3.22.15 Foreign Partnership Withholding

Manual Transmittal

November 17, 2017

Purpose

(1) This transmits revised (IRM) 3.22.15, International Error Resolution - Foreign Partnership Withholding.

Material Changes

(1) Various editorial corrections, line number changes and updated dates are included throughout the IRM.

(2) IRM 3.22.15.1 - Added internal control subsections.

(3) IRM 3.22.15.1.1 - Updated partnership and street address names for Figure 3.22.15-1.

(4) IRM 3.22.15.1.1.1(4) - Corrected Section 1441 income definition.

(5) IRM 3.22.15.1.1.1(5) - Removed references to 1993 and 2012 legislation.

(6) IRM 3.22.15.1.1.1(7) - Corrected due date from April to March.

(7) IRM 3.22.15.1.1.1(8) - Added new paragraph to reference to Notice 2017-47.

(8) IRM 3.22.15.1.1.1(9) - Added new paragraph to reference the Bipartisan Budget Act of 2015.

(9) IRM 3.22.15.1.1.4(3) - Updated reference for new tax year 2017.

(10) IRM 3.22.15.1.1.1.7 - Corrected IRM 1.11.2.2.4 reference title.

(11) IRM 3.22.15.4 - Updated Taxpayer Bill of Rights information.

(12) IRM 3.22.15.5(3) - Removed Caution regarding Taxpayer Authentication.

(13) IRM 3.22.15.5(4-5) - Added new paragraph with instructions on Taxpayer Authentication.

(14) IRM 3.22.15.8.1(3) - Changed step list to alpha list.

(15) IRM 3.22.15.9.6.2(3) - Added IRM title to IRM reference.

(16) IRM 3.22.15.12(5) - Added IRM title to IRM reference.

(17) IRM 3.22.15.13(1)(b) - Added IRM title to IRM reference.

(18) IRM 3.22.15.13(8) - Format changed from numbering to bullets.

(19) IRM 3.22.15.14.1 - Updated reference for new tax year 2017.

(20) IRM 3.22.15.14.1(2) - Corrected tax years to current years.

(21) IRM 3.22.15.14.2(3) - Added IRM title to IRM reference.

(22) IRM 3.22.15.14.2(4) - Added IRM title to IRM reference.

(23) IRM 3.22.15.14.3 - Added IRM title to IRM reference.

(24) IRM 3.22.15.14.3.6(2) - Added the title to Exhibit 3.22.15-10 referenced.

(25) IRM 3.22.15.14.4 - Removed OUO from first and second paragraphs.

(26) IRM 3.22.15.14.4(3) - Removed second row in CI referral chart.

(27) IRM 3.22.15.14.5 - Removed OUO from paragraph.

(28) IRM 3.22.15.16.1(4) - Changed number list to alpha list.

(29) IRM 3.22.15.21 - Added Tax Year Beginning date field reference 01-X.

(30) IRM 3.22.15.21.3 Updated name control example. Updated Figure 3.22.15-3.

(31) IRM 3.22.15.21.5(4) - Updated Return Due Date and fixed minor grammatical errors.

(32) IRM 3.22.15.21.7(4) - Updated partnership and street address names for Figure 3.22.15-3.

(33) IRM 3.22.15.21.8 - Updated address example when name of street is also a direction.

(34) IRM 3.22.15.21.11(6) - Updated partnership and street address names for Figure 3.22.15-5.

(35) IRM 3.22.15.21.13(3) - Updated Return Due Date.

(36) IRM 3.22.15.21.13.1(3) - Deleted extra "IRC" citations.

(37) IRM 3.22.15.21.14(5) - Updated Return Due Date and added "Puerto Rico".

(38) IRM 3.22.15.21.23 - Created new subsection to include instructions for new Tax Year Beginning Year date field, reference 01-X.

(39) IRM 3.22.15.23.1 - Updated Figure 3.22.15-6a for new tax year 2017 and added Field 01-X Tax Year Beginning date transcription line.

(40) IRM 3.22.15.23.1 - Updated Figure 3.22.15-6b for new tax year 2017.

(41) Exhibit 3.22.15-1 - Updated page 1 title and graphic for Tax Year 2017 and added Field 01-X Tax Year Beginning date transcription line.

(42) Exhibit 3.22.15-1 - Updated page 2 graphic for Tax Year 2017.

(43) Exhibit 3.22.15-2 - Updated to include Field 01-X Tax Year Beginning Date reference.

(44) Exhibit 3.22.15-3 - Updated to include Field 01-X Tax Year Beginning Date reference.

(45) Exhibit 3.22.15-4 - Created new Exhibit for Tax Year 2008 Form 8804 conversion.

(46) Exhibit 3.22.15-5 - Updated graphic for Tax Year 2017 and added Field 01-X Tax Year Beginning date transcription line.

(47) Exhibit 3.22.15-6 - Updated graphic for Tax Year 2017 and added Field 01-X Tax Year Beginning date transcription line.

Effect on Other Documents

IRM 3.22.15, dated November 14, 2016 (effective January 1, 2017), is superseded. IPU 17U0262 was issued 02-09-2017.

Audience

Wage and Investment Error Resolution employees (Ogden Submission Processing Center (OSPC) Only)

Effective Date

(01-01-2018)

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

Program Scope and Objectives

  1. Purpose: This Internal Revenue Manual (IRM) provides error resolution instructions for correcting Form 8804, "Annual Return for Partnership Withholding Tax (Section 1446)" to the Business Master File (BMF). See Figure 3.22.15-1

  2. Audience: These procedures apply to IRS employees with responsibility for reviewing and editing the Form 8804, Annual Return for Partnership Withholding Tax (Section 1446) information returns in Document Perfection Operation including Supervisory Tax Examining Assistant, Lead Tax Examining Technicians, and Tax Examining Technicians primarily the International team at the Ogden Submission Processing Center.

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

  4. Program Owner: The Code & Edit/ERS IMF Section of the Paper Processing Branch of Submission Processing.

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

  6. Program Goals: Accurately review and prepare all paper returns for Data Transcription and/or correspondence as necessary.

Background

  1. Form 8804 is processed under:

    • File Location Code 98 Philadelphia Submission Processing Campus (PSPC) or 60 Ogden Submission Processing Campus (OSPC)

    • Tax Class 1

    • Doc. Code 29

    • Blocking Series 000-999

    • MFT Code 08

    • Program Code 11340

    Figure 3.22.15-1

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    Please click here for the text description of the image.

Form 8804 Background -- Annual Return for Partnership Withholding Tax under (Section 1446)
  1. Form 8804 was modified as a result of the Internal Revenue Code (IRC) § 1446 (26 CFR 1446) Regulations. This modification branched out the types of Effectively Connected Taxable Income (ECTI) allocable to a foreign partner from the highest rate applicable to the type of foreign partner to the highest rate applicable to the type of income allocable to that type of foreign partner. For corporate partners the rate remained unchanged at 35%. For partnership taxable years beginning in 2013 for non-corporate partners the rates are 39.6 % , 28%, 25% and 20% as long as the foreign partners provides the partnership with valid documentation (e.g., a Form W-8BEN -Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals)) showing they qualify for the preferential rates.

  2. There are two categories of income allocable to a foreign partner:

    • Income that is effectively connected with a trade or business in the United States, and

    • Income that is not effectively connected with a trade or business in the United States

      Note:

      The difference between these two categories is that effectively connected income, after allowable deductions, is taxed at the same rates that apply to U.S. citizens and resident aliens. Income that is not effectively connected is, to the extent it is U.S. source income, taxed at a flat 30% (or lower treaty) rate, and reported on Form 1042 (Annual Withholding Tax Return for U.S. Source Income of Foreign Persons).

  3. Partnerships (except for certain publicly traded partnerships) must make installment payments of withholding tax on its foreign partners' share of effectively connected taxable income whether or not distributions are made during the year.

  4. The rules for making payments of amounts withheld under 26 CFR 1441 for fixed or determinable annual or periodical (FDAP) income apply to the amount of 26 CFR 1446 or Treasury Regulation Section 1446 tax withheld by publicly traded partnerships.

  5. The withholding tax rate on a partner’s share of ECTI is generally the highest marginal tax rate applicable to that type of taxpayer. The highest rate is currently 35% for foreign corporate partners, and 39.6% for all other foreign partners.

  6. Pursuant to the IRC § 1446 Regulations, a partnership may, with respect to non-corporate partners, determine withholding tax by the highest tax rate applicable to particular types of income allocated to the partner, provided that the partnership receives valid documentation (e.g., a Form W-8BEN) from a partner to which these rates apply. These types of income are:

    • Net Ordinary Income, which has a highest rate of 39.6% for non corporate partners and 35% for corporate partners.

    • Collectible Gains allocated to non-corporate partners, which has a highest rate of 28%

    • Unrecaptured section 1250 gains allocated to non-corporate partners, which has a highest rate of 25%

    • Adjusted net capital gain (including qualified dividend income and net section 1231 gains) allocable to non-corporate partners, which has a highest rate of 20%

  7. Form 8804 is due on or before the 15th day of the third month after the close of the partnership's taxable year. However, if the partnership keeps its books and records outside of the United States and Puerto Rico (This is indicated by a checkbox in the upper right corner of Form 8804), then the Return Due Date (RDD) is the 15th day of the sixth month after the close of the partnership's taxable year. Therefore, a calendar year return would be due March 15th, or June 15th, respectively.

  8. For taxable years beginning in 2016 and later, the due date for the return of a partnership, including a Form 8804, moved from the fifteenth day of the fourth month (April 15 for calendar-year filers) to the fifteenth day of the third month (March 15 for calendar-year filers). In Notice 2017-47, the IRS provided relief from the failure to timely file penalty for taxpayers who, ostensibly unaware of the changed due date, filed their 2016 returns or requested extensions of time to file by the former due date.

  9. Section 1101 of the Bipartisan Budget Act of 2015 (BBA) repeals the TEFRA partnership audit rules for partnership tax years beginning after December 31, 2017. See revised sections 6221 through 6241. While the new rules generally go into effect for partnership taxable years beginning after December 31, 2017, partnerships may elect into these rules for tax years beginning after November 2, 2015, and before January 1, 2018. See Treas. Reg. 301.9100-22T.

Form 8813 Background - Partnership Withholding Tax Payment Voucher (Section 1446)
  1. Form 8813, Partnership Withholding Tax Payment Voucher (Section 1446) is the form used by the partnerships to make their quarterly installment payments. The four installment payments must be made with Form 8813 by the 15th day of the 4th, 6th, 9th and 12th months of the tax year, unless the payment is made through Electronic Federal Trust Payment System (EFTPS) or otherwise modified by published guidance. Effective 01/01/2004, all Form 8813 payments made for tax periods ending December 31, 2004, and subsequent, began to be processed to the Business Master File (BMF).

Form 8804-C Background - Certificate of Partner-Level Items to Reduce Section 1446 Withholding
  1. A foreign partner must use Form 8804-C to provide a certification to a partnership under 26 CFR 1.1446-6 to reduce or eliminate the 1446 tax the partnership must withhold and pay on ECTI allocable to the foreign partner. The foreign partner uses Form 8804-C to certify to the partnership that it meets all the requirements of the regulations, and represents that the information provided, including filing requirements, is true, correct, and complete.

Form 8804 (SCH A) Background - Penalty for Underpayment of Estimated Section 1446 Tax by Partnerships
  1. Partnerships that have effectively connected taxable income (ECTI) allocable to foreign partners use Schedule A (Form 8804) to determine:

    • Whether they are subject to the penalty for underpayment of estimated tax and, if so,

    • The amount of the underpayment penalty.

  2. Generally, the partnership does not have to file this schedule because the IRS will figure the amount of the penalty and notify the partnership of any amount due. However, if the partnership completes this form and attaches it to Form 8804, then the penalty calculated by the taxpayer will be assessed.

  3. Generally, for tax year 2017, a partnership is subject to the penalty if it did not timely pay in installments, at least the smaller of:

    1. The tax shown on line 5f of its 2017 Form 8804 or,

    2. The total section 1446 tax that would have been due for 2016, computed using the ECTI allocable to foreign partners for 2016, but without regard to reduction for certified foreign partner-level items submitted on Form 8804-C, but, only if this amount (i.e., the amounts shown on lines 4a, 4e, 4i, 4m, and 4q of its 2016 Form 8804) is at least 50% of the sum of the amounts shown on lines 4d, 4h, 4l, 4p and 4t of its 2017 Form 8804 and the 2016 tax year was for a full 12 months.

Form 8805 Background - Foreign Partner’s Information Statement of Section 1446 Withholding Tax
  1. Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax, is filed for each foreign partner to show the amount of effectively connected taxable income allocated, and the total tax credit allowed to a foreign partner.

  2. Two types of Form 8805 may be attached to Form 8804.

    • Form 8805 attached to substantiate the withholding claimed on Form 8804 Line 6b. This type of Form 8805 shows the partnership entity information on Lines 1 and 2. See Figure 3.22.15-6a.

    • Form 8805 reflecting the payments generally claimed on Form 8804 Line 6a. This type of Form 8805 shows the partnership entity information on Lines 5 and 6. See Figure 3.22.15-6b.

  3. The Form 8805 matching the second description in paragraph (2) above (2nd bullet) is detached from Form 8804 by Code and Edit and forwarded to Batching and Numbering for assignment of its own Document Locator Number (DLN). See IRM 3.21.25.16 (2), International Returns and Documents Analysis - Miscellaneous Tax Returns.

Authority

  1. Internal Revenue Code (IRC) § 1446 Regulations provides the authority for processing information returns for withholding tax on foreign partners’ share of effectively connected income.

  2. Policy statements for Submission Processing are contained in IRM 1.2.12, Service Wide Policies and Authorities, Policy Statements for Submission Processing Activities.

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 their operation.

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

  4. The team employees are responsible 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 & Edit reports.

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

    • Embedded Quality Submission Processing (EQSP)

    • Balanced Measures

    • Managerial Reviews

Program Objectives and Review

  1. Program Goals: Code & Edit is tasked with timely and accurately reviewing and editing all paper returns.

  2. Program Reports: The Monitoring Section under Submission Processing Program Management /Process Assurance monitors the inventory and timely processing of the returns.

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

    • Embedded Quality Submission Processing (EQSP)

    • Balanced Measures

    • Managerial reviews

  4. Annual Review: The processes included in this manual are reviewed annually to ensure accuracy and promote consistent tax administration.

Terms/Definitions/Acronyms

  1. Acronyms and a glossary of terms can be found in Exhibit 3.22.15-12

Related Resources

  1. The following job aids have been developed to assist tax examiners in their work:

    • BMF Name Control Job Aid, Document 7071-A, Catalog Number 38048K.

    • Coding and Editing BMF Tax Returns, Foreign Addresses, Document 2324-002, Catalog Number 62293V.

♦IRM Deviation Procedures♦

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

♦IRS Employee Contacts - RRA 98, Section 3705(a)♦

  1. The Restructuring and Reform Act of 1998 RRA 98 Section 3705(a), provides identification requirements for all IRS employees working tax-related matters. IRS employees are required to give their name and unique identification number during taxpayer telephone, face-to-face, and written contact. In addition, a telephone number is required on all taxpayer correspondence. This will provide taxpayers with enough information to identify an IRS employee who has previously assisted with tax related matter.

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

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

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

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

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

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

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

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

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

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

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

    Note:

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

♦Taxpayer Advocate Service (TAS)♦

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

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

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

  4. Same day includes cases that can be resolved in 24 hours, as well as cases where steps can be taken within 24 hours to begin resolving the issue. (See also IRM 13.1.7.4, Same Day Resolution by Operations.)

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

♦TAS Service Level Agreements (SLA)♦

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

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

♦Use of FAX for Taxpayer Submissions♦

  1. Tax return information can be received via fax as part of return perfection even if a taxpayer signature is required. In circumstances where contact with the taxpayer has been made and documented, 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://irweb.irs.gov/AboutIRS/co/dese/memo/48254.aspx.

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

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

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

    • IRM 21.1.3.2.3, Required Taxpayer Authentication

    • IRM 21.1.3.2.4Additional Taxpayer Authentication

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

    • IRM 11.3.2.7.1, Leaving Information on Answering Machines/Voice Mail

    • IRM 11.3.1.11, Facsimile Transmission of Tax Information

♦General Disclosure Guidelines♦

  1. IRC § 6103 establishes the taxpayer's (T/P's) right to privacy of tax information. You must be sure that you provide correct information to the correct T/P or authorized representative (check IDRS CC CFINK for Power of Attorney (POA)).

  2. Taxpayer returns and return information must remain confidential as provided for in IRC § 6103,Confidentiality and disclosure of returns and return information . IRC § 7431 provides civil damages for unauthorized disclosure of returns and return information. IRC § 7213 and IRC § 7213A provide criminal penalties for unauthorized disclosure or unauthorized inspection of returns and return information and require employees be discharged from duty if charged and convicted of these offenses.

  3. For more information on General Disclosure Guidelines refer to IRM 21.1.3,Operational Guidelines Overview and for full discussions refer to IRM 11.3.1,Introduction to Disclosure through IRM 11.3.40,Disclosure Involving Trust Fund Recovery Penalty Assessments.

♦Refund Returns 180-Day Jeopardy/Million Dollar Refunds♦

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

    Note:

    Expeditious processing of refund returns is critical if the 180-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:

    Follow the instructions below when the processing date is more than 155 days after the Received Date or the return due date or the refund is $1,000,000 or more.

    The processing date is more than 155 days after the Received Date or the return due date (whichever is later) and the refund is $5,000 or more,

    Note:

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

    1. Edit Action Code "3" .

    2. Remove return from pack of work.

    3. Attach Form 4227, and check off "Reject Correction" . Write in the remarks area "Manual Refund."

    4. Place return in a red folder and then place the folder on top of the batch cart.

    There is an amount on Line 6a of Form 8804, it cannot be computed using the 180-day rule. If the processing date is more than 20 days after the Received Date or the return due date (whichever is later) and the refund is $5,000 or more,

    Note:

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

    1. Edit Action Code "341" .

    2. Give the return to the manager.

    The refund is $1,000,000 or more,

    Note:

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

    1. Do not leave the return in the block.

    2. Edit CCC "U" for numbered and unnumbered returns.

    3. Give the return to the manager.

    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 a TAS manual refund is being issued.

    2. Edit CCC "Y" to send the return to ERS.

♦BMF Consistency♦

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

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

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

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

♦CADE 2♦

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

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

  3. The new BMF campus cycles are:

    1. Campus Cycle: Thursday -- Wednesday

    2. Master File Processing: Friday -- Thursday

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

    4. Unpostables: New available Tuesday; Closing Tuesday

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

    1. 01 Friday

    2. 02 Monday

    3. 03 Tuesday

    4. 04 Wednesday

    5. 05 Thursday

    Note:

    BMF cycle posting dates on BMFOL will continue to reflect YYYYCC. YYYY will indicate the year. CC will indicate the posting cycle. BMF posting cycles in TXMOD will reflect a format YYYYCCDD. The DD value will be 08.

  5. BMF transaction posting time-frames are outlined as follows:

    1. Transactions will be viewable using CFOL (Computer Files Online) command codes on Saturday following the weekly Master File processing run on Thursday.

    2. Transactions will be viewable as posted transactions using IDRS command codes on Monday following the weekly Master File processing run on Thursday.

    Note:

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

General Error Register Guidelines

  1. The following general information can be used when correcting Form 8804 returns.

  2. General instructions eliminate repetition of the same instructions for each return. If the general instructions and the specific instructions conflict, follow the specific instructions.

  3. All money amounts must be entered in U.S. dollars only.

  4. Round the filer's dollar and cents entry to the nearest whole dollar and edit the "rounded" amount above or to the left of the deleted entry.

  5. Money amounts can be either a positive or negative number.

Error Register

  1. A listing of documents on which the transcribed data failed one or more of the consistency, math verification, or validity tests in the computer program.

  2. The register is made up of sections and fields that are directly or indirectly related to the data sections and items transcribed and input to the computer.

Loop Register

  1. An error or reject record that has had a correction record input but still contains an invalid or math error condition that requires correction.

Section Error

  1. A portion or segment of a record containing data fields related to a specific schedule or portion of the source document.

  2. Each section is identified by a two digit numeric section number.

Field Error

  1. A field is a specific item of information transcribed from a form, schedule, or other document.

  2. A section on the Error Register contains a certain number of fields which always appear, whether the field contains data or is blank.

