3.12.217 Error Resolution Instructions for Form 1120S

Manual Transmittal

November 26, 2018

Purpose

(1) This transmits revised IRM 3.12.217, Error Resolution, Error Resolution Instructions for Form 1120S.

Material Changes

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

(2) IRM 3.12.217.1.7 - Related Resources - Added IAT link to the table.

(3) IRM 3.12.217.1.9 - Business Master File (BMF) Consistency - Added Kansas City to match BMF ERS Consistency Template.

(4) IRM 3.12.217.1.13(5) - Use of Fax for Taxpayer Submissions - Updated IRM reference and title to match BMF ERS Consistency Template.

(5) IRM 3.12.217.1.15 - Criminal Investigation (CI) Referral - Revised Criminal Investigation instructions (IPU 18U0004 issued 01-02-2018).

(6) IRM 3.12.217.1.15 - Criminal Investigation (CI) Referral - Added Kansas City to match BMF ERS Consistency Template.

(7) IRM 3.12.217.1.17 - Refund Returns 45 Day Jeopardy and $100 Million Dollar Refunds - Changed $10 million to $100 million for consistency.

(8) IRM 3.12.217.1.27 - Action Code Suspense - Revised phrasing for clarity.

(9) IRM 3.12.217.1.29(1) table - Action Code Chart - Added a column to the left to separate the action codes from the descriptions.

(10) IRM 3.12.217.1.30(1) - Clear Code "C" and "000" - Added the word "Code" for field title consistency.

(11) IRM 3.12.217.1.32(2) table - Correspondence - Added the word "Code" for field title consistency.

(12) IRM 3.12.217.1.32.1(3) - Correspondence Imaging System (CIS) Returns - Revised instructions to match BMF ERS Consistency Template (IPU 18U0236 issued 02-05-2018).

(13) IRM 3.12.217.1.40 - Added Form 965, Form 965, Schedules A-H, and Form 965-B, to this subsection per IRM 3.11.217 feedback from Large Business and International (LB&I).

(14) IRM 3.12.217.1.40 - Revised instructions for continued processing of Section 965 returns held in management suspense with Action Code "460" . (IPU 18U1120 issued 08-01-2018)

(15) IRM 3.12.217.1.40 - Section 965 Returns - Added Schedule K, Line 14r to Section 965 return identification criteria for processing year 2019.

(16) IRM 3.12.217.1.40 - Section 965 Returns - Added instructions for CCC "J" input and correspondence (IPU 18U0624 issued 04-12-2018).

(17) IRM 3.12.217.1.40 - Section 965 Returns - Added new subsection with information to identify and suspend Section 965 returns (IPU 18U0508 issued 03-21-2018).

(18) IRM 3.12.217.2 - Section 01 - Entity Data and Codes for Returns - Added Return Processing Code, Field 01RPC, to Section 01.

(19) IRM 3.12.217.2.2 - Field 01NC - Name Control - Revised title, added instructions from "Correction 01NC" and reformatted text for subsection consistency.

(20) IRM 3.12.217.2.3 - Field 01EIN - Employer Identification Number - Revised title, added instructions from "01EIN Correction" and reformatted text for subsection consistency.

(21) IRM 3.12.217.2.4 - Field 01NAI - North American Industry Classification System (NAICS) - Revised title, added instructions, and reformatted text for subsection consistency.

(22) IRM 3.12.217.2.5 - Field 01TXP - Tax Period - Revised title, added instructions from "Tax Period Correction" and reformatted text for subsection consistency.

(23) IRM 3.12.217.2.6 - Field 01RCD - Received Date - Revised title, added instructions, and reformatted text for subsection consistency.

(24) IRM 3.12.217.2.7 - Field 01CCC - Computer Condition Code - Revised title.

(25) IRM 3.12.217.2.7(3) - Field 01CCC - Computer Condition Code - Added "M" to the list of valid CCCs.

(26) IRM 3.12.217.2.7(3) - Field 01CCC - Computer Condition Code - Added "J" to the list of valid CCCs (IPU 18U0624 issued 04-12-2018).

(27) IRM 3.12.217.2.8 - Added Form 965, Form 965, Schedules A-H, and Form 965-B, to this subsection per IRM 3.11.217 feedback from Large Business and International (LB&I).

(28) IRM 3.12.217.2.8 - Computer Condition Code (CCC) Chart - Added Schedule K, Line 14r to Section 965 return identification criteria to CCC "J" for processing year 2019.

(29) IRM 3.12.217.2.8 - Computer Condition Code (CCC) Chart - Added criteria for CCC "M" input to the chart.

(30) IRM 3.12.217.2.8 - Computer Condition Code (CCC) Chart - Added criteria for CCC "J" input to the chart (IPU 18U0624 issued 04-12-2018).

(31) IRM 3.12.217.2.9 - Field 01TXB - Tax Period Beginning - Revised title, added instructions, and reformatted text for subsection consistency.

(32) IRM 3.12.217.2.10 - Field 01CRD - Correspondence Received Date - Revised title, added instructions, and reformatted text for subsection consistency.

(33) IRM 3.12.217.2.11 - Field 01CBI - Preparer Check Box Indicator - Revised title, added instructions, and reformatted text for subsection consistency.

(34) IRM 3.12.217.2.11 - Field 01CBI - Preparer Check Box Indicator - Deleted last sentence; Code and Edit does not edit CBI (IPU 18U0236 issued 02-05-2018).

(35) IRM 3.12.217.2.12 - Field 01PSN - Preparer Tax identification Number (PTIN) - Revised title and changed bullet list to alpha list in (4).

(36) IRM 3.12.217.2.13 - Field 01PEN - Preparer Employer Identification Number - Revised title and changed bullet list to alpha list in (4).

(37) IRM 3.12.217.2.14 - Field 01PTN - Paid Preparer Telephone Number - Revised title and added alpha list to (3).

(38) IRM 3.12.217.2.15(5) - Field 01MSC Missing Schedule Code - Added the word "Schedules" to the text.

(39) IRM 3.12.217.2.16 - Field 01RPC - Return Processing Code - Added new subsection with instructions for new Field 01RPC.

(40) IRM 3.12.217.3.2(4) - Field 02FAD - Foreign Address - Added Form 4227 title.

(41) IRM 3.12.217.4.1 - Field 03PRI - Penalty/Interest Code - Revised the subsection title.

(42) IRM 3.12.217.4.2 - Field 03TPC - Tax Preference Code - Revised title and instructions - for Tax Periods 201812 and later, the Tax Peference Code is no longer valid.

(43) IRM 3.12.217.4.3 - Field 03SWC - Salary and Wage Code - Revised the subsection title.

(44) IRM 3.12.217.4.4 - Field 03ADC - Audit Code - Revised the subsection title and reformatted text for subsection consistency.

(45) IRM 3.12.217.4.5(2) (7) - Audit Code - Changed line reference from 14(l) to 14p due to new form revision. Added reference to line 14(l) for prior year revisions.

(46) IRM 3.12.217.4.6 - Field 03ISI - Installment Sales Indicator - Revised the subsection title.

(47) IRM 3.12.217.4.7 - Field 03IRC - Initial Return Code - Revised the subsection title.

(48) IRM 3.12.217.4.8 - Field 03GSH - Number of Shareholders - Revised the subsection title.

(49) IRM 3.12.217.4.9 - Field 03AMC - Accounting Method Code - Revised the subsection title.

(50) IRM 3.12.217.4.10 - Field 03LIC - Low Income Housing Credit - Revised the subsection title.

(51) IRM 3.12.217.4.11 - Field 03RLI - Total Recapture Credit - Revised the subsection title.

(52) IRM 3.12.217.7(4) - Section 06 - Tax and Payments - Added valid Tax Period information for new Field 0623D, Refundable Credit from Form 8827.

(53) IRM 3.12.217.7 - Section 06 - Tax and Payments - Deleted (3) and moved the instructions to new subsection for Field 0618A.

(54) IRM 3.12.217.7(5) - Section 06 - Tax and Payments - Added new Fields 06Q15 and 06QOF for new Schedule B, line 15 per Work Request Notification (WRN) dated 05-30-2018.

(55) IRM 3.12.217.7(5) - Section 06 - Tax and Payments - Added new Field 0623D, Refundable Credit from Form 8827, changed existing field designator "0623D" to "06TRT" , Telephone Excise Tax Paid, and changed line references for Field 0623E.

(56) IRM 3.12.217.7.1 - Field 0618A - Total Gross Rents - Added new subsection for Field 0618A instructions.

(57) IRM 3.12.217.7.2 - Field 0623D - Refundable Credit from Form 8827 - Added new subsection for new Field 0623D instructions.

(58) IRM 3.12.217.7.3 - Field 06Q15 - Form 8996, Qualified Opportunity Fund Code - Added new subsection for new Field 06Q15 instructions.

(59) IRM 3.12.217.7.4 - Field 06QOF - Form 8996, Qualified Opportunity Fund Amount - Added new subsection for new Field 06QOF instructions.

(60) IRM 3.12.217.9.2 through IRM 3.12.217.9.5 - Revised the subsection titles and reformatted text for subsection consistency.

(61) IRM 3.12.217.10.2 through IRM 3.12.217.10.12 - Revised the subsection titles and reformatted text for subsection consistency.

(62) IRM 3.12.217.11 - Section 15-18 - Form 4136, Credit for Federal Tax Paid on Fuels - Added new (4) and moved "note" from (3) to (4) and changed to "example" .

(63) IRM 3.12.217.11.1(4) -Section 15-18 Field Errors - Changed expiration date to 201811 for Credit Reference Number (CRN)s 307, 388, 390, 426, 427, 428, 429, 430, 431, 432, 436, and 437.

(64) IRM 3.12.217.11.1(4) -Section 15-18 Field Errors - Updated the Tax Period information. The Bipartisan Budget Act of 2018 (Date of Enactment: February 9, 2018) has extended the biodiesel or renewable diesel mixture credit and the alternative fuel credit through 2017 (IPU 18U0321 issued 02-20-2018).

(65) IRM 3.12.217.11.1 (4) - Section 15-18 Field Errors - Changed expiration date to 201711 for Credit Reference Number (CRN)s 307, 388, 390, 426, 427, 428, 429, 430, 431, 432, 436, and 437 (IPU 18U0074 issued 01-08-2018).

(66) IRM 3.12.217.15.1(3) - Error Code 001 - Tax Year-Invalid Entry - Added Form 4227 title.

(67) IRM 3.12.217.15.1 - Error Code 001 - Tax Year-Invalid Entry - Revised instructions to match BMF ERS Consistency Template (IPU 18U0236 issued 02-05-2018).

(68) IRM 3.12.217.15.14(3)d - Error Code 028 - Received Date Missing - Revised instructions to match similar subsection for consistency within instructions.

(69) IRM 3.12.217.15.18 - Error Code 074 - Telephone Excise Tax Refund (TETR) - Revised error code title and revised the instructions to reflect the expiration of the statute covering claims for refunds on TETR

(70) IRM 3.12.217.15.20(2) - Error Code 622 - Tax Period and CRN Check - Changed expiration date to 201811 for Credit Reference Number (CRN)s 307, 388, 390, 426, 427, 428, 429, 430, 431, 432, 436, and 437.

(71) IRM 3.12.217.15.20(2) - Error Code 622 - Tax Period and CRN Check - Updated the Tax Period information. The Bipartisan Budget Act of 2018 (Date of Enactment: February 9, 2018) has extended the biodiesel or renewable diesel mixture credit and the alternative fuel credit through 2017 (IPU 18U0321 issued 02-20-2018).

(72) IRM 3.12.217.15.20 (2) - Error Code 622 - Tax Period and CRN Check - Changed expiration date to 201711 for Credit Reference Number (CRN)s 307, 388, 390, 426, 427, 428, 429, 430, 431, 432, 436, and 437 (IPU 18U0074 issued 01-08-2018).

(73) IRM 3.12.217.15.24(3) - Error Code 656 - Total Income Mismatch - Added new instructions in the first row and revised instructions in the second row for clarification (IPU 18U0624 issued 04-12-2018).

(74) IRM 3.12.217.15.26(3) table - Error Code 659 - Ordinary Income Loss Mismatch - Added the word "Schedules" to the last Then box.

(75) IRM 3.12.217.15.27(3) - Error Code 660 -Total Tax Taxpayer present and No 06MCT - Revised subsection formatting. Added information from paragraphs into separate If/Then tables for clarity. Added information for new write-in per Form 1120S Work Request Notification dated 04-30-2018.

(76) IRM 3.12.217.15.30(3)e - Error Code 670 - Remittance or RRPS Indicator - Added the word "Code" for field title consistency.

(77) IRM 3.12.217.15.31 - Error Code 672 - Sections 15, 16, 17, 18 or 06 Not Present - Added new Field 0623D (Refundable credit from Form 8827) to the table and changed line reference for Field 0623E, per Form 1120S Work Request Notification dated 04-30-2018.

(78) IRM 3.12.217.15.31(3)e - Error Code 672 - Sections 15, 16, 17, 18 or 06 Not Present - Added the word "Schedules" to the text.

(79) IRM 3.12.217.15.32 - Error Code 674 - Balance Due/Overpayment Mismatch - Changed existing field designator for Telephone Excise Tax Paid from "0623D" to "06TRT" .

(80) IRM 3.12.217.15.32(1) Table - Error Code 674 - Balance Due/Overpayment Mismatch - Changed the field names for 0623D and 0623E (IPU 18U0665 issued 04-19-2018).

(81) Exhibit 3.12.217-14 - Potential Frivolous Arguments for Examination Review - Revised Form 1099-OID title to match BMF ERS Consistency Template (IPU 18U0236 issued 02-05-2018).

(82) Exhibit 3.12.217-21 - Terms/Definitions/Acronyms - Added "RPC" to the acronym table.

(83) IRM references updated throughout the IRM.

(84) Exhibits revised throughout the IRM.

Effect on Other Documents

IRM 3.12.217 dated November 16, 2017 (effective January 1, 2018) is superseded. This IRM also incorporates the following IRM Procedural Updates (IPUs): 18U0004 (issued 01-02-2018), 18U0074 (issued 01-08-2018), 18U0236 (issued 02-05-2018), 18U0321 (issued 02-20-2018), 18U0508 (issued 03-21-2018),18U0624 (issued 04-12-2018), 18U0665 (issued 04-19-2018), 18U1120 (issued 08-01-2018), and 18U1298 (issued 10-05-2018).

Audience

Wage and Investment employees working Business Masterfile (BMF) Error Correction are the intended audience for this Internal Revenue Manual.

Effective Date

(01-01-2019)

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

Program Scope and Objectives

  1. This IRM section provides instructions for Wage and Investment Error Resolution Tax Examiners to correct errors for Form 1120S, U.S. Income Tax Return for an S Corporation.

  2. Purpose: The Error Resolution System (ERS) is a means to resolve errors made by taxpayers and correct errors made during campus processing.

  3. Audience: Tax Examiners in the Input Correction Operation and Error Resolution Section, including:

    • Tax Examining Technicians

    • Lead Tax Examining Technicians

    • Supervisory Tax Examining Assistants

  4. Policy Owner: Director, Submission Processing.

  5. Program Owner: Paper Processing Branch, Business Master File (BMF) Section.

  6. Primary Stakeholders: Other areas that may be affected by these procedures include (but not limited to):

    • Accounts Management (AM)

    • Chief Counsel

    • Compliance

    • Information Technology (IT) Programmers

    • Large Business and International (LB&I)

    • Small Business Self-Employed (SBSE)

    • Statistics of Income (SOI)

    • Submission Processing (SP)

    • Taxpayer Advocate Service (TAS)

    • Tax Exempt and Government Entities (TEGE)

  7. Program Goals: Ensure all necessary action is taken on the return and attachments to ensure correct posting of the return data.

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., Employer Identification Number (EIN) with 8 digits instead of 9).

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

    • Invalid Tax Periods and eligibility for certain credits.

  2. Employees use ERS to correct these conditions and when necessary use IDRS to research.

Authority

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

    • IRC 6201(a)

    • IRC 6213(b)

Responsibilities

  1. The Campus Director is responsible for monitoring operational performance for their campus.

  2. The Operations Manager is responsible for monitoring operational performance for their operation.

  3. The Team Manager/Lead is responsible for performance monitoring and ensuring employees have the tools to perform their duties.

  4. The Team Employees are responsible to follow the instructions contained in this IRM and maintain updated IRM procedures.

Program Management and Reviews

  1. Program Reports:- System control reports are on the Control-D WebAccess (CTDWA) and a general listing of the reports are located in IRM 3.12.38, Error Resolution, BMF General Instructions.

  2. Program Effectiveness is measured using the following:

    • Embedded Quality Submission Processing (EQSP)

    • Balanced Measures

    • Managerial reviews

  3. Annual Review: Federal Managers Financial Integrity Act (FMFIA)

Program Controls

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

Terms/Definitions/Acronyms

  1. For Terms, Definitions and Acronyms, see Exhibit 3.12.217-21.

Related Resources

  1. The following table lists related sources

    Resource Link/Title
    Submission Processing Design Center (SPDC) http://coursebooks.enterprise.irs.gov/
    Servicewide Electronic Research Program (SERP) http://serp.enterprise.irs.gov/
    Integrated Data Retrieval System (IDRS)  
    Integrated Automation Technologies (IAT) http://iat.web.irs.gov/
    IRM 3.11.217 Returns and Documents Analysis - Form 1120S Corporation Income Tax Returns
    IRM 3.24.16 ISRP System - Corporation Income Tax Returns
    IRM 3.12.38 Error Resolution, BMF General Instructions

♦IRM Deviation Procedures♦

  1. IRM deviations must be submitted in writing following instructions from IRM 1.11.2.2.4, When Procedures Deviate from the IRM, and elevated through appropriate channels for executive approval.

♦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, Kansas City, Ogden, and Paper Processing Branch BMF Code and Edit (C&E)/ Error Resolution System (ERS).

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

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

♦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. IRS employees are required to give their name and unique identification number during taxpayer telephone, face-to-face and written contact. In addition, a telephone number is required on all taxpayer correspondence. This will provide taxpayers with enough information to identify an IRS employee who has previously assisted with tax related matters.

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

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

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

    3. Correspondence - All correspondence must include a telephone number that taxpayers can call for answers to any questions they may have. In addition, manually generated and handwritten correspondence must have the employee’s title (e.g., Mr., Mrs., Ms., Miss), last name and IDRS (Integrated Data Retrieval System) number, letter system number, or their badge identification (ID Card) number.

    4. The IDRS number and numbers for some other letter systems are automatically generated. If it is not generated, or a handwritten note is prepared, the badge identification (ID Card) number must be used. Toll-free employees may also provide their location for identification purposes. Faxes to taxpayers on tax-related matters are considered manually generated correspondence and must include the required information.

    5. Correspondence, whether sent directly to the taxpayer or to the taxpayer's personal representative, must contain the required information.

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

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

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

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

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

    Note:

    The Taxpayer Bill of Rights (TBOR) was adopted by IRS in June 2014 and provides 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.

Local Desk Procedures

  1. Some Submission Processing Campuses have developed local Desk Procedures. Such 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; and

    • Are not limited to the examples listed above

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

  3. All existing local information and procedural issuances must be reviewed periodically by the Operation Manager level (at least 2 times a year or with each IRM revision) to ensure conformance with Headquarters procedures (make necessary changes, secure necessary approvals, etc.).

  4. Emergency problems must be telephoned to the Headquarters program analyst if the problem cannot be resolved and is identified as a work stoppage.

♦Customer Account Data Engine (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 CFOL command codes on Saturday following the weekly Master Files processing run on Thursday.

