3.12.154 Unemployment Tax Returns

Manual Transmittal

November 13, 2017

Purpose

(1) This transmits revision for IRM 3.12.154, Error Resolution System - Federal Unemployment Tax.

Material Changes

(1) Various editorial changes have been made throughout this Internal Revenue Manual (IRM).

(2) IRM 3.12.154.1, Program Scope and Objectives - Changed title from "Program Scope" to "Program Scope and Objectives" (IPU 17U0917 issued May 26, 2017).

(3) IRM 3.12.154.1, Program Scope - Changed "General Guidelines" in title to "Program Scope" (IPU 17U0649 issued April 07, 2017).

(4) IRM 3.12.154.1(1), Program Scope - Revised to include old paragraph (2) information (IPU 17U0649 issued April 07, 2017).

(5) IRM 3.12.154.1(2), Program Scope - New paragraph to define Audience (IPU 17U0649 issued April 07, 2017).

(6) IRM 3.12.154.1(3), Program Scope - New paragraph to define Policy Owner (IPU 17U0649 issued April 07, 2017).

(7) IRM 3.12.154.1(4), Program Scope - New paragraph to define Program Owner (IPU 17U0649 issued April 07, 2017).

(8) IRM 3.12.154.1(5), Program Scope - New paragraph to define Stakeholders (IPU 17U0649 issued April 07, 2017).

(9) IRM 3.12.154.1(6), Program Scope - Deleted due to information already exists in paragraph (1) (IPU 17U0649 issued April 07, 2017).

(10) IRM 3.12.154.1(7), Program Scope - Deleted due to information already exists in paragraph (1) (IPU 17U0649 issued April 07, 2017).

(11) IRM 3.12.154.1(8), Program Scope - Deleted. Information is defined in IRM 3.12.154.1.1, Background (IPU 17U0649 issued April 07, 2017).

(12) IRM 3.12.154.1.1, Background - New section providing essential background information pertinent to the program (IPU 17U0649 issued April 07, 2017).

(13) IRM 3.12.154.1.2, Authority - New section providing any authorities relating to the type of work being done (IPU 17U0649 issued April 07, 2017).

(14) IRM 3.12.154.1.3, Responsibilities - New section providing information regarding who is responsible for the activity(s) provided in the IRM. Include employee responsibilities and management responsibilities (IPU 17U0649 issued April 07, 2017).

(15) IRM 3.12.154.1.4, Program Management and Review - Changed the title from "Program Objectives and Review" to "Program Management and Review" (IPU 17U0917 issued May 26, 2017).

(16) IRM 3.12.154.1.4, Program Objectives and Review - New section providing the objectives or goals for the program (IPU 17U0649 issued April 07, 2017).

(17) IRM 3.12.154.1.5, "Program Controls" - New Section added regarding quality review used as a program control.

(18) IRM 3.12.154.1.5, Acronyms and Abbreviations - New section regarding acronyms and abbreviations (IPU 17U0649 issued April 07, 2017).

(19) IRM 3.12.154.1.6, Terms/Definitions/Acronyms - Changed title from "Acronyms and Abbreviations" to "Terms/Definitions/Acronyms" .

(20) IRM 3.12.154.1.6, Related Resources - New section providing a list of additional websites, job aids, or electronic tools are needed to complete the work (IPU 17U0649 issued April 07, 2017).

(21) IRM 3.12.154.1.7, Tax Class, Document Codes, and MFT Codes - New and contains the old information from IRM 3.12.154.1(3), Program Scope (IPU 17U0649 issued April 07, 2017).

(22) IRM 3.12.154.1.8, Due Date - New and contains the old information from IRM 3.12.154.1(4) and (5), Program Scope (IPU 17U0649 issued April 07, 2017).

(23) IRM 3.12.154.1.9(1), Business Master File (BMF) Consistency - Changed "the BMF Consistency" to "this" .

(24) IRM 3.12.154.1.9(2), Business Master File (BMF) Consistency - Replaced "CSPC, OSPC, and W& I Customer Account Services, Submission Processing (SP), Paper Processing Branch, Business Master File (BMF) Code & Edit/Error Resolution" with "Cincinnati, Ogden, Kansas City, and Paper Processing Branch BMF Code and Edit/ERS" .

(25) IRM 3.12.154.1.10(1), IRM Deviation Procedures - Changed "Internal Management Documents System - Internal Revenue manual (IRM) Process, IRM Standards" to "When Procedures Deviate from the IRM" (IPU 17U1015 issued June 15, 2017).

(26) IRM 3.12.154.1.11(1), Taxpayer Advocate Service (TAS) - Moved the taxpayer rights to receive assistance statement to new paragraph (2) (IPU 17U1015 issued June 15, 2017).

(27) IRM 3.12.154.1.11(3), Taxpayer Advocate Service (TAS) - Moved the "Same day" statement to new paragraph (4) and the TAS referral statement to new paragraph (5) (IPU 17U1015 issued June 15, 2017).

(28) IRM 3.12.154.1.11.1, TAS Service Level Agreement (SLA) - Added to title "(SLA)" .

(29) IRM 3.12.154.1.11.1(2), TAS Service Level Agreement (SLA) - Updated the TAS Service Level Agreement (SLA) web address.

(30) IRM 3.12.154.1.12(1)b), BMF Identification (ID) Theft - Added "Intra-SC Reject or Routing Slip" .

(31) IRM 3.12.154.1.12(1)c), BMF Identification (ID) Theft - Replaced "Funny Box" with "Criminal Investigation (CI), Examination (Exam)" ,

(32) IRM 3.12.154.1.13, Criminal Investigation (CI) Referral - In the title changed "Funny Box" to "Referral" .

(33) IRM 3.12.154.1.13(1), Criminal Investigation (CI) Referral - Changed "False claims for refunds based on bogus return information" to read "Criminal tax violations also include the willful failure to collect or pay over tax and false claims for refunds based on bogus return information,"

(34) IRM 3.12.154.1.13(2), Criminal Investigation (CI) Referral - Changed to read For returns with refund claims of $100,000,000 or more, do the following: Caution: If there is no indication Code and Edit (C&E) made a copy and sent to CI Referral, then see below. Also added a table for refund claims.

(35) IRM 3.12.154.1.13(5), Criminal Investigation (CI) Referral - Deleted "but if the return fits other criteria (e.g., Frivolous Argument) take appropriate action" .

(36) IRM 3.12.154.1.13(6), Criminal Investigation (CI) Referral - New paragraph "If the return fits other criteria (e.g., Frivolous Argument), take appropriate action."

(37) IRM 3.12.154.1.15(2), Frivolous Returns and Claims - In the two If procedure boxes added "Intra-SC Reject or Routing Slip" .

(38) IRM 3.12.154.1.15(2), Frivolous Returns and Claims - In the first Then procedure box changed "Frivolous Return Processing" to "Frivolous Return Program" (IPU 17U1015 issued June 15, 2017).

(39) IRM 3.12.154.1.16(3)c), IRC 6020(b) Prepared by Collections - Changed the mail stop from "2-J11.151" to "5-E04.114" (IPU 17U1263 issued August 23, 2017).

(40) IRM 3.12.154.1.19(1), Use of Fax for Taxpayer Submissions - Added a web link regarding signed taxpayer documents by fax policy (IPU 17U1015 issued June 15, 2017).

(41) IRM 3.12.154.1.19(2), Use of Fax for Taxpayer Submissions - Moved the note information for authorized representative to new paragraph (4) and leaving messages on answering machine to new paragraph (5) (IPU 17U1015 issued June 15, 2017).

(42) IRM 3.12.154.1.19(3), Use of Fax for Taxpayer Submissions - Change reference "Code & Edit" to "ERS" (IPU 17U1015 issued June 15, 2017).

(43) IRM 3.12.154.1.20(3), Correspondence Imaging System (CIS) Returns - Revised all the procedures in the table.

(44) IRM 3.12.154.1.21(5), CADE 2 - Revised to include the DD values for cycle posting.

(45) IRM 3.12.154.1.23(1), Coding & Editing Guidelines - Changed the reference of "2016" to "2017" .

(46) IRM 3.12.154.1.23(4), Coding & Editing Guidelines - Changed the reference of "2016" to "2017" .

(47) IRM 3.12.154.7.1(1), Field Designators - Section 01 - Changed the reference of "2016" to "2017" .

(48) IRM 3.12.154.7.4(1), Field 01TXP - Tax Year - Changed the reference of "2016" to "2017" .

(49) IRM 3.12.154.7.6(2), Field 01CCC - Computer Condition Codes - Changed the reference of "2016" to "2017" .

(50) IRM 3.12.154.7.6(3), Field 01CCC - Computer Condition Codes - Changed the reference of "2016" to "2017" .

(51) IRM 3.12.154.7.7.2(1), Field 01RCD - Correction Procedures - Changed the reference of "20160115" to "20170115" and "20170115" to "20180115" .

(52) IRM 3.12.154.7.13(2), Field 01SIC - Schedule Indicator Code - Changed the reference of "2016" to "2017" .

(53) IRM 3.12.154.7.9.2(1), Field 01SC1 - Correction Procedures - Changed "IRM 3.12.154.1.18.2, APO/DPO/FPO Addresses" to "IRM 3.12.154.1.25.2, APO/DPO/FPO Addresses" (IPU 17U0649 issued April 07, 2017).

(54) IRM 3.12.154.8.1(1), Field Designators - Section 02 - Changed the reference of "2016" to "2017" .

(55) IRM 3.12.154.8.19(3), Field 02B/R - Balance Due/Overpayment - Changed the reference of "2016" to "2017" .

(56) IRM 3.12.154.8.20(2), Field 02FD - Federal Tax Deposit Penalty Taxpayer - Changed the reference of "2016" to "2017" .

(57) IRM 3.12.154.9(1), Section(s) 03, 04, and 05 - Form 940 Schedule A State Code and Credit Reduction Wage Fields - Changed the reference of "2016" to "2017" .

(58) IRM 3.12.154.10.2(3), Field 06FAD - Foreign Address - Changed to read "Valid Conditions - Valid characters are alpha, numeric and special characters."

(59) IRM 3.12.154.10.2.2(2), Field 06FAD - Correction Procedures - In the last "Then" procedure box changed "a routing slip" to "Form 4227" and deleted the note.

(60) IRM 3.12.154.10.5(3)a), State Code - Changed "IRM 3.12.154.1.18.1, Domestic Addresses" to "IRM 3.12.154.1.25.1, Domestic Addresses" (IPU 17U0649 issued April 07, 2017).

(61) IRM 3.12.154.10.5(3)b), State Code - Changed "IRM 3.12.154.1.18.2, APO/DPO/FPO Addresses" to "IRM 3.12.154.1.25.2, APO/DPO/FPO Addresses" (IPU 17U0649 issued April 07, 2017).

(62) IRM 3.12.154.10.5(3)c), State Code - Changed "IRM 3.12.154.1.18.3, U.S. Possession or Territory Address" to "IRM 3.12.154.1.25.3, U.S. Possession or Territory Address" (IPU 17U0649 issued April 07, 2017).

(63) IRM 3.12.154.10.5(3)d), State Code - Changed "IRM 3.12.154.1.18.4, Foreign Addresses (OSPC ONLY)" to "IRM 3.12.154.1.25.4, Foreign Addresses (OSPC ONLY)" (IPU 17U0649 issued April 07, 2017).

(64) IRM 3.12.154.11.1, Error Code 001 Tax Year- Invalid Entry - Changed title "Error Code 001 Invalid Entry - Tax Year" to "Error Code 001 Tax Year - Invalid Entry" (IPU 17U1015 issued June 15, 2017).

(65) IRM 3.12.154.11.1.1(1), Invalid Condition (EC 001) - Changed the alpha list to a bullet list (IPU 17U1015 issued June 15, 2017).

(66) IRM 3.12.154.11.2.2(5), Correction Procedures (EC 002) - Added new procedures to refer to all research instructions (IPU 17U1015 issued June 15, 2017).

(67) IRM 3.12.154.11.2.2(7), Correction Procedures (EC 002) - In the first "Then" procedure box changed the last bullet statement to read "The EIN on the return is the taxpayer’s SSN (check CC INOLEG)." In the second "Then" procedure box changed "Routing Slip" to "Form 4227" .

(68) IRM 3.12.154.11.2.2(7), Correction Procedures (EC 002) - Added "Command Code" reference (IPU 17U1015 issued June 15, 2017).

(69) IRM 3.12.154.11.2.3(2), Suspense Corrections (EC 002) - Added "using CC BMFOL" reference (IPU 17U1015 issued June 15, 2017).

(70) IRM 3.12.154.11.3.2(3), Correction Procedures (EC 003) - Changed "Form 9440" to "Form 940" .

(71) IRM 3.12.154.11.4.2(5), Correction Procedures (EC 004) - Added new procedures to refer to all research instructions (IPU 17U1015 issued June 15, 2017).

(72) IRM 3.12.154.11.4.2(6), Correction Procedures (EC 004) - Added "IDRS using Command Code" reference (IPU 17U1015 issued June 15, 2017).

(73) IRM 3.12.154.11.4.2(7), Correction Procedures (EC 004) - Added "IDRS using Command Code" reference (IPU 17U1015 issued June 15, 2017).

(74) IRM 3.12.154.11.4.2(8), Correction Procedures (EC 004) - In the second "Then" procedure box changed "Routing Slip" to "Form 4227" .

(75) IRM 3.12.154.11.4.2(8), Correction Procedures (EC 004) - Added "or there is an indication of a name change on Form 940" and "using Command Code" references (IPU 17U1015 issued June 15, 2017).

(76) IRM 3.12.154.11.4.2(9), Correction Procedures (EC 004) - Added new procedures for performing a name change (IPU 17U1015 issued June 15, 2017).

(77) IRM 3.12.154.11.5.2(5), Correction Procedures (EC 005) Added abbreviations for U.S. Postal Service and Private Delivery.

(78) IRM 3.12.154.11.5.2(5), Correction Procedures (EC 005) - Deleted "Current date minus 10 days" reference (IPU 17U1015 issued June 15, 2017).

(79) IRM 3.12.154.11.5.2(6), Correction Procedures (EC 005) - Revised the received date for faxes procedures in its entirety (IPU 17U1015 issued June 15, 2017).

(80) IRM 3.12.154.11.7.1(1), Invalid Condition (EC 007) - Added "will" to instructions (IPU 17U1015 issued June 15, 2017).

(81) IRM 3.12.154.11.7.2(2), Correction Procedures (EC 007) - Changed the reference of "20160115" to "20170115" and "20170115" to "20180115" .

(82) IRM 3.12.154.11.7.2(2), Correction Procedures (EC 007) - Revised the fourth Then procedure box instructions and deleted the sixth "If" "And" "Then" procedures (IPU 17U1015 issued June 15, 2017).

(83) IRM 3.12.154.11.7.3(1), Suspense Correction (EC 007) - Revised the first "Then" procedure in its entirety (IPU 17U1015 issued June 15, 2017).

(84) IRM 3.12.154.11.15.2(1)b), Correction Procedures (EC 034) - Added "See IRM 3.12.154.7.18.2 Field 01CRD - Correction Procedures for received date priority order for replies received by mail and/or fax."

(85) IRM 3.12.154.11.19.1(1), Invalid Condition (EC 201) - Changed the reference of "2016" to "2017" and changed Sates to State.

(86) IRM 3.12.154.11.20.2(1), Correction Procedures (EC 202) - Changed the reference of "2016" to "2017" and "Sates" to "States" .

(87) IRM 3.12.154.11.21.2(1), Correction Procedures (EC 203) - In the table changed the reference of "2016" to "2017" . In the first "If" procedure box changed "but the same state or a different state(s)" to "and the same state code is" . In the first "Then" procedure box added new paragraph 2) regarding entity state is a credit reduction state and added "if any of the multi states present is a Credit Reduction State." to paragraph c)2).

(88) IRM 3.12.154.11.22.2(1), Correction Procedures (EC 208) - Deleted the sixth procedure boxes for Field 01SC1 is blank or the State Code in Box 1a (01SC1) is a foreign country other than a U.S. Possession.

(89) IRM 3.12.154.11.22.2(1), Correction Procedures (EC 208) - In the fourth "Then" procedure box added to paragraph 2) "Note: Line 2 box can be marked by the taxpayer or by a Code & Edit tax examiner. If edit by Code & Edit ensure the entry was edit correctly prior to entering 1 in Field 01CRB" (IPU 17U0917 issued May 26, 2017).

(90) IRM 3.12.154.11.22.2(1), Correction Procedures (EC 208) - In the fifth and sixth "And" procedure box changed Changed "IRM 3.12.154.1.18.2, APO/DPO/FPO Addresses" to "IRM 3.12.154.1.25.2, APO/DPO/FPO Addresses" (IPU 17U0649 issued April 07, 2017).

(91) IRM 3.12.154.11.22.3(1), No Reply To Correspondence (EC 208) - In the third "Then" procedure box changed "Sate" to "State" . In the fourth "If" procedure box changed "procided" to "provided" .

(92) IRM 3.12.154.11.22.3(1), No Reply To Correspondence (EC 208) - In the fifth "Then" procedure box changed "IRM 3.12.154.1.11, IRS Employee Contacts - RRA98 - Section 3705(a)" to "IRM 3.12.154.1.18, IRS Employee Contacts - RRA98 - Section 3705(a)" . Also changed "IRM 3.12.154.1.11.1, Employee Contact Procedures" to "IRM 3.12.154.1.18.1, Employee Contact Procedures" (IPU 17U0649 issued April 07, 2017).

(93) IRM 3.12.154.11.22.3(1), No Reply To Correspondence (EC 208) - Deleted the sixth procedure boxes for Field 01SC1 is blank or the State Code in Box 1a (01SC1) is a foreign country other than a U.S. Possession. In the fifth "Then" procedure box added new procedures to correspond when no valid state code is present.

(94) IRM 3.12.154.11.22.3(1), No Reply To Correspondence (EC 208) - Added new procedures when no state code has been provided through correspondence (IPU 17U0041 issued January 05, 2017).

(95) IRM 3.12.154.11.23.2(1), Correction Procedures (EC 209) - In the fifth "Then" procedure box changed "IRM 3.12.154.1.18.2, APO/DPO/FPO Addresses" to "IRM 3.12.154.1.25.2, APO/DPO/FPO Addresses" (IPU 17U0649 issued April 07, 2017).

(96) IRM 3.12.154.11.24.1, Invalid Conditions (EC 210) - Revised the invalid conditions that generate Error Code 210.

(97) IRM 3.12.154.11.24.2(1), Correction Procedures (EC 210) - Changed reference of "2016" to "2017" . In the third "Then" procedure box changed "Sates" to "States" .

(98) IRM 3.12.154.11.24.2(1), Correction Procedures (EC 210) - In the fifth And procedure box changed "IRM 3.12.154.1.18.2, APO/DPO/FPO Addresses" to "IRM 3.12.154.1.25.2, APO/DPO/FPO Addresses" (IPU 17U0649 issued April 07, 2017).

(99) IRM 3.12.154.11.27.2, Correction Procedures (EC 214) - Throughout the table changed the mail stop from "2-J11.151" to "5-E04.114" (IPU 17U1263 issued August 23, 2017).

(100) IRM 3.12.154.11.27.2(1), Correction Procedures (EC 214) - Added new paragraph "Compare the screen display to the return and correct coding and transcription errors." In the third "And" procedure box changed "is marked" to "is or is not marked" . In the third "Then" procedure box deleted above do not apply in paragraph c).

(101) IRM 3.12.154.11.27.2(2), Correction Procedures (EC 214) - Changed paragraph to read "Review the return and attachments and follow the procedures in the table below:" . In the table changed the reference of 2016 to 2017. In the third "Then" procedure box changed "Sate" to "State" .

(102) IRM 3.12.154.11.27.2(1), Correction Procedures (EC 214) - In the first "Then" procedure box moved the 6020B procedures are now paragraph a) procedures. In the second "And" procedure box revised to read "Line 2 Box (Field 01CRB) is not marked by the taxpayer or Code & Edit," The third "If" "And" "Then" procedures have been rewritten in their entirety to include Form 940 Line 8 in the instruction for corrective action. Revised the fourth "And" procedure box to read "Line 2 Box (Field 01CRB) is marked by the taxpayer or Code & Edit." Revised paragraph b) in the fourth Then procedure box to include "or if blank and the Credit Reduction total amount on page 1 of Schedule A is 0 (zero not blank)" and deleted "d) If no state wages are present (blank), then SSPND 211" . Revised the filth "And" procedure box to read "Line 2 Box (Field 01CRB) is not marked by the taxpayer or Code & Edit." In the fifth "Then" procedure box moved the 6020B paragraph e) procedures to be new paragraph a), Revised the sixth "And" procedure box to read "Line 2 Box (Field 01CRB) is not marked by the taxpayer or Code & Edit" . In the sixth "Then" procedure box added "Note: Credit Reduction State can be identified by an entry on line 1a, entity state code, or notated on an attachment. FUTA Taxable Wages can be identified on Line 7 provided when multiplied by the credit reduction percentage the result is equal to Line 11 or if line 11 is blank is used in the calculation by the taxpayer for Line 12 and/or Line 14/15. Revised the seventh And procedure box to read Line 2 Box (Field 01CRB) is marked by the taxpayer or Code & Edit" (IPU 17U0917 issued May 26, 2017).

(103) IRM 3.12.154.11.27.3(1), Suspense Correction (EC 214) - In the first "If" procedure box added to instruction "and provides all information requested" . In the first "Then" procedure box added "Enter the information into the correct Section and fields" . In the second "If" procedure box added to instruction "does not provide all of the information requested" (IPU 17U0917 issued May 26, 2017).

(104) IRM 3.12.154.11.28.1(1), Invalid Condition (EC 216) - Changed reference of "2016" to "2017" .

(105) IRM 3.12.154.11.29.1(2), Invalid Conditions (EC 220) - Deleted the reference of "Exhibit 3.12.154-14, Credit reduction States and rates TY2004 - 2016" . Changed the "Note" to read "Note: For a list of valid Credit Reduction States and Rates see Exhibit 3.12.154-14, Credit Reduction States and Rates TY2004-2016."

(106) IRM 3.12.154.11.30.1(1), Invalid Condition (EC 222) - Change the reference of "2016" to "2017" .

(107) IRM 3.12.154.11.30.2(1), Correction Procedures (EC 222) - Change the reference of "2016" to "2017" .

(108) IRM 3.12.154.11.31.2.1(1)c), IRC 6020(b) Returns (EC 225) - Changed the mail stop from "2-J11.151" to "5-E04.114" (IPU 17U1263 issued August 23, 2017).

(109) 3.12.154.11.31.2.3(2), Field 02TTW> - Total Taxable FUTA Wages Computer (EC 225) - In the last "Then" procedure box changed paragraph "K" to "L" and deleted "Revision April 2013" (IPU 17U1339 issued September 15, 2017).

(110) IRM 3.12.154.11.39.2(1), Correction Procedures (EC 236) - Change the reference of "2016" to "2017" .

(111) IRM 3.12.154.11.40.2(1)a), Correction Procedures (EC 238) - Change the reference of "2016-2012" to "2012-2017" .

(112) IRM 3.12.154.11.41.2.4(2), Field 02ADJ - Adjustment Amount (Line 9), Field 02EXL - Some Excluded FUTA Wages (Line 10) and Field 02TCR - Total Credit Reduction (Line 11) (EC 242) - Change the reference of "2016" to "2017" .

(113) IRM 3.12.154.11.41.2.5(2), Fields 02TFT and (>>>>>) - Total Tax Taxpayer (Line 12) and Total Tax Computer Under-print (EC 242) - 6020(b) procedures have been moved to paragraph (2).

(114) IRM 3.12.154.11.41.2.5(3), Fields 02TFT and (>>>>>) - Total Tax Taxpayer (Line 12) and Total Tax Computer Under-print (EC 242) - The Exception for when the taxpayer has correctly figured Line 8 but has no amounts on line 9 through 12 in the ninth procedure box has been moved to the new fifth procedure box.

(115) IRM 3.12.154.11.41.3(1), Suspense Correction (EC 242) - Changed the first If procedure box to read "The return is No no-reply to correspondence or the information provided is incomplete regarding a multi-state return or the correct taxable wages figure cannot be determined from the return or attachments" (IPU 17U0917 issued May 26, 2017).

(116) IRM 3.12.154.11.41.2.5(3), Fields 02TFT and (>>>>>) - Total Tax Taxpayer (Line 12) and Total Tax Computer Under-print (EC 242) - In the second "Then" procedure box changed "IRM 3.12.154.1.9, IRC 6020(b) Prepared by Collections" to "IRM 3.12.154.1.16, IRC 6020(b) Prepared by Collections" (IPU 17U0649 issued April 07, 2017).

(117) IRM 3.12.154.11.44.2(2), Correction Procedures (EC 248) - In the seventh "Then" procedure box changed "Use the following open paragraph" to "Use paragraph J" and deleted the literal verbiage.

(118) IRM 3.12.154.11.44.2(2), Correction Procedures (EC 248) - In the first "Then" procedure box added to paragraph 1) the open paragraph to be used when corresponding regarding lines 3 and 4 amounts being the same. Added new second "If" and "Then" procedure boxes regarding lines 4 and 5 amounts being the same and the open paragraph to be used when corresponding. In the third "Then" procedure box added to paragraph 1) the open paragraph to be used when corresponding regarding lines 5 and 3 amounts being the same (IPU 17U0917 issued May 26, 2017).

(119) IRM 3.12.154.11.46.2(3), Correction Procedures (EC 252) - Moved the 6020B procedure to be the first two procedures in the table. Revised the procedures in its entirety for when the taxpayer did not compute the Balance Due/Overpayment (Line 14/15 blank), Revised the procedures in its entirety for when taxpayers entry for Balance Due/Overpayment Line 14/15 amount differs from the Balance Due/Overpayment computer under-print, Revised the last If procedure box to read "None of the previous procedures apply and EC 252 is still generated" , Revised the last "Then" procedure box to read "If a previous error code identified a math error prior to EC 252, assign the appropriate TPNC" (IPU 17U0917 issued May 26, 2017).

(120) IRM 3.12.154.11.48.2(1), Correction Procedures (EC 258) - Changed the reference of "2016-2012" to "2012-2017" . Added new fourth procedure box for when Line 17 amount is present and Lines 16a through 16b are blank.

(121) Exhibit 3.12.154-1, Form 940 (Revision 2017) and Form 940 Schedule A (Revision 2017)- In the title changed the reference of "2016" to "2017" . Updated the Form 940 and Form 940 Schedule A with Tax Year 2017 form revision.

