3.21.110 Processing Form 1042 Withholding Returns

Manual Transmittal

November 12, 2021

Purpose

(1) This transmits revised IRM 3.21.110, International Returns and Documents Analysis - Processing Form 1042 Withholding Returns.

Material Changes

(1) IRM 3.21.110.1.1 - Removed detailed background beyond framework. Added general overview to provide essential background information pertinent to the program.

(2) IRM 3.21.110.1.5 - Added section to address the IRM Internal Control Component, Program Controls per IRM, 1.11.2.

(3) IRM 3.21.110.7(1) - Updated Taxpayer Bill of Rights (IPU 21U0631 issued 04-20-2021) per BMF consistency file

(4) IRM 3.21.110.7(4) - Updated definition of "same day resolution" per BMF consistency file.

(5) IRM 3.21.110.14.2(4) - Corrected line number (IPU 21U0631 issued 04-20-2021).

(6) IRM 3.21.110.15(1) - Added additional instruction when detaching and routing attachments per BMF consistency file.

(7) IRM 3.21.110.14.2(2) - Added language for the lead to research and determine the correct action (IPU 21U1067 issued 08-27-2021) per BMF consistency file.

(8) IRM 3.21.110.16.4(4) - Added missing statute instruction about CP’s or letters attached to be consistent with BMF consistency file.

(9) IRM 3.21.110.16.5(2) - Added instruction for electronically filed re-entry returns without signatures per BMF consistency file.

(10) IRM 3.21.110.16.12(5) - Added new paragraph for temporary guidance for Action Codes and renumbered subsection (IPU 21U1006 issued 08-02-2021)

(11) IRM 3.21.110.17.2(1) - Added Penalty and Interest code (PIC) to bullet list.

(12) IRM 3.21.110.17.6 - Deleted section due to a SIC code section available with instructions in IRM 3.21.110.22.

(13) IRM 3.21.110.19.2(2) - Removed Note per BMF consistency file. Document 7071-A, BMF Name Control Job Aid, is the best resource to determine Name Control.

(14) IRM 3.21.110.22(4) - Removed obsolete SIC code instructions for 2010 or earlier versions of Form 1042,

(15) IRM 3.21.110.23(4) - Removed obsolete instructions for taxpayers submitting 2007 or earlier versions of Form 1042.

(16) IRM 3.21.110.29(3) - Updated Recipient Chapter 3 Status Codes.

(17) IRM 3.21.110.38(1) - Added last bullet instruction for re-entry returns originally filed electronically (E-File) per BMF consistency file.

(18) IRM 3.21.110 - Revised the Internal Revenue Manual (IRM), where necessary for the following types of editorial changes:

  • Spelling, grammar, punctuation and formatting

  • Sections and titles throughout IRM for clarity and consistency ( including IPU 21U0631)

  • Tax years on forms

  • IRM references, citations, and links (including IPU 21U0631, IPU 21U0535 and IPU 21U0214)

  • Website addresses

  • Reorganized IRM sections for clarity and to comply with Plain Language guidelines per the BMF consistency file

on

Effect on Other Documents

IRM 3.21.110, dated November 17, 2020 (effective January 1, 2021), is superseded. The following IRM Procedural Updates (IPUs) are incorporated into this IRM: 21U0241 issued 02-09-2021, IPU 21U0535 issued 04-05-2021, IPU 21U0631 issued 04-20-2021, IPU 21U1006 issued 08-02-2021 and IPU 21U1067 issued 08-27-2021.

Audience

Wage and Investment, Code and Edit Tax Examiners at the Ogden Submission Processing Center (OSPC) Only

Effective Date

(01-01-2022)

James L. Fish
Director, Submission Processing
Wage and Investment Division

Program Scope and Objectives

  1. Purpose: This section of the IRM provides instructions for reviewing and editing Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons.

  2. Audience: Tax examiners in the International Code and Edit Unit, Ogden Submission Processing Center, Wage and Investment Division (W&I) are the primary users of this IRM.

  3. Policy Owner: The Director of Submission Processing is responsible for the policies in this IRM.

  4. Program Owner: The Code and Edit/ERS IMF Section of the Paper Processing Branch of Submission Processing is responsible for the procedures and all updates related to this IRM.

  5. Primary Stakeholders: Submission Processing (SP) and Large Business and International (LB&I).

  6. Program Goals: To timely and accurately code and edit Form 1042 returns to prepare them for transcription.

Background

  1. The purpose of Document Perfection is to code and edit (perfect) returns and other documents for input to the Master File (MF) through the Integrated Submission and Remittance Processing System (ISRP) or the Service Center Recognition Image Processing System (SCRIPS). In addition, Document Perfection forwards any other documents or attachments not related to the processing of the returns to function responsible for handling them

  2. It is not the purpose of Code and Edit to mathematically verify or to check the validity of the returns and other documents being processed unless otherwise specified in the applicable section. The computer and/or Error Correction (Resolution) performs these functions if the returns and other documents are coded and edited as prescribed in applicable subsections of this section.

  3. Instructions in this manual are for Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons.

Authority

  1. Authority for these procedures includes the following sections of the Internal Revenue Code (IRC) and their corresponding Treasury Regulations:

    • IRC 1441-1446

    • IRC 1461-1464

    • IRC 1471-1474

    • IRC 6201(a)

    • IRC 6213(b)

    • IRC 6302

    • IRC 6402(a)

    • IRC 6511

Responsibilities

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

  2. The Operations Manager is responsible for monitoring operational performance for the 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 for following the instructions contained in this IRM and maintaining updated IRM procedures.

Program Management and Review

  1. Program Reports: The Monitoring Section under Submission Processing Program Management/Process Assurance monitors the Code and Edit reports.

  2. Program Effectiveness: The program goals are measured by the following reviews:

    • Embedded Quality Submission Processing (EQSP)

    • Balanced Measures

    • Managerial Reviews

  3. Annual Review: This IRM is updated and published annually after review by affected offices according to the clearance process established in IRM 1.11.9, Internal Management Documents, Clearing and Approving Internal Management Documents (IMDs).

Program Controls

  1. Quality Review is conducted following Embedded Quality Submission Processing (EQSP) procedures in IRM 3.30.30. The EQSP system provides a method to monitor, measure, and improve the quality of the work throughout Submission Processing. Review data is used to identify trends, problem areas, training needs, and opportunities for improvement. A statistical valid sample size of returns are pulled weekly and input into the EQSP system for review and to ensure IRM guidelines are followed.

Terms and Acronyms

  1. See Exhibit 3.21.110-8 for a list of terms and definitions used within this IRM.

Related Resources

  1. The Submission Processing Design Center has created Job Aid 2543-701 to help tax examiners with processing this form.

Introduction

  1. The Form 1042 is processed under:

    • Program Code: 12500

    • File Source: BMF

    • Tax class: 1

    • Master File Transaction Code (MFT): 12

    • Document Code: 25

    • DLN: XX125-ddd-501-999

    • File Location Code (FLC) 29 (Domestically filed), 60 (Internationally filed) and 78 (filed from a U.S. Possession).

General Information

  1. This IRM cannot address every possibility that occurs while perfecting returns or documents. Take taxpayer intent into consideration. Refer issues not addressed in this IRM to the subject matter expert (SME), lead, or manager to determine the corrective action.

♦Business Master File (BMF) Consistency♦

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

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

  3. A (diamond) before and after titles identifies BMF Consistency subsections.

  4. Text in normal print within a consistency subsection signifies the common process to use for all BMF returns. The text in BOLD print is form specific and applies to this IRM only.

♦IRM Deviation Procedures♦

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

♦Foreign Currency♦

  1. For returns completed in other than U.S. currency, process as filed. However, if corresponding for missing/incomplete item(s), include a request in Letter 1791-C, U.S. Annual Return of Income Paid at Source Incomplete for Processing, to resubmit in U.S. currency.

♦Protective Claims♦

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

    Exception:

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

♦Taxpayer Advocate Service (TAS)♦

  1. The Taxpayer Bill of Rights (TBOR) lists rights that already existed in the tax code, putting them in simple language and grouping them into 10 fundamental rights. Employees are responsible for being familiar with and acting in accord with taxpayer rights. See IRC 7803(a)(3), Execution of Duties in Accord with Taxpayer Rights. For more information on the Taxpayer Bill of Rights, see https://taxpayeradvocate.irs.gov/About-TAS/Taxpayer-Rights. Under these rights, taxpayers have the right to expect the tax system to consider facts and circumstances that might affect their underlying liabilities, ability to pay, or ability to give information timely.Taxpayers have the right to receive help from the Taxpayer Advocate Service if they are experiencing financial difficulty or if the IRS has not resolved their tax issues properly and timely through its normal channels.

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

  3. Refer taxpayers to TAS when the contact meets TAS criteria 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. The definition of "same day resolution" is within 24 hours. The following two situations meet the definition of "same day resolution" :

    • The issue can be resolved within 24 hours.

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

    See IRM 13.1.7.5 , Same Day Resolution by Operations

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

♦Taxpayer Advocate Service (TAS) Service Level Agreements (SLA)♦

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

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

♦IRS Employee Contacts♦

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

  2. All IRS employees who communicate by telephone, face-to-face, or any other method of correspondence with taxpayers or their personal representatives on tax-related matters, must give (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. Toll-free employees may also give their location for identification purposes. Treat faxes to taxpayers on tax-related matters as correspondence and include the required information.

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

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

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

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

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

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

♦Business Master File (BMF) Identification (ID) Theft♦

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

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

♦Use of Fax for Taxpayer Submissions♦

  1. Taxpayers may send tax return information via fax as part of return perfection even when submitting a signature. In circumstances where contact with the taxpayer was made and documented, faxed signatures are acceptable. 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://imdtrack.web.irs.gov/IG_Uploads/IRS.gov_No/NHQ-01-1019-0001.pdf

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

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

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

    • IRM 21.1.3.2.3, Required Taxpayer Authentication

    • IRM 21.1.3.2.4, Additional Taxpayer Authentication

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

    • IRM 10.5.1.6.7.2, Answering Machine or Voicemail.

    • IRM 11.3.1.14, Facsimile (Fax), Electronic Facsimile (e-Fax), and IRS Internal Enterprise Electronic Facsimile (EEFax) Transmission of Tax Information

Purpose of Document Perfection

  1. The purpose of Document Perfection is to code and edit (perfect) returns and other documents for input through the Integrated Submissions and Remittance Processing (ISRP) System.

  2. In addition, Document Perfection forwards any other documents or attachments not related to the processing of the return to the function responsible for handling it.

  3. Document Perfection is not responsible for the mathematical verification of the return or for checking the validity of the documents being processed except as noted in specific line by line instructions.

  4. The computer performs math verification and validity and consistency checks after the returns and other documents are coded and edited as prescribed in this Section.

♦Edit Marks♦

  1. Edit marks are edited on the return for transcription to Automatic Data Processing (ADP) System through the Integrated Submission and Remittance Processing (ISRP) system. Enter edit marks in brown, red, orange, purple or green pencil or pen.

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

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

  4. Edit marks entered by other areas, such as Collections, Entity or Accounts Management, are not to be re-edited except to place the marks in the correct area or perfect for legibility. Do not edit (or write) over another area's edit marks.

    Exception:

    Photocopied Returns.

  5. Photocopied Returns - Re-edit or underline any valid, black edit marks. See IRM 3.21.110.14.3, Correspondence Imaging System (CIS) Returns, and IRM 3.21.110.16.5, Re-Entry Return Procedures.

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

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

    Note:

    If the taxpayer circles an entry, edit the entry.

    Underline Identifies an entry for transcription. (e.g., name control; tax period; etc).
    Arrow Indicates the correct placement of a misplaced entry. Use an arrow if the misplaced item is close to the correct line and there is no question where the entry belongs.

    Note:

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

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

    Note:

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

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

Unprocessable Conditions

  1. A return must contain the following specific items before it is considered processable:

    1. A Taxpayer Identification Number (TIN) (e.g., Employer Identification Number (EIN))

    2. A legible name (for the name control)

    3. A valid Tax Period

    4. Legible tax data (if tax liability is shown)

    5. Jurat and Signature

  2. Perfect all documents to the extent possible from schedules and other attachments.

  3. Conditions which make a document unprocessable are:

    1. The name is so illegible or incomplete the name control cannot be determined.

    2. A social security number (SSN) or individual taxpayer identification number (ITIN) is used instead of the withholding agent's EIN and cannot be perfected from information on the return or attachments.

    3. The TIN is other than nine numeric digits and cannot be perfected from information on the return or attachments.

    4. The document has two or more different TINs.

    5. The Taxpayer has stated they have combined liability for more than one tax period or more than one type of tax.

    6. Tax data entries are so incomplete, illegible or contradictory the tax liability cannot be determined.

    7. The document is mis-blocked.

    8. The return is unsigned.

    9. The return has only entity data and no other statements or attachments from the taxpayer.

    10. Any condition set forth as unprocessable in the sections on processing specific documents.

  4. All Other Unprocessable Conditions — Initiate correspondence by preparing Letter 1791-C CAS, if applicable unless other instructions are given in the IRM.

    Note:

    Service Centers keep all refund, credit-elect, and zero balance returns In-House instead of sending the return back to the taxpayer when corresponding for signature, missing information, and supporting schedules and documentation. Document Analysis, Code and Edit, should follow the instructions they currently use for correspondence when the return cannot be sent back to the taxpayer.

♦Correspondence♦

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

    1. Correspondence received from taxpayers, and

    2. Correspondence issued to taxpayers

♦Definition of Correspondence from Taxpayers♦

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

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

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

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

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

    1. Is taxpayer waiting for a response from IRS?

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

    3. Is taxpayer asking a question?

    Note:

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

♦Issuing Correspondence♦

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

    Exception:

    Do not correspond on:
    -Returns prepared by Collections, IRC 6020(b)
    -Returns prepared by Exam, "Substitute for Return" (SFR)
    -Dummy Returns prepared by the IRS.

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

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

    • Incomplete returns indicating, "Payment Only"

    • Incomplete returns indicating they have previously e-filed

    Note:

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

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

    If And Then
    The return needs correspondence, Requires a response,
    1. Complete Letter 1791-C CAS, indicating the MFT code, and the proper paragraphs.

      Note:

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

    2. Attach Letter 1791-C CAS, to the front of the return below the entity area.

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

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

    The return needs correspondence, Does not require a response,
    1. Complete Letter 1791-C CAS, , indicating the MFT and the proper paragraphs.

      Note:

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

    2. Photocopy first page of return and attach the Letter 1791-C CAS, below the entity area on front of the return copy. Be sure the name and address clearly show above the 1791-C CAS.