    2. Transactions will be viewable as posted transactions using 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 instead of in 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 BMFOL will continue to reflect YYYYCC. YYYY will indicate the year. CC will indicate the posting cycle. BMF posting cycles in TXMOD will reflect a format of YYYYCCDD. The DD value will be 08.

♦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 approved 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 11.3.1.14, Facsimile (FAX), Electronic Facsimile (E-FAX), and IRS Internal Enterprise Electronic Facsimile (EEFAX) Transmission of Tax Information

♦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 Return Program, shown in Exhibit 3.12.217-14, Potential Frivolous Arguments 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 3.12.217-14, Potential Frivolous Arguments for Examination Review),

    Exception:

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

    Remove return from the batch and place the return in the locally designated basket for Examination, Frivolous Return Program (FRP) for review.
    Examination has selected the return as frivolous, indicated by an Action Code 331 and a Form 4227 with the remarks "Refer to Exam FRP for audit after processing" , but send the return for processing, Continue processing the return using procedures in IRM 3.12.217. However, do not circle or void the Action Code indicating a frivolous return.

    Note:

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

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

  3. For returns with refund claims of ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , 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.

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

    2. Attach Form 4227 to the copy.

    3. Route the copy to Ogden, Mail Stop 9001, Criminal Investigation (CI).

    4. Edit an action trail "Copy to CI" , or "CI Referral" , or similar language in the lower left corner going vertically up the side of the return.

    5. Continue processing the return.

  4. Because of the repetitive nature of the ERS/Rejects function, ERS/Rejects Tax Examining Technicians often recognize income tax return data which is outside of the norm for data found on similar returns for each income tax return type. If ERS identifies return characteristics not meeting Audit Code or Exam referral criteria it deems suspicious, CI is available to review the referral.

  5. If a suspicious return is identified, and there is no indication Code and Edit (C&E) made a copy and sent to CI Referral, then, do the following:

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

    2. Attach Form 4227 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.

  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.

Refund Returns 45 Day Jeopardy and $100 Million Dollar Refunds

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

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

    If... Then...
    The processing date is more than 20 days after Received Date or, the Return Due Date (whichever is later) and the 45 day interest free period is in jeopardy and the refund amount is $25,000 or more

    Note:

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

    1. SSPND Action Code "341" .

    2. Attach Form 4227 and give the return to the lead examiner or manager.

    The refund is $100,000,000 or more
    1. SSPND Action Code "341" for numbered and unnumbered returns.

    2. Attach Form 12230, Expedite Processing Million Dollar Manual Refund.

  3. Taxpayer Advocate Service (TAS) Manual Refunds- any return hand walked by a W&I Submission Processing (SP) liaison for Taxpayer Advocate Service must be processed by a Lead Tax Examiner or designated tax examiner using the following procedures in the order listed:

    1. Computer Condition Code (CCC) "O" must be edited on the return and entered in Field 01CCC.

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

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

  4. Correspondence: If required for missing or incomplete information, follow procedures below:

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

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

    3. Suspend (SSPND) with appropriate suspense code and give return back to the W&I SP liaison.

      Note:

      The W&I liaison will contact the Taxpayer Advocate to obtain the required information needed to complete processing.

  5. Additional Suspense action needed: If the return requires other suspense action, then follow procedures below:

    1. Initiate suspense (SSPND) action according to IRM procedures.

    2. Inform the W&I liaison the reason for the action taken.

    3. Give the return back to the liaison.

      Note:

      The W&I liaison will contact Taxpayer Advocate, who in turn will take the necessary action to complete the processing of the return.

  6. Assigning Taxpayer Notice Codes (TPNCs/Math Error): When a math error is identified, do the following:

    1. Assign the TPNC according to IRM procedures.

    2. After all TPNCs have been assigned, inform your liaison of TPNCs issued.

    3. Suspend (SSPND) with appropriate code (suspense must be done at the generated point of error and give the return to the liaison).

      Note:

      The W&I liaison will contact the Taxpayer Advocate, who in turn will take the necessary action to complete the processing of the return.

  7. When Balance Due/ Overpayment Math Error Code (EC) Generates do the following:

    1. Make screen print of the Error Code 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 in to Field 07B/R.

    3. If Balance Due/Overpayment Math Error Code regenerates because the taxpayer made a math error when computing their refund, then make a screen print of the Error Code Screen Display and highlight the computer generated refund amount. Attach the print to the front of the return keeping the entity area visible and assign the appropriate TPNC.

    4. Once return completes processing, give the return, Form 12412, Operations Assistance Request (OAR) and the ERS screen print to the W&I SP liaison.

  8. Rejects Suspense Procedures:

    1. Follow specific instruction given by W&I SP liaison. Correspond and assign appropriate TPNCs as directed.

    2. Refer to paragraphs (6) and (7) above.

♦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 resolved in 24 hours, as well as cases where steps can be taken within 24 hours to begin resolving the issue. (See also IRM 13.1.7.4, 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 Agreements (SLA)♦

  1. The National Taxpayer Advocate has reached agreements with the Commissioners of the Wage and Investment (W&I) Division, Small Business/Self Employed (SB/SE) Division, Tax Exempt Government Entities (TE/GE), Criminal Investigation (CI), Appeals, and Large Business and International (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 and Analysis (P&A).

    2. Attach Form 4227 (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.

  2. Effective January 1, 2017, Computer Condition Code "E" may be edited on Form 1120S (any year) by the BMF ID Theft Liaison to identify a potential identify theft filing.

Related Forms

  1. When the following forms are referred to in this section, the chart below shows their form number, form title and use.

    If this form is used... Then...
    Form 3465, Adjustment Request Request transfer of credits
    Form 4227, Intra-SC Reject or Routing Slip Identify the reason for using the Action Code
    Form 8161, ERS Return Charge-Out Generated by the computer to charge out returns on the new Suspense Records List and Duplicate Document Rejected Document Locator Number (DLN) Register used as a routing slip and history item

System Errors

  1. The Error Resolution System will identify errors according to type and priority.

    If this error is present... Then it is a...
    Action Code Error Priority I
    Section Error Priority II (Integrated Submission and Remittance Processing (ISRP) problem code)
    Validity Error Priority III
    Math/Consistency Error Priority IV (Error Codes)

    Note:

    The record heading will show the type of error.

Field Errors

  1. Any field that does not meet the requirement(s) for that field will be displayed as a Field Error in the order encountered in the record.

    1. Non-alphabetical character in an alpha field.

    2. Blank space in numeric field.

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

Terminus Error

  1. This error is caused by a section with variable length input fields containing an erroneous size field. This type of error will show all input fields of the terminus section. Transcribed data will be present. Computer generated fields or Remittance Field for Section 01 will not be present.

    If... Then...
    Displayed in error Check all fields in the section for necessary corrections
    No correction is needed Transmit from the bottom of the screen display
    Section needs to be deleted Use Command Code (CC) DLSEC to delete the section number

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 specific inventory.

  2. Below is a list of the status codes and a brief explanation:

    1. Status 100, error awaiting correction. Records are in the Error Inventory.

    2. Status 2XX, record awaiting information. Records are in the Unworkable Suspense Inventory.

    3. Status 3XX, suspense period expired no response. Records are in the Workable Suspense Inventory.

    4. Status 4XX, record with information, awaiting correction. Records are in the Workable Suspense Inventory.

    5. 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. For Example -321- Suspense period expired, no response to taxpayer correspondence. If a record has been selected to be held for Quality Review, the second and third position will be "QA" . For Example "1QA" , "3QA" , or "4QA" .

  4. Records for which the Suspense Period has expired before being activated are automatically moved from Status 2XX to Status 3XX.

Action Codes

  1. Action Codes (AC) are input when information is missing or the record must be suspended from processing.

    1. The code will have sufficient detail to indicate if correspondence is to be sent to the taxpayer or the specific in-house research or action required.

    2. Document Perfection Tax Examiners will assign a three-digit Code 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.

    3. This code will be entered on the bottom left hand corner of the return.

Action Code Suspense

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

    1. If the Action Code assigned by Document Perfection is invalid or incomplete or AC 001 the record will be assigned to the Error Inventory for correction or deletion of the code.

    2. Only one Action Code may be assigned at a time to a record.

    3. For routing within the Submission Processing Campus (In-House Research), the Action Code with a sufficient explanation concerning the missing information will need to be entered on the return.

    4. The ERS Tax Examiner may enter an Action Code on a record, delete or correct an invalid code or may overlay the present Action Code with another to either re-suspend or reject from ERS. This is done by entering a valid Action Code with a Command Code (CC) SSPND, NWDLN, or RJECT. IRM 3.12.38, BMF General Instructions, also explains these codes.

    5. An 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.

    6. A Reject Tax Examiner entering a valid Action Code with the CC RJECT will be rejecting the record from ERS. Generally Service Center Control File (SCCF) will be automatically updated for the rejected records. In cases where the Action Code cannot describe the required action, attach a note of explanation to the return using Form 4227.

    Note:

    The Action Code assigned by Document Perfection will be transcribed into the record of the Form 1120S.

Correspondence Action Sheets

  1. If the tax examiner will not be issuing a letter through IDRS, it will be necessary to attach a Correspondence Action Sheet (Form 3696) or other acceptable form to issue the correspondence.

Action Code Chart

  1. The Action Code indicates that specific information is missing or that the record is to be rejected from processing. The code will indicate if correspondence is to be sent to the taxpayer or the specific in-house research or action required. This chart describes each Action Code, their functional use (CE = Code and Edit, EC = Error Correction, S = Suspense Correction and GEN = computer generated) and the suspended period.

    Action Code Description Workday Suspense Period Function Used
    001 Input Document 0 GEN
    210 Employee Plans Master File (EPMF) Correspondence 60 EC, S
    211 First Correspondence 40 CE, EC, S
    212 Second Correspondence 25 CE, EC, S
    213 Correspondence to other 40 CE, EC, S
    215 International Correspondence 45 CE, EC, S
    225 Taxpayer Correspondence - Signature Only 40 CE, EC, S
    226 International Correspondence (Signature Only) 40 CE, EC, S
    300 Examination (Fuel Tax Credit) 10 CE, EC, S
    310 Statute Control 10 CE, EC, S
    320 Entity Control 10 CE, EC, S
    321 Form 851, Affiliations Schedule Employer Identification Number (EIN) Mismatch Modernized e File (MeF) Form 1120, U.S. Corporation Income Tax Return only 10 EC
    331 Frivolous Review 3 CE, EC
    332 Questionable Refund Detection Team (QRDT) Review 3 CE, EC
    333 Prompt Audit 10 CE, EC, S
    334 Joint Committee 10 CE, EC, S
    335 Frivolous Case 10 CE, EC, S
    336 QRDT 10 CE, EC, S
    337 Other Criminal Investigation (CID) 10 CE, EC, S
    341 Manual Refund 10 CE, EC, S
    342 Credit Verification 10 CE, EC, S
    343 Black Liquor 10 CE, EC, S
    344 Manual Refund by Error Resolutions (ERS) 0 EC
    347 Form 2553, Election by a Small Business Corporation attached to Form 1120S and/or taxpayer indicates Rev. Proc. 2007-62 or Rev. Proc. 2013-30 (effective September 3, 2013) on any page of the Form 1120S regardless if a Form 2553 is attached. Control case to Entity for approval 20 EC, CE, S
    351 Taxpayer Identification Number (TIN) Research 0 EC, S
    352 Name Research 3 CE, EC, S
    353 Address Research 3 CE, EC, S
    354 Filing Requirement Research 3 CE, EC, S
    355 Other MFTRA Research 3 CE, EC, S
    360 Other In-House Research 10 CE, EC, S
    370 Examination 10 CE, EC, S
    410 Technical Assistance 0 EC
    420 Management Suspense–A 5 CE, EC, S
    430 Management Suspense–B 10 CE, EC, S
    440 Management Suspense–C 15 CE, EC, S
    450 Management Suspense–D 20 CE, EC, S
    460 Management Suspense–E 25 CE, EC, S
    470 Complex Error Code 0 EC
    480 Early Filed Suspense 150 CE, EC, S
    490 System Problem 5 CE, EC, S
    510 Missing Document 0 CE
    511 Missing Document 1st Suspense 25 EC, S
    512 Missing Document 2nd Suspense 20 S
    513 Missing Document 3rd Suspense 20 S
    515 Missing Document Short Term 5 EC, S
    550 Mag Tape Attachments 0 CE
    551 Mag Tape Inconsistent Data 0 CE
    610 Renumber- Non-Remittance 0 CE, EC
    611 Remittance Renumber 0 S
    620 Non Master File (NMF) / Non-ADP 0 CE, EC, S
    630 Reinput 0 EC
    640 Void 0 CE, EC, S
    650 International 0 CE, EC, S
    660 Data Control Delete Tape Edit Processor (TEP) Delete 0 S
    670 Deleted Missing Document 0 GEN
    700 Duplicate (Dup) Block DLN 0 GEN
    711 Dup. DLN
    From Code and Edit (C&E)
    0 GEN
    712 Dup. DLN From Error Correction 0 GEN
    713 Dup. DLN From Unpostables 0 GEN
    714 Dup. DLN From
    Unworkable suspense
    0 GEN
    715 Dup. DLN From Workable suspense 0 GEN
    800 National Account Profile (NAP) Linkage Problem 2 EC, S
    900 Unpostable Record 0 GEN
  2. Beginning with tax returns for periods ending 12–31-2007 and later, Form 2553, Election by a Small Business Corporation, may be filed as an attachment to Form 1120S requesting to be considered an S Corporation. Code and Edit will edit Action Code (AC) 347 when a Form 2553 is received with a Form 1120S and/or the taxpayer indicates Rev. Proc. 2007-62 or Rev. Proc. 2013-30 (effective September 3, 2013) on any page of the Form 1120S regardless if a Form 2553 is attached. For MeF filed Form 1120S, this will be attached to the return as a Portable Document File (PDF) file and will generate an Action Code 347. Error corrections must then assign the case to Entity Control for prompt consideration.

Clear Code "C" and "000"

  1. The letter "C" is used as a "Clear Code" for the Error Codes where the error condition is such that the resolution does not require a change or correction to the record as displayed. The display will include a Clear Code Field labeled "CL" to indicate the possible need of a Clear Code. CC CRECT is used to enter the "C" .

  2. Code "C" is also used for clearing the Action Code from the screen after corrections for the Action Code have been completed, or as with Action Code 410, the Action Code must be cleared initially, so other errors in the record can be resolved. 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.

  3. The "000" is also used as a Clear Code when deleting Action Codes. It will only be used for erroneous Action Codes and you have determined there is no reason to suspend the record. The "000" cannot be used in suspense correction.

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

  5. Programming erases all "C" Clear Codes for Error Codes and Action Codes for the new day’s Error Inventory and Workable Suspense Inventory. Unfinished records from the previous day will contain none of the "C" Clear Codes that were assigned to a record that was not completely worked.

  6. Error codes (including the ones which may require a "C" Clear Code) are numbered consecutively in order for correcting. There may be instances when you as an ERS tax examiner, correcting errors at the terminal, will create an Error Code with a higher priority than the one(s) you have cleared with a Taxpayer Notice Code or "C" Clear Code. Should this occur, programming will erase all "C" Clear Codes and Taxpayer Notice Codes for Error Codes with a lower priority than the one created.

  7. Beginning with the highest priority Error Code created, programming will continue displaying Error codes for the record. Displays using the corrected data are apt to be different from those previously displayed.

  8. There may be instances when you will make a correction erasing an Error Code which you previously cleared with a "C" and now the error condition no longer exists. Should this occur, the "C" Clear Code for this error and all "C" and TPNC for all subsequent errors in the record will be deleted.

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

  10. The "C" Clear Code will prevent any other corrections to the record to accompany the "C" Clear Code. If a correction must be entered but you have already entered the "C" Clear Code, and the error is no longer displayed, create a higher priority error. If the record has cleared, then use CC GTRECW to make any corrections.

Unprocessable ADP Return

  1. When perfection of a return is not possible and it is necessary to correspond, perform in-house research, or refer the document to another area of the Submission Processing Campus, the record will be suspended and the required action taken.

  2. Suspend the unprocessable record by entering the CC SSPND followed by the appropriate Action Code.

    1. In cases where the Action Code cannot describe the required action, attach Form 4227 to the return with an explanation.

    2. If the tax examiner will not be issuing a letter through IDRS, it will be necessary to attach a Correspondence Action Sheet (Form 3696) to issue the correspondence.

    3. A Charge-Out (Form 4251, Return Charge Out) will be computer generated for all new suspense items.

    4. The Charge-Out will be used for pulling documents as well as routing and controlling documents while the record is being held in suspense and for use in associating the document with the Workable Suspense Inventory when the record becomes workable.

Correspondence

  1. Replies - When the taxpayer replies to correspondence, continue to process the return.

  2. No Replies - When the taxpayer does not respond to correspondence, input CCC "3" and use the following procedures as applicable.

    If... Then...
    Tax Period is more than 12 months Research for the correct period ending and change the Tax Period to conform with the previous filing.
    Tax Period is an unexplained short year Enter Computer Condition Code "Y" in Field 01CCC. When the screen returns, enter a "C" in the Clear Code Field.
    Tax Period is an unauthorized change in Accounting in Period Enter Computer Condition Code "Y" in Field 01CCC. When the screen returns, enter a "C" in the Clear Code Field.
    There are multiple Tax Periods Use earliest Tax Period. If a remittance return, SSPND return to have remittance posted to the correct period.

    Other

    If... Then...
    Signature is required Enter CCC X and CCC 3
    Schedule D Continue normal processing
    Line 22a Support Schedule Continue normal processing
    Form 8609, Low-Income Housing Credit Allocation and Certification, Form 8825, Rental Real Estate Income and Expenses of a Partnership or an S Corporation, Balance Sheet and Schedule K-1, Shareholder’s Share of Income, Deduction, Credits, etc Continue normal processing
    Form 8824 - Like-Kind Exchanges Continue processing

     

    Unsubstantiated credits

    If... Then...
    Form 6478 - Credit for Alcohol Used as Fuel is unsubstantiated Delete credit from the return and the screen.
    Form 4136 - Credit for Federal Tax Paid on Fuels is unsubstantiated Delete credit from the return and the screen.
    Form 6249 - Computation of Overpaid Windfall Profit Tax unsubstantiated Delete credit from the return and the screen.
    Form 8586 - Low-Income Housing Credit is unsubstantiated Delete the credit from the return and the screen.
    Form 8611 - Recapture of Low-Income Housing Credit is unsubstantiated Delete the credit from the return and the screen.

     

  3. For missing schedules use the chart below to determine the Missing Schedule Code, Field 01MSC:

    Missing Schedule Input Code
    Schedule(s) K-1 33
    Schedule L (Balance Sheet) 34
    Schedule(s) K-1 and L 36
    Schedule K 45
    Schedule K and K-1 46
    Schedules K and L 47
    Schedules K, K-1 and L 49
♦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" annotated on the front of the return.

  3. Follow the correspondence instructions below for "CIS" returns:

    CIS Return Correspondence Criteria

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

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

    3. Attach Form 4227, Intra SC Reject or 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.

    The "CIS" return has a Form 13596, Reprocessing Returns, 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 posting (TC 150 posted)
    1. If TC 150 is 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.

