other than zero.

  2. If Form 8827 is attached, do not edit the credit amount to Line 23d. Continue processing the return.

    Note:

    On 2021, 2017 and prior revisions Form 1120-S returns, Line 23d is a subtotal for Lines 23a - 23c. On 2018 revision Form 1120-S, Line 23d is Refundable Credit from Form 8827.

Line 23d - Refundable Credit from Form 8827 (2018 revision Form 1120-S)

  1. If the taxpayer shows a credit on Line 23d from Form 8827, Refundable Credit from Form 8827, then "X" the entry. Continue processing the return.

    Note:

    On 2021, 2017 and prior revisions Form 1120-S returns, Line 23d is a subtotal for Lines 23a - 23c. On 2020 and 2019 revisions Form 1120-S, Line 23d is reserved for future use.

Line 23d - Credit for Federal Telephone Excise Tax Paid, Form 8913 (2006 revision Form 1120-S)

  1. This credit was used for tax periods 200612 - 200711 when claiming credit on Form 8913, Credit for Federal Telephone Excise Tax Paid Only Tax Return. No editing is required.

Line 23e - Tax and Payments (2020 - 2018 revision Form 1120-S)

  1. If Line 23e is blank or illegible and there are entries on any of Lines 23a, 23b, 23c, or 23d, compute the total of Lines 23a, 23b, 23c, and 23d and edit the total to Line 23d.

  2. If Line 23e has an entry, but there are no entries on Lines 23a through Line 23d, double arrow or edit the amount to Line 23a.

Line 24 - Estimated Tax Penalty

  1. Estimated Tax Penalty must be edited when either:

    1. An additional penalty is pre-computed on the return, or

    2. Form 2220, Underpayment of Estimated Tax by Corporations, is attached to the return, and shows liability for estimated tax penalty.

  2. To edit Form 1120-S, Line 24, do the following:

    1. If the taxpayer follows the instructions on Form 2220, the applicable amount must be shown on Form 2220, Line 38*, and on Form 1120-S, Line 24. The taxpayer may have also increased Form 1120-S, Line 25 or decreased Form 1120-S, Line 26, accordingly. Do not adjust this amount.

    2. If Form 1120-S, Line 24 is blank, edit the amount from Form 2220, Line 38, to Form 1120-S, Line 24.

    3. If Form 1120-S, Line 24 is blank and Form 2220, Line 38 is also blank, review the Form 2220 to determine the taxpayer's method of computation. If there are entries on Form 2220, Line 37, Columns (a) - (d), compute the total amount and enter on Form 1120-S, Line 24.

    Note:

    If Form 2220 is attached, some conditions may require CCC "8" .

Lines 25 and 26 - Amount Owed/Overpayment

  1. Lines 25 and 26 are edited as positive only. If the taxpayer enters a negative amount, no action is required.

  2. Edit the proper entry to Line 25 or Line 26 if both are blank. Do both of the following:

    1. Add Lines 22c and 24. Subtract Line 23d (Prior year line numbers: 2018 - 2020 revision: Line 23e; 2017 - 2007 revision: Line 23d).

    2. Edit the positive result on Line 25 or the negative result (do not bracket) on Line 26.

  3. If pre-computed interest, delinquency penalty, or other charge is evident, make sure that it has not been included in Line 25 or reduced Line 26.

    Lines 25 and 26 - Amount Owed/Overpayment

    If Then
    The amount on Line 25 has pre-computed interest, delinquency penalty, or other charge,
    1. "X" Line 25 amount.

    2. Delete the interest, penalty, or other charge from the amount owed.

    3. Edit the correct amount owed to the left of the original entry.

    The amount on Line 26 is reduced by pre-computed interest, delinquency penalty, or other charge,
    1. "X" Line 26 amount.

    2. Compute the Overpayment amount without the interest, penalty, or other charge.

    3. Edit the correct Overpayment to the left of the original entry.

     

Backup Withholding

  1. If the taxpayer shows "Backup Withholding" , edit an "X" to the left of the amount and continue processing the return.

♦Signature♦

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

    • Returns prepared under IRC 6020(b). These returns must be signed by a Compliance Function representative - See IRM 3.11.217.3.6.1, IRC 6020(b) Prepared by Collections.

      Note:

      Accept electronic or typed revenue officer (RO) signatures as valid on the return.

    • Returns prepared by Examination, for example Substitute for Return "SFR" or "SUBSTITUTE RETURN" - See IRM 3.11.217.3.6.3, Examination Prepared.

    • Dummy returns prepared by IRS.

    • Returns filed under IRC 501(d) (Religious or Apostolic Organization).

    • Returns attached to taxpayer response to IRS correspondence containing a jurat and the taxpayer’s signature. See paragraph (5) below.

    • Re-entry returns originally electronically filed (E-File). These returns may be identified by the presence of Modernized E-file (MeF) (MeF) printouts or "Tax Return Print (TRPRT) Do Not Process" (or similar language) in lieu of an actual return.

      Note:

      If the TRPRT print says "TRPRT Print Do Not Process" in the top margin, circle the words "Do Not Process" .

  2. Do not correspond for a signature on "CIS" returns with Form 13596, Reprocessing Returns, attached. See IRM 3.11.217.3.4.3, Correspondence Imaging System (CIS) Returns, for processing instructions.

  3. If a signature is missing, correspond:

    Exception:

    Do not correspond on Section 965 Returns. ERS will take care of any correspondence needed. See IRM 3.11.217.2.11, Section 965 Returns (201712 through 202012), for more information.

    Note:

    See IRM 3.11.217.3.4.2(2) - Issuing Correspondence - for returns that are incomplete and appear to be duplicate filings.

    Signature

    If Then
    • The return is not signed on the line designated for the taxpayer's signature, or

    • The jurat is not present on the line designated for the taxpayer's signature (a non-standard return), or

    • Only the entity information is present and there are no attachments containing tax data,

    1. Edit Action Code 225 (Correspondence for Signature only) or 226 (International Correspondence for Signature only).

    2. Leave in batch and continue editing.

     

    Note:

    Paper returns sent in by the filer that says their return was rejected through the E-file system require a signature. Form 8879-CORP, E-file Authorization for Corporations, is not an acceptable signature substitute for a paper return. Prior to Tax Year 2022 (process year 2023), Form 8879-S, e-file Signature Authorization for Form 1120-S, was used but the form is now retired.

  4. If the jurat is altered or stricken (crossed out), see IRM 3.11.217.2.8, Frivolous Arguments, for frivolous return instructions.

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

    1. If the "signature declaration" is altered or stricken (crossed out), see IRM 3.11.217.2.8, Frivolous Arguments, for frivolous return instructions.

    2. If the taxpayer responds with a self-prepared "signature declaration" , it must contain the same language as the jurat on the tax return: e.g., "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."

    3. Form 8879-CORP, E-file Authorization for Corporations, is not an acceptable signature substitute for a paper return.

      Note:

      Prior to Tax Year 2022 (process year 2023), Form 8879-S, e-file Signature Authorization for Form 1120-S, was used but the form is now retired.

  6. Tax examiners are not handwriting experts. 26 Code of Federal Regulations (CFR) 301.6064-1 allows the Service to presume that the signature on the return, statement, or other document is the true signature of the person who signed the document.

    Note:

    Do not accept a “✓” or “X” on the signature line as a valid taxpayer signature.

  7. The following types of signatures are not valid for Form 1120-S:

    • Faxed signatures

      Exception:

      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 was made and documented, faxed signatures are acceptable.

    • Electronic signatures

    • Docusign signatures

    • Typed font signatures

    Exception:

    Starting July 1, 2013, the revenue officer's (RO's) electronic signature or typed signature will be accepted as a valid signature on the return.

  8. Correspond one time for the signature.

♦Paid Preparer Checkbox Indicator♦

  1. The Paid Preparer Checkbox is next to the taxpayer signature area. It shows 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:

    Paid Preparer Checkbox Indicator

    If Then
    Only the "Yes" box is checked, Take no action.
    • "No" box is checked

    • Neither box is checked or

    • Both boxes are checked

    Circle the Paid Preparer's Telephone Number if present.
     

♦Paid Preparer Section♦

  1. The Paid Preparer section is below the Signature area at the bottom of Form 1120-S, U.S. Income Tax Return for an S Corporation.

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

  1. The Preparer's Tax Identification Number (PTIN) is to the right of the Preparer's Signature in the PTIN Box at the bottom right margin of Form 1120-S, 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 PTIN if invalid, all zeros or all nines.

♦Firm’s Employer Identification Number (EIN)♦

  1. The Firm's EIN is located below the Preparer's PTIN Box at the bottom right margin of Form 1120-S, Page 1.

  2. No action is required on amended returns.

  3. The Firm's EIN is a nine-digit number. Circle the EIN if it is invalid, all zeros or all nines.

♦Paid Preparer Telephone Number♦

  1. The Paid Preparer's Phone Number is below the Paid Preparer's EIN at the bottom right corner of Form 1120-S, Page 1.

    Paid Preparer Telephone Number

    If Then
    The return is amended, No action is required.
    The Preparer's Phone Number is more than 10 digits, No action is required.
    The Preparer's Phone Number is illegible or less than 10 digits, Circle the Phone Number.

Schedule A - Cost of Goods Sold (2010 and prior revisions)

  1. Schedule A was replaced with Form 1125-A, Cost of Goods Sold.

  2. See IRM 3.11.217.34, Form 1125-A, Cost of Goods Sold, for processing instructions of prior year returns containing a Schedule A.

Schedule B - Other Information

  1. This subsection provides instructions for editing Schedule B, Other Information, on Form 1120-S.

Accounting Method Code

  1. The Accounting Method Code is transcribed from the taxpayer’s response to the boxes on Form 1120-S, Schedule B, Line 1.

  2. No editing is required.

Form 8996 - Qualified Opportunity Fund Checkbox

  1. If Form 1120-S, Schedule B, Question 15 "Is the corporation attaching Form 8996, Qualified Opportunity Fund, to certify as a Qualified Opportunity Fund" is answered "Yes" and the amount line is blank, search attachments for Form 8996. If Form 8996 is attached with an amount on Line 15 (Form 8996 prior year revision line numbers: 2020: Line 14, 2018: Line 13), then edit the amount to Schedule B, Question 15.

    Note:

    Edit this amount using dollars and cents.

  2. If Form 8996, Qualified Opportunity Fund, is attached, edit Return Processing Code (RPC) 6 to Page 1, in the right margin next to Line 1c (Total, Add Lines 1a and 1b) of Form 1120-S. See IRM 3.11.217.13.7, Return Processing Code (RPC), for more information.

  3. See IRM 3.11.217.33, Form 8996, Qualified Opportunity Fund, for more information.

Schedule K - Shareholders' Pro Rata Share Items

  1. This subsection provides instructions for editing Schedule K, Shareholders' Pro Rata Share Items, on Form 1120-S.

  2. Correspond for Schedule K if missing or blank unless the return meets any of the following conditions:

    • The tax period 201212 and prior.

    • Attached Schedule K-1 (Form 1120-S), Part III, has no tax data or reports only Ordinary Income, on Line 1.

    • Any of the following are attached:
      Schedule D, (Form 1120-S) Capital Gains and Losses and Built-in Gains
      Form 8825, Rental Real Estate Income and Expenses of a Partnership or an S Corporation
      Form 6478, Biofuel Producer Credit
      Form 4797, Sales of Business Property
      Form 4562, Depreciation and Amortization (Including Information on Listed Property)
      Form 3468, Investment Credit

    • The return is for a short period.

    • The return has no significant entries or is blank.

      Note:

      A significant entry is defined as any amount other than zero.

Schedule K, Line 2 - Net rental real estate income (loss)

  1. Correspond with the taxpayer for Form 8825, Rental Real Estate Income and Expenses of a Partnership or an S Corporation, if the amount on Form 1120-S, Page 3, Schedule K, Line 2 is either ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and Form 8825 is not attached.

  2. For processing of Form 8825, see IRM 3.11.217.28, Form 8825 - Rental Real Estate Income and Expenses of a Partnership or an S Corporation.

Schedule K, Line 4 - Interest income

  1. If Form 1120-S, Schedule K, Line 4, Interest income, is blank check the supporting attachments for Portfolio Income. If an amount is present, edit to Line 4.

  2. Bracket if negative.

Schedule K, Line 10 - Other income (loss)

  1. If Form 1120-S, Schedule K, Line 10, Other income (loss), reflects a loss ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ edit Audit Code "5" in the left margin near Line 9 (Deductions area). See IRM 3.11.217.13.1, Audit Codes, for more information.

  2. If Form 1120-S, Schedule K, Line 10, Other income (loss) shows a significant entry with the notation "Section 965" or similar language (202012 - 201712 form revisions), edit Computer Condition Code (CCC) "J" and Action Code 460 (Management Suspense). This instruction is only valid for Tax Periods 201712 - 202012.

    Note:

    A significant entry is defined as any amount other than zero.

  3. Form 1120-S, Schedule K-1, Box 10, with Code F (202012 - 201712 form revisions) may show a Section 965(a) return. See IRM 3.0.101, Schedule K-1 Processing, for complete instructions to edit and process Schedules K-1. This instruction is only valid for Tax Periods 201712 - 202012.

  4. See IRM 3.11.217.2.11, Section 965 Returns (201712 through 202012), IRM 3.11.217.14.7, CCC "J" - Section 965 Tax, and IRM 3.11.217.3.1, Action Codes, for more information. This instruction is only valid for Tax Periods 201712 - 202012.

Schedule K, Line 12d - Other deductions

  1. If Form 1120-S , Schedule K, Line 12d, Other deductions, shows a significant entry with the notation "Section 965" or similar language (202012 - 201712 form revisions), edit Computer Condition Code (CCC) "J" and Action Code 460 (Management Suspense). This instruction is only valid for Tax Periods 201712 - 202012.

    Note:

    A significant entry is defined as any amount other than zero.

  2. Form 1120-S, Schedule K-1, Box 12, with Code K (202012 - 201712 form revisions) may show a Section 965(c) return. See IRM 3.0.101, Schedule K-1 Processing, for complete instructions to edit and process Schedules K-1. This instruction is only valid for Tax Periods 201712 - 202012.

  3. See IRM 3.11.217.2.11, Section 965 Returns (201712 through 202012), IRM 3.11.217.14.7, CCC J - Section 965 Tax, and IRM 3.11.217.3.1, Action Codes, for more information. This instruction is only valid for Tax Periods 201712 - 202012.

Schedule K, Line 13a -
Low-income housing credit (section 42(j)(5))

  1. If Form 1120-S, Schedule K, Line 13a, Low-income housing credit (section 42(j)(5)), has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, Form 8586 is required.

    Form 8586

    If Then
    Form 8586 is attached, See IRM 3.11.217.13.5, Form 8586, Low-Income Housing Credit.
    Form 8586 is not attached, Correspond with the taxpayer for the missing Form 8586.
     

Schedule K, Line 13b -
Low-income housing credit (other)

  1. If Form 1120-S, Schedule K, Line 13b, Low-income housing credit (other), has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, Form 8586 is required.

    Form 8586

    If Then
    Form 8586 is attached, See IRM 3.11.217.13.5, Form 8586, Low-Income Housing Credit.
    Form 8586 is not attached, Correspond with the taxpayer for the missing Form 8586.
     

Schedule K, Line 13f - Biofuel producer credit

  1. If Form 1120-S, Schedule K, Line 13f, Biofuel producer credit, has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, Form 6478, Biofuel Producer Credit, (Credit for Alcohol Used as Fuel, for 2012 - 2007), is required. If Form 6478 is not attached, correspond with the taxpayer for the missing form.