(122) Exhibit 3.12.154-2, Form 940-PR (Revision 2017) and Form 940 Schedule A-PR ((Anexo A (Formulario 940-PR)) (Revision 2017) - In the title changed the reference of "2016" to "2017." Updated Form 940-PR and Form 940 Schedule A-PR with Tax Year 2017 form revision.

(123) Exhibit 3.12.154-14, Credit Reduction States and Rates (TY 2004-2017) - In the title changed the reference of "2016" to "2017" . Added new Credit Reduction States and Rates table for Tax Year 2016. Table will be updated once the Credit reduction States and Rates become available in November 2017 from the Department of Labor.

(124) Exhibit 3.12.154-14, Credit Reduction States and Rates (TY 2004-2016) - Added the Tax Year 2006 Credit Reduction States and Rates for California and Virgin Islands (IPU 17U0041 issued January 05, 2017).

(125) Exhibit 3.12.154-16, Acronyms, Abbreviations and Definitions - In the title changed "Acronyms" to "Acronyms, Abbreviations and Definitions" (IPU 17U0649 issued April 07, 2017).

Effect on Other Documents

This material supersedes IRM 3.12.154 dated November 16, 2016 (effective January 1, 2017). This IRM includes current procedures from IRM Procedural Updates (IPUs): 17U0041 issued January 05, 2017, 17U0649 issued April 07, 2017, 17U0917 issued May 26, 2017, 17U1015 issued June 15, 2017, 17U1263 issued August 23, 2017, and 17U1339 issued September 15, 2017.

Audience

Wage and Investment, Submission Processing, Error Resolution

Effective Date

(01-01-2018)

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

Program Scope and Objectives

  1. Purpose of this Internal Revenue Manual (IRM) section is to provide instructions for Input Correction, Error Resolution System (ERS) with a means to resolve errors made by taxpayers’ and correct errors made during campus processing for the following Form 940 series returns:

    • Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return. The Form 940 was redesigned beginning with Tax Year 2006. The redesigned form includes Form 940 Schedule A, Multi-State Employer and Credit Reduction Information. These returns are processed at both the Cincinnati Submission Processing Campus (CSPC) and the Ogden Submission Processing Campus (OSPC).

    • Form 940-PR, Employer's Annual Federal Unemployment (FUTA) Tax Return (Puerto Rican Version) in Spanish. Beginning with Tax Year 2006, the form was redesigned and includes Form 940-PR Schedule A, Multi-State Employer and Credit Reduction Information (Puerto Rican Version) in Spanish. These returns are processed as foreign tax returns at the Ogden Submission Processing Campus (OSPC) only.

    • Form 940-EZ, Employer's Annual Federal Unemployment (FUTA) Tax Return (Revision 2005 and Prior) was the simplified version of Form 940. Form 940-EZ was made obsolete after Tax Year 2005. All Form 940-EZ returns must be converted to the current year revision of Form 940. These returns are processed at both the Cincinnati Submission Processing Campus (CSPC) and the Ogden Submission Processing Campus (OSPC) using current year Form 940 fields and lines.

  2. Audience for this IRM are as follows:

    • ERS Supervisory Tax Examining Assistant, Lead Tax Examining Technician, Tax Examining Technician.

    • Rejects Supervisory Tax Examining Technician, Lead Tax Examining Technician, Tax Examining Technician.

  3. Policy Owner for this IRM is Director, Submission Processing.

  4. Program Owner responsible for the administration, procedures, and updates related to this program is Paper Processing Branch, Business Master File (BMF) Section.

  5. Primary Stakeholders affected by these procedures or have input to the procedures which may include a change in work flow, additional duties, change in established time frames, and similar issues are:

    • Accounts Management (AM)

    • Small Business/Self-Employed (SBSE)

    • Large Business and International (LB&I)

    • Chief Financial Officer (CFO)

    • Tax Payer Advocate (TAS)

    • Chief Counsel, Information Technology programmers

    • Statistics of Income (SOI)

    • Tax Exempt/Government Entities (TEGE)

    • Compliance, Modernized E-file (MeF), Submission Processing (SP)

Background

  1. The purpose of Error Resolution is to resolve validity errors, field errors, consistency errors, and math errors in returns and other documents for posting to the Master File. Records fall out in Error Resolution System (ERS) due to the Generalized Mainline Framework (GMF). The entries from transcription are transferred to ERS fields. The GMF programming causes a record to fall out to ERS if it fails to meet certain criteria, including:

    • Invalid characters in a field (e.g., numeric instead of alpha)

    • Invalid length of field (e.g., EIN with 8 digits instead of 9)

    • Invalid codes in field (valid Action Codes, Audit Codes, etc. are programmed in GMF)

    • Consistency errors - any valid field used in any computation where the result is inconsistent with (or contradictory to) any other valid field

    • Math errors - computer does math computation and it differs from the taxpayer’s amount, and invalid tax periods and eligibility for certain credits

    • Employees use the ERS system and the return to correct these conditions and when necessary use Integrated Data Retrieval System (IDRS) to research

  2. Instructions in specific sections take precedence over general section instructions in case of a conflict.

  3. This Internal Revenue Manual (IRM) is your main source of information for correcting the error record and the related return. Other related IRMs are:

    1. IRM 3.12.38, Error Resolution- BMF (Business Master File) General Instructions, which contains procedures for correcting records on the screen. It also contains information regarding document controls, inventories, and management reports.

    2. IRM 3.11.154, Returns and Documents Analysis - Unemployment Tax Returns.

Authority

  1. Title 26 of the United States Code (USC) or more commonly known as the Internal Revenue Code (IRC).

  2. The Federal Unemployment Tax Act (FUTA) established the Federal Unemployment Tax and required cooperation between the States, Internal Revenue Service, and the Department of Labor to determine an employer's contribution to the Unemployment System.

  3. All Policy Statements for Submission Processing are contained in IRM 1.2.12, Servicewide Policies and Authorities, Policy Statements for Submission Processing Activities:

    • Code sections which provide the IRS with the authority to issue levies.

    • Congressional Acts which outline additional authorities and responsibilities like the Travel and Transportation Reform Act of 1998 or the Tax Reform Act of 1986.

    • Policy Statements that provide authority for the work being done.

Responsibilities

  1. The Directors for Ogden Service Center (OSC) and Cincinnati Service Center (CSC) are responsible for monitoring operational performance for their Submission Processing campus.

  2. The Operations Managers for OSC and CSC are responsible for monitoring operational performance for their operation.

  3. The Department Managers for OSC and CSC are responsible for monitoring Team Units performance within their department.

  4. The team manager/lead is responsible for performance monitoring and ensuring employees have the tools to perform their duties.

  5. The team employees are responsible to follow the instructions contained in this IRM and maintain updated IRM procedures.

Program Management and Review

  1. Program Goal for ERS is to correct any errors that are identified using the Error Resolution System (ERS).

  2. System control reports are on the Control-D/Web and a general listing of the reports are located in IRM 3.12.38, Error Resolution, BMF General Instructions.

  3. Program Effectiveness is measured by:

    • Embedded Quality Submission Processing (EQSP)

    • Balanced Measures

    • Managerial reviews

  4. Annual Review is performed by Federal Managers Financial Integrity Act (FMFIA) to ensure accuracy and promote consistent tax administration.

Program Controls

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

Terms/Definitions/Acronyms

  1. The following table contains a list of words which require interpretations:

    Word Definition Example of using a word that is open to interpretation. (This column is for illustration purposes only)
    Fair Provide accurate and professional service to all persons without regard to personal bias. Treat the customer in a fair manner when working with FOIA requests.
    Usually Provide the exceptions when something is not required or what would create the unusual circumstance. Pay adjustments will be accomplished within a reasonable amount of time, usually within two (2) pay periods.
    Timely Provide the time frame to consider what is or is not timely. Process all IMF adjustments in a timely fashion.
    Significant entry Any entry other than zero or blank. For example: If line 1 has a significant entry. Enter "A" in Field 01CCC.
  2. For a list of ERS acronyms, abbreviations and definitions see Exhibit 3.12.154-16, Acronyms, Abbreviations and Definitions.

Related Resources

  1. Additional job aides, electronic tools, or websites needed to complete the work are listed below:

    • Servicewide Electronic Research Program (SERP)

    • Submission Processing Design Center (SPDC)

    • Integrated Data Retrieval System (IDRS)

Tax Class, Document Codes, and MFT Codes

  1. The tax class, document codes, and Master File tax (MFT) codes for Unemployment Tax Returns are as follows:

    Form Type Form 940 and Form 940PR Form 940 Electronic Filing
    Tax Class 8 8
    Document Code 40 39
    MFT 10 10

Due Date

  1. The due date for Form 940 and Form 940-PR is January 31 of the following Tax Year.

  2. Since this is an annual return (covering a 12 month period) there are no short/fiscal period returns as compared to other Business Master File (BMF) returns.

  3. The taxpayer may notate short period on the return, but if no reason is given, such as final, quarterly payment, seasonal, etc., we correspond to find out why the return was filed early.

  4. The due date is extended by 10 days, if timely Federal Tax Deposits have been made in full by the due date.

  5. There is no extension form for these returns.

♦Business Master File (BMF) Consistency♦

  1. The purpose of this initiative is to achieve consistency in the Business Master File (BMF) Error Resolution System (ERS) processing IRMs.

  2. Topics for BMF Consistency have been identified and developed as a coordinated effort between Cincinnati, Ogden, Kansas City, and Paper Processing Branch BMF Code and Edit/ERS.

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

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

♦IRM Deviation Procedures♦

  1. IRM deviations must be submitted in writing following instructions from IRM 1.11.2.2, When Procedures Deviate from the IRM, and elevated through appropriate channels for executive approval.

♦Taxpayer Advocate Service (TAS)♦

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

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

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

  4. "Same day" includes cases that can be completely resolved in 24 hours, as well as cases where steps can be taken within 24 hours to begin resolving the issue. (see IRM 3.1.7.4, Same Day Resolution by Operations.

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

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

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

♦BMF Identification (ID) Theft♦

  1. BMF Identification Theft is increasing. If a tax examiner in Submission Processing (SP) Error resolution System (ERS) finds a case with attachments or correspondence indicating the taxpayer is a victim of ID Theft:

    1. SSPND "360" to route the return to Planning & Analysis (P&I).

    2. Attach Form 4227, Intra-SC Reject or Routing Slip (or other appropriate routing slip) with the notation "ID THEFT" .

    3. Provide the entire case to your senior/lead.

    Your senior/lead will expedite the case to the P&A staff for referral to one of the SP BMF ID Theft liaisons. The taxpayer must indicate that they are a victim of “ID Theft”; do not send cases that are subject to Criminal Investigation (CI), Examination (Exam) or "Fraud" review.

♦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 attempts to evade or defeat the income tax. Criminal tax violations also include the willful failure to collect or pay over tax and false claims for refunds based on bogus return information.

  2. For returns with refund claims of $100,000,000 or more, do the following:

    Caution:

    If there is no indication Code and Edit (C&E) made a copy and sent to CI Referral, then see below.

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  3. Other CI Referral Criteria:

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

    Caution:

    If there is no indication Code and Edit (C&E) made a copy and sent to CI Referral, then see below.

    1. Make a copy of the return.

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

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

      Cincinnati Ogden Kansas City
      Mail Stop 83G, Criminal Investigation (CI) Mail Stop 9001, Criminal Investigation (CI) 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.

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

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

Examination (Exam) Funny Box

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

♦Frivolous Returns and Claims♦

  1. A frivolous argument is used for the purpose of expressing dissatisfaction with the substance, form, or administration of the tax laws by attempting to illegally avoid or reduce tax liabilities. Recognized frivolous arguments made by businesses include, but are not limited to, the examples in IRM 25.25.10, Frivolous Returns Program (FRP) shown in Exhibit 3.12.154-13, Potential Frivolous Argument for Examination Review.

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

    If... Then...
    The return meets any of the conditions identified as a frivolous return. See Exhibit 3.12.154-13, Potential Frivolous Argument for Examination Review.

    Caution:

    If the return shows Action Code 331 and has a Form 4227, Intra-SC Reject or Routing Slip attached with the remarks, "Refer to Examination (Exam) Frivolous Return Program (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, e.g., indicated by an Action Code 331 "and a Form 4227, Intra-SC Reject or Routing Slip or other routing slip, with the remarks" , "Refer to Exam FRP for audit after processing" , but sends the return for processing, Continue to process the return using the procedures in IRM 3.12.154, Error Resolution Unemployment Tax Returns. However, do not circle or void the Action Code "indicating a frivolous return" .

    Note:

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

♦IRC 6020(b) Prepared by Collections ♦

  1. When the taxpayer fails to file a required return, IRC 6020(b) is the authority for the IRS to prepare the return. These returns can be received in various formats.

    Note:

    Revenue officers may satisfy the taxpayer’s requirement to report Federal Unemployment Tax by filing Form 940 or Form 940(cg) with the notation "IRC 6020(b)" . If the return is a Form 940(cg), use the Form 940 procedures shown in IRM 3.11.154, Document and Analysis - Unemployment Tax Return to process.

  2. At the campus’ option, IRC 6020(b)Form 940 returns can be processed through ISRP or Service Center Recognition Image Processing System (SCRIPS).

  3. These are identified by the notation: "PREPARED AND SIGNED UNDER AUTHORITY OF IRC 6020(b) OF THE INTERNAL REVENUE CODE" which is located in the center bottom of Page 1 or Page 2 of the return. The right margin should also indicate "TC 599 cc 38" , or "TC 599 cc 39" should appear in the left upper margin.

    1. Returns must have a received date. If missing, follow the normal procedures for editing the Received Date. See IRM 3.12.154.7.7, Field 01RCD Received Date.

    2. Returns must be signed by Compliance Function. Accept the Revenue Officer (RO) signature anywhere on the return or, if Form 5604 is attached, when the signature appears in the "Initiating Collection Employee" box.

    3. All unsigned IRC 6020(b) returns received in Document Perfection must be brought to the attention of Campus Planning Analysis for proper handling.

      Note:

      For Planning Analysis analysts Only- If a IRC 6020(b) return is received unsigned, mail to the following address:
      Internal Revenue Service
      2970 Market St.
      Mail Stop 5-E04.114
      Philadelphia, PA 19104

    4. Edit CCC "4"

      Note:

      CCC "R" should not be used with CCC "4" .

    5. Edit CCC "D" if the Compliance Function representative notates: "DO NOT ASSESS FAILURE TO PAY PENALTY."

    6. Do not correspond with the taxpayer for unprocessable conditions. If the return is completely unprocessable, route to the address in (c) above.

    7. Edit CCC “W” if the received date is more than 2 years 9 months after the return due date. Do not send the return to Statute Control function.

    8. No special calculations or notations are necessary on an IRC 6020(b) return that involves a credit reduction state. Do not calculate any credit reduction amounts. Do not enter the credit reduction wage amount.

Indian Tribal Government - Background

  1. After December 20, 2000, services rendered to a federally recognized Indian Tribal Government ( or its instrumentalities) are exempt from Federal Unemployment Tax (FUTA), subject to the tribes compliance with applicable state law. For more information, see Announcement 2001-16 and IRC 3309(d).

  2. For submission processing purposes, Code & Edit and ERS employees will accept all FUTA tax returns notated or referenced with the following explanations for exemption to the FUTA tax. We will code and perfect these returns as "Non-Taxable and Final" .

    • Indian Tribal Government for Tax Years 200012 and subsequent;

    • Announcement 2001-16;

    • The Community Renewal Tax Relief Act of 2000;

    • H.R. 5662, incorporated in H.R. 4577, the Consolidated Appropriations Act, 2001;

    • Public Law No. Pub 106-554, 114 Stat. 2763;

    • Internal Revenue Code Section IRC 3309(d); and/or

    • Similar explanation as described above,

    Note:

    If the taxpayer is claiming a refund for Federal Tax Deposits, ensure that the return is perfected by editing/deleting all transcription lines so the overpayment is refunded to the taxpayer.

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

  1. The Restructuring and Reform Act of 1998 (RRA98), Section 3705 (a) provides identification requirements for all IRS employees working tax related matters.

  2. IRS employees are required to give their name and unique identification number during taxpayer telephone, face to face, and written contact. Other correspondence must include a telephone number that the taxpayer may contact.

  3. This will provide taxpayers with enough information to identify an IRS employee who has previously assisted with tax related matters.

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

    • Your title (e.g., Mr., Mrs., Ms., Miss),

    • Your last name, and

    • Your badge identification (ID Card) number.

  2. Correspondence - All correspondence must include a telephone number where the taxpayer's questions can be answered. In addition, manually generated and handwritten correspondence must include:

    • Your title (e.g., Mr., Mrs., Ms., Miss),

    • Your last name, and

    • Your IDRS, letter system or ID Card number.

  3. The IDRS number and numbers for some other letter systems are automatically generated. If it is not generated, or a handwritten note is prepared, the ID Card number must be used.

  4. Toll-Free employees may also provide their location for identification purposes. E-mail and faxes to taxpayers on tax related matters are considered manually-generated correspondence and must include the required information.

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

    Note:

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

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

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

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

  9. It is not necessary to repeat the 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 by telephone or in-person) their ID Card number on the first contact. However, the ID Card number must be included on all correspondence and provided to the taxpayer upon request.

♦Use of Fax for Taxpayer Submissions♦

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

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

  3. ERS examiners will indicate the fax paragraph on the Form 12522, Correspondence Action Sheet, to advise taxpayers of the option to fax their response.

  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 11.3.2.7.1, Leaving Information on Answering Machines/Voice Mail

    • IRM 11.3.1.11, Facsimile Transmission of Tax Information

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

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

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

    2. Remove the return from the batch and SSPND 640 to have the DLN voided.

    3. Attach Form 4227, Intra SC Reject or Routing Slip, (or other appropriate routing slip) to the return and route to AM to secure missing information.

    4. 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 appropriate routing slip).

    The CIS return has a Form 13596 attached and the return is incomplete (e.g., missing signature, schedules, or forms), There is an indication on the return that correspondence has been sent (e.g., CCC 3 is edited on the return), Do not route the return to 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), Research for prior (Transaction Code (TC) 150 posted)
    1. If TC 150 present and the information is the same, cancel the DLN and treat as classified waste.

    2. If TC 150 is not present, follow normal correspondence procedures.

♦CADE 2♦

  1. The Customer Account Data Engine (CADE) 2 Program Office in Headquarters is charged with the primary goal to implement a single, modernized programming solution which provides daily processing of taxpayer accounts.

  2. The CADE 2 solution is comprised of several components, to modernize the IRS to a daily processing environment with several Transition States.

  3. The BMF campus cycles are:

    1. Campus Cycle: Thursday – Wednesday

    2. Master File Processing: Friday – Thursday

    3. Notice Review Saturday: Monday (8+ days)

    4. Unpostables: New available Tuesday; Closing Tuesday

  4. BMF transaction posting time frames are outlined as follows:

    1. Transactions will be viewable using Corporate File On-Line (CFOL) command codes (CC) on Saturday following the weekly Master File processing run on Thursday.

    2. Transactions will be viewable as posted transactions using Integrated Data Retrieval System (IDRS) command codes on Monday following the weekly Master File processing run on Thursday.

    Note:

    With the acceleration of the IDRS weekly analysis being performed the weekend directly after the Master File processing on Thursday, transactions will be posted rather than in a "pending" status on Monday.

  5. Transaction posting dates will reflect a format of YYYYCCDD. YYYY will indicate the year. CC will indicate the posting cycle. For IMF transactions, the following values for DD are defined:

    • 01 = Friday

    • 02 = Monday

    • 03 = Tuesday

    • 04 = Wednesday

    • 05 = Thursday

      Note:

      BMF cycle posting dates on Business Master File On-Line (BMFOL) will continue to reflect YYYYCC YYYY will indicate the year. CC will indicate the posting cycle. BMF posting cycles in TIF Tax Module Display (TXMOD) will reflect a format of YYYYCCDD. The DD value will be 08.

Local Desk Procedures

  1. Some Submission Processing Campuses have developed local use Desk Procedures.

  2. Unit managers must have a signed approval on file from the responsible Branch Chief on all Submission Processing Campus Desk Procedures.

  3. All existing local information and procedural issuances must be reviewed by the Operations Manager upon receipt of the new IRM revision to ensure conformance with Headquarters procedures.

  4. Local desk procedures are only to be used:

    • To supplement existing Headquarters procedures.

    • To expand Submission Processing Campus Error Resolution procedures by incorporating material from other IRMs, Automatic Data Processing (ADP) handbooks, etc.

    • For local routing procedures.

Coding & Editing Guidelines

  1. The applicable code is edited in the designated area on Form 940, or Form 940-PR as follows:

    Fields Field Location
    Computer Condition Code
    1. Revisions 2006 through 2017: Immediately to the right of the line that states, You MUST fill out both pages of this form and SIGN it.

    2. Revision 2005 and prior: Bottom margin, in the center position.

    Received Date Body of the return.
    ERS Action Code Revisions 2006 through 2017: Edit to the right of the words: "You MUST fill out both pages of this form and sign it."
    Penalty and Interest (P/I) Code We no longer edit the Penalty and Interest Code.
    Tax Period Next to the form title.
    Failure to Deposit Penalty We no longer edit the Failure to Deposit Penalty.
    Third Party Designee (when the "Yes" box is checked) No editing is needed.
  2. All returns must be in an acceptable current year's revision.

  3. Code & Edit examiners use different characters to indicate corrections, changes, or deletion of entries when editing forms. This is due to the implementation of the Service Center Recognition/Image Processing System (SCRIPS), which scans the Form 940 return and captures the information from pre-designated locations. Error resolution examiners must be able to comprehend any edited changes shown on a return.

  4. Form 940 returns, Revisions 2006 and subsequent, filed for tax years 2006 and subsequent may be processed through SCRIPS, (at the campus' discretion.) ISRP processes the following returns:

    • Form 940 (Revision 2005 and prior)

    • Form 940-PR (All Revisions)

    • All Form 940 Returns converting a filed Form 940-EZ Return.

    • Form 940(cg). This form can be identified by the presence of Form 940(cg) in the upper left hand corner.

    • Year 2005 and prior tax information that has been submitted on a Revision 2006 through 2017 form.

    • Year 2005 and prior tax information that has been submitted on the appropriate revision of Form 940 and Form 940-PR.

    • Revision 2005 or prior return that was filed for tax year 2006 and subsequent tax information. These returns will be edited by Code & Edit as necessary. All transcription entries will be edited to match the current revision.

  5. ISRP is used for forms that cannot be input via SCRIPS.

  6. For a description of specific edit marks used in SCRIPS and ISRP processing, see the table below:

    Edit Mark SCRIPS ISRP Description
    Asterisk "*" X X Used to prompt the SCRIPS or ISRP system operator to stop at a field so that the operator can make a change. The "*" is used to delete tax data or to indicate that an item is not to be transcribed.

    Note:

    The asterisk must be placed to the left of the entry as close as possible.

    Exception:

    An Asterisk (*) in the signature box indicates that the signature is on an attachment or is not needed.

    Circle X X Used to delete a Received Date. If the taxpayer circles an entry, edit the entry.
    Decimal point X X Indicates the separation of dollars and cents, if no distinction has been made by the taxpayer.
    Edit Marks Made by Other IRS Functions X X Edit marks entered by another area (such as Compliance or Accounts Management), are not to be re-edited except to place the marks in the correct area.
    Line through X X Entity Perfection Only - Used to delete data. Unless otherwise specified, a horizontal line through data will always indicate the data is being deleted from the return.

    Note:

    Always edit an Asterisk (*) as closely as possible to the left when lining through an entry.

    Percent Sign (%) X X Indicates the presence of a "Care of Name" or address.
    Underline X X Used to identify a Name Control that is to be transcribed.
    Zero, Dash, or None X X "Zero" , "dash" or "None" are considered valid entries except when specific instructions require editing of an entry.
    slash "/" X X A "/" through the entire page can be used when deleting a form or schedule that is not to be transcribed, or by ERS, to indicate that all the information from the document has been deleted from the return's record.
    "/" XX "/$"
    XX represents the two digit foreign country code
      X ISRP ONLY: Indicates a foreign address. The two digit alpha foreign country code will be preceded by / and followed with "/$" . This cannot be used for documents processed via SCRIPS.

    Note:

    The "X" and "arrow" will no longer be used in editing Form 940 Series returns.

  7. When a Code & Edit examiner initiates correspondence, they are required to show the applicable Action Code in the lower left hand corner of the return. If Letter 142C is used, they are also required to notate the paragraph, and if appropriate, the fill in number(s) followed by the inserted fill-in information.

  8. Form 940 returns (Revision 2006 and subsequent) processed through SCRIPS will be received in ERS not stapled and sorted into "Perfect" (e.g., document without attachments), and "Imperfect" (e.g., documents with attachments and/or envelopes) batches.

    1. When pulling documents from a "Perfect" truck or batch, ensure that all pages are pulled (page 1, 2 and/or Form 940 Schedule A).

    2. When pulling documents from an "Imperfect" truck or batch, check the upper right corner for a seven digit sequence number. Then, go to the colored folder at the back of the gusset and pull the corresponding attachments. Staple any attachments to the return before routing

  9. Working trails/Audit trails/Action trails - the following actions will be edited on the Unemployment Returns in the ERS program:

    1. Changes to Tax Period (01TXP).

    2. When Tax Examiners send a letter, they must make a notation such as "3875C" .

    3. Changes to Employer Identification Numbers (EIN) - (Field 01EIN)

    4. Any Action Code (AC) will be notated on bottom left hand corner of the return and on Form 4227.

    5. If an IDRS transaction is input, a notation must be made on the document showing the TC (Transaction Code) and the date.

    6. When instructed to prepare Form 3465 (Adjustment Request) while working Form 940 Series returns take the following actions:

      If... Then...
      Form 3465 prepared,
      1. Make a copy of the Original Return and attachments to attach to Form 3465

      2. Notate "COPY" on the copy and place in the "BMF Adjustment Out Box"

      3. Notate "3465 PREP" in the bottom left margin of the original Form/Return.

Correspondence

  1. See Exhibit 3.12.154-5, Correspondence Action Chart for issues needing correspondence.

  2. See Exhibit 3.12.154-6, No Reply/Undeliverable Chart for no response to correspondence issues.

General Information and Definitions of Taxpayer's Entity Addresses in the Unemployment Program

  1. The determination of a domestic or foreign address is based only on the address of the taxpayer.

Domestic Addresses
  1. A Domestic Address is a U.S. address that contains:

    • Street Address

    • City

    • State

    • ZIP Code

  2. These Unemployment Tax Returns are processed at CSPC and OSPC.

APO/DPO/FPO Addresses
  1. An APO/DPO/FPO Address is a U.S. address which may include:

    • APO (Army/Air Force Post Office)

    • DPO (Diplomatic Post Office)

    • FPO (Fleet Post Office)

    • Postal Service Center

    • Mobile Unit Designation

    • Name of Ship

    • State Code

    • ZIP Code

  2. APO/DPO/FPO addresses are not foreign addresses.

  3. These Unemployment Tax Returns are processed at CSPC and OSPC.

  4. The Postal Service has established address requirements for APO/DPO/FPO addresses. If an address appears in the old APO/DPO/FPO format, such as "APO New York, NY 091XX" , convert to the new state code based on the ZIP Code as follows: "APO AE 091XX" .