     

Perfection of Attachments

  1. Sometimes a return is received with written information on the attachments.

    If... Then...
    The taxpayer writes a question or request for assistance on the return itself. Make a photocopy of the question/request and the taxpayer's EIN, name and address. Route this information to the appropriate function.
    Unrelated, unanswered taxpayer correspondence is attached and no action has been taken. Detach and route to the appropriate area using local Submission Processing Campus procedures.
    Unanswered taxpayer correspondence relating to the Form 1120S is attached. Make a photocopy of the attachment and forward it to the appropriate area using local Submission Processing Campus procedures.
  2. All attachments or photocopies of attachments that are routed to another area must contain the taxpayer's:

    • Name

    • Address

    • EIN

    • Received Date

NAMEE Search

  1. The CC NAMEE will be using a system called Name Search Facility (NSF), which is a Taxpayer Identification Number searching tool.

  2. NSF provides a national centralized name search capability which replaces the Key Index File (KIF) located at each Submission Processing Campus. Authorized users will have access to NSF via CC NAMEE for EIN searches.

  3. NSF will provide an input screen to enter data about the taxpayer (name, address, etc.). It will match the data entered, to data we have in our files and will return to the users the Social Security Number (SSN) or EIN of any possible matches. The more information entered, the narrower the search and the better the possibility for a match. The CC NAMEE requires a name be entered for searching the NSF use CC NAMEE to verify that the EIN the taxpayer has furnished is on the Master File. See IDRS Command Codes at IDRS Command Codes Job Aid for all CC job aids.

On-Line Entity (OLE)

  1. OLE is a Taxpayer Identification Number (TIN) system designed to allow for validation of the EIN and EIN/name control on line with Integrated Data Retrieval System (IDRS) input CCs. It is also designed to allow for entity research on a national basis.

  2. Use CC INOLE to research the entity module. This information includes name lines, name control, address, employment codes and filing requirements. See IDRS Command Codes Job Aid for all CC job aids.

  3. The display for a BMF EIN account or INOLE will show the:

    1. Primary name and all the name lines on the BMF

    2. Mailing address

    3. Primary name control

    4. Prior name control

    5. Sole proprietor SSN

    6. Fiscal month

    7. Prior fiscal month

    8. Establishment date

    9. Employment code

    10. Exempt Organization (EO) data, if present, and

    11. Filing requirements.

  4. Validation of IDRS CCs - IDRS CCs that create a transaction for posting to the Master File will have the EIN and EIN/name control validated using the Taxpayer Information File (TIF), and the National Accounts Profile (NAP).

  5. The CCs will not return the "Request Completed" response until the EIN and EIN/name control have been validated by the NAP as being on the Master File that the transaction will attempt to post.

  6. The following IDRS CCs are affected by OLE validation:

    • FRM49 - Taxpayer Delinquent Return Notices and Investigations

    • ENREQ - Entity Changes

  7. If the EIN matches the EIN and name control, normal processing will continue.

  8. If the EIN or name control mismatches, See IDRS Command Codes Job Aid for all CC job aids.

BRTVU

  1. CC BRTVU is used to research edited, transcribed and computer-generated line items for BMF returns and related forms and schedules. This information will be accessed using CC BRTVU with a Taxpayer TIN, a two digit Master File Transaction (MFT) Code, Tax Period and Definer Code.

  2. The Returns Transaction File does not contain all the information available on the IDRS system, for example, IDRS notice status, case control information. BRTVU can be accessed even when TXMOD and SUMRY are not available.

  3. CC BRTVU, with definer SM, requests the summary screen for a specific EIN, MFT and Tax Period. This screen provides information about income, deductions, tax, remittance, number of pages, and schedules or forms attached to the return.

  4. Definers will only be displayed for the forms that are present with the return. A form is present if any field on the related screen (other than name control) contains significant data.

  5. If the definer is blank or invalid, or a definer is requested for a screen not available for the record requested, the computer will display the summary screen, showing available screen and definers.

  6. Screens may be accessed using the appropriate two positions definer code. The valid definers for Form 1120S are:

    Definer Meaning
    SM Summary screen
    R1 Screen 1
    R2 Screen 2
    R3 Screen 3
    SK Schedule K
    N1 Form 4136
    V2 Form 8586 (PY 91)
    V1 Form 8586 (PY 91)
    W1 Form 8611 (PY 91)
    Y1 Form 8693 (PY 91)
  7. Amended and duplicate returns can be accessed via CC BRTVU by inputting a sequence number immediately after the definer code. These returns will display the format of the year processed, therefore, the line numbers may be inconsistent with current year returns.

BMFOL

  1. CC BMFOL provides on-line research capability of nationwide entity and tax data information posted to the Master File.

  2. CC BMFOL displays information very similar to CC MFTRA. In fact CC BMFOL, is a suggested alternative to CC MFTRA.

  3. CC BMFOL, with definer I, displays a summary screen for a specific account. The summary screen will show what other display screens are accessible and a minimum of information on each available module.

  4. For further explanation of the screen displays and applicable definer codes, see IDRS Command Codes Job Aid for all CC job aids.

Form 1120 Converted to Form 1120S

  1. Form 1120 must be converted to Form 1120S when the taxpayer has filed Form 1120 and the Entity Control Unpostable Unit has determined the taxpayer has a valid Form 2553, Election by a Small Business Corporation, on file.

  2. When the Form 1120 has been converted to a Form 1120S Entity must ensure that only the Received Date, Field 01NAI and Audit Code "4" is edited to the new renumbered form. If a field other than those mentioned above has been entered, delete it.

  3. For MeF Form 1120 being reprocessed as Form 1120S, ensure the correct Received Date is edited on the document. The Received Date is the Julian DLN date of the original DLN. Do not subtract 10 days in the case from the Julian Date.

  4. Do not enter any tax data on the "blank" Form 1120S.

Installment Agreement

  1. If a request for an installment agreement (an inquiry by the taxpayer to make payments on a debt) is attached to any return, detach it and send it to the Collection Branch. This request may come on Form 9465, Installment Agreement Request. When forwarding the installment request make sure the following information is included as a working trail: EIN, Name, Type of Return, Tax Period, Amount Due and Amount Paid.

Section 965 Returns

  1. Section 965 (Repatriation Provision), Treatment of deferred foreign income upon transition to participation exemption system of taxation for U.S. Shareholders of Specified foreign corporations per Tax Cuts & Jobs Act (Tax Reform), Provision Section 14103, Public Law 115-97 (H.R. 1).

  2. Suspend (SSPND) with Action Code "460" , and input "J" in Field 01CCC, when any of the following are present:

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

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

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

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

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

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

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

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

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

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

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

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

    • A significant entry is present on Schedule K, lines 10, 12d, or 14r with the notation "Section 965" (or similar language).

      Note:

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

  3. If a Section 965 return has been identified by ERS and C&E has not edited Action Code "460" and/or CCC "J" , SSPND Action Code "460" and enter CCC "J" in Field 01CCC.

  4. Follow the instructions below to finish processing the return:

    1. Ensure the return has been correctly identified as a Section 965 return.

      If Then
      The return was identified as a Section 965 return in error,
      1. Remove "J" from Field 01CCC, if present.

      2. Ensure any correspondence issues are addressed.

        Note:

        Code and Edit (C&E) has been instructed not to correspond on Section 965 returns. C&E will notate "K-1 missing" (or similar language) in the lower left margin (action trail) of the return, if correspondence is needed for missing Schedules K-1.

      3. Continue normal return processing.

      The return is confirmed as a Section 965 return, and correspondence is needed,
      1. Verify "J" is present in Field 01CCC.

      2. Resolve any field errors and/or error codes.

      3. Suspend the return and initiate correspondence.

        Note:

        Code and Edit (C&E) has been instructed not to correspond on Section 965 returns. C&E will notate "K-1 missing" (or similar language) in the lower left margin (action trail) of the return, if correspondence is needed for missing Schedules K-1.

      The return is confirmed as a Section 965 return, and correspondence is not needed,
      1. Verify "J" is present in Field 01CCC.

      2. Input TC 971 Action Code 114:

        1. Use Command Code (CC) FRM77.

        2. Enter MFT 02.

        3. Enter TXPD (YYYYMM).

        4. Enter the current date as the TRANS-DT (MMDDYYYY).

        5. Enter Tax period ending in the SECONDARY-DT field (MMDDYYYY).

        6. Enter 114 in TC 971/151-CD field.

        7. Enter zero (0) in MISC field.

        8. Enter NSD statement: "965 update for total tax amount." under the last input line.

      3. Resolve any field errors and/or error codes.

Section 01 - Entity Data and Codes for Returns

  1. Section 01 contains the entity data and codes for returns. The line designation, maximum length for each field, title and location where the field can be found is listed below:

    Field Designator Max Length Title Location
    01NC 4 Name Control Pg. 1, First Name Line
    01EIN 9 EIN Pg. 1, Box D, Employer Identification Number
    01NAI 6 North American Industry Code Pg. 1, Box B, Business activity code number
    01TXP 6 Tax Period Pg. 1, upper right margin
    01RCD 8 Received Date Pg. 1, stamped date
    01CCC 10 Computer Condition Code Dotted portion of Line 2
    01TXB 8 Tax Period Beginning Pg. 1, to the left/near the title of the return.
    01CRD 8 Correspondence Received Date ERS input only
    01MSC 2 Missing Schedule Code Edited as 7–33, 34, 36, 45, 46, 47, or 49 to the left of line 9. Input by ERS only
    01CBI 1 Check Box Indicator Page 1, Paid Preparer area
    01PSN 9 Tax Preparer SSN Bottom of Page 1
    01PEN 9 Tax Preparer EIN Bottom of Page 1
    01PTN 10 Tax Preparer Phone Number Bottom of Page 1
    01RPC 35 Return Processing Code Page 1, right margin next to line 1c

Remittance

  1. Remittance (RMIT>) is an entry that identifies payment made with return.

  2. This entry must be blank or numeric.

  3. If a numeric amount is present, it must be dollars and cents.

  4. It must be blank for non-remittance returns, overpaid returns and remittance returns processed through the Residual Remittance Processing System (RRPS) / Integrated Submission and Remittance Processing (ISRP) systems.

  5. This is a non-correctable entry.

Field 01NC - Name Control

  1. Field 01NC consists of the first four significant characters of the corporation’s name.

  2. The valid characters are alpha, numeric, ampersand (&), hyphen (-), and blank.

  3. Invalid Condition:

    • The first position is blank.

    • The second, third or fourth position is not an alpha, numeric, hyphen, ampersand or blank.

    • There are any intervening blanks between significant characters.

  4. Correction Procedures:

    1. Correct coding errors and transcription errors and misplaced entries.

    2. Enter the Name Control.

    3. If the Name Control cannot be determined, research using local Submission Processing procedures.

Field 01EIN - Employer Identification Number

  1. The EIN is located in the box indicated on the return.

  2. Invalid Condition:

    • EIN begins with 00, 07, 08, 09, 17, 18, 19, 28, 29, 49, 78, 79, or 89.

    • EIN is not numeric.

    • EIN is less than 9 characters.

    • EIN is all zeroes or all nines.

  3. Correction Procedures:

    1. Correct coding errors, transcription errors, and misplaced entries.

    2. If transcribed correctly, search the return for another EIN and/or use local Submission Processing Campus research procedures to obtain the EIN. If found, enter in Field 01EIN and send a Letter 3875C.

      Note:

      Letter 3875C should not be sent if it is obvious that EIN numbers have been transposed or has three or fewer digits different.

    3. If another EIN is not found during the search above, or if there is no record of an EIN, or multiple EINs are found, suspend the record with Action Code "320" and route to Entity Control for an EIN to be assigned.

      If... Then...
      Entity Control has found the correct EIN, Enter in Field 01EIN.
      Entity Control has assigned an EIN,
      1. Enter in Field 01EIN.

      2. Enter the Entity Assignment Date (from the lower left hand corner of the return) in Field 01CRD, if it is after the Return Due Date.

    4. On an RPS return, with an EIN change SSPND with Action Code "351" to route to Rejects. Rejects will research any RPS return with a change to the EIN to determine if a payment has posted correctly.

Field 01NAI - North American Industry Classification System (NAICS)

  1. Field 01NAI is a 6 digit numeric field transcribed from Page 1, Box B, of Form 1120S.

  2. Invalid Condition:

    • Not present (except G Coded returns).

    • Not numeric.

    • Entry not within range of 000001-999000.

    • Entry contains six of the same digit.

  3. Correction Procedures:

    1. Check for coding and/or transcription errors and correct accordingly.

    2. If Field 01NAI is blank, enter the entry from Page 1, Box B, Form 1120S.

    3. If no code is found, enter 999000

    4. If the taxpayer uses the four digit Principal Business Activity Code (PBA Code), enter the four digit code preceded by 2 zeros.

Field 01TXP - Tax Period

  1. Field 01TXP is located to the right of the title area, at the top of page 1 of Form 1120S.

  2. Tax Period ending is printed in Year (YYYY), month (MM) format e.g., Dec. 31, 2018 is printed 201812.

  3. The Tax Period must be present and contain six numeric digits.

  4. A taxpayer can file a return for:

    • A Calendar Year (Ends December 31).

    • A Fiscal Year (Ends last day of the month except December).

    • A 52 and 53 Week Year-Ends 6 days before to 3 days after the end of the month (April 29, 2018 and May 2, 2018 both are 201804).

      Example:

      52-53 tax year that ends on the last Friday of the month can end as much as 6 days before the last day of the month. If the tax year ended on April 27, 2018, then the valid period would be 201804.

      Example:

      52-53 year that ends on the Friday that is nearest to the last day of the month can end as much as 6 days before, or 3 days after the last day of the month. If the Tax Period ends August 3, 2018, then the valid period would be 201807.

  5. Invalid Condition:

    • The Tax Period is not all numeric.

    • The last two digits (month) are not 01-12.

    • The Tax Year (first four digits) is after the current year.

    • The Tax Year is equal to the current year (e.g., 2018), but the month is after the current processing month.

  6. Correction Procedures:

    1. Correct coding errors, transcription errors, and misplaced entries.

    2. Determine the correct Tax Period from Form 1120S and attachments.

      If... Then...
      The Tax Period cannot be determined from the return, attachments or research, Enter the current year in Field 01TXP.
      A "Final" return and the Tax Period ending is the same as or later than the Received Date, Change the Tax Period to the month preceding the Received Date.

      Note:

      If prepaid credits are claimed on Lines 23a or 23b, SSPND "342" to have the credits moved to the correct Tax Period.

      A non-final return and the Tax Period ending is equal to or later than the current year-month by four months or less, SSPND "480" and attach Form 4227, Intra-SC Reject or Routing Slip, noting that the return should be held and processed after the end of the Tax Period
      A non-final return and the Tax Period ending is later than the current year-month by more than four months, SSPND "211" and correspond, requesting confirmation of the Tax Period ending.
      The taxpayer response indicates the return is a "final" return and the close of business precedes the edited Tax Period, Change the Tax Period to agree with the close of business date.

      Note:

      If prepaid credits are claimed on Lines 23a or 23b, SSPND "342" to have the credits moved to the correct Tax Period.

      No reply is received, SSPND "480" and attach Form 4227 noting that the return should be held and processed after the end of the Tax Period.

Field 01RCD - Received Date

  1. Field 01RCD is a numeric field that is either the date stamped by Receipt and Control or edited by C & E. The Received Date is required on allForm 1120S.

    1. The legal due date is the 15th day of the third month after the Tax Period ending.

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

    3. When the due date falls on a weekend or legal holiday, the return is timely if postmarked by the first business day following the due date.

    4. Consider the return timely if:

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

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ the postmark is on or before the legal due date.

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

  2. Field 01RCD must be present and entered in "YYYYMMDD" format.

  3. Invalid Condition:

    • The Received Date is not present.

    • The Received Date is not in "YYYYMMDD" format.

    • The Received Date is later than the current processing date.

    • The Received Date is not all numeric.

    • The Received Date is not within the valid month, day range detailed below:

      Month Day
      01, 03, 05, 07, 08, 10 and 12 01-31
      04, 06, 09 and 11 01-30
      02 01-28 (29 leap year)
  4. Correction Procedures:

    1. Check for coding errors, transcription errors, and misplaced entries.

      If... Then...
      The Received Date is invalid and it appears that the incorrect year was used (e.g., 20180115 instead of 20190115), and other information (Julian date, postmark date, and/or signature date) indicates that the Received Date should be a current year, Change the Received Date year to the current year.
      Multiple Received Dates are present, Enter the earliest IRS stamped Received Date.
      The Received Date is missing or illegible, Determine Field 01RCD using the following priority order:
      1. Earliest legible U.S. or foreign postmark or a postmark established by an acceptable designated private delivery service. See IRM 3.10.72, Receiving, Extracting, and Sorting, for further details.

        Note:

        If both U.S. Postal Service and private meter marks are present, honor the U.S. Postal Service Postmarks.

        Note:

        For certified mail only - If a postmark is not present, look for a "USPS.com Track & Confirm" record that has been attached to the return (should be before the envelope. Use the Acceptance date on the record to determine timeliness, follow normal editing procedures. If the "USPS.com Track & Confirm" record is not attached, no action is required.

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

      3. Revenue Officer'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, unless MeF return. Use the original Julian DLN date when assigning a Received Date for MeF returns.

      6. Current date minus 10 days.

Field 01CCC - Computer Condition Code

  1. Computer Condition Codes are used to identify a specific condition for the computer.

  2. This field can contain up to 10 positions.

  3. The valid characters are B, D, E, F, G, I, J, L, M, O, Q, R, S, T, W, X, Y, 1, 2, 3, 8, and 9.

  4. Computer Condition Codes are edited to the center dotted portion of the Income Area, on page 1 (lines 1–6) of the return.

  5. If an overflow condition occurs in Field 01CCC (more than 10 codes) retain the codes in the following priority–F, D, O, Y, W and others.

  6. Examine the return for transcription errors. Correct any errors found on the return and the screen as appropriate. Refer to the chart of Computer Condition Codes.

  7. If CCC "G" is present with another CCC except "S" , "T" , "W" and/or "3" , it will cause a field error.

  8. If CCC "G" is correct, delete all other CCC except "S" , "T" , "W" and/or "3" . Otherwise, delete CCC "G" and enter all tax information as reported on the return.

Computer Condition Code (CCC) Chart

  1. Use the chart below to identify Computer Condition Codes:

    Code Definition Error Check
    B Enter when a taxpayer has made an Entry in the margin of either Schedule D or Form 4797, Sale of Business Property, electing not to report sales on the installment basis.  
    D Reasonable cause for failure to pay taxes timely Received Date must be present.
    E Potential Identify Theft Filing Edited by the BMF ID Theft Liaison.
    F Final Return  
    G Amended Return No other CCC except "W" , "T" , "S" and/or "3" . All entries must be blank, except RMIT, 01NC, 01EIN, 01TXP, 01RCD, 01CCC, and 01CRD.
    I Form 6781, Gains and losses from Section 1256 Contracts and Straddles, is attached. Received Date must be present.
    Tax Period must be 198106 and later.
    J Input J in Field 01CCC when any of the following are present:
    • "Section 965" or "965 Tax" (or similar language) notated on the return, attachments, or statements.

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

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

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

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

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

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

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

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

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

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

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

    • A significant entry is present on Schedule K, lines 10, 12d, or 14r with the notation "Section 965" (or similar language).

      Note:

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

    • See IRM 3.12.217.1.40, Section 965 Returns.

     
    L Taxpayer writes Section 6114 "Election" on the return or attached Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b), to the return.  
    M Form 8949, Sales and Other Dispositions of Capital Assets,
    Enter M in Field 01CCC when:
    • Tax Period is 201801 or later, and

    • Form 8949, contains a code “Z” in column (f).

    Note:

    Tax Cuts and Jobs Act of 2017, P.L. 115-97 (H.R. 1), Section 13823, Opportunity Zones. Taxpayers who elect to defer gain on the sale of an asset by investing in an Opportunity Zone Fund will indicate that they are deferring the gain by entering code "Z" in column (f).