  2. Check Form 6478, Line 4 against Schedule K, Line 13f.

    1. If the amounts agree, continue processing the return.

    2. If there is a discrepancy, edit the amount from Form 6478, Line 4 to Schedule K, Line 13f.

Schedule K, Line 14 - International Checkbox

  1. Line 14 - No editing is required. Accept taxpayer’s entry.

Schedule K, Line 16f - Foreign taxes paid or accrued

  1. If Form 1120-S, Schedule K, Line 16f*, Foreign taxes paid or accrued, has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, edit an Audit Code "2" in the left margin near Line 9 (Deductions area) *(Schedule K prior year line numbers: 2020 - 2018: Line 14p, 2017 - 2004: Line 14l). See IRM 3.11.217.13.1, Audit Codes.

  2. If Form 1120-S, Schedule K, Line 16f*, Foreign taxes paid or accrued, has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, edit an Audit Code "7" in the left margin near Line 9 (Deductions area). *(Schedule K prior year line numbers: 2020 - 2018: Line 14p, 2017 - 2004: Line 14l.) See IRM 3.11.217.13.1, Audit Codes.

Schedule K, Line 14r - Other foreign tax information

  1. These instructions are only valid for Tax Periods 201712 - 202012.

  2. If Form 1120-S, Schedule K, Line 14r, Other foreign tax information, shows a significant entry with the notation "Section 965" or similar language (202012 - 201712 form revisions), edit Computer Condition Code (CCC) "J" and Action Code 460 (Management Suspense).

    Note:

    A significant entry is defined as any amount other than zero.

  3. Form 1120-S, Schedule K-1, Box 14, with Code U (202012 - 201712 form revisions) may show a Section 965 return. See IRM 3.0.101 ,Schedule K-1 Processing, for complete instructions to edit and process Schedules K-1.

  4. See IRM 3.11.217.2.11, Section 965 Returns (201712 through 202012), IRM 3.11.217.14.7, CCC J - Section 965 Tax, and IRM 3.11.217.3.1, Action Codes, for more information.

Schedule K, Line 16d - Distributions

  1. Accept taxpayer's entry.

Schedule K, Line 17d - Other items and amounts

  1. If Form 1120-S, Schedule K, Line 17d, Other items and amounts, shows a significant entry with the notation "Section 965" or similar language, edit Computer Condition Code (CCC) "J" and Action Code 460 (Management Suspense).

  2. Form 1120-S, Schedule K-1, Box 17, with Code AD may show a Section 965 return. See IRM 3.0.101, Schedule K-1 Processing, for complete instructions to edit and process Schedules K-1.

Schedule K, Line 18 - Income/loss reconciliation

  1. Accept taxpayer's entry on Form 1120-S, Schedule K, Line 18.

Schedule L - Balance Sheets per Books

  1. Correspond with the taxpayer for missing or blank Schedule L, Balance Sheets per Books, unless the return meets any of the following conditions:

    • Tax periods 0712 and prior.

    • Amended return (CCC "G" ).

    • Final return.

    • Page 2, Schedule B, Line 11 (prior years: 2017 - 2012: Line 10) is checked "Yes" .

      Note:

      If both the "Yes" box and the "No" box are checked, or neither box is checked, and none of the conditions in the bullets listed here are met, correspond.

    • There are no significant entries on Page 1, Lines 1 through 20.

      Note:

      A significant entry is defined as any amount other than zero.

    • Page 1, Box F, Total assets and Line 1a, Gross receipts or sales, have a "-" (dash), "None" , "N/A" , or some similar entry or is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • Schedule L is crossed out or annotated "0" (zero), "-" (dash), "None" , "N/A" , or some similar entry.

    • Schedule B, Line 1 (Check accounting method) - The "Cash" box on Schedule B is checked or the taxpayer has notated "Single Entry Records" , "See Books" , "Balance Sheet not available" , or similar entry.

  2. If the "Yes" box on Form 1120-S, Schedule B, Line 11* is checked and Total assets, (Page 1, Box F)** ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡and Gross receipts or sales, (Page 1, Line 1a)*** ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, delete (slash (/)) Schedule L. (For example, if either "Total assets" or "Gross receipts or sales" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, do not delete Schedule L, Balance Sheets per Books.)
    *Schedule B, Line 10 (prior years: 2017 - 2012: Line 10).
    **Page 1, Box F.
    ***Page 1, Line 1a.

    Reminder:

    Edit Total Assets, Page 1, Box F per IRM 3.11.217.10, Total Assets-Page 1, Box F.

  3. The following information is transcribed from Form 1120-S, Page 4, Schedule L, Balance Sheets per Books. No action is necessary to perfect these amounts. Accept the taxpayer's entry:

    1. Loans to Shareholders, end of year. Schedule L, Line 7 (d).

    2. Total Assets, beginning of year. Schedule L, Line 15 (b).

    3. Loans from Shareholders, end of year. Schedule L, Line 19 (d).

    4. Capital Stock, end of year. Schedule L, Line 22 (d).

    5. Additional Paid-In Capital, end of year. Schedule L, Line 23 (d).

    6. Retained Earnings, end of year. Schedule L, Line 24 (d).

Schedule M-1 and Schedule M-2

  1. This section provides instructions for Form 1120-S , Schedule M-1, Reconciliation of Income (Loss), and Schedule M-2, Analysis of Accumulated Adjustments Account.

Schedule M-1 - Reconciliation of Income (Loss)

  1. The following information is transcribed from Schedule M-1, Reconciliation of Income (Loss), Form 1120-S, Page 5 (Page 4 for prior years).

  2. Schedule M-1, Line 3(b) - Travel and Entertainment. Accept taxpayer's entry.

Schedule M-2 - Analysis of Accumulated Adjustments Account

  1. The following information is transcribed from Schedule M-2, Analysis of Accumulated Adjustments Account, Form 1120-S, Page 5 (Page 4 for prior years).

  2. Schedule M-2, Line 1, Column (a) - Balance at beginning of tax year. Accept taxpayer's entry.

Schedule N (Form 1120) - Foreign Operations of U.S. Corporations

  1. Schedule N is valid for tax periods beginning 01-01-2000. Delete Schedule N if the tax period begins before 01-01-2000.

  2. S Corporations that, at any time during the tax year, have assets in or operate a business in a Foreign Country or U.S. possession may have to file Schedule N.

  3. Do not correspond if Schedule N is missing. Dummy a Schedule N and edit the applicable entries when Form 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships, Form 5471, Information Return of U.S. Persons With Respect To Certain Foreign Corporations, or Form 8873, Extraterritorial Income Exclusion, is attached to the tax return.

  4. If Schedule N is present and has no entries, do not correspond.

  5. If more than one Schedule N is attached, combine the information from all Schedules N, including all subsidiaries and:

    1. Edit to the first Schedule N that has the EIN of the return being processed. "Staple up" any remaining Schedules N, or

    2. Dummy and edit Schedule N, for the parent return if one is not present on a consolidated return.

  6. See IRM 3.11.217.15.1(1), Sequencing of Return, for the sequence order of Schedule N.

Schedule N (Form 1120), Line 1a - Form 8858, Information Return of U.S. Persons With Respect to Foreign Disregarded Entities (FDEs) and Foreign Branches (FBs)

  1. Form 8858 (Revision 12-2018), Information Return of U.S. Persons With Respect To Foreign Disregarded Entities (FDEs) and Foreign Branches (FBs), must be filed by U.S. persons with respect to FDEs and FBs. Also, Form 8858 (Revision 12-2018) must be filed by U.S. persons with respect to FDEs and FBs owned by certain controlled foreign corporations or controlled foreign partnerships.

  2. Edit Audit Code "2" if:

    1. Schedule N (Form 1120), Question 1a is answered "Yes" , or

    2. Form 8858 is present.

Schedule N (Form 1120), Line 2 - Number of Forms 8865

  1. No entry is required for Schedule N, Line 2 unless Form 8865 is present.

  2. Edit Line 2 as follows:

    Schedule N (Form 1120), Line 2

    If And Then
    A number is present for Schedule N, Line 2,   Take no further action.
    Schedule N, Line 2 is blank, Form(s) 8865 is attached, Edit the number of Forms 8865 in the dotted line area of Line 2.
    Form 8865 is attached, Schedule N is not present, Dummy a Schedule N and edit the number of Forms 8865 to Schedule N, Line 2.
  3. Edit Audit Code "2" if Form 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships, is attached. See IRM 3.11.217.13.1, Audit Codes.

Schedule N (Form 1120), Line 3 - Form 8865 Question

  1. Edit Audit Code "2" if Schedule N (Form 1120), Question 3 is answered "Yes" or Form 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships, is attached. See IRM 3.11.217.13.1, Audit Codes.

Schedule N (Form 1120), Lines 4a and 4b - Form 5471, Controlled Foreign Corporation

  1. Line 4a is "Reserved for future use" .

    1. For prior year returns (2020 and prior revisions), edit Audit Code "2" if Schedule N, Question 4a is answered "Yes" .

  2. Line 4b - Edit Audit Code "2" if Form 5471 is attached. See IRM 3.11.217.13.1, Audit Codes.

  3. No entry is required for Schedule N, Line 4b unless Form 5471 is present.

  4. Edit Line 4b as follows:

    Schedule N (Form 1120), Line 4

    If And Then
    A number is present for Schedule N, Line 4b,   Take no further action.
    Schedule N, Line 4b is blank, Form(s) 5471 is attached, Edit the number of Forms 5471 in the dotted line area of Line 4b.

    Note:

    Document Perfection is responsible for determining the number of any and all Form(s) 5471 received, whether attached to a parent return in a consolidated group, or found as an attachment to a subsidiary return.

    Form 5471, Information Return of U.S. Persons With Respect To Certain Foreign Corporations, is attached, Schedule N is not present, Dummy a Schedule N and edit the number of Forms 5471 to Schedule N, Line 4b.

Schedule N (Form 1120), Line 5 - Form 3520 Question

  1. Edit Audit Code "2" if Schedule N (Form 1120), Question 5 is answered "Yes" . See IRM 3.11.217.13.1, Audit Codes.

Schedule N (Form 1120), Line 6b - Foreign Country Code

  1. Edit Schedule N (Form 1120), Line 6b as follows:

    Schedule N (Form 1120), Line 6b

    If And Then
    The taxpayer has entered the name of a Foreign Country in Line 6b,   Write the two letter Country Code to the left of Line 6b. See Acceptable Foreign Countries in Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries.

    Exception:

    Edit Other Country Code "OC" if the foreign country is not listed in Document 7475.

    Note:

    Use "UK" for England, Northern Ireland, Scotland, and Wales. Also, "Holland" is not an official country name, but is part of The Netherlands.

    No Foreign Country is present or "US" , "USA" , "America" , or similar reference to the United States is present, Question 6a is checked "Yes" , Edit Other Country Code, "OC" .
    More than one Foreign Country is present,   Edit the Country Code of the first Foreign Country shown.
     

Schedule N (Form 1120), Line 7a - Form 8873 Question

  1. Edit Audit Code "2" if Schedule N (Form 1120), Question 7a is answered "Yes" . See IRM 3.11.217.13.1, Audit Codes.

Schedule N (Form 1120), Line 7b - Number of Forms 8873

  1. No entry is required for Schedule N (Form 1120), Line 7b unless Form 8873, Extraterritorial Income Exclusion, is present.

    Note:

    Input of Command Code (CC) REQ77 / FRM77 with IDRS Transaction Code (TC) "971" and correct IDRS Action Code (depending on which election was made) may be needed with the Form 8873. See IRM 3.11.217.29, Form 8873, Extraterritorial Income Exclusion.

  2. Edit Line 7b as follows:

    Schedule N (Form 1120), Line 7b

    If And Then
    A number is present for Schedule N, Line 7b, Form(s) 8873 is attached, Process Form 8873, Extraterritorial Income Exclusion, per IRM 3.11.217.29, Form 8873, Extraterritorial Income Exclusion.
    A number is present for Schedule N, Line 7b, Form(s) 8873 are not attached, Take no further action.
    Schedule N, Line 7b is blank, Form(s) 8873 is attached,
    1. Edit the number of Forms 8873 in the dotted line area of Line 7b.

    2. Process Form 8873 per IRM 3.11.217.29, Form 8873, Extraterritorial Income Exclusion.

    Form 8873 is attached, Schedule N is not present,
    1. Dummy a Schedule N and edit the number of Forms 8873 to Line 7b of Schedule N.

    2. Process Form 8873 per IRM 3.11.217.29, Form 8873, Extraterritorial Income Exclusion.

Schedule N (Form 1120), Line 7c - Total Extraterritorial Income Exclusion

  1. No entry is required for Schedule N (Form 1120), Line 7c unless Form 8873 is present.

  2. Edit Line 7c as follows:

    Schedule N (Form 1120), Line 7c

    If And Then
    An amount is present for Schedule N, Line 7c, Form 8873 is attached, Process Form 8873 per IRM 3.11.217.29, Form 8873, Extraterritorial Income Exclusion.
    An amount is present for Schedule N, Line 7c, Form 8873 is not attached, Take no further action.
    Schedule N, Line 7c is blank, Form(s) 8873 is attached,
    1. Compute the total amount of extraterritorial income exclusion from Line 52 and edit to the area provided on Line 7c.

    2. Process Form 8873 per IRM 3.11.217.29, Form 8873, Extraterritorial Income Exclusion.

    Form 8873 is present with a significant entry on Line 52.

    Note:

    A significant entry is defined as any amount other than zero.

    Schedule N is not attached,
    1. Dummy a Schedule N and compute the total amount of extraterritorial income exclusion from all attached Forms 8873. Edit the total to the area provided on Schedule N, Line 7c.

    2. Process Form 8873 per IRM 3.11.217.29, Form 8873, Extraterritorial Income Exclusion.

     

    Note:

    Input of Command Code (CC) REQ77 / FRM77 with IDRS Transaction Code (TC) "971" and correct IDRS Action Code (depending on which election was made) may be needed with the Form 8873. See IRM 3.11.217.29, Form 8873, Extraterritorial Income Exclusion.

Schedule N (Form 1120), Line 8 - Statement of Specified Foreign Financial Assets

  1. For Tax Year (TY) 202001 and later, Form 8938, Statement of Specified Foreign Financial Assets, will be transcribed into the General Purpose Programming (GPP) database. If Form 8938 is attached, see IRM 3.11.217.42, Form 8938, Statement of Specified Foreign Financial Assets, for more information.

Form 8825 - Rental Real Estate Income and Expenses of a Partnership or an S Corporation

  1. If Form 8825, Rental Real Estate Income and Expenses of a Partnership or an S Corporation, is attached to Form 1120-S, compute Line 18a, Total Gross Rents, when there are entries on Page 1, Line 2, Columns A through D or Page 2, Line 2, Columns E through H. Edit Form 8825 in positive amounts in dollars only as follows:

  2. See IRM 3.11.217.15.1(1), Sequencing of Return, for the sequence order of Form 8825.

    Form 8825

    If And Then
    Only one Form 8825 is attached, Line 18a is negative, "X" the negative amount.
    Only one Form 8825 is attached, Line 18a is blank, Compute and enter a positive amount on Line 18a. See Figure 3.11.217-24, Example of Editing Form 8825.
    Multiple Forms 8825 are attached, Only one Form 8825 has an entry on Line 18a,
    1. Accept positive taxpayer entry ("X" negative amount).

    2. Place Form 8825 in sequence order if Line 18a has a positive amount.

    3. "X" the remaining Form 8825.

    Multiple Forms 8825 are attached, More than one Form 8825 has an entry on Line 18a or Line 18a is blank,
    1. Add all Schedule K, Line 2 amounts together.

    2. If positive, edit the amount(s) to Line 18a of the first Form 8825.

    3. "X" the remaining Forms 8825.

    4. Place edited Form 8825 in sequence order.

     

    Figure 3.11.217-24

    This is an Image: 51221585.gif

    Please click here for the text description of the image.