    ZIP Code State Code
    340 AA
    090-098 AE
    962-966 AP
U.S. Possession or Territory Address
  1. A U.S. Possession or Territory Address will include:

    • Street Address

    • City/U.S. Possession

    • ZIP Code

  2. A U.S. Possession or Territory is considered a foreign address return.

  3. These Unemployment Tax Returns are processed at the Ogden Submission Processing Campus only.

    1. SSPND 650.

    2. Attach Routing Slip with the notation "Forward to OSPC" .

    3. Prepare Letter 86C to inform the taxpayer that the return has been sent to Ogden.

  4. OSPC ONLY -Returns with an address in a U.S. Possession or Territory are considered to be a foreign return for processing purposes and are entered in the same way as domestic addresses.

    1. A two character alpha code must be entered in Field 06ST for the possession or territory name.

      U.S. Possession Abbreviation
      American Samoa AS
      Federated States of Micronesia FM
      Guam GU
      Marshall Islands MH
      Northern Mariana Islands MP
      Republic of Palau PW
      Puerto Rico PR
      U.S. Virgin Islands VI
    2. A ZIP Code must be present.

Foreign Addresses (OSPC ONLY)
  1. All returns with a foreign address must be shipped to OSPC.

    1. SSPND 650.

    2. Attach a routing slip with the notation "Forward to OSPC" .

    3. Prepare Letter 86C to inform the taxpayer that the return has been sent to Ogden.

  2. A Foreign Address will contain:

    • Street Address or P.O. Box

    • City or town name

    • Other principal subdivision (i.e., province, state, country, etc.)

    • Postal code, if present

    • Foreign country

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

  4. Returns with an address in a U.S. Possession or Territory are considered to be foreign returns for processing purposes.

ZIP Codes – Explanation, Procedures, Corrections
  1. All ZIP CODES are standardized at Enterprise Computing Center at Martinsburg, WV (ECC-MTB) before the return posts to the Master File.

  2. This program called "FINALIST" matches the taxpayer's street address and city address to the ZIP CODE on the return with the latest ZIP Code updates received from the U.S. Postal Service.

    1. If the ZIP CODE is correct, the program standardizes the ZIP CODE to a 12 DIGIT ZIP CODE and passes the record (return) on to the Master File for posting to the taxpayer's account.

    2. If the ZIP CODE is incorrect, but there is a match to the taxpayer's street and city address, then the program corrects and standardizes the ZIP CODE, and passes the record (return) on to the Master File for posting to the taxpayer's account.

  3. If you have an incomplete or no ZIP CODE on the return, but it contains a street and city address, no research is necessary, take the following action:

    1. Exhibit 3.12.154-8, Entity State Code and Zip Code Chart or Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries for the Major State ZIP Code that includes the last two digits of "01" .

    2. If there is a match by the program, the ZIP CODE is standardized at Enterprise Computing Center - Martinsburg (ECC-MTB) for posting to the Master File.

    3. If there is a no match by the program, ECC-MTB passes the return on to the Master File for posting, but an Error Listing is generated and sent to the Service Center for correction.

  4. If you have an incomplete or no ZIP CODE, and the street or city address is incomplete or missing, then research is needed for the complete address. Follow local submission processing procedures for research.

Glossary of ERS Terms

  1. The following words are used in the sections of this IRM:

    Words Definition
    Action Code (AC) ERS A three digit numeric code indicating the need for additional information not available in the record or on the source document. Only one Action Code can be assigned to a record at one time. See Exhibit 3.12.154-12, Action Code Chart.
    Amended Return A return the taxpayer files to change information on the original tax return.
    Annualized A method of computing tax on less than one full year (12 months) using the appropriate tax rates for that Year.

    Note:

    In the FUTA program, you may see this statement on a final return.

    Block A group of 100 or less documents identified with the same block DLN (Document Locator Number) in order to control the documents.
    Block-Out-Of-Balance (BOB) A condition where the total returns or money listed does not equal the sum total of returns or amounts.
    Check Digits Two computer-generated alpha characters used with the Social Security Number (SSN) or Employee Identification Number (EIN) to identify a taxpayer's account (E, G, and M are invalid).
    Computer Condition Code (CCC) A one digit number or letter assigned to a return to identify a specific condition or computation.
    Consistency Error A condition determined when the computer compares two or more Fields and these Fields do not meet the processing requirements.
    Entity Index File (EIF) A computer file that stores name data for each EIN on file. A check is made between the EIN and name entered.
    Error Code A three digit numeric code identifying specific math or consistency error in an Error Record.
    Error Records Data records failing any of the math or validity checks on Generalized Mainline Framework or containing an invalid or incomplete Action Code.
    Generalized Mainline Framework (GMF) The system used to process and control all documents through the service center pipeline.
    Name Search Facility (NSF) A National file of name and address data used to Locate a Taxpayer Identification Number (TIN). NSF uses off-the-shelf software and a relational database to search for taxpayer names that match or are similar to the name requested by CC NAMEE.

Related Forms

  1. The following forms are referred to in this section. The table below shows their form number, form title and use:

    Form Title Use
    Form 3244 Payment Posting Voucher Identifies account where payment is applied.
    Form 3465 Adjustment Request To request transfer of credits.
    Form 12522 Correspondence Action Sheet Initiates correspondence to the taxpayer through the Typing Unit or IDRS. (or follow local procedures)
    Form 4227 Intra-SC Reject or Routing Slip Identifies the reason for using the Action Code.
    Form 10886 Reject Routing Slip Identifies the reason for an action code.

Command Codes (CC)

  1. The COMMAND CODES(CC) used for correcting the Error Inventory and the Workable Suspense Inventories are described below.

    1. CCs are used to tell the system what function to do,

    2. CCs must be entered in a valid format, otherwise an error message will display, and

    3. Correct the data entered with the CC and transmit.
      The following is a list of some CCs:

    Command Code Definition
    BMFOL Reviews transactions posted to the Master File.
    BRTVU Used to see the transcribed data from a return that has posted to the Master File.
    CRECT Will be displayed with all error displays.
    DLSEC Deletes a section of a record.
    ENMOD Requests a display of entity information for a specific module.
    ENREQ Requests the BNCHG format.
    ERINV Used to research a DLN or TIN on ERS to see if the document is in the ERS inventory.
    ERVOL Used with a STATUS CODE to display the number of ERS records in the current Workable Inventory and Unworkable Inventory.
    GTREC Accesses the first error in a block in the Error Inventory or a specific record in the Workable Suspense Inventory. It can also re-display any uncorrected error.
    GTRECQ Retrieves and corrects a record selected for quality review.
    GTRECW Retrieves and corrects an Error Record that has been erroneously worked. Can be used on the day that the record or block was worked.
    GTSEC Obtains the display of any section of a record in process.
    INOLE Research Entity Module.
    MFREQ Retrieves a tax module and its related entity date from Master File.
    NAMEE Used to provide nationally centralized entity research via Name Search Facility (NSF).
    NWDLN Changes (renumbers) the DLN and MFT of the record and/or reject the record.
    RJECT Rejects a record from ERS.
    SSPND Used to enter an Action Code and place a record in suspense inventory.
    TRDBV A summary selection screen display of the returns, schedules and forms submitted by the specific taxpayer.

Action Codes (AC)

  1. The ERS Action Code indicates that specific information is missing or that the record is to be rejected from processing. The Action Code will have sufficient detail to indicate if correspondence is to be sent to the taxpayer or the specific inhouse research or action required. See Exhibit 3.12.154-12, Action Code Chart.

  2. ACTION CODE 001 will be computer generated when the BOB Resolution Function(Block Out of Balance) has added a missing document by only inputting the TIN and the Name Control for the missing document. See IRM 3.12.154.4.2(2), Priority I Errors Inventory Correction Procedures.

  3. Document Perfection Tax Examiners (Code & Edit) will assign Action Codes to numbered returns when they determine that the document is unprocessable in its present form either by needing additional information or some manual intervention is required. The action code will be entered on the lower left margin of the return.

  4. Correspondence Action Sheets (Form 12522) may be attached by Code & Edit to initiate correspondence.

    1. Action Codes and literal for each Action Code will generally be sufficient with no further explanation, except other research.

    2. When a note of explanation concerning the missing information is attached to the return, an Action Code is assigned by Code & Edit.

  5. The presence of a valid Action Code other than AC 001 will place the record in the Suspense Inventory, either Workable or Unworkable.

  6. If the Action Code assigned by Code & Edit is invalid, incomplete, or AC 001, the record will be assigned to the Error Inventory for correction or deletion of the Action Code.

  7. Only one Action Code may be assigned at one time to a record. The priority of the Action Codes will be:

    • 310

    • 320

    • 4XX

    • 6XX

    • 3XX

    • 2XX

    • 610

    • 611

    Exception:

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

  8. An ERS Tax Examiner may enter an Action Code on a record, delete or correct an invalid Action Code.

  9. ERS Tax Examiner entering a valid Action Code with CC SSPND will be clearing the record from the screen and placing the record in either Workable Suspense or Unworkable Suspense.

  10. A Reject Tax Examiner entering a valid Action Code with CC RJECT will be rejecting the record from ERS. Generally, Service Center Control File (SCCF) will be automatically updated for the rejected record.

  11. A Reject Tax Examiner entering an Action Code with the CC NWDLN will be rejecting the record from ERS and establishing the new DLN under which the record is to be input.

    1. See Exhibit 3.12.154-12, Action Code Chart for a list of suspense periods.

    2. The suspense period should be used for controlling suspense documents, NOT to determine which Action Code to use.

Status Codes

  1. Records for the documents in the Error Resolution System (ERS) are controlled by Status Codes. The status is updated when the record is placed in a specific inventory.

  2. Below is a list of the Status Codes and a brief explanation:

    Status Code Explanation
    Status 100 Error awaiting correction. Records are in the Error Inventory.
    Status 2XX Records awaiting information to be received. Records are in the Unworkable Suspense Inventory.
    Status 3XX Suspense period expired - no response. Records are automatically transferred from Unworkable to Workable Suspense Inventory.
    Status 4XX Records awaiting correction - information received. Records are in the Workable Suspense Inventory.
    Status 900 Record is on the Unselected Inventory.
  3. The final two positions of the Status Code will consist of the first two positions of the Action Code. This will put similar work together on the Workable Suspense Inventory.

    Example:

    321 - Suspense period expired, no response to taxpayer correspondence.

Taxpayer Notice Codes (TPNC)

  1. This code is used when a math error is present involving the tax liability or balance due/overpayment. It is entered on the terminal screen following the literal "NC." See Exhibit 3.12.154-15, Taxpayer Notice Codes.

  2. To eliminate a TPNC, do one of the following:

    1. Delete 02TTW and 02TFT and XMIT, GTSEC 02 and reenter. (Deleting only one field may not eliminate the TPNC), or

    2. Enter "G" in 01CCC and XMIT. When Error Code 010 falls out, delete CCC "G" .

  3. The TPNC is entered after determining that no other corrections to the record are needed.

  4. Each Math Error will have certain TPNCs that are valid to clear the Math Error.

    1. The TPNC assigned must be valid for that error or the same as one previously assigned.

    2. When a TPNC that is not valid is entered, the error will be re-displayed.

    3. A previously assigned TPNC can only be used if it has been validated for that Error Code.

  5. Each Math Error display will require a correction to a field or the entry of a TPNC. The transmission of a TPNC must not be accompanied by any other correction.

  6. A return can have a total of three TPNCs. If more than three TPNCs are to be assigned, use TPNC "90" instead and list the errors for Notice Review to type and send to the taxpayer.

  7. TPNC "90" is actually a fill-in notice and should be used when no other TPNC fully explains the correction(s) made to the taxpayer.

    1. The tax examiner will write a brief explanation of the error and attach it to the face of the return.

    2. When a brief explanation is written, there must be a mandatory review before the record (return) is closed off the ERS system. Follow local procedures for review.

    3. The return should be charged out and routed directly to Notice Review, and/or follow local procedures.

    4. Notice Review will type the Math Error explanation on the notice before mailing to the taxpayer.

    5. can be used with other TPNCs.

  8. Listed below are procedures you may take once a TPNC is transmitted to the ERS record:

    1. If errors remain after transmitting the TPNC, then create an error with a higher priority,

    2. This will cause all "C" Clear Codes and any TPNC already assigned with a lower priority error to be deleted from the record.

    3. TPNCs will be deleted from the header display,

    4. Beginning with the higher Priority IV error created, all subsequent error TPNCs will be displayed for resolution, although they may have been displayed previously, and

    5. A correction erases an Error Code which you previously cleared with a TPNC or "C" Clear Code. In this case, the "C" or TPNC on this error and all subsequent Error Codes will be displayed for resolution whether or not they were previously displayed.

    6. The TPNCs for this error and subsequent Error Codes will be deleted from the header display.

  9. Records which have been worked may be reworked using CC GTRECW. Refer to IRM 3.12.38.3.2.(4), General Correction Procedures, for further details.

  10. All TPNCs are erased when a record is suspended with CC SSPND.

  11. Unfinished records from the previous day will contain none of the TPNCs assigned to the records that were not completely worked.

  12. OSPC Only - Form 940-PR TPNCs are issued in the Spanish version.

  13. For a listing of the TPNCs valid for specific forms, See Exhibit 3.12.154-15, Taxpayer Notice Codes.

Clear Code "C"

  1. The letter "C" is used as a Clear Code for the Error Codes (consistency errors) where the error condition is such that the resolution does not require a change or correction to the record as displayed.

    1. The display will include a Clear Field labeled "CL" to indicate the possible need of a Clear Code.

    2. The Clear Code Field will always be located to the right of CC CRECT on the screen display.

    If... Then...
    Error Codes indicate the possible need for a Clear Code, These are cleared by either correcting the condition or entering a "C" to indicate no correction is needed.
    Corrections are required,
    1. Corrections must be entered and transmitted before entry of the Clear Code "C."

    2. Assure that all corrective procedures have been input as shown under each individual Error Code before entering a "C" in the Clear Code Field.

    3. The "C" Clear Code will prevent any other corrections to the record.

    4. If a correction must be entered but you have already transmitted the "C" Clear Code, and the error is no longer displayed, then use CC GTRECW to make any corrections.

    Clearing the Action Code from the screen after corrections for the Action Code have been completed, or, as with Action Codes 410 and 700, the Action Code must be cleared initially, so other errors in the record can be resolved,
    1. Clear Code "C" is used.

    2. The presence of the "C" with a Priority I Error indicates that you have made the corrections to the Action Code and now wish to have any other errors on the record displayed.

    Deleting an Action Code 1,
    1. "000" is also used as a Clear Code.

    2. It will only be used for invalid or erroneous Action Codes when you have determined there is no reason to suspend the record.

    3. The "000" cannot be used in suspense correction.

  2. Programming erases all "C" Clear Codes for Error Codes when a record is suspended with the CC SSPND.

  3. It also erases Error Codes and Action Codes for the new day's Error Inventory and Workable Suspense Inventory.

    1. Unfinished records from the previous day will contain none of the "C" Clear Codes assigned to a record that was not completely worked.

    2. Error Codes (including the ones which may require a "C" Clear Code) are numbered in order of correction.

  4. Sometimes an ERS Tax Examiner, correcting errors at the terminal, will create an Error Code with a higher priority than the one(s) cleared with a TPNC or "C" Clear Code.

    1. Should this occur, programming will erase all "C" Clear Codes and TPNCs for Error Codes with a lower priority than the one created.

    2. Beginning with the higher priority Error Code created, programming will continue displaying Error Codes for the record.

    3. Displays using the corrected data are apt to be different from those previously displayed.

  5. Sometimes an ERS Tax Examiner will make a correction erasing an Error Code which you previously cleared with a "C" and now the error condition no longer exists.

    1. Should this occur, the "C" Clear Code for this error and all "C" and TPNCs for all subsequent errors in the record will be deleted.

    2. If after deleting the "C" and TPNCs there are errors remaining on the record, they will continue to be displayed for resolution whether or not they were previously displayed.

Statute Control Cases

  1. Any Form 940 series return that has a current processing date equal to or more than two years and nine months or more after the original due date (without regard to any extension) or the received date, whichever is later, is a statute control document.

    1. It will appear on the screen as Error Code 001, unless CCC"W" is present.

    2. The "W" indicates the record has been cleared by the Statute Unit.

  2. All "G" Coded returns become statute returns if the processing date is equal to or more than two years and nine months after the due date.

  3. If the return has an attachment or stamp which indicates previous clearance by the Statute Control Group within the last 90 days, the error must be cleared by entering "W" in Field 01CCC.

  4. If the return does not have an attachment or stamp which shows that the Statute Control Group has cleared it within the last 90 days, take the following actions:

    1. Treat the record as unprocessable, suspend the record with AC 310 for statutory clearance,

    2. If working the Error Inventory, return the document to the block, and

    3. If working the Workable Suspense Inventory, notate 2nd and 3rd copies of charge-out, if available, with AC 310 and the current date.

    4. Handle the document as instructed for statutory clearance. Refer to IRM 3.0.273.11, Administrative Reference Guide for further information.

  5. The statute date for timely filed Form 940 series returns requesting an overpayment/refund due is shown in the table below.

    1. All returns received after the postmarked date are disallowed by the Statute Unit (for overpayment or refund).

    2. Original balance due returns must be cleared by the Statute Unit. Follow procedures outlined in (4) above.

    Tax Return Tax Year Statute Barred Date 90 Days to Statute Bar Date
    940 or 940PR 2017 01-31-2021 01-31-2020
    940 or 940PR 2016 01-31-2020 11-02-2019
    940 or 940PR 2015 01-31-2019 11-02-2018
    940 or 940PR 2014 01-31-2018 11-02-2017
    940 or 940PR 2013 01-31-2017 11-02-2016
    940 or 940PR 2012 01-31-2016 11-02-2015
    940 or 940PR 2011 01-31-2015 11-02-2014
    940 or 940PR 2010 01-31-2014 11-02-2013
    940 or 940PR 2009 01-31-2013 11-02-2012
    940 or 940PR 2008 01-31-2012 11-02-2011
    940 or 940PR 2007 01-31-2011 11-02-2010

Pre-Computed Penalty

  1. If a penalty other than a delinquency, late payment or Federal Tax Deposit (FTD) penalty is included on the return and the notation "3465 Prepared" does not appear on the return take the following actions:

    1. Prepare a Form 3465 to request an assessment of the penalty.

    2. If the return remittance includes an amount applicable to all or part of the penalty referred to above, indicate on the Form 3465 that this portion of the remittance is available for application to the assessment.

    3. Enter CCC "X" to freeze the refund until the assessment for penalty posts to BMF.

    4. Enter CCC "R" when an assessment of fraud penalty is shown. Notate on the return "Form 3465 Prepared" and route the Form 3465 to Accounts Management.

Electronic Filing

  1. The following instructions apply to Electronically Filed returns:

    1. Since all validity and consistency checks are performed up front during the transmission process, there should be minimal fall out to ERS;

    2. If an Electronic record appears in your error inventory, please take the following steps:

      If... Then...
      You are able to correct the error condition, Make the correction following the procedures within this IRM.
      You are unable to resolve the error condition for the Electronic record,
      1. Take a screen print and give it to your manager.

      2. The manager will contact the Planning and Analysis Staff Analyst responsible for Error Resolution who will contact and forward the documentation to the Unemployment Return (Electronic) Program Analyst at Headquarters.

        Note:

        A Knowledge, Incident/Problem, Service and Asset Management (KISAM) Alert may be required to notify Headquarters management and/or to correct current programming. The Planning and Analysis Staff Analyst should contact the Unemployment Return (Electronic) Program Analyst at Headquarters first, prior to issuing any KISAM Alert, to attempt to resolve the problem in a timely manner. Follow local procedures for issuing the KISAM Alert to Headquarters.

  2. Form 940 originally input by electronic filing come out on ERS for correction.

  3. The corrections are identical to corrections made for paper input documents.

    1. Electronic Filed error corrections are made by referring to a computer printed facsimile document.

    2. These facsimile documents have the Electronic Filed Error Codes printed in the top left corner of the return.

  4. Electronic Filed DLNs contain Document CODE 39.

♦Refund Returns - 45 Day Jeopardy and Ten Million Dollar Refunds♦

  1. This section explains the procedure for issuing refunds when the 45 Day interest free period is about to expire or when the amount of refund is over ten million dollars.

  2. Document Perfection and ERS are responsible for identifying refunds and for initiating requests for manual refunds.

    Note:

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

  3. Action Code 341 should be input by Code & Edit to show that a manual refund is needed.

  4. If these are not identified in Code & Edit, ERS examiners need to be aware of the following criteria:

    If... Then...
    The processing date is more than 20 days after received date or return due date (whichever is later), and the 45 day interest free period is about to expire 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.

    1. Input AC 341.

    2. Attach Form 4227 (or other appropriate routing slip) and give to the manager.

    The refund is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ,
    1. Input AC 341.

    2. Attach Form 12230, Expedite Processing Million Dollar Manual Refund, and give to the manager.

  5. Taxpayer Advocate Service (TAS) Initiated Manual Refunds - Any request for a manual refund that is hand walked by a Wage and Income Submission Processing (SP) liaison for a Taxpayer Advocate Service (TAS) employee as a manual refund, should be processed by a Lead Tax Examiner or designated tax examiner using the following procedures in the order listed:

    1. CCC "O" should be edited on the return and entered in 01CCC.

    2. Delete the CCC "Y" from Field 01CCC.

    3. Continue to process the return according to Error Code processing.

  6. Correspondence If the manual refund requires correspondence for missing or incomplete information, then do the following:

    1. Complete the appropriate correspondence request form and request all information that is missing or incomplete.

    2. Inform the W&I SP liaison of all information that is being requested.

    3. Suspend (SSPND) with appropriate suspense code and give the return back to the Wage and Income Submission Processing liaison.

    4. The Wage and Income Submission Processing liaison will contact the TAS employee to obtain the required information needed to complete the processing of the manual refund.

  7. Other Suspense Action If the return requires other suspense action, then do the following:

    1. Initiate suspense (SSPND) action according to the Error Code procedures.

    2. Inform the Wage and Income Submission Processing liaison the reason of the action taken.

    3. Give the return back to the Wage and Income Submission Processing liaison.

    4. The Wage and Income Submission Processing liaison will contact the TAS employee, who in turn, will take the necessary action to complete the processing of the manual refund.

  8. Assigning TPNCs/Math Error When a math error is identified, do the following:

    1. Assign the TPNC in accordance with the Error Code procedures.

    2. After all TPNCs have been assigned, inform the W&I SP liaison of the TPNCs issued.

    3. Suspend (SSPND) with appropriate code (suspense should be done at the generated error code) and give the return to the W&I SP liaison.

    4. The Wage and Income Submission Processing liaison will contact the TAS employee, who, in turn, will take the necessary action to complete the processing of the return.

  9. When Balance Due/Overpayment Math Error Code generates, do the following:

    1. Make a screen print of the Error Code Screen Display. Highlight the Computer Generated Refund Amount, and attach the print to the front of the return with the entity portion of the return visible.

    2. Enter the amount the taxpayer claimed as the amount they requested to be refunded back into Field 02B/R.

    3. Once return processing is complete, give the return, Form 12412, Operations Assistance Request and the ERS screen print to the W&I SP liaison.

  10. If Balance Due/Overpayment Math Error Code regenerates because the taxpayer made a math error when computing their refund, then do the following:

    1. Make a screen print of the Error Code Screen Display and highlight the Computer Generated Refund Amount.

    2. Attach the print to the front of the return with the entity portion of the return visible.

    3. Assign the appropriate TPNC.

    4. Once return processing is complete, give the return, Form 12412, Operations Assistance Request and the ERS screen print to the W&I SP liaison.

  11. Rejects Suspense Manual refunds that are hand walked by a W&I SP liaison that have been suspended should be processed as follows:

    1. Follow the specific instruction given by the W&I SP liaison regarding correspondence issues and the assignment of the TPNCs.

    2. Refer to Paragraphs 9 and 10 above.

Form 940, Form 940-PR and Form 940-EZ, Conversions

  1. The Form 940 and Form 940-PR were redesigned for Tax Years 2006 and subsequent.

  2. The Form 940-EZ became obsolete. Thus, all Form 940-EZ returns must be converted to a current year Form 940 return format.

Form 940-EZ Conversion

  1. The Form 940-EZ is obsolete must be converted to a current year Form 940 return format. All converted forms are processed through ISRP.

  2. Conversion of Form 940-EZ to Form 940.

    1. The following table enumerates the Form 940-EZ line conversion to Form 940.

      Line Item Description Line Number on Form 940-EZ Line Number on Form 940, Rev 2013 Transcription Line Title of Field Field Designator
      Amount of Contributions paid to state Unemployment Fund A N/A No N/A N/A
      Name of state where contributions are paid B 1a Yes State Code 01SC1
      Total payments to employees 1 3 No N/A N/A
      Exempt payments 2 4 No N/A N/A
      Payments of more than $7,000 3 5 No N/A N/A
      Add lines 2 and 3 4 6 No N/A N/A
      Total taxable wages 5 7 Yes Total Taxable Wages 02TTW
      FUTA Tax 6 12 Yes Total Tax Taxpayer 02TFT
      Total FUTA Tax Deposited 7 13 Yes FTD Credit Claimed Amount 02FCC
      Balance due 8 14 Yes Balance Due/Overpayment Taxpayer 02B/R
      Overpayment 9 15 Yes Balance Due/Overpayment Taxpayer 02B/R
      First Quarter Liability First Box in Part II 16a Yes Total Tax Liability Amount 02Q1
      Second Quarter Liability Second Box in Part II 16b Yes Total Tax Liability Amount 02Q2
      Third Quarter Liability Third Box in Part II 16c Yes Total Tax Liability Amount 02Q3
      Fourth Quarter Liability Fourth Box in Part II 16d Yes Total Tax Liability Amount 02Q4
    2. Form 940-EZ - All valid Codes should be transferred to Form 940 including 01SIC and 01RCD.