    Tax Period must be for 201801 or later
    O Quick refund of overpayment  
    R Reasonable cause for delinquency Received Date must be present.
    S Form 8883, Asset Allocation statement under section 338, is attached to the return.  
    T Form 8886, Reportable Transaction Disclosure Statement, is attached to the return.  
    W Used to bypass Statute check Entered when a return has been cleared by Statute Control Group
    X Indicated settlement of the return is to be frozen.  
    Y Updates Fiscal Year Month (FYM) on Master File. Entered only on a short period return due to change of accounting period. Return must be manually verified.
    1 Current Year Related Party Like-Kind Exchange Indicator, Form 8824, Like-Kind Exchanges, is attached. "1" is generated in Field 01CCC.
    2 Form 8938, Statement of Specified Foreign Assets is attached.  
    3 Entered if no reply to correspondence Enter to suppress credit interest from being generated.
    8 Waiver of Estimated Tax Penalty When tax on annualized income is computed by the taxpayer, (taxpayer has attached a worksheet) or if the taxpayer has written "Waiver" in the bottom margin of page 1, or on Form 2220, enter CCC "8" on the return. The Tax Period cannot be prior to 198912.
    9 Low-Income Housing Credit Indicator If not present enter "9" when Form 8611, Form 8693, Form 8609, Form 8609-A, or Form 8586 is attached and has entries on any of lines 1 through 3(prior year Lines 1 through 4). The Tax Period can not be prior to 198701.

Field 01TXB - Tax Period Beginning

  1. Field 01TXB is located on page 1, to the left/near the title of Form 1120S.

  2. The Tax Period Beginning displays in YYYYMMDD format and must contain eight digits.

  3. Invalid Condition:

    • The Tax Period beginning date is not all numeric.

    • The last two digits (month) are not 01-12.

    • The Tax Period beginning date is later than Tax Period end date (e.g., if tax period is 201812 and Tax Period beginning date is 1/1/2019 or later).

    • The Tax Period beginning date is earlier than 12 months before Tax Period end date (e.g., if tax period is 201812, and Tax Period beginning date is 11/01/2017 or earlier)

  4. Correction Procedures:

    1. Correct coding errors, transcription errors, and misplaced entries.

    2. Determine and enter Field 01TXB for all "Initial" , "Final" , and "Short Period" returns.

Field 01CRD - Correspondence Received Date

  1. Field 01CRD is a numeric field located on the reply to correspondence.

  2. The Correspondence Received Date (CRD) displays in YYYYMMDD format and must contain eight digits.

  3. Invalid Condition:

    • Not numeric.

    • Not in YYYYMMDD format.

  4. Correction Procedures:

    1. Correct coding errors, transcription errors, and misplaced entries.

    2. Determine the CRD from the date the reply was received at the campus. If the reply was not date stamped, use the U.S. Postal Service postmark date on the envelope attached to the reply.

    3. If more than one CRD is present, use the CRD that made the return complete and processable.

    4. If there is an indication that Entity Control has assigned an EIN to the return, enter the entity assignment date found in the lower left-hand corner of the return if it is later than the Received Date and the Return Due Date. If there are both a CRD and an Entity Assignment date, enter the later of the two.

    5. Do not enter Field 01CRD if any of the following conditions are present:

      Do not enter CRD
      • The correspondence was received prior to the due date of the return.

      • The correspondence was required because of an IRS processing error.

      • We failed to ask for all the required information.

      • The correspondence was not necessary.

      • The correspondence was issued in error.

    6. If the reply was missing, incomplete or the notice was undeliverable, enter CCC "3" in Field 01CCC.

Field 01CBI - Preparer Check Box Indicator

  1. The Paid Preparer Check Box is located next to the taxpayer signature area. This box is used to indicate whether or not the taxpayer has elected to allow the Paid Preparer to answer questions about the taxpayer's return as it is being processed.

  2. This field is transcribed from the bottom of page 1, Form 1120S.

  3. Invalid Condition:

    • Field 01CBI is other than "1" or blank.

  4. Correction Procedures:

    1. Correct coding errors, transcription errors, and misplaced entries.

    If... Then...
    The "Yes" box is checked Enter a "1" in Field 01CBI
    The "No" box is checked or neither box is checked or both boxes are checked Delete Field 01CBI and continue processing.

Field 01PSN - Preparer Tax identification Number (PTIN)

  1. Description - The Preparer's PTIN is transcribed from the bottom of Page 1, Form 1120S. Data may or may not be present in Field 01PSN.

  2. Valid Condition - Entries are blank, all numeric or a P for the first character followed by eight numeric characters,

  3. Invalid Condition - Field 01PSN is invalid if it is all zeros, all nines or less than nine positions.

  4. Correction Procedures:

    1. Correct coding errors, transcription errors, and misplaced entries.

    2. If unable to determine a valid entry, delete Field 01PSN.

Field 01PEN - Preparer Employer Identification Number

  1. Description - The Preparer's EIN is transcribed from the bottom of Page 1, Form 1120S.

  2. Valid Condition - This field can be blank or it can be numeric, if numeric it cannot be all zeros and it cannot be all nines.

  3. Invalid Condition - This field is invalid if it is all zeros, all nines or less than nine positions.

  4. Correction Procedures:

    1. Correct coding errors, transcription errors, and misplaced entries.

    2. If unable to determine a valid entry, delete Field 01PEN.

Field 01PTN - Paid Preparer Telephone Number

  1. The Paid Preparer Phone Number is transcribed from the bottom of page 1, Form 1120S below the Paid Preparer EIN.

    Note:

    If the taxpayer checked the paid preparer check box "Yes" , a telephone number for the paid preparer must be entered to allow contact.

  2. Invalid Condition:

    • Field 01PTN is invalid if other than alpha or numeric.

  3. Correction Procedures: -

    1. Correct coding errors, transcription errors, and misplaced entries.

    2. If the telephone number is invalid, delete Field 01PTN.

Field 01MSC - Missing Schedule Code

  1. Beginning with Tax Period 200812, Form 1120S will be charged penalties for not providing a complete return. Code and Edit (C&E) will be responsible for initiating correspondence when needed, requesting the missing information, and ERS will be responsible for coding the Field 01MSC appropriately if the missing information is not received.

  2. Enter Field 01MSC whenever the taxpayer does not respond to our request for missing information. See the chart below for the correct code.

    Missing Schedule(s) Code
    Schedule(s) K-1 33
    Schedule L (Balance Sheet) 34
    Schedule(s) K-1 and L 36
    Schedule K 45
    Schedule K and K-1 46
    Schedules K and L 47
    Schedules K, K-1 and L 49
  3. Invalid Condition:

    • Field 01MSC is invalid if it is not numeric and not one of the numbers shown above.

      Note:

      There is always a possibility that a Missing Schedule Code is edited by C&E. However, employees working the suspense files in ERS must be entering the appropriate code based on the response received from the taxpayer.

  4. Correction Procedures:

    1. Correct coding errors, transcription errors, and misplaced entries.

    2. If taxpayer does not respond with the missing information, input the appropriate Missing Schedule Code as shown in (2) above.

  5. Suspense Procedures:

    If... Then...
    Taxpayer responds with missing information, Enter Correspondence Received Date in Field 01CRD and continue processing.
    Taxpayer does not respond, Enter appropriate Missing Schedule Code in Field 01MSC.
    Taxpayer does not provide missing TINs on Schedules K-1, Enter Missing Schedule Code 33 in Field 01MSC and continue processing.
    Taxpayer provides missing Schedules K-1 and/or missing TINs, Write the DLN of the return on the first Schedule K-1, in the upper left hand corner, then detach and send for processing. Enter Correspondence Received Date in Field 01CRD.

    Caution:

    Enter missing TINs on each Schedule K-1 before detaching for processing.

Field 01RPC - Return Processing Code (RPC)

  1. A Return Processing Code (RPC) is an alpha or numeric character used to identify a specific condition for the computer. The RPC is edited on Page 1, in the right margin next to line 1c of Form 1120S.

  2. Invalid Condition:

    • Characters are other than "A" through "Z" or "1" through "9" .

    • More than 35 characters.

  3. Correction Procedures:

    1. Correct coding errors, transcription errors, and misplaced entries.

    2. When the code(s) entered on the return are illegible or invalid, examine the return and enter the correct code from the table below:

      Note:

      RPCs do not need to be entered in any specific order.

    RPC Explanation
    A Form 5471, Schedule E, Income, War Profits, and Excess Profits Taxes Paid or Accrued, is attached.
    B Form 5471, Schedule H, Current Earnings and Profits, is attached.
    C Form 5471, Schedule I-1, Information for Global Intangible Low-Taxed Income, is attached.
    D Form 5471, Schedule P, Previously Taxed Earnings and Profits of U.S. Shareholder of Certain Foreign Corporations, is attached.
    E Form 8865, Schedule G, Statement of Application of the Gain Deferred Method Under Section 721(c), is attached.
    F Form 8865, Schedule H, Acceleration Events and Exceptions Reporting Relating to Gain Deferral Method Under Section 721(c), is attached.
    2 Form 8992, Global Intangible Low-Taxed Income, is attached.
    4 Form 8994, Employer Credit for Paid Family and Medical Leave, is attached.
    6 Form 8996, Qualified Opportunity Fund, is attached.
    7 Form 8990, Limitation on Business Interest Expense IRC 163(j), is attached.

Section 02 - Address Information

  1. Section 02 contains address (entity) information. It will be present when a change of address has been entered.

  2. All fields are of variable length and it is not necessary to account for every position allotted.

  3. This section is not present on a "G" Coded Return.

    Field Designator Max Length Title Location
    02CON 35 In-Care-of-Name Page 1, number and street line
    02FAD 35 Foreign Address Page 1, number and street line
    02ADD 35 Street Address Page 1, number and street line
    02CTY 22 City Page 1, city, state, ZIP line
    02ST 2 State Page 1, city, state, ZIP line
    02ZIP 5/9/12 ZIP Code Page 1, city, state, ZIP line

♦Field 02CON - "In-Care-of" Name♦

  1. Description - Field 02CON is located in the entity section of the return.

  2. Valid Conditions - Field 02CON has 35 positions and the valid characters are alpha, numeric, ampersand, dash or slash or percent sign (%).

    Note:

    The first character of the "in-care-of" name must be alpha or numeric.

  3. Invalid Condition - Field 02CON is invalid if any of the following conditions are present:

    • The first position is % (percent) and the second position is not blank, or

    • The first position is blank, or

    • The first character of the "in-care of" name is not alpha or numeric, or

    • There are two consecutive blanks between significant characters.

  4. Correction Procedures - Correct coding errors, transcription errors, and misplaced entries.

    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 space followed by the "in-care-of" name beginning with an alpha or numeric in Field 02CON.

    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 02CON.

    The first character of the "in-care-of" name is not alpha or numeric,
    1. Verify "in-care-of" name on the return

    2. Enter the "in-care-of" name beginning with an alpha or numeric in Field 02CON.

    Two consecutive blanks are present between significant characters Delete any unnecessary blanks in Field 02CON.

♦Field 02FAD - Foreign Address♦

  1. Description - Field 02FAD is located in the entity section of the return.

    1. This field will contain an entry when there is a foreign address present on the return.

    2. Field 02FAD should not be present on "G" coded short length records.

  2. Valid Characters - Valid characters are alpha, numeric, and special characters.

  3. Invalid Condition: Field 02FAD 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.

  4. Correction Procedures:

    1. Correct coding errors, transcription errors, and misplaced entries.

      If... Then...
      Field 02FAD is present,
      1. GTSEC 02.

      2. Ensure Field 02CTY contains a foreign country code and Field 02ST (State) contains a "." (period/space).

      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 02CTY if the foreign address is from Canada and the address contains a province name or abbreviation. See Exhibit 3.12.217-17, Province/County Code-Canada Only.

      A province abbreviation is not present for Australia, Brazil, Canada, Cuba, Italy, Mexico or The Netherlands but a province name is present, Enter the province abbreviation in the appropriate position in 02CTY. See Exhibit 3.12.217-12, Province, State and Territory Abbreviation.
      A foreign address is not present on the return,
      1. SSPND "610" .

      2. Renumber return with domestic DLN.

    2. If Form 8822, Change of Address or Form 8822-B, Change of Address or Responsible Party - Business is attached to the return, compare the name and address information on the Form 8822 or Form 8822-B to the return.

      Note:

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

      If... And... Then...
      Form 8822, Change of Address, or Form 8822-B, Change of Address or Responsible Party - Business, is attached, All of the following applies:
      • Mailing address information is the same,

      • No location address is listed on Form 8822 or Form 8822-B, Line 7,

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

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

      • Location address is listed on Form 8822 or Form 8822-B, Line 7,

      • An entry is listed on Form 8822-B, Lines 8 or 9,

      1. Enter address shown on Form 8822-B in Field 02FAD.

      2. Notate "Form 8822 or Form 8822-B detached" on tax return.

      3. Detach Form 8822-B and route to Entity Control using Form 4227, Intra-SC Reject or Routing Slip, or follow local procedures.

      4. Notate on Form 4227, "CHANGE OF ADDRESS PER Form 8822 or Form 8822-B" .

    Note:

    The lead tax examiner is required to batch all Forms 8822 or Form 8822-B daily and hand carry them to Entity Control for expedite processing.

Field 02ADD - Street Address

  1. This field is transcribed from the Street Address line of the entity portion of the return.

  2. Invalid Condition - Field 02ADD is invalid if:

    • Street Address is present and the first position is blank,

    • A character other than alpha, numeric, blank, dash or slash is present,

    • Any character follows two consecutive blanks, or

    • There are more than 35 characters in this field.

      Note:

      ISRP will input a pound (#) sign as the 35th character to indicate an overflow condition.

  3. Correction Procedures:

    1. Correct coding errors, transcription errors, and misplaced entries.

    2. If the 35th character is a pound sign (#), refer to Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries. Abbreviate the address to 35 or fewer characters.

    3. If unable to correct, DLSEC 02.

  4. If Form 8822, Change of Address or Form 8822-B, Change of Address or Responsible Party - Business is attached to the return, compare the name and address information on the Form 8822 or Form 8822-B to the return.

    Note:

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

    If... And... Then...
    Form 8822, Change of Address, or Form 8822-B, Change of Address or Responsible Party - Business, is attached, All of the following applies:
    • Mailing address information is the same,

    • No location address is listed on Form 8822 or Form 8822-B, Line 7,

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

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

    • Location address is listed on Form 8822 or Form 8822-B, Line 7,

    • An entry is listed on Form 8822-B, Lines 8 or 9,

    1. Enter address shown on Form 8822 or Form 8822-B in Field 02FAD.

    2. Notate "Form 8822 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 or Form 8822-B" .

    Note:

    The lead tax examiner is required to batch all Forms 8822 or Form 8822-B daily and hand carry them to Entity Control for expedite processing.

Field 02CTY - City

  1. This field is transcribed from the City, State, ZIP line of the entity portion, on page 1 of the return.

    1. Certain cities are designated "Major Cities" and have been assigned a designator that consists of two alpha characters. This code represents both the city and state.

    2. Whenever the city is on the Major City list, ISRP will enter the Major City Code instead of entering the entire name of the city and the state.

    3. When a Major City Code is used, it will be the first two positions of Field 02CTY.

  2. Invalid Condition - Field 02CTY is invalid if:

    • City is present and the first position is blank.

    • Any character other than alpha or blank is present.

    • Any character follows two consecutive blanks.

    • A Major City Code is present and it is not a valid Major City Code.

  3. Correction Procedures:

    1. Correct coding errors, transcription errors, and misplaced entries.

    2. Follow procedures below:

      If... Then...
      Valid city is not available from return or envelope
      • Research using CC INOLES or ENMOD or

      • Refer to Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries, or

      • Follow local Submission Processing (SP) procedures

      Major city code is found Enter in Field 02CTY and delete Field 02ST
      Unable to correct DLSEC 02

Field 02ST - State

  1. This field is transcribed from the City, State, ZIP Code line of the entity portion of the return.

  2. If the address is a foreign address, defined as not within the 50 states or the District of Columbia, SSPND with Action Code "650" and attach a Form 4227 with a notation to forward to the "Ogden Submission Processing Campus" .

    Note:

    An Army Post Office (APO), Diplomatic Post Office (DPO) or Fleet Post Office (FPO) address is not considered a foreign address, but an address in an American possession.

  3. Invalid Condition - Field 02ST is invalid if the entry is not a state code that is listed in the State Code Table in Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries.

  4. Correction Procedures:

    1. Correct coding errors, transcription errors, and misplaced entries.

    2. If a valid State Code is not available from the return or envelope, take any of the following steps:

      • Research using INOLES and/or ENMOD to determine state,

      • Refer to Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries, and determine Major City Code, or

      • Follow local Submission Processing procedures.

        Note:

        If a major city code is found, GTSEC 02. Enter the code in Field 02CTY and delete Field 02ST.

    3. If unable to correct, DLSEC 02.

Field 02ZIP - ZIP Code

  1. This field is transcribed from the City, State, ZIP line of the entity portion of the return.

  2. Invalid Condition - Field 02ZIP is invalid if:

    • ZIP Code is present and the first 5 positions are not numeric,

    • The last 4 positions are not all numeric or all blank, or

    • Positions 4 and 5 are "00"

      Exception:

      ZIP Code 20500

  3. Correction Procedures:

    1. Correct coding errors, transcription errors, and misplaced entries.

    2. If a valid ZIP code is not available from the return or envelope, research using any of the following to determine the ZIP code.

    3. INOLES, ENMOD. and/or Document 7475, Major City, State and Address Abbreviations, ZIP Codes and Countries.

Section 03 - General Information

  1. Section 03 is a General Information section.

  2. The list below gives the designation, length, title and the location on the return where the fields are displayed in Section 03 of Form 1120S.

    Field Designator Max Length Title Location
    03PRI 1 Precomputed Penalty/Interest (P/I)Code Entered as "2-" followed by the P&I code next to line 9, Form 1120S (deductions section)
    03TPC 1 Tax Preference Code (TPC) Entered as "4-" followed by TPC code next to line 9, Form 1120S (deductions section)
    03SWC 1 Salary and Wage Code Page 1, line 8, right margin
    03ADC 3 Audit Code Entered as "1-" followed by the appropriate Audit Code next to line 9, Form 1120S (deductions section)
    03ISI 1 Installment Sales Indicator Edited as" 3-" followed by the appropriate Installment Sales Indicator next to line 9, Form 1120S (deductions section)
    03IRC 1 Initial Return Code Page 1 Line G
    03GSH 4 Number of Shareholders Page 1, line I
    03AMC 1 Accounting Method Code Page 2, Sch B, line 1
    03QG 1 Consolidated S Corp Indicator 199712 and prior only. ERS input only. If Box G on page 1 is checked, input a 1 in Field 03QG.
    03LIC 15 Low Income Housing Credit Edited as "5-" followed by Form 8586 credit next to line 9, Form 1120S (deductions section).
    03RLI 15 Total Recapture Credit Edited as "6-" - followed by the Form 8611 credit next to line 9, Form 1120S (deductions section).

Field 03PRI - Penalty/Interest Code

  1. The precomputed Penalty and Interest Code "1" is entered when the precomputed penalty and interest ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ the original due date.

  2. Transcription is from the left hand margin next to line 9. If applicable "2-" followed by "1" has been edited.

  3. If interest only is indicated, CCC "R" must also be present in 01CCC.

  4. 03PRI must be blank or "1" .