    3. Forward the copy to the correspondence area.

    4. Edit an Action Trail (e.g., 1791-C SENT mmddyy) in the lower left corner going vertically up the side of the return.

    5. Finish editing the return and leave in batch.

    Note:

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

  4. If missing page 2, correspond using Letter 1791-C CAS, and mark line 22.

♦Correspondence Imaging System (CIS) Returns♦

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

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

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

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

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

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

    2. Remove the return from the batch and route to AM.

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

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

♦Routing Guide for Attachments♦

  1. Review all attachments to the return before the return can be considered processable.

    1. Only detach attachments when specifically instructed.

      Note:

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

    2. Edit Action Trail(s) (e.g., "2848 detached" ) in the lower left corner going vertically up the side of the return.

    3. Edit the name and EIN (if not present) on the detached document. Also, edit the return received date (e.g., Rec’d MM/DD/YY) in the lower left margin of the detached document before routing.

  2. Follow the general guidelines below for each attachment:

    Document Detach Descriptions/Actions
    CP 504 and CP 504B No
    1. Pull CP 504 to the front.

    2. Route notice and return to Accounts Management.

    CP 518

    Note:

    Do not route to Statute Control Unit for clearance. See IRM 3.21.110.16.4, Statute Returns, for more information.

    No Correspondence is attached or taxpayer’s response shows:
    • Taxpayer disagrees they are required to file the return.

    • Only page one of the return is attached.

    • EIN on notice does not match EIN on return.

    • Return requested on notice not the same as return submitted.

    • Taxpayer asking question(s) or requesting IRS take action(s) on their account.

    • Case involves any other IRS action(s) C&E not trained to complete.

    Then, Route to Compliance Services Collection Operations (CSCO). Use return address on CP notice;
    • Brookhaven - Stop #662

    • Memphis - Stop #81

    • Philadelphia - 4-N31.142


    If none of the above apply, correspondence or written response to the notice is not attached, and/or "599" is notated:
    1. Move the notice to the back of the return.

    2. Continue processing the return.

    Note:

    If the return is unsigned, but the taxpayer signed the CP notice under the jurat, it is not necessary to correspond for the signature. Notate see CP Notice and leave attached.

    CP 259 and CP 959 (Spanish version)

    Note:

    Do not route to Statute Control Unit for clearance. See IRM 3.21.110.16.4, Statute Returns, for more information.

    No Correspondence is attached or taxpayer’s response shows:
    • Taxpayer disagrees they are required to file the return.

    • Only page one of the return is attached.

    • Employer Identification Number (EIN) on notice does not match EIN on return.

    • Return requested on notice not the same as return submitted.

    • Taxpayer asking question(s) or requesting IRS take action(s) on their account.

    • Case involves any other IRS action(s) C&E not trained to complete.

    Then, Route to Compliance Services Collection Operations (CSCO). Use return address on Computer Paragraph (CP) notice:
    • Brookhaven - Stop #662

    • Memphis - Stop #81

    • Philadelphia - 4-N31.142


    If none of the above apply, correspondence or written response to the notice is not attached, and/or "599" is notated:
    1. Move the notice to the back of the return.

    2. Continue processing the return.

    Note:

    If the return is unsigned, but the taxpayer signed the CP notice under the jurat, it is not necessary to correspond for the signature. Notate see CP Notice and leave attached.

    Letters 112-C, 282-C, 2255-C or 2284-C

    Note:

    Do not route to Statute Control Unit for clearance. See IRM 3.21.110.16.4, Statute Returns, for more information.

    No
    1. Identify which organization initiated the letter to the taxpayer (e.g., what organization signed the letter?).

    2. Route letters initiated by Accounts Management (AM) to Accounts Maintenance Research (AMRH):

      • Ogden - Mail Stop 6712

      • Kansas City - Mail Stop N2 6800

    3. Route letters initiated by Collections as follows:

      1. If correspondence is attached or taxpayer’s response shows any of the following:

        • Taxpayer disagrees they are required to file the return.

        • Only page one of the return is attached.

        • EIN on letter does not match EIN on return.

        • Return requested on letter not the same as return submitted.

        • Taxpayer asking question(s) or requesting IRS take action(s) on their account.

        • Case involves any other IRS action(s) C&E not trained to complete.

        Then, Route to Compliance Services Collection Operations (CSCO). Use return address on letter;
        • Brookhaven - Stop #662

        • Memphis - Stop #81

        • Philadelphia - 4-N31.142

      2. If none of the above apply, correspondence or written response to the letter is not attached, and/or no "599" is notated:
        Then, Move the letter to the back of the return and continue processing.

    Letter 5935, Offshore Compliance Status Letter Yes Route to:
    LB&I, Stop 431, AUSC
    Includes Tax Liability for Multiple Tax Periods or Types of Tax. No
    • Numbered returns, route to Rejects.

    • Unnumbered returns, prepare a dummy return if possible; otherwise correspond.

    Other Tax Returns (original signature). Yes
    1. Edit received date to the detached return.

    2. Route to proper function unless specifically directed otherwise.

    Exception:

    Returns attached to a consolidated return will NOT be detached.

    Petitions in opposition of tax law provisions Yes

    Note:

    Do not edit an action trail when detaching a petition.

    Route to:
    IRS
    Room 3244

    1111 Constitution Avenue, NW
    Washington, DC 20224
    State Tax Returns (Original or Copy With Original Signature). Yes Route to Receipt and Control
    State Tax Returns (Photocopy, facsimile or no signature. No Leave attached.
    Statement Establishing Reasonable Cause for Delinquent Filing. No
    1. Issue Letter 1382-C , Penalty Removal Request Incomplete.

    2. Continue editing the return.

    3. See IRM 3.21.110.16.7.

    Remittance Found. No Immediately hand carry the return and remittance to supervisor.
    Request for Acknowledgement No No action required
    Request for information or inquiries. Yes
    1. Photocopy any data necessary to process the return.

    2. Attach the copy to the return.

    3. Route the original attachment to the proper office for necessary action.

    Requests for Installment Agreement Yes Route as follows:
    Ogden - Route to Collections Mail Stop 5500.
    Kansas City — Route to Mail Stop P4 5000
    Request for Adjustment to another document. Yes Route to the proper function. The attachment must contain a name, address, EIN, and received date. Edit if missing.
    Request for money transfer. Yes If the taxpayer attaches a request to transfer money to the return you are processing:
    1. Prepare Form 3465, Adjustment Request, to route the request to Accounts Management.

    2. Detach the transfer request.

    3. Hold the return for 2 cycles before processing.


    If the taxpayer attaches a request to transfer money from the return you are processing:
    1. Prepare Form 3465, to route the request to Accounts Management.

    2. Edit CCC "X" to freeze overpayment.

    3. Detach the transfer request.

    4. Continue processing return.

    Request for Forms or Schedules. No If requesting current year forms:
    1. Prepare Form 4190, Order Form for Tax Forms and Publications.

    2. Forward to National Distribution Center (NDC) for processing.


    If Requesting prior year forms:
    1. Prepare Form 6112, Prior Year Tax Products Order Form.

    2. Forward to National Distribution Center (NDC) for processing.

    Note:

    Use the write-in sections of Form 4190 and Form 6112 for all BMF forms and schedule requests..

    A General Power of Attorney or a Durable Power of Attorney or Tax Information Authority is submitted on any document other than Form 2848, Power of Attorney and Declaration of Representative, or Form 8821, Tax Information Authorization No Take no action. Leave the Power of Attorney or Tax Authorization attached to the return. Do not route to the Centralized Authorization File (CAF) function.
    Claims for Collective Refund No Take no action.
    W-8, Certificate of Foreign Status, Series or a substitute thereof (in the form of a statement) No Take no action.
    Form 433-B, Collection Information Statement for Businesses Yes Route as follows:
    Ogden - Route to Collections Mail Stop 5500.
    Kansas City - Route to Mail Stop P4 5000.
    Form 433-D, Installment Agreement Yes Route as follows:
    Ogden - Route to Collections Mail Stop 5500.
    Kansas City - Route to Mail Stop P4 5000.
    Form 1000, Ownership Certificate No Take no action.
    Form 1042-S Copy A/Form 1042-T Yes
    1. Prior to detaching Copy A:
      Verify entity and lines 61-63; Do not separate Form 1042-T from associated Form(s) 1042-S.
      Ensure the 1042-S has the name, EIN, and address before detaching, edit if necessary.

    2. Route to Receipt and Control for rebatch.

    • Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, Copy B (C, D, and/or E) ONLY, or

    • Letter signed by "U.S. Competent Authority" , or

    • Taxpayer statement supporting the amount of U.S. source substitute dividends received from the withholding agent.

    No Leave attached to Form 1042 for verification of Line 67a/67b. See IRM 3.21.110.29.
    Form 2848, Power of Attorney and Declaration of Representative Yes
    1. Edit taxpayer name and EIN on Form 2848 if missing.

    2. Edit received date on Form 2848 .

    Route as follows:
    Ogden - Route to Mail Stop 6737
    Kansas City - route to:
    Internal Revenue Service
    5333 Getwell Rd., Mail Stop 8423
    Memphis, TN 38118
    Form 3520, Annual Return to Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts Yes Route to Receipt and Control for rebatch, if original signature is on Form.
    Form 3520-A, Annual Return of Foreign Trust With a U.S. Owner Yes Route to Receipt and Control for rebatch, if original signature is on Form.
    Form 4224, Form is Obsolete No Take no action.
    Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns Yes/No If the extension is for a different period or different Form, detach and Route to Receipt and Control for re-batch. If the Form 7004 is a photocopy do not detach.
    Form 8233, Exemption from Withholding on Compensation for Independent (and Certain Dependent) Personal Service of a Nonresident Alien Individual No Take no action.
    Form 8288, U.S. Withholding Tax Return for Disposition by Foreign Persons of U.S. Real Property Interests Yes Route to the International BMF Accounts Management Foreign Investment in Real Property Tax Act (FIRPTA) Unit.
    Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U.S. Real Property Interests Yes Route to the International BMF Accounts Management Foreign Investment in Real Property Tax Act (FIRPTA) Unit.
    Form 8300, Report of Cash Payments over $10,000 Received in a Trade or Business Yes Route to the Detroit Computer Center (DCC). This form is used to report cash payments in excess of $10,000.
    Form 8804, Annual Return for Partnership Withholding Tax (IRC 1446) Yes Route to Receipt and Control for rebatch.
    Form 8813, IRC 1446 Payments Yes Route to the International BMF Accounts Management FIRPTA Unit.
    Form 8821, Tax Information Authorization Yes
    1. Edit taxpayer name and EIN on Form 8821 if missing.

    2. Edit received date on Form 8821.

    3. Edit action trail on tax return.

    Route as follows:
    Ogden - Route to Mail Stop 6737
    Kansas City, route to:
    Internal Revenue Service
    5333 Getwell Rd., Mail Stop 8423
    Memphis, TN 38118
    Form 9465, Installment Agreement Request Yes Route as follows:
    Ogden - Route to Collections Mail Stop 5500.
    Kansas City - Route to Mail Stop P4 5000.
    Form 14039-B, Business Identity Theft Affidavit No If a specific function is indicated by the envelope address or an IRS CP notice or IRS letter, place the Form 14039-B on top and route Form 14039-B and the return to the specific function.

    If Ogden or Kansas City receives a Form SS-4, Application for an Employer Identification Number and Form 14039-B route the returns to
    Internal Revenue Service
    Ogden BMF Entity
    Mail Stop 6273
    Ogden, UT 84201.

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

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

    • The envelope is not addressed to a specific function.


    Place the Form 14039-B on top of the return and route to the local Image Control Team (ICT).
    Ogden - Mail Stop 6552.
    Kansas City — Mail Stop C1 6525
    Form 14157, Complaint: Tax Return Preparer Yes Route to:
    Attn: Return Preparer Office
    401 W. Peachtree Street NW
    Mail Stop 421-D
    Atlanta, Georgia 30308
    Form 15023, Offshore Compliance Status Yes Route to:
    LB&I, Stop 4301, AUSC

Form 1042 Annual Withholding Tax Return for U.S. Source Income of Foreign Persons - Special Conditions

  1. For procedures when processing unusual Form 1042 conditions, this section covers the following topics:

    • Early-Filed Returns

    • Non-Taxable Returns With No Line Entries

    • Fiscal Year Returns

    • Voluntary Compliance Program (VCP)

    • Statute Returns

    • Re-Entry Returns

    • Amended Returns

    • Delinquent Returns

    • Compliance Secured/Prepared Returns

    • IRC 6020(b) - Prepared by Collection

    • Collection Secured

    • Examination Prepared

    • Examination Secured

    • Frivolous Argument

    • Refund Returns (180-Day Jeopardy and Refunds $500,000 or more)

    • Form 1042 - Prior Year Returns Processing

Early-Filed Returns

  1. Early-filed returns must be held for processing at the beginning of the appropriate processing year. See Figure 3.21.110-1.

  2. An early-filed Form 1042 for Tax Period 202112 (filed before January 1, 2022) must be held for processing until January 2022.

  3. Edit Action Code 480 on early-filed returns to suspend them to Rejects until the returns can be processed.

    Figure 3.21.110-1

    This is an Image: 34025006.gif

    Please click here for the text description of the image.

Non-Taxable Returns With No Line Entries

  1. Process a signed return containing no line entries as a non-taxable return. This includes a signed return with notations such as Not Liable, etc.

  2. Process as final any return stating Final, No longer in business, Do not file this form, etc. if the required signature is shown. A signature is not required if the taxpayer shows he/she received the wrong type of return, and another type of return is filed provided the following actions are taken before CCC "F" is entered:

    1. Prepare Form 4227 (or Form 6882, IDRS/Master File Information Request, if your Center prefers), for research to be performed to determine whether the proper filing requirement was established for the return the taxpayer states was filed. Notate in the remarks area, "research for the entity and MFT " of the appropriate return.

    2. If research shows the taxpayer has a filing requirement for the appropriate return, process the incorrect return as final to turn off the filing requirement.

    3. If research shows the taxpayer does not have a filing requirement for the return, he/she states should be filed, attach the research papers to the invalid return and forward to Entity Control on Form 4227 for filing requirement determination. If the filing requirement is incorrect, Entity Control changes it and notate the change on Form 4227. The return is sent back to Document Perfection to be converted to the proper return.

Fiscal Year Returns

  1. If the Form 1042 shows it is a Fiscal Year return:

    1. Change the return to show the current calendar year.

    2. Prepare Letter 1791-C CAS, to inform the withholding agent Form 1042 must be filed on a calendar year basis with the following literal:
      “We received your Form 1042 for tax period beginning _______ and ending _______. We cannot process it because Form 1042 must cover a calendar year. Please submit a new Form 1042 covering the appropriate calendar year. If your Form 1042 reflected monies paid during two calendar years, please submit a Form 1042 for each year.”

    Note:

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

♦Statute Returns♦

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

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

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

    • Compliance IRC 6020(b) returns.

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

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

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

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

  4. If any of the following computer paragraphs (CPs) or letters are attached to a BMF return, do not route to Statute Control Unit for clearance. Edit CCC "W" if it is determined the return should be processed. See IRM 3.21.110.15, Routing Guide for Attachments, for more information.