Form 8873 - Extraterritorial Income Exclusion

  1. Document Perfection is responsible for processing Part I, "Elections and Other Information" of Form 8873. Elections are identified by inputting Command Code (CC) REQ77 / FRM77 with Transaction Code (TC) "971" and IDRS Action Code 361, 362, or 363 depending on which election was made.

    Note:

    "Action Codes" referenced in the Form 8873 instructions are IDRS Action Codes, not to be confused with ERS Action Codes.

  2. If Part I, Lines 1 through 3 of the Form 8873, are not checked, then no "TC 971" needs to be entered on IDRS.

Form 8873, Line 1 - Section 942(a) (3) Election

  1. If the box is marked for Part 1, Line 1 of Form 8873, enter "TC 971" with IDRS Action Code 361. Use the current date for the Effective Date.

    Note:

    Edit Action Trail (e.g., "TC 971-361" or similar language) in the lower left margin going vertically up the side of the return.

Form 8873, Line 2 - Extraterritorial Income Exclusion in Lieu of Election

  1. If the box is marked for Part I, Line 2 of Form 8873, enter "TC 971" with IDRS Action Code 362. Use the current date for the Effective Date.

    Note:

    Edit Action Trail (e.g., "TC 971 - 362" or similar language) in the lower left margin going vertically up the side of the return.

Form 8873, Line 3 - Domestication Election

  1. If the box is marked for Part I, Line 3 of Form 8873, enter "TC 971" with IDRS Action Code 363. Use the current date for the Effective Date.

    Note:

    Edit Action Trail (e.g., "TC 971 - 363" or similar language) in the lower left margin going vertically up the side of the return.

Schedule D (Form 1120-S) - Capital Gains and Losses and Built-in Gains

  1. Edit Schedule D, (Form 1120-S) Capital Gains and Losses and Built-in Gains:

    Schedule D (Form 1120-S)

    If Then
    All of the following conditions apply:
    1. Form 1120-S is for 201212 tax year or later and

    2. The Schedule D is a 2012 or later revision and

    3. Significant entries are present on one or more of the transcription lines or checkbox is marked.

      Note:

      A significant entry is defined as any amount other than zero.

      • Transcription lines for 2019 and subsequent are as follows:

        • Checkbox above Part I,

          Note:

          Valid for tax periods ending 201712 and later.

        • Part I, Line 1a, Columns (d) and (e),

        • Part I, Lines 1b - 3, Columns (d), (e) and (g),

        • Part II, Lines 8a, Columns (d) and (e),

        • Part II, Lines 8b - 10, Columns (d), (e) and (g),

        • Part II, Line 13.

      • Transcription lines for 2018 through 2013 are as follows:

        • Part I, Line 1a, Columns (d) and (e),

        • Part I, Lines 1b - 3, Columns (d), (e), and (g)

        • Part II, Lines 8a, Columns (d) and (e),

        • Part II, Lines 8b - 10, Columns (d), (e), and (g),

        • Line 13.

    1. Place Schedule D in sequence order.

    2. Edit Schedule D in dollars only.

    3. For 2013 and later Schedule D revisions:

      • "X" any negative transcription entries, except the following: Lines 1b(g), 2(g), 3(g), 8b(g), 9(g), and 10(g). These lines can be positive or negative.

    4. For 2012 Schedule D revisions:

      • "X" any negative transcription entries.

      • Change Page 1, Part I, Line 1 to Line 1b and,

      • Change Page 1, Part II, Line 8 to Line 8b.

    Criteria above is not met, Cross-out or slash Schedule D.

    Exception:

    If Form 1120-S, Page 1, Line 22b has a significant entry, do not cross-out or slash Schedule D. Continue processing the return.

     

  2. See IRM 3.11.217.15.1(1), Sequencing of Return, for the sequence order of Schedule D.

Form 4797 - Sales of Business Property

  1. Line 1b - No editing is required. See IRM 3.11.217.16.3, Line 4 - Net Gain (Loss), for more information.

  2. Line 1c - No editing is required. See IRM 3.11.217.16.3, Line 4 - Net Gain (Loss), for more information.

  3. Place Form 4797, Sales of Business Property, in sequence order if significant entries are present on Line 1b or Line 1c (2021 and later form revisions). See IRM 3.11.217.15.1(1), Sequencing of Return, for the sequence order of Form 4797.

Form 8949 - Sales and Other Dispositions of Capital Assets

  1. Form 8949, Sales and other Dispositions of Capital Assets, is valid for tax periods 201712 and later. See Figure 3.11.217-25, Example of Editing Form 8949.

  2. If the taxpayer has entered a "Z" or "Y" in any of the rows in either Part I, Line 1, Column (f), or Part II, Line 1, Column (f), of Form 8949, then edit CCC "M" .

  3. If the taxpayer has entered a "Z" in any of the rows from Part I, Line 1, Column (f), then edit Form 8949 as follows:

    1. Place Form 8949 in sequence order if significant entries are present. See IRM 3.11.217.15.1(1), Sequencing of Return. If there is more than one Form 8949 attached, then sequence the Form 8949 with the Part I edited data first.

    2. Underline the EIN (Column (a)) from the first row with a "Z" present in Column (f) if EIN is present.

    3. Underline the Date Acquired (Column (b)) from the first row with a "Z" present in Column (f) if the day, month, and year are present.

    4. Underline the dollar amount (Column (g)) from the first row with a "Z" present in Column (f) if the money amount is present.

    5. If the taxpayer has shown more than one row with a "Z" in Column (f), then edit "Z-1" to the right margin of Part I, Line 1 of Form 8949.

  4. If the taxpayer has entered a "Y" in any of the rows from Part I, Line 1, Column (f), then edit the Form 8949 as follows:

    1. Place the form in sequence order. If there are more than one Form 8949 attached, then sequence the Form 8949 with the edited data.

    2. Underline the EIN (Column (a)) from the first row with a "Y" in Column (f) if the EIN is present.

    3. Underline the Date Sold or Disposed Of (Column c)) from the first row with a "Y" in Column (f) if the Date Sold or Disposed Of is present.

    4. Underline the dollar amount (Column g)) from the first row with a "Y" in Column (f) if a money amount is present.

    5. If the taxpayer has shown more than one row with a "Y" in Column (f), then edit "Y-1" to the right margin of Part I, Line 1, Row 1 of Form 8949.

    6. If "Z-1" was edited, then edit "Y-1" under "Z-1" .

  5. If the taxpayer has entered a "Z" in any of the rows from Part II, Line 1, Column (f) then edit Form 8949 as follows:

    1. Place the form in sequence order. See IRM 3.11.217.15.1(1), Sequencing of Return. If there is more than one Form 8949 attached, then sequence the Form 8949 with the Part I edited data first followed by the Part II edited data.

    2. Underline the EIN (Column (a)) from the first row with a "Z" present in Column (f) if EIN is present.

    3. Underline the Date Acquired (Column (b)) from the first row with a "Z" present in Column (f) if the day, month, and year are present.

    4. Underline the dollar amount (Column (g)) from the first row with a "Z" present in Column (f) if a money amount is present.

    5. If the taxpayer has shown more than one row with a "Z" in Column (f), then edit "Z-1" to the right margin of Part II, Line 1, Row 1 of Form 8949.

  6. If the taxpayer has entered a "Y" in any of the rows from Part II, Line 1, Column (f), then edit the Form 8949 as follows:

    1. Place the form in sequence order. If there are more than one Form 8949 attached, then sequence the Form 8949 with the Part I edited data first and then the Part II edited data.

    2. Underline the EIN (Column (a)) from the first row with a "Y" in Column (f) if the EIN is present.

    3. Underline the Date Sold or Disposed Of (Column (c)) from the first row with a "Y" in Column (f) if Date Sold or Disposed Of is present.

    4. Underline the dollar amount (Column (g)) from the first row with a "Y" in Column (f) if money amount is present.

    5. If the taxpayer has shown more than one row with a "Y" in Column (f), then edit "Y-1" to the right margin of Part II, Line 1, Row 1 of Form 8949.

    6. If "Z-1" was edited, then edit "Y-1" under "Z-1" .

    Figure 3.11.217-25

    This is an Image: 51221606.gif

    Please click here for the text description of the image.

Form 8996 - Qualified Opportunity Fund

  1. Form 8996, Qualified Opportunity Fund, is valid for tax periods ending 201712 and later. The table below compares Form 8996 line numbers based on the tax year of the return:

    2021 and later 2020 2019 2018 and 2017
    Line 5 Line 5 Line 5 N/A
    Line 6 N/A N/A N/A
    Line 7 Line 7 Line 6 Line 5
    Line 8 Line 8 Line 7 Line 6
    Line 10 Line 10 Line 9 Line 8
    Line 11 Line 11 Line 10 Line 9
    Line 14 Line 14 Line 13 Line 12
    Line 15 Line 15 Line 14 Line 13
    For prior year conversion instructions, see Exhibit 3.11.217-5, Form 8996 Prior Year Conversion Chart.

  2. Place Form 8996 in sequence order if significant entries are present on any of the lines listed in a through h below. See IRM 3.11.217.15.1(1), Sequencing of Return, for the sequence order of Form 8996.

    Note:

    Only Part III, Lines 14 and 15 require editing.

    1. Part I, Line 5 checkbox is marked.

    2. Part I, Line 6 - Reserved for future use.

    3. Part II, Line 7 - Total QOZ property held by the taxpayer on the last day of the first 6-month period of the taxpayer’s tax year.

    4. Part II, Line 8 - Total assets held by the taxpayer on the last day of the first 6-month period of the taxpayer’s tax year.

    5. Part II, Line 10 - Total QOZ property held by the taxpayer on the last day of the taxpayer’s tax year.

    6. Part II, Line 11 - Total assets held by the taxpayer on the last day of the taxpayer’s tax year.

    7. Part III, Line 14 - Perfect Line 14 as follows:
      - Edit the Line 14 percent in 0.00 format. For example, edit 50 percent as 0.50.
      - If the percent is greater than 1.00, "X" the percentage amount on Line 14. For example, if the percentage shown is 1.23.

    8. Part III, Line 15 - Perfect Line 15 as follows:
      - If Form 8996, Part III, Line 15 is blank and Part IV, Line 8 has an amount, edit Part IV, Line 8 to Part III, Line 15 in dollars cents.

  3. If Form 8996, Qualified Opportunity Fund, is attached, then edit Return Processing Code (RPC) "6" . See IRM 3.11.217.13.7 Return Processing Code (RPC), for more information.

    Note:

    If Form 8996 is attached, then further editing may be needed on Form 1120-S, Schedule B, Line 15. See IRM 3.11.217.23.2(1). Form 8996 Qualified Opportunity Fund.

Form 1125-A - Cost of Goods Sold (Formerly Form 1120-S, Page 2, Schedule A)

  1. Place Form 1125-A, Cost of Goods Sold, in sequence order if entries are present on Line 1 or Line 7. See IRM 3.11.217.15.1, Sequencing of Return.

  2. Edit Form 1125-A in dollars only.

  3. Form 1125-A Line 1 - Inventory at the beginning of the year. Accept taxpayer's entry. If Line 1 is blank, edit from the taxpayer's attachment (if present).

  4. Form 1125-A Line 3 - Cost of labor. No specific editing is necessary, but an entry on this line is indicative of a Salary and Wage Code condition. See IRM 3.11.217.17.3, Salary and Wage Code.

  5. Form 1125-A Line 7 - Inventory at the end of the year. Accept taxpayer's entry. If Line 7 is blank, edit from the taxpayer's attachment (if present).

  6. Form 1125-Amust be dummied if missing and if Line 1 or Line 7 are able to be edited. Use instructions in (2) through (5) above to edit lines. Place dummy Form 1125-A in sequence order.

    Note:

    If a negative entry is present on either of Line 1 or Line 7, "X" the amount.

    Figure 3.11.217-26

    This is an Image: 51221595.gif

    Please click here for the text description of the image.

  7. See IRM 3.11.217.15.1(1), Sequencing of Return, for the sequence order of Form 1125-A.

Form 4136 - Credit for Federal Tax Paid on Fuels

  1. If Form 4136, Credit for Federal Tax Paid on Fuels, is missing and a significant entry is claimed on Form 1120-S, Page 1, Line 23c for a Fuel Tax Credit, correspond with the taxpayer for the missing Form 4136.

    Note:

    A significant entry is defined as any amount other than zero.

  2. If a fuel credit claim is found on other than the correct line on the return, and Form 4136 is attached, adjust incorrect entry before editing Fuel Tax Credits.

  3. Form 4136 should be placed in sequence order.

  4. If Fuel Tax Credit is claimed on Page 1, Form 1120-S and Form 4136 is attached, perfect Column (d) as necessary. Column (d) should equal Line 17 of Form 4136. If perfection is not possible, correspond.

  5. Code and Edit is no longer required to renumber the lines on prior year Form 4136 to current year format. Column (d), Amount of credit, is transcribed using the corresponding Credit Reference Number (CRN) in Column (e).

  6. See IRM 3.11.217.15.1(1), Sequencing of Return, for the sequence order of Form 4136.

Form 8913 - Credit for Federal Telephone Excise Tax Paid Only Tax Return

  1. This credit was used for tax periods 200612 - 200711 when claiming credit on Form 8913, Credit for Federal Telephone Excise Tax Paid Only Tax Return. No editing is required.

Form 8941 - Credit for Small Employer Health Insurance Premiums

  1. Place Form 8941, Credit for Small Employer Health Insurance Premiums, in sequence order if significant entries are present.

    Note:

    A significant entry is defined as any amount other than zero.

  2. Significant entries are present on one or more of the transcription lines (T lines). Transcription lines are shown in the Transcription Line Table below.

    Transcription Line

    Transcription Line Description
    A Small Business Health Options Program (SHOP) Marketplace Box - Did you pay premiums during your tax year for employee health insurance coverage you provided through a Small Business health Options Program (SHOP) Marketplace (or do you qualify for an exception to this requirement)?
    B Employer Identification Number (EIN) - Enter the employer identification number (EIN) used to report employment taxes for individuals included on Line 1 below if different from the identifying number listed above.
    C Does a tax return you (or any predecessor) filed for a tax year beginning in 2014 include a Form 8941, Credit for Small Employer Health Insurance Premiums, with Line A checked "Yes" and Line 12 showing a positive amount?
    1 Enter the number of individuals you employed during the tax year who are considered employees for purposes of this credit (total from Worksheet 1, Column (a)).
    2 Enter the number of full-time equivalent employees (FTEs) you had for the tax year (from Worksheet 2, Line 3). If you entered 25 or more, skip Lines 3 through 11 and enter -0- on Line 12.
    3 Average annual wages you paid for the tax year (from Worksheet 3, Line 3). This amount must be a multiple of $1,000.
    4 Premiums you paid during the tax year for employees included on Line 1 for health insurance coverage under a qualifying arrangement (total from Worksheet 4, Column (b)).
    5 Premiums you would have entered on Line 4 if the total premium for each employee equaled the average premium for the small group market in which the employee enrolls in health insurance coverage (total from Worksheet 4, Column (c)).
    10 Enter the total amount of any state premium subsidies paid and any state tax credits available to you for premiums included on Line 4 (see instructions).
    13 If Line 12 is zero, skip Lines 13 and 14 and go to Line 15. Otherwise, enter the number of employees included on Line 1 for whom you paid premiums during the tax year for health insurance coverage under a qualifying arrangement (total from Worksheet 4, Column (a)).
    14 Enter the number of FTEs you would have entered on Line 2 if you only included employees included on Line 13 (from Worksheet 7, Line 3).
    15 Credit for small employer health insurance premiums from partnerships, S corporations, cooperatives, estates, and trusts (see instructions).
    16 Add Lines 12 and 15. Cooperatives, estates, and trusts, go to Line 17. Tax-exempt small employers skip Lines 17 and 18 and go to Line 19. Partnerships and S corporations, stop here and report this amount on Schedule K. All others, stop here and report this amount on Form 3800, Part III, Line 4h.
     