Field 03TPC - Tax Preference Code

  1. The Tax Preference Code "1" is valid for Tax Periods 201811 and prior.

  2. For Tax Periods 201812 and later, Field 03TPC must be blank. If a "1" is present in Field 03TPC, remove it.

  3. For Tax Periods 201811 and prior, the valid entries are blank and 1.

    1. Transcription is from the left hand margin next to line 9. If applicable, "4-1" has been edited.

    2. A "1" should be present in Field 03TPC if:

    • Schedule K-1, line 15, Alternative minimum tax (AMT) items, totals ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ for any individual Tax Period, or

    • Form 4626, Alternative Minimum Tax - Corporations, is attached with an amount present on lines 3, 6, and/or 11.

Field 03SWC - Salary and Wage Indicator

  1. The Salary and Wage Code "1" must be entered when Salary and Wages are present.

  2. Valid codes are blank or 1.

  3. A Code "1" must be present if:

    • line 8, page 1 of the 1120S has an amount for salaries/wages.

    • line 3, Form 1125-A, has an amount for salaries/wages.

    • If there are other attachments with salaries/wages indicated.

  4. Field 03SWC may be blank if there is no indication of salaries/wages.

Field 03ADC - Audit Code

  1. The Audit Codes are used to identify specific conditions requested by Examination.

  2. Field 03ADC will be transcribed from the left hand margin next to line 9. If applicable "1-" followed by the appropriate audit code (1-9) has been edited.

  3. Invalid Condition:

    • Not numeric or blank.

    • More than nine Audit Codes used at one time.

    • A digit or character appears after the first blank.

  4. Correction Procedures:

    1. Correct coding errors, transcription errors, and misplaced entries.

Audit Code

  1. Audit Code 1 - Disclosure Statement / Inconsistent Filer

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

    2. Form 8275, Disclosure Statement, is attached.

    3. Form 8275-R, Regulation Disclosure Statement, is attached.

    4. Form 8886, Reportable Transaction Disclosure Statement, is attached.

  2. Audit Code 2 - International Income or Credit)

    1. Form 1120S, Schedule K, line 14p (line 14(l) for 2017 - 2004 prior year revisions),Total Foreign Taxes,≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

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

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

    4. Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations, is attached.

    5. Form 5472, Information Return of a Foreign Owned Corporation, is attached.

    6. Form 8621, Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund, is attached and Part V, Lines 15a - 16f has an ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ . (For Tax Year 2011 and prior, refer to Part IV, Lines 10a - 11f).

    7. Form 5713, International Boycott Report, Tax Effect of the International Boycott Provisions is attached and both questions in 7(f) are answered "yes" .

    8. Form 8832, Entity Classification Election, is attached and either box 2(d), (e) or (f) is checked.

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

    10. Form 8858, Information Return of U.S. Persons With Respect to Foreign Disregarded Entities, is attached.

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

  3. Audit Code 3 - Non-Cash Charitable Contributions and Asset Transfers

    1. Form 8283, Noncash Charitable Contribution, is attached ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    2. Form 8283 is attached ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    3. Form 8883, Asset Allocation statement under Section 338, is attached ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    4. Form 8594, Asset Acquisition Statement, is attached, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  4. Audit Code 4 - Invalid "S" Election

    1. Form 1120 processed with a valid election on file (Form 2553) and converted to Form 1120S.

  5. Audit Code 5 - Large Loss - Other Income

    1. Schedule K - line 10 reflects a loss ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  6. Audit Code 6 - Form 3115

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

  7. Audit Code 7 - International Issues

    1. Form 1120S, Schedule K, line 14p (line 14(l) for 2017 - 2004 prior year revisions), Total Foreign Taxes ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    2. Form 5713, International Boycott Report, is attached ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ " .

    3. Form 8621, Information Return by a Shareholder of a Passive Foreign Investment Company, or Qualifying Electing Fund, is attached and Part V, Lines 15a - 16f has an ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ (For Tax Year 2011 and prior, refer to Part IV, Lines 10a - 11f.)

  8. Audit Code 8 - Schedule M-3

    1. Schedule M-3 attached.

  9. Audit Code 9 - First Year "S" Election

    1. The date in Box A falls during the tax year for which the S corporation is being filed.

Field 03ISI - Installment Sales Indicator

  1. The taxpayer has computed installment sales income.

    1. Transcription is from left hand margin next to line 9. If applicable "3-" followed by the appropriate Installment Sales Indicator (1-3) has been edited.

    2. The valid entries are 1, 2, 3, or blank.

    3. Enter the Installment Sales Indicator code indicated by the shareholder’s response to Question 3, Form 6252, Installment Sale Income.

    Question 3 Code
    Yes 1
    No 2
    Blank Blank
    Yes and No 3
  2. Correction Procedures:

    1. Examine the return and attachments to determine the correct code.

    2. Delete the incorrect entry and enter the correct code on the screen in Field 03ISI and on the left side margin next to line 9.

    3. If a code should not be present, blank the entry on the screen.

Field 03IRC - Initial Return Code

  1. This code is entered as an indication that this is a first time filer.

  2. This field is determined from the Initial Return Box, line G, page 1.

  3. The valid entries are 2 and blank.

  4. ISRP will transcribe this field from the code edited to the upper right margin of page 1, Box E.

  5. If there is an indication the return is an initial return, enter a "2" when:

    1. the initial return box, located below the entity area is checked.

    2. the date of incorporation, Box E, is within 12 months of the Tax Period ending.

    3. there is an indication of an initial filing written on the return such as "Initial Return" , "First Return" or "New Corporation" .

    4. the date of incorporation is within 24 months (or is not shown) and the beginning balance sheet is blank or zeros.

Field 03GSH - Number of Shareholders

  1. The valid entries are blank, 0001 thru 9999.

  2. ISRP will transcribe this field from Page 1, line I.

Field 03AMC - Accounting Method Code

  1. This code is input to identify taxpayer’s accounting method.

  2. Transcription is from line 1, Schedule B.

  3. Valid entries for this field are blank, 1, 2, or 3.

  4. Input the Accounting Method Code as follows:

    • Code 1 if box (a) is checked

    • Code 2 if box (b) is checked

    • Code 3 if box (c) is checked

  5. Leave blank if multiple or no boxes are checked.

Field 03LIC - Low Income Housing Credit

  1. The taxpayer is claiming a Low Income Housing Credit.

  2. Transcription is from the left hand side margin next to line 9, Form 1120S (deductions section). If applicable "5-" followed by the Form 8586 credit amount.

  3. The money amount is entered in dollars only and must be positive.

  4. If Form 8586, Form 8609, or Form 8609-A are attached or Low Income Housing Credit is claimed (entries present on Schedule K, lines 13a or 13b), enter "9" in Field 01CCC.

  5. Valid Tax Periods are 198701 and later. If Tax Period is 198612 or prior, delete the credit.

  6. If Low Income Housing Credit is claimed, Form 8586 must be attached. Form 8609 and Form 8609-A must also be attached if Form 8586 has any entries in Lines 1 through 3 (Lines 1 through 4 for tax years 2004 and prior). If missing, correspond.

  7. If no reply, enter CCC 3.

Field 03RLI - Total Recapture Credit

  1. The taxpayer is filing a Form 8611,Recapture of Low-Income Housing Credit to recapture the Low Income Housing Credit.

  2. Transcription is from the left hand side margin next to line 9, Form 1120S (deductions section). If applicable "6-" has been edited with the Form 8611 credit amount.

  3. The entry amount is notated next to "6-" it has been edited from Form 8611, line 14 (prior year line 12).

  4. The money amount is edited in dollars only and must be positive.

  5. If Form 8693, Low Income Housing Credit Disposition Bond, is attached, enter "9" in Field 01CCC (if not present).

  6. If this field has an entry, Form 8611 must be attached.

  7. If missing, correspond. If no reply, enter CCC 3.

  8. Valid Tax Periods are 198701 and later.

Section 04 - Income

  1. Section 04 is the income lines (1-6) on Form 1120S.

  2. Listed below are the fields displayed in Section 04 of Form 1120S.

  3. Verify the figures to ensure that the taxpayer used the appropriate line.

    Field Designator Max Length Title Dollars/Cents Positive/Negative Location
    0401A 15 Gross Receipts or Sales $ +/- Pg 1, Line 1a
    0401B 15 Returns and Allowances $ +/- Pg 1, Line 1b
    0402 15 Cost of Goods Sold $ +/− Pg 1, Line 2
    0404 15 Net Gain/Loss $ +/− Pg 1, Line 4
    0405 15 Other Income $ +/− Pg 1, Line 5
    0406 15 Total Income $ +/− Pg 1, Line 6
    04MCV 15 Merchant Card Payments Verified (prior year only) $ +/- 2011 only, Pg 1, Line 1a

Section 05 - Deduction

  1. Section 05 is the deduction Lines (7-21) on Form 1120S.

  2. Listed below are the fields displayed in Section 05 of Form 1120S.

  3. Verify the figure to ensure that the taxpayer used the appropriate line.

    Field Designator Max Length Title Dollars/Cents Positive/Negative Location
    0507 15 Compensation of Officers $ +/− Pg 1, Line 7
    0508 15 Salary and Wages Less employment Credits $ +/− Pg 1, line 8
    0509 15 Repairs and Maintenance $ +/− Pg 1, line 9
    0510 15 Bad Debts $ +/− Pg 1, line 10
    0511 15 Rents $ +/− Pg 1, line 11
    0512 15 Taxes and Licenses $ +/− Pg 1, line 12
    0513 15 Interest $ +/− Pg 1, line 13
    0514 15 Depreciation not claimed on Form 1125-A or elsewhere (Form 4562) $ +/− Pg 1, line 14
    0515 15 Depletion $ +/− Pg 1, line 15
    0516 15 Advertising $ +/− Pg 1, line 16
    0517 15 Pension, Profit- Sharing, etc., plans $ +/− Pg 1, line 17
    0518 15 Employee benefit programs $ +/− Pg 1, line 18
    0519 15 Other deductions $ +/− Pg 1, line 19
    0520 15 Total deductions $ +/− Pg 1, line 20
    0521 15 Ordinary business income (loss) $ +/− Pg 1, line 21

Section 06 - Tax and Payments

  1. Section 06 is the Tax and Payment lines on Form 1120S.

  2. Verify the figures to ensure that the taxpayer used the appropriate line.

  3. Listed below are the fields displayed in Section 06 of Form 1120S.

    Field Designator Max Length Title Dollars / Cents Positive / Negative Location
    0618A 15 Total Gross Rents $ + Form 8825, line 18a
    0622C 15 Total Tax Taxpayer $/¢ + Page 1, line 22c
    06OTH 15 Travel and Entertainment $ +/- Pg 5, Sch M-1, line 3b
    0623A 15 Estimated Tax Payment $/¢ + Page 1, line 23a
    0623B 15 Form 7004 Payment $/¢ + Page 1, line 23b
    0623D 15 Refundable Credit from Form 8827 $/¢ + Page 1, line 23d
    06TRT 15 Telephone Excise Tax Paid $/¢ + Page 1 line 23d (200612-200711)
    06TRV 15 Telephone Excise Tax Paid - Verify Field $/¢ + Corrected Telephone Excise Tax Refund (TETR) amount based on correspondence reply
    0623E 15 Total Payments/Credits (total lines 23a through 23d) $/¢ + Page 1, line 23e
    0624 15 Estimated Tax Penalty $/¢ + Page 1, line 24
    0625 15 Amount owed / Overpayment Taxpayer $/¢ +/− Page 1, line 25, 26
    0627 15 Credit Elect Amount $/¢ + Page 1, line 27, Center
    06Q15 1 F8996-QUAL-OP-FUND-CD N/A N/A Schedule B, line 15 check boxes
    06QOF 15 F8996-QUAL-OP-FUND-AMT $/¢ + Schedule B, line 15
    06A01 15 Inventory at beginning of year $ + Form 1125-A, line 1
    06A07 15 Inventory at end of year $ + Form 1125-A, line 7
    0613F 15 Biofuel Producer credit (attach Form 6478) $ + Page 3, line 13f, Schedule K
    0616D 15 Distributions $ +/- Page 3, Schedule K, line 16d
    0618 15 Income/loss reconciliation $ +/- Page 3, Schedule K, line 18
    06BXF 15 Total Assets $ + Page 1, Form 1120S, Box F
    06MCT 15 Manually Corrected $ + Page 1, line 22c, Left
    06K4 15 Portfolio Interest $ +/− Page 3, Schedule K, line 4
    06LTS 15 Loans to Shareholders (end of year) $ +/- Schedule L, line 7d
    06TAB 15 Total Assets Beginning $ +/- Schedule L, line 15b
    06LFS 15 Loans from Shareholders $ +/- Schedule L, line 19d
    06CSE 15 Capitol Stock (EOY) $ +/- Schedule L, line 22d
    06ACE 15 Additional Paid in Capital $ +/- Schedule L, line 23d
    06REE 15 Retained Earnings (EOY) $ +/- Schedule L, line 24d
    06AAA 15 Sch. M-2 Balance (BOY) $ +/- Schedule M-2, line 1A

Field 0618A - Total Gross Rents

  1. Field 0618A is transcribed from Form 8825, line 18a.

  2. Field 06QOF is a 15 digit numeric, positive only, dollars only field.

  3. Invalid Condition:

    • Field is other than all numeric or blank.

    • Field is negative.

    • The entry exceeds the maximum field length (15 characters).

  4. Correction Procedures:

    1. Correct coding errors, transcription errors, and misplaced entries.

    2. If the amount is negative, delete the field.

Field 0623D - Refundable Credit from Form 8827

  1. Field 0623D is transcribed from line 23d, page 1, Form 1120S.

  2. Field 0623D is a 15 digit numeric, positive only, dollars and cents field valid for Tax Periods beginning 01-01-2018 and later.

  3. Invalid Condition:

    • Field is other than all numeric or blank.

    • Field is negative.

    • Tax Period beginning date is before 01-01-2018.

    • The entry exceeds the maximum field length (15 characters).

  4. Correction Procedures:

    1. Correct coding errors, transcription errors, and misplaced entries.

    2. If the amount is negative, delete the field.

    3. If the Tax Period beginning date is before 01-01-2018, delete the field.

Field 06Q15 - Form 8996, Qualified Opportunity Fund Code

  1. Field 06Q15 is transcribed from Form 1120S, Schedule B, line 15.

  2. Field 06Q15 is a one digit numeric field valid for Tax Periods 201812 and later.

  3. Invalid Condition:

    1. Blank.

    2. An entry other than "0" , "1" , "2" , or "3" is present.

    3. Tax Period is prior to 201812.

  4. Correction Procedures:

    1. Correct coding errors, transcription errors, and misplaced entries.

      If Then
      Schedule B, line 15 box is "Yes" , Enter "1" in Field 06Q15.
      Schedule B, line 15 box is "No" , Enter "2" in Field 06Q15.
      Both the "Yes" and "No" boxes are checked, Enter "3" in Field 06Q15.
      Neither box is checked (e.g., blank), Enter "0" in Field 06Q15.
      Tax Period is prior to 201812, Change entry to "0" in Field 06Q15.

      Note:

      If Form 8996 is attached, verify "6" is present in Field 01RPC.

Field 06QOF - Form 8996, Qualified Opportunity Fund Amount

  1. Field 06QOF is transcribed from the dotted line area of Form 1120S, Schedule B, line 15.

  2. Field 06QOF is a 15 digit numeric, positive only, dollars and cents field valid for Tax Periods 201812 and later.

  3. Invalid Condition:

    1. Field is not all numeric.

    2. Field is negative.

    3. Tax Period is prior to 201812.

    4. The entry exceeds the maximum field length (15 characters).

  4. Correction Procedures:

    1. Correct coding errors, transcription errors, and misplaced entries.

    2. If the amount is negative, delete the field.

    3. If the Tax Period is before 201812, delete the field.

    Note:

    If Form 8996 is attached, verify "6" is present in Field 01RPC.

Section 10 - Schedule D, Capital Gains and Losses and Built-In Gains

  1. Section 10 contains information reported on Schedule D, Capital Gains and Losses and Built-In Gains.

  2. This section is not required.

  3. All fields in Section 10 are numeric only and transcribed in dollars only.

  4. Listed below are all valid fields:

    Field Designator Maximum Length Positive / Negative Title Location on Schedule D
    101AD 15 + Line 1a Short Term Proceeds (Sales Price) Part I, Line 1a, Column (d)
    101AE 15 + Line 1a Short Term Cost or other basis Part I, Line 1a, Column (e)
    101BD 15 + Line 1b Short Term Proceeds (Sales Price) Part I, Line 1b, Column (d)
    101BE 15 + Line 1b Short Term Cost or other basis Part I, Line 1b, Column (e)
    101BG 15 +/- Line 1b Short Term Adjustments to gain or loss Part I, Line 1b, Column (g)
    1002D 15 + Line 2, Short Term Proceeds (Sales Price) Part I, Line 2, Column (d)
    1002E 15 + Line 2, Short Term Cost or other basis Part I, Line 2, Column (e)
    1002G 15 +/- Line 2 Short Term Adjustments to gain or loss Part I, Line 2, Column (g)
    1003D 15 + Line 3 Short Term Cost or other basis Part I, Line 3, Column (d)
    1003E 15 + Line 3 Short Term Cost or other basis Part I, Line 3, Column (e)
    1003G 15 +/- Line 3 Short Term Adjustments to gain or loss Part I, Line 3, Column (g)
    108AD 15 + Line 8a Long Term Proceeds (Sales Price) Part II, Line 8a, Column (d)
    108AE 15 + Line 8a Long Term Cost or other basis Part II, Line 8a, Column (e)
    108BD 15 + Line 8b Long Term Proceeds (Sales Price) Part II, Line 8b, Column (d)
    108BE 15 + Line 8b Long Term Cost or other basis Part II, Line 8b, Column (e)
    108BG 15 +/- Line 8b Long Term Adjustments to gain or loss Part II, Line 8b, Column (g)
    1009D 15 + Line 9, Long Term Proceeds (Sales price) Part II, Line 9, Column (d)
    1009E 15 + Line 9, Long Term Cost or other basis Part II, Line 9, Column (e)
    1009G 15 +/- Line 9 Long Term Adjustments to gain or loss Part II, Line 9, Column (g)
    1010D 15 + Line 10, Long Term Proceeds (Sales price) Part II, Line 10, Column (d)
    1010E 15 + Line 10, Long Term Cost or other basis Part II, Line 10, Column (e)
    1010G 15 +/- Line 10 Long Term Adjustments to gain or loss Part II, Line 10, Column (g)
    10013 15 + Capital gain distributions Part II, Line 13
  5. Field Errors will display for this section whenever non-numeric characters are entered into any field. Check for transcription errors and make necessary corrections. If correct information is not available, delete the entry.

Section 12 - Direct Deposit Refunds

  1. Section 12 contains data for Direct Deposit refunds for businesses.

  2. If direct deposit is requested, filers of Form 1120S must use Form 8050, Direct Deposit of Corporate Tax Refund, to request that the IRS deposit a corporate income tax refund (including a refund of $1 million or more) directly into an account at any U.S. bank or other financial Institution (such as a mutual fund or brokerage firm) that accepts direct deposits.

  3. Direct Deposit refunds are not valid for prior year returns.

Error Record Format Section 12

  1. The Error Record Format for Section 12 is:

    Field Designator Field Length Title Location
    12RTN 9 Routing Transit Number (RTN) Form 8050
    12DAN 17 Depositors Account Number (DAN) Form 8050
    12DDC 2 Direct Deposit Code Form 8050
    12TDA 1 Type Depositor Account (TDA) Form 8050

Field 12RTN - Routing Transit Number (RTN)

  1. Field 12RTN is transcribed from line 1, Form 8050.

  2. Field 12RTN is a 9 digit numeric or blank field.

  3. Invalid Condition - Field 12RTN is invalid if present and the first two digits are not:

    • Between 01 through 12; or

    • Between 21 through 32.