  3. Each field is indicated by an Alpha Indicator (letter) which is located at the beginning of each field.

  4. A field is either FIXED (no field breaker) or VARIABLE (ends with a field breaker). See the next section for an explanation.

Field Breaker

  1. A field breaker is a special symbol which indicates the end of a variable field.

    Note:

    A variable field is any field ending with a field breaker.

  2. The most common field breaker is a plus sign (+), although some fields can end with a minus sign (-), indicating a loss or a refund.

  3. The field breaker always appear at the end of the field whether it contains data or not.

  4. When changing the data in a field on the error register and you enter a positive field breaker, enter a comma (,) and not the plus sign (+).

  5. When changing the data in a field on the error register and you enter a negative field breaker, enter a pound (#) sign and not the minus sign (-).

  6. Do not line through a field breaker unless you are changing it to a different one.

    Example:

    You would not line through a plus sign and enter a comma above it; however, you would only line through the data in the field and leave the field breaker alone.

  7. When a section is added to the error register, only the fields which contain data are actually entered onto the register. The field breakers used would be the comma and/or pound sign, as required, but not the plus or minus sign.

  8. A few fields on the error register do not end with a field breaker, or any other indication of the end of the field. These are known as "Fixed" fields. Information for these fields are found in the IRM under each specific field explanation.

Error Register Action Codes

  1. Action Codes are used to indicate that specific information is missing or the record is to be rejected from processing. The Action Code must contain sufficient detail to indicate if correspondence is to be sent to the taxpayer or the specific in-house research or action required.

  2. Only one Action Code may be entered in any one section of the Error Register to correct the section. The Action Codes valid for this program are, 0, 1, 2, 3, 4, 5, 6, 7, and 9.

    • If two incompatible action codes are required, the return must go through the "Loop Register" .

    • The definitions and rules of usage for the following Action Codes apply to the Error Register Correction Procedures

Action Code "0"
  1. Action Code "0" accepts the taxpayer’s or tax examiner’s figures.

  2. Enter to the left of Section "01" when the record is correct and the computer computation should be disregarded.

  3. Never use Action Code "0" unless the error register already contains the correct tax data.

  4. When Action Code "0" is used, no other Action Code is valid.

Action Code "1"
  1. Action Code "1" indicates the taxpayer's math error is above tolerance.

  2. Action Code "1" is entered to the left of Section 01 with a Taxpayer Notice Code (TPNC) to indicate a math error made by the taxpayer.

    • Enter Action Code "1" when the data in a record has been transcribed correctly, but the taxpayer made an error on the return and the computer's tax computation should be accepted by the Master File

    • All taxpayer entries have been transcribed correctly but the total tax due or overpayment is in error

  3. Action Code "1" must be followed by a valid TPNC for the type of return and correctly advises the taxpayer of the reason for the error. Use a two-digit numeric code (See IRM 3.22.15.21.16, Field 01-Q - Taxpayer Notice Codes (TPNC)) when a math error is present which affects the tax liability or settlement (Balance Due or Refund) amounts. Enter this code to the right of AC "1" , preceded by a hyphen (e.g., 1 - 01).

    Note:

    The maximum number of TPNCs allowed to be entered are three (3). For example: 01, 02, 03.

Action Code "2"
  1. Action Code "2" is used only in the Rejects Unit.

    Reminder:

    No other action code can be with Action Code "2" .

  2. Enter to the left of Section "01" .

  3. Action Code "2" must be used with reject designator;

    • D – Delete (voids) record

    • N – Re-number

    • R – Re-input (with Form 3893 - Re-entry Document Control)

      Note:

      If it is necessary to re-number a return on Loop Register, use Action Code "9" to bring the record back to RAW (reject) status, then have it re-numbered.

  4. "D" and "R" can be used on Rejects Loop Register.

Action Code "3"
  1. Use Action Code "3" to reject an unprocessable or Non-ADP document.

    Reminder:

    When using Action Code "3" , do not use any other Action Code.

  2. Enter to the left of Section "01."

  3. This code can be used only by the Service Center Replacement System (SCRS) Unit to send a return to the Rejects Unit. It cannot be used on the rejects register.

Action Code "4"
  1. Use Action Code "4" to delete any section of a record when the section is not required.

    Example:

    DO NOT USE Action Code "4" in Section "01" of a record.

  2. Enter it to the left of the section that needs to be deleted.

  3. Action Codes "4" , "5" and "6" may be used on the same Error Register, but only in different sections.

  4. If a section appears on the Error Register but contains no significant data:

    • It is not necessary to delete the section, unless entering CCC "G" .

    • The section automatically deletes when the record posts.

      Note:

      Do not use Action Code "4" to delete a (computer-generated) section with all fields blank, which shows an asterisk (*) before the section number. If no data is to be added to a field in this section, ignore it. If no other correction is required to the record, use Action Code "7" to clear it. Using Action Code "4" with such a section results in an invalid correction attempt (AA) on the Loop Register.

Action Code "5"
  1. Action Code "5" is used to:

    1. Add a missing section to the record.

    2. Use it to add a missing section required to be present, but which has not printed on the Error Register.

      Exception:

      DO NOT USE Action Code "5" in Section "01" of a record

  2. Enter to the left of a section that needs to be added.

  3. When adding a section,

    1. Enter only the fields which have significant data

    2. Enter the Alpha Field Designation and the appropriate field breakers for each field entered (e.g.: "5 06A1000," Action Code "5" , Section 06, field A, positive amount 1000)

  4. Action Codes "4" , "5" and "6" may be used on the same Error Register, but only in different sections.

Action Code "6"
  1. Use Action Code "6" to indicate that at least one field in the section requires correction.

  2. This code is entered to the left of the section number.

  3. There is no limit to the number of sections which can accept Action Code "6" on an error record, or to the number of fields in a section that can be corrected.

    Note:

    Correct as many fields as possible with Action Code "6" on each correction run.

  4. When Action Code "6" is used on the Error Register, at least one field in the section must be corrected (if the "6" is found not to be needed, erase it from the register).

    1. Line through the erroneous data following the field designator.

    2. Enter the correct data above the lined-through data, changing the field breaker only if it is to be changed also (if not do not line through the field breaker).

    3. Because a Fixed field has no field breaker, unused spaces must be accounted for. This affects only the name control (other fixed fields either must be present in full or cannot be corrected). See the instructions under the various fixed fields for more information.

  5. If any transcription entry is wrong, illegible, on the wrong line, or on an attachment, do the following:

    1. Enter the information on the applicable line on the return (or arrow up or down to the correct line, if possible)

    2. Enter the information into the correct field on the Error Register.

      Note:

      If the section containing the field is already on the register, use Action Code "6" to enter the data into the field. If the section containing the required field is not on the register, use Action Code "5" to add the section to the record and enter the data into the required field. Action Codes "5" and "6" cannot be used for the same section on the same correction run.

  6. Action Codes "4" , "5" and "6" can all be used on the same record, but only in different sections.

Action Code "7"
  1. Use Action Code "7" to indicate that the data on the error register is correct and no action is necessary.

    Reminder:

    When Action Code "7" is used, no other Action Code is valid.

  2. Enter to the left of Section "01."

  3. The most common use of Action Code "7" is on Loop when there is the "AA" (invalid correction attempt) on the top line of the error record. Not every invalid correction attempt made by Transcription appears as an error on the error register. When the "AA" appears, examine the fields in the record and if no error is seen, use the Action Code "7" .

  4. Action Code "7" will not clear a math error condition.

    Note:

    If the computer cannot do the computation, use Action Code "0" .

Action Code "9"
  1. Action Code "9" is used only on Rejects Loop Register. It is not valid on RAW rejects registers or on SCRS error registers at all.

    Reminder:

    No other action code can be used with Action Code "9" .

  2. This code is entered to the left of Section 01.

  3. The Action Code "9" is used to bring a loop reject record back to the RAW (called re-reject) status. This is required because some operations cannot be done on a Rejects Loop Register, such as having a document re-numbered, sending a document to another area in the campus or corresponding to a taxpayer.

    Note:

    It is possible to void (2-D) or re-input (2-R/Form 3893) on Rejects Loop Register. The Action Code "9" is not needed in these circumstances.

Unprocessable Conditions

  1. A return must contain the following specific items before it is considered processable. If they are not present and cannot be found on the return or its' attachments, then ERS must research IDRS, to locate the information in order to make the return processable.

    • An Employer Identification Number (EIN)

    • A legible name (for the Name Control)

    • A valid Tax Period (200412 and subsequent)

  2. Conditions which make a document unprocessable are:

    • The name is so illegible or incomplete that the Name Control cannot be determined

    • The EIN contains other than nine numeric characters and cannot be perfected from information on the return or attachments

    • The document has more than one ElN

    • The filer has stated they have combined information for more than one tax period or more than one type of return

    • Data entries are so incomplete or illegible that they cannot be perfected or transcribed

    • The document has been mis-blocked

    • The return is unsigned

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

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

  3. When required, use IDRS letter 3104C (FIRPTA and Foreign Partnership Withholding Tax Return Processing and Unsubstantiated Refundable Cr) to correspond for the information.

Pre-Master File Processing of Form 8804

  1. Reject any Form 8804 filed for tax period ending November 30, 2004, (200411) and prior.

  2. Rejection Action:

    1. Prepare Form 4227, Intra-Campus Reject or Routing Slip , indicating the reason for rejection.

    2. Attach Form 4227 with explanation "Non Master File (NMF) Form 8804 Return Tax Period 200411 and Prior" to the face of the document.

    3. Complete Form 3499,Informational Transmittal, and transship to the Accounting Branch at the Cincinnati Submission Processing Center (CSPC):
      Internal Revenue Service
      Cincinnati, Ohio 45999-0005

Disposition of Unnumbered Edited Returns

  1. Forward any unnumbered Form 8804 found in a block to Receipt and Control for batching and numbering. Documents withdrawn from processing:

    • Must be forwarded to the appropriate Campus activity for the required action, when necessary.

    • This includes items detached from other processable documents which require correspondence, accounting or other action.

General Correspondence Procedures

  1. All taxpayer correspondence is governed by the guidelines in IRM 21.3.3, Incoming and Outgoing Correspondence/Letters . Correspondence includes all written communication from a taxpayer or their representative, excluding tax returns, whether solicited or unsolicited, and includes:

    • Responses to IRS requests for information or data

    • Requests for information accompanying tax returns

    • Annotated notice responses

    • Other correspondence providing additional information or disputing a notice

  2. In all instances where you are instructed to correspond for missing information on Form 8804, completely examine the return to ensure all missing information is requested in the same letter. Initiate correspondence one time only.

Processing Taxpayer Correspondence

  1. Enter a Correspondence Received Date (CR) on the 4th line of the "For IRS Use Only" box on Form 8804 when correspondence is received. Enter the "CR" date (in YYYYMMDD format) except in the following situations:

    • The reply from the taxpayer was received before the due date of the return

    • The correspondence was required because of an IRS processing error (e.g., a request for an attachment lost during processing)

    Note:

    If there is no reply enter CCC 3.

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

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

    If... And... Then...
    The "CIS" return has a Form 13596 (Reprocessing Returns) attached

    Note:

    If there is an indication on the return that correspondence has been sent (e.g., CCC "3" is edited on the return), do not route the return to Accounts Management. Continue processing the return.

    The return is not complete (e.g., missing signature, schedules or forms) Remove the return from the batch and route to Accounts Management.

    Note:

    Do not correspond for missing information on "CIS" reprocessable/reinput returns.

    The "CIS" return does not have a Form 13596 attached The return is not complete (e.g., missing signature, schedules or forms) Follow normal correspondence procedures.

Attachments Related to Form 8804

  1. Use the following instructions to process Form 8804.

    Note:

    Examine all attachments to the return being processed and take action as required by the attachment.

  2. When an attachment has an affect on the document being processed leave it attached, unless a specific instruction requires it to be detached.

    Example:

    If the taxpayer requests an address change, the entity on the front of the return should be changed and the request should be left attached to the return.

  3. Leave any approved extensions (Form 7004 - Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns) to the filer's income tax return attached to the return.

  4. If a Form 8813 (Partnership Withholding Tax Payment Voucher -- Section 1446) is attached to Form 8804, then place an "X" on the entire Form 8813, and leave it attached to Form 8804.

  5. Form 8804 is also used to transmit Form 8805 to the IRS. Form 8805 is sometimes detached from the Form 8804 and forwarded to Batching and Numbering for processing. See IRM 3.22.15.1.1.5, Form 8805 Background - Foreign Partner’s Information Statement of Section 1446 Withholding Tax before detaching any Form 8805.

    Reminder:

    When required, Code and Edit detaches the Form 8805. However, there will be an occasion or two when Service Center Replacement System (SCRS)/Rejects will have to detach Form 8805 and route it to Batching and Numbering for processing under program code 11340.

  6. If Form 8804 is received with remittance attached, immediately forward the return and the remittance to the work leader.

  7. Leave a tax deposit "MEMORANDUM RECEIPT" attached to the return.

  8. If the taxpayer has requested an attachment be returned, then photocopy the attachment and attach the photocopy to Form 8804.

  9. Enter Computer Condition Code "F" and send the attachment to the Entity Control function if the taxpayer indicates on an attachment that Form 8804 is not required to be filed for future tax years.

  10. If the taxpayer submits a return other than Form 8804 , but indicates Form 8804 should be filed, research IDRS using CFOL Command Codes or ENMOD

    Note:

    If a Form 8804 filing requirement is not found, send the return to the Entity Control function for update of the filing requirement.

  11. When the corrected return is received from Entity Control:

    1. Convert the return to the proper form.

    2. Process as required.

  12. If the taxpayer attaches a Form 2220 (Underpayment of Estimated Tax by Corporations) , Form 8804-W (Installment Payments of Section 1446 Tax for Partnerships) , or a Form 8804 Schedule A to their Form 8804 tax return to pay an estimated tax penalty, leave it attached.

Attachments Unrelated to Form 8804

  1. Requests for adjustment of another return:

    1. Remove any attachment requesting an adjustment (ADP or non-ADP)

    2. Forward to the BMF International Accounts Management Department for action.

      Note:

      "If the taxpayer inquiry meets TAS criteria and the case cannot be resolved the same day, complete Form 911 and refer to your local Taxpayer Advocate." See IRM 3.22.15.4.

  2. If the attachment does not include the taxpayer's name, address or Taxpayer Identification Number (TIN), enter this information.

  3. If the taxpayer writes a question or requests assistance on the return itself, check with your manager.

  4. If the attachment requests a Form 8813, Partnership Withholding Tax Payment Voucher (Section 1446), and its the only issue mentioned:

    1. Remove the attachment requesting the form.

    2. Forward to the BMF International Accounts Management Branch.

    3. lMPORTANT: Leave an "Action Trail" on the Form 8804, annotating the attachments removed from the Form 8804.

  5. If a tax authorization is attached to correspondence (Form 2848 or Form 8821), review the correspondence to determine if other requests are involved:

    1. If other requests are involved, photocopy the correspondence and send the copy, along with the authorization to the Centralized Authorization File (CAF) function for processing.

    2. If other requests are not involved, send the original correspondence and the authorization to the Campus CAF function for processing.

  6. Other Unrelated Attachments:

    1. Remove other unrelated attachments (such as other returns, acknowledgments, requests for tax forms, etc.) from the document being processed.

    2. Route to the proper function for necessary action.

  7. Always include the following information when forwarding documents to other functions:

    • Name and address of the taxpayer

    • Taxpayer Identification Number

    • Received Date or the words "TIMELY FILED "

    • Tax Period, type of document, and DLN from which detached

    • Action required to be taken

  8. If an attachment is removed because the majority of the information is unrelated to the Form 8804 being processed:

    • Photocopy the attachment,

    • Attach it to Form 8804,

    • Leave an "Action Trail," and

    • Route the attachment to the appropriate function.

Special Returns

  1. Use the following instructions when processing special or nonstandard returns for Form 8804.

Early-Filed Returns

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

  2. An early-filed Form 8804 for Tax Period 201712 (filed before January 1, 2018), must be held for processing in 2018.

Fiscal Year Returns

  1. Form 8804 can be filed as a fiscal or calendar year return. Generally, the tax period ending for Form 8804 will be the same as the tax period ending for Form 1065, U.S. Return for Partnership Income. A fiscal year return will have the dates written at the top of page 1.

  2. If the tax period ending month does not agree with the month ending on INOLE, then:

    • The tax period will underprint, or

    • The return will go unpostable (UPC 307)

  3. If the Fiscal year ends prior to 200412, the return must be renumbered to NMF. See IRM 3.22.15.10.1, Pre-Master File Processing of Form 8804

  4. Follow instructions under Field 01-B to resolve tax period errors. See IRM 3.22.15.21.2, Field 01-B - Tax Period

  5. Partnerships whose fiscal years began in 2012 apply the tax rates in effect in 2012 for purposes of determining the amount of section 1446 withholding tax that the partnerships must pay. This rule applies even if the partnership fiscal year ends in 2013. See Announcement 2013-30.

Delinquent Returns

  1. A return is normally delinquent if it is not received on or before the return due date.

    Note:

    However, accept the return as timely if received within the ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ See IRM 3.10.72, Receiving, Extracting, and Sorting or IRM 3.22.15.21.13, in this IRM for additional instructions.

  2. Accept a return as timely if:

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

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

  3. Consider a return timely:

    1. If it appears the Post Office might have sent it to another government agency in error (i.e., SSA - Social security Administration)

    2. If the original envelope bears a timely postmark or a timely date stamp by that agency

    3. However, if the return was erroneously addressed to another agency, it will be date stamped with the current date when the IRS receives it

  4. Consider a return timely if it is received or mailed on the next workday when the last day for filing falls on a Saturday, Sunday, or legal holiday.

  5. See IRM 3.22.15.21.13 (3) , Field 01-M - Received Date for information on the due date of Form 8804.

  6. If a return is delivered to the IRS after the date prescribed for filing, consider,

    • The postmark date stamped on the envelope as the date of delivery

    • The document as timely if the postmark date falls on or before the prescribed date for filing the return

  7. If the return is truly delinquent, check the return for attachments for an explanation of late filing, unless a pre-computed delinquency penalty has been shown. If reasonable cause for late filing is found, enter the appropriate Computer Condition Code "D or R" .

♦Compliance Secured/Prepared Returns♦
  1. Compliance functions secure returns from the taxpayer and also prepare returns if the taxpayer does not provide them.

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

    2. Secured tax returns are notated with "TC 59X" or "ICS" (Integrated Collection System) or notated "Process as Original" with an attached Form 13133, Expedite Processing Cycle. The "Delinquent Return" box on Form 13133 should be checked. If Form 13133 is attached, enter the Computer Condition Codes (CCC) that are checked on the form for Form 8804.

      Note:

      Enter CCC "R" when there is an indication on the return, such as "DO NOT ASSESS FAILURE TO FILE PENALTY" and the appropriate checkbox is not marked.

♦IRC § 6020(b) - Prepared by Collection♦
  1. When the taxpayer fails to 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 located in the center bottom of Page 1 of the return.

    1. Returns must have a Received Date. If no Received Date is present per the Compliance Function, follow the normal procedures for editing the Received Date.

    2. The returns or an attached Form 13496, "IRC § 6020(b) Certification Form " must be signed by Compliance. If not, route to Compliance using Form 4227.

    3. Enter CCC "4" .

      Note:

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

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

    5. Enter CCC "W" if the Received Date is more than 2 years and 9 months after the Return Due Date. Do Not send the return to Statute Control.

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

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

    2. Correspond for conditions that cannot be processed (e.g., missing signatures, missing schedules, etc.).

    3. Enter CCC "W" if the Received Date is more than 2 years and 9 months after the Return Due Date. Do Not send the return to Statute Control.

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

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

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

    3. If Form 13133 is attached, enter the Computer Condition Codes that are checked on the form.

      Note:

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

    4. Enter CCC "W" if the Received Date is more than 2 years and 9 months after the Return Due Date. Do Not send the return to Statute Control.

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

    1. Correspond for conditions that cannot be processed (e.g., missing signatures, missing schedules, etc.).

    2. Enter the Computer Condition Codes that are checked on Form 13133.

      Note:

      CCC "X" (Hold Credits on Module) is not valid for Form 8804.

    3. Enter CCC "W" if the received date is more than 2 years 9 months after the Return Due Date. Do Not send to Statute Control function.