    • CP 259, Master File Generated 1st TDI Notice

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

    • CP 518, Final Notice - Return Delinquency

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

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

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

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

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

    Note:

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

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

  7. If Then
    Numbered Returns,
    1. Edit Action Code 310.

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

    Unnumbered Returns,
    1. Do not continue processing.

    2. Pull the return from the batch.

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

  8. Edit CCC "W" if the return was cleared by Statute Control Unit. Statute stamps or indicate clearance on the front of the return.

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

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

  10. If any of the following computer paragraphs (CPs) or letters are attached to a BMF return, do not route to Statute Control Unit for clearance.

    • CP 259, Master File Generated 1st TDI Notice

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

    • CP 518, Final Notice - Return Delinquency

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

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

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

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

    See IRM 3.21.110.15, Routing Guide for Attachments, for more information.

♦Re-Entry Returns♦

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

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

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

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

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

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

  5. Examine Form 3893 or Form 13596 to determine the action needed to make the return processable (See Figure 3.21.110-2):

    Caution:

    If the IRS received date is two years and nine months or more after the Return Due Date, refer to Statute procedures before re-entering or reprocessing the return. See IRM 3.21.110.16.4, Statute Returns.

    If Then
    Neither Form 3893 nor Form 13596 is present,
    1. Edit Action Code 610 to post the return to the proper account or module.

    2. Route to Receipt and Control using Form 4227, Intra-SC Reject or Routing Slip.

    3. Leave the return in the batch.

    Form 3893 or Form 13596 is attached, Determine if the return is edited according to current processing instructions.

    Exception:

    If more than one return is in the batch and only the top Form 3893 has an entry in Box 1 (Alpha/Numeric Block Control Number), edit all returns using current processing instructions, and keep all returns clipped together.

  6. If it is determined an unprocessable condition exists, edit the proper CCC. Circle out any incorrect CCC(s) and any other edit marks no longer applicable. Re-edit according to current processing instructions.

  7. Line through DLN.

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

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

  3. Circle the CCC "G" , if present.

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

  5. Do not send Letter 1382-C, if a request for reasonable cause is attached.

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

  7. If the return is edited according to current processing instructions, ensure the information from Form 3893 is edited on the return.

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

    2. Do not change any tax due amounts.

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

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

  9. An IRS received date must be present on all re-input returns.

    If Then
    IRS received date is not present, Edit an IRS received date to the middle of the return.
    Multiple IRS received dates present, Circle all but the earliest date.

  10. When more information is still needed to make the return processable, prepare approved Correspondence Action Sheet or Form 4227, for the proper action (e.g., correspondence, research).

  11. When perfection is not possible, edit Action Code 640 on the return, and attach Form 4227 noting, "perfection not possible" , and leave in batch.

    Figure 3.21.110-2

    This is an Image: 34025007.gif

    Please click here for the text description of the image.

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

  2. Circle CCC "G" if present.

  3. Do not edit CCC "G" on amended returns.

  4. Do not send Letter 1382-C if a request for reasonable cause is attached.

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

  6. If the return is edited according to current processing instructions ensure the information from Form 13596 is edited on the return.

    Form 13596 Action Taken
    TIN correction Edit correct TIN on return.
    Tax Period correction Edit correct Tax Period ending on return.
    Reasonable cause Edit proper Computer Condition Code:
    1. Edit CCC "R" if the "FTF" (Failure to Pay) box is checked.

    2. Edit CCC "D" if the "FTP" (Failure to File) box is checked.

  7. Examine returns with any color other than red editing in the tax data section to determine if the corrections are due to improper perfection or taxpayer error.

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

  8. An IRS received date must be present on all reprocessed returns.

    If Then
    IRS received date is not present, Edit an IRS received date to the middle of the return.
    Multiple received dates are present, Circle all but the earliest date received by the IRS.

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

  10. When more information is still needed to make the return processable prepare an approved Correspondence Action Sheet or Form 4227, for the proper action (e.g., correspondence, research).

♦Amended Returns♦

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

    • The Amended Box is checked.

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

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

      Note:

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

  2. Examine the return for attachments:

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

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

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

    If Then
    Compliance Services Entered "TC 59X" or "ICS" on the return, Do not edit CCC "G" . Process the return as an original.
    Statute stamped the return "Delinquent Original Cleared for Processing," Do not edit CCC "G" . Process the return as an original.
    Form 3893 or Form 13596 is attached, Do not edit CCC "G" . See IRM 3.21.110.16.5, Re-Entry Document Procedures. .
    None of the above is present, Edit CCC "G" . Do not use any other codes with CCC "G."

    Exception:

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

  4. The following data must be present on all amended returns:

    • Name Control

    • EIN

    • Tax Period

    • CCC "G"

    • IRS Received Date

    • Signature

    Note:

    No further editing is required.

Delinquent Returns

  1. A return is normally delinquent if it is not received on or before the Return Due Date (RDD). However, accept the return as timely filed if the received date is within the ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ See IRM 3.10.72, Receiving, Extracting, and Sorting or IRM 3.10.73, Batching and Numbering.

  2. Accept a return as timely if:

    1. The return was mailed in time to reach the IRS through normal handling within the legal period but,

    2. Through no fault of the taxpayer, it was not delivered.

  3. Consider a return timely if the Post Office might have sent it to another government agency in error, or if the original envelope bears a timely postmark or a timely date stamp by that agency. However, if the return was erroneously addressed to another agency, it is date stamped with the current date when the IRS received it.

  4. See IRM 3.21.110.17.4.1, for information on the due date of Form 1042.

  5. If a return is delivered to the IRS after the date prescribed for filing, but the postmark date falls on or before the prescribed date for filing the return, then consider the return timely, and edit the timely postmark date in MMDDYY format on the dotted part of Line 62b(1).

  6. If the Form 1042 is delinquent, check the return for an explanation of late filing. If the taxpayer attaches correspondence with a reasonable cause explanation for failure to file a timely return, take the following action:

    1. Detach the reasonable cause explanation correspondence from the return.

    2. Complete Form 3499, Informational Transmittal, and forward to Ogden International Accounts Management Campus (OAMC), BMF INT'L unit 1973 N Rulon White Blvd., Ogden, Utah 84404 M/S 6552. In the remarks area write "Process attached Reasonable Cause Correspondence. TC 150 to post in 4 weeks."

    3. Prepare Correspondence Action Sheet for IDRS Letter 1382-C (use paragraphs "A and S" ) and assign it to a clerk for input to IDRS or follow local procedures. It may or may not include the Rejects function. Photo, LTR and attach to 1382C.

      Note:

      Do not edit CCC "R or 7" on the return. OAMC will address the taxpayers reasonable cause letter.

      Exception:

      Edit CCC "R" and continue processing if the return is stamped by the IRS: "Do not assess late file penalty"

      See IRM 3.21.110.17.3.7.

    4. Continue processing Form 1042. Do not attach the Correspondence Action Sheet, Letter 1382C to the return.

♦Compliance Secured/Prepared Returns♦

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

  2. Compliance notates:

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

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

    Note:

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

♦Internal Revenue Code (IRC) 6020(b) - Prepared by Collection♦
  1. When the taxpayer does not file a required return, IRC 6020(b) is the authority for the IRS to prepare the return.

  2. These returns are identified by the notation: "Prepared and signed under the authority of IRC 6020(b) of the Internal Revenue Code" which is in the center bottom of Page 1 of the return.

    1. Returns must have an IRS received date. If no received date is present per the Compliance Function, follow the normal procedures for editing the received date. See IRM 3.21.110.17.4.

    2. Compliance Function representatives must sign returns. If not signed, route to Compliance using Form 4227.

      Note:

      Accept Revenue Officer (RO) typed or electronic signatures as valid signatures on the return.

    3. Edit CCC "4" .

      Note:

      Do not use CCC "R" with CCC "4" .

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

    5. Edit CCC "D" if the Compliance Function Representative notates "Do not assess failure to pay penalty" and the return due date (without regard to extensions) is July 30, 1996 or prior.

      Note:

      Do not edit CCC "D" if the return due date is after July 30, 1996 (without regard to extensions) even if the Compliance Function representative notates "Do not assess failure to pay penalty " .

    6. Edit CCC "W" if the received date is more than two years and nine months after the Return Due Date. Do Not send the return to Statute Control. See IRM 3.21.110.17.3.9.

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

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

    2. Use Letter 1791-C CAS, to correspond for conditions that are unprocessable. (e.g., missing signatures, etc.)

    3. Edit CCC "W" if the received date is more than two years and nine months after the Return Due Date. Do Not send the return to Statute Control.

    Reminder:

    If there is indication penalties require suppression, edit the proper Computer Condition Code(s). See IRM 3.21.110.17.3, Computer Condition Codes, for more information.

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

    1. Return must have an IRS received date. If no received date is present, follow the normal procedures for editing the received date. See IRM 3.21.110.17.4, Received Dates

    2. Do Not correspond with the taxpayer for unprocessable conditions. If the return is completely unprocessable, use No Reply procedures and edit CCC "3" and continue processing.

    3. If Form 13133 is attached, edit the CCC(s) that are checked on the form.

      Note:

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

    4. Edit CCC "W" if the received date is more than two years and nine months after the Return Due Date. Do Not send the return to Statute Control. See IRM 3.21.110.16.4, Statute Returns.

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

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

    2. Use Letter 1791-C CAS, to correspond for conditions that are unprocessable. (e.g., missing signatures, missing schedules etc.)

    3. Edit the Computer Condition Codes checked on Form 13133, Expedite Processing Cycle.

    4. Edit CCC "W" if the received date is more than two years nine months after the Return Due Date. Do Not send to Statute Control. . See IRM 3.21.110.17.3.9, CCC "W" - Returned Cleared by Statute.

    Reminder:

    If Form 13133 (or something similar) shows penalties require suppression, edit the proper Computer Condition Code(s). Please refer to IRM 3.21.110.17.3, Computer Condition Codes, for more information.

♦Frivolous Argument♦

  1. Businesses use frivolous arguments for expressing dissatisfaction with the substance, form or administration of the tax laws by trying to illegally avoid or reduce tax liabilities. See IRM 25.25.10, Frivolous Arguments, and Exhibit 3.21.110-7, potential Frivolous Arguments for Examination Review, for a list of recognized frivolous arguments made by businesses.

  2. Review the return to decide if it is a frivolous return. .

    If Then
    The return meets any of the conditions shown as a frivolous return See Exhibit 3.21.110-7, Potential Frivolous Arguments for Examination Review.

    Exception:

    If the return shows Action Code 331 and has a Form 4227 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,

    Example:

    shown by an Action Code 331 and a Form 4227, with the remarks, "Refer to Exam FRP for audit after processing," but sends the return for processing.

    Continue processing the return using procedures in IRM. However, do not circle or void the Action Code showing a frivolous return.

  3. Do not consider the following as frivolous:

    • Returns with only zeros, blanks, or no entries.

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

    • Returns showing no evidence of a frivolous argument.

♦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, do not send for further CI action.

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

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

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

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

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

    5. Edit Action Code 341 or CCC "U" (whichever is applicable) on the return. See IRM 3.21.110.16.10.

    6. Continue processing the return.

  4. Due to the repetitive nature of the Code and Edit (C&E) function, C&E 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 C&E finds return characteristics not meeting Audit Code or Exam referral criteria it considers suspicious, CI is available to review the referral.

  5. If a suspicious return is found, 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, Intra-SC Reject or Routing Slip, to the copy.

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

      Ogden Kansas City
      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 proper action.

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

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

  1. Document Perfection identifies refunds in jeopardy and requests manual refunds Use the chart below for manual refund procedures.

    Note:

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

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

    2. Pull the return from the non-refund batch using local procedures.

    Note:

    Also follow the instructions below for more actions needed on returns to minimize the payment of interest.

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

    Note:

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

    1. Unnumbered Returns:

      1. Pull the return from the batch.

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

      3. Edit Action Code 341.

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

    2. Numbered Returns:

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

      2. Edit Action Code 341.

    The processing date is more than 155 days after Received Date or the Return Due Date (whichever is later) and the 180-day interest free period is in jeopardy and the refund amount is $500,000 or more,
    1. Edit Action Code 341.

    2. Attach Form 4227 and give the return to the manager.

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

    Note:

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

    Unnumbered Returns:
    1. Pull the return from the batch.

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

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

      Note:

      For returns with CCC "U" , attach Form 4227 and check the "Reject Correction" box.

    4. Make a copy of the first two pages of the tax return along with any suspicious pages. See IRM 3.21.110.16.9.1, Criminal Investigation (CI) Referral.

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

    6. Expedite processing.



    Numbered Returns:
    1. Code and edit the return as completely as possible.

    2. Edit Action Code 341 (or CCC "U" as applicable)

    3. Attach Form 4227 to the return, edit Action Code 341 on Form 4227, and leave in batch.

      Note:

      For returns with CCC" U" , attach Form 4227 and check the "Reject Correction" box.

    4. Make a copy of the first two pages of the tax return along with any suspicious pages. See IRM 3.21.110.16.9.1, Criminal Investigation (CI) Referral.

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

    The W&I Submission Processing Liaison for TAS issues, walks a return through Code and Edit, In addition to normal editing, perform the actions below:
    1. Edit CCC "O" to freeze the refund only if TAS is issuing a manual refund.

    2. Edit CCC "Y" to send the return to Error Resolution Section (ERS).

    The refund is $500,000 or more,
    1. Do not leave the return in the batch.

    2. Edit Action Code 341, attach Form 12230, Expedite Processing Million Dollar Manual Refund, and give the return to the manager.

Form 1042 - Prior Year Returns Processing

  1. Upon receipt of a prior year Form 1042 return with a tax year prior to the current processing tax year, first determine if the return is for the year shown on the return or for the current year.

  2. If the return is for the current processing tax year,

    1. edit the correct tax year,

    2. draw a line thru prior year line numbers that have been changed, and

    3. edit new Line numbers on form to conform to current year format.

    4. If necessary, dummy the current year form.

  3. If the return is for a prior tax year:

    1. Edit the prior year return to conform to current year line format

    2. Draw a line thru prior year line numbers that have been changed.

    3. Edit new Line numbers on form to conform to current year format.

    4. If not possible to edit the form, dummy the current year form

♦Action Codes♦

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

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

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

  4. Assign Action Codes in the following priority:

    1. Action Code 310 (Statute Control)

    2. Action Code 320 (Entity Control)

    3. Action Code 4XX

    4. Action Code 6XX

    5. Action Code 3XX

    6. Action Code 2XX (Correspondence)

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

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

    Note:

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

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

    If Then
    Action Codes include 211 or 215, and Action Code 341,
    1. Edit the Action Code 211 or 215 on the Form 1042.

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

    Action Codes have the same priority,
    1. Edit the Action Code with the shorter suspense period on the Form 1042.

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

    3. See IRM 3.21.110.16.12(8), Action Codes for suspense periods and Exhibit 3.21.110-6.

    Action Codes have different priorities,
    1. Edit the Action Code with the higher priority on the Form 1042.