  3. For prior year Form 8941, Credit for Small Employer Health Insurance Premiums, revisions, if significant amounts/entries are present on Form 8941, see Form 8941 Prior Year Revision Table below.

    Form 8941 Prior Year Revision

    Form 8941 Prior Year Revision Action
    2013
    • Change Line 1a to Line 1

    • Change Line 1b to Line B

    2012
    • Change Line 1a to Line 1

    • Change Line 1b to Line B


    See IRM 3.11.217.43, Form 1120-S Prior Year Conversion Charts, for more prior year information.

  4. See IRM 3.11.217.15.1(1), Sequencing of Return, for the sequence order of Form 8941.

Form 5884-B - New Hire Retention Credit

  1. The status of Form 5884-B, New Hire Retention Credit, is historical and was valid March 19, 2010, to December 31, 2010 (Tax Periods 2010 and 2011).

Form 6252 - Installment Sale Income

  1. Form 6252, Installment Sale Income, is valid for tax periods ending in 201712 and later.

  2. Only one Form 6252 can be processed. If multiple forms are attached, process the first one with significant transcription entries and delete the others.

    Caution:

    Multiple Forms 6252 must be used to determine the Installment Sale Indicator.

  3. Place Form 6252 in sequence order if entries are present on any of the transcription lines listed below. See IRM 3.11.217.15.1(1), Sequencing of Return, for the sequence order of Form 6252.

    Note:

    Part II, Line 19 is the only line that requires editing, however, an Installment Sale Indicator must be determined from Line 3. See IRM 3.11.217.13.3, Installment Sale Indicator.

    1. Line 1 - Description of Property - Taxpayer may enter a code and a description of installment sale property as described in the table below. No editing is required.

      Indicator Description of property
      1 Sale property is Timeshare or residential lot
      2 Sale by an individual of personal use property (within the meaning of Section 1275(b)(3))
      3 Sale of any property used or produced in the trade or business of farming (within the meaning of Section 2032A(e)(4) or (5))
      4 Other - All other installment sales not listed

    2. Line 2a - Date acquired.

    3. Line 2b - Date sold.

    4. Line 3 - Information is used to determine the Installment Sale Indicator - Edit "3 -" followed by the appropriate Installment Sale Indicator code in the left margin of Form 1120-S, Page 1, near line 9 when Form 6252 is present (e.g., "3 - 1" ). Valid Installment Indicator codes are as follows:

      Code One Form 6252 More than one Form 6252
      1 "Yes" response to Question 3, At least one form has a "Yes" response.
      2 "No" response to Question 3, All "No" responses, or a combination of "No" and/or blank responses.
      3 "Yes" and "No" are checked or Question 3 is blank, Question 3 is blank on all forms.

    5. Part I, Line 7 - Subtract Line 6 from Line 5.

    6. Part II, line 19 - Gross Profit Percentage. If Line 19 is not in 0.0000 format, edit the percentage as follows:

      Taxpayer’s Entry Edit
      50 percent 0.5000
      .123 0.1230
      .12345 0.1234

      Note:

      ISRP will only transcribe four digits after the decimal. If more than four digits are present, e.g., 0.123456, it is not necessary to delete the extra digits. If the percent is greater than 1.00, X the percentage amount on Line 19. For example, the percentage is 1.2300 or 1.23 percent.

    7. Part II, Line 21 - Payments received during year.

    8. Part II, Line 23 - Payments received in prior years.

  4. See IRM 3.11.217.13.3, Installment Sale Indicator, for more information.

Form 8997 - Initial and Annual Statement of Qualified Opportunity Fund (QOF) Investments

  1. Form 8997, Initial and Annual Statement of Qualified Opportunity Fund (QOF) Investments, is valid for tax periods ending 201901 and later.

  2. Place Form 8997 in sequence order if the form is attached and significant entries are present in any of Parts I, II, III or IV.

  3. No editing is required except for the indicator in Parts I, II, III or IV. Transcription is from Row 1 of each part.

  4. Part I - Total QOF Investment Holdings due to Deferrals Prior to Beginning of Tax Year (Row 1).

    1. Column a - QOF EIN.

    2. Column b - Date QOF Investment acquired.

    3. Column d - Special gain code.

    4. Column e - Amount of short-term deferred gain remaining in QOF.

    5. Column f - Amount of long-term deferred gain remaining in QOF.

    6. Part I Indicator - If more than one row of tax data is present in Part I, edit "1" in the right margin of Part I, row 1.

    7. Line 2, Column e - total amount.

    8. Line 2, Column f - total amount.

  5. Part II - Current Tax Year Capital Gains Deferred by Investing in QOF (Row 1).

    1. Column a - QOF EIN.

    2. Column b - Date QOF investment acquired.

    3. Column d - Special gain code.

    4. Column e - Amount of short-term deferred gain remaining in QOF.

    5. Column f - Amount of long-term deferred gain remaining in QOF.

    6. Part II Indicator - If more than one row of tax data is present in Part II, edit "1" in the right margin of Part II, Row 1.

    7. Line 2, Column e - total amount.

    8. Line 2, Column f - total amount.

  6. Part III - Inclusion Events and Certain Other Transfers During the Current Tax Year (Row 1).

    1. Column a - QOF EIN.

    2. Column b - Date of event.

    3. Column d - Special gain code.

    4. Column e -Amount of previously deferred short-term gain now included in taxable income.

    5. Column f - Amount of previously deferred long-term gain now included in taxable income.

    6. Part III Indicator - If more than one row of tax data is present in Part III, edit "1" in the right margin of Part III, row 1.

    7. Line 2, Column e - total amount.

    8. Line 2, Column f - total amount.

  7. Part IV - Total QOF Investments Due to Deferrals at Year End (Row 1).

    1. Column a - QOF EIN.

    2. Column b - Date QOF Investment acquired.

    3. Column d - Special gain code.

    4. Column e - Amount of short-term deferred gain invested in QOF.

    5. Column f - Amount of long-term deferred gain invested in QOF.

    6. Part IV Indicator - If more than one row of tax data is present in Part IV, edit "1" in the right margin of Part IV, row 1.

    7. Line 2, Column e total amount.

    8. Line 2, Column f total amount.

  8. If Form 8997, Initial and Annual Statement of Qualified Opportunity Fund (QOF) Investments, is attached, edit Return Processing Code (RPC) "9" . See IRM 3.11.217.13.7, Return Processing Code (RPC), for more information.

Schedule K-1 - Shareholder’s Share of Income, Deductions, Credits, etc.

  1. All Form 1120-S filers must complete and file Schedule K-1, Shareholder’s Share of Income, Deductions, Credits, etc., and attach it to the Form 1120-S. If no Schedules K-1 are attached, follow the procedures listed below:

    Note:

    Detach Schedules K-1 for current year (TY2022), two preceding years (TY2021 and TY2020), and future Schedules K-1.

  2. Do not correspond for Schedule K-1 if:

    • Section 965 Returns - See IRM 3.11.217.2.11, Section 965 Returns (201712 through 202012), for more information.

    • Form 1120-S is a TY2018 and prior tax period.

    • Form 1120-S, Line 21, Ordinary Business Income (Loss), ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • There are attachments to the return in a standard format which may be used as a Schedule K-1.

    • Re-entry return (Form 13596, Reprocessing Returns or Form 3893, Re-Entry Document Control, is attached to return).

    • Amended (CCC "G" ) return.

    • IRC 6020(b) return

    • Examination Secured "Substitute for Return" (SFR) returns.

    • There are no entries on Form 1120-S, Lines 1 through 21.

    • Form 1120-S has a Form 4251, Return Charge-Out, attached and is being processed as an original return

    • Payee is a foreign entity.

  3. When correspondence with the taxpayer is required, see IRM 3.11.217.3.4.2, Issuing Correspondence.

  4. If Schedule K-1, Line 15*, Alternative minimum tax (AMT) items, has an amount ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, edit Tax Preference Code in the left margin near Line 9 (Deductions area) of Form 1120-S. See IRM 3.11.217.13.4, Tax Preference Code.

  5. Form 1120-S, Schedule K-1, Box 10 (with code F), Box 12 (with code K), and Box 14 (with code U) may show a Section 965 return. See IRM 3.11.217.2.11, Section 965 Returns (201712 through 202012), for more information.

  6. See IRM 3.0.101, Schedule K-1 Processing, for complete instructions to edit and process Schedules K-1.

  7. See IRM 3.11.217.15.1, Sequencing of Return, for the sequence order of Schedule K-1.

Form 8938, Statement of Specified Foreign Financial Assets

  1. For Tax Year (TY) 202001 and later, Form 8938, Statement of Specified Foreign Financial Assets, will be transcribed into the General Purpose Programming (GPP) database.

  2. Process Form 8938 with the following criteria:

    1. The Tax Period Beginning on Form 1120-S is 202001 or later, and

    2. Form 8938 is a 2022, 2021, or 2020 revision, and

    3. Form 8938 has significant entries.

      Note:

      A significant entry is defined as any amount other than zero.

  3. If Form 8938 is attached, but does not meet the criteria in paragraph (2), edit CCC "2" and continue normal processing of the Form 1120-S. Do not sequence the form to the back of the return or place the form in a designated basket.

  4. If the return meets the criteria in paragraph (2), process Form 8938 per the instructions below:

    Note:

    For TY 19-20, always renumber the Form 8938 to match the current year Form 8938. See the attached inserts for Exhibit 3.11.217-4, Form 8938 - Prior Year Conversion Chart, and Form 8938 with T-Lines and numbering changes displayed.

    1. Completely edit Form 1120-S.

    2. Edit CCC "2" .

    3. Detach Schedules K-1.

    4. Pull the Form 8938 from the return and sequence to the back of the last page of Form 1120-S (after schedules and attachment pages), attaching the Form 8938 so that it is back- to- back with the parent return.

    5. Place the Form 1120-S in a designated basket.

    6. Only one Form 8938, Pages 1 and 2, can be processed. If multiple Forms 8938 are attached, select the form that has the highest account value in Part V, Line 23, (Line 4 for 2020 and prior revisions); or highest asset value in Part VI, Line 32, (Line 4 for 2020 and prior revisions), and delete the others.

      Note:

      The Form 8938 can have multiple "Additional or Continuation Statements" . Do not confuse the multiple additional or continuation statements with multiple Form 8938.

  5. Form 1120-S with Form 8938 attached must be batched separately. The transcription of Form 8938 occurs under Program Code 43300 after the parent Form 1120-S is transcribed.

  6. See IRM 3.11.217.15.1(1), Sequencing of Returns, for the sequence order of Form 8938.

Form 1120-S Prior Year Conversion Charts

  1. The following charts show information for converting Form 1120-S (and other applicable forms and schedules) to the current year form (and schedule).

    Prior Year Conversion 2020 - 2018

    Form/Schedule Action
    Form 1120-S
    • Change Line 23e to Line 23d

    Form 8996 2020
    • Change Line 6 to Line 7

    • Change Line 7 to Line 8

    • Change line 9 to Line 10

    • Change Line 10 to Line 11

    • Change Line 13 to Line 14

    • Change Line 14 to Line 15

    2019 and 2018
    • Change Line 5 to Line 7

    • Change Line 6 to Line 8

    • Change Line 8 to Line 10

    • Change Line 9 to Line 11

    • Change Line 12 to Line 14

    • Change Line 13 to Line 15

     

    Prior Year Conversion 2017

    Form/Schedule Action
    Form 8996 2017
    • Change Line 5 to Line 7

    • Change Line 6 to Line 8

    • Change Line 8 to Line 10

    • Change Line 9 to Line 11

    • Change Line 12 to Line 14

    • Change Line 13 to Line 15

     

    Prior Year Conversion - 2013

    Form/Schedule Action
    Form 8941
    • Change Line 1a to Line 1

    • Change Line 1b to Line B (EIN)

     

    Prior Year Conversion - 2012

    Form/Schedule Action
    Schedule D, (Form 1120-S) Capital Gains and Losses and Built-in Gains, Page 1, Part I
    • Change Line 1 to Line 1b

    Schedule D (Form 1120-S), Page 1, Part II
    • Change Line 8 to Line 8b

    Form 8941
    • Change Line 1a to Line 1

    • Change Line 1b to Line B

     

Acronyms and Abbreviations

ExhibitsAcronyms and Abbreviations

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

Acronyms and Abbreviations

Acronyms and Abbreviations Definition
ACA Affordable Care Act
ADP Automatic Data Processing
AM Accounts Management
AMRH Accounts Maintenance Research
APO Army Post Office
AUR Automated Underreporter
BBTS Batch Block Tracking System
BMF Business Master File
c/o Care of
C&E Code and Edit
CAS Correspondence Action Sheet
CBR Case Base Reasoning
CCC Computer Condition Code
CDP Collection Due Process
CFR Code of Federal Regulations
CI Criminal Investigation
CIS Correspondence Imaging System
CP Computer Paragraph
CSCO Compliance Services Collection Operations
DLN Document Locator Number
DPO Diplomatic Post Office
DPO Document Perfection Operation
EEFax Enterprise Electronic Fax
E-File Electronic Filing
e.g. For Example
EIN Employer Identification Number
EQSP Embedded Quality Submission Processing
EOCU EO Compliance Unit
ERS Error Resolution System
etc. Et Cetera
Exam Examination
FATCA Foreign Account Tax Compliance Act
Fax Facsimile
FB Foreign Branches
FDE Foreign Disregarded Entities
FedEx Federal Express Corporation
FPO Fleet Post Office
FRP Frivolous Return Program
FTF Failure To File
FTP Failure To Pay
GILTI Global Intangible Low-Taxed Income
GPP General Purpose Programming
HIRE Hiring Incentives to Restore Employment
http HyperText Transfer (or Transport) Protocol
ICS Integrated Collection System
ICT Image Control Team
ID Identification or Identity
IDRS Integrated Data Retrieval System
IMF Individual Master File
IPU IRM Procedural Update
IRC Internal Revenue Code
IRS Internal Revenue Service
ISRP Integrated Submission and Remittance Processing
IT Information Technology
KCSPC Kansas City Submission Processing Campus or Kansas City Submission Processing Center
LB&I Large Business and International
MeF Modernized E-file
MFT Master File Tax
MMDDYY Month, Day, Year
NAICS North American Industry Classification System
N/A Not Applicable
NDC National Distribution Center
OC Other Country
OID Original Issue Discount
OMB Office of Management and Budget
OSPC Ogden Submission Processing Campus or Ogden Submission Processing Center
PBA Principal Business Activity
PDS Private Delivery Service
P.L. Public Law
PTIN Preparer Tax Identification Number
POA Power of Attorney
P.O. Post Office
QSSS Qualified Subchapter S Subsidiary
R&C Receipt and Control
RD Return Delinquency
Rev. Proc. Revenue Procedure
RICS Return Integrity and Compliance Services
RO Revenue officer
RPC Return Processing Code
RRA98 Restructuring and Reform Act of 1998
SBSE Small Business Self-Employed
SCAMPS Service Center Automated Mail Processing System
SCRIPS Service Center Recognition Image Processing System
SERP Servicewide Electronic Research Program
SFR Substitute for Return
SLA Service Level Agreement
SME Subject Matter Expert
SOI Statistics of Income
SP Submission Processing
SPDC Submission Processing Design Center
SSN Social Security Number
TAC Taxpayer Assistance Center
TAS Taxpayer Advocate Service
TBOR Taxpayer Bill of Rights
TC Transaction Code
TCJA Tax Cuts and Jobs Act of 2017
TE Tax Examiner
TEGE Tax Exempt and Government Entities
TETR Telephone Excise Tax Refund
TIN Taxpayer Identification Number
TP Taxpayer
TPE Tax Period Ending
TRPRT Tax Return Print
TY Tax Year
U.S. United States
UCC Uniform Commercial Code
UPS United Parcel Service
USC United States Code
USPS United States Postal Service
UWR Unified Work Request
W&I Wage and Investment
ZIP Zoning Improvement Plan
 

Note:

The above list may not be all-inclusive.