♦Frivolous Returns and Claims♦
  1. A frivolous argument is used for the purpose of expressing dissatisfaction with the substance, form or administration of the tax laws by attempting to illegally avoid or reduce tax liabilities. Recognized frivolous arguments made by businesses include, but are not limited to, the examples in IRM 25.25.10, Frivolous Return Program, shown in Exhibit 3.22.15-11, Potential Frivolous Arguments for Examination Review

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

    If... Then...
    The return meets any of the conditions identified as a frivolous return. (See Exhibit 3.22.15-10, 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, indicated 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 indicating a frivolous return.

    Note:

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♦Criminal Investigation (CI) Referral♦

  1. Criminal Investigation (CI) investigates potential criminal violations of the Internal Revenue Code (IRC) and related financial crimes. Criminal violations of the IRC include willful attempts to evade or defeat the income tax. Criminal tax violations also include the willful failure to collect or pay over tax and false claims for refunds based on bogus return information.

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

    Caution:

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

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  3. Other CI Referral Criteria:

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

    Caution:

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

    1. Make a copy of the return.

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

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

      Cincinnati Ogden Kansas City
      Mail Stop 83G, Criminal Investigation (CI) Mail Stop 9001, Criminal Investigation (CI) Mail Stop S2 9000, Criminal Investigation (CI)
    4. Edit an action trail "Copy to CI" , or "CI Referral" , or similar language in the lower left corner going vertically up the side of the return.

    5. Continue processing the return.

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

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

♦Examination (Exam) "Funny Box"

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

Re-Entry Document Procedures

  1. A return posted to the wrong account or module, or, attempting to post, must be reprocessed to post to the proper account or module. A Re-entry document is referred to as:

    • A Re-input return (a return that has not posted to the master file, e.g., unpostable).

    • A Re-processable return (a return that has posted to the master file, e.g., return posted to the wrong account or module).

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

    • Form 3893 is used to reinput documents

    • Form 13596 is used to reprocess documents.

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

    Exception:

    If the return is more than 2 years and 6 months after the return due date, do not use Form 3893 or Form 13596 reprocessing procedures. Route return to the Statute Control Unit following statute procedures.

  4. Examine Form 3893 and/or Form 13596 to determine the action needed to make the return processable.

    If... Then...
    Form 3893 or Form 13596 is missing
    1. Enter CCC "U" in error register Field 01-L.

Validity Errors

  1. The three general types of errors that will cause a record to print on the Error Register are:

    • Field Validity Errors

    • Section Validity Errors

    • Math/Consistency Errors

Field Validity Errors

  1. These errors result when required data is missing, or when incorrect data is present.

  2. These errors are indicated by an asterisk (*) printed before the invalid field.

  3. An asterisk may also be printed before a field for verification purposes.

    Note:

    This is also known as "look-see" condition, when the computer wants you to "look and see" if data should be entered into a particular field, or verify that the data in the field should be there, and if so, if it is correct. If everything is correct and there is no other error, use Action Code "7" to clear the record. If there is another error, no special action is required for this "look-see" condition.

  4. Correction procedures:

    1. Compare the return entry with the Error Register field.

    2. Enter Action Code "6" .

    3. Line out the incorrect field.

    4. Enter the correct data immediately above the lined-out data.

Section Validity Errors

  1. These errors include:

    • Missing data (missing section)

    • Extraneous data

    • Integrated Submission and Remittance Processing (ISRP) errors

    • Terminus errors

Correcting Section Validity Errors
  1. Compare the section(s) entry with the Error Register fields.

  2. Line out each incorrect field and enter the correct data immediately above the lined-out data.

  3. Enter Action Code "6" .

  4. If no error is found, use Action Code "7" to clear the Error Register.

    Note:

    Before using Action Code "7" be sure to first look at the specific correction information under the particular error condition.

  5. For Terminus Errors, if a return entry is truly larger than the maximum size field acceptable for computer processing,

    1. Reject the return record with Action Code "3" .

    2. Attach Form 4227 with an explanation.

Missing Section Errors
  1. The computer will generate a section with all fields "blank" and an asterisk will appear to the left of the Section Number.

  2. If there is Data to be entered into a field, enter it (changing the field breaker, only if required). If there is no data and no other error appears on the record, use Action Code "7" .

    Note:

    Be sure no field in the section requires data before clearing the record, or the record will loop. Read the section data in the IRM to determine what is required.

Extraneous Section Errors
  1. Extraneous section errors are caused by the transcription of an unnecessary section.

  2. These errors are indicated by one pound sign (#) preceding the section number.

  3. Delete the Extraneous section with Action Code "4" . Be sure the extraneous section was not entered in place of another section that is missing and required for the record. Examine the Register.

ISRP Errors
  1. ISRP errors are caused when too many characters have been entered for a field.

  2. Extra characters are dropped when the data is converted to Error Register format.

  3. These errors are printed to the left of the Section Number and will be shown on the Error Register as described in (4), (5), (6) and (7) below:

  4. "#1" : Split screen transmission.

    1. The Key Verifier attempted to change Check Digit

    2. The Key Verifier changed four or more digits of TIN

    3. The Original Entry operator entered required Section as "missing"

  5. "#3" : Invalid Section ending point.

  6. "#4" : Invalid field length.

  7. "#5" : Questionable section. A section was entered twice or entered out of sequence by ISRP.

  8. Examine each field in the section with the error notation. If there is no error, use Action Code "7" to clear the record.

Terminus Errors
  1. Terminus errors are caused when a non-numeric character is entered in a numeric field or when the format of a section is incorrect.

  2. These errors are identified by two asterisks (**) printed to the left of the section number.

  3. If you enter or correct data in a field in the Terminus section with Action Code "6" , or delete the section with Action Code "4" , because it is not needed and it re-appears on Loop with the "**" still before the section number, it will be necessary to re-input the document using Form 3893, and a "2-R" on the rejects register. SCRS will have to reject such a record.

    Note:

    Action Code "7" will not clear the Terminus condition, even if there is no error on the Loop register.

Math/Consistency Errors

  1. Math/consistency errors are caused when the computer computation differs from the taxpayers computation or the transcribed amount.

  2. Math Errors occur when:

    1. There is a transcription error

    2. The taxpayer reports more entries than can be transcribed

    3. The taxpayer makes a mistake in a calculation

  3. When a Math Error occurs,

    1. The computed amount in question will underprint with the computer's calculation

    2. The "Manual Correction" field is Field 03-A.

  4. Use the "Manual Correction" field to bypass the math check on a loop. Use Action Code "0 " .

  5. If the transcription is correct, use Action Code "6" to enter the computer's calculation in the "manual correction" field.

  6. If the computer cannot compute the amount correctly. Then:

    1. Verify the taxpayer's computation.

    2. Enter Action Code "6" to enter the verified total into the "Manual Correction" Field 03-A.

  7. To correct math/consistency errors:

    1. Compare the transcribed amount listed above the underprinted figure on the Register to the Form 8804 to ensure the information was accurately transcribed.

    2. If the transcription is correct, and the error is within tolerance, bring up the underprinted amount into the Manual Correction field. Use Action Code "0" .

    3. If the transcription is correct, and the error is not within tolerance, use Action Code "6" to enter the correct amount in the "Manual Correction" field.

    4. Always leave a working trail to ensure that any correction made on the Error Register is also made to the return itself.

Error Correction

  1. Error Register fields are identified by a letter designation in the left most position of the field.

  2. The designators are listed in the appropriate section in this IRM.

  3. On the Error Register, an asterisk "*" designates an invalid field.

    Note:

    Any field may be corrected even if not designated invalid.

  4. When making corrections to the Error Register, the correction must also be made to the corresponding area on the return.

  5. When an invalid or math error condition is indicated, determine whether correction of the transcription errors resolve the situation.

Correcting Invalid Correction Attempts

  1. An invalid correction attempt error is caused by:

    • An incorrect entry on the Error Register

    • A ISRP error when transcribing data from the Error Register

  2. A complete description of invalid attempts may be found in IRM 3.12.38, BMF General Instructions for Campus Error Resolution.

  3. When an invalid correction attempt is detected, "AA" is printed to the right of the Batch Number on the Document Identification Line of the Loop Register.

    Note:

    If the document is unprocessable, use Action Code "3" to send it to Rejects.

  4. If the cause of the invalid correction attempt can be determined, correct the Loop Register as if no attempt had been made to correct it before.

    Note:

    It may be necessary to examine the correction made on the prior Error Register.

  5. If the cause of the invalid correction attempt cannot be determined, enter Action Code "7" .

    Note:

    Not every invalid correction attempt that causes the "AA" to appear on the Error Register results in an error that requires correction. Many such invalid correction attempts do not appear on the register at all. Transcription enters more data into the computer that appears on the Error Register, and it is this other data that is causing the "AA" to appear.

Unprocessable Returns

  1. When perfection of a return is not possible, reject the return.

  2. Review for unprocessable conditions.

Illegible or Missing Data

  1. To correct illegible or missing data use the following procedures:

    IF... THEN...
    the error condition involves an Illegible or Missing Name and/or Address, and the required data cannot be perfected through research of the document,
    1. Enter Action Code "3" .

    2. Re-charge the return out of the block.

    3. Prepare Form 4227, attach it to the return, and

    4. Route it to the Rejects unit.

  2. Rejects inputs a Notice of Action on the Master File as discussed below by using IDRS Command Code REQ77/FRM77.

    • When an unprocessable return is rejected and sufficient information is available: enter Transaction Code (TC) 599 and enter Closing Code "17" to defer the normal delinquency check.

    • When the EIN, Name Control, MFT, and Tax Period are present; enter TC 599 and enter Closing Code "17"

Processing Form 8804 - Error Register and General Information

  1. Form 8804 appears on the Error Register (not the ERS terminals) and there is no electronic filing.

  2. The Form 8804 Error Register can contain up to three sections: 01, 02, and 03.

  3. These returns are processed at the Ogden Submission Processing Campus.

  4. All editing is completed on the return.

  5. The Extension request form is Form 7004. Prior to 01/01/2006, the extension request used was Form 2758 (Application for Extension of Time to File Certain Excise, Income, Information, and Other Returns becoming Historical effective 09/21/2006).

  6. The Document Locator Number (DLN) for Form 8804 is as follows.

    • The "File Location Code (FLC) must be 98 (if PSPC) or 60 (if OSPC)"

      Note:

      Do not renumber to "66 or 78" if a U.S. Possession address, or "28 or 29" if a domestic address on Form 8804.

    • The Tax Class "1"

    • The Document Code "29"

    • The Blocking Series "000-999"

    • The MFT Code "08"

    • The Program Code "11340"

  7. The earliest valid tax period is 200412. Prior to 200412, the return is processed through Non Master File. The valid months are 01-12.

Section 01: Form 8804

  1. Section 01 alpha field designators, maximum field lengths, titles and return locations are as follows:

    Field Reference Field Length Field Title Field Location on Form 8804 Return
    01-A 12 Remittance Amount Remittance amount is documented in the margin to the right of Line 10, Page 2

    Note:

    Green Rocker

    01-B 6 Tax Period Appears to the left of the printed tax year
      2 Tax Period Underprint  
    01-C 4 Name Control Line 1a
      4 Name Control Underprint  
    01-D 9 TIN Line 1b
    01-E 1 Books and Records CKBX Appears to the right of CKBX above Line 1b
    01-F 35 In Care of Name Line Line 1c
    01-G 35 Foreign Address Line 1c
    01-H 35 Address Line 1c
    01-I 22 City or Town Line 1d
    01-J 2 State or Province Line 1d
    01-K 12 Zip Code or Foreign Postal Code Line 1d
    01-L 10 CCC Inside "For IRS Use Only" box - CC line
    01-M 8 Received Date Inside "For IRS Use Only" box - RD line
    01-O 8 Correspondence Received Date Inside "For IRS Use Only" box - CR line
    01-P 1 Entity Underprint Code  
    01-Q 6 TPNC Appears at the upper TOP left of Form 8804
    01-R 9 Preparer's PTIN (Preparer Tax Identification Number) On page 2 Signature area, PTIN box
    01-S 9 Preparer's EIN On page 2 Signature area, Firm’s EIN box
    01-T 10 Preparer's Phone Number On page 2 Signature area, Phone NO. box
    01-U 7 Foreign Partner Count Line 3a
    01-V 7 Form 8805 attached to Form 8804 Line 3b
    01-W 7 Form 8804-C attached to Form 8805 Line 3c
    01-X 8 Tax Year Beginning date Appears at the upper left of the Form 8804, just above the form’s name.

Field 01-A - Remittance Amount

  1. Field 01-A is a 12 position money field that may be present.

  2. The valid characters are numeric 0-9, or blank.

  3. It is entered into the margin to the right of Line 10, Page 2.

  4. It is entered in dollars and cents, and must be positive.

  5. The field shows the amount of remittance paid with the return that is not already in the module.

  6. This is a fixed field which cannot be corrected with Action Code "6" . If there is an error, reject using AC "3" . Rejects will re-input the return with the correct amount of remittance on the Form 3893 (in the "credit" box).

  7. The field is invalid if the total tax amount is not present in Field 02-P, or if the total tax field underprints "zero."

    Note:

    Entering the correct total tax amount into Field 02-P eliminates the invalid condition. If there is no tax and the remittance is for penalty or interest only, enter a "1" into Field 02-P.

Field 01-B - Tax Period

  1. Field 01-B is a 6 position field that must be present. The tax period is on the preprinted label or edited in the upper right corner of the return, and to the left of the pre-printed year in YYYYMM format.

    Exception:

    Do not enter the Tax Period on current calendar year returns because the computer Auto-generates the tax period.

  2. Valid characters are numeric 0-9.

  3. Field 01-B is invalid if any of the following is present:

    • Field 01-B is blank

    • The month is not in the range of 01-12

    • The tax period is for a future period (later than the register date)

    • The tax period is a month or less in the future

    • The tax period is prior to 200412

  4. Form 8804 may be filed for either a calendar or fiscal year.

    Caution:

    Do not send any Form 8804 to Statute Control.

  5. The field underprints if the month in the tax period disagrees with the month in the module.

    If... Then...
    The tax period is prior to 200412,
    1. Reject the return (and any Form 8805 attached to the return) and transship to the CSPC for re-numbering to Non-Master File (NMF).

    2. Prepare Form 4227 with the notation PRE 200412 Form 8804 RETURN - PROCESS VIA NMF.

    3. Forward return to CSPC Accounting Branch for processing:
      Internal Revenue Service
      Cincinnati, Ohio 45999–0005

    Caution:

    If the tax year on Form 8804 begins with January 2004, or later, and ends before December 31, 2004, (200412) because it is a final return, then change the tax period to 200412. Be sure CCC "F" is present in Field 01-L. Do not send Form 8804 to be re-numbered for NMF processing.

    The tax period is not entered correctly
    1. Line through the error on the register.

    2. Enter the correct tax period.

    3. Enter Action Code "6" to the left of Section 01.

    4. Enter "2" in Field 01-P.

    The tax period on the register agrees with the return
    1. Research INOLE and ENMOD for the correct Fiscal Year Month (FYM).

    2. Correspond with the taxpayer for the correct FYM period using Letter 3653C (Foreign Trust Return Processing).

    3. If a new TIN account, forward the return to Entity Control Unit for input of a TC 016.

    4. Enter the corrected tax period in Field 01-B.

    5. Enter "2" in Field 01-P.

    The tax period ends on one of the first three days of a month
    1. Enter the tax period and using the previous month in Field 01-B.

      Example:

      If the tax period ends May 3, 2008 then enter "200804" in Field 01-B.

    2. Enter "2" in Field 01-P.

    The tax period is later than the current date and the return is a Final Return
    1. Change the month in the tax Period to the month prior to the current month.

    2. Enter CCC "F" in Field 01-L, if not present.

    3. Enter "2" in Field 01-P.

    The tax period is later than the current date and the return is not a Final Return
    1. Reject with Action Code "3" .

    2. Prepare Form 4227 with annotation "EARLY FILED RETURN" .

    1. It is an initial filing, research BMFOLI to see if there are previous year(s) posted for MFT 08. If posted,

    2. If no previous Form 8804 return is posted,

    1. Enter "2" in Field 01-P.

    2. SCRS will reject to have Entity input a TC 016 to change the tax period.

    It is not an initial filing and the final Form 1065 return has posted with a matching tax period. Research BMFOLR to see if there is an "F" in the alpha condition codes field. If present,
    1. Enter an "F" in Field 01-L.

    2. Enter a "2" in Field 01-P

    3. Edit Action Code "6" to the left of Section 01.

    It is not an initial filing and the final Form 1065 return has not posted with a matching tax period, Correspond with the taxpayer for clarification of the tax period with the 3653C Letter.
Tax Period Underprint
  1. This is a 2 position field for use when the transcribed tax period month requires correction.

  2. When this field is underprinted, be sure to enter the correct FYM (01-12) to resolve the error.

    Note:

    Correspond with the taxpayer for clarification of the Fiscal Year Month (FYM) using IDRS letter 3104C when necessary.

  3. Enter Action Code "6" to the left of Section 01.

Field 01-C - Name Control/Check Digits

  1. Field 01-C is a 4 position field which must be present.

  2. Valid characters are alpha (a-z), numeric (0-9, ampersand (&), hyphen (-) and blank).

    Exception:

    Alpha characters "E" "G" and "M" are not valid Check Digit characters.

  3. This field is a fixed field (no field breaker). If it is necessary to enter a name control, the number of unused spaces must be accounted for by entering the number of unused spaces in a circle immediately after the entry.

    Figure 3.22.15-2

    This is an Image: 37643004.gif
     

    Please click here for the text description of the image.

  4. The name control is derived from the name on Line 1a.

    Note:

    Use the name control from the name on Line 2a, if Line 1a is blank.

  5. The name control of a partnership name showing multiple names is from the first 4 letters of the first partner’s last name.

    Example:

    Robin Melon and Daisy Apple Partnership
    The name control is "MELO."

    Exception:

    The online application cannot distinguish a partner's name (first or last name) from a business (trade) name. Therefore, corporate name rules (first four characters entered in the legal name field) are applied to all partnership entities established over the internet.

  6. If the field underprints with a different name control ( not "XXXX" ):

    1. Be certain that the Name Control and EIN (Field 01-D) are entered correctly.

    2. If transcribed incorrectly, enter the correct name (or EIN). If the correct name control is different from the underprint, enter a "1" into Field 01-P (Entity Underprint Code).

    3. If the name control (and EIN) are transcribed correctly, research for a correct EIN using NAMEE and/or NAMEB. If no record, reject using Action Code"3" . Rejects will send it to Entity.

  7. If the name control underprints with "XXXX:"

    1. Be sure that the Name, EIN and Name Control were correctly transcribed.

    2. Research NAMEE, NAMEB and INOLE for the correct name and/or EIN or to determine how the name and name control should appear on the Error Register to match the Business Master File (BMF).

    3. If the EIN is in orange ink (assigned by Entity) or purple ink (assigned by Entity Unpostable), be sure it was transcribed correctly and enter a "1" into Field 01-P.

      Note:

      Also enter the Entity assignment date (located next to the EIN in orange ink) into Field 01-O, if the return is processed after the due date.

    4. If research provides a good EIN, enter it and issue Letter 3875C. Also, be sure the name control is entered correctly and input a "1" into Field 01-P.

    5. If after research you cannot determine the correct name control or a good EIN is not found, reject case using Action Code "3." Rejects will send the return to Entity.

  8. If check digits are present in Field 01-C and you change the EIN in Field 01-D, you must also change the check digits to the correct name control. Check digits are derived from the numbers of the EIN, so if the EIN is changed, the check digits are no longer valid.

  9. A check digit must have blanks in the first 2 positions and a letter other than "E" , "G" or "M" in the last 2 positions.

  10. Never re-enter check digits, even if they seem correct. When Field 01-C must be corrected, you must enter the name control.

  11. For complete information on BMF name controls, refer to Document 7071-A, BMF Name Control Job Aid.

Name Control Underprint
  1. The Name Control Underprint is a 4 position field that is used when the transcribed name control requires correction.

  2. The following If/Then table is to be used to correct the name control underprint.

    If... Then...
    The name control is underprinted, Check Form 8804, Line 1a to see if the name was correctly transcribed, and Line 1b to see if the EIN was correctly transcribed.
    The name and EIN were correctly transcribed, Research NAMEE, NAMEB and INOLE for correct name and/or EIN.
    After research you cannot determine the correct name control, Reject case using Action Code "3" . Rejects will send to Entity.