      Exception:

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

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

  7. Edit the following Action Codes when a return cannot be perfected:

    Action Code Description
    211 (First Correspondence-Domestic)
    • Return is illegible, incomplete, or contradictory, and therefore unprocessable

    • Taxpayer notates on the return or an attachment they are reporting tax for more than one Tax Period or for more than one type of tax.

    • If the address is domestic, it is a domestic return.

      Note:

      For missing signature, complete Letter 1791-C CAS, and attach to the return.

    215 (International Correspondence)
    • Return is illegible, incomplete, or contradictory, and therefore cannot be processed.

    • Taxpayer notates on the return or an attachment they are reporting tax for more than one Tax Period or for more than one type of tax.

    • If the address is foreign, it is a foreign return.

      Note:

      For missing signature, complete Letter 1791-C CAS, and attach to the return.

    225 (Missing Signature-Domestic Correspondence)

    Note:

    Not applicable to Form 1042. See AC 211.

    • Unsigned domestic return (only issue for correspondence)

    • If the address is domestic, it is a domestic return.

    226 (Missing Signature-International Correspondence)

    Note:

    Not applicable to Form 1042. See AC 215.

    • Unsigned foreign return (only issue for correspondence).

    • If the address is foreign, it is a foreign return.

      Note:

      Complete Letter 1791-C CAS, and attach to the return.

    480 (Early Filed Suspense) Early filed return.
    610 (Renumbered Non-Remittance) or 611 (Renumbered with Remittance) Mis-batched return (e.g., Form 1065 found in a Form 1042 batch of work).
    640 (Void) To delete the assigned DLN on the return (e.g., Re-Entry Returns).
    650 (International) An International return: Processed in Ogden Submission Processing Center (OSPC).
  8. Continue perfecting the return after editing the Action Codes. For a valid list of Action Codes, see Exhibit 3.21.110-6.

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

♦Bankruptcy♦

  1. If the Form 1042 shows bankruptcy (e.g., shows "Receiver" , "Trustee" , or "Debtor in Possession" ) in the entity area or on an attachment, route to Entity Control. Follow local procedures using Form 13934, Entity Document/C&E Merge Transmittal.

Form 1042 - Annual Withholding Tax Return for U.S. Source Income of Foreign Persons

  1. Form 1042 is the annual tax return used by withholding agents to report tax withheld under sections IRC 1441-IRC 1443 on certain income of foreign persons; tax withheld under chapter 4 on withholdable payments; tax withheld under IRC 5000C on specified federal procurement payments; certain distributions made by publicly traded trusts and qualified investment entities under IRC 1445 purposed; certain payments subject to IRC 877A; and distributions of effectively connected income made by publicly traded partnerships under section 1446 purposes. See Exhibit 3.21.110-1.

  2. Form 1042 is to be filed by all individuals, corporations, and partnerships having the control, receipt, custody, disposal, or payment of interest, dividends, rent, salaries, etc. (amounts subject to withholding under Treas. Reg 1.1441-2(a)), to the extent any such items constitute gross income from sources within the United States to nonresident alien individuals, foreign partnerships, foreign corporations and other foreign persons.

  3. Form 1042 must be filed whether any tax is withheld or must be withheld (i.e., income is exempt from withholding).

  4. Payment of Taxes - Effective January 1, 2011, taxpayers must deposit tax withheld using the EFTPS. Form 8109, Federal Tax Deposit Coupon, can no longer be used.

  5. The amount of taxes withheld determines the frequency of deposits.

    1. If at the end of any quarter-monthly period, the total amount of undeposited taxes is $2,000 or more, the taxes must be deposited within three banking days after the end of the quarter-monthly period. A quarter-monthly period ends on the 7th, 15th, 22nd and the last day of each month.

    2. If at the end of any month, the total amount of undeposited taxes is $200 or more but less than $2,000, taxes must be deposited by the 15th day of the following month.

    3. If at the end of the year, the total amount of undeposited taxes is less than $200, the entire amount must be deposited via EFTPS or remitted with Form 1042 on or before March 15 of the current tax year.

Amended Return Checkbox

  1. Identifies whether the return is an amended return or original. See IRM 3.21.110.16.6 Amended Returns.

For IRS Use Only Box

  1. The IRS Use Only box is used to list:

    • Computer Condition Codes (CCC) IRM 3.21.110.17.3

    • Penalty and Interest Codes (PIC) IRM 3.21.110.17.5

    • Schedule Indicator Codes (SIC) IRM 3.21.110.22

♦Computer Condition Codes (CCC)♦

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

  2. Edit CCC on the CC line of the For IRS Use Only box in the upper right corner of Form 1042.

CCC A – Qualified Derivatives Dealer (QDD)
  1. Edit CCC "A" if the taxpayer marks the box on Page 2, Section 4, identifying themselves as a Qualified Derivatives Dealer (QDD).

♦CCC D – Reasonable Cause for Waiver of Failure to Pay Penalty♦
  1. Do not edit CCC "D" if the taxpayer requests abatement for "Failing to Pay Timely" when the return is submitted. Send Letter 1382-C, to inform the taxpayer of the proper procedure to follow to request penalty abatement if and when a penalty is assessed. See IRM 3.21.110.16.7(6), Delinquent Returns.

  2. Edit CCC "D" if an internal use form or routing slip is attached and shows "Do not assess failure to pay penalty."

    Note:

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

CCC E – Credit Election
  1. Edit CCC "E" as follows:

    If And Then
    The taxpayer has checked the credit elect box on Line 71, Form 1042, The overpayment is $1.00 or more on Lines 70a and/or 70b, Edit CCC "E" .
    The taxpayer has attached a statement requesting a credit election, The overpayment is $1.00 or more on Lines 70a and/or 70b, Edit CCC "E" .
    Neither the Credit Elect nor Refund box is checked on Line 71, The overpayment is $1.00 or more on Lines 70a and/or 70b, Edit CCC "E" .
    Both the Credit Elect and the Refund box is checked on Line 71, The overpayment is $1.00 or more on Lines 70a and/or 70b, Edit CCC "E" .
    An overpayment is to be applied to another type of tax,   Do not edit CCC "E" , edit CCC "X" . See IRM 3.21.110.17.3.10, CCC "X" .
    An overpayment is the result of excess remittance paid with the return,   Do not edit CCC "E" .
    Only Refund box is checked,   Do not edit CCC "E" .

    Note:

    If CCC "F" is edited, do not edit CCC "E" , instead edit CCC "S" .

♦CCC F – Final Return♦
  1. Edit CCC "F" when the final return box is checked or there is an indication the taxpayer is not liable for future returns. Notations may include, but are not limited to:

    • Final

    • Deceased

    • Out-of-Business

    • Liquidation

    • Exempt Under IRC 501(c)(3)

    • Dissolved

    • Cites IRC 708(b)(1)(B)

    • Notates, Filed in Accordance with Rev. Proc. 2003-84

    Note:

    Do not edit CCC "F" if the date entered for the final income paid is after the tax period. For example, if the tax form submitted is a printed 2020 form, but the taxpayer made a hand written entry of paying their last income on March 5, 2021, it is not a final return.

♦CCC G – Amended Return♦
  1. Edit CCC "G" if there is a clear indication on the return or on an attachment that the return being processed is not the first return filed for the tax period. See IRM 3.21.110.16.6 for instructions.

CCC J – Reasonable Cause for Failing to Make Timely Deposits
  1. Edit CCC "J" when a notation of "3121 Agreement" or "VCP" is on the return. See IRM 3.21.110.17.3.7. Also edit a Schedule Indicator Code (SIC) of 2.

  2. For tax year 2017 ONLY, if the filer has noted Dividend Equivalent-Partnership anywhere on the return or attachment. See IRM 3.21.110.16.7.

  3. Do not edit CCC "J" if the taxpayer requests abatement for Failing to Make Timely Deposits. Instead, follow the step list instructions in IRM 3.21.110.16.7 (6), Delinquent Returns

    Note:

    "Withholding Under Lag Method" may be noted on the return. Do not edit CCC "J" , the CCC "J" is computer generated.

♦CCC R – Reasonable Cause for Failing to Timely File Return♦
  1. Do not edit CCC "R" when a reason is given by the taxpayer for a delay in filing a return. Issue Letter 1382-C and continue editing the return.

  2. Edit CCC "R" on the return when any of the following conditions are present:

    1. There is an indication such as "Do not assess failure to file penalty" on a secured return annotated with "599" .

    2. If an internal use form or routing slip is attached and shows do not assess failure to file penalty.

    3. The return shows an assessment of a fraud penalty (IRC 6663 or IRC 6664).

    4. A notation of "VCP" is on the return.

      Note:

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

    Note:

    Do not use CCC "R" with CCC "4" . Do not edit CCC "R" if CCC "7" (Reasonable Cause Denied) is present.

    See IRM 3.21.110.17.3.6.

    Note:

    Withholding under Lag Method may be noted on return. Do not edit CCC "R" , the CCC "R" is computer generated.

CCC S – Refund Return
  1. Edit CCC "S" when the overpayment is $1.00 or more on Lines 70a and/or 70b and:

    1. The refund box, Line 71, Form 1042 is checked, or

    2. A statement requesting the money be refunded is attached, or

    3. The return is a final return.

  2. See IRM 3.21.110.32(4).

♦CCC W – Cleared by Statute Stamped on Return♦
  1. CCC "W" is used when the return was cleared by Statute Control. See instructions in IRM 3.21.110.16.4, Statute Returns.

♦CCC X – Refund/Credit Freeze♦
  1. Edit CCC "X" when any of the following conditions occur:

    If Then
    The taxpayer has requested part of the refund applied to another account,
    1. Edit CCC "X" .

    2. Photocopy Page 1 of Form 1042.

    3. Prepare Form 3465, attach to the photocopy, and forward to Accounts Management.

    4. Notate "FORM 3465 prepared" on the original Form 1042.

    Correspondence for a signature is returned as a No reply and a refund is due,
    1. Edit CCCs "X" and "3" .

    2. Photocopy Page 1 of Form 1042.

    3. Prepare Form 3465, attach to the photocopy, and forward to Accounts Management.

    4. Notate "FORM 3465 prepared" on the original Form 1042.

    If the taxpayer has requested a refund on Excise Tax Only returns, Edit CCC "X" .

    Note:

    Also edit CCC “X” as noted in specific line by line instructions.

♦CCC 3 – No Reply to Correspondence♦
  1. Edit CCC "3" when the taxpayer does not respond to a correspondence, or the correspondence is returned undeliverable.

  2. Edit CCC "3" when the return is unprocessable and there is asign correspondence was sent and no reply received.

  3. If the return is overpaid (refund) and the correspondence is for signature only, then also edit CCC "X" . See IRM 3.21.110.17.3.10.

    Note:

    There may be other times CCC "X" is edited on Refund returns, follow specific line by line instructions.

♦CCC 4 – 6020(b) Return♦
  1. Edit CCC "4" when the IRS's Compliance Branch has prepared a return and the Revenue Officer has entered IRC 6020(b).

    Note:

    Do not use CCC "R" with CCC "4" .

CCC 7 – Reasonable Cause Denied
  1. CCC "7" is used when the taxpayer’s statement for failing to file or pay taxes timely is not acceptable.

    Note:

    This CCC is rarely be used because code and edit tax examiners do not make decisions on reasonable cause request.

  2. Refer to the step list instructions in IRM 3.21.110.16.7 (6).

  3. CCC "7" cannot be used with CCCs "D, R or J" .

♦Received Date♦

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

  2. All 1042 returns require a received date.

    If Then
    The return is received within ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The return is considered timely.
    The due date falls on a weekend or legal holiday, The return is timely if postmarked by the first business day following the weekend or legal holiday.
    The IRS received date stamp ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ of the legal or extended due date, and the postmark or shipment date is on or before the legal or extended due date, Edit the received date to agree with the postmark date or shipment date.

    Note:

    The postmark or shipment date includes returns delivered by:

    • U.S. Postal Service,

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

    • Returns with a Foreign Postmark.

    Caution:

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

    Note:

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

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

  4. A valid received date Stamp may consist of the following (MMDDYY):

    • The word "Received"

    • Month (alpha or numeric)

    • Day (numeric 01-31)

      Example:

      "1" or "01"

    • Year (numeric) - four digits

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

      Note:

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

  5. If the IRS received date stamp is not present or the date is illegible or invalid, edit the IRS received date in MMDDYY format to the dotted part of Line 62b(1) on the Form 1042. Edit the IRS received date according to the following priority:

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

      If Then
      An envelope is not attached, Use the date stamped on the face of the return.
      A document was returned for insufficient postage, Use the postmark date that coincides with the correct delivery of the return.
      An envelope has a USPS and private metered postmark, Always use the USPS postmark.
      An envelope marked Certified Mail and postmark is missing, Look for the USPS.com Track and Confirm record attached to the return (should be in front of the envelope). Use the acceptance date on the record to determine timeliness and follow normal editing procedures.
      If the USPS.com Track and Confirm record is not attached, take no action.
      An envelope has a foreign and private metered postmark, Always use the foreign postmark.
      An envelope has two private metered postmarks, Always use the latest private metered postmark.
      An envelope has only one private metered postmark, Use the private metered postmark.

      Note:

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

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

    3. Revenue Officer's signature date.

    4. Signature date (only if within current year).

      Exception:

      Use the signature date on prior year returns only when it is signed in the current year. DO NOT use the signature date stamp to determine the received date for replies to correspondence.

    5. Julian control date minus 10 days.

    6. Current date minus 10 days.

  6. Edit the received date as follows:

    If Then
    A timely received date is the only received Date stamped on the return, Do not edit.
    Two or more dates stamped on the return,
    1. Use the earliest IRS received date stamped on the return.

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

      Note:

      Treat Received Dates circled out by another function as if they are not present.

    A federal return is addressed to the IRS but delivered to a state agency, Use the postmark date as the IRS received date.
    A federal return is addressed to a state agency, Use the IRS received date.
    The only received date on the return is a TAS received date, Circle out the TAS or Chief Counsel received date and edit the IRS received date according to instructions. See IRM 3.21.110.17.4(5).

    Reminder:

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

  7. If a return was faxed to another area of the IRS and then sent to Submission for processing, do not edit the Enterprise Electronic Fax (EEFax) Date as the IRS received date. Edit a received date according to normal procedures. See IRM 3.21.110.17.4(5), Received Date.

    Caution:

    .Do not use the EEFax Date as the IRS received date.

Received Date Chart
  1. The received date chart below provides return due date information. The dates are subject to local adjustments for State/D.C. Holidays.

    Calendar Year Ending Date Due Date Weekends and Holidays Considered Delinquent (7004) Extended Due Date Weekends and Holidays Considered Delinquent Return
    12-31-21 03-15-22 ≡ ≡ ≡ ≡ ≡ ≡ ≡ 09-15-22 ≡ ≡ ≡ ≡ ≡

Penalty and Interest Code (P/I Code)

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

  2. Valid characters are 1 and blank.

  3. Edit this code on the I line of the For IRS Use Only box in the upper right corner of Form 1042 when the pre-computed delinquency penalty and/or interest is shown on a return with a received date (stamped or improvised) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

Chapter 3 Status Code - Chapter 4 Status Code

  1. The chapter 3 and chapter 4 status code boxes are located in the entity part of the return.

  2. This is a 2 digit code entered by the taxpayer from the list of Status Codes provided in the Form 1042-S and its Instructions.