Due Date Chart

ExhibitsDue Date Chart

Due Date Chart

Tax Period Return Due Date (weekends and holidays considered) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Extended Due Date - 6 months (weekends and holidays considered)
Jan. 2021 4-15-2021 ≡ ≡ ≡ ≡ ≡ ≡ ≡ 10-15-2021
Feb. 2021 5-17-2021 ≡ ≡ ≡ ≡ ≡ ≡ 11-15-2021
Mar. 2021 6-15-2021 ≡ ≡ ≡ ≡ ≡ ≡ 12-15-2021
Apr. 2021 7-15-2021 ≡ ≡ ≡ ≡ ≡ 1-18-2022
May 2021 8-16-2021 ≡ ≡ ≡ ≡ ≡ 2-15-2022
Jun. 2021 9-15-2021 ≡ ≡ ≡ ≡ ≡ ≡ ≡ 3-15-2022
Jul. 2021 10-15-2021 ≡ ≡ ≡ ≡ ≡ ≡ 4-18-2022
Aug. 2021 11-15-2021 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ 5-16-2022
Sept. 2021 12-15-2021 ≡ ≡ ≡ ≡ ≡ ≡ ≡ 6-15-2022
Oct. 2021 1-18-2022 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ 7-15-2022
Nov. 2021 2-15-2022 ≡ ≡ ≡ ≡ ≡ ≡ 8-15-2022
Dec. 2021 3-15-2022 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ 9-15-2022
Jan. 2022 4-18-2022 ≡ ≡ ≡ ≡ ≡ ≡ 10-17-2022
Feb. 2022 5-16-2022 ≡ ≡ ≡ ≡ ≡ ≡ 11-15-2022
Mar. 2022 6-15-2022 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ 12-15-2022
Apr. 2022 7-15-2022 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ 1-17-2023
May 2022 8-15-2022 ≡ ≡ ≡ ≡ ≡ 2-15-2023
Jun. 2022 9-15-2022 ≡ ≡ ≡ ≡ ≡ ≡ 3-15-2023
Jul. 2022 10-17-2022 ≡ ≡ ≡ ≡ ≡ ≡ 4-18-2023
Aug. 2022 11-15-2022 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ 5-15-2023
Sept. 2022 12-15-2022 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ 6-15-2023
Oct. 2022 1-17-2023 ≡ ≡ ≡ ≡ ≡ ≡ ≡ 7-17-2023
Nov. 2022 2-15-2023 ≡ ≡ ≡ ≡ ≡ ≡ 8-15-2023
Dec. 2022 3-15-2023 ≡ ≡ ≡ ≡ ≡ ≡ ≡ 9-15-2023
Jan. 2023 4-18-2023 ≡ ≡ ≡ ≡ ≡ ≡ 10-16-2023
Feb. 2023 5-15-2023 ≡ ≡ ≡ ≡ ≡ ≡ 11-15-2023
Mar. 2023 6-15-2023 ≡ ≡ ≡ ≡ ≡ ≡ 12-15-2023
Apr. 2023 7-17-2023 ≡ ≡ ≡ ≡ ≡ ≡ 1-16-2024
May 2023 8-15-2023 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ 2-15-2024
Jun. 2023 9-15-2023 ≡ ≡ ≡ ≡ ≡ ≡ 3-15-2024
Jul. 2023 10-16-2023 ≡ ≡ ≡ ≡ ≡ ≡ 4-15-2024
Aug. 2023 11-15-2023 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ 5-15-2024
Sept. 2023 12-15-2023 ≡ ≡ ≡ ≡ ≡ ≡ 6-17-2024
Oct. 2023 1-16-2024 ≡ ≡ ≡ ≡ ≡ ≡ 7-15-2024
Nov. 2023 2-15-2024 ≡ ≡ ≡ ≡ ≡ ≡ 8-15-2024
Dec. 2023 3-15-2024 ≡ ≡ ≡ ≡ ≡ ≡ ≡ 9-16-2024

Routing Guide for Attachments

ExhibitsRouting Guide for Attachments

Review all attachments to the return before the return can be considered processable.

Only detach attachments when specifically instructed.

Note:

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

Edit Action Trail(s) (e.g., "2848 detached" or similar language) in the lower left margin going vertically up the side of the return.

Edit the name and EIN (if not present) on the detached document. Also, edit the return received date (e.g., Rec’d MM/DD/YY) in the lower left margin of the detached document before routing.

Follow general guidelines below for each attachment:

Routing Guide for Attachments

Form/Document Detach Descriptions/Action
Adjustment - Request for Adjustment to another document Yes
  • Route to appropriate function.

  • Attachment must contain Name, Address, EIN, and Received Date. Edit if missing.

IRC 965 , Transition Tax Statement (or similar 965 statement)

Note:

Additional Form 965 series below.

No
  • Edit Computer Condition Code "J" and Action Code 460 (Management Suspense) on the return and continue processing.

    Caution:

    Do not correspond on Section 965 Returns. ERS will take care of any correspondence needed.

  • See IRM 3.11.217.2.11, Section 965 Returns (201712 through 202012), for more information.

  • See IRM 3.11.217.3.1, Action Codes, for more information.

  • See IRM 3.11.217.14.7, CCC "J" - Section 965 Tax, for more information.

  • See IRM 3.11.217.24.3, Schedule K, Line 10 - Other Income (Loss), for more information.

  • See IRM 3.11.217.24.4, Schedule K, Line 12d - Other Deductions, for more information.

  • See IRM 3.11.217.24.10, Schedule K, Line 14r - Other Foreign Tax Information, for more information.

  • See IRM 3.11.217.24.2, Schedule K, Line 17d - Other items and amounts, for more information.

  • See IRM 3.0.101, Schedule K-1 Processing, for complete instructions to edit and process Schedule K-1.

CP 259, CP 959, (Spanish version)
Master File Generated 1st TDI Notice

Note:

Do not route to Statute Control Unit for clearance. See IRM 3.11.217.3.7, Statute Returns, for more information.

No Correspondence is attached or taxpayer’s response shows:
  • Taxpayer disagrees that they must file the return.

  • Only page one of the return is attached.

  • Employer Identification Number (EIN) on notice does not match EIN on return.

  • Return requested on notice not the same as return submitted.

  • Taxpayer asking question(s) or requesting IRS take action(s) on their account.

  • Case involves any other IRS action(s) C&E not trained to complete.

Then, Route to Compliance Services Collection Operations (CSCO). Use return address on Computer Paragraph (CP) notice:
  • Brookhaven - Mail Stop #662

  • Memphis - Mail Stop #81

  • Philadelphia - 4-N31.142


If none of the above apply, correspondence or written response to the notice is not attached, and/or, "599" is notated:
  1. Move the notice to the back of the return.

  2. Continue processing the return.

Note:

If the return is unsigned, but the taxpayer signed the CP notice under the jurat, it is not necessary to correspond for the signature.

CP 259 A through H
Master File Generated 1st TDI Notice
No Route to:
Ogden Submission Processing Campus (OSPC)
BMF Entity Mail Stop 6273
CP 504/504B
Final Notice - Balance Due
No
  1. Place Computer Paragraph (CP) 504/CP 504B to the front of the return.

  2. Route notice and return to Accounts Management (AM).

CP 518
Delinquency Notice

Note:

Do not route to Statute Control Unit for clearance. See IRM 3.11.217.3.7, Statute Returns, for more information.

No Correspondence is attached or taxpayer’s response shows:
  • Taxpayer disagrees that they must file the return.

  • Only page one of the return is attached.

  • Employer Identification Number (EIN) on notice does not match EIN on return.

  • Return requested on notice not the same as return submitted.

  • Taxpayer asking question(s) or requesting IRS take action(s) on their account.

  • Case involves any other IRS action(s) C&E not trained to complete.

Then, Route to Compliance Services Collection Operations (CSCO). Use return address on Computer Paragraph (CP) notice:
  • Brookhaven - Mail Stop #662

  • Memphis - Mail Stop #81

  • Philadelphia - 4-N31.142


If none of the above apply, correspondence or written response to the notice is not attached, and/or, "599" is notated:
  1. Move the notice to the back of the return.

  2. Continue processing the return.

Note:

If the return is unsigned, but the taxpayer signed the CP notice under the jurat, it is not necessary to correspond for the signature.

Letter 112-C, Letter 282-C, Letter 2255-C, or Letter 2284-C

Note:

Do not route to Statute Control Unit for clearance. See IRM 3.11.217.3.7, Statute Returns, for more information.

No
  1. Identify which organization initiated the letter to the taxpayer (e.g., What organization signed the letter?).

  2. Route letters initiated by Accounts Management (AM) to Accounts Maintenance Research (AMRH):

    • Ogden - Mail Stop 6712

    • Kansas City - Mail Stop N2 6800

  3. Route letters initiated by Collections as follows:

    1. If correspondence is attached or taxpayer’s response shows any of the following:

      • Taxpayer disagrees that they must file the return.

      • Only page one of the return is attached.

      • Employer Identification Number (EIN) on letter does not match EIN on return.

      • Return requested on letter not the same as return submitted.

      • Taxpayer asking question(s) or requesting IRS take action(s) on their account.

      • Case involves any other IRS action(s) C&E not trained to complete.

      Then, Route to Compliance Services Collection Operations (CSCO). Use return address on letter:
      • Brookhaven - Mail Stop #662

      • Memphis - Mail Stop #81

      • Philadelphia - 4-N31.142

    2. If none of the above apply, correspondence or written response to the letter is not attached and/or, no "599" is notated:
      Then, Move the letter to the back of the return and continue processing the return.

Note:

If the return is unsigned, but the taxpayer has signed the letter under the jurat, it is not necessary to correspond for the signature.

Letter 2030
Initial Letter Issued to Request Verification for Unreported Income, Deductions, Payment and/or Credits on BMF Income Tax Returns Matched to Payer Information Documents Procedures
No
  1. Place Letter 2030 to the front of return.

  2. Route letter and return to BMF Automated Underreporter (AUR) in Compliance.

Letter 2531
Initial Contact for Potential Discrepancy of Income, Deductions and/or Credits Claimed on BMF Income Tax Returns Matched to Payer Information Documents Procedures
No
  1. Place Letter 2531 to the front of return.

  2. Route letter and return to BMF Automated Underreporter (AUR) in Compliance.

Includes tax liability for Multiple Tax Periods or Types of Tax No
  • Unnumbered Return - Prepare a dummy return if possible; otherwise, correspond.

  • Numbered Return - Route to Rejects.

Other Tax Returns (original signature) Yes
  1. Edit the received date to the detached return.

  2. Route to appropriate function, unless specifically directed otherwise.

Exception:

Returns attached to a consolidated return will not be detached. Conversion of Form 1120 to Form 1120-S will not be detached. See IRM 3.11.217.4.2, Conversion of Form 1120 to Form 1120-S for more information.

Statement establishing Election to be subject to the Tonnage Tax Regime - Sect 1354 No Route a copy of the election to::
Brenda E. Sarini,
Internal Revenue Agent
1719 C Route 10
Parsippany, New Jersey
07054-4507
Petitions in opposition of tax law provisions Yes

Note:

Do not edit an action trail when detaching a petition.

Route to:
IRS
≡ ≡ ≡ ≡ ≡ ≡ ≡
1111 Constitution Avenue, NW
Washington, DC 20224
Pro Forma Form 1120 (Form 1120 with a notation of "Pro Forma" , "Pro Forma Form 1120" , "Pro Forma Form 1120 New York State" , or similar statement is notated on the return) for New York State No No action required.
Prompt Assessment/Prompt Determination Request Yes/No See Form 4810, Request for Prompt Assessment Under Internal Revenue Code Section 6501(d), information below.
Statement establishing Reasonable Cause for delinquent filing No
  1. Issue Letter 1382-C, Penalty Removal Request Incomplete.

    Exception:

    Do not send Letter 1382-C, Penalty Removal Request Incomplete, if the taxpayer has notated "Late filed return due to CCH software outage" or similar language.

  2. Continue editing the return.

  3. See the following IRM references for more information:

    • IRM 3.11.217.14.2, CCC "D" - Reasonable Cause for Failing to Pay Timely

    • IRM 3.11.217.14.13 CCC "R" - Reasonable Cause for Failing to Timely File Return

Remittance found No Immediately hand-carry return and remittance to supervisor.
Request for e-file Waiver Statement notating: "Form 1120-S e-file Waiver Request" Yes/No
  • Yes - Ogden - Route request to: Mail Stop 1057.

  • No - Kansas City - Fax request to: 877-477-0575.

Request for Form 8109
Deposit Slips, or Coupon Books
No No action required.
Request for Forms or Schedules No
  • If requesting current year forms:

    1. Prepare Form 4190, Order Form for Tax Forms and Publications.

    2. Forward to National Distribution Center (NDC) for processing.

  • If requesting prior year forms:

    1. Prepare Form 6112, Prior Year Tax Products Order Form.

    2. Forward to National Distribution Center (NDC) for processing.

Note:

Use the write-in sections of Form 4190 and Form 6112 for all BMF forms and schedule requests.

Request for Acknowledgement No No action required.
Request for Installment Agreement Yes Route as follows:
  • Ogden - Route to Collections Mail Stop 5500.

  • Kansas City - Route to Mail Stop P4 5000.

Request for Information or Inquiries Yes
  1. Photocopy any data necessary to process the return.

  2. Attach the photocopy to the return.

  3. Route original attachment to the proper office for necessary action.

Request for Money Transfer Yes/No
  • Yes - If the taxpayer notates "Transfer of Money" (or similar language) FROM the return you are processing:

    1. Edit CCC "X" to freeze overpayment.

    2. Detach Transfer of Money request.

    3. Prepare Form 3465, Adjustment Request, and:

      • Indicate in the "Routing" box "Adjustments" .

      • Notate the requested action in the "Remarks" box.

    4. Attach Form 3465, Adjustment Request, to the Transfer of Money request and route to Accounts Management (AM).

    5. Continue editing the return.

  • No - the taxpayer notates "Transfer of Money" (or similar language) TO the return you are processing:

    1. Prepare Form 3465, Adjustment Request, and:

      • Indicate in the "Routing" box "Rejects" .

      • Notate "See attached money transfer request" in the "Remarks" box.

    2. Edit Action Code 450 to route the request to Rejects.

State Tax Returns
Original or Copy with an original signature
Yes Route to Receipt and Control.
State Tax Returns (Photocopy, facsimile or no signature) No Leave attached.
Indication of Final return No
  • Edit CCC "F" .

  • See IRM 3.11.217.14.4, Computer Condition Code "F" - Final Return.

Notices - Payment Agreement or Disagreement with notice amount   Follow local Submission Processing Campus procedures. May involve inputting a STAUP and routing attachment to another function.
SS-4
Application for Employer Identification Number
Yes/No
  • Yes - Original - Route to Entity Control.

  • No - Copy - No action required.

Schedule D (Form 1120-S)
Capital Gains and Losses and Built-in Gains
No
  • Place in sequence order.

  • See IRM 3.11.217.15.1, Sequencing of Return, and IRM 3.11.217.30, Schedule D (Form 1120-S) - Capital Gains and Losses and Built-in Gains.

Schedule F (Form 1040)
Profit or Loss From Farming
No
  • Possible Salary and Wage Code "1" .

  • See IRM 3.11.217.17.3, Salary and Wage Code.

Schedule K-1, Form 1120-S
Shareholder's Share of Income, Credits, Deductions, etc.
Yes
  1. Detach Schedules K-1 for current year (TY2022) and two preceding years (TY2021 and TY2020).

  2. Always detach Schedules K-1 for future years.

  3. See IRM 3.0.101, Schedule K-1 Processing, for complete instructions to edit and process Schedule K-1.

  4. See the following IRM references for further instructions regarding Schedule K-1:

    • IRM 3.11.217.2.11, Section 965 Returns (201712 through 202012), and

    • IRM 3.11.217.12, Number of Shareholders - Page 1, Line I.