    3. Form 940-EZ - Circle out any ACTION CODES.

    4. Form 940-EZ - Staple the replacement Form 940 to the front of the original return.

    5. Form 940-EZ - Follow local submission processing campus procedures for renumbering.

  3. Using CC SSPND 61X, suspend to Rejects.

Form 940 (Revision 2005 and prior) Conversion to Current Year

  1. Forms that have been converted will be processed via ISRP.

  2. Conversions of prior year returns to Form 940 will be performed by Code & Edit.

  3. In addition, some converting will be necessary as indicated below when a credit reduction state is involved.

    If... Then...
    The taxpayer completed Part I, Line 6, signifying a Credit Reduction State, Part I, Line 6 should be edited to Form 940 Schedule A and entered into the appropriate Field in Section 03, 04, or 05.
    Part I, Line 7 should be entered on Form 940, Line 11 (current year revision).
    If the taxpayer has not identified the Form 940 Schedule A Credit Reduction State and it's associated FUTA Taxable Wage amount, SSPND 211 using Letter 142C (or local letter as permitted by the campus) correspond for a completed Form 940 (current year revision) and Form 940 Schedule A.

ERS Error Codes

  1. This section provides general information regarding ERS Error Codes.

Error Codes

  1. An error code is computer generated to a record and assigned in numerical order.

  2. Error codes are displayed on ERS by priority. The lower number error codes appear first.

  3. Error codes require one of the following actions to be taken by the tax examiner:

    1. Correct the invalid field/math condition,

    2. Assign a TPNC in the appropriate field,

    3. Suspend the document with the appropriate Action Code, or

    4. Verify and clear the error with a "C" Code in the appropriate Clear Field.

Explanation of Priority Types

  1. ERS will identify errors according to type and priority. The record heading will show the type of error.

  2. Priority I are Action Code Errors. When an Action Code is assigned to a return, it displays as a Priority I error.

  3. Priority II are Section Errors (ISRP and Terminus).

    1. ISRP (transcription - error) - An error detected by ISRP displays as an ISRP Section Error,

    2. Terminus - An alpha transcribed in a numeric field or vice versa and a section with variable length fields containing an erroneous size field displays as a terminus section error,

  4. Priority III are Field Validity Errors. Any field failing to meet the requirements for that field displays as a Priority III error.

  5. Priority IV are Math and Consistency Errors. When a record is assigned an Error Code because of a math error or an inconsistency between fields, it displays as a Priority IV error.

  6. There may be records where the tax examiner finds that programming has not furnished a section that is needed to solve an error. If this happens, the tax examiner will enter the section using CC GTSEC and enter the missing data. It should be reported to Headquarters for correction of the display.

Priority I Action Code Errors

  1. This section contains Priority I Action Code Error information for Form 940 and Form 940-PR.

Priority I Guidelines

  1. All records that are assigned an Action Code by Code & Edit will be displayed as a Priority I Error.

  2. If the Action Code is valid and other than 001, it will be placed in the Suspense Inventory.

    Note:

    If the Action Code is invalid or 001, it will be placed in the Error Inventory.

Priority I Error Inventory Correction Procedures

  1. The Error Screen Display will show the following:

    Note:

    The items listed will display in the header portion of each Error Record. Previously assigned TPNCs will also be displayed in the header information.

    • Document Locator Number (DLN)

    • Taxpayer Identification Number and Name Control

    • Processing Date

    • ISRP/RRPS (literal printed if a document was processed through the Residual Remittance Processing System)

    • ERS Status Code

    • Command Code

  2. Before making corrections do the following:

    1. Make sure the DLN on the screen display matches the DLN of the document.

    2. Make sure the taxpayer's entries are on the correct lines of the tax return.

    3. Check and correct all coding and transcription errors in each section.

    4. Make certain all sections and fields are transcribed.

    If... Then...
    Suspense action is required,
    1. Use CC SSPND and the correct Action Code.

    2. If no suspense action is needed, enter "000" in the Clear Code Field and transmit.

    The BOB Resolution function has added a document to a block by entering only the name control and TIN, Action Code 001 will be computer - generated,
    1. Error Resolution must enter the remainder of the record.

    2. Enter CC GTSEC for each record section that should contain data.

    3. Add the required data. When all of the sections have been entered, clear the Action Code by entering "C" in the Clear Code Field.

  3. Money Amounts - When you correct a screen display, be sure money amounts have been transcribed correctly in dollars and cents.

  4. Check the displayed Action Code for validity. See Exhibit 3.12.154-12, Action Code Chart for valid Action Codes.

    1. Also check the return to verify that the Action Code assigned is appropriate and whether it has been transcribed properly.

    2. Remember to use CC GTSEC before clearing the data from the terminal on "AC 001" .

Priority I Suspense Inventory Correction Procedures

  1. Determine if the record can now be resolved with the information available. If so, make the corrections to the record using CC DLSEC or CC GTSEC.

  2. After all corrections are made and transmitted, enter a "C" in the Clear Code Field and transmit.

    1. If there are other errors in the record, they will be displayed.

    2. If the error is resolved, release the document to files.

  3. The No Reply instructions are furnished on the No Reply Chart. See Exhibit 3.12.154-6, No-Reply / Undeliverable Chart.

  4. If the error cannot be resolved without additional information or clearance, re-suspend with the appropriate Action Code using CC SSPND.

    1. Enter the new Action Code and date on both copies of the charge-out (Form 4251) (a new charge-out is not issued for the re-suspended record, if available.)

    2. Give the return with attached charge-outs to the Suspended Documents File Unit.

  5. A record may also require rejecting from ERS, either for re-input or voiding.

    1. A record being re-input may be re-input with the same Document Locator Number (DLN) or a new DLN. Notate on charge-out,

    2. A new charge-out will be issued for the Rejected Document.

    3. Give the return to the Suspended Document Unit.

    4. On the screen, use the appropriate CC RJECT or CC NWDLN and enter the appropriate Reject Action Code.

  6. The following table contains Priority I error instructions:

    If... And... Then...
    Priority I Error, Action Code 21X, Correspondence Status 321 For correspondence with No Reply, follow the No Reply instructions before clearing the Priority I Error. See Exhibit 3.12.154-6, No Reply / Undeliverable Chart.
    Priority I Error, Action Code 21X, Correspondence Status 421 Input the information received in the reply before clearing the Priority I Error.
    Priority I Error, Action Code 310, Statute Control Status 331 or 431 Document will be furnished to the tax examiner with instructions from Statute Control.
    1. If the Statute Control Group indicates clearance, use CC GTSEC for Section 01, verifying 01TXP (Tax Year) and entering "W" in 01CCC for Form 940 returns.

    2. If document is to be voided:

      • Use CC RJECT 640 for non-remittance documents.

      • Use CC NWDLN 640 for remittance documents.

      • Refer to IRM 3.12.38, Error Resolution, BMF General Instructions for the DLN of the payment posting voucher (Form 3244) to post the remittance to the year and MFT of the voided Statute document.

    3. Transmit and then clear the Priority I Error.

    Priority I Error, Action Code 320, Entity Control. Status 432 Document will be furnished to the tax examiner with instructions from Entity Control.
    1. Follow instructions from Entity Control before clearing the Priority I Errors.

      1. Enter the correct fields using CC GTSEC for Section 01 if the return was referred to Entity for the Name Control or EIN.

      2. When Entity assigns an EIN, enter the assigned date in the Correspondence Received Date (CRD) field, (01CRD).

    Priority I Error, Action Code 33X, Review/Routing to CI Status 433 Document will be referred to CI before giving to tax examiners.
    1. If instructed to void the record and refer the Form 940 or Form 940-PR to CI, use CC RJECT or CC NWDLN, AC 640, following CI instructions.

    2. CC NWDLN 640 is for the voided Form 940 or Form 940-PR with a remittance.

    3. The new DLN is the DLN of the payment posting voucher that posts the remittance to the year and MFT of the voided document sent to CI or URF if CI instructs that the money is to be applied to the Unidentified Remittance File.

    4. If you continue processing Form 940 or Form 940-PR, follow CI instructions before clearing Priority I Error.

    Priority I Error, Action Code 35X, IDRS Research Status 435 AC 351 indicates IDRS was not available when the record was on the Error inventory.
    1. If after researching with CC NAMEB or CC NAMEE and the EIN is located - enter in 01EIN after using CC GTSEC for Section 01.

    2. If after researching with CC NAMEB or CC NAMEE and the EIN is NOT located, re-suspend using CC SSPND with AC 320 for referral of a document to Entity for EIN.

    3. Action Codes "352" , "354" or "355" , - if after researching you are unable to resolve, re-suspend to Entity with AC 320.

    4. AC 353 will not be used on Form 940 or Form 940-PR, unless correspondence is necessary and there is no address.

    Priority I Error, Action Codes 420 through 460, Management Suspense Status 442 Management may direct either that you work or re-suspend the record.
    1. If re-suspending, use CC SSPND and the Action Code as directed.

    2. When instructed to work the record, clear the Priority I Error with the "C" Clear Code, so if other errors exist in the record, they can be displayed.

    Priority I Error, Action Code 480, Early Filed Final Suspense Status 448 See IRM 3.12.154.7.4.2, Field 01TXP Correction Procedures and IRM 3.12.154.11.7.2, Correction Procedures (EC 007).
    Priority I Error, Action Code 490, System Problem Status 349 Instructions are needed from the Computer Branch through your supervisor for working. If instructions are not furnished for Status 349, you may be advised to re-suspend, using CC SSPND 490.
    Priority I Error, Action Code 490, System Problem Status 449 Once you clear AC 490, if no other error exists in the record, the record will go to good tape. It is imperative to await instructions from the Computer Branch.
    Priority I Error, Action Code 51X, Missing Document Status 451 or 351
    1. The charge-out issued for a missing document may be used for the initial search.

    2. It may also be used for subsequent searches by marking Second Request, Third Request, etc. on the charge-out returned from Files.

    3. A special search is continued as indicated in IRM 3.12.38, Error Resolution, BMF General Instructions until a document is located or record is rejected from ERS with AC 670.

    4. If the missing document is a non-remittance document, use CC RJECT 670.

    5. If the missing document is a remittance document, use CC NWDLN 670 and the DLN of Form 3244 for the payment or if unable to designate where remittance should be applied, use CC NWDLN 670 URF.

    l. Priority I Error, Action Code 6XX, Rejects  
    1. Review the document to see if you agree with recommended reject action.

    2. If so, delete with CC RJECT or CC NWDLN and the appropriate Action Code.

    3. If you determine not to delete the record, clear the Priority I Error with the "C" Clear Code deleting the Action Code so that other errors that might exist can display.

    Priority I Error, Action Code 700, Duplicate Block DLN   Clear the Priority I Error with the "C" Clear Code so that other errors in the record might display.
    Priority I Error, Action Code 900, Unpostable Records  
    1. The literal for the AC 900 will include the Unpostable Code and the Unpostable Reason Code.

    2. For AC 900 returns, determine if the record can be resolved. If so, use CC GTSEC for the desired section(s) and make the correction(s).

    3. After all corrections are made and transmitted, enter a "C" in the Clear Field. Once the AC 900 is cleared, all other errors on the record will be displayed for correction.

    4. If no other errors exist, the record will clear the screen. The record has never posted to Master File.

    5. Fields displayed will be as processed before being an Unpostable. The record may contain editing and transcription errors.

    6. All Clear Codes and TPNCs assigned when previously processed will be deleted from the record and will need to be assigned again, if still applicable.

Priority II Section Errors

  1. Errors which are identified as Priority II Errors are: ISRP, SCRIPS, and Terminus Errors.

  2. These errors and the correction procedures are explained in this section.

Priority II - ISRP or SCRIPS Errors

  1. An edit error is a section with an error detected by ISRP or SCRIPS.

  2. Edit errors are coded as follows:

    Code Error
    "1"
    1. Split screen transmission.

    2. Key Verifier attempted to change Check Digit.

    3. Key Verifier changed 4 or more digits of TIN.

    4. The Original Entry operator entered required section as missing.

    "2" Not used at this time.
    "3" Invalid section ending point.
    "4" Invalid field length.
  3. Questionable Section - the same section was input more than once or a section was entered out of sequence. The computer program will drop all duplicate sections and display the first one encountered.

  4. Mainline Problem - two sections were input (04 and 05 input) to generate Section 02.

    1. The computer cannot determine which input section to use.

    2. When displayed, this type of error will display all input fields, except the Remittance in Section 01 of the section in error,

    3. Transcribed data will be present, and

    4. Computer-generated data will not be present.

ISRP or SCRIPS Errors - Correction Procedures
  1. Check the fields with the return and do the following:

    If... Then...
    Check all fields of the section when this condition exists, Verify that fields are entered as coded.
    No correction is needed, or once the section is correct, Go to the bottom of the screen and transmit.
    The section needs to be deleted, Enter CC DLSEC with the section number.

Priority II Terminus Error

  1. This error is caused by a section with variable length input fields containing an erroneous size field.

  2. When displayed, this type of error will show all input fields of the terminus section.

    1. Transcribed data will be present.

    2. Computer-generated fields or Remittance Field for Section 01 will not be present.

Terminus Error - Correction Procedures
  1. Check all fields and make the necessary corrections.

    If... Then...
    No correction is needed, or once the section is correct, Go to the bottom of the screen and transmit.
    The section needs to be deleted, Enter CC DLSEC with the section number.

Priority III Field Errors

  1. Any field that does not meet the requirement(s) for that field will be shown as a Priority III Error.

Types of Field Errors

  1. Some reasons for this type of error are as follows:

    1. Non-alpha character in an alpha field.

    2. Blank space in a numeric field.

    3. Blank in the first position of an alpha field.

    4. Non-numeric character in a numeric field.

    5. A required field is blank.

    6. On re-input–the field length exceeds the maximum allowable characters.

    7. Form 940 and Form 940-PRSection 02, 03, 04, and 05 money fields, with the exception of the balance due field, have negative amounts.

  2. All fields with a Priority III error will be displayed in the order encountered in the record.

  3. The Action Code and TPNC will never be displayed as a Priority III error.

  4. Follow the correction procedures below for an Overflow condition:

    If... Then...
    The money amount on a return exceeds the maximum field length allowable.
    * "Overflow Field,"
    1. Enter the maximum amount allowable on the original return.

    2. Recompute the tax data and enter the corrected amount(s) on the screen display and the return.

    3. DO NOT SEND A TPNC.

    4. Annotate on the original return, "Dummy Return prepared due to an overflow document."

    5. Prepare a "Dummy Return" by computing and entering the remaining overflow money amount(s) for all applicable T-lines. Enter the following information on the "Dummy Return" :

      • Entity data from the original return,

      • CCC "G"

      • In the signature area write "Signature on Original return. "

      • The DLN from the original return.

      • On the top of the return write "Prepared from Overflow Document."

    6. Route completed "Dummy Return" to Receipt and Control on a routing slip to be numbered and processed.

Section 01 Fields

  1. This IRM section identifies the Section 01 field designators for Form 940 and Form 940-PR.

Field Designators - Section 01

  1. Section 01 information is as follows:

    • See Exhibit 3.12.154-1, Form 940 (Revision 2017 and Form 940 Schedule A (Revision 2017).

    • See Exhibit 3.12.154-2, Form 940-PR (Revision 2017 ) and Form 940 Schedule A-PR(Anexo A (Formulario 940-PR)) Revision 2017).

    • Form 940 ( Revision 2005 and prior).

    Field Designator Field Length Title of Field LOCATION on Revision 2006 and subsequent
    01NC 4 Name Control/Check Digit Entity Portion
    01EIN 9 Employer Identification Number Entity Portion
    01TXP 4 Tax Year Entity Portion
    01CCC 10 Computer Condition Codes Form 940: Immediately to the right of the line that states "You MUST fill out both pages of this form and SIGN it."
    Form 940PR: Immediately to the right of the line that states: "Usted DEBE llenar ambas paginas de esta planilla y luego FIRMARLA"
    01RCD 8 Received Date Center Portion of Return
    01PIC 1 Penalty and/or Interest Code No longer edited by Code & Edit
    01SC1 2 State Code Part 1, Line 1a
    01ABC 1 ABC Indicator Not Applicable.
    01CAF 1 Centralized Authorization File Not Applicable
    01SIC 1 Schedule Indicator Code (SIC) In the right margin, next to the line that separates the entity information from Part 1
    01MSB 1 Multi-State Filer Check Box Indicator Part 1, Line 1b
    01CRB 1 Credit Reduction Check Box Indicator Part 1, Line 2
    01SRI 1 Form 940 Schedule R Indicator An indicator "R" on the right margin next to Line 6, "Subtotal" .
    01CRD 8 Correspondence Received Date (CRD) Far left of the address
    01ARN 1 Applied Refund Indicator Part 4, After Line 15
    01CBI 1 Third Party Designee Indicator Part 6
    01CBP 5 Third Party Designee Personal Identification Number (PIN) Part 6
    01PSN 9 Paid Preparer's SSN or PTIN Part 7, below the taxpayer signature line
    01PEN 9 Firm's EIN Part 7, below the taxpayer signature line
    01PTN 10 Paid Preparer's Phone Number Part 7, below the taxpayer signature line

Field 01NC - Name Control/Check Digits

  1. Name Control:

    1. This field is located in the Entity Section of the return and is underlined by Code & Edit.

    2. Each of the four positions must have an alpha, numeric, hyphen, ampersand or a.

    3. The first position cannot be blank.

  2. Check Digits

    1. This field is located above the Entity Section of the return.

    2. This is also a four-position field.

    3. There must be blanks in the first two positions and a letter of the alphabet in the third and fourth positions.

Field 01NC - Invalid Conditions
  1. The Name Control field is invalid if any of the following occurs:

    1. The first position is not an alpha or numeric.

    2. The "2nd" , "3rd" or "4th" position is not an alpha, numeric, hyphen, ampersand or blank.

    3. There are any intervening blanks between characters.

    4. Letters "E" , "G" or "M" are present in the check digits.

Field 01NC - Correction Procedures
  1. Check the field with the return and do the following:

    If... Then...
    Data was transcribed incorrectly, Enter the correct data. Check digits have priority over the Name Control.
    Name control is not available, Use CC ENMOD, CC NAMEB, CC NAMEE and/or CC INOLE to secure the name control.
    Unable to secure name control, Refer the document to Entity Control and suspend the record with "AC 320" . See Name Control Job Aid (Doc. 7071A) for methods of determining name controls if the Name Control is obviously wrong. Otherwise, follow instructions above.

    Note:

    See IRM 3.12.154.10.1.2, Field 06CON, - Correction Procedures.

Field 01EIN - Employer Identification Number

  1. Description - The EIN is a number assigned by IRS for identification of a business tax account.

  2. This field is located in the Entity Section of the return.

Field 01EIN - Invalid Condition
  1. The EIN is invalid if one of the following conditions is present:

    1. It is not numeric.

    2. It is less than nine characters.

    3. The first two digits are: "00" , "07" , "08" , "09" , "17" , "18" , "19" , "28" , "29" , "49" , "78" , "79" , or "89" .

    4. It is all "zeros" or all "nines" .

Field 01EIN - Correction Procedures
  1. Check the field with the return and do the following:

    If... Then...
    The EIN was transcribed incorrectly, Enter the correct EIN.
    The EIN was transcribed correctly, Search for another valid EIN on the return or attachments and enter the correct number.
    A correct number cannot be determined,
    1. Research using CC NAMEB, CC NAMEE, or CC INOLE for the correct number.

      1. If a valid EIN is found, enter the correct number.

      2. If EIN is changed from the one the taxpayer used, issue Letter 3875C as a non-response letter to the address on the return. Continue processing the return.

        Note:

        Do not send Letter 3875C if three or less digits of the EIN are transposed, different or missing or when INOLES indicates the account has been "merged to" or "merged from" or the EIN on the return is the taxpayer's SSN and research shows there is no valid entry on Master File for that EIN.

    More than one number is found or if unable to determine valid EIN, Suspend with AC 320 for referral to Entity Control.
    Entity assigns an EIN.
    1. Enter the EIN in Field 01 EIN.

    2. Enter the Entity Assigned Date in Field 01CRD if the date is after the return due date.

Field 01TXP - Tax Year

  1. Description - This field is located in the Entity Section of the return and consists of the four digits for the Tax Year, for example, 2017.

Field 01TXP - Invalid Conditions
  1. This field is invalid if one of the following conditions is present:

    1. It is not all numeric.

    2. It is not in YYYY format.

    3. It is all blank.

    4. It is greater than the processing date.

Field 01TXP - Correction Procedures
  1. Check the return and/or attachments for the correct Tax Year and do the following:

    If... Then...
    The Tax Year cannot be determined, Research BMFOLI to see which year has not yet posted. If unable to determine the tax year after researching BMFOLI, enter the current year being processed as the tax period.
    The taxpayer is attempting to pay more than one year's tax on the return and you are unable to determine the tax and wage amount for each year, Correspond with the taxpayer and suspend with AC 211 for Form 940 or AC 215 for Form 940-PR.
    Early Filed (the taxpayer indicates a Tax Year for a future year) - Final and complete return,
    1. Enter CCC "F"

    2. Enter AC 480 to suspend the return.

    Early Filed - Final and incomplete return
    1. Correspond for the missing data and suspend with AC 211 for Form 940 or AC 215 for International returns.

    2. Input CCC "F" , if necessary, depending on the taxpayer's response.

    3. When the correspondence is received, enter AC 480 to suspend the return until the upcoming January according to the taxpayer's response.

    Early Filed - Non-Final return

    Note:

    This procedure includes early filed completeCIS returns.

    1. Suspend with AC 211 for Form 940 or AC 215 for International returns.

    2. Correspond using Letter 142C (or, a local letter paragraph, as permitted by the campus) for explanation for early filing.

      Exception:

      If the return is prepared under IRC 6020(b)) by a Revenue Officer, do not correspond with the taxpayer.

    3. If No Reply, then re-suspend with AC 480. If this is an overpayment/refund return, enter CCC "X" to freeze the refund.

    4. If the current date is November 1 through December 31, do not correspond using AC 211 for Form 940 or AC 215 for International returns. SSPND 480 as an Early Filed return.

    See Exhibit 3.12.154-6, No Reply / Undeliverable Chart.

Field 01SCE - Entity State Code

  1. Field 01SCE will no longer be used.

Field 01CCC - Computer Condition Codes

  1. Field 01 will take up to 10 Computer Condition Codes.

  2. This field can be found in the following locations on the tax form:

    Form... Location...
    Form 940 (Revision 2006 and subsequent) Immediately to the right of the line that states: "You MUST fill out both pages of this form and SIGN it." See Exhibit 3.12.154-1, Form 940 (Revision 2017 and Form 940 Schedule A (Revision 2017).
    Form 940-PR (Revision 2006 and subsequent) Immediately to the right of the line that states: "Usted DEBE llenar ambas paginas de esta planilla y luego FIRMARLA" . See Exhibit 3.12.154-2, Form 940-PR (Revision 2017) and Form 940 Schedule A-PR (Anexo (Formulario 940-PR)) (Revision 2017).
    Form 940 (Revision 2005 and prior) Center of the bottom of Page 1.
    Form 940-PR (Revision 2005 and prior) Center of the bottom of Page 1.
  3. Computer Condition Codes (CCC) are used to identify a special condition or computation for the computer. See the following table:

    CCC Definition Validity/Consistency Checks Remarks
    "C" Unexplained exemption   Not Applicable. This code will no longer be used.
    "D" Reasonable cause for failure to make timely payments, Must have a received date (Error Code 028) Cannot have a pre-computed penalty.
    "E" Credit Election Cannot be "F" , "G" , or "S" Coded. (Field Error) Computer Generated if 01ARN is blank and 02 B/R has an overpayment.
    "F" Final Return Cannot be coded "G" , or "E"  
    "G" Amended Return
    1. No other CCC codes allowed except "W" and "3"

    2. Must have received date. (Error Code 028)

    3. All fields must be blank except 01NC, 01EIN, 01TXP, 01CCC, 01RCD, 01CRD (Error Code 010)

     
    "J" Reasonable cause for Waiver of FTD penalty. Also used when TP notates "state" , "city" , or "county" , in the entity area of the return. Cannot have pre-computed FTD penalties (Error Code 038)  
    "O" Module Freeze   Manual Refund
    "R" Reasonable cause for delinquency.
    1. Must have received date. (Error Code 028)

    2. Cannot be "4" Coded (Field Error)

    3. Can not be "7" coded. (Field Error)

    Cannot have a pre-computed penalty.
    "S" Overpayment Refund Cannot be "E" or "G" Coded (Field Error) Computer Generated if 01ARN is "2" and 02 B/R has an overpayment.
    "W" Cleared by Statute Control Must be present on Statute cases (Error Code 001)  
    "X" Credit Freeze    
    "3" No Reply Received - Suppress Credit Interest Must not contain Correspondence Received Date (Error Code 073) Used to suppress credit interest when No Reply is received to correspondence
    "4" Return prepared by IRS under IRC 6020(b). Cannot be "R" Coded (Field Error) Will have notation about IRC 6020(b) and the signature of revenue agent or officer.
    "5" Successor Employer   Box "b" should be checked to signify that the taxpayer is entitled to special credits as a Successor Employer.
    "7" Reasonable cause statement denied
    1. Cannot be both "D" coded and "R" coded (Field Error)

    2. Must have a received date (Error Code 028)

    Code used when a taxpayer provides unacceptable reason(s) for failing to file or pay tax timely.
    "9" No Payments to Employees in 2017   Box "c" will be checked to signify that no payments were made to employees.
Field 01CCC - Invalid Conditions
  1. This field is in error if any one of the following is present:

    1. The entry is other than "C" , "D" , "E" , "F" , "G" , "J" , "O" , "P" , "R" , "S" , "W" , "X" , "3" , "4" , "5" , "7" , or " 9" .

    2. CCC"G" is present and any other CCC except "W" and/or "3" is present.

    3. CCCs"E" and "F" are used together.

    4. CCCs"E" and "S" are used together.

    5. CCC"7" is present and CCCs"D" and "R" are present.

    6. CCC"4" is present and CCC"R" is present.

Field 01CCC - Correction Procedures
  1. Check the return for the CCC and do the following:

    If... Then...
    The CCC was transcribed incorrectly, Enter the correct CCC.
    Other CCCs are present with "G" , "W" , or "3" .
    1. If the CCC "G" is needed, delete the other CCC.