Field 01-D - Employer Identification Number (EIN)

  1. Field 01-D is a 9 position field which must be present .

  2. The valid characters are numeric 0-9.

  3. The only TIN that is valid on Form 8804 is an EIN.

  4. The Employer Identification Number format is "NN-NNNNNNN " . The first two positions of the EIN are not invalid if it begins with these numbers; "00, 07, 08, 09, 17, 18, 19, 28, 29, 49, 78, 79, or 89."

  5. The EIN in field 01-D is located on Line 1b (or possibly on Line 2b in lieu of 1b).

    Reminder:

    Anytime you change the digits of an EIN, look at Field 01-C. If check digits are present, they must be changed to the name control. Check digits are derived from the numbers of the EIN, so if the EIN is changed, the check digits are no longer valid.

    If... And... Then...
    The EIN is missing, illegible or has more or less than 9 digits   Review any attachments for a good EIN. If none is found, research NAMEE and NAMEB.

    Note:

    If the taxpayer did not include sufficient data in line 1, then use the information on Line 2.

    A good EIN is found,  
    1. Enter EIN in Field 01-D.

    2. Send IDRS Letter 3875C.

      Reminder:

      Do not send Letter 3875C if three or less digits of the EIN are transposed, different or missing or when INOLES indicates the account has been "merged to" or "merged from"

    Note:

    If the name control is also underprinting, be sure the name control is entered correctly, and enter a "1" into Field 01-P.

    A good EIN is not found,   Reject using Action Code"3" . Rejects will send it to Entity.
    There is more than one EIN on the return,  
    1. Research INOLE to determine if one of the EINs is correct.

    2. Enter the correct EIN in Field 01-D.

    Both EINs are for the same partnership,   Reject using Action Code"3" . Rejects will send it to Entity.
    A Social Security Number (SSN), Individual Taxpayer Identification Number (ITIN) or Preparer Tax Identification Number (PTIN) is present,  
    1. Research NAMEB and NAMEE for an EIN.

    2. If and EIN is not found, Reject using Action Code"3" . Rejects will send the return to Entity.

    The EIN contains any of the following conditions:
    • Illegible;

    • Missing:

    • Other than 9 digits;

    • All zeroes; or

    • All nines

    Cannot be determined from attachments or schedules,
    1. Research IDRS.

    2. If EIN is found, enter in Field 01-D and on the return.

    3. Issue IDRS Letter 3875C.

      Reminder:

      Do not send Letter 3875C if three or less digits of the EIN are transposed, different or missing or when INOLES indicates the account has been "merged to" or "merged from"

    "PENDING" , "APPLIED FOR" , etc., is indicated in the EIN area,  
    1. Research IDRS.

    2. If EIN is found, enter in Field 01-D and on the return.

    3. If EIN is not found, route to Entity Control.

  6. If a return is received with no EIN and Entity has assigned an EIN, enter the Entity Assignment Date into the Correspondence Received Date field (CR) located in the "For IRS Use Only" box on Form 8804 and in Field 01-O.

    Caution:

    Only enter this date if the Entity Assignment date is after the Return Due Date.

Field 01-E - Books and Records Checkbox - Outside the U.S. and Puerto Rico

  1. Field 01-E is a 1 position field that may be present.

  2. The valid characters are "1" and "blank."

  3. The "Books and Records" checkbox is located in the upper right corner of Form 8804, directly under the pre-printed tax year.

  4. If the checkbox is checked, it indicates that the partnership keeps its books and records outside the United States and Puerto Rico. This changes the Return Due Date (RDD) from the 15th day of the 3rd month, to the 15th day of the 6th month after the end of the partnership’s tax year.

  5. If Field 01-E contains a number other than "1," look to see if it can be a misplaced entry. Also determine if the "1" is necessary in this field by looking at the actual checkbox on Form 8804.

Field 01-F - "In Care of" Name Line

  1. Field 01-F is a 35 position field that may be present. If the "In-Care-of" Name is present, then enter it in Field 01-F.

  2. The valid characters are alpha (a-z), numeric (0-9), ampersand (&), percent (%), hyphen (-) and slash (/).

    Note:

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

  3. Field 01-F is invalid if any of the following conditions are present:

    • The first position is blank

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

    • There are two consecutive blanks between significant characters

  4. Correct Field 01-F using the following procedures:

    If... Then...
    A blank is in the first position,
    1. Delete blank.

    2. Enter the "in-care-of" name beginning with an alpha or numeric in Field 01-F.

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

    2. Enter the "in-care-of" name beginning with an alpha or numeric in Field 01-F.

    Two consecutive blanks are present between significant characters, Delete any unnecessary blanks in Field 01-F.

Field 01-G - Foreign Address

  1. Field 01-G is a 35 position field that may be present.

  2. Ogden Submission Processing Campus works all foreign/international addresses and U.S. Possessions/Territories returns.

    Exception:

    BMF NMF Form 8804 must be sent to Cincinnati Processing Campus.

  3. The valid characters are alpha (a-z), numeric (0-9), dash/hyphen (-), slash (/) and blank.

    Reminder:

    Training Pub 2324-002 International: Coding and Editing BMF Returns (Foreign Address Job Aid) .

  4. Field 01-G is invalid if any of the following conditions are present:

    • The first position is blank

    • Any character follows two consecutive blanks

    • There are more than 35 characters in the field

      Note:

      ISRP is instructed to input a pound sign (#) as the 35th character if there are more than 35 characters present for this field on the return. If the foreign address is longer than 35 characters, continue the address into Field 01-H.

    Figure 3.22.15-3

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  5. The determination of a foreign address is based only on the address of the partnership.

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

    2. All U.S. Possessions/Territories are considered foreign for processing purposes.

  6. A foreign address contains:

    • Street address or P.O. Box

    • City or town name

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

    • Postal code, if present can be before or after the city, town, province, state, county, etc. name but always before the foreign country

    • Foreign country

  7. See Document 7475 (State and Address Abbreviations, Major City Codes (MCCs), Countries and ZIP Codes) for the appropriate abbreviation if the address contains a state, province or territory from any of the following countries:

    • Australia

    • Brazil

    • Canada

    • Cuba

    • Italy

    • Mexico

    • The Netherlands

  8. Returns with an address in a U.S. Possessions/Territories are considered foreign returns for processing purposes but are entered in the same way as domestic addresses.

    1. A two-character alpha code must be entered in Field 01-J for the possession/territory name.

    2. A ZIP Code must be present for U.S. Possessions/Territories. See Exhibit 3.22.15-9

    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 Islands (U.S.) VI
  9. The U.S. Postal Service established new address requirements for Army Post Office (APO), Fleet Post Office (FPO), and Diplomatic Post Office (DPO) addresses. If the old address appears (i.e., APO New York, NY 091XX), 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 conversion chart below:

    ZIP Code Address Country APO/FPO Address
    34000-34049 APO Americas APO AA [ZIP Code]
    34050-34099 FPO Americas FPO AA [ZIP Code]
    340XX-340XX DPO Americas DPO AA [ZIP Code]
    090XX-094XX
    096XX-098XX
    APO Europe APO AE [ZIP Code]
    095XX FPO Europe FPO AE [ZIP Code]
    090XX-098XX DPO Europe DPO AE [ZIP Code]
    962XX-965XX
    98700-98759
    APO Pacific APO AP [ZIP Code]
    966XX and
    98760-98799
    FPO Pacific FPO AP [ZIP Code]
    962XX-966XX DPO Pacific DPO AP [ZIP Code]

Field 01-H - Address

  1. Field 01-H is a 35 position field that must be present .

  2. The valid characters are alpha a-z, numeric 0-9, dash/hyphen (-), slash (/) and blank.

  3. Field 01-H is invalid if any of the following conditions are present:

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

    • The first position is blank

    • Any character follows two consecutive blanks

    • There are more than 35 characters present in the field.

    Note:

    ISRP is instructed to input a pound sign (#) as the 35th character if there are more than 35 characters present for this field on the return.

  4. When entering either the mailing address or location address information, remember the following guidelines:

    1. Ensure that a house or building number is present.

    2. Always input the suite, apartment number, room number, etc. at the end of the street address line.

    3. If present, always input the street suffix, such as street, drive, lane, terrace, etc... (See Document 7475).

    4. If present, always include the direction information, such as North, South, East, West, etc.

    5. If the name of a street is also a direction and a direction is present, abbreviate the direction only and not the name of the street.

      Example:

      1234 West South Street would be entered as 1234 W South St.

  5. Enter Action Code "6" to the left of Section 01, when correcting the address.

    If... Then...
    Address is more than 35 characters Abbreviate the address if necessary.
    The first position is blank All positions must be blank.
    Street address is in error and a valid Major City Code is present Correct by entering the entire name of the city in Field 01-I (i) and the State Code in Field 01-J. (See Document 7475)
    If no street address or P.O. Box is provided Enter the word "Local" on the street address line.

    Note:

    This should occur in very small towns only.

Field 01-I (i) - City

  1. Field 01-I is a 22 position field that must be present.

  2. When a foreign address is present, enter the foreign country code in Field 01-I. See Document 7475, Section 6 for a list of valid foreign country codes.

  3. Valid characters are alpha and blank.

  4. Field 01-I is invalid if any of the following conditions are present:

    • The first position is blank

    • Any position contains other than a blank or alpha

    • Any character follows two consecutive blanks

    • The Major City Code does not match any of the valid codes in the Major City Code Table

      Note:

      Certain cities within each state are designated Major Cities and are assigned a special code of two alpha characters. ISRP enters the Major City Code as appropriate. This code represents the city and state and is transcribed on the error record with no intervening blanks and no other characters in the City field either before or after the code.

    • Foreign country code is not valid or Field 01-I contains "XX"

    If... Then...
    A Major City Code is used Field 01-I must be present.
    Field 01-I contains an error Check to see if the Major city code is correct.
    Field 01-I is not valid and a Major City Code cannot be determined Enter the entire city name in Field 01-I.
    A Major City Code is not used and Field 01-I is present Field 01-J (state) must be present.
    A foreign address is shown on the return Enter the appropriate foreign country code in Field 01-I (See Document 7475, Section 5).
    Field 01-I contains an incorrect country code or "XX " Enter the appropriate foreign country code in Field 01-I (See Document 7475, Section 5).

Field 01-J - State

  1. Field 01-J is a 2 position field that must be present.

  2. The valid characters are:

    • Alpha (a-z) and must be on the list of valid state codes

    • Period ("." ) followed by a Blank space for foreign addresses

    Caution:

    This field can never be completely blank.

  3. If the address is one of the U.S. states or a U.S. Possession, enter the valid state code from the list of valid state codes. See Document 7475.

    Note:

    Since there is no state code for a foreign country, enter a period (.) and a blank (which is a "1" in a circle – to indicate a blank space) into the first position of Field 01-J to take the place of the state code.

    Figure 3.22.15-4

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Field 01-K - ZIP Code

  1. This is a 12 position field that must be present for all U.S. and U.S. possession addresses. It must not be present for other foreign addresses.

  2. The valid characters are numeric (0-9).

  3. A minimum of five (5) digits must be entered when required, but up to 12 digits can be entered.

  4. Invalid conditions are:

    • Field 01-K is blank and there is an entry in Field 01-J

    • Field 01-K is present and a period is present in Field 01-J

    • The zip code in Field 01-K does not agree with the state code in Field 01-J.

  5. The only ZIP Codes that can be entered in Field 01-K are for U.S. states and U.S. Possessions/Territories.

  6. Postal codes from any foreign country can not appear in Field 01-K. Postal codes are part of the foreign address. See IRM 3.22.15.21.7

    If... Then...
    The address is a U.S. address and Field 01-K is missing, or incomplete
    1. Research the ZIP Code Directory.

    2. Enter the correct zip code in Field 01-K.

    The ZIP Code is for a U.S. Possession/Territory and there is a period in Field 01-J
    1. Delete the period from Field 01-J.

    2. Enter the appropriate state code abbreviation for the possession/territory in Field 01-K. ( See Document 7475)

    3. Delete the name of the U.S. Possession/Territory if present in another field.

    Field 01-K is present and there's a period in Field 01-J
    1. Review the return to determine if there is a foreign address.

    If a foreign address is present on the return
    1. Delete entry from Field 01-K.

    2. Delete city from Field 01-I, if present, and enter the appropriate country code. See Document 7475, Section 5.

    A foreign address is not present on the return
    1. Delete the period from Field 01-J.

    2. Enter the appropriate state code in Field 01-J. See Document 7475.

    Figure 3.22.15-5

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    Please click here for the text description of the image.

  7. The only foreign zip code that can be entered into the zip code field is the Zip code of a U.S. possession. No Postal Code from any other foreign country can appear in the zip code field.

  8. Foreign "ZIP" codes (called Postal Codes) cannot be present in this field, but should appear as part of Field 01-H (if space is available).

  9. See Document 7475, which also contains a list of ZIP codes.

  10. Depending on the addressing conventions of a foreign country, a foreign Postal code can be entered at the end of the address line or be included as part of the foreign address.

  11. If there is a period and space in the state code field, then the entry in the Zip code field will be invalid. If the Zip code is that of a U.S. possession, then change the state code entry to the state code for the possession and delete the possession name if it appears in another field. If the Zip code is that of a foreign country, blank the Zip code field and enter the Zip code into the address field.

Field 01-L - Computer Condition Code

  1. Field 01-L is a 10 position field that may be present.

  2. The valid characters are: "A" , "D" , "E" , "F" , "G" , "O" , "Q" , "R" , "S" , "V" , "W" , "X" , "Y" , "3" , "4" , and "7" .

  3. The CCC is entered onto the return on the "CC" line in the "For IRS Use Only" box in the upper, right corner of the return, under the EIN box.

  4. Leave "blank" if no CCC is required.

    CCC Description
    A Schedule A (Form 8804) is attached but no penalty was computed.
    D Partnership provided reasonable cause for waiver of the failure to pay penalty.
    E Credit elect or penalty payment is to be applied.
    F Partnership indicates that they will not file this return in the future (final return). Filing requirement for the return is removed.
    G Amended, corrected or superseding return. If there is any question that the return is an amended return, research BMFOLT (MFT 08) for a TC 150 present in the module for the tax period. If there is a TC 150, it is an amended return. If a TC 150 is not present, process the return as an original.

    Reminder:

    If you enter CCC "G" for an amended return, you must delete the following: Section 02, Fields 01-E, 01-F, 01-G, 01-H, 01-I, 01-J, and 01-K. In Field 01-L, only CCC "G" (and "W" if needed) can be present.

    O A pre-settlement manual refund was issued.
    Q Manual computation of the tax was completed due to a math error on the return.
    R Indicates a delinquent return with reasonable cause. The failure to file penalty is not assessed.
    S An overpayment (refund) appears on Form 8804 and the taxpayer does not specify application of the overpayment to the subsequent period.
    V Reasonable cause to waive the Daily Delinquency penalty. The daily penalty will not be assessed.
    W Return cleared by Statute Control Unit.

    Reminder:

    If the tax period is prior to 200412, then Form 8804 must be re-numbered and processed to NMF. Do not send it to Statute Control for clearance.

    X Generates a TC 570 to freeze the tax module. Used when doing credit transfers, etc. or may be necessary in certain "No Reply" conditions. Will not allow the refund to be issued.
    Y Accepts a return as filed (e.g., short period return)
    3 Indicates that there was a No Reply to correspondence.

    Caution:

    CCC 3 cannot be present if there is an entry in Field 01-O (Correspondence Received Date). Determine the correct entry and delete the other.

    4 Indicates the return was prepared by the IRS under IRC § Section 6020(b).
    7 Reasonable cause for failure to file timely was considered and denied.

    Caution:

    When using CCC "7" , do not use CCC "D" or "R" .

Field 01-M - Received Date

  1. Field 01-M is an 8 position field that must be present.

  2. The received date may be stamped onto the middle of the return or may be entered on the "RD" line in the "For IRS Use Only" box in the upper, right corner of the return.

  3. The Return Due Date (RDD) for Form 8804 is the 15th day of the 3rd month after the end of the partnership’s tax year (April 15 for YYYY18). The RDD is the 15th day of the 6th month after the end of the partnership’s tax year (June 15 YYYY18) if Field 01-E has a "1" (books and records kept out of the U.S. and Puerto Rico).

  4. Valid conditions for Field 01-M are:

    • Must be in YYYYMMDD format

    • Must be all numeric (0-9)

  5. Field 01-M is invalid when any of the following conditions are present:

    • Field is blank or contains less than 8 digits

    • It is not in the proper YYYYMMDD format

    • It is a future date

    • Field is prior to the tax period

    • The month is not 01-12, or the day is not 01-31, depending upon the month

    Month Day
    01, 03, 05, 07, 08, 09, 10 and 12 01-31
    04, 06, 09 and 11 01-30
    02 01–28 (29 in leap year)

    Note:

    Sometimes, especially in the beginning of the year, the date will show the correct day and month, but the previous year, due to a stamping error in Numbering. Change it to the current year (look at the signature date, attachments, postmark date etc. to help determine the correct year).

  6. Correct coding and transcription errors.

    If... Then...
    The received date is not stamped or edited on the return Determine the received date in the following priority and enter the date on the second line of the "For IRS Use Only" and in Field 01-M:
    1. Latest postmark date on an attached envelope Service Center Automated Processing System (SCAMPS) digital dates.

    2. Revenue Officer's signature date.

    3. Return signature date (if current year).

    4. Julian date minus 10 days.

    5. Current date minus 10 days.

    Field 01-E is invalid because the month in the received date is the same as the month in the tax period, Enter the first day of the month following the month in the tax period in Field 01-M.
    There are multiple received dates and one of the received dates is from another IRS office, Enter the earliest received date stamped in Field 01-M.
    There are multiple received dates and both dates are stamped by the same IRS office, Enter the latest received date stamped in Field 01-M.
    The return has both a U.S. Postal or foreign postmark and a private meter mark, Enter the U.S. Postal Service or foreign postmark in Field 01-M.
  7. The received date is changed to the legal due date of the return if the postmark shows legal timely mailing, without regard to the grace period.

  8. DO NOT change the received date on a return if:

    • No envelope is attached

    • No postmark is indicated on a return bearing a delinquent Received Date

  9. Process a return as a timely-filed return when:

    • It is necessary to use the signature date or the DLN control date to ascertain timeliness

    • The computation results in a timely Received Date

  10. Use the following chart to select and enter the Received Date for returns addressed to IRS:

    IRS Received Date Official US Postmark Received
    On or Before Due date N/A Use IRS Received Date
    After Return Due Date (RDD) On or Before RDD Use U.S. Postmark Date
    After Return Due Date After RDD Use IRS Received Date
    After Return Due Date Period Missing/Illegible Use IRS Received Date
    Missing/Illegible Present Use U.S. Postmark Date
    Missing/Illegible Missing/Illegible Use Signature Date, or DLN Julian Date minus 10-days
  11. If the postmark is not legible, the taxpayer has the burden of proving the date when the postmark was made. Refer to Treasury Regulation Section 301.7502-1(c)(1)(iii).

    Reminder:

    If the legal due date falls on a Saturday, Sunday, or holiday, the return is considered to be timely if it is postmarked by the first work day thereafter. The Service allows an extended due date from the legal due date, which includes Saturdays, Sundays and legal holidays. A return received after the extended due date is considered delinquent if the postmark date is after the extended due date.

  12. If the legal due date falls on a Saturday, Sunday, or holiday, the return is considered to be timely if it is postmarked by the first work day thereafter. A return received after the return or extended due date is delinquent.

  13. Take the following action when processing returns that were sent back to the taxpayer:

    • Timely Replies: If the return and the reply to correspondence is received by the return due date, consider the return timely.

    • Late Replies: If the return and the reply to correspondence is received after the return due date, circle all previous received dates, and determine a new received date using the following priorities. The IRS date stamp stamped by the receipt and control function, the postmark date on the reply envelope, the SCAMPS date, or the current date.

    • Incomplete Replies: If the return was originally timely submitted but incomplete and a valid (complete) return is filed within the period requested on the IRS correspondence returning the original submission, consider the return timely filed.

Statute of Limitations
  1. A period of limitation is a time period established by law to review, analyze and resolve taxpayer and/or IRS related issues.

  2. The Internal Revenue Code (IRC) states that the Internal Revenue Service (IRS) will assess, refund credit, and collect taxes within specific time limits. These limits are known as Periods of Limitations. When they expire, we can no longer assess additional tax, allow a claim for refund by the taxpayer, nor take collection action. There are different periods of limitations for Assessment, Refund, and Collection Statutes. The expiration of these periods is tracked separately.