    Note:

    If the taxpayer has entered a single digit number in the box, it is not necessary to edit a “0” in front of the number.

  3. If blank and 1042-S is attached, edit the code from 1042-S box 12b or 12c; if not present on box 12b and/or box 12c, take no action unless you are corresponding for other missing information then, correspond for Status Code if both chapter 3 and chapter 4 are blank. Use the following literal when corresponding: “Please provide the missing chapter 3 and/or chapter 4 status code on page 1.”

♦Entity Perfection – General♦

  1. The entity section of a tax return identifies the taxpayer on the Business Master File. The entity section of the return has the following:

    1. Employer Identification Number

    2. Name

    3. Address

♦Entity Perfection – Employer Identification Number (EIN)♦

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

  2. The EIN is in the upper right of Form 1042.

    1. Form 1042 cannot be processed with an SSN or an IRS ITIN.

    2. Do not accept an SSN or ITIN in place of an EIN.

  3. Determine the EIN as follows:

    If And Then
    If Form 1042 is filed with an SSN or ITIN instead of an EIN or QI-EIN,  
    1. Circle out the SSN/ITIN.

    2. Research for EIN.

    3. If not found, attach Form 4227 to route to Entity Control.

    The EIN is missing, You can determine the correct EIN from the attachments, Arrow or edit the EIN to the correct location.
    The EIN is either a Preparer Tax Identification Number (PTIN) or Individual Tax Identification Number (ITIN), Unnumbered return,
    1. Remove return from batch.

    2. Route to Entity Control following local procedures, using Form 13934 for EIN assignment.

    The EIN is either a PTIN or ITIN, Numbered return,
    1. Edit Action Code 320.

    2. Leave return in batch.

    Multiple EINs are present, Unnumbered return (see Figure 3.21.110-3),
    1. Research IDRS

    2. If found edit to proper location and circle out wrong EIN.

    3. If not found, route to Entity Control following local procedures, using Form 13934 for EIN assignment.

    Multiple EINs are present, Numbered return, Edit Action Code 320.
    The EIN has any of the following conditions and cannot be determined from attachments or schedules:
    • Illegible,

    • Missing,

    • Other than 9 digits,

    • All zeroes, or

    • All nines or other repeating digits,

    Unnumbered return (see Figure 3.21.110-4),
    1. Research IDRS.

    2. If found, edit to the proper location.

    3. If not found, route to Entity Control (e.g., Form 13934).

    The EIN has any of the following conditions and cannot be determined from attachments or schedules:
    • Illegible,

    • Missing,

    • Other than 9 digits,

    • All zeroes, or

    • All nines,

    Numbered return,
    1. Circle out all illegible EINs, zeroes, or nines.

    2. Research IDRS.

    3. If not found, edit Action Code 320.

    Pending, Applied for, etc., is shown in the EIN area, Unnumbered return,
    1. Research IDRS.

    2. If found, edit to the proper location.

    3. If not found, route to Entity Control following local procedures, using Form 13934.

    Pending, Applied for, etc., is shown in the EIN area, Numbered return, Edit Action Code 320.

    Figure 3.21.110-3

    This is an Image: 34025008.gif

    Please click here for the text description of the image.

    Figure 3.21.110-4

    This is an Image: 34025009.gif

    Please click here for the text description of the image.

  4. Listed below are the most common conditions indicating an entity change requiring a new EIN.

    1. Individual owner dies and estate takes over business.

    2. Individual owner dies, Surviving Spouse takes over when no estate is involved.

    3. Individual ownership changes to a corporation.

    4. Individual ownership changes to a partnership.

    5. Partnership changes to individual ownership or disregarded entity (except where the resulting Business changes from an individual owner to another individual owner).

    6. Partnership changes to corporation (except for elective change caused by filing Form 8832).

    7. There is a sale or exchange of 50 percent or more of the interests in a partnership within a 12-month period.

    8. Corporation changes to an individual ownership or disregarded entity (except where the resulting owner already has an EIN).

    9. Corporation changes to a partnership (except for elective change caused by filing Form 8832).

    10. Sole proprietor shows bankruptcy.

♦Entity Perfection – Name Control♦

  1. The type of entity present on the return determines the name control procedures.

    • Individuals

    • Corporations

    • Partnerships;

    • Trusts and Estates

    • Other organizations

  2. The name control consists of four characters or less.

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

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

  3. See Document 7071-A BMF Name Control Job Aid to properly determine the name control.

  4. Edit the name control as follows:

    If And Then
    A second name line is present and begins with "FKA" (formerly known as), Unnumbered Return,
    1. Remove return from batch.

    2. Attach Form 4227 or follow local procedures.

    3. Route to Entity Control.

    A second name line is present and begins with "FKA" (formerly known as), Numbered Return, Edit Action Code 320.
    A second name is present and begins with "AKA" (also known as) or "DBA" (doing business as),   Circle out the abbreviations.
    Able to determine the name control,   Underline the name control.
    Unable to determine the name control, Unnumbered Return,
    1. Research IDRS.

    2. If not found, Route to Entity Control.

    Unable to determine the name control, Numbered Return, Edit Action Code 352 (name research).

    Note:

    If a return shows the taxpayer has filed bankruptcy (e.g., shows "receiver" , "trustee" , or "debtor in possession" in the entity area, signature line or an attachment), route to Entity.

♦Entity Perfection – In-Care-of Name♦

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

    Note:

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

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

    If Then
    The in-care-of name is located on the street address line preceding the street address, Do not edit.
    The in-care-of name is located above the first name line or below the street address, Arrow the in-care-of name below the first name line and above the street address.
    The In-care of name is shown on an attachment,
    1. Edit the In-care-of name above the street address beginning with the % or c/o in the first position.

    2. Continue editing the return.

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

    2. Circle the business address and edit TC 014.

    3. Completely edit the return.

    4. Pull from batch, place in designated area.

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

    • A check mark in the "Name Change" box, or

    • A check mark in the "Address Change" box, or

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

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

    2. Continue editing the return.

    An "in-care-of" name is present and there is a sign of an address change,
    1. Edit the "in-care-of" name as shown above.

    2. Correct the address. See IRM 3.21.110.19.4, Entity Perfection – Domestic Address.

    3. Continue editing the return.

  4. "Special Considerations"

    1. APO/FPO/DPO addresses us the following format:

      Line EXAMPLE: Applicable Field
      Payee Name PVT. Willard J. Doe 02ADD
      Mailing Address Company F. PSC Box 100 167 Infantry REGT 02ADD
      Payee City APO, FPO or DPO 02CTY
      Payee State AE, AA, or AP* 02ST
      Payee ZIP Code 09801 02ZIP

      Note:

      *AE is the designation for ZIPs beginning with 090-098, AA for ZIP 340, and AP for ZIPs 962-966

♦Entity Perfection – Domestic Addresses♦

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

    Note:

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

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

  3. Perfect the address as follows:

    If And Then
    The address has information other than a street address or P.O. Box,   No perfection is necessary. ISRP enters the complete address.
    Attachment shows address was changed   Edit the new address in the entity section of the return. Delete old address.
    Form 8822, Change of Address, or Form 8822-B, Change of Address or Responsible Party- Business, is attached, All the following applies:
    • Mailing address information is the same,

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

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

    1. Take no action.

    2. Continue processing the return.

    Form 8822, Change of Address, or Form 8822-B, Change of Address or Responsible Party- Business, is attached, Any applies:
    • Mailing address information is different,

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

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

    Detach Form 8822/ Form 8822-B and route to Entity Control following local procedures using Form 13934, Entity Document/C&E Merge Transmittal.
    Both a P.O. Box and a street address are shown,  
    1. 1. Underline the P.O. Box

    2. Notate "TC 014" in the upper-left margin of the return.

    3. Completely edit the return.

    4. Pull from batch, place in designated area.

    See Figure 3.21.110-5.
    Two street addresses are shown, An "in-care-of" name includes a street address other than the withholding agent’s street address,
    1. Circle the withholding agent’s street address.

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

    3. Completely edit the return.

    4. Pull from batch, place in designated area.

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

    2. Notate "TC 014" in the upper-left margin of the return.

    3. Completely edit the return.

    4. Pull from batch, place in designated area.

    See Figure 3.21.110-6.
    One street address is shown, The taxpayer changed the address to a P.O. Box,
    1. Notate "TC 014" in the upper-left margin of the return.

    2. Completely edit the return.

    3. Pull from batch, place in designated area.

    The city and state are not shown on the return, but are shown on an attachment,   Edit the city and state on the form in the entity section.
    The zip code is missing or illegible, Is not available from the return or attachments, Determine the zip code by using IRM 3.21.110.24.2.
    Only the first three digits of the zip code can be determined,   Edit "01" for the fourth and fifth digits.
    The National Change of address (NCOA) label is present,   Underline the name control.
    No address is shown on the return or attachments, You must research IDRS for an address, If no address is found route the return to Entity Control following local procedures using Form 13934, Entity Document/C&E Merge Transmittal.
    The address has information other than a street address or P.O. Box,   Do not perfect. ISRP enters the complete address.

    Note:

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

  4. The U.S. Postal Service established new address requirements for APO/FPO/DPO addresses. If it is an old address (i.e., APO New York, NY 191XX), convert to the new state code abbreviation based on the zip code (i.e., the previous example would be converted to APO AE 091XX). Consider APO/FPO/DPO addresses as domestic addresses. Refer to the Conversion Chart below:

    If Then
    Only the first three digits of the zip code can be determined, Edit 01 for the fourth and fifth digits.
    No address is shown on the return or attachments, Route the return to Entity.
    "Special Considerations"
    1. APO/FPO/DPO addresses use the following format:

      Line: EXAMPLE:
      Payee Name PVT. Willard J. Doe
      Mailing Address Company F. PSC Box 100 167 Infantry REGT
      Payee City APO, FPO or DPO
      Payee State AE, AA, or AP*
      Payee ZIP Code 09801

      Note:

      *AE is the designation for ZIPs beginning with 090-098, AA for ZIP 340, and AP for ZIPs 962-966

    2. The following table is an APO/FPO/DPO Conversion Chart.

      City Code: APO/FPO/DPO State Code: AA/AE/AP State Location ZIP Code
      APO AA Americas 34000–34049
      FPO AA Americas 34050–34099
      DPO AA Americas 340XX-340XX
      APO AE Europe 090XX-094XX and 096XX
      FPO AE Europe 095XX
      DPO AE Europe 090XX-098XX
      APO AP Pacific 962XX–965XX and 98700-98759
      FPO AP Pacific 966XX and 98760-98799
      DPO AP Europe 962XX-966XX

    Figure 3.21.110-5

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    Figure 3.21.110-6

    This is an Image: 34025010.gif

    Please click here for the text description of the image.

♦Entity Perfection – Foreign Address♦

  1. Use Job Aid 2324–002, Coding and Editing BMF Tax Returns, Foreign Addresses Job Aid, to edit foreign addresses.

    Note:

    Submission Processing BMF Foreign Address Job Aid provides examples for editing foreign addresses.

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

  3. Consider returns with Army Post Office (APO)/Fleet Post Office (FPO)/Diplomatic Post Office (DPO) addresses as domestic addresses. See IRM 3.21.110.19.4, Entity Perfection - Domestic Address.

  4. Route returns with a foreign address to Ogden Submission Processing Center (OSPC) for processing. Prepare Letter 86-C, Referring Taxpayer Inquiry/Forms to Another Office, to inform the taxpayer the return was sent to Ogden.

  5. Consider returns with addresses in the following U.S. possessions/territories as foreign for processing purposes. Edit in the same way as domestic addresses.

    1. Edit a two-character alpha code for the possession/territory name:

      U.S. Possession/Territory Abbreviation
      American Samoa AS
      Federated States of Micronesia FM
      Guam GU
      Marshall Islands MH
      Northern Mariana Islands MP
      Palau PW
      Puerto Rico PR
      Virgin Island (U.S.) VI

    2. A zip code must be present. Edit the zip code if one is not provided. See Exhibit 3.21.110-3.

  6. Foreign addresses are edited the same as a domestic address with the following exceptions:

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

    2. Circle out the foreign country and edit the country code preceded by a / and followed by a" /$" Document 7475 for official foreign country codes.

    3. Check if the foreign address contains a province, state, or territory for the following foreign countries: Australia, Brazil, Canada, Cuba, Italy, Mexico, China, El Salvador, India, Malaysia, Thailand, or the Netherlands.

      Note:

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

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

      2. Edit correct abbreviation.

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

      Note:

      ISRP enters the two-digit state code

    4. A zip code is not required on a foreign address. Foreign addresses use a postal code that is entered before the foreign country and is part of the address.

Entity Perfection of Tax Period

  1. All returns must have a tax period. If it is missing, incomplete, or illegible, search the return or attachments for the correct period. Edit the tax period to the left of the printed Tax Year in YYYY format.

  2. The tax period is preprinted on this current annual return. Therefore, editing usually is not required unless the tax period is changed by the taxpayer or is other than the tax period being processed (i.e., Fiscal Year, Prior Year, Delinquent, or Early Filed). See IRM 3.21.110.16.3.

    1. If the taxpayer has indicated a tax period other than the period shown on the preprinted return, edit the tax period based on the taxpayer's indication.

    2. After searching, if you are still unable to determine the tax period, process the return for the annual year currently being processed.

Record of Federal Tax Liability (ROFTL) (Lines 1 through 60)

  1. These lines contain the Tax Liabilities for each week of the tax year.

  2. If present, only numeric characters are valid.

  3. Entries must be present in the weekly Tax Liability lines when the monthly Tax Liability lines exceed $2,000.

  4. Beginning with Tax Year 2011, a 2 percent (%) tax on specified federal procurement payments is included in the ROFTL. The total liability for specified federal procurement payments is reflected on Line 64d.

  5. If an entry on any monthly Tax Liability line is $2,000 or less, and the weekly Tax Liability Lines for that month are blank, double arrow the amount from the monthly total to the last weekly Tax Liability line for that month.

    Note:

    Do not edit SIC 1 after monthly liability is arrowed to weekly liability.

  6. If an entry on any monthly Tax Liability line exceeds $2,000, and if no amounts are entered on the weekly Tax Liability lines for that month, correspond.

  7. If there is an entry for the Total Net Tax Liability (Line 64e) and if Lines 1 thru 60 are blank, correspond for the missing ROFTL amounts.