    2. If the CCC "G" CCC is not needed, delete it and leave the other CCC.

    Note:

    Review all sections and input data where necessary. Research BMFOLT for TC 150. If TC 150 is present, CCC "G" must be present. If there is no TC 150, review all sections and input data where necessary. Delete CCC "G" .

    CCCs "E" and "S" are present,
    1. Verify box on Line 10 Field 01ARN.

    2. If applied to the next return box is checked, then enter CCC "E" .

    3. If the refund box is checked, then enter CCC "S" .

    4. If no box is checked, and an overpayment is shown on the return, enter CCC "E"

    CCCs "E" and "F" are present,
    1. Determine if the return is a Final.

    2. If it is a final return, delete "E" .

    3. If there is no indication of a final return, delete the "F" .

    CCCs "D" and "R" are present with CCC "7" , Determine which is correct and delete the incorrect CCC.
    Both CCC "4" and "R" are present,
    1. If the return was prepared under IRC 6020(b), delete the "R" .

    2. If the return was not prepared under IRC 6020(b), delete the "4" .

    CCC "9" is present and Line 3 or Line 7 (e.g., Line 7a if Revision 2011) has an amount greater than zero, Delete the "9" .

Field 01RCD - Received Date

  1. The Received Date field is date stamped by Receipt and Control or perfected by Code & Edit on the center of return.

  2. Timely filed Form 940 Series returns are not date stamped by the Receipt and Control Branch.

  3. If the return is received after the due date of the return, Receipt and Control stamps the Received Date and attaches the envelope to the return per the IRM 3.10.72, Campus Mail and Work Control, Receiving, Extracting and Sorting.

    Note:

    The due date of the Form 940 is January 31 of the year following the tax year.

  4. The Received Date is required when the return is delinquent, amended, a Penalty and Interest Code is present, or a CCC"D" , "G" , "R" , or "7" is present.

  5. If all positions in the field are blank, it would not cause an invalid condition.

Field 01RCD - Invalid Conditions
  1. The Received Date field is invalid if any of the following occur:

    1. Not in YYYYMMDD format.

    2. Before 19620101 - Form 940.

    3. Later than the current processing date.

    4. Not all numeric (if present).

    5. Not within the valid month, day range as shown below:

      Month Day
      01 01-31
      02 01-28 (29 leap year)
      03 01-31
      04 01-30
      05 01-31
      06 01-30
      07 01-31
      08 01-31
      09 01-30
      10 01-31
      11 01-30
      12 01-31
Field 01RCD - Correction Procedures
  1. Received Date - Compare the screen entry to the entry on the return and do the following:

    If... Then...
    The field was transcribed incorrectly, Correct the screen entry.
    It appears the incorrect year was used (i.e., 20170115 instead of 20180115) and other information (julian date, postmark date, and/or signature date) indicates the received date should be a current year, Change the received date year to the current year.
    Multiple dates are on the return, Use the earliest date.

    Note:

    When you enter a received date, if the return was filed at a Service Center other than the one at which it is supposed to be filed, enter the earliest received date regardless of where it was filed.
    OSPC Only: If a foreign-address return was filed with an IRS office in the foreign country instead of OSPC, enter the foreign-country received date (this includes U.S. Possessions).

    The return has been held in suspense, Circle all but the earliest date.
    The Received Date is not needed, i.e., the return is neither delinquent nor does it have a CCC "D" , "G" , "R" , or "7" , Delete the entry from Field 01RCD.
    The Received Date is not present on the return, or the date is illegible/invalid, Determine the Received Date using the following priorities:
    1. Earliest legible postmark date of the U.S. Post Office or a Private Delivery Service or a foreign postmark date.

      Note:

      If an envelope is not attached, use the postmark date stamped on the face of the return.

    2. Service Center Automated Mail Processing System (SCAMPS) digital date.

    3. Revenue Officer's signature date.

    4. Signature date, if within the current year

    5. Julian date minus 10 days.

    6. Current date minus 10 days.

  2. The Received Date should never precede the beginning of the Tax Year (Error Code 007).

Field 01PIC - Penalty and Interest Code

  1. This field is no longer edited by Code & Edit.

  2. The "P" / "I" Code was used to alert the computer to do a computation for penalty and/or interest if the return is received ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

Field 01PIC - Invalid Conditions
  1. Penalty Interest Code- Entry was invalid if it is other than "1" or blank.

Field 01PIC - Correction Procedures
  1. Penalty Interest Code- Compare the screen entries with the return and do the following:

    If... Then...
    There was a transcription error, Change the field to the correct entry.
    Pre-computed delinquency penalty and/or interest is shown in the Penalty and Interest box or area, and the return is received ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , Enter Code "1" .

Field 01SC1 - State Code

  1. Description - The State Code Field for a single state filer is located in Part 1, Line 1a. for Form 940 and Form 940-PR (Revision 2006 and subsequent).

  2. The state codes are composed of two alpha characters.

  3. There are 53 valid codes, as shown below. See Exhibit 3.12.154-8, Entity State Code and Zip Code Chart.

Field 01SC1 - Invalid Condition
  1. The State Code Field is invalid if one of the following occurs:

    1. The State Code in the State Code field is not a valid abbreviation for one of the 50 U. S. States, District of Columbia, Puerto Rico, or the U.S. Virgin Islands. See Exhibit 3.12.154-7, State Codes.

    2. The State Code is a foreign country.

Field 01SC1 - Correction Procedures
  1. State Code Field -Compare the screen entry with the entry on the return and do the following:

    If... And... Then...
    The field was transcribed incorrectly,   Correct the screen display from the return.
    Box 1a (01SC1) entry is an invalid state code,   Enter the valid state code from the return.

    Note:

    If the return is non-taxable, enter "ZZ" in field 01SC1 only for a credit reduction state.

    Field 01SC1 is blank or the State Code in Box 1a (01SC1) is a foreign country other than a U.S. Possession, AA, AE, or AP, address is present on the entity of the return,
    See IRM 3.12.154.1.26.2, APO/DPO/FPO Address.
    Enter the state from the entity address on page 1 of the return.
    Field 01SC1 is blank or the State Code in Box 1a (01SC1) is a foreign country other than a U.S. Possession, No AA, AE, or AP address is present on the entity of the return,
    1. Delete the entry in Fields 01SC1, 01MSB and 01CRB, if present for the single invalid credit reduction state.

    2. Also, delete the invalid credit reduction state code and associated amount from Section 03, 04, or 05, as applicable, if multi states are involved.

    A valid State Code cannot be determined from the return or attachments,   Use "CC SSPND" with" AC 650" and transship to the Ogden Submission Processing Campus (OSPC).
    OSPC Only: Delete entry of foreign country and/or U.S. possessions (Exceptions: Puerto Rico and Virgin Islands).
    The address on the return is a foreign address from "AS" (American Samoa), "FM " (Federated States of Micronesia), "GU" (Guam), "MH" (Marshall Is.)," MP " (Northern Mariana Is.), or "PW" (Palau), but not US Virgin Island (VI) or Puerto Rico (PR),   Delete the State Code from Field 01SC1 if present.
    The State Code in Box 1a (01SC1) is blank, Box 1b. (01MSB) is not checked
    1. If Line 9 (02ADJ) entry is blank, SSPND 211 and correspond for Line 9 amount.

    2. If Line 9 (02ADJ) entry is present, take no action and continue to process the return.

Field 01SC1 - State Code Field (Form 940-EZ)

  1. All Form 940-EZ returns must be converted to Form 940 current year format. See IRM 3.12.154.7.9, Field 01SC1 - Sate Code correction procedures.

Field 01ABCD - ABCD Indicator

  1. The ABCD Indicator will no longer be edited. The ABCD Indicator will not be used.

Field 01ABCD - Invalid Condition
  1. This field is invalid if it is not "Blank" .

Field 01ABCD - Correction Procedures
  1. Compare the screen entry with the entry on the return.

  2. If code is present, delete the entry from Field 01 ABCD.

Field 01CAF - Central Authorization File (CAF)

  1. Form 2848, Power of Attorney and Declaration of Representative and Form 8821, Tax Information Authorization (TIA) are forwarded to the Central Authorization File Unit (CAF) by Code & Edit function.

  2. Editing of Central Authorization File Codes by Code & Edit is no longer necessary. When the CAF Code was being edited, the field 01CAF had a value of 1, 2, 3, 4, or 7 depending on how much authority the CAF representative had received from their client.

  3. If a Form 2848 or Form 8821 is still attached to the return, detach and route to the CAF function.

  4. If a "General Power of Attorney" or a "Durable Power of Attorney" or "Tax Information Authorization" is submitted on any document other than Form 2848 or Form 8821, leave it attached to the return. Do not detach. Do not route to the Central Authorization File function.

Field 01CAF - Invalid Condition
  1. This field is invalid if the entry is other than "1" , or is not blank.

Field 01CAF - Correction Procedures
  1. Compare the return to the screen entry with the entry on the return.

    If... Then...
    There is a transcription error, Enter the correct data.
    A valid code is not present on the return, Delete the entry.

Field 01SIC - Schedule Indicator Code

  1. The Schedule Indicator Code (SIC) is used to notify the computer that the Record of Quarterly Federal Tax Liability (ROFTL) is incomplete or unnecessary. SIC 1 would be edited when:

    1. Total FUTA Tax is ≡ ≡ ≡ ≡ ≡ or less.

    2. The ROFTL Total is ≡ ≡ ≡ ≡ or less.

    3. The ROFTL Total is ≡ ≡ ≡ or more.

    4. There is a negative amount in the ROFTL.

    5. The ROFTL is blank.

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

    7. The Total FUTA tax is more than ≡ ≡ ≡ ≡ and the Total in the ROFTL is more than ≡ ≡ ≡ ≡ , but there is a difference of more than ≡ ≡ ≡ between the two amounts.

  2. The Schedule Indicator Code (SIC) can be found in the following locations:

    Form Location
    Form 940 (Revision 2006 and subsequent) In the margin, to the right of the line that separates the entity information from Part 1. See Exhibit 3.12.154-1, Form 940 (Revision 2017 and Form 940 Schedule A (Revision 2017).
    Form 940-PR (Revisions 2006 and subsequent) In the margin, to the right of the line that separates the entity information from Part 1. See Exhibit 3.12.154-2, Form 940-PR (Revision 2017 and Form 940 Schedule A-PR (Anexo A (Formulario 940-PR)) (Revision 2017).
    Form 940 (2005 and prior revisions) In the margin, to the right the line that separates the entity information from the ABCD Questions.
    Form 940-PR (2005 and prior revisions) In the margin, to the right of line that separates the entity information from the ABC Questions.
Field 01SIC - Invalid Condition
  1. This field is invalid if it is other than "1" or "blank" .

Field 01SIC - Correction Procedures
  1. Check the field with the return and take the following actions:

    If... Then...
    There is a transcription error, Enter the correct data.
    A valid code is not present on the return, Delete the entry.

Field 01MID - Multiple ID Code

  1. We no longer capture the state reporting number. Therefore, the Multiple ID Code is not necessary. It will not be edited.

Field 01MSB - Multi-State Filer Check Box Indicator

  1. This box is found in Part 1, Line 1b. If this box is checked, the taxpayer is indicating wages were paid in more than one state. Form 940 Schedule A must be completed when Box 1b is checked. Valid entries for 01MSB are "1" and blank.

Field 01MSB - Invalid Condition
  1. This field is invalid if the entry is other than "1" or is not blank.

Field 01MSB - Correction Procedures
  1. Compare the screen entry with the entry on the return and do the following:

    If... Then...
    The field 01MSB is other than "1" , or is not blank,
    1. If Box 1b is checked on the return, correct field 01MSB to "1" .

    2. If the box is not checked, blank the field.

Field 01CRB - Credit Reduction Check Box Indicator

  1. Box 2 must be checked if the taxpayer paid wages in a state that is subject to credit reduction. Valid entries are "1" or blank.

Field 01CRB - Invalid Condition
  1. This field is invalid if the entry is other than "1" or is not blank.

Field 01CRB - Correction Procedure
  1. Compare the screen entry with the entry on the return and do the following:

    If... Then...
    The field 01CRB is other than "1" or, is not blank, If Box 2 is checked on the return, correct field 01CRB to "1" . If the box is not checked, blank the field.

Field 01SRI -Form 940 Schedule R Indicator

  1. This field is used to indicate that a Form 940 Schedule R, Allocation Schedule for Aggregate Form 940 Filers was attached to the Form 940 when filed.

  2. The Form 940 Schedule R and its continuation sheet are created to identify the clients by EIN and allocate the clients "federal income tax withholding amounts being reported on the agent's aggregate Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return." Agents will be required to attach Form 940 Schedule R and any continuation sheets to Form 940 calendar year 2011.

  3. Valid entries are "R" (active) or blank (inactive).

  4. When the Form 940 is filed with a Form 940 Schedule R attached, Code & Edit will edit an "R" to the right margin next to Line 6, "Subtotal."

Field 01SRI - Invalid Conditions
  1. This field is invalid if any character other than "R" is present.

Field 01SRI - Correction Procedures
  1. If a character other than "R" is present then delete the entry.

Field 01CRD - Correspondence Received Date

  1. The Correspondence Received Date field is used as a second date in computing interest on overpayments.

  2. If all the positions in the field are blank, it does not cause an invalid condition.

Field 01CRD - Invalid Conditions
  1. This field is invalid if:

    1. It is not numeric.

    2. Not in YYYYMMDD format.

    3. Not in the valid month, day range.

    4. The same as, or prior to the due date of the return.

Field 01CRD - Correction Procedures
  1. Compare the screen entry with the entry on the return and do the following:

    1. Determine the Correspondence Received Date in the following priority:

      • Correspondence Received Date Stamp

      • Postmark Date on envelope

      • Current Date

        Exception:

        Fax Replies.

    2. Determine the Correspondence Received Date in the following priority for Fax Replies:

    • Correspondence Received Date Stamp

    • Date the reply was faxed

    • Date entered on fax cover sheet by the taxpayer

    • Current Date

    If... Then...
    Transcribed incorrectly Enter the correct CRD from the correspondence
    The date is illegible, Check the attached correspondence, which bears a received date stamp for the correct date.
    More than one CRD is stamped or written, Use the earliest date as the CRD.
    There is No Reply, Enter CCC "3" , unless equal to or prior to the due date. Leave field 01CRD box blank.

Field 01ARN - Applied Refund Indicator

  1. Description -This field is used to indicate that the taxpayer has requested that an overpayment of $1.00 or more be either credit elect (CCC E generated) or refund (CCC S generated).

  2. If the Applied Refund Indicator"2" is present, then the system will generate CCC "S" .

  3. If the Applied Refund Indicator is blank, the system will generate CCC "E" (if CCC "F" is not present). If CCC "F" is present, CCC "S" will generate.

Field 01ARN - Invalid Condition
  1. This field is invalid if it is not blank or " 2" .

Field 01ARN - Correction Procedures
  1. Check the field with the return and do the following:

    If... Then...
    There is a transcription error, Enter the correct data.
    An incorrect code is present, Correct the entry.
    The "Refund" box is checked, Enter "2" .
    The "Applied to Next Return" box is checked, 01ARN should be blank- Unless CCC "F" is present,
    then enter "2" .
    Both boxes are checked, 01ARN should be blank- Unless CCC "F" is present,
    then enter "2" .
    Neither box is checked, 01ARN should be blank - Unless CCC "F" is present,
    then enter "2" .

Field 01CBI - Third Party Designee Checkbox Indicator

  1. Description - Valid character for this field is "1" or blank.

  2. This field has one (1) position.

Field 01CBI - Invalid Conditions
  1. The Third Party Designee information is present and no check box indicator is marked by the taxpayer.

  2. An invalid character may have been entered. For example, &, #, –, or ( ).

Field 01CBI - Correction Procedures
  1. If the taxpayer checked the "YES" Box in the Third Party Designee area on the bottom portion of the return, then enter "1" in the field and transmit.

  2. If the "YES" Check box is not marked by the taxpayer, clear all entries on the screen and transmit.

  3. Do not correspond or take any further action.

Field 01CBT - Third Party Designee Phone Number

  1. No action is necessary. This information will not be captured.

Field 01CBP - Third Party Designee Personal Identification Number (PIN)

  1. Description - the valid characters for this field are numeric.

  2. The field length is five (5) positions.

  3. This number is not issued by IRS. This number is self-selected by the taxpayer.

Field 01CBP - Invalid Conditions
  1. Verify the entry for any invalid characters.

  2. An invalid character such as &, #, –, or ( ). may have been entered.

Field 01CBP - Correction Procedures
  1. Verify the entry.

  2. Correct any invalid characters.

  3. If there are no invalid characters in the Third Party Designee PIN, then blank the field and transmit.

  4. Do not correspond and take no further action.

Field 01PSN - Paid Preparer's SSN or PTIN

  1. This field contains the preparer's Social Security Number (SSN) or Preparer's Tax Identification Number (PTIN). The SSN is issued by the Social Security Administration. The PTIN is issued by IRS.

    1. This entry can be Blank or 9 digits.

    2. The Paid Preparer's SSN must be a 9 digit number.

    3. The PTIN is a valid entry in the Preparer's Social Security Number area at the bottom of Form 940 and Form 940-PR.

    4. The PTIN is a 9 character number beginning with the letter P followed by eight numbers. For example: PXXXXXXXX.

Field 01PSN - Invalid Conditions
  1. This field is invalid if any of the following conditions are present:

    1. Field 01PSN is other than nine numeric digits or a "P" followed by eight numbers.

    2. The field contains all zeros.

    3. The field contains all nines.

Field 01PSN - Correction Procedures
  1. Compare the screen entry with the return and do the following:

    If... Then...
    A valid PTIN is present, Enter the PTIN in Field 01PSN.
    A valid SSN is present, Enter the SSN in Field 01PSN.
    A valid PTIN and SSN are both present, Enter the PTIN in Field 01PSN.
    A valid PTIN or SSN cannot be located, Delete 01PSN.

Field 01PEN - Firm's Employer Identification Number (EIN)

  1. This field contains the preparer's firm Employer Identification Number (EIN). The Firm's EIN:

    1. Can be Blank or 9 digits.

    2. If an entry is present, it must contain 9 digits.

    3. If an entry is present, it cannot be all zeros or all nines.

Field 01PEN - Invalid Conditions
  1. This field is invalid if one of the following occurs:

    1. Field 01PEN is other than nine numbers. Alpha characters cannot be present.

    2. Field 01 contains all zeros.

    3. Field 01 contains all nines.

Field 01PEN - Corrections Procedures
  1. Compare the screen entry with the entry on the return, and do the following:

    If... Then...
    A Valid EIN is present on the return or attachments, Enter the EIN in Field 01PEN.
    If a valid EIN cannot be located, Delete Field 01PEN.

Field 01PTN - Paid Preparer's Telephone Number

  1. The Paid Preparer's Telephone Number is located on Page 2 of Form 940 and Form 940-PR in Part 7. This field is not valid for any tax years prior to 2008.

Field 01PTN - Invalid Conditions
  1. This field is invalid if it is less than 10 characters.

Field 01PTN - Correction Procedures
  1. If the Paid Preparer's Phone Number is invalid or incomplete, delete the phone number.

Section 02 Fields

  1. This IRM Section provides a description of the fields in Section 02 of Form 940, and Form 940-PR returns. This includes those Form 940 returns created (converted) from Revision 2005 and prior, and Form 940-EZ return revisions.

Field Designators - Section 02

  1. The following is Section 02 for Form 940 and Form 940-PR. See Exhibit 3.12.154-1, Form 940 (Revision 2017) and Form 940 Schedule A (Revision 2017). and Exhibit 3.12.154-2., Form 940-PR (Revision 2017) and Form 940 Schedule A-PR (Anexo A (Formulario 940-PR)) (Revision 2017).

  2. All input fields are dollars and cent and positive only with the exception of Field 02BD/R which can be positive or negative.

  3. This table shows (in line sequential order) the field designator, the field length, the title of field, and the location of the field on the return:

    Field Designator Field Length Title of Field Location on Current Year Form 940 Format
    02TTW 15 Total Taxable Wages Line 7

    Note:

    On Revision 2011, Line 7a

    02TTW> 15 Total Taxable Wages (computer generated) Lien 7

    Note:

    On Revision 2011, Line 7a.

    Revision 2011 only: 02W08 15 Revision 2011 only: FUTA Wages paid before 7/1/2011 (transcribed amount in the box before the .008 amount on Line 7b Revision 2011 only: Line 7b
    Revision 2011 only: 02W7c 15 FUTA Taxes paid before 7/1/2011 (the transcribed amount in the box after the .008 amount on Line 7c) Revision 2011 only: Line 7c
    Revision 2011 only: 02W7c> 15 FUTA Taxes paid before 7/1/2011 (the Computer Generated under-print amount for the box after the .008 amount on Line 7c. Revision 2011 only: Line 7c (computer generated)
    Revision 2011 only: 02W06 15 FUTA Wages paid after 6/30/2011 (the transcribed amount in the box before the .006 amount on Line 7d. Revision 2011 only: Line 7d
    02W60>

    or,
    02W62>
    15 Total Taxable Wages x .060

    or,

    Total Taxable Wages x .062
    This field is computer generated. It is the total of 02TTW (Total Taxable Wages) times .060. (See Note below) The computer displays the result if corrections may be needed for Line 8, revision 2013 by generating Error Code 242.

    Note:

    For taxable FUTA wages earned prior to July 1, 2011, the computer uses 02TTW times .062 for Error Code 242.

    Revision 2011 only: 02W7e 15 FUTA Taxes paid after 6/30/2011 x .006 (the transcribed amount in the box after the .006 Revision 2011 only: Line 7e
    Revision 2011 only: 02W7e> 15 FUTA Taxes paid after 6/30/2011 x .006 (the computer generated under-print amount for the box after the .006 amount on Line 7e. Revision 2011 only: Line 7e (Computer amount)
    02TBA 15 FUTA Tax before adjustments (transcribed amount on Line 8) Line 8
    02TBA> 15 FUTA Tax Before Adjustments (computer generated) Line 8 (Computer amount)
    02ADJ 12 Adjustment Amount Line 9
    02W54> 15 Total Taxable Wages x .054 This field is computer generated. It is the total of 02TTW (Total Taxable Wages) times .054. The computer calculated result displays if corrections may be needed for Line 9 (Error Code 242).
    02EXL 12 Some Excluded Wages or Late Payments Line 10
    02TCR 10 Total Credit Reduction Amount Line 11
    02TFT 15 Total Tax Taxpayer Line 12
    02FCC 15 FTD Credit Claimed Amount Line 13
    02B/R 15 Balance Due/Overpayment Taxpayer Line 14 or Line 15
    02FD 10 FTD Penalty Taxpayer Line FTD To the right of the "Type of Return" Box
    02Q1 14 Total Tax Liability Amount Line 16a
    02Q2 14 Total Tax Liability Amount Line 16b
    02Q3 14 Total Tax Liability Amount Line 16c
    02Q4 14 Total Tax Liability Amount Line 16d

Field Designators - Section 02 (Form 940-EZ Conversions)

  1. All money fields are in dollars and cents.

  2. The following table shows the field, the field length, the title of field and the location on the return:

    Field Designator Field Length Title of Field Location on Form 940-EZ Location on Current Year Form 940 Format
    02TTW 15 Total Taxable 940-EZ Wages Part I, Line 5 Line 7
    02TFT 14 Total Tax Taxpayer Part 1, Line 6 Line 12
    02FCC 14 FTD Credit Claimed Amount Part 1, Line 7 Line 13
    02B/R 14 Balance Due/Overpayment Taxpayer Part 1, Line 8 or 9 Line 14 or 15
    02FD 10 FTD Penalty Taxpayer Line FD, Penalty Line FD Penalty
    02Q1 14 Total Tax Liability Amount Part II, First Quarter 1 Column , Line 16a
    02Q2 14 Total Tax Liability Amount Part II, Second Quarter 2 Column Line 16b
    02Q3 14 Total Tax Liability Amount Part II, Third Quarter 3 Column Line 16c
    02Q4 14 Total Tax Liability Amount Part II, Fourth Quarter 4 Column Line 16d

Field 02TTC - Total Tentative Credit

  1. The Total Tentative Credit will no longer be applicable.

Field 02TTW - Total Taxable FUTA Wages

  1. Description - This field is located on Line 7 (Line 7a 2001 Revision or Line 5 2005 and Prior) on Form 940 and Form 940-PR It must be entered as dollars and cents and positive amounts only.

  2. If taxable wages are present, the taxpayer's total tax cannot be zero.

Field 02TTW - Invalid Condition
  1. This field is invalid if it is not all numeric.

Field 02TTW - Correction Procedures
  1. Compare the screen entry with the entry on the return.

    If... Then...
    The field was transcribed incorrectly, Correct the screen display.

    Note:

    The amount of wages could be on Line 3 or Line 6 (Rev. 2006 and subsequent), or Line 1 or Line 4 (Rev. 2005 and prior). This could be due to erroneous placement. It may be necessary to perfect Line 7 by subtracting the amount on Line 6 from Line 3 (Rev. 2006 and subsequent), or perfecting Line 5 by subtracting the amounts on Lines 2 through 4 from Line 1 (Rev. 2005 and prior).

Field 02TTW>> - Total Taxable Wages Computer Under-print

  1. This field is located on Line 7 (Line 7a 2011 Revision or Line 5 2005 and Prior) on Form 940 and Form 940-PR. Computer Generated under-print amount.

  2. There are no invalid conditions or correction procedures for this field.

Field 02W08 - FUTA Wages Paid Before 7/01/2011

  1. This field is located in Line 7b on Form 940 and Form 940-PR for Tax Year 2011 revisions (transcribed amount in the box before the .008 amount).

  2. It must be entered as dollars and cents and positive amounts only.

Field 02W08 - Invalid Condition
  1. This field is invalid if it is not all numeric.

Field 02W08 - Correction Procedures
  1. Compare the screen entry with the entry on the return.

    If... Then...
    The field was transcribed incorrectly, Correct the screen display.

Field 02W7C - FUTA Taxes paid before 7/01/2011 x .008

  1. This field is located in Part 2, Line 7c (transcribed amount in the box after the .008 amount).

Field 02W7C - Invalid Condition
  1. This field is invalid if it is not all dollars and cents.

Field 02W7C - Correction Procedures
  1. Compare the screen entry with the entry on the return.

    If... Then...
    The field was transcribed incorrectly, Correct the screen display. If present as a negative amount, convert to a positive amount.