  3. The different periods of limitations expiration dates that are tracked are:

    • Assessment Statute Expiration Date (ASED): Return filed early - 3 years from the later of (1) the date the Form 8804 is filed or (2) April 15th if the Form 8804 is filed before April 15th of the calendar year following the calendar year that the tax was incurred. See IRM 4.31.2.2.17.2.1. No return filed - assessment may occur at anytime. IRC § 6501(a) , IRC § 6501(b)(2), IRC §6501(3)(c), and IRC § 6229(c)(3)

    • Refund Statute Expiration Date (RSED): 3 years from the time the return was filed or, if later, 2 years from the date after the tax was paid. IRC § 6511(a) and (b)(2)(A).

    • Collection Statute Expiration Date (CSED) is generally 10 years from the 23-C date or 10 years from the date of the TC 29X or 30X adjustment. IRC § 6502(a).

    Note:

    Exceptions may apply to change the periods of limitations.

  4. There are several conditions that may change the general Assessment Statute Expiration Date (ASED). They include:

    • IRC § 6501 (c) (1) - False Return

    • IRC § 6501 (c) (4) - Extensions by Agreement

    • IRC § 6501 (b) (3) - Substitute for Return by Authority of IRC § 6020(b)

      Caution:

      IRC § 6020(b) is not a tax return that triggers the period of limitations on assessment under IRC § 6501(a). If the taxpayer subsequently files a return reporting an additional liability, that return constitutes an original tax return allowing for the assessment of any additional amount not already assessed under the Substitute for Return program and triggering the running of the period of limitations on assessment for the tax year.

    • IRC § 6501 (d) - Is request for Prompt Assessments, which shortens the Assessment Period

    • IRC § 6501 (e) - Substantial (in excess of 25%) Omission of Income provides for a 6 year period of limitations.

    • IRC § 6503 (a) - Issuance of Statutory Notice of Deficiency (90-day Letter, which suspends the running of the period of limitations.)

    • IRC § 6901 (c) - Fiduciaries and Transferees

    • IRC § 6503 (h) - Bankruptcy

    • IRC § 6229 (a) through (h) - Partnership Items

♦Protective Claims♦
  1. Returns marked as "Protective Claim," "Protective Refund," "Protective Claim for Refund," or similar statement will be removed from the batch and routed to Accounts Management if unnumbered. Notate "Protective Claim" in the remarks box of Form 4227.

    Exception:

    If the return is amended, do not remove from batch. Enter Computer Condition Code "G" in Field 01-L and use Action Code "6."

Field 01-O - Correspondence Received Date

  1. Field 01-O is a 8 position field (YYYYMMDD) that may be present.

  2. The valid characters are numeric (0-9) or blank.

  3. This field is invalid if any of the following is present:

    • Not in YYYYMMDD format.

    • The entry is the same as the Received Date in Field 01-M

    • The entry is earlier than the Received Date in Field 01-M

    • The entry is earlier than the return due date (including the grace period)

  4. The correspondence received date is to be entered on the "CR" line in the "For IRS Use Only" box in the upper, right corner of the return.

  5. This date must be later than both the Due Date (15th day of the 3rd month after the end of the partnership’s tax year or the 15th day of the 6th month after the end of the partnership’s tax year if the books are kept outside the U.S. and Puerto Rico) of the return and the received date.

    Note:

    An entry of "1" in Field 01-E adds 2 months to the usual due date, which, in turn, affects the validity of the correspondence received date.

  6. This field cannot be used when CCC "3" is present in Field 01-L, even if the date in Field 01-O is the Entity assignment Date and there was no reply to correspondence.

  7. The CRD date should be stamped onto the reply, which is attached to the return. If not, look for and use the postmark date on the attached envelope. If the taxpayer faxed the reply, use the date the fax was received.

  8. This field can also contain the date that Entity assigned an EIN to the return (the Entity Assignment Date). This date is subject to the same restrictions as the correspondence received date, as the computer cannot differentiate between them.

    Note:

    If you have both a correspondence received date and an Entity Assignment Date, enter the later date into the field.

  9. If Field 01-O is invalid,

    1. Review the attached correspondence to determine the reply received date.

    2. If the received date (Field 01-M) is prior to the due date of the return, delete entry in Field 01-O (this includes a date entered by Entity when a TIN was assigned).

    3. If there was no reply, delete any date in Field 01-O, and enter CCC 3 in Field 01-L.

  10. Do not enter a date in Field 01-O if:

    • The taxpayer is not at fault

    • The correspondence is due to IRS error

Field 01-P - Entity Underprint Code (EUC)

  1. Field 01-P is a 1 position field used by error correction tax examiners when correcting the tax period Fiscal Year Month (FYM), or other entity data.

  2. This field does not appear on the return, only the error register.

  3. Enter "1" if:

    1. The name control underprints a different name control and the corrected name control is not the same as the underprint.

      Note:

      This is especially true if the name control itself is not corrected but the EIN is. You still need the Entity Underprint Code (EUC) "1" to clear the underprinted name control if the EIN is now correct.

    2. The name control underprints "XXXX" and the name control and EIN are both correct as is, or you correct either or both fields.

      Note:

      If the EIN is in orange (assigned by Entity) or purple (assigned by Entity Unpostables), the "1" is still required.

    3. As long as the underprinted name control is different from the name control in the field, the record continues to loop until the EUC is entered.

  4. Enter "2" if:

    1. The month underprinting the tax period (Field 01-B) does not agree with the month of the tax period in the field. If the correct tax period month does not agree with the underprint, the 2 must be entered into Field 01-P.

    2. If the tax period ending month on INOLE does not agree with what the taxpayer shows as the ending month at the top of the return, a TC 016 will be required. SCRS will reject and Rejects will send the return to Entity. Upon return, an EUC of 2 will be required to clear the underprint.

  5. Enter "3" if:

    1. When both the name control and the tax period underprint and the correct name control and tax period-ending month do not agree with their respective underprints.

    2. If both fields underprint and a "1" or "2" is entered instead of a "3," the record continues to loop (e.g., 2 will not clear the tax period underprint if the "3" is required).

  6. If there is no different underprint for either the name control or tax period, do NOT enter an EUC. If the name control is invalid (*) rather than underprinting, do not enter an EUC. The field must underprint and the correct data must not match the underprint for an EUC to be required.

  7. If the field is invalid, look at the name control and the tax period fields to determine if an EUC is required. If it is, enter the correct code; if not, blank the field.

Field 01-Q - Taxpayer Notice Codes (TPNC)

  1. Field 01-Q is a 6 position field that may be present.

  2. The valid characters are 01, 02,03, 90, or blank.

  3. The taxpayer notice codes are not entered into this field by the tax examiner. The TPNC is entered into the upper, left corner of the return and on the return to the left of Section 01, with Action Code "1" .

  4. The purpose of this field is to store the TPNCs after the return goes to good tape (posts). Only the computer can enter the TPNCs into this field.

  5. If the field is invalid because of an invalid TPNC or other entry, do not correct the field. Just make whatever other correction is required, such as assigning the correct (or same) TPNC (to the left of Section 01).

  6. You may see the TPNCs in this field if the TPNC were assigned on RAW and the record Loops, showing the "AA" (invalid correction attempt) on the top line of the error register record. In this case, the TPNCs will not be invalid. If there are no other errors, use Action Code "7" to clear the record.

  7. Do not enter a TPNC when any of the following is present:

    • Difference in Balance Due/Overpayment (+/-) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • Total Section 1446 tax ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • The withholding credit ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ for each type of Form (e.g., Form 1042-S, Form 8805).

      Note:

      There is no tolerance for Form 8288-A credits, all Form 8288-A credits must be verified by the Code and Edit Foreign Investment in Real Property Tax Act (FIRPTA) examiners created within the Code and Edit Unit of the OSPC or the Austin Submission Processing Campus (AUSPC).

  8. Remember, never enter or correct data in Field 01-Q.

  9. If correspondence is required, use IDRS Letter 3104C.

  10. The narratives below are printed on the BMF notice for the appropriate TPNC entered in Field 01-Q. TPNC 01 and 02 will print on CP 131A (Math Error, Balance Due of $1 to $4.99 on Form 990C, Form 990T, Form 1041, Form 1120 , and TPNC 03 will print on CP 173 (Notification of Estimated Tax Penalty Due on Form 1120 Series, Form 1041, Form 990-C, Form 990-T and Form 990-PF.

    Reminder:

    Before using any TPNC, check to make sure that all math has been verified.

    TPNC Literal
    01 We found an error in the total Section 1446 tax.
    02 We cannot allow the amount of tax withheld shown on Form 8804 because you didn't attach any supporting documentation. Therefore, we changed your return. If we are in error, please provide us with the necessary documentation to support the amount of withholding taxes claimed on your return. This documentation can be a copy of either Form 8805, Form 8288-A, or Form 1042-S.

    Note:

    It is not uncommon for taxpayers to enter the credit amount on the wrong line. Before you send TPNC 02, you must research BMFOLT (MFT 08) for the tax period and look to see if the credit amount posted (either all of it or part of it). This will appear as TC 660, TC 670, TC 716, TC 610, etc. If you see this, adjust the form accordingly before you use TPNC 02.

    03 We found that the installment tax payments (Payments with Extension of time to file and overpayments applied from last year's taxes) shown on your account do not agree with the amount claimed on your return.

    Note:

    This TPNC would usually be used only in the Rejects unit if notified by Unpostables that there was such an error. It could, of course, be used by SCRS or Rejects if research was done that showed the amounts did not agree.

    90 An open paragraph for notices of errors not covered by the previous TPNCs.

    Example:

    Deletion of a non-substantiated credit amount and no reply to correspondence was received. Or,
    Failure to attach the required election statement to apply the IRC § 1446 Regulations to the 2005 tax return. Or,
    Error in total credits on Line 7.

Field 01-R - Preparer PTIN

  1. Field 01-R is a 9 position field that may be present.

  2. Valid conditions are:

    • Entry is blank

    • "P" for the first character followed by eight numeric characters

  3. Invalid condition is one of the following:

    • Field 01-R is other than a "P" followed by eight digits

    • Contains all zeroes

    • Contains all nines

    • Contains all numeric

  4. Correct Field 01-R as follows:

    If... Then...
    Only a valid PTIN is present Enter the PTIN in Field 01-R, and use AC "6."
    Only a valid SSN is present Delete the SSN in Field 01-R, and use AC "6."
    A valid PTIN is present and a SSN is also present Enter the PTIN in Field 01-R. Use AC "6."
    A valid PTIN cannot be located Delete the entry in Field 01-R, and use AC "6."

Field 01-S - Preparer EIN

  1. Field 01-S is an 9 position field that may be present.

  2. Valid conditions are:

    • Entry is blank

    • All numeric

  3. Invalid condition is one of the following:

    • Field 01-S is other than nine numeric digits

    • Contains all zeroes

    • Contains all nines

  4. Correct Field 01-S as follows:

    If... Then...
    Only a valid EIN is present Enter the EIN in Field 01-S. and use AC "6" .
    A valid PTIN is present and an EIN is also present Enter the PTIN in Field 01-R, and delete the entry in Field 01-S. Use AC "6" .
    Both an EIN and SSN are present Delete the SSN in Field 01-R, and make sure the EIN in Field 01-S is correct. Use AC "6" .
    A valid EIN cannot be located Delete the entry in Field 01-S, and use AC "6" .

Field 01-T - Preparer Phone Number

  1. Field 01-T is a 10 digit field that may be present.

  2. Valid characters are alpha or numeric or a combination of alpha and numeric characters, not to exceed 10 characters or blank.

  3. Field 01-T is invalid when the Preparer Phone Number is other than 10 alpha/numerics.

  4. Delete the entry if the phone number is invalid, illegible or cannot be located.

Field 01-U - Number of Foreign Partners - Line 3a

  1. Field 01-U is a 7 position field that must be present on Line 3a.

  2. Valid characters are numeric 0-9.

  3. Invalid conditions:

    • A non-numeric character is in the field.

    • The field is blank.

  4. Corrections procedures:

    If... And... Then...
    Field 01-U (Line 3a) is blank or a non-numeric character is present   Enter the count/value from Field 01-W (line 3c)
    Field 01-U (Line 3a) is blank or a non-numeric character is present Field 01-W (Line 3c) has no count/value Enter the default value of "1"
    It is a number written in text

    Example:

    nineteen

      Convert the text into a numeric value and enter it in Field 01-U

    Example:

    "19"

    Note:

    If you are required to correspond for another condition, and Field 01-U is blank, then also ask the partnership to provide the correct number of Foreign Partners in the partnership.

  5. If Form 8804 is a zero tax return (no income to report) and no data appears in Fields 02-A through 02-P, then enter a "1" in Fields 01-U, 02-A and 02-D.

Field 01-V - Number of Form 8805 Attached to Form 8804 - Line 3b

  1. Field 01-V is a 7 position field that must be present on Line 3b.

  2. If Field 01-V (Line 3b) is blank and Code and Edit determined the Form 8805 were not attached, then use the International Correspondence Action Sheet Letter 3104C prepared by C and E to correspond for Form 8805.

    Note:

    ERS/REJ is not to correspond for any Form 8805 in which Code and Edit has not prepared correspondence action sheet 3104C.

    Reminder:

    Once the taxpayer has responded with the copies of Form 8805, forward the Form 8805 to Batching and Numbering. The Form 8805 will be batched, placed on Batch Block Tracking System (BBTS) and then Numbering will assign them a DLN before releasing the batch work to the C and E FIRPTA unit. The C and E FIRPTA unit will record the Form 8805 in the International National Standard Application Database (INTL NSA Db) before releasing the batch work to files. Do not separate any Form 8804-C from the Form 8805.

  3. Valid characters are numeric 0-9.

  4. Invalid conditions:

    • A non-numeric character is in the field.

    • The field is blank.

  5. Corrections procedures:

    If... And... Then...
    Field 01-V (Line 3b) is blank or a non-numeric character is present   Enter the count/value from Field 01-U (line 3a)
    Field 01-V (Line 3b) is blank or a non-numeric character is present Field 01-U (Line 3a) has no count/value Correspond for Form 8805 with IDRS Letter 3104C.

    Note:

    Do not correspond for the number of Form 8805 if the Form 8804 return is reporting negative income and the total tax is zero. Instead enter seven nines in Field 01-V (e.g., 9999999) and continue processing the return.

    The partnership responds to Letter 3104C a count is provided Enter the count in Field 01-V and continue processing the return.
    The partnership doesn't respond to Letter 3104C   Enter the default value of "1" in Field 01-V and continue processing the return.
    It is a number written in text

    Example:

    one hundred one

      Convert the text into a numeric value and enter it in Field 01-V

    Example:

    "101"

  6. If Form 8804 is a zero tax return (no income to report) and no data appears in Fields 02-A through 02-T, then enter a "1" in Fields 01-V, 02-A and 02-D. Do not correspond for Form 8805.

Field 01-W - Number of Form 8804-C Attached to Form 8805 - Line 3c

  1. Field 01-W is a 7 position field that may or may not be present on Line 3c.

  2. Valid characters are numeric 0-9.

  3. Invalid conditions:

    • A non-numeric character is in the field.

    • The field is blank.

  4. Corrections procedures (Do not correspond for this field):

    If... And... Then...
    Field 01-W (Line 3c) is blank or a non-numeric character is present   Enter "0" in Field 01-W.
    A Loop register generates for Field 01-W a "0" is present in Field 01-W Enter a "1" in Field 01-W.
    It is a number written in text

    Example:

    twenty four

      Convert the text into a numeric value and enter it in Field 01-W

    Example:

    "24"

Field 01-X - Tax Year Beginning Date

  1. Field 01-X is an 8 position field. Field 01-X is automatically generated unless there is a “Y” or “F” in field 01-L (CCC).

  2. The Tax Year Beginning date will be edited at the upper left, just above Form 8804’s name.

  3. If the return is a final or short period, and beginning tax period is present on return, then enter beginning tax period in YYYYMMDD format.

  4. If the return is a final or short period, and the day is not present in the beginning tax period, then enter “01” for the day.

  5. If the return is a final or short period, and Beginning Tax Period is not present, then determine the beginning tax period from the ending tax period.

  6. Since the Field 01-X is automatically generated and a “Y” or “F” is entered in Field 01-L (CCC), Field 01-X will need to be adjusted as well.

Section 02 - Form 8804

  1. Section 02 alpha field designators, maximum field lengths, titles and return locations are as follows:

    Note:

    The following acronyms are used within this subsection:
    Effectively Connected Taxable Income (ECTI)
    Non-Corporate Foreign Partner (NCFP)

    Field Reference Field Length Field Title Field Location on Form 8804 Return
    02-A 12 Total ECTI Allocable to Corporate Partners Line 4a
    02-B 12 Reduction to line 4a for State and Local taxes Line 4b
    02-C 12 Reduction to line 4a for Certificates Line 4c
    02-D 12 Subtract the sum of lines 4b and 4c from 4a Line 4d
    02-E 12 Total ECTI allocable to Non-Corporate Partners Other Than on Lines 4i, 4m and 4q Line 4e
    02-F 12 Reduction to line 4e for State and Local taxes Line 4f
    02-G 12 Reduction to 4e for Certified Foreign Partners Line 4g
    02-H 12 Subtract the sum of 4f and 4g from 4e Line 4h
    02-I 12 NCFP ECTI 28% Gains Line 4i
    02-J 12 NCFP 28% Gains Reduction for State and Local taxes Line 4j
    02-K 12 NCFP ECTI Gains Cert Reduction Line 4k
    02-L 12 Subtract the sum of lines 4j and 4k from line 4i Line 4l
    02-M 12 Section 1250 NCFP Gains Line 4m
    02-N 12 Section 1250 NCFP Gains Reduction for State and Local taxes Line 4n
    02-O 12 Section 1250 NCFP Gains Cert Reduction Line 4o
    02-P 12 Subtract the sum of lines 4n and 4o from line 4m Line 4p
    02-Q 12 Adjusted Net Capital Gain (includes Qual Div Inc and Section 1231 gain) Line 4q
    02-R 12 Reduction to Line 4q for State and Local taxes Line 4r
    02-S 12 Reduction to line 4q for Certificates Line 4s
    02-T 12 Subtract the sum of lines 4r and 4s from 4q Line 4t
    02-U 12 Gross 1446 Tax at 35% Line 5a
      12 Gross 1446 Tax at 35% - Underprint  
    02-V 12 Gross 1446 Tax at 39.6% Line 5b
      12 Gross 1446 Tax at 39.6% - Underprint  
    02-W 12 Gross 1446 Tax at 28% Line 5c
      12 Gross 1446 Tax at 28% - Underprint  
    02-X 12 Gross 1446 Tax at 25% Line 5d
      12 Gross 1446 Tax at 25% - Underprint  
    02-Y 12 Gross 1446 Tax at 20% Line 5e
      12 Gross 1446 Tax at 20% - Underprint  
    02-Z 12 Total 1446 Tax Line 5f
      12 Total 1446 Tax - Underprint  

Field 02-A - Total ECTI Allocable to Corporate Partners

  1. Field 02-A is a 12 position field that may have an entry. Any entry present on Line 4a must be in dollars and cents.

    Caution:

    The $1.00 dollar entry issue mentioned throughout the following subsections for Fields 02-A through 02-T is only to be implemented when all the following Fields 02-D, 02-H, 02-L, 02-P, and 02-T are zero or blank. Use the $1 process one time only.

  2. The valid characters are numeric (0-9), or blank.

  3. The amount may only be "positive" .

  4. If the amount is actually negative, accept it (make no change to Field 02-A).

  5. If the entry is $2.00 or less, then leave it alone.

  6. If there is a positive entry in Field 02-D, then an amount must be present in Field 02-U.

    Note:

    A positive entry is an amount greater than zero.

Field 02-B - Reduction for State and Local Taxes Allocable to Corporate Partners

  1. Field 02-B is a 12 position field that may have an entry. Any entry present on Line 4b must be in dollars and cents.

    Caution:

    Field 02-B must be "BLANK" for tax periods prior to 200801.

  2. The valid characters are numeric (0-9) or blank.

  3. Field 02-B is a positive entry.

    Note:

    The entry on Form 8804, Line 4b, must be "negative" because Line 4b has pre-printed brackets "(_________)" . However, the program recognizes it as a positive entry for the math calculation.

  4. A significant entry in Field 02-B reduces the amount reported in Field 02-A, and the end result appears in Field 02-D.

