IRS Logo

3.21.110  Chapter Three Withholding Returns - Form 1042 (Cont. 1)

3.21.110.16 
Form 1042 - Annual Withholding Tax Return for U.S. Source Income of Foreign Persons

3.21.110.16.2  (11-15-2016)
For IRS Use Only Box

  1. The IRS Use Only box is used to list Computer Condition Codes and Schedule Indicator Codes (SIC). See IRM 3.21.110.16.3, Computer Condition Codes (CCC) and IRM 3.21.110.21, Schedule Indicator Code (SIC).

3.21.110.16.3  (03-02-2015)
♦Computer Condition Codes (CCC)♦

  1. CCC are used to identify a special condition or computation for the computer. Computer Condition Codes post to the Master File.

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

3.21.110.16.3.1  (11-15-2016)
♦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 1382C to inform the taxpayer of the proper procedure to follow to request penalty abatement if and when a penalty is assessed.

  2. Edit CCC "D" if an internal use form or routing slip is attached and indicates "DO NOT ASSESS FAILURE TO PAY PENALTY" .

    Note:

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

3.21.110.16.3.2  (10-27-2015)
♦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 or 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 3.21.110.16.3.9, CCC "X" – Refund/Credit Freeze .
    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" .

3.21.110.16.3.3  (11-15-2016)
♦CCC F – Final Return♦

  1. Edit CCC "F" when the taxpayer checks the Final Return box, or gives a positive indication that they are not liable of filing future returns. This includes notations such as (but not limited to) the following:

    • 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 of the final income paid is after the tax period. “For example: If the tax form is submitted on a printed 2015 form, but the taxpayer made a hand written entry of paying their last income paid on March 5, 2016, it is not a final return.”

3.21.110.16.3.4  (01-01-2015)
♦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 3.21.110.15.7, Amended Returns for instructions.

3.21.110.16.3.5  (01-01-2015)
♦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. Also edit a Schedule Indicator Code (SIC) of 1.

  2. Do not edit CCC "J" if the taxpayer requests abatement for Failing to Make Timely Deposits. Instead, follow the step list instructions in IRM 3.21.110.15.8 (6), Delinquent Returns.

3.21.110.16.3.6  (04-07-2014)
♦CCC R – Reasonable Cause For Failing to Timely File Return♦

  1. Edit CCC "R" on Form 1042 if the return indicates an assessment of a fraud penalty (i.e., IRC Section 6663 or IRC Section 6664).

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

  3. Enter a CCC "R" if a notation of "VCP" is on the return.

  4. When the taxpayer has provided a letter with the reason for the delay in filing their return you must follow the step list instructions from IRM 3.21.110.15.8 (6), Delinquent Returns.

  5. Enter a CCC "R" if return is stamped by IRS: Do Not Assess Late File Penalty

3.21.110.16.3.7  (10-27-2015)
♦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 that the money be refunded is attached, or

    3. The return is a final return.

    4. IRM 3.21.110.31

3.21.110.16.3.8  (01-01-2015)
♦CCC W – Cleared by Statute Stamped on Return♦

  1. See instructions in IRM 3.21.110.15.5, Statute Returns

3.21.110.16.3.9  (11-15-2016)
♦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 CCC's "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.

3.21.110.16.3.10  (11-15-2016)
♦CCC 3 – No Reply to Correspondence♦

  1. Edit CCC "3" when the taxpayer fails to respond to a correspondence or the correspondence is returned undeliverable.

  2. If the return is overpaid (refund) and the correspondence is for signature only, then also edit CCC "X" . See IRM 3.21.110.16.3.9 , CCC X – Refund/Credit Freeze.

    Note:

    There may be other times that the CCC “X” is edited on Refund returns, follow specific line by line instructions.

3.21.110.16.3.11  (01-01-2015)
♦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 Section 6020(b).

    Note:

    CCC "4" cannot be used with CCC "R" .

3.21.110.16.3.12  (01-01-2015)
♦CCC 7 – Reasonable Cause Denied♦

  1. CCC "7" is used when the taxpayers statement for failing to file or for failing to pay taxes timely is not acceptable.

    Note:

    This CCC will 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 3.21.110.15.8 (6), Delinquent Returns.