Field 02W7C> - FUTA Taxes Paid Before 7/01/2011 x .008 Computer Amount

  1. This field is located in Line 7c (computer generated amount for the box after the .008 amount).

  2. There are no invalid conditions or correction procedures for this field.

Field 02W06 - FUTA Wages Paid After 06/30/2011

  1. This field is located in Line 7d on Form 940 and Form 940-PR for Tax Year 2011 revisions (transcribed amount in the box before the .006 amount).

Field 02W06 - Invalid Condition
  1. This field is invalid if it is not all numeric. It must be entered as dollars and cents and positive amounts only.

Field 02W06 - Correction Procedures
  1. Compare the screen entry with the entry on the return.

    If... Then...
    The field was transcribed incorrectly, Correct the screen display.

Field 02W7E - FUTA Taxes paid after 03/30/2011 X .006

  1. This field is located in Line 7e (transcribed amount in the box after the .006 amount).

Field 02W7E - Invalid Condition
  1. This field is invalid if it is not all numeric. It must be a positive amount only. If present as a negative amount, convert to a positive amount.

Field 02W7E - Correct Procedures
  1. Compare the screen entry with the entry on the return.

    If... Then...
    The field was transcribed incorrectly, Correct the screen display.

Field 02W7E> - FUTA Wages paid after 06/30/2011 x .006 Computer Amount

  1. This field is located in Line 7e (computer generated amount for the box after the .006 amount).

  2. There are no invalid conditions or correction procedures for this field.

Field 02TBA - FUTA Tax Before Adjustments

  1. This field is located in Line 8 on Form and Form 940-PR for Tax Year 2006 and subsequent.

  2. This field is invalid if it is not all numeric. It must be a positive amount only. If present as a negative amount, convert to a positive amount.

Field 02TBA - Invalid Condition
  1. This field is invalid if it is not all numeric. It must be a positive amount only. If present as a negative amount, convert to a positive amount.

Field 02TBA - Correction Procedures
  1. Compare the screen entry with the entry on the return.

    If... Then...
    The field was transcribed incorrectly, Correct the screen display. The amount on Line 8 should equal the amount of Line 7c plus Line 7e.

Field 02TBA> - FUTA Tax Before Adjustments Computer Amount

  1. This field is located in Line 8 on Form and Form 940-PR for Tax Year 2006 and subsequent.

  2. It is not a transcribed field. It is a computer generated field. There are no invalid conditions or correction procedures for this field.

Field 02ADJ - Adjustment Amount

  1. This field is located on Line 9 of Form 940 and Form 940-PR, Revision 2006 and subsequent. The taxpayer enters an amount on this line if all of the taxable FUTA wages they paid were excluded from state unemployment tax.

  2. This field may or may not contain an entry. This field can be "blank" or "zero" or may show a "dash" , indicating that Line 9 does not apply to the taxpayer.

  3. If present, this field must be entered as dollars and cents. It must be a positive amount only. If present as a negative amount, convert to a positive amount.

Field 02ADJ - Invalid Condition
  1. This field is invalid if it is not all numeric.

Field 02ADJ - Correction Procedures
  1. Compare the screen entry with the entry on the return.

    If... And... Then...
    If Line 9 (02ADJ) entry is blank, The State Code in Box 1a (01SC1) is blank, SSPND 211 and correspond for Line 9 amount.
    If Line 9 (02ADJ) entry is present The taxpayer calculated the field incorrectly, Correct the screen display. The amount on Line 9 should equal the amount of Line 7 multiplied by .054.

Field 02EXL - Some Excluded Wages or Late Payments

  1. This field is located on Line 10 of Form 940940 and Form 940-PR (2006 through 2011 Revisions). The taxpayer will complete this line if some of the FUTA wages that they paid were excluded from state unemployment tax, or if they paid any state unemployment tax late.

  2. This field may or may not have an entry.

  3. This field must be entered as dollars and cents, or can be "blank" or "zero" on taxable returns. If present, it must be a positive amount only. If present as a negative amount, convert to a positive amount.

Field 02EXL - Invalid Conditions
  1. This field is invalid if any of the following occur:

    1. If it is not all numeric.

    2. If there is an entry on Line 9 (02ADJ) and Line 10 (02EXL).

Field 02EXL - Correction Procedures
  1. Compare the screen entry with the entry on the return, and do the following.

    If... Then...
    The field was entered incorrectly, Correct the screen display.
    If there is an entry on Line 9 and also on Line 10, Delete the Line 10 entry. The taxpayer cannot have an entry on Line 9 and Line 10.

Field 02TCR - Total Credit Reduction Amount

  1. A Credit Reduction state or territory is named by the Department of Labor when it is unable to repay loans from the Federal Unemployment Fund. Employers doing business in that state or territory are required to pay an additional tax on their Form 940. This is done by a reduction of the allowable credit.

  2. If credit reduction does not apply for a particular year, the applicable lines relating to credit reduction will be grayed out on the form.

  3. This field can be found in the following locations:

    Form Location
    Form 940 and Form 940-PR (2006 and subsequent) Line 11

    Note:

    In tax years where there are no credit reduction states, the correct revision for that year has line 11 shaded.

    Form 940 (2005 Revision) Line 7
    Form 940-PR (2005 Revision) Not Applicable
  4. This field is not valid for tax years 2006 through 2008.

  5. It must be entered as dollars and cents and positive amounts only. If present as a negative amount, convert to a positive amount.

  6. The information obtained from this area is utilized by The Bureau of Public Debt and The Department of Labor.

Field 02TCR - Invalid Conditions
  1. This field is invalid if any of the following occur:

    1. If it is not all numeric.

    2. If it entered for Tax Year 2006, 2007 or 2008.

    3. If there is an entry on Line 9 (02ADJ) and Line 11 (02TCR).

Field 02TCR - Correction Procedures
  1. Compare the screen entry with the entry on the return and do the following:

    If... Then...
    The return is for tax year 2006, 2007 or 2008,
    1. There should be no entry.

    2. Delete the amount in 02TCR.

    The taxpayer pays wages in only one state that is not a Credit Reduction state, Correct the return, deleting the Credit Reduction information.
    Line 9 (02ADJ) and Line 11 (02TCR) both have an entry (Revisions 2006 and subsequent), Delete the entry on Line 11 (02TCR).
    The taxpayer pays wages in only one state that is subject to Credit Reduction, but did not attach or did not complete Form 940 Schedule A (Revision 2011), SSPND 211 and correspond with the taxpayer for the Credit Reduction Wages.
    The taxpayer is a multi-state filer and one of the states checked in Form 940 Schedule A is subject to credit reduction, but Form 940 Schedule A was not completed, SSPND 211 and correspond with the taxpayer for the Credit Reduction Wages.
    The taxpayer is a multi-state filer but does not check the box which corresponds to the Credit Reduction State on Form 940 Schedule A, Check the boxes on Lines 1b and 2

Field 02TFT - Total Tax Taxpayer

  1. Description - This field can be found in the following locations:

    Form Location
    Form 940 Line 12 (FUTA Tax After Adjustments)
    Form 940-PR Line 12
    Form 940 (2005 and prior revisions) Line 7
    Form 940-PR (2005 and prior revisions) Line 7
  2. This field must be entered as dollars and cents and cannot be "blank" or "zero" on taxable returns. It must be a positive amount only.

Field 02TFT - Invalid Condition
  1. This field is invalid if it is not all numeric.

Field 02TFT - Correction Procedure
  1. Compare the screen entry with the entry on the return.

    If... Then...
    The field was entered incorrectly, Correct the screen display.

Field 02FCC - Federal Tax Deposit Credit Claimed

  1. It must be entered as dollars and cents.

  2. All money amounts must be positive only.

  3. This field can be found in the following locations:

    Form Location
    Form 940 Line 13
    Form 940-PR Line 13
    Form 940 (2005 and prior revisions) Line 8
    Form 940-PR (2005 and prior revisions) Line 2 or Line 8 (Code & Edit will convert Part II, Line 2 or Part III, Line 8 to Line 13)
Field 02FCC - Invalid Condition
  1. This field is in error if it is not all numeric.

Field 02FCC - Correction Procedures
  1. Compare the screen entry with the entry on the return.

    If... Then...
    The field was transcribed incorrectly, Correct the screen display.

    Note:

    WATCH FOR MISPLACED ENTRIES.

Field 02B/R - Balance Due/Overpayment

  1. This field must be entered as dollars and cents and can be a positive or negative amount.

  2. Code & Edit will perfect balance due/overpayment.

  3. This field can be found in the following locations:

    Form Location
    Form 940 Line 14 or 15.
    See Exhibit 3.12.154-1, Form 940 (Revision 2017) and Form 940 Schedule A (Revision 2017).
    Form 940-PR Line 14 or 15.
    See Exhibit 3.12.154-2, Form 940-PR (Revision 2017) and Form 940 Schedule A-PR (Anexo A (Formulario 940-PR) (Revision 2017).
    Form 940 (2005 and prior revisions) Part II, Line 9 or 10.
    Form 940-PR (2005 and prior revisions) Part II, Line 3 or 4 (converted to Line 14 or 15), or
    Part III, Line 9 or 10 (converted to Line 14 or 15).
Field 02B/R - Invalid Condition
  1. This field is in error if it is not all numeric.

Field 02B/R - Correction Procedures
  1. Compare the screen entry with the entry on the return.

    If... Then...
    The field was transcribed incorrectly, Correct the screen display.
    A negative amount is shown, A "-" must be entered.

Field 02FD - Federal Tax Deposit Penalty Taxpayer

  1. This field must be entered as dollars and cents in positive amounts only.

  2. This field can be found in the following location:

    Form Location
    Form 940 In the right margin near the "Type of Return" Box.
    See Exhibit 3.12.154-1, Form 940 (Revision 2017) and Form 940 Schedule A (Revision 2017).
    Form 940-PR In the right margin near the "Type of Return" Box.
    See Exhibit 3.12.154-2, Form 940-PR (Revision 2017) and Form 940 Schedule A-PR (Anexo A (Formulario 940-PR) (Revision 2017).
    Form 940 (2005 and prior revisions) In the right margin next to the "Penalty and Interest" box.
    Form 940-PR (2005 and prior revisions) In the right margin next to the "Penalty and Interest" Box.
Field 02FD - Invalid Condition
  1. This field is invalid if it is not all numeric.

Field 02FD - Correction Procedure
  1. Compare the screen entry with the entry on the return.

    If... Then...
    The field was transcribed incorrectly, Correct the screen display.

Fields 02Q1, 02Q2, 02Q3, and 02Q4 - Total Tax Liability Amount Quarters 1, 2, 3, and 4

  1. These fields must be entered in dollars and cents and positive amounts only.

  2. These fields can be found in the following locations:

    Form Location
    Form 940 Lines 16a through 16d
    Form 940-PR Lines 16a through 16d
    Form 940 (2005 and prior revisions) In the ROFTL in Part III
    Form 940-PR (2005 and prior revisions) In the ROFTL in Part IV
    Form 940-EZ On Form 940, Lines 16a through 16d
Fields 02Q1 - Invalid Condition
  1. These fields are invalid if they are not all numeric and positive entries.

Fields 02Q1 -Correction Procedures
  1. Compare the screen entries with the entries on the return.

    If... Then...
    The field was transcribed incorrectly, Correct the screen display.
    Any negative amounts are entered in Fields 02Q1 through 02Q4.
    1. GTSEC 01

    2. Enter "1" in Field 01SIC, and blank Fields 02Q1 through 02Q4.

Section(s) 03, 04, and 05 - Form 940 Schedule A State Code and Credit Reduction Wage Fields

  1. Field designators, field lengths, title of field, and location on Schedule A are outlined in the following table:

    Field Designator Title of Field Field Length Location
    Section(s) 03, 04, and 05   15 Form 940 Schedule A or Form 940 Schedule A-PR.
    See Exhibit 3.12.154-1, Form 940 (Revision 2017) and Form 940 Schedule A (Revision 2017). and Exhibit 3.12.154-2, Form 940-PR (Revision 2017) and Form 940 Schedule A-PR (Anexo A (Formulario 940-PR) (Revision 2017).
    (State Abbreviation) State Code
    See Exhibit 3.12.154-7, State Codes.
    2 Form 940 Schedule A or Form 940 Schedule A-PR.
    See Exhibit 3.12.154-1, Form 940 (Revision 2017) and Form 940 Schedule A (Revision 2017). and see Exhibit 3.12.154-2, Form 940-PR (Revision 2017) and Form 940 Schedule A-PR (Anexo A (Formulario 940-PR) (Revision 2017).
    $xxxxxxxxxxxx.xx
    (Dollar and cents amount)
    Credit Reduction Wages 15 Form 940 Schedule A or Form 940 Schedule A-PR.
    See Exhibit 3.12.154-1, Form 940 (Revision 2017) and Form 940 Schedule A (Revision 2017). and Exhibit 3.12.154-2, Form 940-PR (Revision 2017) and Form 940 Schedule A-PR (Anexo A (Formulario 940-PR) (Revision 2017).
  2. For ERS, Form 940 Schedule A may be displayed in three Sections, (Section 03, 04, and 05) depending on the number of state boxes checked (marked) on Form 940 Schedule A.

  3. The first 26 U.S. States or Territories taken from Form 940 Schedule A display in Section 03. If there are more than 26 states or territories on the Form 940 Schedule A marked, the 27th through 52nd state or territory display in Section 04. The 53rd state of territory will display in Section 05. Within each Section any state's code and the related state information can be entered in random order, or corrected. Also, if a state is duplicated in any of the Sections, it will generate a field error.

  4. See Exhibit 3.12.154-7, State Codes for a list of the valid state codes (abbreviations). Any codes other than those listed are invalid and will generate a field error. Blank any invalid State codes in Section 03, 04, or 05 on the display screen.

  5. The Credit Reduction Wage amounts should be shown by the taxpayer on the return, attachment, or in reply to correspondence.

  6. The Credit Reduction Wage amounts must be in dollars and cents and be positive amounts.

  7. Correction procedures for 6020(b) returns. If Form 940 Schedule A is missing and line 1a of Form 940 contains a State Code, then GTSEC 03 and enter the State Code and .01 into Field 03S01. When error code 214 generates, enter 1 in Field 01CRB and .01 in 02TCR.

Section 06 - Entity

  1. Field designators, field lengths, title of field, and location on returns are outlined in the following table:

    Field Designator Field Length Title of Field Location on Return
    06FAD 35 Foreign Address Entity Portion
    06CON 35 "In Care of " Name Entity Portion
    06ADD 35 Street Address Entity Portion
    06CTY 22 City Entity Portion
    06ST 2 State Entity Portion
    06ZIP 12 ZIP Code Entity Portion
  2. Section 06 contains the complete address (Street Address, City, State, if not a foreign country, and ZIP Code), and secondary name line e.g., Care of Name.

  3. Foreign address returns are processed at the OSPC only.

♦Field 06CON♦ "In Care of" Name

  1. Description - This field 06CON is located in the entity section of the return.

  2. This section contains "In Care of" Name information.

  3. The valid characters are alpha, numeric, ampersand, dash, slash, or percent sign (%).

  4. The first position must be alpha or numeric.

Field 06CON - Invalid Conditions
  1. This field will be invalid if any of the following conditions are present:

    1. The first position is % (percent) and the second position is not blank.

    2. The first position is blank.

    3. The first position of the "in care of" name is not alpha or numeric.

    4. There are two consecutive blanks between significant characters.

Field 06CON - Correction Procedures
  1. Check the entry on the screen with the entry on the return. Correct coding and transcription errors.

    If... Then...
    A % (percent) is in the first position,
    1. Verify there is a blank in the second position.

    2. If not blank, enter a blank followed by the "in care of" name beginning with an alpha or numeric in Field 06CON.

    A blank is in the first position,
    1. Delete blank.

    2. Enter the "in care of" name beginning with an alpha or numeric in Field 06CON

    The first position is not alpha or numeric,
    1. Verify the "in care of" name on the return.

    2. Enter the "in care of" name beginning with an alpha or numeric in Field 06CON.

    Two consecutive blanks are present between significant characters, Delete any unnecessary blanks in Field 06CON.

Field 06FAD - Foreign Address

  1. Description - This field is located in the entity section of the return.

  2. This field will contain an entry when there is a foreign address present on the return.

  3. Valid Conditions - Valid characters are alpha, numeric and special characters.

  4. Field 06FAD should not be present on "G" Coded returns.

Field 06FAD - Invalid Conditions
  1. Field 06FAD will generate as an error when any of the following conditions are present:

    • The first position is blank.

    • Any character follows two consecutive blanks.

    • There are more than 35 characters present in the field.

    Note:

    ISRP is instructed to input a pound sign (#) as the 35th character if there are more than 35 characters present for this field on the return.

Field 06FAD - Correction Procedures
  1. Correct all coding and transcription errors.

    If... Then...
    Field 06FAD is present,
    1. GTSEC 06.

    2. Ensure Field 06CTY contains a foreign country code and Field 05ST contains a "." (period/space). See Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries.

      Note:

      Use the country code based on the province in field 06CTY if the foreign address is from Canada and the address contains a province name or abbreviation. See Exhibit 3.12.154-11, Province, Foreign State and territory.

    A foreign address is not present on the return,
    1. SSPND 610.

    2. Renumber return to domestic DLN.

  2. If Form 8822 (Change of Address) or Form 8822-B (Change of Address-Business) is attached to the return, compare the name and address information on the Form 8822 or Form 8822-B to the return.

    If... And... Then...
    Form 8822, Change of Address, or Form 8822-B, Change of Address-Business, is attached, Mailing address information is the same and no location address is listed on Line 7, Form 8822 or Form 8822-B, Take no action and continue processing.
    Form 8822, Change of Address, or Form 8822-B, Change of Address-Business, is attached, Mailing address information is the different and/or a location address is listed on Line 7, Form 8822 or Form 8822-B,
    1. Enter the address shown on Form 8822 or Form 8822-B in Field 06FAD.

    2. Notate "Form 8822 detached" or "Form 8822–B detached" on tax return.

    3. Detach Form 8822 or Form 8822-B and route to Entity Control using Form 4227, or follow local procedures.

    4. Notate on Form 4227, "Change of Address Per Form 8822-B (or 8822)"

Field 06ADD - Street Address

  1. Description - This field is located in the Entity Section of the return.

  2. This section contains address information.

  3. Valid characters are alpha, numeric, blank, dash or slash.

  4. It will be present when a change of address has been entered.

  5. This section will not be present if Field 01CCC contains CCC"G."

Field 06ADD - Invalid Conditions
  1. This field will be invalid if the following occurs:

    1. The street address is present and the first position is blank.

    2. Any character is other than alpha, numeric, blank, dash, or slash.

    3. Any character follows two consecutive blanks.

    Note:

    ISRP is instructed to input a pound sign (#) as the 35th character if there are more than 35 characters present for this field on the return.

Field 06ADD - Correction Procedures
  1. Check the screen entry with the entry on the return. Correct coding and transcription errors.

    If... Then...
    The field was transcribed incorrectly, Correct the screen display.
    The first position is blank, All positions must be blank.
    Field 06ADD is present, Fields 06CTY, and 06ST and 06ZIP must be present.
    Street address is in error and a valid Major City Code is present, Correct by entering the entire name of the city in Field 06CTY and the State Code in Field 06ST.
    See Exhibit 3.12.154-8, Entity Sate Code and Zip Code Chart.
    A good address is not located, Delete address and revert to INOLE.
  2. If Form 8822 (Change of Address) or Form 8822-B (Change of Address- Business) is attached to the return, compare the Name Control, EIN, Address, City, State and ZIP Code information on the Form 8822 or Form 8822-B to the return.

    If Then
    The information is the same, Take no action and continue processing.
    The information is different,
    1. Enter address shown on Form 8822 or Form 8822-B in Field 06ADD.

    2. Notate "Form 8822 detached" or "Form 8822-B detached" on tax return.

    3. Detach Form 8822 or Form 8822-B and route to Entity Control using routing slip, or follow local procedures.

    4. Notate on routing slip, "Change of Address Per (Form 8822 or) Form 8822-B"

    Note:

    The lead tax examiner is required to batch all Form 8822 or Form 8822-B daily and hand carry to Entity Control for expedited processing.

Field - 06CTY City

  1. Description - This field is located in the Entity Section of the return.

  2. Valid characters are alpha and blank.

  3. Certain cities within each state are designated "Major Cities" and assigned a special code of two alpha characters.

  4. This code represents the city and state.

  5. It is transcribed on the Error Record with no intervening blanks and no other characters in the City-State Field either before or after the code.

Field 06CTY - Invalid Conditions
  1. This field is invalid if any of the following conditions are present:

    1. The first position if blank.

    2. Any character is other than blank or alpha.

    3. Any character follows two consecutive blanks.

    4. The Major City Code does not match any of the valid codes in the Major City Code Table.

    5. Foreign country code is not present, incorrect or contains "XX" .

Field 06CTY - Correction Procedures
  1. Compare the screen entry with the entry on the return. If Form 8822 (Change of Address) or Form 8822-B (Change of Address-Business) is attached, to the return:

    1. Compare the Name Control, EIN, Address, City, State and ZIP Code information on the Form 8822 or Form 8822-B to the return.

    2. a. If the information is the same, then correct field 06CTY. Leave the Form 8822 or Form 8822-B attached.
      b. If the information is different, then enter the correct information from the Form 8822 or Form 8822-B. Detach the Form 8822 or Form 8822-B and route to Entity Control. Notate on the left hand margin, "Form 8822 (or, Form 8822-B) to Entity" .

  2. Determine if a Major City Code is used.

    If... Then...
    A Major City Code is used, Field 06CTY must be present
    Field 06CTY contains an error, Check to see if the Major City Code is correct.
    Field 06CTY is not valid and a Major City Code cannot be determined, Input the entire city name.
    A major City Code is not used and Field 06CTY is present, Field 06ST (State) must be present.
    A foreign address is shown on the return, Enter appropriate foreign country code in Field 06CTY from Document 7475, "State, and Address abbreviations, Major City Codes (MCCs), ZIP Codes and Countries" .
    Field 06CTY contains an incorrect country code or "XX" , Enter the appropriate foreign country code in 06CTY from Document 7475, "State, and Address abbreviations, Major City Codes (MCCs), ZIP Codes and Countries" .

Field 06ST - State Code

  1. Description - This field is located in the Entity Section of the return.

  2. Valid characters are alpha and blank.

  3. The following defines entity addresses:

    1. See IRM 3.12.154.1.26.1, Domestic Addresses.

    2. See IRM 3.12.154.1.26.2, APO/DPO/FPO Addresses.

    3. See IRM 3.12.154.1.26.3, U.S. Possession or Territory Address.

    4. See IRM 3.12.154.1.26.4, Foreign Addresses (OSPC ONLY).

Field 06ST - Invalid Conditions
  1. This field is invalid if it is not contained in the State Code Table. See Exhibit 3.12.154-8, Entity State Code and Zip Code Chart for a detailed listing.

Field 06ST - Correction Procedure
  1. Check the entry on the screen with the entry on the return.

    If... Then...
    The field was transcribed incorrectly, Correct the screen display.
    Form 8822, (Change of Address) or Form 8822-B (Change of Address-Business) is attached, to the return,
    1. Compare the Name Control, EIN, Address, City, State and ZIP Code information on the Form 8822 or Form 8822-B to the return.

    2. If the information is the same, then correct the state code abbreviation. Leave the Form 8822 or Form 8822-B attached.

    3. If the information is different, then enter the correct information from the Form 8822 or Form 8822-B. Detach the Form 8822 or Form 8822-B and route to Entity Control. Notate on the left hand margin, "Form 8822 (or, Form 8822-B) to Entity"

    Unable to perfect, DLSEC 06

Field 06ZIP - ZIP Code

  1. Description - This field is located in the Entity Section of the return.

  2. Valid characters are numeric and blank.

Field 06ZIP - Invalid Condition
  1. This field is invalid if any of the following conditions are present:

    1. Any character is other than numeric or blank.

    2. An entry is other than five or nine positions.

    3. The entry is not within the range of 00401 and 99999.

    4. The entry does not match the Major City Code or State Code.

Field 06ZIP - Correction Procedures
  1. Check the entry on the screen with the entry on the return.

    If... Then...
    The field was transcribed incorrectly, Correct the screen display.
    Form 8822 (Change of Address) or Form 8822-B (Change of Address- Business) is attached to the return,
    1. Compare the Name Control, EIN, Address, City, State and ZIP Code information on the Form 8822 or Form 8822-B to the return.

    2. If the information is the same, then correct the ZIP code. Leave the Form 8822 or Form 8822-B attached.

    3. If the information is different, then enter the correct address information from the Form 8822 or Form 8822-B. Detach the Form 8822 or Form 8822-B and route to Entity Control. Notate on the left hand margin, "Form 8822 (or Form 8822-B) to Entity"

    A valid ZIP code is available from the return or attachments,

    Note:

    For this condition, Form 8822 (Change of Address) or Form 8822-B (Change of Address- Business) is not attached to the return,

    Only the first five digits are required to be entered in Field 06ZIP.
    Only the first three digits of the ZIP code can be determined, Enter "01" for the fourth and fifth digits.
    A valid ZIP code is not available from the return or attachments,

    Note:

    For this condition, Form 8822 (Change of Address) or Form 8822-B (Change of Address- Business) is not attached to the return,

    Determine the first three digits of a valid ZIP Code for the Major City. For the Major City and for US Possessions ZIP Codes.
    See Exhibit 3.12.154-8, Entity State Code and Zip Code Chart.
    The Major City is not listed or the first three digits cannot be determined see Exhibit 3.12.154-7, State Codes, Enter the ZIP Code in Field 06ZIP of the State shown in the address.
    See Exhibit 3.12.154-8, Entity State Code and Zip Code Chart.

Priority IV - Consistency / Math Errors

  1. These errors will be displayed with the error code assigned to them for the specific error in ascending numerical order.

  2. The screen display will show the error code assigned and the fields needed to make the necessary correction.

  3. The blank field "NC" will be displayed for the entry of a TPNC for all Math Error displays, if needed.

  4. Multiple TPNCs may be entered if you have multiple Notice Code Fields.

  5. The blank field "CL" will be displayed for the entry of a clear code on records where the possibility exists that a change or correction may not be needed.

  6. The "C" Clear Code does not permit any other corrections to the record after it is transmitted to clear the screen.

  7. If an unworkable situation exists, suspend or reject the return with the appropriate Action Code.

♦Error Code 001 - Tax Year- Invalid Entry♦

  1. Error Code 001 will display as:

    Field Designator Field Name Field Length
    01TXP Tax Year 4
    01CCC Computer Condition Code 10
    01RCD Received Date 8
♦Invalid Condition♦ (EC 001)
  1. Error Code 001 will generate when any of the following conditions is present:

    • Computer Condition Code "G" isNot Present - The processing date is equal to or more than two years and ten months after the Return Due Date or Received Date (whichever is later), and CCC " W" is not present.