    1. Do not correspond for Lines 1 thru 60 if the total amount for line 64e is less than or equal to ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Caution:

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

  8. Entries on Lines 1 thru 60 cannot contain negative amounts. If any negative entries are present,

    1. Edit SIC 1 and continue processing the return.

    2. ISRP will not input the quarter monthly liability amounts.

Schedule Indicator Code (SIC)

  1. A SIC is used to notify the computer the ROFTL is:

    1. Incomplete,

    2. Unnecessary, or

    3. A penalty should not be assessed.

    4. Monthly totals are missing.

  2. Edit the Schedule Indicator Code to the SIC line of the "For IRS Use Only box" in the upper right-hand corner of Form 1042.

  3. Edit a SIC 1 if any of the following conditions exist:

    1. Negative entries are present on Lines 1 thru 60.

    2. Monthly Money totals are missing.

    3. The Gross Income amounts were entered instead of the Total Tax Liability (the total of the ROFTL (Lines 64b, 64c, and 64d) equals Line 62c).

    4. There are money amounts shown on a nontaxable return. A nontaxable return is when line 64e shows "None" , "Dash (-)" or a "zero" is present on it.

    5. The return is prepared under IRC 6020(b).

    6. The ROFTL is unnecessary (i.e., Line 64e (Total Tax Liability) equals 0).

    7. The ROFTL is unnecessary (i.e., the only entry for Lines 64 a-e is on Line 64a and it equals Line 64e.

    Note:

    No editing of the ROFTL is necessary if SIC 1 is edited.

  4. Edit a SIC 2 if any of the following conditions exist:

    • CCC "J" is edited due to a notation of 3121 Agreement or VCP on the return.

    • TY 2017 only: CCC "J" is edited for an amount present on Line 62b(1).

Number of Forms 1042-S Filed: Lines 61a and 61b

  1. Line 61a has the number of paper-filed Form 1042-S Copy A filed.

    1. Always verify the taxpayer’s information by counting the paper Forms 1042-S "Copy A" attached and comparing the number attached with the entry on Form 1042 Line 61a and on Form 1042-T Line 1d.

      Note:

      If unable to verify (no Form 1042-S Copy A attached), accept taxpayer entry and take no action.

    2. If the entry on Line 61a is correct, take no action.

    3. If the entry on Line 61a is incorrect, delete the entry and edit the correct number to the line.

    4. If blank, edit the number of Form 1042-S Copy A attached.

    5. Do not correspond for line 61a information or Form 1042-S if not attached.

    Note:

    Always verify all information on the Form 1042 prior to detaching the Form 1042-S Copy A and Form 1042-T. If entity information is missing on Form 1042-S and/or Form 1042-T, edit from Form 1042 prior to detaching.

  2. Line 61b has the number of electronically filed Form 1042-S. Accept the taxpayer’s entry.

    Note:

    If Line 61b has an entry, Line 61a is blank, and there are Form 1042-S, Copy A attached, edit the number of 1042-S Copy A attached to Line 61a. If the number attached equals the entry on Line 61b, consider line 61b a misplaced entry and delete.

  3. If Line 61a and 61b are blank and there is no indication of the number of Form 1042-S filed (paper or electronic), on either the Form 1042 or any attachments, correspond.

    Note:

    Do not correspond on a non-taxable return as shown by the words none or zero, or a dash (-) on line 64e. See IRM 3.21.110.16.2, Non-Taxable Returns with No Line Entries.

Total gross amounts reported on all Forms 1042-S and 1000 - Line 62

  1. Line 62 is header information only.

  2. Reporting components are broken down into 62a, b(1), b(2), c, and d.

Total Fixed, Determinable, Annual, Periodical (FDAP) U.S. Income Amount - Line 62a

  1. "X" any negative entries.

  2. If blank, take the following action:

    1. Enter the amount from Form 1042-T, Line 2.

    2. If no Form 1042-T is attached, total the amounts from Box 2 of all Form 1042-S Copy A, attached and edit the total to Form 1042, Line 62a. DO NOT include any amounts from Form 1042-S Copy B (C, D, and/or E).

  3. If required to edit, entries should be made in Dollars and Cents.

Total U.S. Source Substitute Dividend Payments Reported - Line 62b(1)

  1. May or may not be present.

  2. "X" any negative entries.

Other U.S. Source Substitute Payments Reported - Line 62b(2)

  1. May or may not be present.

  2. "X" any negative entries.

Total Gross Amounts Reported - Line 62c

  1. May or may not be present.

  2. If blank and there are entries leading to a total, compute and enter by adding lines 62a-b.

  3. If required to edit, entries should be made in dollars and cents.

  4. "X" any negative entries.

Gross Amounts Paid - Line 62d

  1. May or may not be present.

  2. All amounts must be positive.

  3. "X" a negative entry.

  4. If required to edit, entries should be edited in dollars and cents.

  5. If the return is completely blank, follow instructions in IRM 3.21.110.16.2, Non-Taxable Returns With No Line Entries.

Total Tax Reported as Withheld or Assumed on all Forms 1042-S and 1000 - Line 63

  1. Line 63 is not a reporting field, it has header information only.

  2. Reporting information is broken down in 63a, b(1), b(2), c(1), c(2), d, and e.

Taxes Withheld by Withholding Agent - Line 63a

  1. May or may not be present.

  2. "X" any negative entry.

For Payments Other Than Substitute Dividends - Line 63b(1)

  1. May or may not be present.

  2. "X" any negative entry.

Payments for Substitute Dividends - Line 63b(2)

  1. May or may not be present.

  2. "X" any negative entry.

Adjustments to Withholding - Line 63c

  1. Line 63c is not a reporting field and contains header information only.

  2. Reporting information is broken down in 63c(1) and 63c(2).

Adjustments to Overwithholding - Line 63c(1)
  1. May or may not be present, accept taxpayer’s entry.

  2. Entry is always a negative number.

Adjustments to Underwithholding - Line 63c(2)
  1. May or may not be present.

  2. "X" a negative entry.

Tax Paid by Withholding Agent - Line 63d

  1. May or may not be present.

  2. "X" any negative entry.

  3. Delete entry if that line is being used as a subtotal line (i.e., Line 63a=63d=63e).

  4. This line should be the total of amounts in box 11 on all Form 1042-S.

Total Tax Reported as Withheld or Paid - Line 63e

  1. "X" a negative entry.

  2. If Line 63e is blank:

    And Then
    There are entries on Lines 63a-d, Compute and edit to Line 63e.
    Lines 63a-d are blank, and Form 1042-T is attached, Edit the amount from Line 3a and 3b on Form 1042-T to Line 63e.
    Lines 63a-d are blank, Form 1042-T is NOT attached, and one or more Form 1042-S Copy A are attached, Compute Line 63e as follows:
    1. Add amounts from 1042-S, Copy A boxes 10 plus 11 and subtract box 9.

    2. Edit the total to Line 63e of Form 1042.

Total Net Tax Liability - Line 64

  1. Line 64 is not a reporting field, it has header information only.

  2. Reporting information is broken down in 64a, b, c, d, and e.

Adjustments to Total Net Tax Liability - Line 64a

  1. May or may not be present.

  2. May be positive or negative.

  3. TY15 and prior: A statement justifying the adjustment must be attached. Correspond if missing using Letter 1791-C CAS, and open paragraph 0 (zero) with the following literal: "Your Form 1042 for tax year xxxx contains an amount listed as an adjustment to total net tax liability. A statement justifying the adjustment must be attached. Please submit the required statement."

    Note:

    TY15 and prior - Any document stating the reason for underwithholding is acceptable.

Total Net Tax Liability Under Chapter 3 - Line 64b

  1. May or may not be present.

  2. "X" any negative entries.

  3. If Line 64a-64d are blank and 64e has an entry, edit the Line 64e amount to Line 64b.

Total Net Tax Liability Under Chapter 4 - Line 64c

  1. May or may not be present.

  2. "X" any negative entries.

Excise Tax on Specified Federal Procurement Payments - Line 64d

  1. May or may not be present.

  2. "X" any negative entry.

Total Net Tax Liability - Line 64e

  1. Perfect Line 64e as follows:

    If Then
    Line 64e is blank, Compute Line 64e by adding Line 64a thru 64d. Edit to Line 64e.
    If lines 64a - 64e are blank, and there are money amounts on lines 1 - 60, Correspond for missing information on Lines 64a - 64e. Use Letter 1791-C CAS, use paragraph L.

    Note:

    Do not correspond on a non-taxable return as indicated by the words "none" or "zero" , or a "dash (-) " on Line 64e.

    Line 64e has entry and Lines 64a-64d are blank, Edit the Line 64e amount to Line 64b.
    Line 64e is negative, "X" Line 64e.

Total Paid by Electronic Federal Tax Payment System (EFTPS) - Line 65

  1. Line 65 is not a reporting field, it is header information only.

  2. Reporting information is broken down in 65a and 65b.

Total Paid During Calendar Year - Line 65a

  1. May or may not be present.

  2. X a negative amount.

Total Paid During Subsequent Year - Line 65b

  1. May or may not be present.

  2. X a negative amount.

Overpayment Applied as Credit from Prior Year - Line 66

  1. May or may not be present.

  2. "X" a negative amount.

Credit for Amounts Withheld by Other Withholding Agents - Lines 67a and 67b

  1. All amounts must be positive and may or may not be present.

  2. "X" a negative amount.

  3. All entries on Line 67a and Line 67b must be substantiated by attaching a copy of Form 1042-S, Copy B (C, D, and/or E), or Form 1099. Review Form 1042 for supporting documentation.

    1. The Recipient’s name on the Form 1042-S must be the same as the filer’s name on the Form 1042, and the Recipient Chapter 3 Status Code (Form 1042S Box 13f) must be 09, 11, 12, 13, 14, or 35.

    2. The Intermediary or Flow-through entity’s name (Form 1042-S Box 15d) must be the same as the filer’s name on the Form 1042 and the Recipient Chapter 3 Status Code must be other than 09, 11, or 12.

    3. If neither a or b above apply, delete the amount claimed on Line 67a or 67b, unless (4) or (5) applies.

    Note:

    It is not necessary to math verify amounts on Lines 67a and 67b.

  4. If the Form 1042-S is missing and a credit is claimed for U.S. source substitute dividends paid from a withholding agent that has not issued a Form 1042-S, the filer may attach a statement to Form 1042 to support the amount on Line 67b with all the following info:

    • The withholding agent's name, address, and EIN (if known).

    • The amount of U.S. source substitute dividends received from the withholding agent.

    • The amount of credit forward included in connection with these substitute dividends.

    If Then
    all the information is present, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    any of the information is missing, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, allow the credit.
    any of the information is missing, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, follow instructions in (6).

  5. If the taxpayer attaches a letter signed by a "U.S. Competent Authority" instead of Form 1042-S Copy B, accept the withholding amounts claimed.

  6. If Form 1042-S, Copy B (C, D, and/or E) is missing, and no acceptable substitute statement is attached (i.e., Form 1099-INT or Form 1099-DIV), correspond using Letter 1791-C CAS, and mark paragraph line 5.

  7. Form 1042-S, Copy B or Form 1099, must remain attached to Form 1042 to substantiate the amount of withholding at source claimed on lines 67a and 67b. See Figure 3.21.110-7a and 7b.

    Figure 3.21.110-7a

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    Figure 3.21.110-7b

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  8. Intermediary Form 1042-S:

    If And Then
    Form 1042-S, Copy A is attached, It was issued by another withholding agent,
    1. Line thru the "A" ,

    2. Edit a "B" to the right side of the "A" , and

    3. Attach the 1042-S to the 1042.

    Form 1042-S, Copy A, B, C, D, or E is attached, Form 1042-T is also attached, Detach Form 1042-T and Form 1042-S, Copy A, and forward them together to Batching and Numbering for processing. See Figure 3.21.110-8a, 8b, and 8c.

    Note:

    Leave Form 1042-S, Copies B, C, D, and E attached to the 1042 return.

    Form 1042-S is attached, The taxpayer is an Intermediary, BUT the supporting 1042-S documentation for the entry on lines 67a and 67b is not a different withholding agent (i.e., it is the same withholding agent/taxpayer), Prepare Letter 1791-C CAS, to correspond for the correct Form 1042-S document that does not list the taxpayer as the withholding agent.

    Figure 3.21.110-8a

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    Figure 3.21.110-8b

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    Figure 3.21.110-8c

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Total Payments - Line 68

  1. If Line 68 is blank or negative, and there are entries on Lines 65 thru 67, calculate and edit the amount on Line 68.

    1. If the total is 0 or greater, edit the amount on Line 68.

    2. If the total is less than 0 (negative), "X" Line 68.

    Note:

    If you identify a potential Erroneous Refund Return, (refer to IRM 3.12.38, BMF General Instructions, for more instructions), contact the lead or manager, as you may be advised to place the return in the locally designated basket for further review by Examination.

Balance Due - Line 69

  1. An entry may or may not be present.

  2. Perfect Line 69 by subtracting Line 68 from Line 64e.

  3. If the taxpayer has included penalty or interest in the amount for balance due, then subtract the penalty/interest from Line 69 and edit the correct amount to Line 69.

Overpayment - Lines 70a and 70b

  1. If Line 68 is greater than Line 64e, do the following:

    1. Perfect Line 70a by subtracting Line 64e from Line 68, then subtracting Line 64d and entering the result on Line 70a.

    2. Line 70b should be equal to the amount on Line 64d. If blank, edit from Line 64d.

  2. Take the following actions if Line 70a and/or 70b is $1.00 or more and the following conditions exist:

    If Then
    The "Credit" box is checked on Line 71, Edit CCC "E" on the CC line of the "For IRS Use Only" box in the right corner of Form 1042.
    The "Refund" box is checked, Edit CCC "S" on the CC line of the "For IRS Use Only" box in the right corner of Form 1042.
    Neither box or both boxes are checked, and the return is not final, Edit CCC "E" on the CC line of the "For IRS Use Only" box in the right corner of Form 1042.
    Neither box or both boxes are checked, and the return is a final, Edit CCC "F" and CCC "S" on the CC line of the "For IRS Use Only" box in the right corner of Form 1042. See Figure 3.21.110-9.
    Attachment requesting money be refunded, Edit CCC "S" on the CC line of the "For IRS Use Only" box in the right corner of Form 1042.

    Caution:

    If this is an Excise Tax only return (the only return entries are in ROFTL and the same amount is on Line 64d), and the Refund box is checked, edit a CCC "X" . See IRM 3.21.110.17.3.10, CCC "X" .

    Figure 3.21.110-9

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Credit Elect or Refund Checkbox - Line 71

  1. This is a one position field that identifies whether the withholding agent has elected to apply their overpayment as a credit on next year’s Form 1042 account or request a refund of their overpayment. See IRM 3.21.110.32, Overpayment – Lines 70a and 70b for possible CCC "E" or CCC "S" editing.

Section 2 - Reconciliation of Payments of U.S. Source Fixed, Determinable, Annual, Periodical (FDAP) Income

  1. This section was added to the 2014 Form 1042 for withholding agents to reconcile amounts of U.S. source FDAP income reportable under chapter 4 with amounts of U.S. source FDAP income reported on all Forms 1042-S. This section was OPTIONAL for 2014 and required for 2015 and later.