  4. Correction Procedures:

    1. Check for coding errors and transcription errors and correct accordingly.

    2. If Field 12RTN is not valid, blank the field.

Field 12DAN - Depositors Account Number (DAN)

  1. Field 12DAN is transcribed from line 2, Form 8050. Field 12DAN is valid up to 17 characters.

  2. Invalid Condition - Field 12DAN is invalid if:

    • A Depositor Account Number is present and a character is not numeric, alpha, hyphen or space.

    • Field 12DAN is present but Field 12TDA is not present.

  3. Correction Procedures:

    1. Correct coding errors, transcription errors, and misplaced entries.

    2. Check line 2 of Form 8050.

      If Then
      The account number is valid (the entry contains only numeric, alpha, hyphen or space) GTSEC 12 and refer to Field 12TDA instructions below.
      Enter a valid code in Field 12TDA.
      The account number is not valid Delete Field 12DAN

Field 12DDC - Direct Deposit Code (DDC)

  1. Field 12DDC is a computer generated field and is not correctable. The Direct Deposit Code is included in the Section 12 screen display for information only.

  2. Field 12DDC may be blank or it may contain a two digit number that is used by Master File to generate a notice to the taxpayer.

Field 12TDA - Type Depositor Account (TDA)

  1. Field 12TDA is transcribed from line 3, Form 8050. Field 12TDA may be blank or a one-digit alpha code (C or S).

  2. Invalid Condition - Field 12TDA is invalid if present and the entry is not:

    • "C" for Checking, or

    • "S" for Savings

  3. Correction Procedures:

    1. Correct coding errors, transcription errors, and misplaced entries.

    2. If both or neither box (Checking or Savings) is checked, enter "C" in Field 12TDA.

Section 14 - Schedule N

  1. Section 14 contains data from Form 1120S, Schedule N, Foreign Operations of U.S. Corporations. See Exhibit 3.12.217-2 for a copy of Schedule N.

  2. Section 14 data is valid for Tax Periods beginning after 199912. Schedule N was not available for Tax Periods 199912 and prior.

Error Record Format Section 14

  1. The Error Record Format for Section 14 is:

    Field Designator Field Length Title Location
    14Q01 1 Disregarded Entity Form 1120S, Schedule N, line 1a
    14Q02 3 Number of Forms 8865 Form 1120S, Schedule N, line 2
    14Q03 1 Direct/Indirect Interest Form 1120S, Schedule N, line 3
    14Q4A 1 Controlled Foreign Corporation Form 1120S, Schedule N, line 4a
    14Q4B 3 Number of Forms 5471 Form 1120S, Schedule N, line 4b
    14Q05 1 Foreign Trust Distribution Form 1120S, Schedule N, line 5
    14Q6A 1 Foreign Country Financial Account Form 1120S, Schedule N, line 6a
    14Q6B 2 Foreign Country Code Form 1120S, Schedule N, line 6b
    14Q7A 1 Extraterritorial Income (EI) Exclusion Form 1120S, Schedule N, line 7a
    14Q7B 3 Number of Forms 8873 Form 1120S, Schedule N, line 7b
    14Q7C 15 Total EI Exclusion Form 1120S, Schedule N, line 7c

Field 14Q01 - Disregarded Entity

  1. Field 14Q01 is transcribed from line 1a, Schedule N, Form 1120S.

  2. Invalid Condition - Field 14Q01 is invalid if it is not blank or an entry other than "1" , "2" or "3" is present.

  3. Correction Procedures:

    1. Correct coding and transcription errors and misplaced entries.

      If Then
      Schedule N, line 1 box is "yes" , Enter "1" in Field 14Q01.
      Schedule N, line 1 box is "no" , Enter "2" in Field 14Q01.
      Both the "yes" and "no" boxes are checked, Enter "3" in Field 14Q01.
      Neither box is checked, Delete Field 14Q01.

Field 14Q02 - Number of Forms 8865

  1. Field 14Q02 is transcribed from the dotted line portion of line 2, Schedule N, Form 1120S.

  2. Invalid Condition - Field 14Q02 is invalid if it is not all numeric (001 through 999) or blank.

  3. Correction Procedures:

    1. Check for coding and transcription errors and correct accordingly.

    2. If Schedule N, line 2 is blank and Form 8865 is attached, overlay with the correct number of forms.

Field 14Q03 - Direct/Indirect Interest

  1. Field 14Q03 is transcribed from the line 3, Schedule N, Form 1120S.

  2. Invalid Condition - Field 14Q03 is invalid if it is not all blank or an entry other than "1," "2" or "3" is present.

  3. Correction Procedures:

    1. Correct coding and transcription errors and misplaced entries.

      If Then
      Schedule N, line 3 box is "yes" , Enter "1" in Field 14Q03.
      Schedule N, line 3 box is "no" , Enter "2" in Field 14Q03.
      Both the "yes" and "no" boxes are checked, Enter "3" in Field 14Q03.
      Neither box is checked, Delete Field 14Q03.

Field 14Q4A - Controlled Foreign Corporation

  1. Field 14Q4A is transcribed from line 4a, Schedule N, Form 1120S.

  2. Invalid Condition - Field 14Q4A is invalid if it is not all blank or an entry other than "1," "2" or "3" is present.

  3. Correction Procedures:

    1. Correct coding and transcription errors and misplaced entries.

      If Then
      Schedule N, line 3 box is "yes" , Enter "1" in Field 14Q4A.
      Schedule N, line 3 box is "no" , Enter "2" in Field 14Q4A.
      Both the "yes" and "no" boxes are checked, Enter "3" in Field 14Q4A.
      Neither box is checked, Delete Field 14Q4A.

Field 14Q4B - Number of Forms 5471

  1. Field 14Q4B is transcribed from the dotted line portion of line 4b, Schedule N, Form 1120S.

  2. Invalid Condition - Field 14Q4B is invalid if it is not all numeric (001 through 999) or blank.

  3. Correction Procedure:

    1. Check for coding and transcription errors and correct accordingly.

    2. If Schedule N, line 4b is blank and Form 5471 is attached, overlay with the correct number of forms.

Field 14Q05 - Foreign Trust Distribution

  1. Field 14Q05 is transcribed from line 5, Schedule N, Form 1120S.

  2. Invalid Condition - Field 14Q05 is invalid if it is not all blank or an entry other than "1," "2" or "3" is present.

  3. Correction Procedures:

    1. Correct coding and transcription errors and misplaced entries.

      If Then
      Schedule N, line 3 box is "yes" , Enter "1" in Field 14Q05.
      Schedule N, line 3 box is "no" , Enter "2" in Field 14Q05.
      Both the "yes" and "no" boxes are checked, Enter "3" in Field 14Q05.
      Neither box is checked, Delete Field 14Q05.

Field 14Q6A - Foreign Country Financial Account

  1. Field 14Q6A is transcribed from line 6a, Schedule N, Form 1120S.

  2. Invalid Condition - Field 14Q6A is invalid if it is not all blank or an entry other than "1," "2" or "3" is present.

  3. Correction Procedures:

    1. Correct coding and transcription errors and misplaced entries.

      If Then
      Schedule N, line 3 box is "yes" , Enter "1" in Field 14Q6A.
      Schedule N, line 3 box is "no" , Enter "2" in Field 14Q6A.
      Both the "yes" and "no" boxes are checked, Enter "3" in Field 14Q6A.
      Neither box is checked, Delete Field 14Q6A.

Field 14Q6B - Foreign Country Code

  1. Field 14Q6B is transcribed from line 6b, Schedule N, Form 1120S.

  2. Invalid Condition - Field 14Q6B is invalid if present and the code is not a valid Foreign Country Code.

  3. Correction Procedures:

    1. If Then
      A foreign country is present on Schedule N, line 6b,
      Enter the appropriate code in Field 14Q6B and to the left of line 6b.

      Note:

      See Document 7475 for a list of the valid two-digit Foreign Country Codes.

      Unable to determine the Foreign Country Code, Delete Field 14Q6B.

Field 14Q7A - Extraterritorial Income Exclusion

  1. Field 14Q7A is transcribed from the left of line 7a, Schedule N, Form 1120S.

  2. Invalid Condition - Field 14Q7A is invalid if it is not all blank or an entry other than "1," "2" or "3" is present.

  3. Correction Procedures:

    1. Correct coding errors and transcription errors and misplaced entries.

      If Then
      Schedule N, line 3 box is "yes" , Enter "1" in Field 14Q7A.
      Schedule N, line 3 box is "no" , Enter "2" in Field 14Q7A.
      Both the "yes" and "no" boxes are checked, Enter "3" in Field 14Q7A.
      Neither box is checked, Delete Field 14Q7A.

Field 14Q7B - Number of Forms 8873

  1. Field 14Q7B is transcribed from the dotted line area of line 7b, Schedule N, Form 1120S.

  2. Invalid Condition - Field 14Q7B is invalid if it is not all numeric (001 through 999) or blank.

  3. Correction Procedure:

    1. Check for coding and transcription errors and correct accordingly.

    2. If Schedule N, line 7b is blank and Form 8873 is attached, overlay with the correct number of forms.

Field 14Q7C - Total Extraterritorial Income Exclusion

  1. Field 14Q7C is transcribed from the dotted line area of line 7c, Schedule N, Form 1120S.

  2. Field 14Q7C can be positive or negative and is dollars only.

  3. Invalid Condition - Field 14Q7C is invalid if it is not blank or all numeric.

  4. Correction Procedures - Correct coding errors and transcription errors and misplaced entries.

Section 15-18 - Form 4136, Credit for Federal Tax Paid on Fuels

  1. This section contains instructions for correcting Sections 15-18 Field Errors.

  2. Computer generated fields are described under the appropriate Error Code(s).

  3. Section 15 -18 contains data from Form 4136, Credit for Federal Tax Paid on Fuels. All fields are transcribed in dollars and cents and must be positive. Each of these fields are 15 characters in length and must be numeric only.

  4. ISRP enters the Form 4136 information by inputting the specific credit reference number (CRN) the taxpayer indicates on his Form 4136. All fields that represent CRNs are three characters in length and must be numeric only.

    Example:

    Taxpayer reports a credit of $4,500.00 on Line 3a and $600.00 on Line 5b, Form 4136. Section 15 will show the amount transcribed from Line 3a as 15A01, $4,500.00 with 15C01 as 360 Credit Reference Number (CRN) and amount transcribed as 15A02 $600.00 and 15C02 as 355 (CRN). In this scenario only Screen 15 would appear since only two credits were claimed.

  5. Screens 15-18 could generate on an account if the taxpayer claimed as many as 43 different credits. Screen 15 indicates the first 12 credits transcribed, Screen 16 will indicate credits 13-24, Screen 17 will indicate credits 25-36, and Screen 18 will indicate credits 37-43.

Section 15-18 Field Errors

  1. Correctable Section 15-18 fields are listed below:

    Field Designator Field Name
    15A01 First credit reported on Form 4136
    15C01 CRN for first credit reported on Form 4136
    15A02 - 15A12 Second thru twelfth credit amounts reported on Form 4136
    15C02 - 15C12 Second thru twelfth CRN(s) reported on Form 4136
    16A01 Thirteenth credit reported by taxpayer on Form 4136 (appears on Screen 16).
    16C01 Thirteenth CRN reported on Form 4136 (appears on Screen 16)
    16A02 - 16A12 Fourteenth thru twenty -fourth credit amount reported on Form 4136
    16C02 - 16C12 Fourteenth thru twenty-fourth CRN(s) reported on Form 4136
    17A01 Twenty-fifth credit reported on Form 4136 (appears on Screen 17)
    17C01 Twenty-fifth CRN reported on Form 4136 (Screen 17)
    17A02 - 17A12 Twenty-sixth thru thirty-sixth credit amounts reported on Form 4136.
    17C02 - 17C12 Twenty-sixth thru thirty sixth CRN reported on Form 4136
    18A01 Thirty-seventh credit amount reported on Form 4136 (Screen 18)
    18C01 Thirty-seventh CRN reported on Form 4136 (Screen 18)
    18A02 - 18A07 Thirty-eighth thru forty-third credits reported on Form 4136
    18C02 - 18C07 Thirty-eighth thru forty-third CRN reported on Form 4136.
  2. Invalid Condition - Section 15-18 field errors will display if:

    1. A field is not all numeric.

    2. An entry exceeds the maximum field length.

    3. A "positive only" field is negative.

  3. Correction Procedures:

    1. Check for coding errors and transcription errors and misplaced entries.

    2. Make necessary corrections.

    3. If a "positive only" field is negative, delete the field.

  4. Current valid Credit Reference Numbers with their valid periods are listed below:

    CRN Valid Tax Periods
    306 200601 and later
    307 200601 through 201811
    309 200601 and later
    310 200601 and later
    318 199708 and prior
    324 199701 and later
    346 199801 and later
    347 199801 and later
    350 199801 and later
    352 1990401 - 200708
    353 All
    354 All
    355 All
    356 199801 - 200512
    357 199801 - 200512
    359 199801 - 200512
    360 All
    361 199401 - 200708
    362 199401 and later
    363 199801 - 200512
    369 199401 and later
    375 199301 - 200511
    376 199301 - 200511
    377 199301 - 200511 or after 200712
    388 200501 through 201811
    390 200501 through 201811
    393 200501 thru 201211
    394 200501 thru 201211
    395 200501-200708
    411 200601 and later
    412 200601 and later
    413 200601 and later
    414 200601 and later
    415 200601 and later
    416 200601 and later
    417 200601 and later
    418 200601 and later
    419 200610 and later
    420 200610 and later
    421 200610 and later
    422 200610 and later
    423 200610 and later
    424 200610 and later
    425 200610 and later
    426 200610 through 201811
    427 200610 through 201811
    428 200610 through 201811
    429 200610 through 201811
    430 200610 through 201811
    431 200610 through 201811
    432 200610 through 201811
    433 200510 and later
    434 200510 and later
    435 200810 and later
    436 200810 through 201811
    437 200810 through 201811
  5. For Tax Periods 2000 and prior use the following conversion chart below:

    If Tax Year is 2000 or prior and CRN is... Then Convert to CRN...
    301 362
    302 356
    303 360
    304 361
    305 353
    307 324
    310 369
    312 359

Section 20 - Telephone Excise Tax Refund

  1. Section 20 contains information reported on Form 8913, Credit For Federal Telephone Excise Tax Paid.

  2. This section is not required.

  3. All fields in Section 20 are numeric only and transcribed in dollars and cents.

  4. All fields in Section 20 must be positive.

  5. Listed below are all valid fields:

    Field Designator Maximum Length Title Location Form 8913
    20TTR 15 Telephone Excise Tax Credit 15(d)
    20TTI 15 Telephone Excise Tax Credit Interest 15(e)
  6. TETR can only be claimed on returns with Tax Periods ending 200612–200711.

Section 21 - Form 8941, Small Employer Health Insurance Premiums

  1. Section 21 contains information reported on Form 8941, Credit for Small Employer Health Insurance Premiums.

  2. This section is not required.

  3. All fields in Section 21 are numeric only and are transcribed as dollars only.

  4. All fields in Section 21 must be positive.

  5. Fields 21CBX and 21BXC cannot be blank; the default is zero for no boxes checked.

  6. Field 21LN1 cannot be all zeros.

  7. Listed below are all valid fields:

    Field Designator Maximum Length Title Location Form 8941
    21CBX 1 SHOP Box Box A
    21LNB 9 E.I. Number Line B
    21BXC 1 Previous Form 8941 Filed Box C
    21LN1 4 Number of Employees Line 1
    2102 4 Number of Full Time Employees Line 2
    2103 15 Average Annual Wages Line 3
    2104 15 Health Insurance Premiums Paid Line 4
    2105 15 Premiums You Would Have Paid Line 5
    2110 15 Premium Subsidies Paid Line 10
    2113 4 Number of Employees With Premiums Paid Line 13
    2114 4 Number of Full Time Employees With Premiums Paid Line 14
    2115 15 Credit for Small Employer Health Insurance Premiums Line 15
    2116 15 Sum of Lines 12 and 15 Line 16
  8. Field Errors will display for this section whenever non-numeric characters are entered into any field and if Fields 21CBX or 21BXC are blank, or other than 0 through 3. Check for coding and transcription errors and make necessary corrections.

Section 22 - Form 5884-B, New Hire Retention Credit

  1. Section 22 contains information reported on Form 5884-B, New Hire Retention Credit.

  2. This section is not required.

  3. All fields in Section 22 are numeric only.

  4. Field 2210 cannot be more than 15 numeric digits, dollars only and positive only. Field 2211 cannot be more than 7 numeric positive digits, not a dollar field.

  5. Listed below are all valid fields:

    Field Designator Maximum Length Title 5884-B Location Form 5884-B
    2210 15 Total of Line 9, columns (a) through (c) Line 10
    2211 7 Number of retained workers for whom receiving credit Line 11

Math/Consistency Priority IV

  1. These errors will be displayed with the Error Code assigned to them for the specific error in ascending numerical order. The screen display will show the error code assigned and the fields needed to make the necessary correction.

  2. 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.

  3. All errors must be resolved by either eliminating the error, entering a Clear Code, or entering a Taxpayer Notice Code.

♦Error Code 001 - Tax Year-Invalid Entry♦

  1. Fields Displayed

    Field Designator Field Name Length
    01TXP Tax Period 6
    01RCD Received Date 8
    01CCC Computer Condition Code 10
  2. Invalid Condition - Error Code 001 will generate when any of the following conditions are present:

    1. Computer Condition Code"G" is not present - The processing date is equal to or more than two years and 10 months after the Return Due Date or the Received Date (whichever is later) and Computer Condition Code "W" is not present.

    2. Computer Condition Code"G" is present - The processing date is equal to or more than two years and 10 months after the Return Due Date and CCC "W" is not present.

    3. "G" Coded and Non- "G" Coded Returns - The processing date is less than two years after the Return Due Date and a Computer Condition Code "W" is present.

  3. Correction Procedures:

    1. Correct coding errors and transcription errors and misplaced entries.

    2. Do not send the returns listed in the following table to Statute Control for clearance. Instead, do the following:

      If... Then...
      • Return is prepared by Compliance (e.g., IRC 6020(b))

      • Return is secured by Examination/Collections

      • Return has a TC 59X (Transaction Code)

      • Return has "ICS" (Integrated Collection System) notated on the face of the return.

      • Return is a Substitute for Return prepared by Examination ("SFR" in the margin) with Form 13133, Expedite Processing Cycle, attached.

      • Return has a stamp indicating a previous clearance by Statute Control within the last 90 days.

      Enter "W" in Field 01CCC and on the return and continue processing.
    3. Compare the displayed fields with the return and attachments. If incorrect, overlay the screen with the correct information.

    1. If... Then...
      Field 01RCD is blank,
      1. Enter the Received Date in Field 01RCD. Use the earliest date if multiple Received Dates are present.

      2. See IRM 3.12.217.2.6, Received Date 01RCD to determine the 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 90 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 90 days,
      1. Suspend (SSPND) "310" .

      2. Prepare Form 4227, Intra-SC Reject or Routing Slip, to route to Statute Control.

  4. Suspense Corrections:

    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. Fields Displayed

    Field Designator Field Name Length
    CL Clear Code 1
    01NC Name Control 4
    >>>> Name Control Underprint 4
    01EIN Employer Identification Number 9
    01TXP Tax Period 6
    02CON "In-Care- of " Name 35
    02FAD Foreign Address 35
    02ADD Street Address 35
    02CTY City 22
    02ST State 2
    02ZIP ZIP Code 12
  2. Invalid Condition - Error Code 002 will generate when the Name Control mismatched against the National Account Profile (NAP) or the Entity Index File (EIF).