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

3.21.110.16.4  (11-15-2016)
♦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. A Received Date is required on all Form 1042 returns. Use the chart below to perfect the received date.

    If... Then...
    The return is received within ≡ ≡ ≡ ≡ ≡ ≡ ≡ of the legal or extended due date ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ . 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.

    Caution:

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

    Note:

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

  3. The Received Date may or may not be stamped on the face of the return.

  4. A valid Received Date Stamp consists 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 (TAC)" Site plus the "City" location or a functional area within one of these sites (e.g. CSCO, Exam, ICT, CIS, 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 contains 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 portion of Line 62b(1) on the 1042 return. Edit the IRS Received Date according to the following priority:

    1. The earliest legible Postmark Date (U.S. Postal Service or Private Delivery Service) on the envelope. Rules for using the U.S. Postal Service Postmark (USPS) 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 Receipt and Control function will attach the USPS tracking page if the postmark date is missing from a piece of certified mail. Use the "Acceptance" and "Date and Time" as the postmark date.
      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:

      A private metered postmark is to be considered timely if received ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ of the legal due date.

    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 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, No editing is required.
    Two or more dates stamped on the return.
    1. Use the earliest IRS Received Date stamped on the return.

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

      Note:

      Received dates that have been circled out by another function should be treated 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 stamp as 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.”

    Reminder:

    If an envelope is attached to the return, check the envelope for remittance. If found, hand carry remittance to manager.

  7. If a return has been faxed to another area of the service and then sent to Submission Processing for processing, do not edit the Enterprise Electronic Fax (EEFax) Date as the IRS Received Date. Edit a Received Date according to normal procedures.

    Caution:

    The EEFax Date cannot legally be used as an IRS Received Date.

3.21.110.16.4.1  (11-15-2016)
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.

    Ending Date Due Date Weekends and Holiday Considered Delinquent (7004) EXT. Due Date Weekend and Holidays Considered Delinquent Return
    12-31-2016 3-15-2017 ≡ ≡ ≡ ≡ ≡ 9-15-2017 9-23-2017

3.21.110.16.5  (01-01-2015)
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) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

3.21.110.16.6  (10-27-2015)
Schedule Indicator Code (SIC)

  1. SeeIRM 3.21.110.21Schedule Indicator Code (SIC), for instructions for SIC code instructions.

3.21.110.17  (03-23-2016)
Chapter 3 Status Code - Chapter 4 Status Code

  1. The Chapter 3 and Chapter 4 status code boxes are located in the entity portion 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 Line 12b and 12c; if not present on Line 12b and/or Line 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.

3.21.110.18  (01-01-2015)
♦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 contains the following:

    1. Employer Identification Number

    2. Name

    3. Address

3.21.110.18.1  (11-15-2016)
♦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 located in the upper right of Form 1042.

    1. Form 1042 cannot be processed with a 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 appropriate location.
    The EIN is a PTIN Unnumbered Return. Route to Entity Control for EIN assignment.
    The EIN is a PTIN Numbered Return. Edit Action Code 320.
    Multiple EIN's are present. Unnumbered Return. See Figure 3.21.110-3.
    1. Remove return from batch.

    2. Attach Form 4227 or follow local procedures.

    3. Forward to Entity for EIN assignment.

    Multiple EIN's are present. Numbered Return Edit Action Code 320.
    The EIN contains any of the following conditions and cannot be determined from attachments or schedules:
    • Illegible;

    • Missing;

    • Other than 9 digits;

    • All zeroes; or,

    • All nines.

    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.

    The EIN contains 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 EIN's, zeroes or nines.

    2. Research IDRS

    3. If not found edit Action Code 320.

    PENDING, APPLIED FOR, etc., is indicated 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.

    PENDING, APPLIED FOR, etc., is indicated in the EIN area. Numbered Return. Edit Action Code 320.

    Figure 3.21.110-3

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

    Figure 3.21.110-4

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

3.21.110.18.2  (11-15-2016)
♦Entity Perfection - Name Control♦

  1. The type of entity present on the return determines the Name Control procedures.

    1. Individuals;

    2. Corporations;

    3. Partnerships;

    4. Trusts and Estates; and,

    5. Other organizations.

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

    1. Valid characters are alpha, numeric, ampersand ( and ), 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.

    Note:

    If an individual and a trade name are present and it can be determined that the trade name is for a corporation or partnership, follow the Name Control procedures for corporations or partnerships. If other than a corporation or partnership, follow the name control procedures for individuals, regardless of which line the individual owner's name is listed.