    • IRM 3.11.217.13.4, Tax Preference Code, and

    • IRM 3.11.217.13.6, Form 8611, Recapture of Low-Income Housing Credit and Form 8693, Low-Income Housing Credit Disposition Bond, and

    • IRM 3.11.217.14.23, CCC "9" - Low-Income Housing Forms, and

    • IRM 3.11.217.17.16, Line 21 - Ordinary Income, and

    • IRM 3.11.217.24, Schedule K - Shareholders' Pro Rata Share Items, and

    • IRM 3.11.217.41, Schedule K-1.

Schedule M-3 (Form 1120-S)
Net Income (Loss) Reconciliation for S Corporations With Total Assets of $10 Million or More
No
  • Edit CCC "B" . See IRM 3.11.217.14.1, CCC "B" - Schedule M-3.

  • Edit Audit Code "8" . See IRM 3.11.217.13.1, Audit Codes.

Schedule N (Form 1120)
Foreign Operations of U.S. Corporations
No
  • Place in sequence order if significant entries are present.

  • See IRM 3.11.217.15.1, Sequencing of Return.

  • See IRM 3.11.217.27, Schedule N (Form 1120) - Foreign Operations of U.S. Corporations.

  • Edit Audit Code "2" if Questions 1a, 3, 4a (2019 and prior revisions), 5, or 7a are answered "Yes" .

  • See IRM 3.11.217.13.1, Audit Codes.

Form 56
Notice Concerning Fiduciary Relationship
Yes
  1. Edit received date.

  2. Route to Entity Control.

Form 433-B
Collection Information Statement for Businesses
Yes Route as follows:
  • Ogden - Route to Collections Mail Stop 5500.

  • Kansas City - Route to Mail Stop P4 5000

Form 433-D
Installment Agreement
Yes
Parts 1, 2, or 3
Route as follows:
  • Ogden - Route to Collections Mail Stop 5500.

  • Kansas City - Route to Mail Stop P4 5000.

Caution:

If Parts 2 and/or 3 are present, leave attached to Part 1 when routing.

Form 637
Application for Registration (For Certain Excise Tax Activities)
Yes/No
  • Yes - TC 150 has not posted to the tax module:

    1. Edit received date.

    2. Route Form 637 to:
      Kansas City Submission Processing Campus (KCSPC), Excise
      Mail Stop 5701G

  • No - TC 150 has posted to the tax module:
    Route Form 637 and the return to:
    Kansas City Submission Processing Campus (KCSPC), Excise
    Mail Stop 5701G

Form 843
Claim for Refund and Request for Abatement
Yes
  1. Edit received date.

  2. Route to Accounts Management.

Form 851
Affiliations Schedule
No No action required.
Form 911
Request for Taxpayer Advocate Service Assistance (And Application for Taxpayer Assistance Order)
Yes Route to Taxpayer Advocate Service (TAS).
Form 926
Return by a U.S. Transferor of Property to a Foreign Corporation
No
  • Edit Audit Code "2" in the left margin near Line 9 (Deductions area).

  • See IRM 3.11.217.13.1, Audit Codes.

Form 965
Inclusion of Deferred Foreign Income Upon Transition to Participation Exemption System
No
  • For Tax Years 201712 through 202012, edit Computer Condition Code "J" and Action Code 460 (Management Suspense) on the return and continue processing.

    Caution:

    Do not correspond on Section 965 Returns. ERS will take care of any correspondence needed.

  • See IRM 3.11.217.2.11, Section 965 Returns (201712 through 202012), for more information.

  • See IRM 3.11.217.3.1, Action Codes, for more information.

  • See IRM 3.11.217.14.7, CCC "J" - Section 965 Tax, for more information.

  • See IRM 3.11.217.24.3, Schedule K, Line 10 - Other income (loss), for more information.

  • See IRM 3.11.217.24.4, Schedule K, Line 12d - Other deductions, for more information.

  • See IRM 3.11.217.27.1, , Line 14r - Other foreign tax information, for more information.

  • See IRM 3.0.101, Schedule K-1 Processing, for complete instructions to edit and process Schedule K-1.

Form 965, Schedule A
U.S. Shareholder’s Section 965(a) Inclusion Amount
No
  • Edit Computer Condition Code "J" and Action Code 460 (Management Suspense) on the return and continue processing.

    Caution:

    Do not correspond on Section 965 Returns. ERS will take care of any correspondence needed.

  • See IRM 3.11.217.2.11, Section 965 Returns (201712 through 202012), for more information.

  • See IRM 3.11.217.3.1, Action Codes, for more information.

  • See IRM 3.11.217.14.7, CCC J - Section 965 Tax, for more information.

  • See IRM 3.11.217.24.3, Schedule K, Line 10 - Other income (loss), for more information.

  • See IRM 3.11.217.24.4, Schedule K, Line 12d - Other deductions, for more information.

  • See IRM 3.11.217.27.1, Schedule K, Line 14r - Other foreign tax information, for more information.

  • See IRM 3.0.101, Schedule K-1 Processing, for complete instructions to edit and process Schedule K-1.

Form 965, Schedule B
Deferred Foreign Income Corporation’s Earnings and Profits (E&P)
No
  • Edit Computer Condition Code "J" and Action Code 460 (Management Suspense) on the return and continue processing.

    Caution:

    Do not correspond on Section 965 Returns. ERS will take care of any correspondence needed.

  • See IRM 3.11.217.2.11, Section 965 Returns (201712 through 202012), for more information.

  • See IRM 3.11.217.3.1, Action Codes, for more information.

  • See IRM 3.11.217.14.7, CCC "J" - Section 965 Tax, for more information.

  • See IRM 3.11.217.24.3, Schedule K, Line 10 - Other income (loss), for more information.

  • See IRM 3.11.217.24.4, Schedule K, Line 12d - Other deductions, for more information.

  • See IRM 3.11.217.27.1, Schedule K, Line 14r - Other foreign tax information, for more information.

  • See IRM 3.0.101, Schedule K-1 Processing, for complete instructions to edit and process Schedule K-1.

Form 965, Schedule C
U.S. Shareholder’s Aggregate Foreign Earnings and Profits Deficit
No
  • Edit Computer Condition Code "J" and Action Code 460 (Management Suspense) on the return and continue processing.

    Caution:

    Do not correspond on Section 965 Returns. ERS will take care of any correspondence needed.

  • See IRM 3.11.217.2.11, Section 965 Returns (201712 through 202012), for more information.

  • See IRM 3.11.217.3.1, Action Codes, for more information.

  • See IRM 3.11.217.14.7, CCC "J" - Section 965 Tax, for more information.

  • See IRM 3.11.217.24.3, Schedule K, Line 10 - Other income (loss), for more information.

  • See IRM 3.11.217.24.4, Schedule K, Line 12d - Other deductions, for more information.

  • See IRM 3.11.217.27.1, Schedule K, Line 14r - Other foreign tax information, for more information.

  • See IRM 3.0.101, Schedule K-1 Processing, for complete instructions to edit and process Schedule K-1.

Form 965, Schedule D
U.S. Shareholder’s Aggregate Foreign Cash Position
No
  • Edit Computer Condition Code "J" and Action Code 460 (Management Suspense) on the return and continue processing.

    Caution:

    Do not correspond on Section 965 Returns. ERS will take care of any correspondence needed.

  • See IRM 3.11.217.2.11, Section 965 Returns (201712 through 202012), for more information.

  • See IRM 3.11.217.3.1, Action Codes, for more information.

  • See IRM 3.11.217.14.7, CCC "J" - Section 965 Tax, for more information.

  • See IRM 3.11.217.24.3, Schedule K, Line 10 - Other income (loss), for more information.

  • See IRM 3.11.217.24.4, Schedule K, Line 12d - Other deductions, for more information.

  • See IRM 3.11.217.27.1, Schedule K, Line 14r - Other foreign tax information, for more information.

  • See IRM 3.0.101, Schedule K-1 Processing, for complete instructions to edit and process Schedule K-1.

Form 965, Schedule E
U.S. Shareholder’s Aggregate Foreign Cash Position - Detail
No
  • Edit Computer Condition Code "J" and Action Code 460 (Management Suspense) on the return and continue processing.

    Caution:

    Do not correspond on Section 965 Returns. ERS will take care of any correspondence needed.

  • See IRM 3.11.217.2.11, Section 965 Returns (201712 through 202012), for more information.

  • See IRM 3.11.217.3.1, Action Codes, for more information.

  • See IRM 3.11.217.14.7, CCC "J" - Section 965 Tax, for more information.

  • See IRM 3.11.217.24.3, Schedule K, Line 10 - Other income (loss), for more information.

  • See IRM 3.11.217.24.4, Schedule K, Line 12d - Other deductions, for more information.

  • See IRM 3.11.217.27.1, Schedule K, Line 14r - Other foreign tax information, for more information.

  • See IRM 3.0.101, Schedule K-1 Processing, for complete instructions to edit and process Schedule K-1.

Form 965, Schedule F
Foreign Taxes Deemed Paid by Domestic Corporation
No
  • Edit Computer Condition Code "J" and Action Code 460 (Management Suspense) on the return and continue processing.

    Caution:

    Do not correspond on Section 965 Returns. ERS will take care of any correspondence needed.

  • See IRM 3.11.217.2.11, Section 965 Returns (201712 through 202012), for more information.

  • See IRM 3.11.217.3.1, Action Codes, for more information.

  • See IRM 3.11.217.14.7, CCC "J" - Section 965 Tax, for more information.

  • See IRM 3.11.217.24.3, Schedule K, Line 10 - Other income (loss), for more information.

  • See IRM 3.11.217.24.4, Schedule K, Line 12d - Other deductions, for more information.

  • See IRM 3.11.217.27.1, Schedule K, Line 14r - Other foreign tax information, for more information.

  • See IRM 3.0.101, Schedule K-1 Processing, for complete instructions to edit and process Schedule K-1.

Form 965, Schedule G
Foreign Taxes Deemed Paid by Domestic Corporation for U.S. Shareholder Tax Year Ending in 2017
No
  • Edit Computer Condition Code "J" and Action Code 460 (Management Suspense) on the return and continue processing.

    Caution:

    Do not correspond on Section 965 Returns. ERS will take care of any correspondence needed.

  • See IRM 3.11.217.2.11, Section 965 Returns (201712 through 202012), for more information.

  • See IRM 3.11.217.3.1, Action Codes, for more information.

  • See IRM 3.11.217.14.7, CCC "J" - Section 965 Tax, for more information.

  • See IRM 3.11.217.24.3, Schedule K, Line 10 - Other income (loss), for more information.

  • See IRM 3.11.217.24.4, Schedule K, Line 12d - Other deductions, for more information.

  • See IRM 3.11.217.27.1, Schedule K, Line 14r - Other foreign tax information, for more information.

  • See IRM 3.0.101, Schedule K-1 Processing, for complete instructions to edit and process Schedule K-1.

Form 965, Schedule H
Disallowance of Foreign Tax Credit and Amounts Reported on Forms 1116 and 1118
No
  • Edit Computer Condition Code "J" and Action Code 460 (Management Suspense) on the return and continue processing.

    Caution:

    Do not correspond on Section 965 Returns. ERS will take care of any correspondence needed.

  • See IRM 3.11.217.2.11, Section 965 Returns (201712 through 202012), for more information.

  • See IRM 3.11.217.3.1, Action Codes, for more information.

  • See IRM 3.11.217.14.7, CCC "J" - Section 965 Tax, for more information.

  • See IRM 3.11.217.24.3, Schedule K, Line 10 - Other income (loss), for more information.

  • See IRM 3.11.217.24.4, Schedule K, Line 12d - Other deductions, for more information.

  • See IRM 3.11.217.27.1, Schedule K, Line 14r - Other foreign tax information, for more information.

  • See IRM 3.0.101, Schedule K-1 Processing, for complete instructions to edit and process Schedule K-1.

Form 965-B
Corporate and Real Estate Investment Trust (REIT) Report of Net 965 Tax Liability and Electing REIT Report of 965 Amounts
No
  • Edit Computer Condition Code "J" and Action Code 460 (Management Suspense) on the return and continue processing.

    Caution:

    Do not correspond on Section 965 Returns. ERS will take care of any correspondence needed.

  • See IRM 3.11.217.2.11, Section 965 Returns (201712 through 202012), for more information.

  • See IRM 3.11.217.3.1, Action Codes, for more information.

  • See IRM 3.11.217.14.7, CCC "J" - Section 965 Tax, for more information.

  • See IRM 3.11.217.24.3, Schedule K, Line 10 - Other income (loss), for more information.

  • See IRM 3.11.217.24.4, Schedule K, Line 12d - Other deductions, for more information.

  • See IRM 3.11.217.27.1, Schedule K, Line 14r - Other foreign tax information, for more information.

  • See IRM 3.0.101, Schedule K-1 Processing, for complete instructions to edit and process Schedule K-1.

Form 966
Corporate Dissolution or Liquidation
Yes/No
  1. Yes - Qualified Subchapter S Subsidiary (QSSS), Consolidation, or subsidiary is shown:

    • Route to Entity Control.

  2. No - No indication of items above:

    • Possible CCC "F"

    • IRM 3.11.217.14.4, CCC "F" - Final Return.

Form 1042
Annual Withholding Tax Return for U.S. Source Income of Foreign Persons
Yes
  • Ogden - Route to Receipt and Control.

  • Kansas City - Route to Ogden Submission Processing Campus (OSPC).

Form 1042-S
Foreign Person's U.S. Source Income Subject to Withholding
No No action required.
Form 1096
Annual Summary and Transmittal of U.S. Information Returns
Yes Route to Receipt and Control.
Form 1099
Information Return of Income and Payments
(Copy A only)
Yes Route to Receipt and Control.
Form 1120-POL
U.S. Income Tax Return for Certain Political Organizations
Yes
  • Ogden - Route to Receipt and Control (R&C).

  • Kansas City - Route to Ogden Submission Processing Campus (OSPC).

Form 1120-X
Amended U.S. Corporation Income Tax Return
No Give entire return to the Lead.
Form 1125-A
Cost of Goods Sold
No
  • Place Form 1125-A in sequence order if significant entries are present.

  • See IRM 3.11.217.34, Form 1125-A, Cost of Goods Sold.

Form 1128
Application to Adopt, Change, or Retain a Tax Year
No See IRM 3.11.217.6.4, Short Period - Editing Proof of Entitlement.
  1. Not Approved

    • See IRM 3.11.217.6.6, Short Period Returns - Editing a Disapproved Application-Form 1128

  2. No indication of Approval or Disapproval

    • See IRM 3.11.217.6.7, Short Period Returns - Editing Form 1128 With No Indication of Approval or Disapproval.

Form 1138
Extension of Time for Payment of Taxes by a Corporation Expecting a Net Operating Loss Carryback
Yes
  1. Edit received date.

  2. Route to Accounts Management.

Form 1139
Corporation Application for Tentative Refund
Yes
  1. Edit received date.

  2. Route to Accounts Management.

Form 2220
Underpayment of Estimated Tax by Corporations
No
  • Conditions may require CCC "8" .

  • May need to edit Form 2220, Line 38 to Form 1120-S, Line 24, if no entry is present.

  • See IRM 3.11.217.14.22, CCC 8 - Waiver of Estimated Tax Penalty, and IRM 3.11.217.18.11, Line 24 - Estimated Tax Penalty.

Form 2553
Election by a Small Business Corporation
No
  • Possible Action Code 347.

    Note:

    Action Code 347 is used to route Form 1120-S to Entity Control.

  • See IRM 3.11.217.3.1, Action Codes, for more information.