  2. Do Not Correspond for missing or incomplete information.

Section 2 Line 1 - Total U.S. Source Fixed, Determinable, Annual, Periodical (FDAP) Income Required to be Withheld Under Chapter 4

  1. Accept taxpayer's entry.

Section 2 Line 2a-e - U.S. Source Fixed, Determinable, Annual, Periodical (FDAP) Income Reported With No Withholding Requirement Under Chapter 4

  1. Section 2 Line 2 is not a reporting field, and is header information only.

  2. Reporting components are broken down into Lines 2a, 2b, 2c, 2d, and 2e.

Section 2 Line 2a - Amount of Income Paid to Recipients With No Chapter 4 Withholding Requirements
  1. Accept taxpayer's entry.

Section 2 Line 2b - Amount of Excluded Nonfinancial Payments
  1. Accept taxpayer's entry.

Section 2 Line 2c - Amount of Income Paid With Respect to Grandfathered Obligations
  1. Accept taxpayer's entry.

Section 2 Line 2d - Amount of Income Connected With the Conduct of a Trade or Business in the U.S.
  1. Accept taxpayer's entry.

Section 2 Line 2e - Total U.S. Source Fixed, Determinable, Annual, Periodical (FDAP) Income Required to be Reported Under Chapter 4

  1. Accept taxpayer's entry.

  2. If blank and there are entries leading to a total, compute and edit by adding Lines 2a-2d.

Section 2 Line 3 - Total U.S. Source Fixed, Determinable, Annual, Periodical (FDAP) Income Reportable Under Chapter 4

  1. Accept taxpayer's entry.

  2. If blank and there are entries leading to a total, compute and edit by adding Lines 1 and 2e.

Section 2 Line 4 - Total U.S. Source Fixed, Determinable, Annual, Periodical (FDAP) Income Reported on all Forms 1042–S

  1. Accept taxpayer's entry.

  2. If blank, compute and edit by adding Lines 62a, 62b(1) and 62b(2) in Section 1.

    Note:

    Do not compute and edit if Section 2 is blank. SeeIRM 3.21.110.34.

Section 2 Line 5 - Total Variance

  1. Accept taxpayer's entry.

  2. If blank, compute and edit by subtracting Line 3 from Line 4.

  3. Entry may be positive or negative.

    Note:

    If Line 5 is other than zero, an explanation is required on Line 6. Do not correspond if missing.

Section 2 Line 6 - Variance Explanation Indicator

  1. If explanation is present, edit a "1" in the right margin area of Line 6. See Figure 3.21.110-10.

  2. If explanation is NOT present, but is required, edit a "0" in the right margin area of Line 6.

    Figure 3.21.110-10

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Section 3 - Potential Section 871(m) Transactions

  1. This section has a checkbox but requires no editing.

Section 4 - Dividend Equivalent Payments by Qualified Derivatives Dealer (QDD)

  1. Section 4 checkbox for QDD, requires no editing.

  2. If the QDD checkbox is marked, edit CCC "A" .

  3. For tax year 2018 and later, Qualified Derivatives Dealer EIN must be a valid nine-digit number (XX-XXXXXXX). If QDD EIN is illegible or any repeating 9 digits, then "X" the QDD EIN. If QDD EIN has an SSN or ITIN instead of an EIN “X” QDD EIN.

Third Party Designee

  1. The Third Party Designee election was created to allow a withholding agent or an individual paid preparer of the return to discuss the Form 1042 with the IRS, should questions arise during processing.

Third Party Designee Indicator

  1. the Third Party Designee checkbox is located above the taxpayer signature line. It shows whether the taxpayer has elected to allow the third-party Designee to answer questions about the taxpayers return as it is processed. No action is required.

Third Party Designee Phone Number

  1. The Third Party designee phone number is located below the checkbox. No action is required.

Third Party Designee Personal Identification Number (PIN)

  1. Circle out if illegible. This field can be up to 5 characters long. The entry may be any alpha (i.e., A to Z) numeric (0 to 9), or any combination of both. The PIN number is self-selected by the taxpayer or designee. It is not assigned by IRS.

♦Signature♦

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

    Note:

    Faxed signatures are acceptable. See IRM 3.21.110.10

    • Returns prepared under IRC 6020(b). These returns must be signed by a Compliance Function Representative. See IRM 3.21.110.16.8.1, IRC 6020(b) – Prepared by Collection..

      Note:

      Accept electronic or typed Revenue Officer (RO) signatures as valid on the return.

    • Returns prepared by Examination, for example Substitute for Return "SFR" or "Substitute Return" See IRM 3.21.110.16.8.3 (3), Examination Prepared.

      Note:

      Returns by Examination do require a signature and jurat. See IRM 3.21.110.16.8.4, Examination Secured, for more information.

    • Dummy returns prepared by IRS.

    • Returns filed under IRC 501(d) (Religious or Apostolic Organization).

    • Returns attached to taxpayer response to IRS correspondence containing a jurat and the taxpayer’s signature. See paragraph (5) below.

    • Re-entry returns originally filed electronically (E-File). These returns may be identified by the presence of Mod E-File printouts or "Tax Return Print (TRPRT) Do Not Process" in lieu of an actual return.

      Note:

      If the TRPRT print states "TRPRT Print Do Not Process" in the top margin, circle the words "Do Not Process" .

  2. Do not correspond for a signature on "CIS" returns with a Form 13596 , attached. SeeIRM 3.21.110.14.3, Correspondence Imaging System (CIS) Returns, for processing instructions on CIS Returns.

  3. If a signature is missing, correspond:

    If Then
    1. The return is not signed on the line designated for the 1042 signature, or

    2. The jurat is not present on the line designated for the 1042 signature (non-standard return), or

    3. Only the entity information is present and there are no attachments containing tax data,

    1. Edit Action Code 225 (Correspondence for Signature only) or 226 (International Correspondence for Signature only).

    2. Leave in batch and continue editing.

    Note:

    Paper returns sent in by the filer stating their return was rejected through the E-file system require a signature. Form 8879 or Form 8453 is not an acceptable substitute for a paper return.

  4. If the jurat is altered or stricken (crossed-out), see IRM 3.21.110.16.9, Frivolous Arguments, for frivolous return instructions.

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

    1. If the signature declaration is altered or stricken (crossed-out), see IRM 3.21.110.16.9, Frivolous Arguments, for frivolous return instructions.

    2. If the taxpayer responds with a self-prepared, "signature declaration" , it must contain the same language as the jurat on the tax return (i.e., "Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct and complete." ).

  6. Tax examiners are not handwriting experts. IRC 301.6064-1 allows IRS to presume the signature on a return, statement or other document is the true signature of the person who signed the document.

    Note:

    Do not accept a “✓” or “X” on the signature line as a valid taxpayer signature

  7. Correspond one time for the signature. If you do not receive a reply after the prescribed suspense period, input the return:

    If Then
    The return has an overpaid condition, Edit CCC "3" and CCC" X" and continue processing.
    The return is a balance due or zero condition, Edit CCC "3" and continue processing.

  8. Facsimile Signature -

    1. Rather than providing a hand written signature, an owner, partner, corporate officer, or duly authorized agent may use a "facsimile" (e.g., computer generated, mechanical device, or rubber stamp) signature when filing Form 1042.

      Note:

      If a facsimile signature is used, the person filing the form must keep a letter, signed by the individual authorized to sign the return(s), declaring under penalties of perjury the facsimile signature on the form is the signature adopted by the authorized person and the signature was placed there by the authorized person or under the authorized person’s direction.

    2. Correspond if no signature is found.

♦Preparer Signature♦

  1. A signature may or may not be present; do not correspond if not present.

  2. Do not correspond for a missing signature on any return prepared by a Compliance function.

  3. Do not question any signature on the return. IRC 301.6064-1 allows the IRS to presume the signature on the return, statement or other document is the true signature of the person who signed the document.

  4. A constructive signature (a signature on an accompanying check, letter, etc.) is not acceptable unless the signature follows a perjury statement containing the same language as the jurat of the tax return.

Paid Preparer Tax Identification Number (PTIN)

  1. The Preparer's EIN or PTIN is located to the right of the Preparer's Signature at the bottom of Form 1042.

    Reminder:

    If the return is for 2009 or prior, then the PTIN box is named Preparer's SSN or PTIN.

  2. No action is required on amended returns.

  3. A valid PTIN begins with the alpha "P" followed by an eight-digit number (e.g., PXXXXXXXX). Circle the SSN/PTIN if it is invalid or any repeating 9 digits.

  4. Valid characters are numeric (0 thru 9) and alpha "P" only.

  5. Circle the entry if:

    • it does not begin with a "P" ,

    • it is an SSN,

    • it has all zeroes, nines, or any repeating 9 digits, or

    • it has invalid characters.

Paid Preparer Firm's Employer Identification Number (EIN)

  1. The FIRM's EIN (Paid Preparer's EIN - 2009 and prior revisions) must be a nine-digit numeric number. The FIRM's EIN is entered in NN-NNNNNNN format. The FIRM's EIN cannot be all zeroes or all nines.

  2. No action is required on amended returns.

  3. Circle the FIRM's EIN (Paid Preparer's EIN - 2009 and prior revisions) if all zeroes, all nines, or any repeating 9 digits.

♦Paid Preparer Phone Number♦

  1. The Paid Preparer's Phone Number is located below the Paid Preparer's EIN at the bottom right corner of Form 1042.

    Note:

    ISRP inputs the first 10-digits only.

    If Then
    A complete Paid Preparer Telephone Number is located elsewhere on the return or attachments, Edit to the "Phone No." line.
    The return is amended, No action required.
    The Preparer’s Phone Number is more than 10 digits, No action required.
    The Preparer’s Phone Number is illegible or less than 10 digits, Circle the incomplete or illegible phone number.
  2. If the return is for a tax period prior to 2001, circle the telephone number.

2021 Form 1042, Page 1, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons, Transcription Lines

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2021 Form 1042, Page 2, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons, Transcription Lines

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U.S. Possessions ZIP Codes

U.S. Possessions ZIP Codes

American Samoa (AS)

City Zip Code
Faga'itua 96799
Leone 96799
Olosega Manua' 96799
Pago Pago 96799
 

Federated States of Micronesia (FM)

City Zip Code
Chuuk 96942
Kosrae 96944
Pohnpei 96941
Yap 96943
 

Marshall Islands (MH)

City Zip Code
Ebeye 96970
Majuro 96960
 

Palau (PW)

City Zip Code
Koror 96940
Palau 96940
 

Northern Mariana Islands (MP)

City Zip Code
Capitol Hill 96950
Rota 96951
Saipan 96950
Tinian 96952
 

Virgin Islands (VI)

City Zip Code
Charlotte Amalie 00802
Christiansted 00820
Cruz Bay 00830
Downtown 00840
Frederiksted 00840
Kingshill 00850
Saint Croix 00820
Saint John 00830
Saint Thomas 00805
Sunny Isle 00850
Veterans Annex 00820
 

Guam (GU)

City Zip Code
Agana 96910
Inarajan 96917
Merizo 96916
Tamuning 96931
Umatac 96915
Yona 96915
 

Puerto Rico (PR)

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

State Abbreviations and ZIP Code Ranges Including APO/FPO/DPO Zones

State AbbreviationsZip Code RangesAPO/FPO/DPO Zones
State Name State Abbreviation Zip Code Range
Alabama AL 350-369
Alaska AK 995-999
Arizona AZ 850-865
Arkansas AR 716-729
California CA 900-928, 930-961
Colorado CO 800-816
Connecticut CT 060-069
Delaware DE 197-199
District of Columbia DC 200, 202-205
Florida FL 320-339, 341-342, 344, 346, 347, 349
Georgia GA 300-319, 399
Hawaii HI 967-968
Idaho ID 832-838
Illinois IL 600-629
Indiana IN 460-479
Iowa IA 500-528
Kansas KS 660-679
Kentucky KY 400-427
Louisiana LA 700-714
Maine ME 039-049
Maryland MD 206-219
Massachusetts MA 010-027, 055
Michigan MI 480-499
Minnesota MN 550-567
Mississippi MS 386-397
Missouri MO 630-658
Montana MT 590-599
Nebraska NE 680-693
Nevada NV 889-898
New Hampshire NH 030-038
New Jersey NJ 070-089
New Mexico NM 870-884
New York NY 005, 100-149
North Carolina NC 270-289
North Dakota ND 580-588
Ohio OH 430-459
Oklahoma OK 730-731, 734-741, 743-749
Oregon OR 970-979
Pennsylvania PA 150-196
Rhode Island RI 028-029
South Carolina SC 290-299
South Dakota SD 570-577
Tennessee TN 370-385
Texas TX 733, 750-799
Utah UT 840-847
Vermont VT 050-054, 056-059
Virginia VA 201, 220-246
Washington WA 980-986, 988-994
West Virginia WV 247-268
Wisconsin WI 530-549
Wyoming WY 820-831

APO/FPO/DPO ZONE

Name Zip Code Range
AA 340
AE 090-098
AP 962-966

♦Province, Foreign State, and Territory Abbreviations♦

Australia State

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

Brazil State

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

Canada Province/Territory

Canada Province/Territory Abbreviation
Alberta AB
British Columbia BC
Manitoba MB
New Brunswick NB
Newfoundland and Labrador NL
Northwest Territories NT
Nova Scotia NS
Nunavut NU
Ontario ON
Prince Edward Island PE
Quebec QC
Saskatchewan SK
Yukon YT
 

Cuba Province

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

Italy Province

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

Mexico State

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

The Netherlands Province

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

♦Action Codes♦

Action Code Description Workday Suspense Period
211 First Taxpayer Correspondence 40
212 Second Taxpayer Correspondence 25
215 International Correspondence 45
225 Taxpayer Correspondence (signature only)

Note:

Not applicable to Form 1042.

40
226 International Correspondence (signature only)

Note:

Not applicable to Form 1042.

40
310 Statute Control 10
320 Entity Control 10
331 Frivolous Review 3
341 Manual Refund 10
342 Credit Verification 10
352 Name Research 3
360 Other-in-House Research 10
420 Management Suspense A 5
450 Management Suspense D 20
480 Early Filed Suspense 150
610 Renumber Non-Remit 0
611 Renumber Remit 0
640 Void 0
650 International 0

♦Frivolous Arguments Criteria♦

Exhibit3.21.110-7Frivolous Arguments Criteria

Potential Frivolous Arguments for Examination Review

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

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

  3. Files a return with several types of rambling dialogue and/or confusing arguments no one could reasonably view as a good faith effort to follow the law.

  4. Files a return with some type of message or protest to the IRS, but does not include sufficient identifying information for the IRS to either determine the identity of the taxpayer or correspondent or return address.