Field 02-C - Form 8804-C Certificate Reduction Allocable to Corporate Partners

  1. Field 02-C is a 12 position field that may have an entry. Any entry present on Line 4c must be in dollars and cents.

  2. The valid characters are numeric (0-9) or blank.

  3. Field 02-C is positive only.

    Note:

    The entry on Form 8804, Line 4c, will always be "negative" because Line 4c has pre-printed brackets "(_________)" . However, the program recognizes it as a positive entry for the math calculation.

  4. A significant entry in Field 02-C reduces the amount reported in Field 02-A, and the end result will appear in Field 02-D.

Field 02-D - Taxable Inc Allocable to Corporate Partners Adjusted (±)

  1. Field 02-D is a 12 position field that may have an entry. Any entry present on Line 4d must be in dollars and cents.

  2. Valid characters are numeric (0-9) or blank.

  3. The amount can be "positive or negative" .

  4. If Field 02-D is zero or blank and appears as a consistency error, then enter "$1" in Field 02-A to resolve the error.

  5. A consistency check of Field 02-D will be systemically performed to verify Field 02-D by subtracting Fields 02-B and 02-C from Field 02-A. The result should match the entry in Field 02-D. If not correct, then Field 02-D will underprint.

  6. The program will use the underprint amount to calculate the 35% tax in Field 02-U. However, if the tax in Field 02-U is based on the $1, then no tax is assessed.

Field 02-E - Total ECTI Allocable to Non-Corporate Partners other than on Lines 4i, 4m and 4q

  1. Field 02-E is a 12 position field that may have an entry. Any entry present on Line 4e must be in dollars and cents.

    Caution:

    The $1.00 dollar entry issue mentioned throughout the following subsections for Fields 02-A through 02-T is only to be implemented when all the following Fields 02-D, 02-H, 02-L, 02- P, and 02-T are zero or blank. Use the $1 process one time only.

  2. Valid characters are numeric (0-9) or blank.

  3. The amount may only be "positive" .

  4. If the amount is actually negative, accept it (make no change to Field 02-A).

  5. If the entry is $2.00 or less, then leave it alone.

  6. If there is a positive entry in Field 02-H, then an amount must be present in Field 02-V.

    Note:

    A positive entry is an amount greater than zero.

Field 02-F - Reduction for State and Local taxes under Regulations section 1.1446- 6(c)(1)(iii)

  1. Field 02-F is a 12 position field that may have an entry. Any entry present on Line 4f must be in dollars and cents.

    Caution:

    Field 02-F must be "BLANK" for tax periods prior to 200801.

  2. The valid characters are numeric (0-9) or blank.

  3. Field 02-F is a positive entry.

    Note:

    The entry on Form 8804, Line 4f, must be "negative" because Line 4f has pre-printed brackets "(_________)" . However, the program recognizes it as a positive entry for the math calculation.

  4. A significant entry in Field 02-F reduces the amount reported in Field 02-E, and the end result appears in Field 02-H.

Field 02-G - 8804-C Certificate Reduction

  1. Field 02-G is a 12 position field that may have an entry. Any entry present on Line 4g must be in dollars and cents.

  2. The valid characters are numeric (0-9) or blank.

  3. Field 02-G is positive only.

    Note:

    The entry on Form 8804, Line 4g, will always be "negative" because Line 4g has pre-printed brackets "(_________)" . However, the program recognizes it as a positive entry for the math calculation.

  4. A significant entry in Field 02-G reduces the amount reported in Field 02-E, and the end result will appear in Field 02-H.

Field 02-H - Taxable Inc Non-Corporate Adjusted (±)

  1. Field 02-H is a 12 position field that may have an entry. Any entry present on Line 4h must be in dollars and cents.

  2. Valid characters are numeric (0-9) or blank.

  3. The amount can be "positive or negative" .

  4. If Field 02-H is zero or blank and appears as a consistency error, then enter "$1" in Field 02-E to resolve the error.

  5. A consistency check of Field 02-H will be systemically performed to verify Field 02-H by subtracting Fields 02-F and 02-G from Field 02-E. The result should match the entry in Field 02-H. If not correct, then Field 02-H will underprint.

  6. The program will use the underprint amount to calculate the 39.6% tax in Field 02-V. However, if the tax in Field 02-V is based on the $1, then no tax is assessed.

Field 02-I - Non Corporate Foreign Partner (NCFP) Allocable 28% Gain (+)

  1. Field 02-I is a 12 position field that may have an entry. Any entry present on Line 4i must be in dollars and cents.

    Caution:

    The $1.00 dollar entry issue mentioned throughout the following subsections for Fields 02-A through 02-T is only to be implemented when all the following Fields 02-D, 02-H, 02-L, 02-P and 02-T are zero or blank. Only use the $1 process one time.

  2. The valid characters are numeric (0-9) or blank.

  3. The amount may only be "positive" .

  4. If the amount is actually negative, accept it (make no change to Field 02-I).

  5. If the entry is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , then leave it alone.

  6. If there is a positive entry in Field 02-L, then an amount must be present in Field 02-W. A positive entry is an amount greater than zero.

Field 02-J - Reduction for State and Local Taxes on NCFP 28% Gain

  1. Field 02-J is a 12 position field that may have an entry. Any entry present on Line 4j must be in dollars and cents.

    Caution:

    Field 02-J must be "BLANK" for tax periods prior to 200801.

  2. The valid characters are numeric (0-9) or blank.

  3. Field 02-J is a positive entry.

    Note:

    The entry on Form 8804, Line 4j, will always be "negative" because Line 4j has pre-printed brackets "(_________)" . However, the program recognizes it as a positive entry for the math calculation.

  4. A significant entry in Field 02-J reduces the amount reported in Field 02-I, and the end result will appear in Field 02-L.

Field 02-K - NCFP 28% Gain Form 8804-C Certificate Reduction

  1. Field 02-K is a 12 position field that may have an entry. Any entry present on Line 4k must be in dollars and cents.

  2. The valid characters are numeric (0-9) or blank.

  3. Field 02-K is positive only.

    Note:

    The entry on Form 8804, Line 4k, will always be "negative" because Line 4k has pre-printed brackets "(_________)" . However, the program recognizes it as a positive entry for the math calculation.

  4. A significant entry in Field 02-K reduces the amount reported in Field 02-I, and the end result will appear in Field 02-L.

Field 02-L - NCFP Net Allocable 28% Gain Adjusted (±)

  1. Field 02-L is a 12 position field that may have an entry. Any entry present on Line 4l must be in dollars and cents.

  2. The valid characters are numeric (0-9) or blank.

  3. The amount can be "positive or negative" .

  4. If Field 02-L is zero or blank and appears as a consistency error, then enter "$1" in Field 02-I to resolve the error.

  5. A consistency check of Field 02-L is systemically performed to verify Field 02-L by subtracting Fields 02-J and 02-K from Field 02-I. The result should match the entry in Field 02-L. If not correct, then Field 02-L underprints.

  6. The program uses the underprint amount to calculate the 28% tax in Field 02-W. However, if the tax in Field 02-W is based on the $1, then no tax is assessed.

Field 02-M - Non Corporate Foreign Partner (NCFP) Section 1250 Gains (±)

  1. Field 02-M is a 12 position field that may have an entry. Any entry present on Line 4m must be in dollars and cents.

    Caution:

    The $1.00 dollar entry issue mentioned throughout the following subsections for Fields 02-A through 02-T is only to be implemented when all the following Fields 02-D, 02-H, 02-L, 02-P and 02-T are zero or blank. Only use the $1 process one time.

  2. The valid characters are numeric (0-9) or blank.

  3. If Field 02-M is zero and appears as a consistency error, then enter "$1" in Field 02-M to resolve the error.

  4. The amount cannot be"negative."

    Note:

    A positive entry is an amount greater than zero.

  5. If the amount is actually a negative, then enter "$1" in Field 02-M.

  6. If the entry is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ; Leave it alone.

  7. If there is a positive entry in Field 02-P, then an amount must be present in Field 02-X. A positive entry is an amount greater than zero.

Field 02-N - Reduction for State and Local Taxes on NCFP Section 1250 Gains

  1. Field 02-N is a 12 position field that may have an entry. Any entry present on Line 4n must be in dollars and cents.

    Caution:

    Field 02-N must be "BLANK" for tax periods prior to 200801.

  2. The valid characters are numeric (0-9) or blank.

  3. Field 02-N is a positive entry.

    Note:

    The entry on Form 8804, Line 4n, will always be "negative" because Line 4n has pre-printed brackets "(_________)" . However, the program recognizes it as a positive entry for the math calculation.

  4. A significant entry in Field 02-N reduces the amount reported in Field 02-M, and the end result will appear in Field 02-P.

Field 02-O - NCFP Section 1250 Gains Form 8804-C Certificate Reduction

  1. Field 02-O is a 12 position field that may have an entry. Any entry on Line 4o must be in dollars and cents.

  2. The valid characters are numeric (0-9) or blank.

  3. Field 02-O is positive only.

    Note:

    The entry on Form 8804, Line 4o, will always be "negative" because Line 4o has pre-printed brackets "(_________)" . However, the program recognizes it as a positive entry for the math calculation.

  4. A significant entry in Field 02-O reduces the amount reported in Field 02-M, and the end result will appear in Field 02-P.

Field 02-P - NCFP Section 1250 Net Gains Adjusted (±)

  1. Field 02-P is a 12 position field that may have an entry. Any entry present on Line 4p must be in dollars and cents.

  2. The valid characters are numeric (0-9) or blank.

  3. The amount can be "positive or negative" .

  4. If Field 02-P is zero or blank and appears as a consistency error, then enter "$1" in Field 02-M to resolve the error.

  5. A consistency check of Field 02-P will be systemically performed to verify Field 02-P by subtracting Fields 02-N and 02-O from Field 02-M. The result should match the entry in Field 02-P. If not correct, then Field 02-P underprints.

  6. The program uses the underprint amount to calculate the 25% tax in Field 02-X. However, if the tax in Field 02-X is based on the $1, then no tax is assessed.

Field 02-Q - Adjusted Net Capital Gain (incl Qual Div Inc and Section 1231 gain) (+)

  1. Field 02-Q is a 12 position field that may have an entry. Any entry present on Line 4q must be in dollars and cents.

    Caution:

    The $1.00 dollar entry issue mentioned throughout the following subsections for Fields 02-A through 02-T is only to be implemented when all the following Fields 02-D, 02-H, 02-L, 02-P and 02-T are zero or blank. Only use the $1 process one time.

  2. The valid characters are numeric (0-9) or blank.

  3. If Field 02-Q is zero and appears as a consistency error, then enter "$1" in Field 02-Q to resolve the error.

  4. The amount may only be "positive" .

  5. If the amount is actually negative, accept it (make no change to Field 02-Q).

  6. If the entry is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , then leave it alone.

  7. If there is a positive entry in Field 02-T, then an amount must be present in Field 02-Y. A positive entry is an amount greater than zero.

Field 02-R - Reduction to Line 4q for State and Local Taxes

  1. Field 02-R is a 12 position field that may have an entry. Any entry present on Line 4r must be in dollars and cents.

    Caution:

    Field 02-R must be "BLANK" for tax periods prior to 200801.

  2. The valid characters are numeric (0-9) or blank.

  3. Field 02-R is a positive entry.

    Note:

    The entry on Form 8804, Line 4r, will always be "negative" because Line 4r has pre-printed brackets "(_________)" . However, the program recognizes it as a positive entry for the math calculation.

  4. A significant entry in Field 02-R reduces the amount reported in Field 02-Q, and the end result will appear in Field 02-T.

Field 02-S - Reduction to Line 4q for Certificates

  1. Field 02-S is a 12 position field that may have an entry. Any entry on Line 4s must be in dollars and cents.

  2. The valid characters are numeric (0-9) or blank.

  3. Field 02-S is positive only.

    Note:

    The entry on Form 8804, Line 4s, will always be "negative" because Line 4s has pre-printed brackets "(_________)" . However, the program recognizes it as a positive entry for the math calculation.

  4. A significant entry in Field 02-S reduces the amount reported in Field 02-Q, and the end result will appear in Field 02-T.

Field 02-T - NCFP Net Div Inc and LTG (±) Adjusted

  1. Field 02-T is a 12 position field that may have an entry. Any entry present on Line 4t must be in dollars and cents.

  2. The valid characters are numeric (0-9) or blank.

  3. The amount can be "positive or negative" .

  4. If Field 02-T is zero or blank and appears as a consistency error, then enter "$1" in Field 02-Q to resolve the error.

  5. A consistency check of Field 02-T is systemically performed to verify Field 02-T by subtracting Fields 02-R and 02-S from Field 02-Q. The result should match the entry in Field 02-T. If not correct, then Field 02-T underprints.

  6. The program uses the underprint amount to calculate the 20% tax in Field 02-Y. However, if the tax in Field 02-Y is based on the $1, then no tax is assessed.

Field 02-U - Gross 1446 Tax at 35%

  1. Field 02-U is a 12 position money field that may have an entry on Line 5a.

  2. The valid characters are numeric (0-9) or blank.

  3. Field 02-U cannot have a negative entry below ".00" .

  4. The computer uses the underprint of Field 02-D to calculate the tax for Field 02-U.

    Note:

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

  5. If Field 02-D is actually a negative amount, then correct Field 02-U by entering "0" . Use Action Code "6" .

  6. If the taxpayer enters an amount in Field 02-U, and did not enter a source amount in Field 02-D, then back into the tax amount using the appropriate tax rate to calculate the source amount and then enter it in Field 02-A and 02-D.

    Example:

    Field 02-U shows a tax of $500,000. The tax rate for Field 02-U is 35%. Divide $500,000.00 by 35% to arrive at the source to enter in Field 02-A and 02-D. The amount would be $1,428,572. Enter 1428572 in Field 02-A and 02-D.

Field 02-V - Gross 1446 Tax at 39.6%

  1. Field 02-V is a 12 position filed that may have an entry on Line 5b.

  2. The valid characters are numeric (0-9) or blank

  3. Field 02-V cannot have a negative entry below ".00" .

  4. The computer uses the underprint of Field 02-H to calculate the tax for Field 02-V.

    Note:

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

  5. If Field 02-H is actually a negative amount, then correct Field 02-V by entering "0" . Use Action Code "6" .

  6. If the taxpayer enters an amount in Field 02-V, and did not enter a source amount in Field 02-H, then back into the tax amount using the appropriate tax rate to calculate the source amount and then enter it in Field 02-E and 02-H.

    Example:

    Field 02-V shows a tax of $500,000. The tax rate for Field 02-V is 39.6%. Divide $500,000.00 by 39.6% to arrive at the source to enter in Field 02-E and 02-H. The amount would be $1,262,626. Enter 1262626 in Field 02-E and 02-H.

Field 02-W - Gross 1446 Tax at 28%

  1. Field 02-W is a 12 position money field that may have an entry on Line 5c.

  2. The valid characters are numeric (0-9) or blank.

  3. Field 02-W cannot have a negative entry below ".00" .

  4. The computer uses the underprint of Field 02-L to calculate the tax for Field 02-W.

    Note:

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

  5. If Field 02-L is actually a negative amount, then correct Field 02-W by entering "0" . Use Action Code "6" .

  6. If the taxpayer enters an amount in Field 02-W, and did not enter a source amount in Field 02-L, then back into the tax amount using the appropriate tax rate to calculate the source amount and then enter it in Field 02-I and 02-L.

    Example:

    Field 02-W shows a tax of $500,000. The tax rate for Field 02-W is 28%. Divide $500,000.00 by 28% to arrive at the source to enter in Field 02-I and 02-L. The amount would be $1,785,714. Enter 1785714 in Field 02-I and 02-L.

Field 02-X - Gross 1446 Tax at 25%

  1. Field 02-X is a 12 position money field that may have an entry on Line 5d.

  2. The valid characters are numeric (0-9) or blank.

  3. Field 02-X cannot have a negative entry below ".00" .

  4. The computer uses the underprint of Field 02-P to calculate the tax for Field 02-X.

    Note:

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

  5. If Field 02-P is actually a negative amount, then correct Field 02-X by entering "$.00" . Use Action Code "6" .

  6. If the taxpayer enters an amount in Field 02-X, and did not enter a source amount in Field 02-P, then back into the tax amount using the appropriate tax rate to calculate the source amount and then enter it in Fields 02-M and 02-P.

    Example:

    Field 02-X shows a tax of $500,000. The tax rate for Field 02-X is 25%. Divide $500,000.00 by 25% to arrive at the source to enter in Field 02-M and 02-P. The amount would be $2,000,000. Enter 2000000 in Field 02-M and 02-P.

Field 02-Y - Gross 1446 Tax at 20%

  1. Field 02-Y is a 12 position money field that may have an entry on Line 5e.

  2. The valid characters are numeric (0-9) or blank.

  3. Field 02-Y cannot have a negative entry below ".00" .

  4. The computer uses the underprint of Field 02-T to calculate the tax for Field 02-Y.

    Note:

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

  5. If Field 02-T is actually a negative amount, then correct Field 02-Y by entering "0" . Use Action Code "6" .

  6. If the taxpayer enters an amount in Field 02-Y, and did not enter a source amount in Field 02-T, then back into the tax amount using the appropriate tax rate to calculate the source amount and then enter it in Fields 02-Q and 02-T.

    Example:

    Field 02-Y shows a tax of $500,000. The tax rate for Field 02-Y is 20%. Divide $500,000.00 by 20% to arrive at the source to enter in Field 02-Q and 02-T. The amount would be $2,500,000. Enter 2500000 in Field 02-Q and 02-T.

Field 02-Z - Total Tax

  1. Field 02-Z is a 12 position money field, that may have an entry on Line 5F.

  2. The valid characters are numeric (0-9) or blank.

  3. The amount is entered in dollars and cents.

  4. Field 02-Z cannot be "negative" . Review Lines 4d, 4h, 4l, 4p and 4t (Fields 02-D, 02-H, 02-L, 02-P and 02-T) of Form 8804 to make sure they were not transcribed in error. Use Action Code "6" to correct any error. If the taxpayer entered negative amounts, then change them to zero.

  5. If on the RAW register the aggregate underprint sum of Fields 02-U through 02-Y is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ in difference from the taxpayers amount, then enter the corrected total tax in the "Manual Correction Field," which is Field 03-K.

    Note:

    On the first Loop register enter TPNC "01" and use Action Code "1" to inform the taxpayer of the math error.

  6. If Field 02-Z is blank, and a positive entry appears in Fields 02-D, 02-H, 02-L, 02-P or 02-T then enter the correct tax amount shown on the computer underprint in Field 03-K.

    Caution:

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

Section 03 - Additional Error Register Fields

  1. Section 03 alpha field designators, maximum field lengths, and titles:

    Field Designator Field Length Field Title Field Location on Form 8804 Return
    03-A 12 Installment Payments Line 6a
    03-B 12 Form 8805 Section 1446 withholding on Tiered Partnership Line 6b
    03-C 12 Form 1042-S Section 1446 withholding on Publicly Traded Partnership (PTP) Line 6c
    03-D 12 Form 8288-A Section 1445(a) or (e)(1) withholding on USRPI Disposition Line 6d
    03-E 12 Form 1042-S Section 1445(e) withholding on USRPI Investment Income Line 6e
    03-F 12 Total Payments Line 7
        Total Payments - Computer Underprint  
    03-G 12 Estimated Tax Penalty Line 8
    03-H 12 ± Balance Due/
    Overpayment
    Line 10
    Line 11
        ± Balance Due/Overpayment Underprint  
    03-I 12 Credit Elect Line 13
    03-J 1 Reserve Code/ => $1 Million  
    03-K 12 Manual Correction Field  

Field 03-A - Payments and Credit Elects

  1. Field 03-A is a 12 position field that may be present.

  2. The valid characters are numeric (0-9) or blank and must be entered in Dollars and Cents (positive).

  3. Field 03-A is located on Line 6a and it lists the total amount of pre-paid credits, payments made, or credit elected (from the previous tax year). Pre-paid credits/payments appear in the tax module account as a TC 670, or a TC 710/716.

  4. Review the entries on Form 8804 Lines 6a, 6b, 6c, 6d and 6e, and check IDRS for any payments. If the payments on IDRS match, delete the entry in Fields 03-B, 03-C, 03-D and/or 03-E and enter in Field 03-A. Use Action Code "6."

  5. Do not enter more than the amount written by the taxpayer on Line(s) 6b, 6c, 6d and/or 6e, even though IDRS may reflect more money. Use Action Code "6."

    Reminder:

    The amount of credit present on this line is already in the module, therefore no form is required to be attached to the Form 8804 to substantiate the credit amount.