  3. Correction Procedures:

    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 On-Line Entity (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 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 underprint in Field 01NC, research IDRS using Command Code INOLES to determine the correct Name.

      If... Then...
      The Name on the return or attachment matches the Name Control on INOLES, Bring up the underprint.
      The Name Control on INOLES is different from the Name on the return or attachment, Research IDRS using Command Code NAMEB/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 matches 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/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. Ensure that the entity information matches 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 TIN 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 or there is an indication of a name change on Form 1120S, research IDRS using Command Code ENMOD for a new name.

      If... Then...
      The Name Control on ENMOD matches the Name on the return or attachment, Enter "C" in the Clear Code Field.
      The Name Control on ENMOD or INOLES does not match the Name on the return or attachments,
      1. SSPND "320" to route the return to Entity Control.

      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)" .

  4. Suspense Corrections:

    1. If there is an indication that Entity Control has assigned an EIN to the return, determine the Entity Assignment Date:

      If... Then...
      The Entity Assignment Date is past the Return Due Date or 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, "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 correctly,
      1. Enter correct EIN in Field 01EIN 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 003 – Check Digit Invalid♦

  1. Fields Displayed

    Field Designator Field Name Length
    01NC Name Control 4
    01EIN Employer Identification Number 9
  2. Invalid Condition – 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.

  3. Correction Procedures:

    1. Correct coding errors and transcription errors and misplaced entries..

    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 Command Code (CC) NAMEB/NAMEE for correct EIN.
    3. Compare the EIN from CC NAMEB/NAMEE to the EIN on the return.

    If... Then...
    The EIN on Form 1120S matches the EIN on CC NAMEB/NAMEE, Enter Name Control from CC NAMEB/NAMEE in Field 01NC.
    Research indicates a different EIN, Verify the EIN and name on CC INOLES.
    Name Control on CC INOLES matches the name on the return or attachment,
    1. Overlay Field 01EIN with the EIN from CC 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
      • CC INOLES indicates the account has been “merged to” or “merged from”, or
      • The TIN on the return is the taxpayer's SSN (check CC INOLEG).

    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" .

  4. Suspense Correction:

    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. Fields Displayed

    Field Designator Field Name Length
    CL Clear Code 1
    01NC Name Control 4
    >>>> Name Control Underprint 4
    01EIN Employer Identification Number 9
  2. Invalid Condition - Error Code 004 will generate when any of the following conditions are present:

    • The EIN is not present at Master File (MF)

    • The Entity Index File (EIF) and the National Account Profile (NAP) were not accessed or were not operational, causing a blank underprint in Field 01NC

      Note:

      An underprint of "XXXX" indicates that there is no account on the Master File, while a blank underprint indicates that the NAP has not been accessed or was not operational.

  3. Correction Procedures:

    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 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 underprint in Field 01NC, research IDRS using Command Code (CC) INOLES to determine the correct Name Control.

      If... Then...
      The Name on the return or attachments matches the Name Control on INOLES, Bring up the underprint.
      The Name Control on INOLES is different from the Name on the return or attachment, Research IDRS using Command Code NAMEB/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 attachments,
      1. Ensure that the entity information matches the return.

      2. Overlay Field 01EIN with the new EIN from NAMEB/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 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 TIN 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 Command Code 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 Name Control on INOLES or there is an indication of a name change on Form 1120S, research IDRS using Command Code ENMOD for a new name.

      If... Then...
      The Name Control on ENMOD agrees with the Name on the return or attachments, Enter "C" in the Clear Code field.
      The Name Control on ENMOD or INOLES does not agree with the Name on the return or attachments,
      1. SSPND "320" to route the return to Entity Control.

      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" " .

  4. Suspense Corrections:

    1. If there is an indication that Entity Control 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 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 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 the return, to the left of the entity section.

      4. Enter CCC "X" in Field 01CCC.

      The payment posted correctly,
      1. Enter the correct EIN in Field 01EIN 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 - Invalid Tax Year or Received Date♦

  1. Fields Displayed

    Field Designator Field Name Length
    CL Clear Code 1
    01TXP Tax Period 6
    01RCD Received Date 8
  2. Invalid condition - Error Code 005 will generate when the year-month of the processing date is later than the Tax Period plus six months and the Received Date is not present.

  3. Correction Procedures:

    1. Correct coding errors and transcription errors and misplaced entries.

    2. Compare the displayed fields with the return. If incorrect, overlay the screen with the correct information.

    3. A Received Date must be in Field 01RCD.

    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. Post Office, Foreign, or Private Delivery Service)

      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.

  4. 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 Received and No Received Date

  1. Fields Displayed

    Field Display Meaning Length
    RMIT> Remittance 16
    01TXP Tax Period 6
    01RCD Received Date 8
  2. Invalid Condition: Error Code 006 will generate when a remittance is received with the return and a Received Date is not present.

  3. Correction Procedures:

    1. Compare the displayed fields with the return. If incorrect, overlay the screen with the correct information. The format for Tax Period is "YYYYMM" and Received Date is "YYYYMMDD"

    2. If the Received Date is missing or illegible, determine the date in the order listed below:
      1. IRS date stamp.
      2. Legible U.S. Post Office postmark date or foreign postmark or an acceptable designated private delivery service. See IRM 3.10.72, Receiving, Extracting, and Sorting, for further details.

      Note:

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


      3. Service Center Automated Mail Processing System (SCAMPS) digital date.
      4. Signature (Use a signature date only for the current year return; if it is a prior year return use the DLN Julian date).
      5. DLN Julian Date minus ten days. (MeF Form 1120S use the Julian date)
      6. Current date minus ten days.

    3. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ from the Return Due Date (RDD), despite Saturday, Sunday or Holiday extension dates.

    4. If both U.S. Postal Service and private meter postmarks are present, honor the U.S. Postal Service postmark.

♦Error Code 007- Received Date Earlier Than Tax Year♦

  1. Fields Displayed

    Field Designator Field Name Length
    01TXP Tax Period 6
    01RCD Received Date 8
    01CCC Computer Condition Code 10
  2. Invalid Condition - Error Code 007 will generate when the Received Date is earlier than the first day of the Tax Period/Year.

  3. Correction Procedures:

    1. Correct coding errors and transcription errors and misplaced entries.

    2. Compare the displayed fields with the return. 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 (e.g., 20180115 instead of 20190115), and other information (Julian date, postmark date, and/or signature date) indicates that the Received Date should be the current year,   Change the Received Date to the current year in Field 01RCD.
      The return is an early filed "Final" return,  
      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 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 Tax Period.

      2. SSPND "211" .

  4. Suspense Correction:

    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 "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 008 - Tax Period Beginning

  1. Fields Displayed

    Field Display Meaning Length
    01TXB Tax Period Beginning 8
    01TXP Tax Period 6
    01CCC Computer Condition Code 10
  2. Invalid Condition - Error Code 008 will generate if any of the following conditions are present:

    • Tax Period Beginning is not present with a CCC "Y" or "F"

    • Tax Period Beginning is after the Tax Period Ending, or

    • Tax Period Beginning is earlier than 12 months prior to Tax Period Ending

  3. Correction Procedures:

    1. Correct coding errors and transcription errors and misplaced entries.

    2. Compare displayed fields with the return. If incorrect, overlay the screen with the correct information.

    If... And... Then...
    The return is a "Final" or "Short Period" , Tax Period Beginning is present on return, Enter Tax Period Beginning in YYYYMMDD format.
    The return is a "Final" or a "Short Period" , The day is not present in the Tax Period Beginning, Enter "01" for the day.
    The return is a "Final" or a "Short Period" , Tax Period Beginning is not valid, Determine a Tax Period Beginning date from the ending Tax Period.
    The return is an Initial Short Period, Tax Period Beginning is not present, Use the "Date Incorporated" from the face of the Form 1120S entered in Box E or "S Election Effective Date" from the face of the Form 1120S entered in Box A.
    The return is not a "Final" or "Short Period" ,   Remove CCC "Y" and/or "F" from the field display.

♦Error Code 010 - Amended Return "G" Coded♦

  1. Fields Displayed

    Field Designator Field Name Length
    01TXP Tax Period 6
    01NAI North American Industry Code 6
    01CCC Computer Condition Code 10
    01CRD Correspondence Received Date 8
    S02DP Data Present  
    S03DP Data Present  
    S04DP Data Present  
    S05DP Data Present  
    S06DP Data Present  
    S10DP Data Present  
    S12DP Data Present  
    S14DP Data Present  
    S15DP Data Present  
    S16DP Data Present  
    S20DP Data Present  
    S21DP Data Present  
    S22DP Data Present  
  2. Invalid Condition - Error Code 010 will generate when Computer Condition Code "G" is present and fields other than Fields 01NC, 01EIN, 01TXP, 01PSN, 01PEN, 01CBI and 01PTN contain entries.

  3. Correction Procedures:

    1. Correct coding errors and transcription errors and misplaced entries.

    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 the applicable Command Code(s) e.g., BRTVU, 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. GTSEC01, 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 data in Sections 02–22 as needed.

      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 014 - Missing Address Entries♦

  1. Fields Displayed

    Field Designator Field Name Length
    02CON In-Care-of-Name 35
    02FAD Foreign Address 35
    02ADD Address 35
    02CTY City 22
    02ST State 2
    02ZIP ZIP Code 12
  2. Invalid Condition - Error Code 014 will generate when any of the following conditions are present:

    1. If the street address is present, Field 02CTY and Field 02ST must be present unless a Major City Code is used.

    2. If a Major City Code is used and Field 02ADD must be present.

    3. A City must be present. If the city is not in the Major City format, Field 02CTY must be present. Field 02ST can be blank

    4. A Major City Code is used and Field 02ST is present.

  3. Correction Procedures:

    1. Correct coding errors and transcription errors and misplaced entries.

    2. Compare the displayed fields with the return. If incorrect, overlay the screen with the correct information.

    3. Research any of the following for valid address information: Document 7475, or INOLES, NAMEB, NAMEE, ENMOD.

      If... And... Then...
      A Major City Code is present, A street address is not available,
      1. Enter the City Name (spelled out, not in Major City format) in Field 02CTY.

      2. Enter the State Code in Field 02ST.

      The Major City Code is correct, The state is present, Delete Field 02ST.
      The ZIP Code cannot be corrected from the information on the return, attachments or from research,   DLSEC 02.

♦Error Code 015 - Foreign Address/State♦

  1. Fields Displayed

    Field Designator Field Name Length
    02FAD Foreign Address 35
    02ADD Address 35
    02CTY City 22
    02ST State 2
    02ZIP ZIP Code 12
  2. Invalid Condition - Error Code 015 will generate when any of the following conditions are present:

    • Field 02ST has an entry other than "." (period/space) when Field 02FAD present.

    • Field 02ZIP has an entry when Field 02FAD is present.

  3. Correction Procedures:

    1. Correct coding errors and transcription errors and misplaced entries.

    2. Compare displayed fields with the return. If incorrect, overlay the screen with correct information.

      If... Then...
      A foreign address is present in Field 02FAD,
      1. Field 02ST must contain "." (period/space).

      2. Delete any entry in Field 02ZIP.

      A foreign address is not present in Field 02FAD, Check return for foreign address.
      A foreign address is present on the return,
      1. Enter the foreign address in 02FAD.

        Note:

        If additional space is required, continue entering the address in Field 02ADD

        .

      2. Field 02CTY 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 02FAD if the foreign address is from Canada and the address contains a province name or abbreviation. (See Exhibit 3.12.217-17, Province/County Code-Canada Only).

      3. Field 02ST must contain "." (period/space).

      4. Delete any entry in Field 02ZIP.

      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. Fields Displayed

    Field Designator Field Name Length
    02CON In-Care-of-Name 35
    02FAD Foreign Address 35
    02ADD Street Address 35
    02CTY City 22
    02ST State 2
    02ZIP ZIP Code 12
  2. Invalid Condition: Error Code 016 will generate when the ZIP Code is inconsistent with the Major City Code or State Code.

  3. Correction Procedures:

    1. Correct coding errors and transcription errors and misplaced entries.

    2. Compare displayed fields with the return. If incorrect, overlay the screen with the correct information.

    3. Research Document 7475, or Command Codes INOLES, NAMEB/NAMEE, ENMOD for valid ZIP Code information.

      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 in Field 02ZIP.
      Only the first three digits of the ZIP Code can be determined,   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 02CTY.
      The address is in a major city, A Major City Code cannot be determined,
      1. Enter the name of the city in Field 02CTY.

      2. Enter the State Code in Field 02ST.

      The address is not in a major city,  
      1. Enter the appropriate state abbreviation in Field 02ST.

      2. Enter the ZIP code in Field 02ZIP.

  4. APO/FPO Addresses - An Army Post Office (APO), Diplomatic Post Office (DPO) or Fleet Post Office (FPO) is not a foreign address. The U.S. Postal Service established new address requirements for APO/DPO/FPO addresses. If an address appears in the old APO/DPO/FPO format, convert to the new state code abbreviation based on the ZIP Code. For example, APO New York, NY 091XX would be converted to APO AE 091XX. Refer to the APO/DPO/FPO conversion chart below:

    ZIP Code State Code
    340 AA
    090-098 AE
    962-966 AP

Error Code 026 - Tax Period Mismatch

  1. Fields Displayed

    Field Designator Field Name Length
    CL Clear Code 1
    01EIN Employer Identification Number 9
    01TXP Tax Period 6
    >>>> Tax Period Underprint 6
    01CCC Computer Condition Code 10
    S03NP Section 03 Not Present  
    03ADC Audit Code 3
    03IRC Initial Return Code 1

    Note:

    The literal "Section 03 Not Present" will display if there is no data in Section 03.

  2. Invalid Condition - The Tax Period underprint is present, CCC "F" or CCC "Y" is not present and the Tax Period does not agree with the Entity Index File.

  3. Correction Procedures:

    • Always drop your cursor to the bottom of the screen and transmit, before performing additional research.

    • Compare the EIN on the return with Field 01EIN. If the EINs do not agree, change Field 01EIN to agree with the return

    • See Exhibit 3.12.217-10 for EC 026 procedures.

  4. Entity Transaction Codes: Following is a list of common transaction codes (TC) you need to be aware of when working EC 026.

    Transaction Code Meaning
    016 Indicates changes to entity data (e.g., filing requirements, fiscal year month. etc.)
    052 Reversal of TC 053, 054 or 055
    053 Form 1128 processed to accept change of accounting period
    054 Form 1128 processed and accepted based on Rev. Proc 2006-46
    055 Form 8716, Election to Have a Tax Year Other Than a Required Tax Year, was filed and the fiscal Tax Period was accepted
    057 Computer generated when calendar year return posts and terminates IRC 444 election
    058 Denied Form 8716
    059 Rejection of Application for change in Accounting Period. Form 1128 was denied.
    090 Small Business Election
    091 Revoked Small Business Election
    092 Reverses TC 090, 093, 095 and 097
    093 Form 2553, Election by a Small Business Corporation, received
    094 Sub- Chapter S election denied
    095 Sub-Chapter S election pending
    096 Sub-Chapter S election terminated
    097 Referral to Chief Counsel for approval

    Note:

    If the account indicates there are prepaid credits and/or extensions and the return is for a short period, SSPND "342" and attach Form 4227 to have the credits and/or extensions moved to the correct period.

  5. Acceptable reasons for filing a short period include, but are not limited to the following:

    1. Statement that a change of accounting period has been granted by the IRS or Approved Form 1128, Application to Adopt, Change or Retain a Tax Year.

    2. Statement of termination of S Status or revocation under IRC 1362 (see page 1, box 5, S election termination or revocation is checked).

    3. Statement the corporation is coming out of consolidation.

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

    5. Accepted Form 8716

    6. IRC 1398 Election.

    7. Second Short Year after IRC 1398 Election.

Error Code 028 - Received Date Missing

  1. Fields Displayed

    Field Designator Field Name Length
    01RCD Received Date 8
    01CCC Computer Condition Code 10
  2. Invalid Condition:

    1. CCC "R" or "D" are present and the Received Date (YYYYMMDD) is not present. Bypass on a "G" Coded Return.

  3. Correction Procedures:

    1. Compare the displayed fields with the return. If incorrect, overlay the screen with the correct information.

    2. If CCC "R" or "D" are present, enter the Received Date in Field 01RCD. If CCC "R" or "D" are not on the return, delete the CCC "R" or "D" from Field 01CCC.

    3. If the return is not a "G" coded return, e.g., no indication that the return is Amended, Revised, Superseding, Duplicate or nothing indicates that this is other than the first return filed, GTSEC 02 and enter the data in the appropriate fields. When Error Code 010 generates, enter the appropriate fields and delete the entry in Field 01CCC.

    4. If the return is correctly "G" coded, enter the Received Date in 01RCD. Determine the date in the order listed below:
      1. IRS date stamp.
      2. Legible U.S. Post Office postmark date or foreign postmark or an acceptable designated private delivery service. See IRM 3.10.72, Receiving, Extracting, and Sorting, for further details.

      Note:

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


      3. Service Center Automated Mail Processing System (SCAMPS) digital date.
      4. Signature (Use a signature date only for the current year return; if it is a prior year return use the DLN Julian date).
      5. DLN Julian Date minus 10 days. (MeF Form 1120S use the Julian date)
      6. Current date minus 10 days

    5. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ from the Return Due Date (RDD), despite Saturday, Sunday or Holiday extension dates.

    6. If both U.S. Postal Service and private meter marks are present, honor the U.S. Postal Service marks. Refer to IRM 3.10.72, Receiving, Extracting, and Sorting, for further information.

    7. The legal due date is the 15th day of the third month after the Tax Period ending or the date granted by an approved extension of time to file. However if the 15th is a Saturday, Sunday or holiday, the legal due date is the first workday thereafter. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ after the Return Due Date.

    8. If the 1120S Return is not delinquent, delete the Computer Condition Code "R" .

Error Code 030 - Penalty and Interest Code Check

  1. Fields Displayed

    Field Designator Field Name Length
    01TXP Tax Period 6
    01RCD Received Date 8
    03PRI Penalty and/or Interest Code 1
  2. Invalid Condition:

    1. The Penalty and Interest Code of "1" is present, and the Received Date is on or before the Return Due Date, (2 months and 15 days) or ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ or the Received Date is not present.

  3. Correction Procedures:

    1. Compare the displayed fields with the return. If incorrect, overlay the screen with the correct information.

    2. If the code is correct, for example, the taxpayer is paying penalty or interest and the ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ enter the correct Received Date. See IRM 3.12.217.2.6 for determining the correct Received Date.

    3. If the Received Date is correct and after the due ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ 03PRI.

    4. If the correct Received Date is equal to or earlier than the due date, delete code "1" from Field 03PRI.

    5. If the Penalty and Interest Code is present and no Received Date is shown, determine the date and enter this date in the field. See IRM 3.12.217.2.6, Received Date 01RCD for instructions.

    6. The "R" Condition Code, if present, will override the "1" Penalty and Interest Code where a delinquency penalty is concerned.

    7. If there is no indication of pre-computed Penalty and Interest, delete code "1" from Field 03PRI.

Error Code 034 - Correspondence Received Date Check

  1. Fields Displayed

    Field Designator Field Name Length
    01TXP Tax Period 6
    01RCD Received Date 8
    01CRD Correspondence Received Date 8
  2. Invalid Condition:

    1. The Correspondence Received Date (Field 01CRD) is earlier or the same as the Received Date (Field 01RCD) or the Return Due Date.