Form 2848
Power of Attorney and Declaration of Representative
Yes/No Route as follows:
  1. Yes -

    • Ogden - Route to Mail Stop 6737.

    • Kansas City - Route to:
      Internal Revenue Service
      5333 Getwell Road Mail Stop 8423
      Memphis, TN 38118

  2. No - No action is required if a "General Power of Attorney" , "Durable Power of Attorney" , or "Tax Information Authorization" is submitted on any document other than Form 2848 or Form 8821.

Form 3115
Application for Change in Accounting Method
Yes/No
  • Edit Audit Code "6" . See IRM 3.11.217.13.1, Audit Codes.

  • The original Form 3115 stays with the return.

  • If a duplicate Form 3115 is present, and Part I is completed, then route one copy to:
    Internal Revenue Service
    M/S 6111
    Ogden, UT 84201

    For Private Delivery Carriers:
    Internal Revenue Service
    1973 N Rulon White Blvd.
    M/S 6111
    Ogden, UT 84201

  • If a duplicate Form 3115 is present, and Part I is not completed route one copy to:
    Internal Revenue Service
    CC:PA:LPD:DRU
    P.O. Box 7604
    Ben Franklin Station
    Washington, DC 20044

    For Private Delivery Carriers:
    Internal Revenue Service
    Attn: CC:PA:LPD:DRU
    Room 5336
    1111 Constitution Ave., NW
    Washington, DC 20224

  • Duplicate Form 3115 attached to a subsidiary should also be pulled and routed to the address above. Original stays with return.

Form 3520
Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts
Yes/No
  1. Yes - If Form 3520 has an original signature:

    • Ogden - Route to Receipt and Control (R&C).

    • Kansas City - Route to Ogden Submission Processing Campus (OSPC).

  2. No - If Form 3520 does not have an original signature, leave attached.


Form 3520-A
Annual Information Return of Foreign Trust With a U.S. Owner (Under Section 6048(b))
Yes
  • Ogden - Route to Receipt and Control (R&C).

  • Kansas City - Route to Ogden Submission Processing Campus (OSPC).

Form 3753
Manual Refund Posting Voucher
No
  • Edit CCC "O" .

  • See IRM 3.11.217.14.10, CCC "O" - Module Freeze.

Form 3949
Information Report Referral
Yes
  1. Route Form 3949 according to Page 2 of Form 3949 to CI, Exam, Disclosure, etc., following local procedures.

  2. Continue processing the return.

Form 3949-A
Information Referral
Yes Route as follows:
Ogden -
  • Route Form 3949-A to Receipt & Control.

  • Continue processing the return.

Kansas City -
  • Route Form 3949-A to Ogden Service Center.

  • Continue processing the return.

Form 4136
Credit for Federal Tax Paid on Fuels
No
  • Perfect necessary lines. Place Form 4136, Credit for Federal Tax Paid on Fuels, in sequence order.

  • See IRM 3.11.217.35, Form 4136 - Credit for Federal Tax Paid on Fuels.

Form 4251
Return Charge-Out
No
  • No action required.

  • May be an indication not to correspond for Schedule K-1.

  • See IRM 3.11.217.41, Schedule K-1.

Form 4466
Corporation Application for Quick Refund of Overpayment of Estimated Tax
No No action required.
Form 4626
Alternative Minimum Tax - Corporations , for tax periods ending November 30, 2018 (201811) and prior
No
  • Tax Cuts and Jobs Act (TCJA) of 2017 - P.L. 115-97 (H.R. 1), Section 12001 repeals the corporate alternative minimum tax (Form 4626).

  • Possible Tax Preference Code.

  • If required, edit the code as "4 - 1" in the left margin near Line 9 (Deductions area).

  • See IRM 3.11.217.13.4, Tax Preference Code.

Form 4684 Casualties and Thefts No No action required.
Form 4797
Sales of Business Property (Also Involuntary Conversions and Recapture Amounts Under Sections 179 and 280F(b)(2))
No
  • Place in sequence order if significant entries are present on Line 1b or Line 1c (2021 and later form revisions).

  • See IRM 3.11.217.15.1, Sequencing of Return.

  • Support for Form 1120-S, Line 4.

  • See IRM 3.11.217.16.3, Line 4 - Net Gain/Loss and IRM 3.11.217.31, Form 4797, Sales of Business Property.

Form 4810
Request for Prompt Assessment Under Internal Revenue Code Section 6501(d)
Yes/No
  1. Yes - TC 150 Not Posted:

    • Unnumbered and Numbered - Route a copy of the return and original Form 4810 to the Examination Function. Process the original return.

    • See IRM 3.11.217.3.10, Prompt Assessment or Prompt Determination - Form 4810.

  2. No - TC 150 Posted:

    • Unnumbered - Route Form 4810 and return to the Examination Function.

    • Numbered - Edit Action Code 370.

Form 4835
Farm Rental Income and Expenses (Crop and Livestock Shares (Not Cash) Received by Landowner (or Sub-Lessor)
No
  • Possible Salary and Wage Code.

  • See IRM 3.11.217.17.3, Salary and Wage Code.

Form 5471
Schedule E, Income, War Profits, and Excess Profits Taxes Paid or Accrued
No
  • Possible Return Processing Code (RPC) "A" .

  • See IRM 3.11.217.13.7, Return Processing Code (RPC), for more information.

Form 5471, Schedule G-1, Cost Sharing Arrangement, No Possible Return Processing Code (RPC) G. See IRM 3.11.217.13.7, Return Processing Code (RPC), for more information.
Form 5471
Schedule H, Current Earnings and Profits
No
  • Possible Return Processing Code (RPC) "B" .

  • See IRM 3.11.217.13.7, Return Processing Code (RPC), for more information.

Form 5471
Schedule I-1, Information for Global Intangible Low-Taxed Income
No
  • Possible Return Processing Code (RPC) "C" .

  • See IRM 3.11.217.13.7, Return Processing Code (RPC), for more information.

Form 5471
Schedule P, Previously Taxed Earnings and Profits of U.S. Shareholder of Certain Foreign Corporations
No
  • Possible Return Processing Code (RPC) "D" .

  • See IRM 3.11.217.13.7, Return Processing Code (RPC), for more information.

Form 5471
Information Return of U.S. Persons With Respect To Certain Foreign Corporations
(Including 5471 Schedules J, M, N and O)
No
  1. Edit Audit Code "2" in the left margin near Line 9 (Deductions area). See IRM 3.11.217.13.1, Audit Codes.

  2. Edit the Number of Forms 5471 to Line 4b of Schedule N.

  3. Dummy a Schedule N if not present and edit the number of Forms 5471 to Line 4b.

  4. See IRM 3.11.217.27.4, Schedule N (Form 1120), Line 4 - Form 5471, Controlled Foreign Corporation.

.
Form 5472
Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business (Under Sections 6038A and 6038C of the Internal Revenue Code)
No
  • Edit Audit Code "2" in the left margin near Line 9 (Deductions area).

  • See IRM 3.11.217.13.1, Audit Codes.

  • Possible Return Processing Code (RPC) "H" . See IRM 3.11.217.13.7, Return Processing Code (RPC), for more information.

Form 5500
Annual Return/Report of Employee Benefit Plan
Yes
  1. Route to the appropriate area or Submission Processing Campus.

  2. Attach Form 4227, Intra-SC Reject or Routing Slip, with the following information:

    • Type of return

    • DLN

    • Received date

    • Notation of either "original" or "substitute" return

Form 5713
International Boycott Report
No
  • Keep original and copy attached.

  • Edit Audit Code "2" if both questions on Form 5713, Line 7(f), are answered "Yes" .

  • Edit Audit Code "7" if both questions on Form 5713, Line 7(f) are not answered "Yes" .

  • See IRM 3.11.217.13.1, Audit Codes.

Form 5792
Request for IDRS Generated Refund (IGR)
No
  • Possible CCC "O" .

  • See IRM 3.11.217.14.10, CCC "O" - Module Freeze.

Form 5884-B
New Hire Retention Credit
No
  • The status of Form 5884-B, New Hire Retention Credit, is historical and was valid March 19, 2010, to December 31, 2010 (Tax Periods 2010 and 2011)..

Form 6252
Installment Sale Income
No
  • Edit Installment Sale Indicator Code in the left margin near Line 9 (Deductions area).

  • See IRM 3.11.217.13.3, Installment Sale Indicator for more information.

  • Place in sequence order if significant entries are present.

  • See IRM 3.11.217.15.1, Sequencing of Return.

  • See IRM 3.11.217.39Form 6252, Installment Sale Income, for more information.

Form 6478
Biofuel Producer Credit
(Alcohol and Cellulosic Biofuel Fuels Credit for 2012 - 2007)
No
  1. Compare Form 6478 with Form 1120-S, Schedule K, Line 13f.

  2. See IRM 3.11.217.24.7, Schedule K, Line 13f, - Biofuel Producer Credit.

Form 6781
Gains and Losses from Section 1256 Contracts and Straddles
No
  • Edit CCC "I" .

  • See IRM 3.11.217.14.6, CCC "I" - Tax Straddles and Future Contracts (Form 6781).

Form 7004
Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns
Yes/No
  • Yes - If Form 7004 is for other than the tax return or tax period being filed, route to Receipt and Control.

  • No - If Form 7004 is for the tax return it is attached.

Form 8027
Employer's Annual Information Return of Tip Income and Allocated Tips
Form 8027-T
Transmittal for Form 8027
Yes
  • Ogden - Route to Receipt and Control (R&C).

  • Kansas City - Route to Ogden Submission Processing Campus (OSPC).

Form 8050
Direct Deposit of Corporate Tax Refund
No
  • Place in sequence order if entries are present.

  • Continue processing the return.

  • See IRM 3.11.217.15.1, Sequencing of Return.

Form 8082
Notice of Inconsistent Treatment or Administrative Adjustment Request (AAR)
No
  • Edit Audit Code "1" in the left margin near Line 9 (Deductions area).

  • See IRM 3.11.217.13.1, Audit Codes.

Form 8275
Disclosure Statement
Form 8275-R
Regulation Disclosure Statement
No
  • Edit Audit Code "1" in the left margin near Line 9 (Deductions area).

  • See IRM 3.11.217.13.1, Audit Codes.

Form 8283
Noncash Charitable Contributions
No
  1. Edit Audit Code "3" if either:

    • Page 1, Part I, Question 2 (a), Art (contribution of $20,000 or more) is checked or

    • Page 1, Part I, Question 3, Column (c) Appraised fair market value entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

  2. See IRM 3.11.217.13.1, Audit Codes.

Form 8288
U.S. Withholding Tax Return for Dispositions by Foreign Persons of U.S. Real Property Interests
Original -
Yes
  • Ogden - Route to Code and Edit Foreign/FIRPTA Team.

  • Kansas City - Route to Ogden Submission Processing Campus (OSPC).

Form 8288
U.S. Withholding Tax Return for Dispositions by Foreign Persons of U.S. Real Property Interests
Copy -
No
No action required.
Form 8288-A
Statement of Withholding on Certain Dispositions by Foreign Persons
No
  • Ogden - Route to Code and Edit Foreign/FIRPTA Team.

  • Kansas City - Route to Ogden Submission Processing Campus (OSPC).

Form 8288-B
Application for Withholding Certificate for Dispositions by Foreign Persons of U.S. Real Property Interests
Original -
Yes
  • Ogden - Route to Code and Edit Foreign/FIRPTA Team.

  • Kansas City - Route to Ogden Submission Processing Campus (OSPC).

Form 8288-B
Application for Withholding Certificate for Dispositions by Foreign Persons of U.S. Real Property Interests
Copy -
No
No action required.
Form 8404
Interest Charge on DISC-Related Deferred Tax Liability
Yes
  • Ogden - Route to Kansas City Submission Processing Campus (KCSPC).

  • Kansas City - Route to Receipt and Control (R&C).

Form 8586
Low-Income Housing Credit
No
  • Possible CCC "9" .

  • See IRM 3.11.217.14.23, CCC "9" - Low-Income Housing Forms.

  • Follow editing procedures in IRM 3.11.217.13.5, Form 8586, Low-Income Housing Credit.

Form 8594
Asset Acquisition Statement Under Section 1060
No
  • Edit Audit Code "3" if Form 8594 has an amount ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ in Box 3.

  • See IRM 3.11.217.13.1, Audit Codes.

Form 8609
Low-Income Housing Credit Allocation and Certification
Form 8609-A (prior year Form 8609 Schedule A)
Annual Statement for Low-Income Housing Credit
No
  • Edit CCC "9" .

  • See IRM 3.11.217.14.23, CCC "9" - Low-Income Housing Forms.

Form 8611
Recapture of Low-Income Housing Credit
No
  1. Edit Line 14, Form 8611 in the left margin near Line 9 (Deductions area).

  2. Edit as "6 -" followed by the credit amount.

  3. Follow editing procedures in IRM 3.11.217.13.6, Form 8611, Recapture of Low-Income Housing Credit and Form 8693, Low-Income Housing Credit Disposition Bond.

  4. Edit CCC "9" .

  5. See IRM 3.11.217.14.23, CCC "9" - Low-Income Housing Forms.

Form 8621
Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund
No
  • Edit Audit Code "2" if Form 8621, Part V (Distributions From and Dispositions of Stock of a Section 1291 Fund), Lines 15a through Line 16f has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

  • Edit Audit Code "7" if Form 8621, Part V (Distributions From and Dispositions of Stock of a Section 1291 Fund), Lines 15a through Line 16f has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

  • See IRM 3.11.217.13.1, Audit Codes.

Form 8693
Low-Income Housing Credit Disposition Bond
No
  • Edit CCC "9" .

  • See IRM 3.11.217.14.23, CCC "9" - Low-Income Housing Forms.

Form 8697 (Refund)
Interest Computation Under the Look-Back Method for Completed Long-Term Contracts
Yes If Form 8697, Part I, Line 9 or Form 8697, Part II, Line 10 shows a refund, then do the following:
  1. Edit tax period, EIN, and received date on Form 8697, if not already present.

  2. Route to Accounts Management (AM).

Form 8716
Election To Have a Tax Year Other Than a Required Tax Year
No See IRM 3.11.217.6.4 Short Period - Editing Proof of Entitlement.
Form 8752
Required Payment or Refund Under Section 7519
Yes/No KCSPC and OSPC:
Yes: Original - Route to Receipt and Control.
No: Copy - No action required.
Form 8821
Tax Information Authorization
Yes/No Route as follows:
  1. Yes -

    • Ogden - Route to Mail Stop 6737.

    • Kansas City - Route to:
      Internal Revenue Service
      5333 Getwell Road Mail Stop 8423
      Memphis, TN 38118

  2. No - No action is required if a "General Power of Attorney" , "Durable Power of Attorney" , or "Tax Information Authorization" is submitted on any document other than Form 2848 or Form 8821.

Form 8822
Change of Address, or

Form 8822-B
Change of Address or Responsible Party - Business
Yes/No
  1. Yes - If any of the following applies:

    • Mailing address information is different,

    • Location address is listed on Form 8822/8822-B, Line 7,

    • An entry is listed on Form 8822-B, Lines 8 or 9,

    Then detach Form 8822 or Form 8822-B and route to Entity Control following local procedures using Form 13934, Entity Document/C&E Merge Transmittal.

  2. No - If all the following applies:

    • Mailing address information is the same,

    • No location address is listed on Form 8822/8822-B, Line 7,

    • No entry on Form 8822-B, Lines 8 or 9,

    Then take no action.

  3. See IRM 3.11.217.5.6(3), Entity Perfection-Domestic Addresses, for more information.

    Note:

    A business may have two addresses. One is the mailing address and the other is the location address or physical location of the business.

Form 8824
Like-Kind Exchanges (and section 1043 conflict-of-interest sales)
No
  • If Form 8824 is attached, edit CCC "1" .

  • See IRM 3.11.217.14.19, CCC "1" - Like-Kind Exchanges.

Form 8825
Rental Real Estate Income and Expenses of a Partnership or an S Corporation
No
  • Place in sequence order if significant entries are present.

  • See IRM 3.11.217.15.1, Sequencing of Return.

  • Form 8825 - Compute Line 2, Columns A through H and enter on Line 18a of Form 8825.

  • See IRM 3.11.217.28, Form 8825 - Rental Real Estate Income and Expenses of a Partnership or an S Corporation.

Form 8832
Entity Classification Election
No
  • Edit Audit Code "2" if Form 8832 is attached and Box 6(d), (e), or (f) is checked.

  • See IRM 3.11.217.13.1, Audit Codes.

Form 8833
Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b)
No
  • Edit CCC "L" .

  • See IRM 3.11.217.14.8, CCC "L" - Treaty Based Positions.

  • Edit Audit Code "2" in the left margin near Line 9 (Deductions area).

  • See IRM 3.11.217.13.1, Audit Codes.

Form 8858
Information Return of U.S. Persons With Respect To Foreign Disregarded Entities (FDEs) and Foreign Branches (FB)
No
  • Edit Audit Code "2" in the left margin near Line 9 (Deductions area).

  • See IRM 3.11.217.13.1, Audit Codes.

Form 8865
Return of U.S. Persons With Respect to Certain Foreign Partnerships
No
  • Edit Audit Code "2" in the left margin near Line 9 (Deductions area).

  • See IRM 3.11.217.13.1, Audit Codes.

  • Edit the number of Forms 8865 to Line 2 of the Schedule N.

  • Dummy a Schedule N if not present and edit the number of Forms 8865 to Line 2.

  • See IRM 3.11.217.27.3, Schedule N (Form 1120), Line 3 - Form 8865 Question.

Form 8865
Schedule G, Statement of Application of the Gain Deferred Method Under Section 721(c)
No
  • Possible Return Processing Code (RPC) "E" .

  • See IRM 3.11.217.13.7, Return Processing Code (RPC), for more information.

Form 8865
Schedule H, Acceleration Events and Exceptions Reporting Relating to Gain Deferral Method Under Section 721(c)
No
  • Possible Return Processing Code (RPC) "F" .

  • See IRM 3.11.217.13.7, Return Processing Code (RPC), for more information.

Form 8866 (Refund)
Interest Computation Under the Look-Back Method for Property Depreciated Under the Income Forecast Method
Yes If Form 8866, Line 9 shows a refund, then do the following:
  1. Edit tax period, EIN, and received date on Form 8866, if not already present.

  2. Route to Accounts Management (AM).

Form 8866 (Balance Due)
Interest Computation Under the Look-Back Method for Property Depreciated Under the Income Forecast Method
No No action required.
Form 8869
Qualified Subchapter S Subsidiary Election
Yes/No
  • Yes - Original - Route to Entity Control.

  • No - Copy - If a copy is present, or a Form 8869 is stamped “IRS Accepted”, “IRS Approved”, (or similar language), then no action is required.

Form 8870
Information Return for Transfers Associated With Certain Personal Benefit Contracts (Under section 170(f)(10))
Yes Route to:
EO Entity
IRS Ogden Campus
Mail Stop 6273
Form 8871
Political Organization Notice of Section 527 Status
Yes Route to Receipt and Control to be re-batched.
Form 8872
Political Organization Report of Contributions and Expenditures
Yes Route to Receipt and Control to be re-batched.
Form 8873
Extraterritorial Income Exclusion
No
  1. Edit the number of Form(s) 8873 attached to Line 7b, Schedule N.

  2. See IRM 3.11.217.27.8, Schedule N (Form 1120), Line 7b - Number of Forms 8873.

  3. Edit the total of Line 52 of all attached Form 8873 to Line 7c, Schedule N.

  4. Dummy a Schedule N if not present and edit the number of Forms 8873 to Line 7b and edit the total amount from Line 52, Form 8873 to Line 7c, Schedule N.

  5. See IRM 3.11.217.27.9, Schedule N (Form 1120), Line 7c - Total Extraterritorial Income Exclusion.

  6. Input Command Code (CC) REQ77 / FRM77 with IDRS Transaction Code (TC) "971" and appropriate IDRS Action Code depending on which election was made.

  7. See IRM 3.11.217.29, Form 8873, Extraterritorial Income Exclusion.

Form 8875
Taxable REIT Subsidiary Election (Under section 856(I)(1) of the Internal Revenue Code)
Yes/No KCSPC and OSPC:
Yes: Original - Route to OSPC BMF Entity - Mail Stop 6273.
No: Copy - No action required.

Note:

Form 8875 is processed at OSPC only.

Form 8883
Asset Allocation Statement Under Section 338
No
  • Edit CCC "S" if Form 8883 is attached.

  • See IRM 3.11.217.14.14, CCC "S" - Form 8883, Asset Allocation Statement Under Section 338.

  • Edit Audit Code "3" if Form 8883 has an amount of ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ in Box 5a.

  • See IRM 3.11.217.13.1, Audit Codes.

Form 8886
Reportable Transaction Disclosure Statement
No
  • Edit CCC "T" .

  • See IRM 3.11.217.14.15, CCC "T" - Form 8886, Reportable Transaction Disclosure Statement.

  • Edit Audit Code "1" if Form 8886 is attached.

  • See IRM 3.11.217.13.1, Audit Codes.

Form 8913
Credit for Federal Telephone Excise Tax Paid Only Tax Return
No This credit was used for tax periods 200612 - 200711.
Form 8938
Statement of Specified Foreign Financial Assets
No
  • Edit CCC "2" if Form 8938, Statement of Specified Foreign Financial Assets, is attached to Form 1120-S. See IRM 3.11.217.14.20, CCC "2" - Form 8938, Statement of Specified Foreign Financial Assets.

  • See IRM 3.11.217.27.10, Schedule N (Form 1120), Line 8 - Statement of Specified Foreign Financial Assets, and IRM 3.11.217.42, Form 8938, Statement of Specified Foreign Financial Assets, for more information.

Form 8941
Credit for Small Employer Health Insurance Premiums
No
  • Place in sequence order if significant entries are present.

  • See IRM 3.11.217.15.1, Sequencing of Return, and IRM 3.11.217.37, Form 8941 - Credit for Small Employer Health Insurance Premiums.

Form 8949
Sales and Other Dispositions of Capital Assets
No Edit CCC "M" when:
  • Tax period ending is 201712 and later, and

  • Form 8949, Sales and Other Dispositions of Capital Assets, contains a code "Z" and/or "Y" in Column (f).

  • See IRM 3.11.217.14.9, CCC "M" - Form 8949 Sales and Other Dispositions of Capital Assets.

  • Place in sequence order if significant entries are present.

  • See IRM 3.11.217.15.1, Sequencing of Return.

Form 8990
Limitation on Business Interest Expense Under Section 163(j)
No
  • Possible Return Processing Code (RPC) "7" .

  • See IRM 3.11.217.13.7, Return Processing Code (RPC), for more information.

Form 8992
, U.S. Shareholder Calculation of Global Intangible Low-Taxed Income (GILTI)
No
  • Possible Return Processing Code (RPC) "2" .

  • See IRM 3.11.217.13.7, Return Processing Code (RPC), for more information.

Form 8994
Employer Credit for Paid Family and Medical Leave
No
  • Possible Return Processing Code (RPC) "4" .

  • See IRM 3.11.217.13.7, Return Processing Code (RPC), for more information.

Form 8996
Qualified Opportunity Fund
No
  • Possible Return Processing Code (RPC) "6" .

  • See IRM 3.11.217.13.7, Return Processing Code (RPC), for more information.

  • Place in sequence order if significant entries are present.

  • See IRM 3.11.217.15.1, Sequencing of Return.

  • See IRM 3.11.217.23.2, Form 8996 - Qualified Opportunity Fund Checkbox, for more information.

Form 8997
Initial and Annual Statement of Qualified Opportunity Fund (QOF) Investments
No
  • Possible Return Processing Code (RPC) "9" .

  • See IRM 3.11.217.13.7, Return Processing Code (RPC), for more information.

  • Place in sequence order if significant entries are present.

  • See IRM 3.11.217.15.1, Sequencing of Return.

Form 9465
Installment Agreement Request
Yes Route as follows:
  • Ogden - Route to Collections Mail Stop 5500.

  • Kansas City - Route to Mail Stop P4 5000.

Form 12857
Refund Transfer Posting Voucher
No
  • Possible CCC "O" .

  • See IRM 3.11.217.14.10, CCC "O" - Module Freeze.

Form 14039-B
Business Identity Theft Affidavit
No
  1. If a specific function is indicated by the envelope address or an IRS CP notice or IRS letter:

    • Place the Form 14039-B on top of the return and

    • Route Form 14039-B and the return to the specific function

  2. If Ogden or Kansas City receives a Form SS-4, Application for Employer Identification Number, and Form 14039-B, route the returns to:
    Internal Revenue Service
    Ogden BMF Entity.
    Mail Stop 6273
    Ogden, UT 84201

  3. 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).
    • Ogden - Mail Stop 6552

    • Kansas City - Mail Stop C1 6525

Form 14157
Return Preparer Complaint
Yes Route to:
Attn: Return Preparer Office
401 W. Peachtree Street NW
Mail Stop 421-D
Atlanta, Georgia 30308
Schedule K-2
Shareholders’ Pro Rata Share Items - International
No Added to Mail Routing Guide for information purpose only.
Schedule K-3
Shareholders’ Share of Income, Deductions, Credits, etc. - International
No Added to Mail Routing Guide for information purpose only.
 

Form 8938 - Prior Year Conversion Chart

  • 2020 and 2019 Tax Periods

    Part and Line # Additional T-Lines per Line #
    Part I  
    Change Line 1 to Line 5  
    Change Line 2 to Line 6  
    Change Line 3 to Line 7  
    Change Line 4 to Line 8  
    Change Line 5 to Line 9 Checkboxes "Yes" "No"
    Part II  
    Change Line 1 to Line 10  
    Change Line 2 to Line 11  
    Change Line 3 to Line 12 Checkboxes "Yes" "No"
    Part III  
    Change Line 1 to Line 13 Rows, a through g, Columns, (c) through (e)
    Change Line 2 to Line 14 Rows, a through g, Columns, (c) through (e)
    Part IV  
    Change Line 1 to Line 15  
    Change Line 2 to Line 16  
    Change Line 3 to Line 17  
    Change Line 4 to Line 18  
    Change Line 5 to Line 19  
    Part V  
    Change Line 1 to Line 20 Checkboxes a and b
    Change Line 2 to Line 21  
    Change Line 3 to Line 22 Checkboxes a through d
    Change Line 4 to Line 23  
    Change Line 5 to Line 24 Checkboxes "Yes" "No"
    Change Line 6 to Line 25 Boxes (a) through (c)
    Change Line 7 to Line 26 Columns (a) and (b)
    Change Line 8 to Line 27  
    Change Line 9 to Line 28  
    Part VI  
    Change Line 1 to Line 29  
    Change Line 2 to Line 30  
    Change Line 3 to Line 31 Lines a and b, checkboxes c and d
    Change Line 4 to Line 32 Checkboxes a through d and Line e
    Change Line 5 to Line 33 Checkboxes "Yes" "No"
    Change Line 6 to Line 34 Boxes (a) through (c)
    Change Line 7 to Line 35 Lines a through e including checkboxes
    Change Line 8 to Line 36 Lines a through e including checkboxes

Form 8996 - Prior Year Conversion Chart

  • 2020 and 2019 Tax Periods

    Part II
    Change Line 6 to 7
    Change Line 7 to 8
    Change Line 9 to 10
    Change Line 10 to 11
    Part III
    Change Line 13 to 14
    Change Line 14 to 15

  • 2018 and 2017 Tax Periods

Part II
Change Line 5 to 7
Change Line 6 to 8
Change Line 8 to 10
Change Line 9 to 11
Part III
Change Line 12 to Line 14
Change Line 13 to Line 15

♦Potential Frivolous Arguments for Examination Review♦

ExhibitsPotential Frivolous Arguments for Examination Review

Potential Frivolous Arguments for Examination Review

Potential Frivolous Argument 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 has income and deductions but the jurat is 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 Claim 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 four categories:
  1. Files a return claiming several 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 several types of rambling dialogue or confusing arguments that no one could reasonably view as a good faith effort to comply with the law.

  4. Files a return that tries to send some type of message or protest to the IRS, but does not include sufficient identifying information for the IRS to either determine the identity of the taxpayer or correspondent or return address.

Challenges to Authority/Due Process Questions several 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 several collections issues are invalid (e.g., Offers in Compromise, Collection Due Process Requests, Installment Agreements, Appeals Requests, etc.) because they are not filed and 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 Office of Management and Budget (OMB) 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 or business files a return reporting false amounts of income (Generally "Other" or "Miscellaneous" income) and claims 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 attached and some have Form 1096, Annual Summary and Transmittal of U.S. Information Returns. Other false financial instruments may be filed in the place of or in addition to the Form 1099-OID such as Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains, promissory notes, bonds, sight drafts, etc.
IRC 861 Business
Employment Tax (BMF 861)
Argument targets employers and advises them that wages are exempt from withholding. These taxpayers rely on Sections 861 through 865 of the Code and the regulations (in particular, Treasury Regulation §1.861-8), 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 IRC 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. vs. Long Submits a return with zero money amounts. To explain the zeros inserted on the form the individual references "U.S. vs. Long" .
Unsigned Returns The individual completes a return but does not 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 line items on the form (e.g., IRC 861, Form 2439, OID, and other BMF filings that claim no income and request refunds). See Revenue Ruling 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 have arguments about the definition of income. There are several variations on this type of filing such as those bearing the words "nunc pro tunc" and "not liable" .

Note:

Returns having only zeros, no entries, are blank, or show "None" , "Not Liable" , etc. with no evidence of a frivolous argument are not to be considered as frivolous returns.

Other All others including those in Notice 2010-33 or any later 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 Taxpayer Identification Numbers (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 more information.

♦Province, Foreign State and Territory Abbreviations♦

ExhibitsProvince, 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
Espirito 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 Province/Territory

Canada Province/Territory Abbreviation
Alberta AB
British Columbia BC
Manitoba MB
New Brunswick NB
Newfoundland and Labrador NL
Northwest Territories NT
Nova Scotia NS
Nunavut NU
Ontario ON
Prince Edward Island PE
Quebec QC
Saskatchewan SK
Yukon YT
 

Cuba Province

Cuba Province Abbreviation
Camaguey CG
Ciego de Avila CA
Cienfuegos CF
Ciudad di La Habana CH
Granma (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 Province

Italy Province Abbreviation
Agrigento AG
Alessandria AL
Ancona AN
Aosta/Aoste AO
Arezzo AR
Ascoli Piceno AP
Asti AT
Bari BA
Belluno BL
Benevento BN
Bergamo BG
Biella BI
Bologna BO
Bolzano Bozen BZ
Brescia BS
Brindisi BR
Cagliari CA
Caltanissetta 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
Genoa 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
Milan 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 TP
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 Province

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

♦U.S. Possessions ZIP Codes♦

ExhibitsU.S. Possessions 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 Marianna Islands (MP)

Northern Marianna Islands (MP) City Northern Marianna 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
 

Puerto Rico (PR)

Puerto Rico (PR) City Puerto Rico (PR) ZIP Code
Adjuntas 00601
Aguada 00602
Aguadilla 00603
Aguas Buenas 00703
Aguirre 00704
Aibonito 00705
Anasco 00610
Angeles 00611
Arecibo 00612
Arroyo 00714
Bajadero 00616
Barceloneta 00617
Barranquitas 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
La Plata 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
Mayaguez 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 Baja 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
 

Virgin Islands - U.S. (VI)

Virgin Islands - U.S. (VI) City Virgin Islands - U.S. (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 Annes 00820

♦USPS.com Track & Confirm Record♦

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