  3. See Document 7071A 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 indicates 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.

3.21.110.18.3  (04-08-2016)
♦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 that the in-care-of name is located above the street address.

    If ... Then ...
    The In-care of name is located below the address,
    1. Arrow up the In-care of name above the street address.

    2. Continue editing the return.

    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 business,
    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. If there is an indication that the in-care-of name has changed, ' i.e. the taxpayer crossed out the original in care of name and has added a new in-care-of name, determine the actions as follows:

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

    2. Correct the address. See IRM 3.21.110.18.4 , 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

3.21.110.18.4  (11-15-2016)
♦Entity Perfection – Domestic Addresses♦

  1. Perfection of the address is necessary 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. The procedures for perfection of address are as follows:

    If ... And ... Then ...
    The Address contains information other than a Street Address or P.O. Box.   No perfection is necessary. ISRP will enter the complete Address.
    There is an indication on an attachment that the Address has been changed.   Edit the new Address in the Entity section of the return.
    Form 8822, Change of Address, or Form 8822-B , Change of Address or Responsible Party- Business, is attached, All of the following applies:
    • Mailing address information is the same,

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

    • 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 of the following applies:
    • Mailing address information is different,

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

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

    Detach Form 8822/ Form 8822-B and route to Entity Control following local procedures.
    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.

    See Figure 3.21.110-6.
    Two street addresses are shown An "in-care-of" name includes a street address other than the withholding agents street address
    1. Circle the withholding agents street address.

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

    Two Street Addresses are shown.  
    1. Underline the second Street Address.

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

    See Figure 3.21.110-5
    One Street Address is shown. The taxpayer changes the Address to a P.O. Box. Notate TC 014 in the upper-left margin of the return.
    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 Exhibit 3.21.110-6.
    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.

    Note:

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

  4. The U.S. Postal Service established new address requirements for APO/FPO/DPO addresses. If the old address appears (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). APO/FPO/DPO addresses are considered 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

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

    Figure 3.21.110-6

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

3.21.110.18.5  (10-27-2015)
♦Entity Perfection – Foreign Address♦

  1. Use Job Aid 2324–002 to edit foreign addresses.

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

  3. Returns with APO/FPO/DPO addresses are considered domestic addresses.

  4. Route returns with a foreign address to OSPC for processing. Prepare Letter 86C to inform the taxpayer that the return has been sent to OSPC.

    • A two-character alpha code must be edited 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
  5. Returns with addresses in the following possessions are considered to be a foreign address for processing purposes but are edited in the same way as domestic addresses.

    1. A ZIP code must be present. Edit the appropriate ZIP code if one is not provided. See Exhibit 3.21.110-5.

  6. Foreign addresses are similar in editing to domestic addresses, but with the following exceptions:

    • The foreign country must be the last entry in the address.

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

    • If the foreign address is from Australia, Brazil, Canada, Cuba, Italy, Mexico or the Netherlands, check if the address contains a province, state or territory.

      Note:

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

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

      2. Edit appropriate 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 will enter the two digit state code

    • 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.

3.21.110.19  (01-01-2015)
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., Prior Year, Delinquent, or Early Filed).

    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.

3.21.110.20  (10-27-2015)
Record of Federal Tax Liability (ROFTL) (Lines 1 through 60)

  1. These Lines are 15 position fields that may or may not be present.

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

  3. If present, only numeric characters are valid.

  4. Entries must be present in the weekly Tax Liability lines when the monthly Tax Liability lines exceed ≡ ≡ ≡ ≡

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

  6. If an entry on any monthly Tax Liability line is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , 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 has been arrowed to weekly liability.

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

    Exception:

    If the taxpayer has notated a specific Revenue Section on the Form 1042 (for example: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ), Subtract Line 64d from Line 64e and edit the amount to Line 59.

  8. 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:

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

  9. 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 quarterly liability amounts.