  6. The ≡ ≡ ≡ tolerance doesn't apply to Line 6a.

    Figure 3.22.15-6a

    This is an Image: 37643002.gif
     

    Please click here for the text description of the image.

    Figure 3.22.15-6b

    This is an Image: 37643003.gif
     

    Please click here for the text description of the image.

Field 03-B - Form 8805 Section 1446 withholding on Tiered Partnership

  1. Field 03-B is a 12 position field that may be present. Any entry present must be in dollars and cents.

  2. Field 03-B is located on Line 6b and includes the total amount withheld from Form 8805. It will post on IDRS with a TC 766 (Credit Reference Number (CRN) 331).

  3. The valid characters are numeric (0-9) or blank and must be positive.

  4. If the entry contains an invalid character, correct the entry by deleting the incorrect entry and entering the correct amount (dollars and cents) reflected on Form 8804, Line 6b by verifying it against the attached Form(s) 8805. Use AC "6."

    Note:

    If Line 6b is blank, delete the entry in Field 03-B. Use AC "6" .

  5. If an entry appears in Field 03-B, and Form 8805 is not attached to support the withholding amount ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ claimed, review the entries on Form 8804 Lines 6a, 6b, 6c, 6d and 6e and check IDRS for any payments (TC 670, 710/716). If the payments on IDRS match, delete the entry in Field 03-B and enter in Field 03-A. Use AC "6" .

  6. If documentation is not attached to support the withholding amount claimed ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and there are no payments on the tax module, correspond for the missing documentation via IDRS letter 3104C.

  7. If an entry appears in Field 03-B, and it is ≡ ≡ ≡ ≡ ≡ ≡ ≡ and Form 8805 is not attached to support the withholding amount, allow the credit. Use AC "0" .

  8. If the taxpayer responds with a copy of Form 8805 and it matches the description in Figure 3.22.15-6a, add the amount on Form(s) 8805 lines 10 and 13, and enter the total in Field 03-B. Use AC "6" .

  9. Delete or reduce the amount in Field 03-B if the taxpayer responds with a copy of Form 8805 and it doesn't match the description in Figure 3.22.15-6a. Use AC "6" and enter TPNC 02.

  10. If the taxpayer doesn’t reply to IDRS letter 3104C, or doesn’t provide supporting documentation to substantiate the withholding amount, delete the entry in Field 03-B, use AC "6" and enter TPNC 02.

Field 03-C - Form 1042-S Section 1446 withholding on Publicly Traded Partnership (PTP)

  1. Field 03-C is a 12 position field that may be present. Any entry present must be in dollars and cents.

  2. Field 03-C is located on Line 6c and includes the total amount withheld from Form 1042-S. It will post on IDRS with a TC 766 (Credit Reference Number (CRN) 330).

  3. The valid characters are numeric (0-9) or blank and must be positive.

  4. If the entry contains an invalid character, correct the entry by deleting the incorrect entry and entering the correct amount (dollars and cents) reflected on Form 8804, Line 6c by verifying it against the attached Form 1042-S. Use AC "6" .

    Note:

    If Line 6c is blank, delete the entry in Field 03-C. Use AC "6" .

  5. If an entry appears in Field 03-C, and Form 1042-S is not attached to support the withholding amount claimed ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , review the entries on Form 8804 Lines 6a, 6b, 6c, 6d and 6e and check IDRS for any payments (TC 670, TC 710/716). If the payments on IDRS match, delete the entry in Field 03-C and enter in Field 03-A. Use AC "6" .

  6. If documentation is not attached to support the withholding amount claimed ≡ ≡ ≡ ≡ ≡ ≡ ≡ and there are no payments on the tax module, correspond for the missing documentation via IDRS Letter 3104C.

  7. If an entry appears in Field 03-C, and it is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ but Form 1042-S is not attached to support the withholding amount then allow the credit. Use AC "0" .

  8. If the taxpayer responds with a copy of Form(s) 1042-S, enter the amount from Line 9, Form 1042-S (or totals of all lines 9, if more than one Form 1042-S) in Field 03-C. Use AC" 6" .

  9. If the taxpayer doesn’t reply to IDRS Letter 3104C, or doesn’t provide supporting documentation to substantiate the withholding amount, delete the entry in Field 03-C, use AC "6" and enter TPNC 02.

Field 03-D - Form 8288-A Section 1445(a) or (e)(1) withholding on USRPI Disposition

  1. Field 03-D is a 12 position field that may be present. Any entry present must be in dollars and cents.

  2. Field 03-D is the total amount of withholding from Form 8288-A found on line 6d of Form 8804. It will post on IDRS with a TC 766 (Credit Reference Number (CRN) 332).

  3. The valid characters are numeric (0-9) or blank and must be positive.

  4. If the entry contains an invalid character, correct the entry by deleting the incorrect entry and entering the correct amount (dollars and cents) reflected on Form 8804, Line 6d by verifying it against the attached Form 8288-A. Use AC "6" .

    Note:

    If Line 6d is blank then delete the entry in Field 03-D, using AC "6" .

  5. If an entry appears in Field 03-D, and no Form 8288-A is not attached to support the withholding amount claimed, review the entries on Form 8804 Lines 6a, 6b, 6c, 6d and 6e and check IDRS for any payments (TC 670, 710/716). If the payments on IDRS match, delete the entry in Field 03-D and enter in Field 03-A. Use AC "6" .

  6. If documentation is not attached to support the withholding amount (e.g., Form 8288-A or settlement statement) and there is no payment on the tax module, correspond for the missing documentation via IDRS letter 3104C.

    Caution:

    If a Form 8288-A is attached, then the FIRPTA credit must be credit verified on Form 13698, International Credit Verification Slip, or similar credit verification slip. If the FIRPTA credit has not been verified, forward the return to the FIRPTA Unit with AC "3" . This is true for any amount on Form 8288-A.

  7. Reply to 3104C Correspondence:

    • If the taxpayer responds with a copy of Form 8288-A(s) or a copy of the settlement statement to support the FIRPTA withholding amount, enter the amount from line 2 (only after it has been credit verified) in Field 03-D. Use Action Code "6" .

    • If the taxpayer responds with a copy of Form 8805 instead of Form 8288-A and it does not match the description in Figure 3.22.15-6a, delete or reduce the amount in Field 03-D. Use Action Code "6" and assign TPNC 02.

    • If the taxpayer responds with a copy of Form 8805 instead of Form 8288-A or 1042-S and it does match the description in Figure 3.22.15-6a, delete or reduce the amount in Field 03-D and enter the amount in Field 03-B. Use Action Code "6" .

    • If the taxpayer doesn’t reply to IDRS Letter 3104C, or doesn’t provide supporting documentation to substantiate the withholding amount, delete the entry in Field 03-D, use AC "6" and enter TPNC 02.

Field 03-E - Form 1042-S Section 1445(e) withholding on USRPI Investment Income

  1. Field 03-E is a 12 position field that may be present. Any entry present must be in dollars and cents.

  2. Field 03-E is located on Line 6e and includes the total amount withheld from Form 1042-S. It will post on IDRS with a TC 766 (Credit Reference Number (CRN) 333).

  3. The valid characters are numeric (0-9) or blank and must be positive.

  4. If the entry contains an invalid character, correct the entry by deleting the incorrect entry and entering the correct amount (dollars and cents) reflected on Form 8804, Line 6e by verifying it against the attached Form 1042-S. Use AC "6" .

    Note:

    If Line 6e is blank, delete the entry in Field 03-E. Use AC "6" .

  5. If an entry appears in Field 03-E, and Form 1042-S is not attached to support the withholding amount claimed ≡ ≡ ≡ ≡ ≡ ≡ ≡ , review the entries on Form 8804 Lines 6a, 6b, 6c, 6d and 6e and check IDRS for any payments (TC 670, 710/716). If the payments on IDRS match, delete the entry in Field 03-E and enter in Field 03-A. Use AC "6" .

  6. If documentation is not attached to support the withholding amount claimed ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and there are no payments on the tax module, correspond for the missing documentation via IDRS letter 3104C.

  7. If an entry appears in Field 03-E, and it is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ but Form 1042-S is not attached to support the withholding amount then allow the credit. Use AC "0" .

  8. If the taxpayer doesn’t reply to IDRS letter 3104C, or doesn’t provide supporting documentation to substantiate the withholding amount, delete the entry in Field 03-E, use AC "6" and enter TPNC 02.

  9. Reply to 3104C Correspondence:

    • If the taxpayer responds with a copy of Form(s) 1042-S, enter the amount from Line 9 (or totals of all line 9 if more than one 1042-S) in Field 03-E. Use AC "6" .

    • If the taxpayer responds with a copy of Form 8805 instead of Form 1042-S and it does not match the description in Figure 3.22.15-6a, delete or reduce the amount in Field 03-E. Use Action Code 6 and enter TPNC 02.

      Note:

      Check the tax period on IDRS (MFT 08) to see if the taxpayer made any payments, because it may well be that the taxpayer erroneously entered the payment(s) amount on line 6e (Field 03-E) instead of line 6a (Field 03-A).

    • If the taxpayer responds with a copy of Form 8805 instead of Form 1042-S and it does match the description in Figure 3.22.15-6a, delete or reduce the amount in Field 03-E and enter the amount in Field 03-B. Use Action Code "6" .

Field 03-F - Total Payments

  1. Field 03-F is a 12 position field that may be present. Any entry present must be in dollars and cents.

  2. The field is located on Line 7.

  3. The valid characters are numeric (0-9) or blank and must be positive.

  4. The entry on this line is the total of the credit amounts entered on Lines 6a, 6b, 6c, 6d and 6e.

  5. If the total of Field 03-F does not agree with the entries in Fields 03-A, 03-B, 03-C, 03-D and 03-E, it will underprint.

  6. If there is an actual error in the total credit amount, assign the appropriate Taxpayer Notice Code (TPNC).

    Caution:

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

Total Payments - Underprint

  1. The Total Payment Underprint appears on the error register when the total sum in Field 03-F does not match the total from Fields 03-A, 03-B, 03-C, 03-D and 03-E.

  2. If Field 03-F is in error, verify the amounts on Lines 6a, 6b, 6c, 6d and 6e of Form 8804. If no error can be found, then use Action Code "0" . Otherwise, if an error exist, then use the "Total Payments - Computer Underprint" amount. Enter Action Code "1" and the appropriate TPNC.

    Caution:

    If Total Payments Field 03-F underprints, make sure the taxpayer didn't inadvertently carry over the total tax from line 5e (Field 02-U) to line 7 (Field 03-F) rather than to line 9. Review Form 8804 and make your correction on the register.

Field 03-G - Estimated Tax Penalty

  1. Field 03-G is a 12 position field for which an entry may be present. Any entry present must be in dollars and cents.

  2. Valid characters are numeric (0-9) or blank.

  3. If line 8 has been deleted from Field 03-G, then enter the amount from Line 8 into Field 03-G and edit Action Code "6" to the left of Section 02.

  4. The partnership may or may not attach Form 8804 Schedule A to support the entry in Field 03-G.

    Note:

    Form 8804 Scheduled A is not required to be attached to support the entry. If the taxpayers calculated Estimated Tax Penalty is incorrect, then a CP 234 generates to the Accounts Management Branch for adjustment.

Field 03-H - Balance Due/Overpayment (±)

  1. Field 03-H is a 12 position field that may be present. Any entry must be dollars and cents.

  2. This field shows the computer calculation of the Balance Due or Overpayment amount from line 10 or 11 on Form 8804.

  3. The valid characters are numeric (0-9) or blank.

  4. A balance due is entered with a "+" field breaker. It is found on Line 10.

  5. An overpayment is entered with a "-" field breaker. It is found on Line 11.

  6. If the balance due or overpayment on the error register do not agree with the taxpayer's amount, it will underprint if the difference ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Note:

    Delete all penalties and interest that are included in Field 03-H, except for the amount from Field 03-G (Estimated Tax Penalty).

  7. If a refund had been transcribed as a balance due or vice-versa, correct the field breaker before sending a TPNC so that figures on the notice are correct.

Balance Due/Overpayment Computer Underprint (±)

  1. The Balance Due/Overpayment Computer Underprint appears on the error register when the total sum in Field 03-H does not match the sum of Fields 02-U and 03-G minus Field 03-F. Use Action Code "1" to send TPNC 03.

  2. If the error was caused by Fields 03-B, 03-C or 03-E, then make sure the ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ amount was taken into consideration. If not taken into account, then do so by correcting Fields 03-B, 03-C or 03-E. Use Action Code "6 " .

  3. If the error was caused by Field 02-U then make sure the ≡ ≡ ≡ ≡ ≡ ≡ ≡ tax tolerance amount was taken into consideration. If not taken into account, then do so by correcting Field 02-U. Use Action Code "6" .

Field 03-I - Credit Elect

  1. Field 03-I is a 12 position field that may be present. Any entry must be in dollars and cents.

  2. The valid characters are numeric (0-9) and must be positive only.

  3. Field 03-I is located on Line 13.

  4. The entry in this field directs the computer to transfer all or part of the overpayment to the module for the following year. On the current year module, this amount appears with a TC 836 (computer generated transaction), and on next years module it will appear with a TC 716.

  5. If there is a math error that changes the overpayment to a balance due, delete the amount in Field 03-I if not sending a TPNC. If you do send a TPNC, this correction is not necessary.

Field 03-J - $1 Million Reserve Code

  1. Field 03-J is a 1 position field that may be present.

  2. The valid characters are "1" and blank.

  3. Invalid conditions:

    • There is an entry other than "1" or blank.

    • There is an entry in the field that was transcribed (i.e. it is present on a RAW register).

  4. This field is entered only by SCRS or Rejects. It is not previously transcribed by ISRP.

    Note:

    Verify the million dollar refund/overpayment money by using a calculator. Subtract line 9 from line 7 on the calculator. See IRM 3.22.15.7 for additional instructions.

  5. A "1" is entered into this field only if there is a refund of one million dollars or more (Field 03-H).

    Note:

    Since this amount of refund would be issued manually, there will also be a Computer Condition Code "O" in Field 01-L, when this reserve code is used.

  6. Field 03-J must be blank if there is no refund or the refund is less than one million dollars.

    IF... Then...
    The entry is a "1" and it is not needed, Delete it.
    The entry is a "1" and it will be needed because the refund is one million dollars or more, Enter CCC "O," and line through the 1 and re-enter the "1" above Field 01-L.
    The entry is anything other than a "1," Delete it.
    Form 8804 Line # Transaction Code Field Designator Credit Reference # (CRN)
    5e 150 02-Y  
    6a 610, 670, 710, 716 03-A  
    6b 766 03-B 331

    Note:

    CRN for Form 8805.

    6c 766 03-C 330

    Note:

    CRN for Form 1042-S.

    6d 766 03-D 332

    Note:

    CRN for Form 8288-A.

    6e 766 03-E 333

    Note:

    CRN for Form 1042-S.

    13 830 or 836 03-I  

Field 03K - Manual Correction Field

  1. Field 03K is a 12 position field. It is entered in dollars and cents and must be positive. It is used when the computer cannot arrive at the correct amount of total tax.

  2. The manually verified tax field is entered on the dotted lines to the left of Line 5e (total tax) on Page 1. This amount is entered only by SCRS or Reject employees. It is not previously transcribed by ISRP.

Form 8804 - Tax Year 2017 Field Designators

Exhibit3.22.15-1Form 8804 - Tax Year 2017 Field DesignatorsThis is an Image: 37643208.gif
 

Please click here for the text description of the image.

This is an Image: 37643209.gif
 

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Form 8804 - Prior Tax Year 2010 Conversion

Exhibit3.22.15-2Form 8804 - Prior Tax Year 2010 ConversionThis is an Image: 37643206.gif
 

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This is an Image: 37643207.gif
 

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Form 8804 - Prior Tax Year 2009 Conversion

Exhibit3.22.15-3Form 8804 - Tax Year 2009This is an Image: 37643201.gif
 

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This is an Image: 37643202.gif
 

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Form 8804 - Prior Tax Year 2008 Conversion

Exhibit3.22.15-4Form 8804 - Tax Year 2008This is an Image: 37643210.gif
 

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This is an Image: 37643211.gif
 

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Form 8804 - Tax Years 2005 Through 2008 Conversion

Exhibit3.22.15-4Form 8804 - Tax Years 2005 Through 2008 ConversionThis is an Image: 37643203.gif
 

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This is an Image: 37643204.gif
 

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Form 8804 - Tax Year 2004 Conversion - Transcription Lines

Exhibit3.22.15-5Form 8804 - Tax Year 2004 Conversion - Transcription LinesThis is an Image: 37643205.gif
 

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Computer Condition Codes

Exhibit3.22.15-6Computer Condition Codes
Codes Explanation
A When a non-penalty Schedule A (Form 8804) is attached to Form 8804.
D When reasonable cause exist for waiver of the failure to pay penalty.
E Edit CCC E if a credit elect or penalty payment is to be applied.
F Final Return: There is a clear indication on the return itself or on an attachment that the return will not be required to be filed for future years.
G Amended Return:
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.
O When a pre-settlement manual refund was paid.
Q To indicate a manual computation of the return with a math error.
R To indicate a delinquent return with reasonable cause. Do not assess a failure to file penalty.
S When an overpayment appears on Form 8804, and the taxpayer does not specify application of the overpayment to the subsequent period.
V To indicate a delinquent return with reasonable cause established, or applicability of Failure to File (FTF) penalty not determined.

Note:

The $20 daily delinquency will not generate.

W When a return has been cleared by statute.
X Indicates that excess remittance with return or overpayment be applied to another account.

Note:

This code is used when it has been determined that an excess remittance should be applied to a different tax class or module (Period). The CCC "X" will freeze the tax module from refund or offsetting any monies by generating TC 570.

Y To accept the return as submitted by the partnership.

Example:

A short period return.

3 No Reply to Correspondence:
To bypass validation of the correspondence received date when the taxpayer fails to reply to IRS-generated correspondence.
4 When the return is notated "Prepared under IRC § 6020(b)."
7 When denying the reasonable cause explanation for filing and paying late.

Caution:

When using "CCC 7" do not use "CCC D or R"

TPNC Chart

Exhibit3.22.15-7TPNC Chart

Taxpayer Notice Codes

Code Description
01 We found an error in the Total Section 1446 tax.
02 We cannot allow the amount of tax withheld shown on Form 8804 because you didn't attach any supporting documentation. Therefore, we changed your return. If we are in error, please provide us with the necessary documentation to support the amount of withholding taxes claimed on your return. This documentation can be a copy of either Form 8805, Form 8288-A, or Form 1042-S.
03 We found that the installment tax payments (Payments with Extension of time to file and overpayments applied from last year's taxes) shown on your account do not agree with the amount claimed on your return.
90 Open paragraph for any error that is not covered by a TPNC.