Challenges to Authority/Due Process Questions several administrative authorities such as delegation orders, summons authority, Privacy Act, etc. Argues they must be afforded a hearing or a trial before taxes can be assessed or before property can be seized.
Challenges to Authority/Title 26 or "law" in Other Documents Argues Title 26 of the United States Code is not law because it was never enacted as named.
Collection Issues Files frivolous documents contending several collections issues are invalid (e.g., Offers in Compromise, Collection Due Process Requests, Installment Agreements, Appeals Requests, etc.) because they are not filed and signed by someone with delegated authority. They may have no certificate of assessment attached, do not comply in form or content with a State or Local law, are not in a certain format or lack a valid OMB (Office of Management and Budget) number or other frivolous positions.
Disclaimer Submits a disclaimer stating, "disclaims the liability for the tax due" , making the liability on the return zero.
Fifth Amendment Assertion of the Fifth Amendment right against self-incrimination as a basis for not providing any financial information.
Foreign Income Argues United States citizens and residents are not subject to tax on their wages or other income derived from sources within the United States, as only foreign-based income or income received by nonresident aliens and foreign S Corporations from sources within the United States is taxable.
Form 1099-OID
(Original Issue Discount)
An individual or business files a return reporting false amounts of income ("Other or Miscellaneous" income) and claims a false amount of income tax withholding approximately equal to the amount of falsely reported income. Although the returns report income, they do not calculate any tax due. Some of the returns have Form 1099-OID attached and some have Form 1096. Other false financial instruments may be filed in the place of or in addition to the Form 1099-OID such as Form 2439, promissory notes, bonds, sight drafts, etc.
IRC 861 Business
Employment Tax (BMF 861)
Argument targets employers and advises them wages are exempt from withholding. These taxpayers rely on Sections 861 through 865 of the Code and the regulations (in particular, Treasury Regulation §1.861-8), promoters of this scheme advise employers to stop withholding and paying payroll taxes on their employee's wages. In addition, some employers file amended payroll tax returns and request refunds of previously paid payroll taxes.
IRS is a Private Organization/Collects Tribute, Not Taxes Argues the IRS is an entity named the Internal Revenue and Tax Service, Inc., which was incorporated in Delaware in 1933, it is a collection agency for the Federal Reserve Bank, or is part of the United Nations and is clandestinely leading the tax-paying public into a "new world order."
Not a Person Argues a taxpayer is not a "person" within the meaning of IRC 7701(a)(14).
Obscene, Vulgar, Harassing Submits documents or other materials indicating non-filing is due to dissatisfaction with tax policies or taxation in general. Often, this argument is expressed with obscene, vulgar, or crude language and characters in an extremely demeaning manner.
Protest Against Government Action/Inaction Argues that refusal to file or pay is justified because they disagree with government policies or spending plans.
Sixteenth Amendment Argues the Sixteenth Amendment was not properly ratified and therefore the federal government does not have the legal authority to collect an income tax without apportionment.
Straw Men Argues the government has created an entity separate and distinct from the taxpayer - a "straw man" and any tax obligations are exclusively those of the "straw man" .
Taxes are Voluntary/Law Does Not Require Submits a return, amended return or correspondence that argues income taxes are voluntary.
U.S. vs. Long Submits a return with zero money amounts. To explain the zeroes inserted on the form the individual references U.S. vs. Long.
Unsigned Returns The individual completes a return but does not sign, a statement indicating disagreement with the tax system is attached or added to the return.
Valuation Income is not taxable due to the declining fair market value of the dollar, because the dollar is not backed by gold/silver, because the value of services is offset by the value of the labor (barter income), etc.
Zero Returns (ZERO) Submits a return with zero money amounts on all or most line items on the form (e.g., IRC 861, Form 2439, OID, and other BMF filings that claim no income and request refunds). See Rev. Rule. "2004-34" . A statement is attached claiming there is no section of the Internal Revenue Code that established an income tax liability. The statement may also have arguments about the definition of income. There are several variations on this type of filing such as those bearing the words "nunc pro tunc" and "not liable" .

Note:

Returns having only zeros, no entries, are blank or show None, Not Liable, etc. with no evidence of a frivolous argument are not to be considered as frivolous returns.

Other All others including those in Notice 2010-33 or any subsequent superseding notice. See also http://www.irs.gov/Tax-Professionals/The-Truth-About-Frivolous-Tax-Arguments-Introduction on irs.gov. This category includes non-filer accounts resulting from initial compliance check such as cross-reference TINs.

Note:

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

Form 1042 Glossary

Exhibit3.22.110-2Form 1042 Glossary Form 1042 Glossary AlienBack-Up WithholdingChapter Three WithholdingFiduciaryFiscal YearForeign PersonsFlow-Through EntityForm 1042-SForm 1042-TNon-Qualified IntermediaryQualified IntermediaryWithholding Agent

Form 1042 Glossary Definitions

Term Definition
Alien Individual who is not a citizen of the United States. The person can be either a resident or non-resident alien. Resident aliens are taxed just like U.S. citizens. Form 1042 is concerned with non-resident aliens. Complete information on aliens can be found in Pub 519.
Back-Up Withholding Tax withholding from income when a person does not provide a valid TIN to payor.
Beneficial Owner The recipient (owner) of an amount of income.
Calendar Year Year ending December 31st (see Fiscal Year). This is the only type of tax year allowed on Form 1042.
Chapter Three Withholding Tax withheld from income under Title 26, Subtitle A, Chapter 3, Subchapter A, Section 1441-3 of the U.S. Code.
Chapter Four Withholding Tax withheld on withholdable payments per Title 26, Subtitle A, Chapter 4, Sections 1471-1474 of the U.S. Code (Foreign Account Tax Compliance Act).
Collective Refund Procedures that allow a QI/WP/WT, PFFI, or a Reporting Model 1 FFI to obtain a refund on behalf of their account holders, partners, owners, or beneficiaries pursuant to their respective agreement with the IRS. The collective refund is claimed using a Form 1042 and requires the QI/WP/WT to provide more information.
CTW The abbreviation for Chapter Three Withholding.
EDC Line Line which appears in the For IRS Use Only box in the URHC of Form 1042. This line is not in current use.
EIN Employer Identification Number is a nine-digit number used to identify business taxpayers on the Business Master File. The first two represent the district office code.
Fiduciary Person responsible for handling money for someone else who cannot, for various reasons. Examples are a trustee for a trust, executor for an estate, or a receiver in a bankruptcy.
52/53 Week Filer Tax year which can begin or end on a day other than the first or last day of a month (with certain restrictions). It is not allowed on Form 1042.
Fiscal Year A tax year (12 months) which ends on the last day of a month other than December, e.g., September 1, 2019 through August 31, 2020. While common on other BMF returns, a fiscal year cannot be used on Form 1042.
Foreign Persons Not just foreign individuals (as the name might imply), but includes Non-Resident Alien individuals, foreign corporations, partnerships, trusts, estates or any other person that is not a U.S. person. It also includes a foreign branch or office of a U.S. financial institution in certain circumstances.
Flow-Through Entity An entity that does not pay income tax itself, but through which income "flows" to another partner, beneficiary, or owner who does pay the tax. Examples include certain trusts, partnerships, S-corporations, etc.
For IRS Use Only Box Outlined area in the URHC of Form 1042 into which various dates, codes and amounts are entered by the IRS, not taxpayers. It takes the place of a separate Edit Sheet (there is no edit sheet for Form 1042).
Form 1000 Document filed with the withholding agent (not to the IRS) by persons with interest on certain types of bonds. These are kept by the withholding agent, but the amounts thereon are summarized on the Form 1042.
Form 1040-NR Individual Master File (IMF) tax return (similar to Form 1040) filed by a Non-Resident Alien with the recipient's copy of Form 1042-S attached. It is used to report income received and tax withheld, and to pay more tax or claim a refund.
Form 1042-S Form similar in function to a Form W-2 that shows the individual amount of income received by a foreign person, the tax withheld, and other information. Each receipt of income by a foreign person is recorded on a separate Form 1042-S. It is the TOTAL amount of income and tax withheld amounts from a group of Form 1042-S which appear on a Form 1042. A copy of each Form 1042-S is sent to the IRS and another copy is given to the recipient, usually used to file atax return.
Form 1042-T Form used as a transmittal for a group of paper-filed Form 1042-S, whose amounts are summarized on the Form 1042-T. The Form 1042-T is filed and processed separately from the Form 1042.
Form W-8BEN Form an individual provides to a withholding agent to certify to foreign status and to claim a reduced rate of withholding pursuant to a treaty (if applicable)
Form W-8BEN-E Form an entity provides to a withholding agent to certify to its foreign status and its status for purposes of chapters 3 and 4, and to claim a reduced rate of withholding pursuant to a treaty (if applicable).
Form W-8ECI Form a beneficial owner provides to a withholding agent to certify certain payments it receives constitute income effectively conducted with a trade or business in the U.S. (and thus is not subject to chapter 3 or 4 withholding).
Form W-8IMY Form an entity provides to a withholding agent to certify its status as a foreign intermediary or flow-through entity and the type of intermediary or flow-through entity (simple or grantor trust, withholding or non-withholding foreign partnership, qualified or nonqualified intermediary, etc.)
Hong Kong Treated as a separate country apart from China for tax purposes (see Pub 515). Treaties which apply to China may not apply to Hong Kong, or vice versa (see Pub 901).
Income, Foreign-Source Income from sources outside of the United States. Not taxable to foreign persons by the IRS.
Income, U.S.-Source Income from sources within the United states. Potentially (depending on Treaty provisions) taxable to foreign persons by the IRS.
Intermediary Person (U.S. or foreign) who acts as a custodian, broker, nominee, or otherwise as an agent for another person, regardless of whether that other person is the beneficial owner of the amount paid, a flow-through entity, or another intermediary. A foreign intermediary can be either a Qualified Intermediary (QI) or a Nonqualified Intermediary (NQI) and shows which by the EIN used on the return
Jurat Certification on an affidavit declaring when, where and before whom it was sworn. It remains attached to the tax return.
Nonresident Alien (NRA) Citizen of a foreign country who has not fulfilled the requirements to be a resident alien. An NRA is subject to tax on U.S.-sourced income only. Form 1042 summarizes the amounts of income paid and the taxes withheld from a group of NRAs (or other foreign persons) for whom the withholding agent is responsible. The NRA, when filing a Form 1040-NR and claiming a credit for an amount withheld reported to him on a Form 1042-S, attaches a copy of his Form 1042-S in support of the claimed credit. This is similar to when a U.S. citizen or resident alien files a Form 1040 with a Form W-2 attached.
Participating Foreign Financial Institution (PFFI) Foreign financial institution that agreed to follow the requirements of an FFI agreement with the IRS with respect to its chapter 4 withholding obligations. A withholding agent that is a PFFI uses a chapter 4 status code of 05 or 06. A PFFI can claim a collective refund using Form 1042 and following the applicable procedures.
Possessions, U.S. Primarily Guam, U.S. Virgin Islands (NOT the British Virgin Islands), American Samoa and the Commonwealth of the Northern Mariana Islands (CNMI). Puerto Rico is not actually a U.S. possession, but is included in IRS information on possessions (such as Pub 570). The Palau Islands are now (since 1993) an independent country but are treated as a U.S. possession for tax purposes. A complete list of U.S. possessions can be found in Publication 570.
QI EIN Valid Range Range of 100,000 available EINs assigned to Qualified Intermediaries by the IRS in Manhattan (NY). A QI must use one of these EINs on Form 1042.
Qualified Derivatives Dealer (QDD). QI that assumes primary chapter 3 and 4 withholding responsibilities and primary Form 1099 reporting and backup withholding responsibilities for certain payments it makes and receives with respect to potential section 871(m) transactions and underlying securities it receives in a principle capacity as documented with Form W-81MY
Qualified Intermediary Foreign institution, primarily banks or investment firms, approved by the IRS to withhold U.S. Federal taxes and assume primary responsibility for their clients to pay those U.S. Federal taxes.
Recipient Nonresident alien, fiduciary, withholding foreign partnership or withholding foreign trust, foreign corporation, qualified intermediary, or certain U.S. branches of U.S. persons that received payments from a withholding agent. It does not include a non-qualified intermediary.
Reimbursement Procedures Procedures to allow a withholding agent to repay a beneficial owner for an overwithheld amount (by the earlier of the date on which a Form 1042-S is filed or the due date for filing such Form), and then reimburse itself by reducing any subsequent deposits made before the end of the following calendar year. The reduced tax liability is reported on Lines 1-60 of the Form 1042 for the period during which the reimbursement occurred, and the total tax withheld is reported as total deposits.
ROFTL Record of Federal Tax Liability found in the center of Form 1042 showing a breakdown of tax withheld during each month of the tax year by the withholding agent.
Special Character Any character used in a field on the error register that is NOT a numeric, alpha or blank (such as a slash, hyphen, period, ampersand, etc.).
Taxpayer Identification Number (TIN) Nine-digit number that identifies a taxpayer and must appear on every IRS form. There are several types of TINs:
SSN Social Security Number is a nine-digit number issued by the Social Security Administration used to identify individual taxpayers on the Individual Master File.
ITIN Individual Taxpayer Identification Number assigned by the Internal Revenue Service Austin Campus due to an accepted Form W-7/Form W-7SP/ application. This is a nine-digit valid permanent number beginning with 9 and fourth and fifth digits being 50 through 65, 70 through 88, 90 through 92, and 94 through 99. Appears on MCC or IDRS transcripts with an asterisk and pound sign differentiating it from temporary SSN which are invalid. See also: TIN.
Tax Liability Foreign persons are subject to U.S. tax at a 30 percent rate on certain fixed or determinable annual or periodical (FDAP income received from U.S. sources. Income includes interest, dividends, rents, royalties, premiums, capital gains, annuities, compensation, etc. The 30 percent rate can be reduced depending on tax treaty provisions.
Tax Treaty Agreement modifying the tax requirements between the United States and another country, such as the reduction of the usual 30 percent tax rate on income. Complete information on tax treaties can be found in Pub 901.
Title 26 Large division or portion of a still-larger work. Title 26 is that portion of the U.S. Code that is the Internal Revenue Code (IRC).
U.S. Code Arrangement (codification) by subject matter of the general and permanent laws of the United States. It is divided by broad subjects into fifty titles (Title 26 is the Internal Revenue Code). It is published every six years, with annual supplements, by an office in the U.S. House of Representatives.
Withholdable Payment Payment defined in Treas. Reg. section 1.1473-1(a) subject to withholding under chapter 4 of the Code. These are payments of U.S. source fixed determinable annual or periodical income (not effectively connected with a trade or business within the United States).
Withholding Agent Person who has control, receipt, custody, disposal or payment of any income of a foreign person who is subject to withholding, and is responsible for withholding the tax on payments made to the foreign person. The agent may be an individual, corporation, trust, estate, association or partnership.
Withholding Partnership/Withholding Trust (WP/WT) Foreign partnership or trust that has entered into withholding agreement with the IRS in which it agrees to assume primary withholding responsibility for payments made to its partners, beneficiaries or owners. The first block on the intermediary line identifies a WP/WT. (See Form W-8IMY)
Withholding Rate Percentage of income withheld as tax. The rate can be modified by treaty.