3.21.110.21  (03-23-2016)
Schedule Indicator Code (SIC)

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

    1. Incomplete,

    2. Unnecessary, or

    3. That a penalty should not be assessed.

    4. Monthly totals are missing.

  2. This is a 1 - position field that may or may not be present.

  3. Valid characters are 1, 2, or blank.

  4. 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.

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

    • Negative entries are present on Lines 1 thru 60.

    • Monthly Money totals are missing.

    • The Gross Income amounts were entered instead of the Total Tax Liability (the total of the ROFTL equals Line 62c).

    • There are money amounts shown on a nontaxable return. A nontaxable return is when line 64e is blank, says "None" or a "zero" is present on it.

    • The return is prepared under Section 6020(b).

    • The taxpayer notated"3121 Agreement or VCP" on Form 1042.

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

    • 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.

    Edit a SIC 2 if the taxpayer did not notate"3121 Agreement" on top of Form 1042, but included a reasonable cause statement for Tax Year 2010 and prior. Follow the step list instructions in IRM 3.21.110.15.8 (6), Delinquent Returns.

  6. Form 1042, Tax Year 2010 return and prior: If the 90 Percent Rule checkbox is checked (the checkbox is located below the entity portion of Form 1042) and any monthly Tax Liability (Lines 5, 10, 15, etc...) exceeds ≡ ≡ ≡ ≡ and the weekly tax liability for that month is also present, edit SIC code 2 in the SIC code line of the "For IRS Use Only" box.

  7. Edit SIC Code 2 in the rare event that both conditions exist at the same time on TY 2010 and prior returns.

3.21.110.22  (11-15-2016)
Number of Form 1042-S Filed: Line 61a and 61b.

  1. Line 61a contains the number of 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.

    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 1042-S Copy A attached.

    5. Do not edit any information on the Form 1042-T.

    Note:

    Only Copy A should be counted. DO NOT include any volumes for Copy B (C, D, and/or E) that may be attached on Line 61a. Always verify all information on the Form 1042 prior to detaching the Form 1042-S Copy A and Form 1042-T.

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

  3. If the return is all zeros and/or Lines 1-60 are blank or the taxpayer notates "no taxable income " , DO NOT correspond for missing Line 61a and/or Line 61b information.

    Caution:

    Procurement returns can be identified by the presence of the word "none" or "NA" on Lines 61a and/or 61b. These returns are for reporting of Excise Tax only. Do not correspond for Line 61a or Line 61b.

  4. If 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:

    If a prior year Form 1042 is submitted and references Magnetic Media, place that data under electronically filed on Line 61b.

    Figure 3.21.110-7

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

3.21.110.23  (01-01-2015)
Total gross amounts reported on all Forms 1042-S and 1000 - Line 62

  1. Line 62 is not for reporting, header information only.

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

3.21.110.23.1  (11-15-2016)
Total 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 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.

3.21.110.23.2  (01-01-2015)
Total U.S. Source Substitute Dividend Payments Reported - Line 62b(1)

  1. May or may not be present.

  2. "X" any negative entries.

3.21.110.23.3  (01-01-2015)
Other U.S. Source Substitute Payments Reported - Line 62b(2)

  1. May or may not be present.

  2. "X" any negative entries.

3.21.110.23.4  (11-15-2016)
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.

3.21.110.23.5  (11-15-2016)
Gross Amounts Paid - Line 62d

  1. All amounts must be positive.

  2. "X" a negative entry.

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

  4. If the taxpayer notates No Taxable Income. Do not correspond for Line 62d

  5. If the return is completely blank, please follow instructions in IRM 3.21.110.15.2, Non-Taxable Returns With No Line Entries and treat a return with no line entries as a non-taxable return.

3.21.110.24  (01-01-2015)
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 contains header information only.

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

3.21.110.24.1  (01-01-2015)
Taxes Withheld by Withholding Agent - Line 63a

  1. May or may not be present.

  2. "X" any negative entry.

3.21.110.24.2  (01-01-2015)
For Payments Other Than Substitute Dividends - Line 63b(1)

  1. May or may not be present.

  2. "X" any negative entry.

3.21.110.24.3  (01-01-2015)
Payments for Substitute Dividends - Line 63b(2)

  1. May or may not be present.

  2. "X" any negative entry.

3.21.110.24.4  (11-15-2016)
Adjustments To Withholding- Line 63c

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

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


More Internal Revenue Manual