♦U.S. Possessions ZIP Codes♦

Exhibit3.22.15-8U.S. Possessions ZIP Codes

American Samoa (AS)

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

Federated States of Micronesia (FM)

City ZIP Code City ZIP Code
Chuuk 96942 Pohnpei 96941
Kosrae 96944 Yap 96943
 

Guam (GU)

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

Marshall Islands (MH)

City ZIP Code City ZIP Code
Ebeye 96970 Majuro 96960
 

Northern Mariana Islands (MP)

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

Palau (PW)

City ZIP Code City ZIP Code
Koror 96940 Palau 96940
 

Puerto Rico (PR)

City ZIP Code City ZIP Code
Adjuntas 00601 Las Marias 00670
Aguada 00602 Las Piedras 00771
Aguadilla 00603 Levittown 00949 - 00950
Aguas Buenas 00703 Loiza 00772
Aguirre 00704 Loiza Street Station 00936
Aibonito 00705 Luquillo 00773
Anasco 00610 Manati 00674
Angeles 00611 Maricao 00606
Arecibo 00612 Maunabo 00707
Arroyo 00714 Mayaguez 00680
Bajadero 00616 Mercedita 00715
Barceloneta 00617 Minillas 00940
Barranquitas 00794 Moca 00676
B O Station 00935 Morovis 00687
Bayamon 00956 Naguabo 00718
Boqueron 00622 Naranjito 00719
Cabo Rojo 00623 Orocovis 00720
Caguas 00725 Palmer 00721
Camuy 00627 Patillas 00723
Canovanas 00729 Penuelas 00624
Caparra Heights 00920 - 00922 Ponce 00731
Carolina 00979 - 00987 Puerta de Tierra 00906
Catano 00962 Puerta Real 00740
Cayey 00736 Punta Santiago 00741
Ceiba 00735 Quebradillas 00678
Ciales 00638 Ramey 00603
Coamo 00769 Rincon 00677
Comerio 00782 Rio Blanco 00744
Corozal 00783 Rio Grande 00745
Coto Laurel 00780 Rio Piedras 00925, 00927, 00928
Culebra 00775 Rosario 00636
Dorado 00646 Sabana Grande 00637
Ensenada 00647 Sabana Hoyos 00688
Fajardo 00738 Sabana Seca 00952
Fernandez Juncos 00909 - 00910 Saint Just 00978
Florida 00650 Salinas 00751
Fort Buchanan 00934 San Antonio 00690
Garrochales 00652 San German 00683
Guanica 00653 San Juan 00936
Guayama 00784 San Lorenzo 00754
Guayanilla 00656 San Sebastian 00685
Guaynabo 00965 - 00971 Santa Isabel 00757
Gurabo 00778 Santurce 00907 - 00908
Hatillo 00659 Toa Alta 00953
Hato Rey Sta 00917 - -00919 Toa Boa 00949
Humacao 00791 Trujillo Alto 00976
Isabela 00662 Utuado 00641
Jayuya 00664 Vega Alta 00692
Juana Diaz 00795 Vega Baja (box 1 - 9049) 00694
Juncos 00777 Vieques 00765
Lajas 00667 Villalba 00766
La Plata 00786 Yabucoa 00767
Lares 00669 Yauco 00698
 

Virgin Islands - U.S. (VI - Entity Section) (VQ - Other than Entity Section)

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

♦Province, State and Territory Abbreviations♦

Exhibit3.22.15-9Province, State and Territory Abbreviations
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 Abbreviation
Acre AC
Alagoas AL
Amapa AP
Amazonas AM
Bahia BA
Ceara CE
Distrito Federal DF
Esperito Santo ES
Goias GO
Maranhao MA
Mato Grosso MT
Mato Grosso do Sul MS
Minas Gerais MG
Parana PR
Paraiba PB
Para PA
Pernambuco PE
Piaui PI
Rio Grande do Norte RN
Rio Grande do Sul RS
Rio de Janeiro RJ
Rondonia RO
Roraima RR
Santa Catarina SC
Sergipe SE
Sao Paulo SP
Tocantins TO
Canada Province/Territory 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 Provincias Abbreviation
Camaguey CG
Ciego de Avila CA
Cienfuegos CF
Ciudad di La Habana CH
Gramma (Bayamo) GR
Guantanamo GT
Holguin HO
La Habana HA
Matazas MT
Municipio Especial Isla de la Juventud IJ
Pinar del Rio PR
Sancti Spiritus SS
Santiago de Cuba SC
(Victoria de) Las Tunas LT
Villa Clara VC
Italy Provincia Abbreviation
Agrigento AG
Alessandria AL
Ancona AN
Aosta/Aoste AO
Arezzo AR
Ascoli Piceno AP
Asti AT
Bari BA
Belluna BL
Beneveto BN
Bergamo BG
Biella BI
Bologna BO
BolozanoBolzen BZ
Brescia BS
Brindisi BR
Cagliari CA
Caltanisetta CL
Campobasso CB
Caserta CE
Catania CT
Catanzaro CZ
Chieti CH
Como CO
Cosenza CS
Cremona CZ
Crotone KR
Cuneo CN
Enna EN
Ferrara FE
Firenze FI
Foggia FG
Forli FO
Frosinone FR
Genova 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
Milano MI
Modena MO
Napoli NA
Novara NO
Nuoro NU
Oristano OR
Padova PD
Palermo PA
Parma PR
Pavia PV
Perugia PG
Pesaro-Urbino PS
Pescara PE
Piacenza PC
Pisa PI
Pistoia PT
Pordenone PN
Potenza PZ
Prato PO
Ragusa RG
Pavenna RA
Peggio de Calabria RC
Reggio nell'Emilia RE
Rieti RI
Rimini RN
Roma RM
Rovigo RO
Salerno SA
Sassari SS
Savona SV
Siena SI
Siracusa SR
Sondrio SO
Taranto TA
Teramo TE
Terni TR
Torino TO
Trapani TO
Trento TN
Treviso TV
Trieste TS
Udine UD
Varese VA
Venezia VE
Verbania VB
Vercelli VC
Verona VR
Vibo Valentia VV
Vincenza VI
Viterbo VT
Mexico State 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 Abbreviation
Drenthe DR
Flevoland FLD
Friesland FR
Gelderland GLD
Groningen GN
Lemburg LB
North Brabant NB
North Holland NH
Overijssel OV
South Holland ZH
Utrecht UT
Zeeland SLD

♦Potential Frivolous Arguments for Examination Review♦

Exhibit3.22.15-10Potential Frivolous Arguments for Examination Review

Potential Frivolous Arguments for Examination Review

Potential Frivolous Arguments Description
Alleged Churches/First Amendment Income from non-religious sources and may claim a vow of poverty.
Altered Form Altering any or all line items with the intent of facilitating non-compliance with the tax laws.
Altered Jurat/UCC (Uniform Commercial Code) 1-207 Return contains income and deductions but the jurat has been altered or stricken. May include reference to UCC 1-207 or a statement that the return was not signed under penalties of perjury.
Amended Returns/Form 843 (Claim for Refund and Request for Abatement) Claim 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 various types of deductions, credits, or overpayments/refunds that have no relation to reality and because of their outrageous character, qualify as frivolous returns.

  2. Files a return containing the filers identifying information but does not request a refund, often lacking sufficient information to determine a tax liability.

  3. Files a return with various types of rambling dialogue and/or crazy arguments that no one could reasonably view as a good faith attempt to comply with the law.

  4. Files a return that attempts to send some type of message or protest to the IRS, but fails to include sufficient identifying information for the Service to either determine the identity of the taxpayer or correspondent or return address.

Challenges to Authority/Due Process Questions various administrative authorities such as delegation orders, summons authority, privacy act, etc. Argues that they must be afforded a hearing or a trial before taxes can be assessed or before property can be seized.
Challenges to Authority/Title 26 or "law" in Other Documents Argues that Title 26 of the United States Code is not law because it was never enacted as named.
Collection Issues Files frivolous documents contending that various collections issues are invalid (e.g., Offers in Compromise, Collection Due Process Requests, Installment Agreements, Appeals Requests, etc.) because they are not filed and/or 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 that United States citizens and residents are not subject to tax on their wages or other income derived from sources within the United States, as only foreign-based income or income received by nonresident aliens and foreign S Corporations from sources within the United States is taxable.
Form 1099-OID
(Original Issue Discount)
An individual files a return reporting false amounts of income (generally "Other or Miscellaneous" income) and all of them claim 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 (Original Issue Discount) 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 that wages are exempt from withholding. Based on IRC § 861, promoters of this scheme advise employers to stop withholding and paying payroll taxes on their employee's wages. In addition, some employers file amended payroll tax returns and request refunds of previously paid payroll taxes.
IRS is a Private Organization/Collects Tribute, Not Taxes Argues that the IRS is an entity named the Internal Revenue and Tax Service, Inc., which was incorporated in Delaware in 1933, it is a collection agency for the Federal Reserve Bank, or is part of the United Nations and is clandestinely leading the tax-paying public into a "new world order."
Not a Person Argues that a taxpayer is not a "person" within the meaning of section 7701(a)(14) of the Internal Revenue Code.
Obscene, Vulgar, Harassing Submits documents or other materials indicating that non-filing is due to dissatisfaction with tax policies or taxation in general. Often, this argument is expressed with obscene, vulgar, or crude language and characters in an extremely demeaning manner.
Protest Against Government Action/Inaction Argues that refusal to file or pay is justified because they disagree with government policies or spending plans.
Sixteenth Amendment Argues the Sixteenth Amendment was not properly ratified and therefore the federal government does not have the legal authority to collect an income tax without apportionment.
Straw Men Argues the government has created an entity separate and distinct from the taxpayer - a "straw man" and any tax obligations are exclusively those of the "straw man" .
Taxes are Voluntary/Law Does Not Require Submits a return, amended return or correspondence that argues income taxes are voluntary.
U.S. vs. Long Submits a return with zero money amounts much the same as the Zero Return category and U.S. vs. Long is referenced. See NOTE in Zero returns below.
Unsigned Returns The individual completes a return but fails to sign, a statement indicating disagreement with the tax system is attached or added to the return.
Valuation Income is not taxable because of the declining fair market value of the dollar, because the dollar is not backed by gold/silver, because the value of services is offset by the value of the labor (barter income), etc.
Zero Returns (ZERO) Submits a return with zero money amounts on all or most of the line items on the form (e.g., IRC § 861, Form 2439, Form OID and other BMF filings that claim no income and request refunds). See Rev. Rul. 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 contain arguments regarding 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:

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

Other All others including those listed in Notice 2010-33. This category includes non-filer accounts resulting from initial compliance check such as cross-reference TINs. See http://www.irs.gov/Tax-Professionals/The-Truth-About-Frivolous-Tax-Arguments-Introduction for additional information.

Note:

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

Glossary and Acronyms

Glossary

GLOSSARY DEFINITION
ACTION CODES Numeric codes edited in the bottom center margin of a return to reject documents and identify the reason the document has been rejected.
ACTION TRAIL A notation in the lower left side margin on page 1 of a return which indicates or explains an action taken.
AMENDED RETURN A return that changes information submitted on a previously filed return.
AUDIT CODE An alpha character edited in the right bottom margin of a return to identify a specific condition for the Examination Operation.
BATCH A group of blocks of documents. A batch cannot contain more than 20 blocks.
BLOCK A group of up to 100 documents with consecutive DLNs containing the same block number (digits 9 through 11 of the DLN). (A block cannot contain more than 100 documents since the documents are numbered from 00 to 99.)
BUSINESS MASTER FILE (BMF) A magnetic tape file containing information about taxpayers filing business returns and related documents.
CALENDAR YEAR A tax year that begins January 1 and ends on December 31.
CENTRAL AUTHORIZATION FILE (CAF) Computerized system of records which houses authorization information from Powers of Attorney (POAs), Tax Information Authorizations (TIAs) and state tax returns. The CAF system contains two types of records:
  1. Taxpayer records

  2. Representative records

CHECK DIGITS Two alpha characters used to identify the tax account.
CODING Placing symbols that have specific meanings on returns. These codes direct the computer to perform certain programmed functions.
COMPUTER CONDITION CODE (CCC) A single alpha or numeric character edited on a return which either identifies a special condition or directs the computer to take a specific programmed action. CCCs are posted to the Master File.
CORRESPONDENCE ACTION SHEETS (CAS) Forms used to request information from the taxpayer. Some are mailed to the taxpayer with the return; others generate a letter.
CURRENT YEAR RETURN For processing in 2017, a Current Year Return is a return filed for tax year 2016.
DATA All information reported or coded on forms, schedules, and attachments.
DELINQUENT RETURN A return filed after the due date without an approved extension.
DOCUMENT Written information, (e.g., forms, schedules and attachments).
DOCUMENT LOCATOR NUMBER (DLN) A fourteen-digit number assigned to every return and document input through the Automatic Data Processing (ADP) system.
DUMMYING The act of transferring information provided by the taxpayer onto a required transcribed form/schedule.
EDITING Preparing returns and attachments for data entry or other transcription processes by correcting entries and entering edit marks.
EMPLOYER IDENTIFICATION NUMBER (EIN) A nine-digit number that identifies the account of a business taxpayer on the Business Master File.
ENTRY Any type of mark entered by, or edited for, the taxpayer.
ERROR RESOLUTION SYSTEM (ERS) A system for the examination and correction of returns rejected due to taxpayer and processing errors.
FISCAL YEAR A tax year which ends on a date other than December 31.
FORM An IRS document identified by a number, e.g., Form 1040.
FRIVOLOUS FILER/NON-FILER Filers and non-filers who use certain types of tax avoidance arguments which are not supported by law.
HARDSHIP An indication of severe consequences for a taxpayer caused by the normal application of IRS regulations and procedures. Although a determination of hardship is highly subjective, the work leader must be consulted if a particular situation may be considered for referral to the Taxpayer Advocate Service (TAS).
INDIVIDUAL MASTER FILE (IMF) A magnetic tape file containing information about taxpayers filing individual income tax returns and related documents.
INDIVIDUAL TAXPAYER IDENTIFICATION NUMBER (ITIN) A unique nine-digit number assigned by the IRS to individuals who must file a U.S. tax return or are listed as a spouse or a dependent and who do not have and cannot obtain a valid Social Security Number. Taxpayers obtain an ITIN by filing a Form W-7.
INTEGRATED DATA RETRIEVAL SYSTEM (IDRS) A system that enables employees in the area/territory offices and the campuses to have visual access to certain computer-based information in taxpayer accounts.
INTEGRATED SUBMISSION AND REMITTANCE PROCESSING SYSTEM (ISRP) A computerized system which will convert paper tax and information documents and remittances received by IRS into perfected electronic records of taxpayer data.
INTERNATIONAL RETURN A return on which income is excluded or not reported because of revenues from, payments to, or residence in a foreign country.
JULIAN DATE A calendar date expressed as the number of days since the beginning of the year. For example, February 1 is Julian Date 032.
JURAT The perjury statement required in the signature area of a tax return, form, or schedule.
MASTER FILE A magnetic tape record which contains taxpayer accounts.
MISBLOCKED RETURN A Form 1040, Form 1040A or Form 1040EZ, found in the wrong type of block or batch. For example, a Form 1040A found in a batch of Forms 1040.
MISFILED RETURN A Form 1040, Form 1040A or Form 1040EZ, filed when a BMF form should have been filed instead.
NAME CONTROL The first four characters of the taxpayer's surname. Also used for dependents, qualifying children, child care providers, etc.
NON-RESIDENT ALIEN (NRA) An alien individual (not a U.S. citizen), who does not meet either the green card test or the substantial presence test for the calendar year.
NUMERIC CHARACTER A number or numeral between 0 and 9, inclusive.
PERFECTING Making returns acceptable for data entry through editing procedures.
PIPELINE The areas in the IRS Submission Processing Campus that process a return from the time it is received until the data from the return is entered to an account in the IRS' main computer. These areas include Receipt and Control, Code and Edit, Data Conversion, Error Resolution, Rejects, and Unpostables.
POWER OF ATTORNEY (POA) A form authorizing a representative to perform certain acts on the taxpayer's behalf.
PAID PREPARER IDENTIFICATION NUMBER (PTIN) Paid preparer tax identification number.
PRIMARY TAXPAYER The taxpayer who is listed first on the name line caption of a joint return, regardless of whether that taxpayer is male or female.
PRIMARY TAXPAYER IDENTIFICATION NUMBER (P-TIN) The TIN associated with the taxpayer who is listed first on the name line of the caption.
PRIOR YEAR RETURN A return for a tax period prior to the current tax year.
PROCESSABLE RETURN A return which meets all the requirements for ISRP input.
RECEIVED DATE Date a return was received by the IRS. If the date is unknown and a Received Date is required, there is a prescribed formula for determining the date to edit as the Received Date. (Required on Amended, Fiscal Year, Short Year, Prior Year, and Delinquent Returns.)
RE-INPUT DOCUMENT A document that did not post to the Master File when originally entered and is now being entered again with a Form 3893, Re-Entry Document Control.
RETURN A legal document used by the taxpayer to report income, deductions, and tax liability.
RETURN DUE DATE The date in which the return is due to the Internal Revenue Service.
RETURN PROCESSING CODE (RPC) A single character edited on a return to direct the computer to take specific actions in processing the return. This code does not post to the Master File.
SCHEDULE An IRS document identified by alpha characters or numbers (e.g., Schedule B, Schedule 8812).
SECONDARY TAXPAYER The taxpayer who is listed second on the name line caption of a joint return, regardless of whether that taxpayer is male or female.
SECONDARY TAXPAYER IDENTIFICATION NUMBER (S-TIN) The TIN associated with the taxpayer whose name appears second on a joint return.
SIGNIFICANT ENTRY Any positive or negative number or dollar amount other than zero.
SOCIAL SECURITY NUMBER (SSN) A nine-digit number identifying the account of an individual on the Individual Master File.
STATUTE RETURN A return filed for a Tax Period more than three years prior to the current Tax Period.
SUFFIX Information added at the end of a word, phrase, or series of numbers. For instance, a title may be edited as a suffix to a name as in James Canary, Exec.
TAX EXAMINER (TE) STAMP A rubber stamp containing a unique identifying number of the Code & Edit tax examiner working the return.
TAX PERIOD The time covered by a particular return represented by the year and month in which the period ends. For example, 1612 stands for the tax year ending December 31, 2016.
TAXPAYER ADVOCATE SERVICE (TAS) An independent organization within the IRS whose employees assist taxpayers who are experiencing economic harm, who are seeking help in resolving tax problems that have not been resolved through normal channels, or who believe than an IRS system or procedure is not working as it should.
TAXPAYER IDENTIFICATION NUMBER (TIN) A nine-digit number which identifies the account of an individual or business taxpayer. The TIN may be a Social Security Number (SSN), an Individual Taxpayer Identification Number (ITIN), Adoption Taxpayer Identification Number (ATIN) or an Employer Identification (EIN).
THIRD PARTY DESIGNEE Person given permission by the taxpayer to discuss their current year return processing issues with the IRS.
TRANSACTION CODE (TC) A three-digit numeric code defining the precise nature of an action posted to the Master File.
TRANSCRIPTION The process of transferring information from documents to a computer-readable form. Also called data conversion, input, and entry.
UNPOSTABLES Data which cannot be entered successfully to an account at the Martinsburg Computing Center (MCC) and is returned to the Campus for corrective action.
UNPROCESSABLE DOCUMENT A document which cannot be perfected for the ADP system, usually because of incomplete information.
 

Acronym

ACRONYM DEFINITION
ADM Administrator
AKA Also Known As
AP Approved Paragraph
APO Army Post Office
ASED Assessment Statute Expiration Date
AUSPC Austin Submission Processing Campus
AWS Alternative Work Schedule
BMF Business Master File
BOB Block Out of Balance
CAF Centralized Authorization File
CAS Correspondence Action Sheet
CCC Computer Condition Code
CLS Common Law Spouse
COMM Commissioner
CONS Conservator
CP Computer Paragraph
CPA Certified Public Accountant
CSPC Cincinnati Submission Processing Campus
CY Calendar Year
DECD Deceased
DLN Document Locator Number
DOD
  • Date of Death

  • Department of Defense

DPO Diplomatic Post Office
EGA Ethics in Government Act
EIN Employer Identification Number
ELF Electronic Filing
ERS Error Resolution System
EXEC Executor
FEC Foreign Employer Compensation
FICA Federal Insurance Contribution Act
FMV Fair Market Value
FPO Fleet Post Office
FSPC Fresno Submission Processing Campus
FRP Frivolous Return Program
FTD Federal Tax Deposit
FTF Failure to File
FTP Failure to Pay
FY Fiscal Year
GDN Guardian
IDRS Integrated Data Retrieval System
IDT Identity Theft
IMF Individual Master File
IRC Internal Revenue Code
IRM Internal Revenue Manual
IRP Information Returns Processing
IRS Internal Revenue Service
IRSN Internal Revenue Service Number
ISRP Integrated Submission and Remittance Processing System
ITIN Individual Taxpayer Identification Number
IVO Integrity and Verification Operation
KCSPC Kansas City Submission Processing Campus
LAFCP Living Abroad Foreign Care Provider
LEM Law Enforcement Manual
MCC Martinsburg Computing Center
MeF Modernized e-File
MFT Master File Tax
NCOA National Change of Address
NO National Office
NR No Record
NRA Non-Resident Alien
OSPC Ogden Submission Processing Campus
PAO Process As Original
PCD Program Completion Date
PDS Private Delivery Service
PER REP Personal Representative
POA Power of Attorney
POD Post of Duty
PPR
  • Personal Property Rental

  • Payment Plan Request

P-TIN Primary Taxpayer Identification Number
Prep. TIN(PTIN) Paid Preparer Taxpayer Identification Number
PY Prior Year
RICS Return Integrity and Correspondence Services
RPC Returns Processing Code
RTN Routing Transit Number
SERP Servicewide Electronic Research Program
SPC
  • Special Processing Code

  • Submission Processing Center

SFR Substitute for Return
SSN Social Security Number
TAS Taxpayer Advocate Service
TC Transaction Code
TE Tax Examiner
TIN Taxpayer Identification Number
TP Taxpayer
TR Trustee
TY Tax Year
USPS United States Postal Service