    • Computer Condition Code "G" isPresent - The processing date is equal to or more than two years and ten months after the Return Due Date and CCC "W" is not present.

    • On any return, the processing date is less than two years after the Return Due Date and CCC "W" is present.

♦Correction Procedures♦ (EC 001)♦
  1. Correct all misplaced entries, coding and transcription errors.

  2. Do not send the following returns to Statute Control for clearance. Instead, enter "W" in Field 01CCC and on the return and continue processing:

    • Any return secured by Compliance (i.e., IRC 6020(b)).

    • Any return secured by Examination/Collections, Secured by TE/GE, Secured by TE/GE EP Exam.

    • Any return with a Transaction Code (TC) 59X.

    • Any return with "ICS" (Integrated Collection System) notated on the face of the return.

    • Any return that is a Substitute for Return prepared by Examination ("SFR" in the margin) with Document 13133 (Expedite Processing Cycle) attached.

    • Any return with a stamp indicating a previous clearance by Statute Control within the last ninety days.

  3. Compare the displayed fields with the return and attachments. If incorrect, overlay the screen with the correct information.

    If... Then...
    Field 01RCD is blank, Enter the Received Date in Field 01RCD. Use the earliest date if multiple Received Dates are present. See IRM 3.12.154.7.7, Field 01RCD Received Date.
    CCC "W" was entered incorrectly, Delete CCC "W" from Field 01CCC.
    The return has a stamp that indicates a previous clearance by Statute Control within the last ninety days, Enter CCC "W" in Field 01CCC and on the return.

    Note:

    Do not send the return to Statute Control.

    The return is not stamped by Statute Control within the last ninety days,
    1. SSPND 310.

    2. Prepare Form 4227, to route to Statute Control.

♦Suspense Corrections♦ (EC 001)
  1. When Statute Control returns the cleared document, enter "W" in Field 01CCC and on the return. Continue processing.

  2. If Statute Control requests the record to be voided to them, SSPND 640.

♦Error Code 002 - Name Control Mismatch♦

  1. Error Code 002 will display as follows:

    Field Designator Field Name Field Length
    CL Clear Code 1
    01NC Name Control/Check digit 4
    >>>> Name Control Under-print 4
    01EIN Employer Identification Number 9
    01TXP Tax Year 4
    06CON "In Care of" Name 35
    06FAD Foreign Address 35
    06ADD Street Address 35
    06CTY City 22
    06ST State 2
    06ZIP ZIP CODE 12
♦Invalid Condition♦ (EC 002)
  1. Error Code 002 will generate when the name control mismatched against the National Account Profile (NAP) or Entity Index File (EIF).

♦Correction Procedures♦ (EC 002)
  1. Before taking any additional research steps to resolve Error Code 002, drop the cursor to the bottom of the screen and transmit. This will ensure that any prior changes to the Name Control have posted to the NAP. If Error Code 002 reappears, continue with the remainder of the correction procedures.

  2. When corrections are made to Field 01NC or Field 01EIN, the computer will validate the entries with the NAP and reset the OLE indicators as appropriate upon transmitting the ERS screen.

  3. Correct all misplaced entries, coding and transcription errors.

  4. Compare the displayed fields with the return and attachments. If incorrect, overlay the screen with the correct information.

  5. Refer to all of the following research instructions in this error code before taking any action.

  6. If Field 01NC and the Name on the return or attachments are the same but differ from the under-print in Field 01NC, research INOLES to determine the correct Name:

    If... Then...
    The Name on the return or attachment matches the Name Control on INOLES, Bring up the under-print.
    The Name Control on INOLES is different from the Name on the return or attachment, Research NAMEB and/or NAMEE for a new EIN.
  7. If a new EIN is located, verify the Name Control using Command Code (CC) INOLES:

    If... Then...
    The Name Control on INOLES agrees with the Name on the return or attachment,
    1. Ensure that the entity information matches the return.

    2. Overlay Field 01 EIN with the new EIN from NAMEB or NAMEE. When the EIN is changed from the one the taxpayer used, issue Letter 3875C as a non-suspense letter to the address on the return.

      Note:

      Do not send Letter 3875C if:
      • Three or less digits of the EIN are transposed, different, or missing, or
      • INOLES indicates the account has been "merged to" or "merged from," or
      • The EIN on the return is the taxpayer's SSN (check CC INOLEG).

    Multiple EINs are located,
    1. SSPND 320 to Entity Control.

    2. Prepare Form 4227, with the notation "MULTIPLE EINS" .

    INOLES indicates a "Merge To" (MT) EIN, Research the "MT" EIN on INOLES.
    The "MT" EIN matches the entity on the return or attachments, Enter the "MT" EIN in Field 01EIN.

    Note:

    Do not send Letter 3875C on MT EIN cases.

    The "MT" EIN does not match the entity on the return or attachments, SSPND 320 to Entity Control.
  8. If the Name on the return or attachment does not agree with the Name Control on INOLES, research ENMOD for a new name:

    If... Then...
    The Name Control on ENMOD agrees with the Name on the return or attachment, Enter "C" in the Clear Code field.
    The Name Control on ENMOD or INOLES does not agree with the Name on the return or attachment,
    1. SSPND 320 to route the return to Entity.

    2. Attach Form 4227, with the notation "NO RECORD" .

  9. If the Name change has not been made, research IDRS using Command Code ENMOD for a pending TC 013:

    If Then
    A pending TC 013 is present, Enter "C" in the Clear Code field.
    A pending TC 013 is not present,
    1. SSPND 320 to route to Entity Control.

    2. Attach Form 4227, with the notation "REQUEST NAME CHANGE (TC 013)" .

♦ Suspense Corrections♦ (EC 002)
  1. If there is an indication that Entity has assigned an EIN to the return, determine the Entity Assignment Date:

    If... Then...
    The Entity Assignment Date is past the Return Due Date and IRS Received Date,
    1. GTSEC 01.

    2. Enter the Entity Assignment Date in Field 01CRD.

    The Entity Assignment Date is not past the Return Due Date and IRS Received Date, Continue Processing.
  2. Research IDRS using CC BMFOL to determine if payments posted incorrectly:

    If... Then...
    The payment posted to the wrong EIN,
    1. Prepare Form 3465, Adjustment Request, to have the payment transferred to the correct module.

    2. Notate on Form 3465 to "MOVE PAYMENT TO CORRECT MODULE UPON COMPLETION AND RELEASE FREEZE"

    3. Write "Form 3465 PREPARED" on return, to the left of the Entity section.

    4. GTSEC 01. Enter CCC "X" in Field 01CCC.

    The payment posted correctly,
    1. Enter correct EIN in Field 01EIN and on the return.

    2. Enter "C" .

    Payment cannot be located, Enter "C" in the Clear Code field.

♦ Error Code 003 - Check Digit Invalid♦

  1. Error Code 003 will display as follows:

    Field Designator Field Name Length
    01NC Name Control 4
    01EIN Employer Identification Number 9
♦Invalid Condition (EC 003)♦
  1. Error Code 003 will generate when any of the following conditions are present:

    • A check digit is present but is not valid for the EIN.

    • The letters "E" , "G" or "M" (in check digit only) are present in Field 01NC.

♦Correction Procedures (EC 003)♦
  1. Correct all misplaced entries, coding and transcription errors.

  2. Compare the displayed fields with the return and attachments. If incorrect, overlay the screen with the correct information:

    If... Then...
    The check digit in Field 01NC does not match the return or is not legible, Enter the Name Control from the return in Field 01NC.
    The EIN on the return is not legible, Research IDRS using CC NAMEB or NAMEE for correct EIN.
  3. Compare the EIN from NAMEB/NAMEE to the EIN on the return:

    If... Then...
    The EIN on Form 940 or Form 940-PR matches the EIN on NAMEB or NAMEE, Enter Name Control from NAMEB or NAMEE in Field 01NC.
    Research indicates a different EIN, Verify the EIN and name on INOLES.
    Name Control on INOLES matches the name on the return or attachment,
    1. Overlay Field 01EIN with the EIN from INOLES.

    2. Issue Letter 3875C as a non-suspense letter to the address on the return.

      Note:

      Do not send Letter 3875C when:
      • Three or less digits of the EIN are transposed, different, or missing, or
      • INOLES indicates the account has been “merged to” or “merged from”, or
      • The EIN on the return is the taxpayer's SSN and research shows there is no valid entity on Master File for that EIN.

    Unable to locate an EIN or more than one EIN is located,
    1. SSPND 320 to Entity Control.

    2. Prepare Form 4227 with the notation "NO RECORD OF EIN" .

Suspense Correction (EC 003)
  1. Research IDRS using CC BMFOL to determine if payments posted incorrectly:

    If... Then...
    The payment posted to the wrong EIN,
    1. Prepare Form 3465, Adjustment Request, to have the payment transferred to the correct module.

    2. Notate on Form 3465, "MOVE PAYMENT TO CORRECT MODULE UPON COMPLETION AND RELEASE FREEZE" .

    3. Write "Form 3465 PREPARED" on the return, to the left of the Entity section.

    4. Enter CCC "X" in Field 01CCC.

    The payment posted to the correct EIN, Enter the correct EIN in Field 01EIN and on the return
    Payment cannot be located, Enter C in the Clear Code field.

♦Error Code 004 - Name Control/EIN Validation♦

  1. Error Code 004 will display as follows:

    Field Designator Field Name Field Length
    CL Clear Code 1
    01NC Name Control/Check Digit 4
    >>>> Name Control Under-print 4
    01EIN EIN 9
♦ Invalid Conditions♦ (EC 004)
  1. Error Code 004 will generate when any of the following conditions are present.

    1. The EIN is not present at Master File (MF).

    2. The Entity Index File (EIF) and the National Account Profile (NAP) were not accessed or were not operational, causing a blank under-print in Field 01NC.

    Note:

    An under-print of "XXXX" indicates that there is no account on the Master File, while a blank under-print indicates that the NAP has not been accessed or was not operational.

♦ Correction Procedures♦ (EC 004)
  1. Before taking any additional research steps to resolve Error Code 004, drop the cursor to the bottom of the screen and transmit. This will ensure that any prior changes to the Name Control/EIN have posted to the NAP. If Error Code 004 reappears, continue with the remainder of the correction procedures.

  2. When corrections are made to Field 01NC or Field 01EIN, the computer will validate the entries with the NAP and reset the OLE indicators as appropriate upon transmitting the ERS screen.

  3. Correct all misplaced entries, coding and transcription errors.

  4. Compare the displayed fields with the return and attachments. If incorrect, overlay the screen with the correct information.

  5. Refer to all of the following research instructions in this error code before taking any action.

  6. If Field 01NC and the Name Control on the return or attachments are the same but differ from the under-print in Field 01NC, research IDRS using Command Code (CC) INOLES to determine the correct Name Control:

    If... Then...
    The Name on the return or attachment matches the Name Control on INOLES, Bring up under-print.
    The Name Control on INOLES is different from the Name on the return or attachment, Research NAMEB and/ or NAMEE for a new EIN.
  7. If a new EIN is located, verify the Name Control using IDRS Command Code (CC) INOLES:

    If... Then...
    The Name Control on INOLES agrees with the Name on the return or attachment,
    1. Ensure that the entity information matches the return.

    2. Overlay Field 01EIN with the new EIN from NAMEB or NAMEE. When the EIN is changed from the one the taxpayer used, issue Letter 3875C as a non-suspense letter to the address on the return.

      Note:

      Do not send Letter 3875C if:
      • Three or less digits of the EIN are transposed, different, or missing, or
      • INOLES indicates the account has been "merged to" or "merged from," or
      • The EIN on the return is the taxpayer's SSN and research shows there is no valid entity on Master File for that EIN.

    Multiple EINs are located,
    1. SSPND 320 to Entity Control.

    2. Prepare Routing Slip with the notation "MULTIPLE EINS" .

    INOLES indicates a "Merge To" (MT) EIN, Research the "MT" EIN on INOLES.
    The "MT" EIN matches the entity on the return or attachments, Enter the "MT" EIN in Field 01EIN.
    The "MT" EIN does not match the entity on the return or attachments, SSPND 320 to Entity Control.
  8. If the Name on the return or attachment does not agree with the Name Control on INOLES, or there is an indication of a name change on Form 940, research using Command Code ENMOD for a new name:

    If... Then...
    The Name Control on ENMOD agrees with the Name Control on the return or attachment, Enter a "C" in the Clear Code field.
    The Name Control on ENMOD or INOLES does not agree with the Name Control on the return or attachment,
    1. SSPND 320 to route the return to Entity.

    2. Attach Form 4227 with the notation "NO RECORD" .

  9. If the Name change has not been made, research IDRS using Command Code ENMOD for a pending TC 013:

    If... Then...
    A pending TC 013 is present, Enter "C" in the Clear Code field.
    A Pending TC 013 is not present,
    1. SSPND 320 to route to Entity Control.

    2. Attach Form 4227 with the notation "REQUEST NAME CHANGE" .

♦ Suspense Correction♦ (EC 004)
  1. If there is an indication that Entity has assigned an EIN to the return, determine the Entity Assignment Date:

    If... Then...
    The Entity Assignment Date is past the Return Due Date and IRS Received Date,
    1. GTSEC 01.

    2. Enter the Entity Assignment Date in Field 01CRD if later than the due date of the return and CCC "3" is not present.

    The Entity Assignment Date is not past the Return Due Date and IRS Received Date, Continue processing.
  2. Research IDRS using CC BMFOL to determine if payments posted incorrectly:

    If... Then...
    The payment posted to the wrong EIN,
    1. Prepare Form 3465, Adjustment Request, to have the payment transferred to the correct module.

    2. Notate on Form 3465"MOVE PAYMENT TO CORRECT MODULE UPON COMPLETION AND RELEASE FREEZE."

    3. Write "Form 3465 PREPARED" on return, to the left of the Entity section.

    4. GTSEC 01. Enter CCC "X" in Field 01CCC.

    The payment posted correctly,
    1. Enter correct EIN in Field 01 EIN and on the return.

    2. Enter "C" in the Clear Code field.

    Payment cannot be located, Enter "C" in the Clear Code field.

♦ Error Code 005 - Tax Year or Received Date♦

  1. "Error Code 005 will display as follows: "

    Field Designator Field Name Field Length
    CL Clear Code 1
    01TXP Tax Year 4
    01RCD Received Date 8
♦ Invalid Condition♦ (EC 005)
  1. Error Code 005 will generate when the year-month of the processing date is later than the tax period plus 6 months and the IRS received date is not present.

♦ Correction Procedures♦ (EC 005)
  1. Correct all misplaced entries, coding and transcription errors.

  2. Compare the displayed fields with the return and attachments. If incorrect, overlay the screen with the correct information.

  3. A Received Date must be in Field 01RCD if the return is not timely filed.

  4. Use the earliest received date in Field 01RCD if there are multiple received dates on the return.

    Exception:

    Do not use a received date in Field 01RCD that is prior to the beginning of the tax period.

  5. Determine the Received Date using the following priority when one is needed but is not stamped on the return or a valid handwritten Received Date is not present:

    • Earliest legible Postmark Date (e.g., U.S. Postal Service (USPS), Foreign or Private Delivery (PDS)).

      Note:

      If an envelope is not attached, use the postmark date stamped on the face of the return.

    • Service Center Automated Mail Processing System (SCAMPS) digital date.

    • Revenue Officer's or other IRS official's signature date.

    • Signature date, if within the current year (unless other information indicates signature date is invalid).

    • Julian Date of the Document Locator Number (DLN) minus 10 days.

  6. If a return has been faxed to another area of the service and then sent to Submission Processing 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:

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

Error Code 006 - Remittance Amount with No Received Date

  1. Error Code 006 will display as follows:

    Field Designator Field Name Field Length
    RMIT Remittance Amount 11
    01RCD Received Date 8
Invalid Condition (EC 006)
  1. Invalid - Remittance is received with return but a Received Date is not present.

Correction Procedures (EC 006)
  1. Compare the displayed field with the return and do the following:

    If... Then...
    Incorrect data, Overlay the screen with the correct information.
    The received date is needed, but is not stamped on the return or a valid handwritten received date is not present, Determine the Received Date using the following priority:
    1. Earliest legible postmark date of the U.S. Post Office or a Private Delivery Service or a foreign postmark date.

      Note:

      If an envelope is not attached, use the postmark date stamped on the face of the return.

    2. Service Center Automated Mail Processing System (SCAMPS) digital date.

    3. Revenue Officer's or other IRS official's signature date.

    4. Signature date, if within the current year (unless other information indicates signature date is invalid).

    5. DLN julian date minus 10 days.

    6. Current date minus 10 days.

    Note:


    OSPC Only: If a foreign address return was sent to an IRS office in the foreign country instead of to Ogden, enter the foreign stamped received date (this includes U.S. Possessions).

♦Error Code 007 - Received Date Is Earlier Than Tax Year♦

  1. Error Code 007 will display as follows:

    Field Designator Field Name Field Length
    01TXP Tax Year 4
    01RCD Received Date 8
♦ Invalid Condition♦ (EC 007)
  1. Error Code 007 will generate when the received date is earlier than the first day of the Tax Period/Year by two months or more.

♦ Correction Procedures♦ (EC 007)
  1. Correct all misplaced entries, coding and transcription errors.

  2. Compare the displayed fields with the return and attachments. If incorrect, overlay the screen with the correct information.

    If... And... Then...
    The Received Date is invalid and it appears that the incorrect year was used (i.e., 20170115 instead of 20180115) and other information (julian date, postmark date, SCAMPS, and/or signature date) indicates that the received date should be a current year,   Change the received date year to the current year and enter in Field 01RCD.
    The return is an early filed "Final" return.  
    1. Enter "F" in Field 01CCC.

    2. SSPND 480.

    The return is not an early filed "Final" return, The Tax period ending is less than four months after the Received Date,
    1. SSPND 480.

    2. Prepare Form 4227, with the notation "Early Filed" .

    The return is not an early filed "Final" return, The Tax Period ending is more than four months after the Received Date,
    1. Initiate correspondence for clarification of the Tax Period.

    2. SSPND 211.

♦Suspense Correction♦ (EC 007)
  1. Refer to taxpayer's response and do the following:

    If... Then...
    The taxpayer replies that the return is a "Final" ,
    1. Change the Tax Period to agree with the month before the Received Date and enter in Field 01TXP.

    2. Enter "F" in Field 01CCC.

    The taxpayer replies that the return is not a final return, SSPND with AC 480 until the end of the tax period provided by the taxpayer.
    The taxpayer fails to reply or the reply is not adequate,
    1. Enter "3" in Field 01CCC.

    2. SSPND 480 until the end of the tax period indicated on the return.

♦Error Code 010 - Amended Return "G" Coded♦

  1. Error Code 010 will display as follows:

    Field Designator Field Name Field Length
    01CCC Computer Condition Code 10
    01PIC Penalty and Interest Code 1
    01SC1 State Code 2
    01ABC ABC Indicator 1

    Note:

    The ABC Indicator will no longer be captured. This field should have no entry.

    01MSB Multiple State Indicator Box 1
    01CRB Credit Reduction Indicator Box 1
    01SRI Form 940 Schedule R indicator 1
    01CAF CAF Indicator 1

    Note:

    The CAF Code will no longer be captured. This field should have no entry.

    01SIC Schedule Indicator Code 1
    01ARN Applied Refund Indicator 1
    Section 02 Present  
    Section 03 Present  
    Section 04 Present  
    Section 05 Present  
    Section 06 Present  
♦ Invalid Condition♦ (EC 010)
  1. Error Code 010 generates when Computer Condition Code G is present and fields other than 01NC, 01EIN, 01TXP, 01RCD, 01CCC, and 01CRD are present.

♦ Correction Procedures♦ (EC 010)
  1. Correct all misplaced entries, coding and transcription errors.

  2. Compare the displayed fields with the return. If incorrect, overlay the screen with the correct information.

  3. Determine if CCC "G" was input correctly.

    If... Then...
    Return indicates amended, revised, supplemental, corrected or superseding, Research BMFOL, SUMRY, and/or TXMOD to determine if information is exactly the same as a posted return.
    All information is not the same,
    1. Process the return with CCC "G" .

    2. DLSEC to delete all sections except Section 01.

    3. Delete the invalid entries that are present in Section 01. GTSEC 01, if necessary.

    All information is exactly the same, SSPND 640 and route to Rejects.
    A return is not posted for the tax period and the return is an amended return, Continue processing as an amended return.
    A return is not posted for the tax period and the return is not amended ("G" coded in error),
    1. Enter all necessary data in Sections 02 through 06.

    2. Ensure that the Section 01 fields are correct.

    3. Delete the "G" code in Field 01CCC.

    Note:

    When deleting CCC "G" and the sections required are shown as being present, no further verification of section entries is needed.

Error Code 011 - Remittance Amount Invalid

  1. Error Code 011 will display as follows:

    Field Designator Field Name Field Length
    RMIT Remittance Amount 11
    01CCC Computer Condition Code 10
    01RCD Received Date 8
    Section 02 Not Present  
Invalid Condition (EC 011)
  1. An invalid condition occurs if a remittance amount is present and there is no money field present in Section 02 and CCC "G" is not present.

Correction Procedures (EC 011)
  1. Compare the entries on the return with those on the screen and do the following:

    If... Then...
    The record is to be "G" Coded,
    1. Section 02 is not necessary. Enter CCC "G" in Field 01CCC.

    2. Verify that the received date is present, and enter it in Field 01RCD.

    Data is present on the return for Section 02 fields, Use CC GTSEC to bring up Section 02 and enter the appropriate data on the screen.
    There is no money amount in the RMIT> field, and an RRPS/ISRP indicator is present,
    1. CC GTSEC 02.

    2. Enter $.01 in Field 02TFT.

    3. Continue processing.

    The data present is insufficient to decide the correct application of the remittance amount,
    1. Suspend the record with SSPND 355.

    2. The Rejects unit will research using IDRS to secure the data and transfer the credit to the appropriate tax class or module.

  2. Rejects/ Suspense:

    If... Then...
    Data is not found, or you are unable to determine where to apply the excess remittance, Leave field 01ARN blank. Any excess remittance will be applied to the next tax year.

Error Code 014 - Missing Address Entries (EC 014)

  1. Error Code 014 will display as follows:

    Field Designator Field Name Field Length
    06CON "In care of" name 35
    06FAD Foreign Address 35
    06ADD Address 35
    06CTY City 22
    06ST State 2
    06ZIP ZIP CODE 12
♦ Invalid Conditions♦ (EC 014)
  1. Error Code 014 will generate if all fields are not present as follows:

    1. If the street address is present, Field 06CTY and Field 06ST must be present, unless a Major City Code is used.

    2. If a Major City Code is used, Field 06ADD must be present.

    3. A City must be present. If the city is not in the Major City format, Field 06ST must be present. Field 06ADD can be blank.

♦ Correction Procedures♦ (EC 014)
  1. Correct all misplaced entries, coding and transcription errors. If data is missing because address is foreign, SSPND 650 (except OSPC) to transship to OSPC.

  2. Compare the displayed fields with the return and attachments. If incorrect, overlay the screen with the correct information.

  3. Research any of the following for valid address information:

    • INOLES, NAMEB/NAMEE, ENMOD

    • Document 7475

    • See Exhibit 3.12.154-8, Entity State Code and Zip Code Chart

    • See Exhibit 3.12.154-10, Foreign Country Codes.

    If... Then...
    A Major City Code is present, and no street address is available,
    1. Enter the City Name in Field 06CTY (spelled out, not in Major City Code format).

    2. Enter the State Code in Field 06ST.

    The Major City Code is correct and the state is present, Delete Field 06ST.
    OSPC Only - Invalid U.S. Possession or foreign country, CC DLSEC 06. See Exhibit 3.12.154-10, Foreign Country Codes.
    The ZIP Code or Address cannot be corrected from the information on the return, attachments or from research, CC DLSEC 06.
    Invalid ZIP CODE, See Exhibit 3.12.154-8, Entity State Code and Zip Code Chart, for valid ZIP codes.

♦Error Code 015 - Foreign Address/State♦

  1. Error Code 015 will display as follows:

    Field Designator Field Name Field Length
    06CON "In Care of" Name 35
    06FAD Foreign Address 35
    06ADD Street Address 35
    06CTY City 22
    06ST State 2
    06ZIP ZIP Code 12
Invalid Condition (EC 015)
  1. Error Code 015 will generate when any of the following conditions are present:

    1. Field 06ST has an entry other than "." (period/space) when field 06FAD is present.

    2. Field 06ZIP has an entry when field 06FAD is present.

Correction Procedures (EC 015)
  1. Correct all misplaced entries, coding and transcription errors.

  2. Compare displayed fields with the return. If incorrect, overlay the screen with the correct information:

    If... Then...
    A foreign address is present in field 06FAD,

    Note:

    CSPC Only- Route returns with a foreign country, or U.S. Possession/Territory address to OSPC.

    1. Field 06ST must contain .(Period/space).

    2. Delete any entry in field 06ZIP

    A foreign address is not present in Field 06FAD, Check return for foreign address.
    A foreign address is present on the return,
    1. Enter the foreign address in field 06FAD.

      Note:

      If additional space is required, continue entering the address in Field 06ADD.

    2. Field 06CTY must contain the appropriate foreign country code. See Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries.

      Exception:

      Use the country code based on the province in field 06FAD if the foreign address is from Canada and the address contains a province name or abbreviation. See Exhibit 3.12.154-11, Province, Foreign Sate and territory Abbreviations.

    3. Field 06ST must contain . (period/space).

    4. Delete any entry in Field 06ZIP.

    A foreign address is not present on the return,
    1. Verify the address on the return is not a foreign address.

    2. SSPND 610.

    3. Renumber return with domestic DLN.

♦Error Code 016 - ZIP Code/State Mismatch♦

  1. Error Code 016 will display as follows:

    Field Designator Field Name Field Length
    06CON "In Care of" name 35
    06FAD Foreign Address 35
    06CTY City 22
    06ST State 2
    06ZIP ZIP Code 12
♦ Invalid Condition♦ (EC 016)
  1. Error Code 016 generates when the ZIP Code is inconsistent with the Major City Code or State Code.

♦ Correction Procedures♦ (EC 016)
  1. Correct all misplaced entries, coding and transcription errors.

  2. Compare the displayed fields with the return and attachments. If incorrect, overlay the screen with the correct information.