    2. The Correspondence Received Date is later than the processing date.

      Note:

      01RCD is required.

  3. Correction Procedures:

    1. Compare the displayed fields with the return. If incorrect, overlay the screen with the correct information. The format for Tax Period is "YYYYMM" and Received Date is "YYYYMMDD" .

    2. A Correspondence Received Date (CRD) will be determined from the date the reply was received in the Submission Processing Campus or from the entity assignment date located in the lower left hand corner of the return.

    3. Refer to the return for the Correspondence Received Date. This can be verified by checking the stamped Received Date on the correspondence attached to the return.

    4. If the Correspondence Received Date is present and earlier than the Return Due Date, or later than the processing date, delete the Correspondence Received Date from Field 01CRD.

    5. If "No Reply" , enter CCC "3" in Field 01CCC to bypass the validity check.

Error Code 073 - CCC 3 is Present with Field 01CRD

  1. Fields Displayed

    Field Designator Field Name Length
    01CCC Computer Condition Code 10
    01CRD Correspondence Received Date 8
  2. Invalid Condition - Error Code 073 will generate when Field 01CCC is "3" and a date has been entered in Field 01CRD.

  3. Correction Procedures:

    1. Review the return and attachments for IRS Correspondence or the entity assignment date.

    2. If IRS correspondence is attached, determine if a reply has been received from the taxpayer.

    3. If a reply has been received from the taxpayer, delete CCC "3" from Field 01CCC.

    4. If the return is a "no reply" delete the entry in Field 01CRD.

    5. If an entity assignment date is present and there is "no reply" to correspondence, delete the entry in Field 01CRD.

Error Code 074 - Telephone Excise Tax Refund (TETR)

  1. The statutory period for claiming a Telephone Excise Tax Refund (TETR) has expired.

  2. If any return falls out for EC 074, there has been a transcription error on one of the following fields:

    • 06TRT

    • 20TTR

    • 20TTI

  3. Correct the transcription by moving the amount to the proper field.

Error Code 620 - Field 0613F and Tax Period Check

  1. Fields Displayed

    Field Designator Field Name Length
    01TXP Tax Period 6
    0613F Credit for Alcohol used as Fuel 15
  2. Invalid Condition: Error Code 620 will generate if Field 0613F contains an amount and the Tax Period is prior to 198010.

  3. Correction Procedures:

    • Verify Tax Period. If return is prior to 198010, delete the amount reported in Field 0613F

    • Correct Tax Period as needed

Error Code 622 - Tax Period and CRN Check

  1. Fields Displayed

    Field Designator Field Name
    01TXP Tax Period
    15TG> Total Credit Computer Generated (Form 4136)
    15A01–15A12 First thru Twelfth Credit Amounts Reported on Form 4136
    15C01 – 15C12 First thru Twelfth CRN Reported on Form 4136
    16A01 -16A12 Thirteenth thru Twenty-fourth Credit Amounts on Form 4136
    16C01 – 16C12 Thirteenth thru Twenty-fourth CRN Reported on Form 4136
    S17DP Section 17 Present
    S18DP Section 18 Present
  2. Invalid Condition:

    1. A CRN and amount are claimed for an ineligible Tax Period. See valid CRN and Tax Periods below:

      CRN Valid Period
      306 200601 and later
      307 200601 through 201811
      309 200601 and later
      310 200601 and later
      318 199707 and prior
      324 199701 and later
      346 199801 and later
      347 199801 and later
      350 199801 and later
      352 199401 - 200708
      353 All
      354 All
      355 All
      356 199801 - 200512
      357 199801 - 200512
      359 199801 - 200512
      360 All
      361 199401 - 200708
      362 199401 and later
      363 199801 - 200512
      369 199401 and later
      375 199301 - 200511
      376 199301 - 200511
      377 199301 - 200511 or after 200712
      388 200501 through 201811
      390 200501 through 201811
      393 200501 thru 201211
      394 200501 thru 201211
      395 200501-200708
      411 200601 and later
      412 200601 and later
      413 200601 and later
      414 200601 and later
      415 200601 and later
      416 200601 and later
      417 200601 and later
      418 200601 and later
      419 200610 and later
      420 200610 and later
      421 200610 and later
      422 200610 and later
      423 200610 and later
      424 200610 and later
      425 200610 and later
      426 200610 through 201811
      427 200610 through 201811
      428 200610 through 201811
      429 200610 through 201811
      430 200610 through 201811
      431 200610 through 201811
      432 200610 through 201811
      433 200510 and later
      434 200510 and later
      435 200810 and later
      436 200810 through 201811
      437 200810 through 201811
    2. Claim amount is present, CRN is not present.

    3. A CRN is present, but no coordinating amount is present.

  3. Correction Procedures:

    1. Correct coding errors and transcription errors and misplaced entries.

    2. Refer to the return for the correct Tax Period and to determine if the entry is a valid or misplaced entry, if the Tax Period is incorrect, make the necessary changes, in the correct format (YYYYMM).

    3. Verify the CRN and credit amount is claimed for a valid Tax Period. If the CRN is invalid, delete the entries from the CRN and credit amount fields.

    4. Delete the entry if it is determined to be a misplaced entry.

    5. If the Tax Period is 2000 or prior:

      If Tax Period is 2000 or prior and CRN is... Then Convert to CRN...
      301 362
      302 356
      303 360
      304 361
      305 353
      307 324
      310 369
      312 359

Error Code 624 - 0623A, 0624 and/or 0627 and Tax Period Check

  1. Fields Displayed

    Field Designator Field Name Length
    01TXP Tax Period 6
    0623A Estimated Tax Payments 15
    0624 Estimated Tax Penalty 15
    0625 Balance Due/Overpayment 15
    0627 Credit Elect Amount 15
  2. Invalid Condition: Error Code 624 will generate when there are significant entries in Estimated Tax Payments, and/or Estimated Tax Penalty, and/or Credit Elect Payment and the Tax Period is 198912 or prior.

  3. Correction Procedures:

    1. Refer to the return for the correct Tax Period and determine if the entry in Field 01TXP is valid.

    2. If the Tax Period is incorrect, make the necessary changes, in the correct format (YYYYMM).

    3. Check the entries in Fields 0623A, 0624, and/or 0627 to make sure the entries are valid or are not misplaced entries. If there are misplaced entries in the above mentioned fields, move or delete the entries.

    4. If the Tax Period is truly 198912 or prior to, delete the entries in Fields 0623A, 0624, 0625, and/or 0627. Then input CCC "X" and prepare Form 3465, Adjustment Request, and route to Accounts Management.

Error Code 628 - CCC "F" and Credit Elect Payments

  1. Fields Displayed

    Field Designator Field Name Length
    01TXP Tax Period 6
    01CCC Computer Condition Code 10
    0625 Balance Due/Overpayment 15
    0627 Credit Elect Amount 15
  2. Invalid Condition - Error Code 628 will generate when Computer Condition Code "F" is present and Credit Elect Payments (Field 0627) contains an amount.

  3. Correction Procedures:

    1. Refer to the return to determine if the entry in Field 01CCC is valid. If the entry in Field 01CCC is incorrect, delete Field 01CCC.

    2. If Computer Condition Code "F" is valid, check the return for misplaced entries in Fields 0625 and 0627.

    3. Delete the entry in Field 0627 when the return is Final.

Error Code 630 - CCC "D" and No Received Date

  1. Fields Displayed

    Field Designator Field Name Length
    01RCD Received Date 8
    01CCC Computer Condition Code 10
  2. Invalid Condition - Error Code 630 will generate when Computer Condition Code "D" is present and the Received Date is not present.

  3. Correction Procedures:

    1. Check the return for transcription errors.

    2. If CCC "D" is correct, determine the correct Received Date and enter it in Field 01RCD and on the return (YYYYMMDD).

Error Code 656 - Total Income Mismatch

  1. Fields Displayed

    Field Designator Field Name Length
    0401A Gross Receipts and Sales 15
    0401B Returns and allowances 15
    0401C> Gross Receipts less Returns and Allowance 15
    0402 Cost of Goods Sold 15
    0403> Gross Profit Computer Generated 15
    0404 Net Gain/Loss Form 4797 15
    0405 Other Income 15
    0406 Total Income 15
    >>>> Total Income Computer Generated 15
    04MCV Merchant Card Payments Verified (prior year only) 15

    Note:

    For 2011 revision of Form 1120S Line 1c will be Line 1a, Line 1d will be Line 1b and Line 1e will be 1c.

  2. Invalid Condition - Error Code 656 will generate when the transcribed total income amount differs ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ taxpayer’s figures.

  3. Correction Procedures - Compare the data on the screen with the taxpayer's entries on the return. Check attachments for any missing or incorrect entries and correct any coding and transcription errors and misplaced entries.

    If... Then...
    Lines 1a and 1b are blank, Enter the amount from line 1c in Field 0401A.
    Lines 1a, 1b, and 1c are blank, Add lines 2 and 3, enter the amount in Field 0401A.
    Field 0402, (Cost of Goods Sold) is blank, Enter the amount from Form 1125-A, line 8, in Field 0402.
    Line 6 is the only entry in the Income Section, Enter the amount in Field 0405.
    There are no transcription errors, and the taxpayer has made an error in calculations, Enter the amount from the computer generated Field 0406 into Field 0406. Place an "X" to the left of the taxpayers figure on Line 6 and enter the correct figure to the left of the "X" .
    2011 Form 1120S has an amount on Line 1a Merchant Card and Third Party payments, Enter the amount in Field 04MCV.

Error Code 658 - Total Deductions Mismatch

  1. Fields Displayed

    Field Designator Field Name Length
    0507 Compensation of Officers 15
    0508 Salaries and Wages 15
    0509 Repairs and Maintenance 15
    0510 Bad Debt 15
    0511 Rents 15
    0512 Taxes and Licenses 15
    0513 Deductible Interest Expense 15
    0514 Depreciation 15
    0515 Depletion 15
    0516 Advertising 15
    0517 Pension Profit-Sharing Plan 15
    0518 Employee Benefit Program 15
    0519 Other Deductions 15
    0520 Total Deductions 15
    >>>> Total Deductions Computer Generated 15
  2. Invalid Condition - Error Code 658 will generate when the transcribed total deductions amount differs ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ total deductions computer.

  3. Correction Procedures - Compare the data on the screen with the taxpayers figures on the return. If the taxpayer has attachments that show deduction/expense information, ensure that amounts are on appropriate lines, check for any missing or incorrect entries. Correct any coding and transcription errors.

    If... Then...
    a. Line 20 is the only entry in the Deductions Section, Enter amount in Field 0519.
    b. There are no transcription errors and the taxpayer has made an error in his calculations, Enter the amount from the computer generated Field 0520 into Field 0520. Place an "X" to the left of the taxpayers figure on Line 20 and enter the correct figure to the left of the "X" .
    c. The taxpayer's total for deductions is correct when the (-) sign is removed, Follow the taxpayer's intent.

Error Code 659 - Ordinary Income Loss Mismatch

  1. Fields Displayed

    Field Designator Field Name Length
    S04NP Section 04 Not Present  
    0406 Total Income/Loss Amount 15
    S05NP Section 05 Not Present  
    0520 Total Deductions 15
    0521 Ordinary Income/Loss 15
    >>>> Computer Generated Ordinary Income/Loss 15
  2. Invalid Condition:

    1. The transcribed Ordinary Income Loss amount differs by more than (plus or minus) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    2. The literal "Section XX Not Present" will display if no entry in Section 04 or 05.

  3. Correction Procedures - Compare the data on the screen with the taxpayers figures on the return. Correct any transcription errors.

    If... Then...
    a. Line 21 is the only entry and it is a loss, Enter line 21 amount into lines 19 and 20.
    b. Line 21 is the only entry and it is a gain, Enter amount into lines 5 and 6.
    c. There are no transcription errors and the taxpayer has made an error in their calculations, Enter the amount from the computer generated Field 0521 into Field 0521. Place an "X" to the left of the taxpayer's figure on Line 21 and enter the correct figure to the left of the "X" .
    d. The error in Ordinary Income is plus or minus ≡ ≡ ≡ ≡ ≡ ≡ or more, Prepare Letter 3833C, to inform the taxpayer of the error in their calculations. Inform the taxpayer to prepare amended Schedules K-1 for the shareholders in the corporation. Notate action taken in the lower left margin of Form 1120S.

    Note:

    Before sending letter, verify the taxpayer has transferred all amounts from attachments correctly.

Error Code 660 -Total Tax Taxpayer present and No 06MCT

  1. Fields Displayed

    Field Designator Field Name Length
    CL Clear Code 1
    0622C Total Tax Taxpayer 15
    06MCT Manually Corrected Total Tax 15
  2. Invalid Condition - Error Code 660 will generate when Total Tax Taxpayer is present and 06MCT is not.

  3. Correction Procedures - If there is an amount in Field 0622C, follow the Manual Verification procedures:

    1. If an amount is present on Line 22a (Excess net passive income or LIFO recapture tax), process as follows:

      If Then
      A supporting schedule is attached,
      1. Verify the correct amount has been transferred to Line 22a, and

      2. Enter a "C" in the Clear Code Field.

      A supporting schedule is not attached, Correspond.

      Exception:

      Do not correspond if the taxpayer notates "Section 47" , but does not attach Form 4255, Recapture of Investment Credit.

    2. If an amount is present on Line 22b (Tax from Schedule D (Form 1120S)), process as follows:

      If Then
      Schedule D is attached,
      1. Verify the correct amount (from Schedule D, Line 23) has been transferred to Line 22b, and

      2. Enter a "C" in the Clear Code Field.

      The tax is computed using regular corporate rates and is entered on Schedule D, Line 14,
      1. Verify the computation of Net Capital Gains,

      2. Verify the computed total tax has been transferred to Line 22b, and

      3. Enter a "C" in the Clear Code Field.

      Schedule D or a supporting schedule is not attached, Correspond.
    3. If an amount is present on Line 22c (Add lines 22a and 22b (see instructions for additional taxes)), process as follows:

      If Then
      Amounts are present on Lines 22a and/or 22b,
      1. Verify the amount equals the total of the verified amounts for Lines 22a and 22b, plus any write-in amount for Form 4255, Recapture of Investment Credit, "Section 47" , and

      2. Enter a "C" in the Clear Code Field.

      Line 22c includes any of the following write-ins:
      • "Tax from Form 4255" , "Section 47" , (or similar language),

      • "Last in First out (LIFO) Tax" (or similar language),

      • "BBA imputed underpayment" (or similar language),

      1. Accept the taxpayer’s entry, and

      2. Enter "C" in the Clear Code Field.

        Note:

        Do not correspond for Form 4255 if not attached.

      The taxpayer has included amounts for pre-computed interest or delinquency penalties, Remove the amounts from Field 0622C.
    4. If an amount is present on Line 22c and there are no amounts on Lines 22a and 22b, process as follows:

      If Then
      Schedule D or Form 4255, Recapture of Investment Credit, with "Section 47" notated, is attached,
      1. Verify the correct amount has been transferred to Line 22c, and

      2. Enter "C" in the Clear Code Field.

      Line 22c includes any of the following write-ins:
      • "Tax from Form 4255" , "Section 47" , (or similar language),

      • "Last in First out (LIFO) Tax" (or similar language),

      • "BBA imputed underpayment" (or similar language),

      1. Accept the taxpayer’s entry, and

      2. Enter "C" in the Clear Code Field.

        Note:

        Do not correspond for Form 4255 if not attached.

      The taxpayer has included amounts for pre-computed interest or delinquency penalties, Remove the amounts from Field 0622C.
      No supporting form, schedule, or statement is attached to explain the entry on Line 22c, Correspond.
      There is no reply from the taxpayer,
      1. Enter "3" in Field 01CCC,

      2. Accept the entry on Line 22c, and

      3. Enter "C" in the Clear Code Field.

    5. Make necessary corrections to lines 22a, 22b and 22c. If line 22c is changed, enter the computed amount in 06MCT. Error Code 662 will generate. An entry in 06MCT must satisfy the Rule of Two. See IRM 3.12.217.15.28, Rule of Two.

    6. If the Manually Corrected Total Tax is zero (0), enter $.01 in 06MCT. When Error Code 660 re-displays, enter a "C" in the Clear Code Field to clear the record.

    7. If Form 8697 or Form 8866 is attached, process as follows:

      If Then
      A refund is claimed on Form 8697 or Form 8866,
      1. Disallow the credit,

      2. Delete the credit amount from Form 1120S refund, if included, and

      3. Detach and route Form 8697 or Form 8866 to Accounts Management.

        Note:

        See IRM 3.12.217.1.33, Perfection of Attachments.

      Form 8697 or Form 8866 is full paid or has a balance due, No action is needed.

Rule of Two

  1. Under normal circumstances, the computer and the taxpayer agree on the computation of the tax. This satisfies the Rule of Two.

  2. On a return with a true math error, the computer and the tax examiner will agree on the computation of tax. This satisfies the Rule of Two.

  3. On a manually computed return with a true math error, the Rule of Two is not satisfied until two tax examiners arrive at the same tax computation.

Error Code 662 - Field 06MCT entry and No TPNC

  1. Fields Displayed

    Field Designator Field Name Length
    NC Notice Code  
    0622C Total Tax Taxpayer 15
    06MCT Manually Computed Tax 15
  2. Invalid Condition - Error Code 662 will generate when valid entries are present in Field 06MCT and a Taxpayer Notice Code is not present.

  3. Correction Procedures:

    1. Correct coding errors and transcription errors and misplaced entries.

    2. If there is an entry in 06MCT, a Notice Code must be sent.

    3. TPNC 40 and 90 are the only valid notice codes for Error Code 662.

    4. TPNC 90 is a fill-in paragraph that uses ME codes.

      Note:

      . For a full listing of the programmed TPNC 90 Math Error Codes and information on how to use the Math Error Codes see TPNC 90 Math Error Code Job Aid at TPNC-90-Math-Error-Code-Job-Aid.doc.

    5. TPNC 40 is used when the taxpayer fails to respond to correspondence.

Error Code 670 - Remittance or RRPS Indicator

  1. Fields Displayed

    Field Designator Field Name Length
    RMIT> Remittance 15
    01CCC Computer Condition Code 10
    S06NP Section 06 Not Present  
    0622C Total Tax Taxpayer 15
  2. Invalid Condition - A remittance is present or a RRPS indicator is present with the return and Total Tax-Taxpayer is zero and a valid Computer Condition Code "G" is not present.

  3. Correction Procedures:

    1. Compare the return with the entries on the screen and correct any transcription errors.

    2. Enter CCC "G" in 01CCC and Received Date in 01RCD if the return indicates an amended, revised, superseding, duplicate or any other positive indication that the return is not the first one filed for the same Tax Period.

    3. If CCC "G" is not to be used and data is present on the return for Section 06, use CC GTSEC and enter the data for Section 06.

    4. If there is no money in the RMIT> Field, and an RRPS/ISRP indicator is present, use GTSEC for Section 06, enter $.01 in Field 0622C and continue processing.

    5. If penalty and interest are present on a zero balance remittance or the remittance equals the refund amount on the Form 1120S Return, enter $.01 into Field 0622C, Total Tax Taxpayer. Error Code 660 will then be generated and if all the entries are correct, enter a C in the Clear Code Field to clear the record.

Error Code 672 - Sections 15, 16, 17, 18, or 06 Not Present

  1. Fields Displayed

    Field Designator Field Name Length
    NC Notice Code  
    0623A Estimated Tax Payment 15
    0623B Form 7004 Payment 15
    0623D