  3. Research any of the following for valid ZIP Code information:

    • Document 7475

    • INOLES, NAMEB/NAMEE, ENMOD

    • See Exhibit 3.12.154-8, Entity State Code and Zip Code Chart.

    Note:

    Enter the 3 digits followed by "01" of the first ZIP code listed for the applicable state in Document 7475 (e.g., 99501 for Alaska).

    If... And... Then...
    Unable to determine a valid ZIP Code from the return or attachments, A valid Zip Code is found through IDRS research, Enter the valid ZIP Code found through research in Field 06ZIP.
    Only the first three digits of the ZIP Code can be determine,   Enter "01" in the "4th" and "5th" position.
    A Zip Code cannot be determined,   Enter the 3 digits followed by "01" of the first Zip Code listed for the applicable state found in Document 7475. (e.g., 99501 for Alaska).
    The address is in a major city, A Major City Code can be determined, Enter Major City Code in Field 06CTY.
    The address is in a major city, A Major City Code cannot be determined,
    1. Enter the name of the city in Field 06CTY.

    2. Enter the State Code in Field 06ST.

    The address is not in a major city,  
    1. Enter the appropriate state abbreviation in Field 06ST.

    2. Enter the ZIP Code in Field 06ZIP.

Error Code 028 - Received Date Missing

  1. Error Code 028 will display as:

    Field Designator Field Name Field Length
    01CCC Computer Condition Codes 10
    01RCD Received Date 8
Invalid Condition (EC 028)
  1. Computer Condition Code "R," "7" , "D" , or "G" is present and the Received Date is NOT present.

Correction Procedures (EC 028)
  1. Compare the displayed fields with the return.

  2. If incorrect, overlay the screen with the correct information. See the table below:

    If... Then...
    "R" , "D" or "7" is present, Enter the Received Date in Field 01RCD.
    "R" , "D" or "7" is not on the return, Delete the "R," "D" or "7" from Field 01CCC.
    The return is not a "G" coded return and nothing indicates that this is other than the first return filed, CC GTSEC 02 and enter the data in the fields for Section 02 and transmit.
    Error Code 010 generates, Enter appropriate fields and delete Field 01CCC.
    The "G" code is correct, Enter the Received Date in Field 01RCD.
    The received date is missing or illegible, Determine the Received Date using the following priorities:
    1. Earliest legible postmark date of the U.S. Post Office or a Private Delivery Service or a foreign postmark date.

      Note:

      If an envelope is not attached, use the postmark date stamped on the face of the return.

    2. Service Center Automated Mail Processing System (SCAMPS) digital date.

    3. Revenue Officer's or other IRS official's signature date.

    4. Signature date, if within current year (unless other information indicates signature date is invalid).

    5. DLN julian date minus 10 days.

    6. Current date minus 10 days.

    Note:

    OSPC Only: If a foreign address return was sent to an IRS office in the foreign country instead of to Ogden, enter the foreign stamped received date (this includes U.S. Possessions).

Error Code 030 - Penalty / Interest Code Not Valid

  1. Error Code 030 will display as:

    Field Designator Field Name Field Length
    01TXP Tax Year 4
    01CCC Computer Condition Codes 10
    01RCD Received Date 8
    01PIC Penalty and Interest Code 1
Invalid Condition (EC 030)
  1. The Penalty and Interest Code of "1" is present and the Received Date is one of the following:

    1. On or before the due date of the return.

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

    3. Not present.

Correction Procedures (EC 030)
  1. Compare the display fields with the return and do the following:

    If... Then...
    Incorrect data, Overlay the screen with the correct information.
    The code is correct. The taxpayer is paying penalty or interest and the Received Date on the return is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Enter the correct Received Date.
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Delete "1" from Field 01PIC.
    The correct Received Date is equal to or earlier than the due date, Delete "1" from Field 01PIC.
    The Penalty and Interest Code is present and the received date is missing or illegible, Determine the Received Date using the following priorities:
    1. Earliest legible postmark date of the U.S. Post Office or a Private Delivery Service or a foreign postmark date.

      Note:

      If an envelope is not attached, use the postmark date stamped on the face of the return.

    2. Service Center Automated Mail Processing System (SCAMPS) digital date.

    3. Revenue Officer's or other IRS official's signature date.

    4. Signature date, if within current year (unless other information indicates signature date is invalid).

    5. DLN julian date minus 10 days.

    6. Current date minus 10 days.

    No indication of pre-computed penalty and/or interest, Delete Code "1" from Field 01PIC.

    Note:

    CCC "R," if present, will override the Penalty and Interest Code "1" .

Error Code 034 - Correspondence Received Date Not Valid

  1. Error Code 034 will display as:

    Field Designator Field Name Field Length
    01TXP Tax Year 4
    01RCD Received Date 8
    01CRD Correspondence Received Date 8
Invalid Conditions (EC 034)
  1. The Correspondence Received Date, Field 01CRD, is earlier or the same as either:

    1. The Received Date, Field 01RCD.

    2. The Return Due Date.

    3. The CRD is later than the processing date.

    4. An entry in Field 01CRD does not require an entry in Field 01RCD.

Correction Procedures (EC 034)
  1. Compare the displayed fields with the return and do the following:

    1. The Received Date will either be stamped or edited on the return.

      Note:

      Timely filed Form 940 Series Returns are not date stamped by Receipt and Control. per IRM 3.10.72., Campus Mail and Work Control - Receiving, Extracting, and Sorting.

    2. A Correspondence Receive Date (CRD) will be determined from the date the reply was received in the service center. Refer to the return for the CRD. It is edited in the Entity section of the return. This can be verified by checking the stamped Received Date on the correspondence attached to the return. See IRM 3.12.154.7.18.2Field 01CRD - Correction Procedures for received date priority order for replies received by mail or fax.

    If... Then...
    Incorrect data, Overlay the screen with the correct information.
    CRD is present and earlier than the Return Due Date, or later than the processing date, Delete the CRD from Field 01CRD.

Error Code 038 - Invalid Penalty Field

  1. Error Code 038 will display as:

    Field Designator Field Name Field Length
    01CCC Computer Condition Codes 10
    02FD FTD Penalty Taxpayer 10
Invalid Condition (EC 038)
  1. CCC "J" is present and FTD Penalty is present in Field 02FD.

Correction Procedures (EC 038)
  1. Refer to the return to determine whether the criteria below applies:

    If... Then...
    "State" , "City" , or "County" is noted on return, Delete the penalty from Field 02FD.
    None of the above is present, Delete the "J" from Field 01CCC.

Error Code 073 - Field 01CRD and Field 01CCC are Both Present

  1. Error Code 073 will display as:

    Field Designator Field Name Field Length
    01CCC Computer Condition Code 10
    01CRD Correspondence Received Date 8
Invalid Condition (EC 073)
  1. This error condition will generate if Field 01CCC is "3" and there is a date in Field 01CRD.

Correction Procedures (EC 073)
  1. Review the return and attachments for IRS correspondence:

    If... Then...
    A reply to IRS correspondence was received from the taxpayer and is attached,
    1. Circle the CCC "3" edited on the return.

    2. Delete CCC "3" from Field 01CCC.

    NO REPLY is attached
    1. Circle the Correspondence Received Date entered on the return.

    2. Delete entry in field 01CRD. See Exhibit 3.12.154-6, No Reply / Undeliverable Chart.

Error Code 200 - Section 03, 04, 05 (Form 940 Only)

  1. Error Code 200 will display as follows:

    Section Presence Description
    Section 03 (If Present)
    Section 04 (If Present)
    Section 05 (If Present)
Invalid Conditions (EC 200)
  1. Section 04 is present and Section 03 is not present.

  2. Section 05 is present and Section 04 is not present.

Correction Procedures (EC 200)
  1. The format of each field is "2" alphas (State Code) and 13 numerics (Credit Reduction wage amount), if applicable:

    If... Then...
    Compare the screen display with the entries on the return or edit sheet and if incorrect, Enter the data in the correct section(s) and use "CC DLSEC" to delete the incorrect section(s). For example: GTSEC 03. Enter in Field 03S01 "NY7000.00" .

Error Code 201 - State Code Field (Form 940 940 Only)

  1. Error Code 201 will display as follows:

    Field Designator Field Name Field Length
    01TXP Tax Year 4
    01SC1 State Code 2
Invalid Condition (EC 201)
  1. "ZZ" is present in "State Code Field" for Non-Credit Reduction Year. Credit Reduction applies, in recent years, to tax years 2004, 2005, and 2009 through 2017. See Exhibit 3.12.154-14, Credit Reduction State and rates (TY 2004 - 2017).

    Note:

    "ZZ" will appear as a field error if present in Sections 03 - 05.

Correction Procedures (EC 201)
  1. Compare screen display to the return for coding and transcription errors and make the appropriate corrections as follows:

    If... Then...
    Tax Year is correct. Delete "ZZ" and enter the correct State Code.
    Tax Year is changed. Transmit and let computer determine if "ZZ" is appropriate.
    Error re-displays, Go back and delete "ZZ" and enter correct State Code.

Error Code 202 - State Code Field

  1. Error Code 202 will display as follows:

    Field Designator Field Name Field Length
    01TXP Tax Year 4
    01SC1 State Code 2
    02TTW Total Taxable FUTA Wages 15
Invalid Condition (EC 202)
  1. "ZZ" is present in State Code Field and Total Taxable Wages for Form 940 is greater than "0" .

    Note:

    " ZZ" is entered into 01SC1 if there is no tax in 02TFT and the only state code available is for a Credit Reduction state for that year.

Correction Procedures (EC 202)
  1. Compare screen display to the return for coding and transcription errors and make the appropriate corrections:

    If... Then...
    After verifying the amount entered as Total Taxable Wages on Form 940 is correct and determining that the State Code entered is not a Credit Reduction State, Delete "ZZ" and enter the correct State Code. See Exhibit 3.12.154-14, Credit Reduction State and rates (TY 2004 - 2017).
    Credit Reduction is present, Delete State Code ZZ and use CC GTSEC 03 and enter State Code and applicable Credit Reduction wages from Form 940 Schedule A (Revision 2011).

Error Code 203 - State Code Present

  1. Error Code 203 will display as follows:

    Field Designator Field Name Field Length
    01SC1 State Code 2
    01MSB Multi-State Box 1
    01CRB Credit Reduction Box 1
    Section 03 Present  
    Section 04 Present  
    Section 05 Present  
Invalid Condition (EC 203)
  1. Error Code 203 will generate when the State Code is present in Field 01SC1 and either Section 04 Form 940 Schedule A is present or Section 05 Form 940 Schedule A is present.

Correction Procedures (EC 203)
  1. Compare the screen display to the return for coding or transcription errors and make the appropriate corrections:

    If... Then...
    The entity state is correct in field 01SC1, and the same state code is in Section(s) 03, 04 and/or 05
    1. Leave the valid State Code in field 01SC1.

    2. If the entity state in field 01SC1 is a Credit Reduction state for the return tax year filed, enter 1 in Field 01CRB if not present. See Exhibit 3.12.154-14Credit Reduction States and Rates (TY 2014 - 2017) for the Credit Reduction states, and tax years to determine the validity prior to entering 1 in Field 01CRB.

    3. DLSEC 03, 04 and 05. Also, blank any entry in field 01MSB.

    There is a State Code in field 01SC1, but there are multiple states in Section 03, 04 and/or 05.
    1. Review the return and any attachments and determine if the taxpayer is a single state filer, or a multi-state filer.

    2. If there is an indication, the taxpayer is a single state filer:

      1. Ensure the state code in field 01SC1 is the same state as the entity. Make correction to the display screen as needed.

      2. If the entity state in field 01SC1 is a Credit Reduction state for the return tax year filed, enter 1 in Field 01CRB if not present. See Exhibit 3.12.154-14, Credit Reduction States and Rates (TY 2014 - 2017) for the Credit Reduction states, and tax years to determine the validity prior to entering 1 in Field 01CRB.

      3. Blank any entry in field 01MSB. CC DLSEC Section(s) 03, 04 and/or 05.

    3. If there is an indication the taxpayer is a multi-state filer:

      1. Enter "1" in 01MSB if multi-states are present.

      2. Ensure there is an entry in field 01CRB if any of the multi states present is a Credit Reduction State. If blank, enter a "1 " in the field on the display screen.

Error Code 208 - State Code Not Present

  1. Error Code 208 will display as follows:

    Field Designator Field Name Field Length
    01CCC Computer Condition Code 10
    01TXP Tax Year 4
    01SC1 State Code 2
    01MSB Multi-State Check Box 1
    01CRB Credit Reduction Check Box 1
    Section 03 (Not Present)  
    Section 04 (Not Present)  
    Section 05 (Not Present)  
Invalid Condition (EC 208)
  1. The State Code Field 01SC1 is blank and no State Code is present in Section 03, 04 or 05 and 02TTW and 02TFT are greater than zero.

Correction Procedures (EC 208)
  1. Compare the screen display to the return for coding and transcription errors and make the appropriate corrections. See the table below:

    If... And... Then...
    The return is an amended return, CCC "G" is not present, Enter CCC "G" in Field 01CCC. The State Code entries are not needed.
    The return or attachments does not identify the return as a single State filer, Box 1b is not marked and no indication on Form 940, Schedule A of multi states or Form 940 Schedule A not attached,
    1. If the entity address on the return has a State Code, enter the valid State Code from the entity address in Field 01SC1.

    2. If the entity address on the return does not have a State Code, SSPND 211 and correspond using Letter 142C.

    The return or attachments identifies the return as a single State filer, The state is not subject to Credit Reduction,
    1. Enter the two character State Code in Field 01SC1. See Exhibit 3.12.154-7, States Codes, for valid state codes.

    2. Delete any entry in Field 01CRB.

    The return or attachments identifies the return as a single State filer, That state is subject to credit reduction,
    1. Enter the two character State Code in Field 01SC1.

    2. Enter a "1" in Field 01CRB, if not present.

      Note:

      Line 2 box can be marked by the taxpayer or by a Code & Edit tax examiner. If edit by Code & Edit ensure the entry was edit correctly prior to entering 1 in Field 01CRB.

    3. If the amount on line 11 is equal to the sum of Line 7 amount multiplied by the Credit Reduction Rate percentage, then enter the Line 7 amount into the appropriate Field for Section 03.

    4. If the amount on line 11 is not equal to the sum of Line 7 amount multiplied by the Credit Reduction Rate percentage, then SSPND 211 and correspond for Form 940 Schedule A using Letter 142C.

    Field 01SC1 is blank or the State Code in Box 1a (01SC1) is a foreign country other than a U.S. Possession, AA, AE, or AP, address is present on the entity of the return,
    See IRM 3.12.154.1.26.2, APO/DPO/ FPO Addresses.
    1. Enter the valid state code from the entity address on page 1 of the return and in Field 01SC1.

    2. If no valid state code is present, SSPND 211 and correspond using Letter 142C.

    Box 1b (Field 01MSB) is checked, Form 940 Schedule A is missing or has not been completed, or no attachment is attached identifying the multiple state Codes and their associated FUTA Taxable Wages, SSPND 211 and correspond using Letter 142C.
    Multiple State Codes are present, At least one state is subject to Credit Reduction and the associated FUTA Taxable Wage is identified by the taxpayer,
    1. Enter the two character State Code(s) and the associated FUTA Taxable Wage amounts (if applicable) in Section(s) 03, 04 and 05.

    2. Enter "1" in 01MSB, if not present.

    3. Enter "1" in 01CRB, if not present.

    4. If an entry is in 01SC1, verify that it is present in Sections 03, 04, or 05, as applicable and delete any entry in 01SC1.

    Multiple State Codes are present, None are subject to credit reduction,
    1. CC "GTSEC" Section(s) 03, 04 and 05. Enter the two character State Codes.

    2. Enter any State Code in Field 01SC1 to Section(s) 03, 04 and 05, as applicable.

    3. Delete any State Code in Field 01SC1.

    4. Enter "1" in 01MSB, if not present.

    The return is non-taxable, The State Code is for a Credit Reduction state for that year,
    1. Enter "ZZ" in the 01SC1.

    2. Delete any entries present in Sections 03, 04 or 05.

    Foreign Address and/or U.S. Possession in Field 01SC1, or Section 03 through 05,   SSPND 650. Prepare a Routing Slip and notate to transship to OSPC.
    OSPC ONLY: There is a foreign country other than a U.S. Possession, US Virgin Islands or Puerto Rico, The valid state code can not be determined, SSPND 215 and correspond using Letter 142C.
    OSPC ONLY: Field 01SC1 is blank, No state or country is listed on Form 940-PR Enter "PR" into Field 01SC1.
No Reply To Correspondence (EC 208)
  1. If correspondence was not received or not provided do the following:

    If... Then...
    The entity State Code is a valid Credit Reduction State for the tax year of the return,
    1. Enter the entity state code in Field 01SC1, if not present.

    2. Enter "1" in 01CRB, if not present.

    3. Enter the Line 7 amount into the appropriate Field for Section 03.

    The entity State Code is not a valid Credit Reduction State for the tax year of the return,
    1. CC "GTSEC" Section(s) 03, 04 and 05. Enter the two character State Code from the entity of the return.

    2. Delete any State Code in Field 01SC1.

    3. Enter "1" in 01MSB, if not present.

    If the entity on the return contains a foreign country other than a U.S. Possession, U.S. Virgin Island or Puerto Rico,
    1. Delete the entry in Fields 01SC, 01MSB, and 01CRB if present.

    2. Also delete the invalid Credit reduction State Code and associated amount from Section 03, 04, and 05 as applicable.

    If no state was provided, Research Command Code BMFOLI to determine whether the taxpayer filed previous Form 940 tax return, If the taxpayer filed a previous year tax return, use Command Codes BMFOLR, TRDBV, and IRPTRI:
    1. Research should reveal the EIN established date.

    2. Then research when the first return was filled after the established date.

    3. The return filed should then reflect the state code in the entity and if it matches IRPTR (Form W-2, Form 1099, etc.) information then, enter the state code on Form 940 and in the fields display.

    If the state code cannot be determined after research BMFOL, TRDBV, and or IRPTR, If a telephone number is provide for a signer (Payroll Technician) or Paid Preparer on the tax return in question. ERS Rejects should call the represent at the number listed requesting the missing state code. See IRM 3.12.154.1.19, IRS Employee Contact Rev. Proc. RRA98-Section 3705(a) and See IRM 3.12.154.1.19.1, Employee Contact Procedures.
    1. If the state code is provided, enter it on the return and on the ERS screen display.

    2. If no state code is provided:

      • SSPND the return with Action Code 460.

      • Notate on Form 4220 “EC 208 State Code not provided TC”.

      • Notify your campus ERS P&A Analyst for elevation of the issue to headquarters.

Error Code 209 - Box 1a State Code and Box 1b Multi-State Indicator

  1. Error Code 209 will display as follows:

    Field Designator Field Name Field Length
    01SC1 State Code 2
    01MSB Multi-State Indicator 1
    01CRB Credit Reduction Check Box 1
    Section 03    
    Section 04    
    Section 05    
Invalid Conditions (EC 209)
  1. There is a valid State Code in 01SC1 (Box 1a) and also an entry in 01MSB (Box 1b).

  2. Neither 01SC1 nor 01MSB are present and 02TTW and 02TFT are greater than zero.

Correction Procedures (EC 209)
  1. Compare the screen display to the return for coding and transcription errors and make the appropriate corrections. See the table below:

    If... And... Then...
    There is a valid state code shown in field 01SC1, There is an entry in 01MSB, Examine the return and attachments to determine if the taxpayer is a single or multi-state filer:
    1. If it is determined that the taxpayer is a single state filer, and not a credit reduction state:

      1. Delete the entry in 01MSB.

      2. Delete the state shown in Sections 03, 04 or 05.

    2. If it is determined that the taxpayer is a multi-state filer:

      1. Delete the entry in 01SC1.

      2. Enter the state code in the appropriate field in Section 03, 04, or 05.

      3. Be sure that the state code shown in 01SC1 is checked on Form 940 Schedule A. If it is not checked, mark the appropriate box on Form 940 Schedule A (Revision 2011)

    A single state is identified anywhere on the return or attachments by the taxpayer, That state is subject to credit reduction,
    1. Enter the state code in 01SC1, if not present.

    2. Enter 1 in 01CRB, if not present.

    3. If the associated FUTA Taxable Wages has been identified by the taxpayer, then enter the amount into Section 03 next to the Credit Reduction State code.

    4. If the associated FUTA Taxable Wages has not been identified by the taxpayer:

      1. If the amount on line 11 is equal to the sum of Line 7 amount multiplied by the Credit Reduction Rate percentage, then enter the Line 7 amount into the appropriate Field for Section 03.

      2. If the amount on line 11 is not equal to the sum of Line 7 amount multiplied by the Credit Reduction Rate percentage, then SSPND 211 and correspond for Form 940 Schedule A using Letter 142C.

    A single state is identified anywhere on the return or attachments by the taxpayer, The state is not subject to the credit reduction, Input the state code in 01SC1.
    Form 940 Schedule A is not attached, 01SC1 contains a valid state code that is not subject to credit reduction, Delete the entry in 01MSB.
    The State Code in Box 1a (01SC1) is a foreign country other than a U.S. Possession, AA, AE, or AP, address is present on the entity of the return,
    See IRM 3.12.154.1.26.2, APO/DPO/FPO Addresses.
    1. Enter the state from the entity address on page 1 of the return and in Field 01SC1.

    2. If no valid state code is present, SSPND 211 and correspond using Letter 142C.

    OSPC ONLY: There is a foreign country other than a US Possession, US Virgin Islands or Puerto Rico in the entity area, A valid state code can not be determined, SSPND 215 and correspond using Letter 142C.
    OSPC ONLY: Field 01SC1 is blank, No state or country is listed on Form 940-PR,
    1. Enter "PR" into Field 01SC1.

    2. Delete entry in 01MSB, if present.

    The State Code in Box 1a (01SC1) is blank, Box 1b. (01MSB) is not checked
    1. If Line 9 (02ADJ) entry is blank, SSPND 211 and correspond for Line 9 amount.

    2. If Line 9 (02ADJ) entry is present, take no action and continue to process the return.

Error Code 210 - Box 1b Multi-State Indictor

  1. Error Code 210 will display as follows:

    Field Designator Field Name Field Length
    01SC1 State Code 2
    01MSB Multi-State Indicator 1
    01CRB Credit Reduction Check Box 1
    Section 03    
    Section 04    
    Section 05    
Invalid Conditions (EC 210)
  1. Error Code 210 will generate when:

    • Field 01MSB contains an entry, and Section(s) 03, 04, or 05 contains only one state code or no state codes are present.

    • Field 01MSB is blank, and Section(s) 03, 04, and 05 contains more than 1 state code or Section(s) 03, 04, or 05 contains only one state code or no state codes are present and Field 01CRB contains an entry.

Correction Procedures (EC 210)
  1. Compare the screen display to the return for coding and transcription errors and make the appropriate corrections. See the table below:

    If... And... Then...
    The return is Identified as a single state filer, The state is not a credit reduction state,
    1. Delete the entry in 01MSB if present.

    2. Enter the single state code into field 01SC1.

    3. Delete the state code(s) and/or FUTA Taxable Wage amount(s) in Section(s) 03, 04, and 05 on the display screen.

      Note:

      If Form 940 Schedule A is attached to the return, draw a slash (/) across the Form 940 Schedule A. This will indicate on the Form 940 Schedule A that it has been deleted.

    The return is Identified as a single state filer, The state is a credit reduction state,
    1. Enter the state code in 01SC1, if not present.

    2. Enter "1" in 01CRB, if not present.

    3. If the associated FUTA Taxable Wages has been identified by the taxpayer, then enter the amount into Section 03 next to the Credit Reduction State code.

    4. If the associated FUTA Taxable Wages has not been identified by the taxpayer:

      1. If the amount on line 11 is equal to the sum of Line 7 amount multiplied by the Credit Reduction Rate percentage, then enter the Line 7 amount into the appropriate Field for Section 03.

      2. If the amount on line 11 is not equal to the sum of Line 7 amount multiplied by the Credit Reduction Rate percentage, then SSPND 211 and correspond for Form 940 Schedule A using Letter 142C

    There is an entry in 01MSB, There is only one state shown in Section(s) 03, 04, or 05,
    1. Examine the return and attachments to determine the taxpayer's true filing status, e.g., single state filer, or Multi-State filer.

    2. If you determine the taxpayer is a single state filer:

      • Delete the entry in 01MSB.

      • Enter the single state code into field 01SC1.

    3. Determine if the state just entered into field 01SC1 is a Credit Reduction state for the return tax period year. See Exhibit 3.12.154-14, Credit Reduction States and rates (TY 2004 - 2017).

      • If the state is a Credit Reduction state for the return tax year, no further action is needed.

      • If the state is not a Credit Reduction state for the tax year, delete the state code(s) and/or FUTA Taxable Wage amount(s) in Section(s) 03, 04, and 05 on the display.

        Note:

        If Form 940 Schedule A is attached to the return, draw a slash (/) across the Form 940 Schedule A. This will indicate on the Form 940 Schedule A that it has been deleted.

    There is no entry in field 01MSB, There is more than one (1) state shown in Section(s) 03 04, or 05,
    1. Enter a "1" in field 01MSB (Box 1b).

    2. If a state is present that is a valid credit reduction state and 01CRB is blank, enter a "1" in Field 01CRB.

    OSPC ONLY: The state code is for a foreign country other than a U.S Possession, AA, AE, or AP, address is present in the entity of the return,
    See IRM 3.12.154.1.26.2, APO/DPO/FPO Addresses.
    Enter the state from the entity address from page 1 of the return in 01SC1.
    OSPC ONLY: The state code is for a foreign country other than a U.S Possession, No AA, AE, or AP, address is present in the entity of the return, SSPND 211 and correspond for a valid state code using Letter 142C.
    OSPC ONLY: Field 01SC1 is blank, No state or country is listed,
    1. Enter "PR" into Field 01SC1.

    2. Delete entry in 01MSB, if present.

Error Code 211 - Box 2 Credit Reduction Indicator

  1. Error Code 211 will display as follows:

    Field Designator Field Name Field Length
    01SC1 State Code 2
    01CRB Credit Reduction Check Box 1
    01MSB Multi-State Indicator 1
    Section 03    
    Section 04    
    Section 05    
Invalid Conditions (EC 211)
  1. This field will be invalid if the Credit Reduction box is checked for a year that is subject to credit reduction, but Section 03, 04, or 05 of Form 940 Schedule A is not present. Note: Error Code 211 will not generate if a state is present in field 01SC.

Correction Procedures (EC 211)
  1. Compare the screen display to the return for coding and transcription errors and make the appropriate corrections. See the table below: