3.22.110 Processing Form 1042 Withholding Returns

Manual Transmittal

November 18, 2019

Purpose

(1) This transmits revised Internal Revenue Manual (IRM) 3.22.110, International Error Resolution - Processing Form 1042 Withholding Returns.

Material Changes

(1) IRM 3.22.110 Editorial changes have been made throughout this IRM.

(2) IRM 3.22.110 Dates and tax periods have been revised throughout this IRM for Tax Year 2019.

(3) IRM 3.22.110.1.1(7) Added words" the current year" .

(4) IRM 3.22.110.1.2(2) Revised the reference to Policy Statements.

(5) IRM 3.22.110.2 Added new section for General Information per BMF Consistency template. All subsequent sections renumbered.

(6) IRM 3.22.110.3(2) Removed Cincinnati due to SP consolidation.

(7) IRM 3.22.110.15.2(2) Removed OUO restriction, not applicable in this section.

(8) IRM 3.22.110.16.7 Removed OUO restriction from note, no longer considered OUO.

(9) IRM 3.22.110.18.1 Note Deleted second sentence of note, repetitive.

(10) IRM 3.22.110.18.7.1 Removed references to Cincinnati in (3) and (5) due to SP consolidation.

(11) IRM 3.22.110.18.8 Added the April 15th date and the effective years for Partnership Items (IRC 6229).

(12) IRM 3.22.110.19.5.6(2) Added tax year and removed first bullet and put the information in a note.

(13) IRM 3.22.110.19.5.6(2) Added 10 and 11 as applicable status codes.

(14) IRM 3.22.110.19.5.8(2) Added tax year and removed first bullet and put the information in a note.

(15) IRM 3.22.110.19.5.8(2) Added 10 and 11 as applicable status codes.

(16) IRM 3.22.110.19.15(5) Added note in regard to CCC J and CCC R.

(17) IRM 3.22.110.19.15(5) Note Added 10 and 11 as applicable status codes.

(18) IRM 3.22.110.21.5.1 Revised definition of CCC A; now entered only when the QDD checkbox is marked, Schedule Q or statement not required.

(19) IRM 3.22.110.21.5.6(2) Revised to remove status codes of 10 and 11.

(20) IRM 3.22.110.21.5.8(2) Removed note.

(21) IRM 3.22.110.21.5(7) Updated the ZIP Code chart.

(22) IRM 3.22.110.21.15(3) Added word "generally" and revised note in (5).

(23) IRM 3.22.110.21.16(3) Added word "generally" .

(24) IRM 3.22.110.22.23 Revised section to allow for Form 1099 to be used as substantiation for line 67a/67b.

(25) IRM 3.22.110.24.23(6) Removed reference to specific type of Form 1099.

(26) IRM 3.22.110.24.28(7) Removed reference to FFIs and QIs from chart.

(27) IRM 3.22.110.26.2(3) Added information to enter the EIN on the return, If/Then Table - corrected digits in EIN and added new information for consecutive numbers and repeating numbers.

(28) IRM 3.22.110.26.3(3) Added information to enter the EIN on the return, If/Then Table - corrected digits in EIN and added new information for consecutive numbers and repeating numbers.

(29) IRM 3.22.110.26.4(3) Added information to enter the EIN on the return, If/Then Table - corrected digits in EIN and added new information for consecutive numbers and repeating numbers.

(30) IRM 3.22.110.26.26 Removed OUO restriction from section with the exception of next to last row of chart.

(31) Exhibit 3.22.110-2 Deleted entry for Foreign Withholding Trust, duplicated in item below.

(32) Exhibit 3.22.110-2 Revised the description for back-up withholding.

(33) Exhibit 3.22.110-10 Revised C-filings description to change word crazy to confusing; updated description for Form 1099-OID to conform with 3.21.110; removed restriction from Zero Returns, no longer considered OUO; updated description for U.S. v. Long to state more clearly.

Effect on Other Documents

This IRM supersedes IRM 3.22.110 dated November 15, 2018, effective 01-01-2019. This IRM also contains the following procedural updates made between January 2019 and October 2019: 19U0014, 19U0113, 19U0307, and 19U0445.

Audience

Wage and Investment, Error Resolution employees of the Ogden Submission Processing Campus (OSPC Only).

Effective Date

(01-01-2020)

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

Program Scope and Objectives

  1. Purpose: This Internal Revenue Manual (IRM) provides instructions to resolve errors made by taxpayers and those made during campus processing.

  2. Audience: Tax examiners (TEs) in the Error Resolution Department of the Ogden Submission Processing Center, Wage and Investment Division (W&I), are the primary users of this IRM.

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

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

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

Background

  1. IRC Section 1441 - IRC Section 1443, Chapter Three Withholding: US Code Title 26, Chapter 3, Sections 1441, 1442, and 1443, provides requirements for withholding on payments of income to foreign persons, including nonresident alien individuals, foreign entities, and governments.

  2. IRC Section 1471-1474, Chapter 4 Withholding: US Code Title 26, Chapter 4, Subtitle A, Sections 1471 through 1474. US Code provides withholding and reporting requirements for Foreign Financial Institutions (FFI) and Non-Financial Foreign Entity (NFFE) withholding agents that make withholdable payments. The forms included in this IRM are used to report the withholding requirements in the above referenced US Code Title 26.

  3. Every withholding agent or intermediary who receives, controls, has custody of, disposes of, or pays any fixed or determinable annual or periodical income must file an annual return for the preceding calendar year on the current year Form 1042.

  4. The 9/11 Healthcare Bill signed January 2, 2011, (Public Law 111-347) introduced the paying, reporting and collection of a two percent (2 percent) excise tax on specified federal procurement payments made to foreign persons or entities Effective January 2, 2011.

Authority

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

    • IRC Section 6201(a)

    • IRC Section 6213(b)

    • IRC Section 6402(a)

    • IRC Section 6511

    • IRC Section 1441-1443

    • IRC Section 1471-1474

  2. Policy Statements for Submission Processing are contained in IRM 1.2.1, Servicewide Policy Statements.

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 Objectives and Review

  1. Program Goals: Correct all Errors identified by the Error Resolution System.

  2. Program Reports: The Monitoring Section under Submission Processing Program Mgmt./Process Assurance monitors the ERS reports. In addition, daily, weekly and periodic reports are available to management through Control-D WebAccess to manage inventory and capture data for program planning and review.

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

    • Embedded Quality Submission Processing (EQSP)

    • Balanced Measures

    • Managerial Reviews

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

Terms/Definitions/Acronyms

  1. See Exhibit 3.22.110-2 for a glossary of terms and Exhibit 3.22.110-4 for abbreviations used in this IRM.

Related Resources

  1. ERS TEs use the following resources in conjunction with this IRM:

    • IRM 3.12.38, BMF General Instructions

    • Job Aid 2543-701; ERS Chapter Three Withholding (CTW) Form 1042

    • Job Aid 2513-703; International Submission Processing IMF Foreign Address Job Aid

    • Integrated Data Retrieval System (IDRS)

    • Servicewide Electronic Research Program (SERP)

    • Related IRS publications listed in Exhibit 3.22.110-3

General Information

  1. This IRM cannot address every possibility that may arise while correcting returns or documents. You must take into consideration taxpayer intent. In these unique cases, refer the issue to your subject matter expert (SME), lead and/or manager to determine the proper corrective action.

♦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 Ogden, Kansas City, 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.

♦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 a 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 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 by 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 the 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 & Investment (WI) Division, Small Business & Self-Employed (SB/SE) Division, Tax Exempt & Government Entities (TE/GE) Division, Criminal Investigations (CI), Appeals, and Large Business & 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://taxpayeradvocate.irs.gov/About-TAS/Taxpayer-Rights.

♦BMF Identification (ID) Theft♦

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

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

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

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

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

♦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.

  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 Letter 1791C, U.S. Annual Return of Income Paid at Source Incomplete for Processing: Form 1042, CAS, 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 11.3.1.14, Facsimile (FAX), Electronic Facsimile (E-FAX), and IRS Internal Enterprise Electronic Facsimile (EEFAX) Transmission of Tax Information

♦Correspondence Imaging System (CIS) Returns♦

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

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

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

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

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

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

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

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

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

♦CADE 2♦

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

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

  3. The BMF campus cycles are:

    1. Campus Cycle: Thursday - Wednesday

    2. Master File Processing: Friday - Thursday

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

    4. Unpostables: New available Tuesday; Closing Tuesday

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

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

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

      Note:

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

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

    • 01 = Friday

    • 02 = Monday

    • 03 = Tuesday

    • 04 = Wednesday

    • 05 = Thursday

      Note:

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

♦Working Trail♦

  1. Leave a legible "Working Trail" (or "Action Trail" ) for those who may work with the return later.

  2. Write all Taxpayer Notice Codes (TPNCs) 90 on the front of the return in the upper left corner (or use Form 12648, Error Correction 90 TPNC). See IRM 3.22.110.21.17, Taxpayer Notice Codes, for additional information.

  3. If corresponding with a non-suspense letter, "X" and write the corrected money amounts to the left of each original point(s) of error. Edit money amounts in dollars only or dollars and cents, as applicable. Arrow money amounts when there are no intervening entries between the arrow and the line to which the money is to be edited. Do not arrow money amounts when there is an intervening entry.

  4. Leave a working trail on the return when changes are made to the following items:

    • Employer Identification Number (EIN) or Social Security Number (SSN)

    • Tax Period

    • Computer Condition Code (CCC)

    • Received Date

    • Correspondence Received Date (CRD)

    Reminder:

    Circle out incorrect Tax Periods, Received Dates, Employer Identification Numbers (EINs), and Social Security Numbers (SSNs).

  5. When working Reject re-inputs, circle out any previous Action Codes shown on the front of the return, if no longer applicable.

  6. When working Rejects, line through the DLN in red and write "Voided" with the date above the DLN, when voiding a return.

♦General Disclosure Guidelines♦

  1. IRC Section 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 CFINK for Power of Attorney (POA)).

  2. Taxpayer returns and return information must remain confidential as provided for in IRC Section 6103,Confidentiality and disclosure of returns and return information. IRC Section 7431 provides civil damages for unauthorized disclosure of returns and return information. IRC Section 7213 and IRC Section 7213A provide criminal penalties for unauthorized disclosure or unauthorized inspection of returns and return information. These IRCs also require employees to 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 through IRM 11.3.40, Disclosure of Official Information.

Purpose of Error Resolution

  1. This section of the IRM provides procedures for correcting and processing Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons,

  2. This IRM is designed to be used by the Error Correction (ERS) TEs at the OSPC.

    Note:

    Form 1042 is only filed at the OSPC. Those erroneously filed at other locations are to be forwarded to the OSPC.

  3. While this IRM is your primary source of information, you must also be familiar with:

    • IRM 3.21.110, Processing Form 1042 Withholding Returns (Document Analysis/Code and Edit)

    • IRM 3.12.38, Business Master File (BMF) General Instructions

  4. In addition, it may be necessary to research information or procedures in IRMs:

    • IRM 3.37.110, ISRP - Chapter 3 Withholding Returns

    • IRM 3.10.72Receiving, Extracting, and Sorting

    • IRM 3.10.73, Batching and Numbering

    • IRM 3.12.279, Business Master File (BMF)/Combined Annual Wage Reporting (CAWR)/Payor Master File (PMF) Unpostable Resolution

    • IRM 3.13.222, BMF Entity Unpostable Correction Procedures

    • IRM 3.30.123, Processing Timeliness: Cycles, Criteria and Critical Dates

    • IRM 2.3.2, Introduction to Integrated Data Retrieval System (IDRS) Terminal Responses

  5. The telephone may be used, at the discretion of management, to resolve questions pertaining to returns on the Error Resolution System in lieu of suspending those returns for subsequent correspondence action.

  6. ERS and Reject TEs are not expected to redo the work of Code and Edit (C&E) TEs. While a complete review of the return is not required, if an omission or error made by C&E is noticed while working Form 1042, enter the correct information onto the return.

    Note:

    You must review all IDRS Correspondence Action Sheets (CAS) prepared by C&E to ensure all required missing data and clarification is requested.

General Processing Instructions

  1. Form 1042 is processed under:

    • Program Code: 12500

    • File Source: Business Master File (BMF)

    • File Location Codes: Domestic 29/ International 60/ US Possessions 78

    • Tax Class: 1

    • Master File Tax (MFT): 12

    • Document Code: 25

    • Blocking Series: 501-999

    • Return Due Date: March 15, XXXX

  2. Withholding Agents may request an extension of time to file using Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns. No request for extension can exceed a six-month period. The due date is extended to 6 months from the due date of the return, generally September 15th, (for exceptions, see instructions for Form 7004, lines 2 and 3.

  3. The following conditions apply to Form 1042 processing:

    • No edit sheet;

    • No attached schedules;

    • Audit codes are not used;

    • Calendar Year only filing, no fiscal or short year returns allowed.

  4. This chart lists the related Forms and Documents referred to in this IRM:

    Form or Letter Title Purpose
    319 C Return Covers Other Than 12-month Accounting Period IDRS computer-generated letter used to correspond with the tax payer about tax period errors.
    1042-S Foreign Persons U.S. Source Income Subject to Withholding Information return used by withholding agent to report certain U.S. income paid to foreign persons.
    1042-T Annual Summary and Transmittal of Form 1042-S Used to transmit Paper Form 1042-S, Foreign Persons U.S. Source Income Subject to Withholding, to the Internal Revenue Service.
    1791C U.S. Annual Return of Income Paid at Source Incomplete for Processing: Form 1042/1042S IDRS computer-generated letter used to send correspondence to the taxpayer.
    3177 Notice of Action for Entry on Master File Prepared by Campus and Area Office personnel for input (via either DIS (Distributed Input System) or IDRS) of miscellaneous transaction codes to the taxpayer's tax module(s).
    3244 Payment Posting Voucher Used primarily by service center Receipt and Control Branch personnel to post (via DIS or IDRS) a subsequent payment to a taxpayer's account. It is not used as an official receipt for proof of payment.
    3465 Adjustment Request Used by Service personnel when requesting a change to a tax module. The completed form is routed to the service center Adjustments Branch for appropriate action by the tax examiner.
    3875C Missing or Incorrect EIN on Return Non-suspense letter sent to the taxpayer when the EIN has been changed.
    3893 Re-Entry Document Control Control document used to identify a block or a partial block of documents which require reprocessing.
    4227 Intra-SC Reject or Routing Slip Used by all functions to route returns and other controlled documents between service center functions.
    13133 Expedite Processing Cycle Used by Collection functions. All boxes checked on the form should be edited to the return to ensure accurate processing.

    Note:

    For TY 2001 and prior, Form 1042 was used as the transmitting record for all associated Form 1042-S. Beginning TY 2002, Form 1042 is no longer used as the transmitting record for Form 1042-S. Instead, Form 1042-T is used as the transmitting record for all Form 1042-S

    Caution:

    If you identify a potential Erroneous Refund Return, SSPND "332" and forward the return to Exam for further review (refer to IRM 21.4.5, Erroneous Refunds for additional information). You should contact your manager, as you may be advised to place the return into a designated basket for Exam review, per local procedures.

Definitions

  1. These terms deal with the correction of error screens.

    Term Definition
    Field A specific entry from a document. See the sections following for complete field information.
    Look-See Condition This is not necessarily an error, although it could be. The computer wants a field or section looked-at to see if it should be addressed by the TE.
    Section A group of related fields indicated by a two-digit section number (01, 02, 03, etc.)

Error Correction Process

  1. All Form 1042 Error Screen Displays will display as follows:

    • Tax Class - 1

    • Document Code 25 - Form 1042

    • MFT - 12

Inventory/Reports

  1. Records will be placed into the Error Inventory or the Workable Suspense Inventory for correction. Once the ERS TE accesses the record and it is displayed on the screen, it must be:

    1. Corrected in full by correcting errors in editing or transcription and/or correcting math errors.

    2. Placed in suspense for additional information.

    3. Rejected from pipeline processing.

  2. Each day the Error Inventory Report will be furnished showing:

    1. Blocks, by the block control number, and block Document Locator Number (DLN) in DLN order.

    2. Each batch will be on a separate page.

    3. Blocks received from Block out of Balance (BOB) Correction will be listed separately.

    4. A copy of the report must be on the carts of documents and used as a charge-out to determine when a cart is completed.

    5. The first line of the Error Inventory Report will show the number of working days the records on that page have been in the Error Inventory. This will enable work left from a previous day to have priority.

Workable Suspense Inventory Report

  1. Each day the Workable Suspense Inventory Report will be furnished showing the records by Program in DLN order for various status situations. Separate pages for each program, with totals, will be provided.

  2. The first line of the report will show the number of working days that the records have been in the Workable Suspense Inventory. This will allow priority to be given to the older work.

Error Displays and Corrections

  1. All Form 1042 Error Screen Displays will display as follows:

    • Each field is identified by an Alpha/Numeric Field Designator (AFD) displayed before the field.

    • Fields are displayed with no breaker.

    • Negative values are indicated by a minus (−) sign following the amount.

    • Decimal points are displayed beginning in the left position.

    • Leading zeroes in amount fields are suppressed and the significant digits are displayed beginning in the left position.

    • If more than one amount field of a record is to be shown, the unit’s positions are aligned beneath one another.

    • Sufficient leading blanks are displayed preceding the shorter amounts. So, the unit position of these amounts is directly in line with the unit position of the longest amount.

    • The cents digits are not displayed for "dollars only" fields. So, the unit position will remain in line with the other fields of the section, two asterisks (**) are displayed in the cents position of the "dollars only" field.

  2. Corrections are entered starting with the left-most position of the field. Blank-out unused positions.

    • If fewer than the maximum number of positions is required, the program will automatically move to the right of the digits.

    • It is not necessary to enter the decimal point. If the decimal point is entered, it will be ignored.

    • A minus sign (−) must be entered as the last numeric if the amount is negative.

  3. Do not enter more than the number of positions allowed for a particular field. If more data is entered, the overflow characters will display on the screen but are dropped when the field is added to the record. This is especially important for the TIN, name and address.

  4. Corrections can be made to a displayed field by overlaying only the digits in error and not re-entering the entire field. It is not necessary to eliminate the decimal point when correcting in this manner.

  5. To add a missing section:

    1. Transmit with Command Code GTSEC, followed by the desired Section Number.

    2. When the empty section format is displayed, enter the missing data in the proper fields and transmit with Command Code CRECT.

  6. To see a field or section of the record other than that shown in the display:

    1. Enter Command Code GTSEC, followed by the desired Section Number.

    2. If a correction is not made to the section, drop to the bottom of the screen, and transmit.

    3. Any error display not showing all fields necessary for resolution should be reported to the National Office.

      Reminder:

      When transmitting corrections to a screen display, move the cursor below the last field containing data before transmitting.

  7. To delete a section of the record, enter Command Code DLSEC, followed by the desired Section Number.

  8. If, during the course of correcting a Priority II, III or IV Error, additional information or research is necessary to resolve the error (or if the error is rejected), enter the appropriate Action Code with either Command Code SSPND or RJECT.

Command Codes

  1. The Command Codes needed for correcting the Error Inventory and the Workable Suspense Inventory are briefly described below. Any Command Code in the Employees Security Profile will be available:

    Command Code (CC) Description
    ACTVT Used to transfer unworkable suspense records to workable suspense inventory.
    CRECT
    • Used to enter a correction.

    • Valid only after an error has been displayed in response to GTREC.

    DLSEC Used to delete a section within the record in progress.
    ENMOD Used to research a name control.
    ERINV Used to research a DLN or TIN on the ERS Control File.
    ERVOL
    • Used with a Status Code to display the number of ERS records in the current Workable Inventory.

    • Used to obtain the actual count of records to be worked.

    • Printed reports for ERS are updated nightly.

    FRM49 Used to input a fact of filing when an unnumbered return is withdrawn from normal processing, i.e., correspondence.
    GTREC
    • Used to access the first error record in an ERS error block.

    • Used to access a specific record in the Workable Suspense Inventory.

    GTRECQ Used to access a worked record held for Quality Review.
    GTRECW
    • Used to recover an ERS data record that has already been worked.

    • Can be used at any time on the same processing day.

      Note:

      Errors discovered on subsequent days must be corrected by using Notice Review and Adjustment procedures.

    GTSEC
    • Used to obtain the display of any data section within the record in progress.

    • Response is the display of all correctable fields of the requested section, including blank fields.

    • Computer generated fields and error indicators will not be shown.

    • If no data is present in the specified section, the empty format of the requested section is displayed.

    INOLE Used to access the National Account Profile (NAP) which contains selected entity information for all Master File accounts.
    MFTRA Used to request a hard copy transcript for a specific TIN.
    NAMEE
    • Used to research a missing or incomplete EIN/TIN.

    • Name and address data is input to search the Key Index File.

    NWDLN Used to assign a renumbered DLN on an ERS record.
    RJECT Used to delete a record from ERS.
    SINOF
    • Used to sign off the computer.

    • SINOF will be used by all terminal users, including ERS, GUF and IDRS.

    • SINOF is displayed but must be keyed onto the screen when signing off.

    • Response is "Request Completed"

    SINON
    • Used to sign on to the computer.

    • SINON is displayed but must be keyed onto the screen when signing on.

    • Password is entered but does not appear on the screen.

    SSPND
    • Used with an ERS Action Code to place a record into Suspense status.

    • SSPND is valid for ERS and Rejects.

    TRDBV Tax Return Data Base
    • Used to access 100 percent of return data as well as all subsequent corrections entered via ERS and GUF.

    • Used to verify specific line items (including any correction activity), resolve taxpayer inquiries, identify refund issues, and verify filing and return status.

Foreign Currency

  1. All entries must be in U.S. dollars and cents. If the entries are in a foreign currency, SSPND "21X" with literal:
    Please complete Lines 1-71 using U.S. dollars and cents.

  2. The presence of symbols for foreign currency on lines of the return are an indication of foreign money.

Correspondence

  1. When it is necessary to contact the taxpayer to obtain missing information or clarification, ERS will:

    1. Complete Letter 1791C CAS, unless otherwise instructed.

    2. Attach it to the return.

    3. SSPND "21X" to automatically suspend for a predetermined number of days or until the taxpayer replies, whichever is earlier. See IRM 3.22.110.19, Action Codes, for which correspondence Action Code to use.

  2. Rejects will review the form to ensure:

    • the current revision was used,

    • it is complete, and

    • it is easy for the taxpayer to understand.

  3. Rejects will either prepare Form 3177, Notice of Action for Entry on Master File, to input Transaction Code (TC) 599 and Closing Code (CC) 17, or input the two codes using Command Code FRM49.

    Note:

    It is not necessary to input the two codes if the return was originally processed through Residual Remittance Processing System (RRPS). The Transaction Code (TC) 610 input by RRPS serves as the satisfying transaction for the normal delinquency check.

  4. Any time a correspondence letter is prepared, ERS and Rejects will review the return to ensure all missing information is requested at the same time.

    Caution:

    Correspondence must be sent only once. It is imperative you review the return for all correspondence conditions.

  5. If C&E has already corresponded (look for attachments or action trail on left side of return), process the error condition ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  6. Rejects will never send a return back to a taxpayer. If sending a photocopy of the return to the taxpayer, notate the word "copy" on the photocopy and black out the DLN and edit marks.

  7. Enter a Correspondence Received Date (CRD) into Field 01CRD when correspondence is received. Enter Field 01CRD in (YYYYMMDD Format) except when:

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

    • The correspondence was requested due to an IRS processing error.

  8. If a reply to correspondence is not received within the allotted time, 30 days for domestic mail and 45 days for international, enter CCC "3" into Field 01CCC.

Missing or Illegible Data

  1. Correspond for missing information when any part of the entity area cannot be found by using all applicable research (e.g. CCs NAMEB, NAMEE, INOLE, ENMOD, etc.).

  2. If the taxpayer has not entered data onto the correct lines of the return but instead puts "see attached" , Rejects will correspond for the return to be properly completed unless instructed otherwise in this IRM.

  3. Rejects will correspond for clarification when the date entered on the return cannot be read accurately.

  4. If the signature is missing, Rejects will correspond. If YOU ARE CORRESPONDING for ONLY a missing signature, use Action Code "225" or "226" and continue to process the return. Do NOT suspend just for a missing signature.

  5. If the taxpayer does not provide a copy of Form 1042-S, Copy B to support the entry on Line 67a/67b, SSPND "21X" for Form 1042-S, Copy B.

    Exception:

    See IRM 3.22.110.24.23, Field 0767A - Credit for Amounts Withheld by Other Agents (other than substitute dividends), if taxpayer attached a statement or letter to support Line 67a/67b.

Manual Refunds

  1. Information on the preparation of Manual Refund Forms (Form 5792, Request for IDRS Generated Refund, or Form 3753, Manual Refund Posting Voucher) and other relevant information can be found in IRMs:

    1. IRM 3.12.38 (BMF General Instructions)

    2. IRM 3.17.79 (Account Refund Transactions)

    3. IRM 21.4.4 (Manual Refunds)

    4. IRM 2.4.20 (Command Codes RFUND and REFAP)

    5. IRM 3.12.14.7.11 (Refund Returns 45 Day Jeopardy and $100 Million or more Refunds)

  2. Document Perfection (Code & Edit- C&E) is responsible for identifying refunds and for initiating requests for manual refunds. C&E should edit to show a Manual Refund must be prepared because the refund is in interest jeopardy or the amount of the refund is $500,000.00 or more. If C&E did not identify these conditions, ERS must follow the instructions in the If/Then chart below:

    Note:

    Expeditious processing of refund returns is critical if the credit interest period of 180 days is about to expire.

    If... Then...
    • The processing date is more than 155 days after Received Date (whichever is later), and

    • The 180 day interest free period is in jeopardy, and

    • the refund amount is $25,000 or more

    SSPND "341" and route to Accounting for manual refund.
    The refund is $500,000 or more SSPND "341" and route to Accounting for manual refund.

♦Re-Entry Document Procedures♦

  1. A return posted (or attempting to post) to the wrong account or module must be reprocessed to post to the proper account or module.

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

  3. Each re-entry return must have Form 3893, Re-Entry Document Control, or Form 13596, Reprocessing Returns, attached. See below for the correct form to use.

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

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

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

  5. Examine Form 3893 or Form 13596 to determine the action needed to re-input the return.

    Note:

    If the IRS Received Date is two years and nine months or more 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. See IRM 3.22.110.18.8.

    If... Then...
    Form 3893 is missing
    • Enter Action Code "640"

    • Route to Receipt and Control using Form 4227.

    • Leave the return in the batch.

    Form 13596 is missing
    • Enter Action Code "640"

    • Route to Accounting using Form 4227.

    • Leave the return in the batch.

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

    Exception:

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

♦Form 3893 Re-Entry Document♦

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

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

  3. If the return was not edited according to current processing instruction, circle out any action codes, CCCs and any other edit marks no longer applicable. Re-edit according to current processing instructions.

  4. If the return was edited according to current processing instruction, ensure the information from Form 3893 is edited to the return.

    Form 3893 Action Taken
    Box 14 (Remarks) Ensure the information is edited to the return.
    Box 15 (Process as)
    • Circle out any edit marks that may indicate a receipt of remittance

    • Do not change any tax due amounts.

  5. Examine returns that have any color other than red editing in the tax data section. Determine if the corrections are the result of improper perfection or taxpayer error.

    If… Then…
    Improper perfection Edit the same correction in red to the appropriate area. Enter in appropriate Fields.
    Taxpayer error Leave the entries as shown on the document.
  6. A Received Date must be present on all Re-entry returns:

    If… Then…
    Received Date is not present Edit an IRS Received Date to the middle of the return. Enter date in Field 01RCD.
    Multiple Received Dates are present Circle out all but the earliest date.

    Exception:

    Do not use a Received Date in Field 01RCD prior to the end of the tax period.

  7. When additional information is still needed to make the return processable, prepare Letter 1791C CAS (or other approved Correspondence Action Sheet) or Form 4227, Intra-SC Reject or Routing Slip, for the appropriate action (e.g., correspondence, research, etc.).

  8. When perfection is not possible, enter Action Code 640 on the return and attach Form 4227 noting, "PERFECTION NOT POSSIBLE" and return to initiator.

♦Form 13596 Reprocessing Returns♦

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

  2. If the return was not edited according to current processing instruction, circle out any action codes, CCCs and any other edit marks that are no longer applicable. Re-edit according to current processing instructions.

  3. If the return was edited according to current processing instruction, ensure the information from Form 13596 is edited to the return.

    Form 13596 Action Taken
    TIN correction Enter correct TIN on return.
    Tax period correction Enter correct tax period ended on return.
    Reasonable cause Enter appropriate CCC.
  4. Examine returns that have any color other than red editing in the tax data section. If the corrections are the result of:

    If… Then…
    Improper perfection Edit the same correction in red to the appropriate area. Enter in appropriate fields.
    Taxpayer error Leave the entries as shown on the document.
  5. A Received Date must be present on all reprocessed returns:

    If… Then…
    Received Date is not present Edit an IRS Received Date to the middle of the return. Enter in Field 01RCD.
    Multiple Received Dates are present Circle out all but the earliest date.

    Exception:

    Do not use a Received Date in Field 01RCD prior to the end of the tax period.

Special Returns

  1. Use the following instructions when processing Special Form 1042 Returns.

♦Compliance Secured/Prepared Returns♦

  1. Compliance functions (Collections and Examination) secure returns from the taxpayer and 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 with "Process as Original" with an attached Form 13133, Expedite Processing Request. The "Delinquent Return" box on Form 13133 should be checked.

    Note:

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

  2. When Form 13133 is attached to a return, ensure all applicable boxes checked (i.e. CCC codes) are edited to the return and entered.

♦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.). Use Letter 1791C CAS and return a copy of the letter back to the withholding agent.

    3. Enter CCC "W" if the Received Date is more than two years and nine months after the Return Due Date. Do Not send the return to Statute Control. SSPND "310" .

    4. If the return is incomplete or no reply is received to the correspondence, and the return is not a statute imminent return, then prepare Form 4227, Intra-SC Reject or Routing Slip, and send to Rejects, and SSPND "640" .

  2. Upon receipt, Rejects will delete the DLN and route the document to collections on Form 3210, Document Transmittal.

♦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, Extracting, Sorting, and Numbering.

  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)

    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. 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

  6. If the return is truly delinquent, check the return and 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 CCC "J" or "R" .

♦IRC Section 6020(b) - Prepared by Collection♦

  1. When the taxpayer fails to file a required return, IRC Section 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 Regulation 6020(b) OF THE INTERNAL REVENUE CODE" which is located in the center bottom of Page 1 of the return.

    1. IRC Section 6020(b) returns must have a Received Date. If no Received Date is present per the Compliance Function, edit the Received Date using IRM 3.22.110.21.6(5), Field 01RCD - Received Date

    2. IRC Section 6020(b) returns must be signed by Compliance Function representative. If not signed, route to Compliance using Form 4227, Intra-SC Reject or Routing Slip.

      Note:

      Starting July 1, 2013, the Revenue Officer’s (RO) electronic or typed signature will be accepted as a valid signature on the return.

    3. Enter CCC "4" .

      Note:

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

    4. Do Not correspond with the taxpayer for unprocessable conditions on 6020(b) returns. If the return is completely unprocessable, enter CCC "3" and continue processing.

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

♦Examination Prepared♦

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

    1. "SFR" returns must have an IRS Received Date. If no IRS Received Date is present, edit/enter the Received Date using IRM 3.22.110.21.6(5), Field 01RCD - 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. Enter CCC "X" if the return shows an overpayment.

    3. If Form 13133, Expedite Processing Cycle, is attached, enter the CCCs 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 two years and nine 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 Request, attached with the "Delinquent Return" box checked.

    1. Use approved Correspondence Action Sheet (CAS) to correspond for conditions that cannot be processed (e.g., missing signatures, missing schedules, etc.).

    2. Enter the CCCs that are checked on Form 13133

    3. Enter CCC "W" if the IRS Received Date is more than two years nine months after the Return Due Date. Do Not send to Statute Control function.

♦Frivolous Arguments♦

  1. A frivolous argument is used for 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 3.22.110-10, 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 3.22.110-10, Potential Frivolous Arguments for Examination Review.

    Exception:

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

    • Remove return from the batch and place the return in the locally designated basket for Exam, Frivolous Return Program (FRP) for review.

      Note:

      IRM 25.25.10.5, Screening Returns and Claims, requires Exam to expedite the return and make a determination whether it qualifies as a frivolous return within two (2) business days.

    • If a determination is not made within the allowed time frame, Exam will edit Action Code 331 in the lower left margin of the Form.

    Examination has selected the return as frivolous, indicated by an Action Code 331, and a Form 4227, Intra-SC Reject or Routing Slip, with the remarks, Refer to Exam FRP for audit after processing, but sends the return for processing, Continue processing the return. However, do not circle or void the Action Code indicating a frivolous return.

    Note:

    Returns having only zeros, no entries, are blank or indicate "None," "Not Liable," etc. with no evidence of a frivolous argument are not to be considered as frivolous returns.

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

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

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

    Caution:

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

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

    2. Attach Form 4227, to the copy.

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

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

    5. Continue processing the return.

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

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

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

    2. Attach Form 4227 to the copy.

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

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

    5. Continue processing the return.

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

♦Examination (Exam) Funny Box
  1. The primary objective in identifying tax returns for examination is to promote the highest degree of voluntary compliance. Small Business/Self Employed (SBSE) Exam 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.

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 Statute 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): Returns filed - 3 years from the Return Due Date (RDD), April 15th for Form 1042, or 3 years after the IRS Received Date, whichever is later; No return filed - assessment may occur at any time. IRC Section 6501(a) and (c)(3).

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

    • Collection Statute Expiration Date (CSED) is generally 10 years from the 23C date or 10 years from the date of the TC 29X or 30X adjustment. IRC Section 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 Section 6501 (c) (1) - False Return

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

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

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

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

    • IRC Section 6901 (c) - Fiduciaries and Transferees

    • IRC Section 6503 (h) - Bankruptcy

    • IRC Section 6229 (a) through (h) - Partnership Items (Effective for tax years beginning before December 31, 2017)

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

      Caution:

      IRC Section 6020(b) is not a tax return that triggers the period of limitations on assessment under IRC Section 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.

  5. Form 1042 should be cleared by Statute Control before coding and editing. If not, SSPND 310, and Rejects will send the return to Statute Control with the required BMFOLT research attached for clearance.

  6. Enter CCC W and continue processing the return if:

    1. TC 59X or Section 6020(b) is notated on the face of the return, or

    2. A return with no money amounts has been prepared by Exam.

      Note:

      A CLEARED BY STATUTE stamp is not required on these returns.

  7. If the statute has already expired or will expire within 60 days of the current processing date, hand-carry to the Statute Control function.

  8. Enter CCC W on statute returns cleared by Statute Control. CLEARED BY STATUTE will be stamped on the left-hand side of the Form 1042 return.

♦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 CCC "G" and SSPND "650."

Action Codes

  1. The ERS Action Code indicates specific information is missing or the record is to be rejected from processing. The code will have sufficient detail to indicate if correspondence is to be sent to the taxpayer or if specific in-house research or action(s) is required.

  2. For a listing of valid ERS Action Codes, see Exhibit 3.22.110-7.

  3. C&E TEs will assign a three-digit Action Code to numbered returns when the document is unprocessable in its present form either by needing additional information or because some manual intervention is required. This code will be entered in the bottom left margin of the return.

  4. Correspondence Action Sheet (CAS) 1791C CAS (or other approved Correspondence Action Sheet) is used for initiating correspondence. This form is attached by C&E, ERS, and Rejects. When routing within the campus (in-house research), an explanation concerning the missing information will be attached to the return using Form 4227, Intra-SC Reject or Routing Slip.

  5. The Action Code assigned by C&E will be transcribed into the record of the Form 1042.

  6. An ERS TE may:

    1. Enter an Action Code on a record.

    2. Delete or correct an invalid code.

    3. Overlay the present Action Code with another to either resuspend or reject from ERS. This is done by entering a valid Action Code with SSPND, RJECT or NWDLN. See IRM 3.12.38, Error Resolution System (ERS), General Instructions for additional information.

    4. Enter a valid Action Code with the SSPND to clear the record from the screen and place the record in either Workable Suspense or Unworkable Suspense.

    5. Enter a valid Action Code with RJECT to reject the record from ERS. Generally, SCCF will be automatically updated for the rejected records.

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

  8. If the Action Code assigned by C&E is invalid or incomplete, the record will be assigned to the Error Inventory for correction or deletion of the code.

  9. Only one Action Code may be assigned at one time to a record. The priority of the Action Codes will be 320, 4XX, 6XX, 3XX, 2XX.

Types of Errors

  1. This section provides a description of the types of errors generated during Form 1042 processing.

  2. The Error Resolution System (ERS) will identify errors according to type and priority. This will show in the record heading.

    • Action Code Error (Priority I)

    • Section Error (Priority II) – includes terminus error and ISRP problem code.

    • Validity Error (Priority III)

    • Math/Consistency Error (Error Codes) (Priority IV)

  3. There may be records where the TE finds that programming has not furnished a section or a field needed to solve an error. In this event, the TE can use GTSEC. This should be reported to Headquarters for correction of the display.

Priority I Errors – Action Code/Unpostable Code Errors

  1. Description:

    • All records with an invalid Action Code assigned by C&E will be placed in the Error Inventory and will be displayed as a Priority I Error.

    • All records with a valid Action Code will be assigned to a Suspense Inventory and will be displayed as a Priority I Error.

  2. Display – The Action Code for the record with the literal description of the action or unpostable condition will be shown.

  3. Correction Procedures – Process Priority I errors as follows:

    If... Then...
    Suspense action is required Enter SSPND with the correct Action Code.
    Suspense action is not required Enter "000" in the Clear field (CL) field.

    Note:

    Except for priority statute and manual refund cases, do not remove the document from the block.

  4. See IRM 3.12.38 procedures for correcting Priority I Action Code errors in Suspense and Unpostable Code Correction.

Priority II Errors – Section Errors

  1. Most edit, missing section and terminus errors should be eliminated by the Integrated Submission and Remittance Processing (ISRP) system. However, edit errors and/or terminus errors may be present if normal ISRP validity checks have been bypassed.

  2. Edit Error – A section with an error detected by ISRP. Edit errors will be coded as follows:

    • Code 1 – Split screen transmission, key verifier changed 4 or more digits of TIN, or the original entry operator indicated a required section is missing.

    • Code 2 – CATCH-ALL ISRP ERROR: Any error attributed to ISRP that is not described below, such as invalid characters in a field, or a combination of errors listed below.

    • Code 3 – Invalid Section ending point.

    • Code 4 – Invalid field length.

    • Code 5 – Questionable section - the ISRP operator input the same section more than once. The computer program will drop all duplicate sections and display on the error screen the first one encountered.

      Note:

      When displayed, this type of error will display all input fields, except for the Remittance in Section 01 of the section in error. Transcribed data will be present. Computer generated data will not be present.

  3. Correction Procedures:

    • Check all fields of the section when this condition exists verifying fields are entered as coded.

    • If no correction is needed, or once the section is correct, transmit from the bottom of the screen.

    • If the section needs to be deleted, enter DLSEC with the section number.

  4. Terminus Error – This error is caused by a section with variable length input fields containing an erroneous size field.

    • When displayed, this type of error will show all input fields of the terminus section. Transcribed data will be present. Computer generated fields or Remittance Field for Section 01 will not be present.

    • All fields present for the section must be examined and the necessary correction(s) made to all the fields.

  5. Correction Procedures:

    • Command Code CRECT will be displayed. If the section needs to be deleted, use DLSEC to delete the section.

    • If no corrections are needed, transmit from the bottom of the screen.

Priority III – Field Errors

  1. Definition – Any field that does not meet the requirement(s) for that field will be shown as a Priority III error. Consistency and or relationships with other fields will not be a factor.

  2. Some reasons for this type of error are:

    • Non-numeric character in a numeric field.

    • Non-alphabetical character in an alpha field.

    • Blank space in a numeric field.

    • Blank in the first position of an alpha field if followed by significant data.

  3. Display – Every field displayed is in error (see Exception below).

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

    • An overflow field is identified by all question marks for a money field or a single pound sign in the last position of a Name Line.

  4. Correction Procedures:

    1. Correct every error field displayed using the specific instructions within each section for the field in error.

    2. Check the information on the source document to see if each displayed field has been correctly coded and transcribed.

    3. Enter the correct data for each field displayed.

    4. If no data is to be in a displayed field, blank the field.

    5. Transmit.

Priority IV Errors – Consistency/Math Errors

  1. Definition – Any valid field used in any computation in which the result is inconsistent with (or contrary to) any other valid field will have Error Code 001-999 assigned and will be shown as a Priority IV Error.

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

    1. The blank field "CL" will be displayed for the entry of a Clear Code on records where the possibility exists that a change or correction may not be needed.

    2. All errors must be resolved by either eliminating the error or entering a Clear Code.

  3. Correction Procedures:

    • Correct all coding and transcription errors.

    • If the data in the field is correct, enter a "C" in the Clear Code field.

Section 01 - Form 1042

  1. Listed below are the fields contained in Section 01 of Form 1042.

  2. The field designator, field length (maximum length for variable fields), the title and the location where the data is obtained on the return is shown below:

    Field Field Length Title Location on Form 1042
    ERS Action Code 3 ERS Action Code  
    RMIT 11 Remittance Amount  
    01NC 4 Name Control Form 1042, First Name Line
    01EIN 9 Employer Identification Number Form 1042, EIN Box
    01TXP 6 Tax Period Form 1042, between Form Title and OMB Number
    01RCD 8 Received Date Form 1042, Tax Liability Area
    01CCC 10 Computer Condition Code Form 1042, Box under Tax Year
    01CRD 8 Correspondence Received Date Form 1042,
    01PIC 1 Penalty and Interest Code Form 1042,
    01SIC 1 Special Income Code Form 1042, Box under Tax Year
    01QIN> 1 Qualified Intermediary Indicator Computer Generated
    01CBI 1 Designee Checkbox Indicator Form 1042, Box below Line 62D
    01CBT 10 Designee Phone Number Form 1042, Below Line 62D
    01CBP 5 Designee Personal Identification Number (PIN) Form 1042, below Line 62D
    01PSN 9 Preparer PTIN Page 1, lower right, below the Signature Line
    01PEN 9 Preparer EIN Page 1, lower right, below the Signature Line
    01PTN 10 Preparer Phone Number Page 1, lower right, below Signature Line
    01CH3 2 Chapter 3 Status Code Under Name Line
    01CH4 2 Chapter 4 Status Code Under EIN

Field RMIT- Remittance

  1. Field RMIT is a 11-position non-correctable field that may or may not be present.

  2. Valid characters are numeric (0 thru 9) and blank.

  3. The computer will generate the amount of remittance in Field RMIT into Field 07B/D (balance due) if Field 07B/D is blank.

  4. Invalid Condition: Field RMIT is invalid when:

    • There is an amount present and Total Net Tax Liability (Field 0764E) is blank.

  5. Correction Procedures:

    1. Perfect Field 0764E from the return, if possible.

    2. Add or correct Sections 03-06, as appropriate.

    3. If there is no tax to enter in Field 0764E, but the reason for the remittance is notated on the return (such as penalty or interest), enter a "1" into Field 0764E.

    4. If there is no tax due and no explanation of the remittance is found, SSPND 351 for research and/or correspondence. Notate the Form 4227, NO TAX BUT ENTRY ON FIELD RMIT.

    5. Compare the form to the field and if the remittance amount in Field RMIT is incorrect, SSPND 630 the return to be re-input. Notate the Form 4227, REMITTANCE IN ERROR.

      Note:

      Never try to correct Field RMIT.

  6. Rejects Correction Procedures:

    1. Rejects will research IDRS. For instance, research using BMFOLI to determine if the remittance should be applied to a different tax year or to a different return.

    2. If research does not provide an answer, SSPND 21X with literal:
      Does the remittance sent with your ____ Form 1042 belong to this EIN, and if so, to which tax return and tax period should it be applied?

      Note:

      Insert the tax year of the Form 1042 for which you are corresponding into the literal.

    3. If the taxpayer replies that the money belongs somewhere else, enter Field 01CRD and CCC "X" into Field 01CCC. Prepare Form 3465 and send it to the Philadelphia Accounts Management Campus (PAMC) International Business Master File (BMF) unit to transfer the remittance to the correct account; Unless the Ogden Rejects Unit is willing to do the Credit Transfer themselves.

      Reminder:

      Circle out the remittance in RED on the Form 1042 and re-input the return as a non-remittance return.

    4. If the taxpayer replies that the money is not his/hers transfer the money to Unidentified Remittance. Refer to IRM 3.12.38.5.18.3Transfer to Unidentified for instructions.

    5. If there is NO REPLY to the correspondence, enter CCCs "3" and "X" into Field 01CCC and enter a "1" into Field 0764E.

      Note:

      When there is an entry in Field RMIT, there must be an entry in Field 0764E, but the tax and remittance amounts do not have to be the same.

    6. If the Form 1042 must be re-input to change the amount in Field RMIT, ERS will SSPND 630 the return and Rejects will re-input the return on Form 3893.

Field 01NC - Name Control

  1. Field 01NC is a 4-position field that must be present.

  2. Valid characters are alpha (A thru Z), numeric (0 thru 9), ampersand (&), hyphen/dash (-) or blank.

  3. The person or organization required to withhold tax is the Withholding Agent.

  4. The Withholding Agent can be either domestic (U.S.) or foreign.

  5. The Withholding Agent can be any of the following:

    • An individual

    • A trust

    • An estate

    • A partnership

    • A corporation

    • A government agency

    • An association

    • A foundation

  6. Invalid Conditions -

    1. The first space in the Field 01NC cannot be blank if the Name Control is present.

    2. Field 01NC will be invalid if any character other than those mentioned in (2) above is present.

  7. Correction Procedures -

    1. Change a slash "/" or period "." in the name control to a hyphen/dash "-" .

      Name Control on Return Change to...
      Re/Max RE-M
      98.6 98-6
    2. If the Name Control has been transcribed incorrectly, enter the correct Name Control.

    3. If the Name Control is invalid or missing, research using Document 7071-AName Control Job Aid - For Use Outside of the Entry Area

    4. If found, enter the correct Name Control in Field 01NC.

    5. If unable to determine the Name Control, SSPND 320 to Rejects.

  8. Rejects Correction Procedures -

    1. Rejects will re-research the name and EIN.

    If... Then...
    Information is found, Correct Field 01NC.
    Information is not found, Send the return to Entity for a new EIN and TC 000.
    A name change is required,
    1. Forward to Entity and notate Name Change Required.

    2. Prepare Form 4227.

    3. Input a TC 013.

Field 01EIN - Withholding Agent Employer Identification Number

  1. Field 01EIN is a 9-position field that must be present.

  2. A Social Security Number (SSN) is never permitted in this field.

  3. Only numeric characters (0 thru 9) are valid.

  4. Invalid Conditions -

    • Field 01EIN contains all zeros or all nines.

    • The field is blank.

    • The field is less than 9 digits.

    • Any character other than a number is present.

    • The first two digits are: 00, 07, 08, 09, 17, 18, 19, 28, 29, 49, 69, 70, 78, 79, or 89.

  5. ERS Correction Procedures -

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

    2. Review Form 1042 and all attachments for a valid EIN. Enter EIN if found.

    3. Research using INOLE, ENMOD, NAMEB, and NAMEE. Enter EIN on the screen and return if found.

    4. If less than 3 digits of the EIN are transposed, different, or missing, do not send 3875C Letter.

    5. TY14 and prior: If Field 01QIN has a 2:

      And... Then...
      The taxpayer checked the QI indicator box, SSPND 21X with literal:
      Are you really a Qualified Intermediary (QI)? If so, did you receive a number in the valid QI EIN range? If so, why is it not on the Form 1042?

      Note:

      See Exhibit 3.22.110-2 for the EIN range applicable to QI taxpayers.

  6. SSPND 320 to Entity if:

    • no valid EIN is found.

    • more than one EIN appears on research. Notate on the Form 4227, MULTIPLE EINs.

    • there is more than one EIN on the return and INOLE indicates both EINs show the same name. Notate on the Form 4227, MULTIPLE EINs.

    • the EIN on a pre-printed label was changed by the taxpayer. Notate on the Form 4227, EIN CHANGED ON PRE-PRINT LABEL.

      Note:

      It is imperative that NAMEE and NAMEB are researched for a valid EIN.

  7. Rejects Procedures -

    1. Re-research return using NAMEE before sending the return to Entity.

    2. If a valid EIN is found, follow the procedures noted above.

    3. If no valid EIN is found, or more than one EIN is found, leave Form 4227 attached with the error condition noted.

      Note:

      No other correction can be made to the ERS Screen when sending a document to another area. Do not enter any Action Code until the return comes back with the new EIN on it. Enter the new EIN into Field 01EIN.

    4. Rejects will never correspond for an EIN. If the return cannot be perfected through research, it must go directly to Entity.

Field 01TXP - Tax Period

  1. Field 01TXP is a 6-position field that must be present.

  2. Only numeric characters in YYYYMM format are valid.

  3. Invalid Conditions

    1. Field 01TXP contains any non-numeric character.

    2. The field is blank or contains less than 6 numbers.

    3. The year is later than 2019 (for 2020 processing).

    4. The tax period is earlier than 198512.

    5. If the month-ending in the tax period is other than 12.

      Reminder:

      All Form 1042 are calendar year only and must end in 12. The field does not underprint, as do most other returns.

  4. Correction Procedures

    1. Correct misplaced entries, coding and transcription errors.

    2. If the tax period is prior to 198512, SSPND 620. Attach Form 4227, and notate RENUMBER TO NMF (Non-Master File).

    3. If the return shows a fiscal year, then:
      1) Change the year to the current calendar year.
      2) SSPND 21X. Form 1042 may only be a calendar year return. If attachments to the return show money for both years, request a separate return for each year. Use literal:
      We received your Form 1042 for tax period beginning _______ and ending _______. We cannot process it because Form 1042 must cover a calendar year. Please submit a new Form 1042 covering the appropriate calendar year. If your Form 1042 reflected monies paid during two calendar years, please submit a Form 1042 for each year.

    4. If the tax period is later than the Received Date (early filer), then:
      1) Verify the tax period was edited and transcribed correctly.
      2) If the tax period is within the first 8 months of the year and is not a Final return, correspond using Letter 319C requesting an explanation with B, D, P, T, Y and 3.
      3) If the tax period is in the last six months of the year, SSPND 480 the return to be input after the year is over.

  5. Rejects Correction Procedures:

    1. If the tax period is prior to 198512, send to NMF using IRM 3.12.38.5.14, Non Master File Items.

    2. Reply Procedures: If the taxpayer replies that it is a Final return, enter CCC "F" . Process according to IRM 3.22.110.21.4.1, Processing Early-Filed Form 1042.

      Note:

      Do not enter a Correspondence Received Date as the CRD will not be valid the following January when the return is processed.

    3. No Reply Procedures:

      If... Then...
      The return is a fiscal year return with money amounts in both years, Enter CCC 3. Enter CCC X if the return shows an overpayment. Follow early-filer procedures, if necessary.
      If the return has a remittance amount that does not appear to belong to the return (such as if the balance due were zero and there is a remittance amount of $500.00),
      1) Send the remittance amount to the Accounting Department Unidentified Remittance group on a Form 3465 (see instructions in IRM 3.12.38).
      2) Enter CCC 3.
      3) Continue processing the return as a non-remittance.
      4) Enter CCC X if the return shows an overpayment.

      Reminder:

      If entering CCC "F" (Final return) or CCC "3" (no reply), edit either code in red onto the document.

Processing Early-Filed Form 1042
  1. An early-filed Form 1042 is one that is received before the end of its tax year. A Form 1042 cannot be processed as a short-period return. Processing must be delayed until after the end of its tax year. These are usually Final returns.

    Example:

    Tax period is 201912 with a Received Date of 10-27-2019, the return cannot be processed until January 2020.

  2. Early filed return procedures for Form 1042 (without remittance):

    1. Prepare Form 4227, Intra-SC Reject or Routing Slip, and notate in the remarks "EARLY FILER."

    2. SSPND 480.

    3. Forward to Rejects. Rejects will hold the early filed return for processing until January of the following year.

  3. Rejects Procedures for Form 1042 (with remittance):

    1. Do NOT void (because of the remittance present).

    2. Prepare Form 3244 to put remittance into the module.

      Note:

      A revenue receipt (Form 3244) can take a future tax period.

    3. Photocopy the return and staple it to the back of the Form 3244.

    4. Photocopy the Form 3244 and staple it to the back of the return.

    5. Circle the remittance or the green rocker in "red" on the return.

    6. SSPND 480 and put the return into the Early-Filer folder.

    7. Notate RENUMBER PAYMENT TO 60117 for OSPC on a Form 4227 and staple it to Form 3244 and send Form 3244 to Accounts Management.

Field 01CCC - Computer Condition Codes (CCC)

  1. Field 01CCC is a 10-position field that may or may not be present.

  2. Valid characters are: A, D, E, F, G, J, O, R, S, T, U, W, X, 3, 4, 7, and blank.

  3. The CCC is transcribed from the CC line in the "For IRS Use Only box" in the upper-right hand corner of the return.

  4. The table provides a brief description of the valid codes. Specific instructions for each Computer Condition Code follow.

    Computer Condition Code Definition Validity Check
    A Qualified Derivatives Dealer (QDD) box checked in Section 4 Must be present if Page 2, Section 4 box is checked.
    D Reasonable cause for failure to make timely payments
    1. Cannot have precomputed penalty.

    2. Must have a Received Date.

    E Credit elect
    1. Must have an overpayment.

    2. Cannot be used with CCC F or G.

    F Final return Cannot be used with CCC E or G.
    G Amended return
    1. Only code valid with CCC W or 3.

    2. Must have a Received Date.

    J QDD reasonable cause for failure to make timely payments. TY17 Only: Amount present on Line 62b(1).
    O Module freeze Manual Refund
    R Reasonable cause for delinquency Must have a Received Date.
    S Refund/overpayment due
    1. Must have check in box on Line 71 of Form 1042.

    2. Overpayment must be $1.00 or more.

    T Return secured as a result of TDI.  
    W Cleared by Statute  
    X Refund/Credit Freeze No reply to correspondence.
    3 No reply to correspondence. Cannot have Correspondence Received Date present.
    4 Return prepared by IRS under IRC Section 6020(b) Will be notated: IRC Section 6020(b) and signature of revenue agent.
    7 Reasonable cause statement denied  
  5. Computer Condition Code priority:

    1. If C&E has edited an Action Code in the bottom left margin of the tax return, ensure that all other required CCCs, such as "F" or "4" , are entered before making any other correction.

    2. If CCC G is present, the only other CCCs that can be present in Field 01CCC at the same time are W and 3.

    3. CCC 7 and R can be used together.

    4. CCC 7 and D can be used together.

  6. Invalid Conditions:

    1. Any code is present with CCC G except W or 3.

    2. CCC E and F are used together.

    3. CCC D and R are used together.

  7. Correction Procedures:

    1. If a previously reinput return is received in ERS, ensure all CCCs were entered in Field 01CCC before making any other correction.

    2. If CCC G is present, then: Delete any other CCC in Field 01CCC (except W and 3 if needed). If there is any question that the return is amended, research BMFOLT for a TC 150. If present, delete the CCC G and enter any necessary data.

      Note:

      If the majority of the lines in the ROFTL (Lines 1-60) have an entry, SSPND 351 for Rejects to input the missing data.

    3. If there is an overpayment amount on Line 70a/70b, there must be a CCC E or S in Field 01CCC. CCC X may also be necessary.

      If... Then...
      The credit box on Line 71 is checked, Enter CCC E.
      The refund box on Line 71 is checked, Enter CCC S.
      Both boxes on Line 71 are checked, SSPND 351 to Rejects for research.
      Neither box on Line 71 is checked, and you are corresponding for another reason SSPND 21X for other correspondence needs and also use literal:
      Please explain whether you want your overpayment applied as a Credit or as a Refund.
      Neither box on Line 71 is checked, and there is no other need for correspondence, Enter CCC E. (Do not correspond for ONLY this condition.)
      The amount is correctly changed from negative to positive, Delete CCC E and CCC S (if present).
    4. If CCC E and CCC F are both present, determine which is correct. If the return is a Final return and there is an overpayment, change CCC E to CCC S.

    5. If CCC D and CCC R are both present, determine which is correct and delete the incorrect CCC.

    6. Look under the specific individual instructions for each code for other possible corrections.

  8. Rejects Correction Procedures:

    1. If a return from C&E with an ERS Action Code 650 is received, ensure all CCCs were entered in Field 01CCC before making any other correction.

    2. If CCC X is required because of a NO REPLY condition and there is an overpayment, CCC E or CCC S must still be present in Field 01CCC along with CCC X and CCC 3.

    3. If a return is received from the Statute Unit with instructions to process the return, ensure all necessary CCCs are entered.

    4. If an erroneous short-year or fiscal-year return was sent to be cleared by Statutes, delete CCC W (if present).

    5. If correcting the tax period to a non-Statute tax period, do not enter CCC W because the corrected tax period no longer makes it Statute criteria.

CCC A - Qualified Derivatives Dealer (QDD) Statement Attached
  1. The presence of CCC A indicates the taxpayer checked the QDD checkbox in Section 4, Form 1042.

CCC D - Reasonable Cause for Waiver of Failure to Pay Penalty
  1. CCC D instructs the computer not to assess a late payment penalty.

  2. Do not use CCC D if there is no IRS Received Date present.

  3. CCC D is NOT to be used if there is a pre-computed penalty in Field TPNC or CCC 7 is present.

  4. While CCC D is entered by C&E, ERS will enter CCC D if necessary.

  5. If the taxpayer attaches correspondence with a reasonable cause explanation for failure to timely pay or file their Form 1042 return:

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

    2. Complete Form 3499,"Informational Transmittal," and forward to Philadelphia Accounts Management Campus (PAMC), BMF INT'L unit, BLN 3-L08.154. In the remarks area write "Process attached Reasonable Cause Correspondence. TC 150 to post in 4 weeks."

    3. Prepare correspondence action sheet for Letter 1382C (use paragraphs "A, N and V" ) and assign it to a clerk for input to IDRS, or follow local procedures. It may or may not include the Rejects function.

      Note:

      Do not edit CCC "D, U, R, or 7" on the return. PAMC will address the taxpayers reasonable cause letter.

    4. Continue processing Form 1042. Do not attach the correspondence action sheet 1382C, Penalty Removal Request Incomplete, to the return.

CCC E - Credit Elect
  1. CCC E is entered when there is an overpayment ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and the Credit box on Line 71 is checked.

  2. CCC E is entered when there is an overpayment ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and neither the Credit or Refund box on Line 71 is checked

    Reminder:

    If you are corresponding for another reason and neither or both checkboxes on line 71 were checked, SSPND 21X for other correspondence needs and add literal:
    Please explain whether you want your overpayment applied as a Credit or as a Refund.
    (Enter CCC E if you have no other reason to correspond unless the return is truly a Final, then enter CCC S.).

  3. Enter CCC E (Delete CCC F) on a "FINAL" return if the taxpayer:

    1. Elected to have the overpayment credited to next year’s return AND does not give a date when the last income was paid. (Refer to the line under the "For IRS Use Only box" ) or,

    2. The return shows a date applicable to next year

      Reminder:

      If the return is marked Final, and the Credit block on Line 71 is checked, but there is no date for when the final income was paid, do not enter CCC F, instead enter CCC E.

CCC F - Final Return
  1. Enter CCC F if there is a clear indication on the return or on an attachment that returns will not be required to be filed for future years.

    Example:

    The block below the City line will usually be checked, but the taxpayer may also notate final, out of business, no longer liable, no longer paying income to Non-Resident Aliens (NRAs), etc.

    Note:

    If the taxpayer puts "not liable" but does not indicate "final" , do not enter CCC F as this may refer only to the current year, not necessarily to future years.

  2. CCC F will delete the 1042 filing requirements from the BMF.

  3. Refer to IRM 3.22.110.21.5.3, CCC E - Credit Elect, when the taxpayer indicates Final but also indicates credit elect on Line 71.

  4. SSPND 21X for the date the final income was paid if unclear, with literal:
    Please provide the date final income was paid.

  5. If the taxpayer indicates Final but the date final income paid is for the year following the tax period, Do NOT enter CCC F (delete if present).

CCC G - Amended Return
  1. The Amended Return checkbox is located in the upper right-hand corner (URHC) of the return under the pre-printed tax year.

  2. CCC G is entered onto all Form 1042 that are notated:

    • Amended

    • Superseding

    • Duplicate

    • Replacement

    • Any other word or phrase indicating that this is not the original return that is being filed for this tax period.

  3. If there is any doubt about whether a return is amended or not, research BMFOLT for the tax period and look for a TC 150 which indicates that another return was previously filed and that this return is amended.

  4. CCC W and CCC 3 are the only other CCCs that can be used with CCC G.

  5. When a return is amended, delete all fields and sections except for:

    Field Description
    RMIT Remittance
    01NC Name Control
    01EIN EIN
    01TXP Tax Period
    01CCC Computer Condition Code
    01RCD Received Date
    01CRD Correspondence Received Date
    01CH3 ONLY VALID ENTRY for Chapter Three Status Code is "00"
    01CH4 ONLY VALID ENTRY for Chapter Four Status Code is "00"
  6. When a return is not amended, delete CCC "G" and enter all data in Sections 01-08, as appropriate.

    Note:

    If the ROFTL (Line 1-60) has entries on all or most of the lines, SSPND 351. Rejects will input the missing data. Circle-out (delete) CCC G.

CCC J - Reasonable Cause for Failure to Make Timely and Sufficient Payments
  1. CCC J is entered when the withholding agent provides reasonable cause for failure to make timely EFTPS payments.

  2. For TY18, enter CCC J when all the following applies:

    • Withholding Agent’s Chapter 3 status code is equal to "08" or "09" .

    • There is an entry on Line 65b, Total paid during subsequent year.

      Note:

      Do not enter on TY19 and later, code is computer generated.

    See IRM 3.22.110.21.5.8 for additional requirements.

  3. For TY17 ONLY: Enter CCC "J" if there is an amount present or entered in Field 07SSD (Line 062b(1)). You may also see Notice 2016-76 notated on top of form.

  4. If the return is notated 3121 AGREEMENT, enter CCC "J" , since taxpayers filing these returns are not required to make FTD payments.

  5. If there is an explanation attached to the return, see IRM 3.22.110.21.5.2(5), Reasonable Cause for Waiver of failure to Pay Penalty, for corrective action to take.

  6. Do not enter CCC "J" if CCC "7" and/or CCC "D" is already present.

CCC O - Manual Refund Issued
  1. If CCC "O" is already present on the return when received in ERS, then a manual refund was previously issued.

  2. When there is an indication that a manual refund must be prepared≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ or the 180-day interest free period is in jeopardy, then:

    1. ERS will SSPND 341 and notate MANUAL REFUND on Form 4227.

    2. If there is any doubt about whether a manual refund was issued, research BMFOLT or TXMODA for the TC 840 or any notation that the refund was sent (e.g., TC 840 input).

    3. If a copy of a completed Form 5792 or Form 3753 is attached to the return, research TXMODA for TC 840 before entering a CCC O.

    4. Rejects will use IRM 3.12.38.5.4.3, Form 1042 - Manual Refunds (Ogden Only) to complete this process.

CCC R - Reasonable Cause for Late Filing of Return
  1. CCC "R" is entered onto a return when the taxpayer provides a reasonable cause explanation for late filing of the return.

    Note:

    See IRM 3.22.110.21.5.2, CCC D, if the taxpayer attaches a reasonable cause explanation to the return.

  2. For TY18, enter CCC R when all the following applies:

    • Withholding Agent’s Chapter 3 status code is equal to "08" or "09" .

    • There is an entry on Line 65b, Total paid during subsequent year

      Note:

      Do not enter on TY19 and later, code is computer generated.

    See IRM 3.22.110.21.5.6 for additional requirements.

  3. All returns with CCC "R" must have a Received Date. If missing, follow IRM 3.22.110.21.6(5), Field 01RCD.

  4. CCC "R" is not valid with CCC "D" but is valid with CCC "7" .

  5. If required and missing, ERS will enter CCC "R" .

CCC S - Refund Return
  1. Enter CCC S when the taxpayer checked the refund block on Line 71 or has another indication that the overpayment is to be refunded. Enter a "1" into Field 0771.

    Note:

    If neither or both checkboxes were checked AND YOU ARE CORRESPONDING FOR ANOTHER REASON, SSPND 21X for other correspondence needs and use literal:
    Please explain whether you want your overpayment applied as a Credit or as a Refund.

    Note:

    Enter CCC E if you have no other reason to correspond unless the return is truly a Final, then enter CCC S.

  2. If CCC S is correct, ensure there is a "1" in Field 0771 (refund indicator).

CCC T - Return Secured as a Result of a Taxpayer Delinquency Investigation (TDI)
  1. The CCC T is entered when the return is identified as having been secured as the result of an IRS Taxpayer Delinquency Investigation (TDI).

  2. Enter CCC T in Field 01CCC if a TC 59X is edited in the left margin of the return

CCC W - Return Cleared by Statutes
  1. The CCC W will by-pass the validity check on returns that are filed two years and ten months (or more) after the due date, if the return has been cleared by the Statutes Unit.

  2. ERS will SSPND 310 any statute criteria return that has not been stamped CLEARED BY STATUTES in the left margin of the return.

    Exception:

    Enter CCC W and continue processing if:
    -TC 59X in the left margin.
    -Section 6020(b) is notated (or stamped) on the front of the return.
    -A return with no money entries was prepared by Exam.

  3. Rejects will attach a BMFOLT print for the tax period to the back of the return and send it to Statutes for clearance.

CCC X - Refund/Credit Freeze
  1. The CCC X will prevent the release of credits or refunds from the module.

  2. Rejects will enter CCC X when there is No Reply to correspondence and there is an overpayment on the return.

    Note:

    In the event of a no reply and there is a refund desired, CCC S must be in Field 01CCC along with the CCC X.

  3. ERS will SSPND 351 when the taxpayer indicates that part or all the overpayment is to be transferred to another tax period, return (MFT) or taxpayer.

    1. Rejects will either do the credit transfer or prepare a Form 3465 to request Adjustments to do the transfer (if Rejects cannot do a credit transfer).

      Note:

      Look for an indication (in red) on the return that C&E has already prepared and sent Form 3465.

    2. If the entire overpayment is to be transferred, enter CCC X

    3. If part of the overpayment is to be transferred, reduce the available credit (Lines 64-66) by the amount to be transferred. Do not enter CCC X.

  4. If there is an amount in Field RMIT that is not for tax (but for penalty and/or interest), and there is no tax in Section 07, enter CCC X. Also enter a "1" into Field 0764E.

CCC 3 - Failure to Reply to Correspondence
  1. CCC 3 will be entered by Rejects when the taxpayer does not reply to correspondence within the 30 or 45-day time frame.

    Note:

    It may also be necessary to enter CCC X in the event of a no reply. See IRM 3.22.110.21.5.12, CCC X.

  2. If C&E edited CCC 3 for a failure to reply to correspondence, SSPND 351 to Rejects.

  3. Field 01CRD (Correspondence Received Date) can never be entered when CCC 3 is in Field 01CCC.

  4. CCC 3 is valid with CCC G.

CCC 4 - Return Prepared by IRS Under IRC Section 6020(b)
  1. CCC 4 is always entered on returns notated 6020(b).

  2. Collection and Exam employees prepare tax returns when taxpayers fail to do so.

  3. ERS will also enter a CCC 3.

    1. The return should be signed by the Revenue Officer/Agent on or near the signature line.

    2. The return must clearly be stamped or notated 6020(b).

CCC 7 - Reasonable Cause Denied
  1. CCC 7 is entered when the withholding agent provides a reason for late filing or incorrect EFTPS payments, but the reason for late filing or incorrect EFTPS payments is not acceptable. See IRM 3.22.110.21.5.2, CCC D, IRM 3.22.110.21.5.6, CCC J and/or IRM 3.22.110.21.5.8, CCC R, for additional instructions.

  2. CCC 7 will be edited by C&E, ERS, and/or Rejects as necessary.

  3. Do not enter CCC 7 if CCC J is present.

Field 01RCD - Received Date

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

  2. The valid characters are numeric (0 thru 9) only and must be in YYYYMMDD format.

  3. The Received Date is transcribed from the RD line in the "For IRS Use Only" box in the URHC of the return. The date may also be stamped on the front of the return.

  4. Invalid Conditions:

    1. The entry is missing or less than 8 numbers in the correct format.

    2. The date is earlier than the last day of the tax year (early-filer).

    3. The day of the month exceeds the number of days for that month, e.g., 20140931 (where September has only 30 days).

    4. The date is later than the current processing date.

  5. Correction Procedures:

    1. Correct misplaced entries, coding and transcription errors.

    2. If there is more than one Received Date present, enter the earliest Received Date.

      Exception:

      Do not use a Received Date in Field 01RCD that is prior to the end of the tax period.

    3. Use the following priority when a Received Date is needed, but it is not stamped on the return, or a valid handwritten Received Date is not present.

      Determine the Received Date
      1. Earliest legible postmark (e.g., U.S. Postal Service (USPS) Foreign or Private Delivery Service (PDS)).

        Note:

        Receipt and Control function will attach the USPS tracking page if the postmark date is missing from a piece of certified mail. Use the "Acceptance" and "Date and Time" as the postmark date.

        Note:

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

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

      3. Revenue Officer's or other IRS official's signature date.

      4. Signature date, if within the current year (unless other information indicates signature date is invalid).

      5. Julian Date of the Document Locator Number (DLN) minus 10 days.

    4. If the year in the Received Date is either prior or future but other data on the return (tax year, postmark date or signature date) indicate that the year should be the current year, enter the current year.

    5. Correct the day of the month accordingly:

      Month Maximum Number of Days
      01, 03, 05, 07, 08, 10, or 12 31
      04, 06, 09, or 11 30
      02 28 (29 in a leap year)
    6. If the date is earlier than the last day of the tax year (e.g., the Received Date is Oct. 27, 2019 for a 201912 return): ERS will examine the return to be certain the tax year and Received Date are correct. ERS will SSPND 480 and notate "early filer" on Form 4227.

  6. Rejects Correction Procedures: Re-examine any return suspended as an Early-Filer to verify it is an early -filed return.

Field 01CRD - Correspondence Received Date

  1. Field 01CRD is an 8-position field that may or may not be present.

  2. The valid characters are numeric, 0 thru 9 (in YYYYMMDD format) or blank.

  3. The date is found on the CR line in the "For IRS Use Only" block in the URHC of the Form 1042.

  4. Invalid Conditions:

    1. The date is not later than the due date of the return.

    2. It is the same as or earlier than the Received Date in Field 01RCD.

    3. CCC 3 (No Reply) is present in Field 01CCC.

  5. Correction Procedures:

    1. Correct misplaced entries, coding and transcription errors on Field 01CRD.

      Note:

      The Correspondence Received Date (CRD) may be present on the return if:
      1) C&E corresponded and entered the date OR,
      2) Entity assigned an EIN and entered the EIN-assignment date on the return.

      Note:

      The Entity date may not have been entered on the CR line. The Entity Assignment Date will be indicated, in the left-hand margin on the front of the return, by a capital E and date assigned in purple.

    2. If CCC 3 and the CRD are both present, determine which is correct and delete the other.

      Note:

      Do not enter a date in Field 01CRD if the taxpayer is not at fault and the correspondence was an IRS error.

  6. Rejects Correction Procedures:

    1. The date is entered when a reply is received in response to IRS correspondence.

    2. Enter the date onto the return on the CR line in the For IRS Use Only block in the URHC of the return.

    3. This reply may be a letter, telephone call or fax.

    4. If the correspondence was sent in error (that is, the taxpayer was not at fault), do not enter a CRD.

    5. Years ago, a No-Reply was indicated by entering 8-9's into this field, if ever seen on an old re-input return, delete and enter CCC 3.

Field 01PIC - Penalty Interest (P/I) Code

  1. Field 01PIC is a 1-position field that may or may not be present.

  2. The valid characters are 1 and blank.

  3. The code is transcribed from the "I" line in the "For IRS Use Only" block in the URHC of the return.

  4. The 1 is entered when:

    1. The taxpayer entered an amount for delinquency (FF) penalty and/or interest onto the return (usually near the balance due or refund line) AND

    2. The Received Date (stamped or edited) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  5. Invalid Conditions:

    1. The entry is other than 1 or blank.

    2. The Received Date is not within the ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

  6. Correction Procedures:

    1. Correct misplaced entries, coding and transcription errors on Field 01PIC and Field 01RCD.

    2. If the P/I code was entered and the transcribed Received Date is within the ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ delete the code.

    3. If you correct Field 01RCD, see if the corrected Received Date affects the P/I code and correct the code accordingly.

  7. Rejects Correction Procedures: If the P/I code "1" should have been entered, enter the code on the return and in Field 01PIC.

Field 01SIC - Schedule Indicator Code (SIC)

  1. Field 01SIC is a 1-position field that may or may not be present.

  2. The valid characters are 1, 2 or blank.

  3. The SIC code is transcribed from the SIC line in the "For IRS Use Only" block in the URHC of the return.

  4. SIC code 1 is entered only when the Record of Federal Tax Liability (ROFTL) (Lines 1-60) is completely blank because it is unnecessary (no tax).

  5. SIC code 2 is entered if any of these conditions exist:

    • CCC J was edited due to a notation of 3121 Agreement or VCP on the return. See IRM 3.22.110.21.5.6, CCC J.

    • TY17 only: CCC J was edited for an amount present on Line 62b(1), Field 07SSD.

    • TY10 and prior: The taxpayer did not notate"3121 Agreement" on top of Form 1042, but included a reasonable cause statement. Follow the step list instructions in IRM 3.22.110.18.3, Delinquent Returns.

    • TY10 and prior: The 90 Percent Rule checkbox is checked (the checkbox is located below the entity portion of Form 1042) and any monthly Tax Liability (Lines 5, 10, 15, etc.) exceeds ≡ ≡ ≡ and the weekly tax liability for that month is also present.

    • TY10 and prior: The taxpayer noted "3121 Agreement" on Form 1042 and any monthly tax liability (line 5, 10, 15, etc) is ≡ ≡ ≡ ≡ or more.

    • TY10 and prior: Both TY10 and prior conditions exist at the same time.

  6. Invalid Conditions:

    1. Any character other than a 1, 2 or blank appears in Field 01SIC.

    2. Although it will not appear invalid, SIC Code 1 must not appear in Field 01SIC if there are any entries at all in the ROFTL (Lines 1-60), Sections 03-06)

  7. Correction Procedures:

    1. Correct misplaced entries, coding and transcription errors.

    2. If there are no entries on Lines 1-60 and Line 64e is zero or blank, enter 1 in Field 01SIC.

    3. If there are any correct entries on Lines 1 thru 60, and a 1 is present in Field 01SIC, delete the entry.

      Note:

      Determine if SIC code 2 should be entered in its place.

    4. TY10 and prior: If C&E has corresponded for any missing amounts in the ROFTL, look at the reply and determine if SIC 2 should have been entered.

  8. Rejects Correction Procedures:

    If... Then...
    Reply is received for missing ROFTL entries, 1) Delete SIC code 1, if present, when entering Sections 03 thru 06 after a REPLY is received for missing ROFTL entries.
    2) Enter the amounts into the proper lines of the return and into the proper fields (and the CRD, if required).
    TY10 and prior Reply is received for missing ROFTL entries, 1) Determine if SIC 2 should be entered.
    2) Enter the amounts into the proper lines of the return and into the proper fields (and the CRD, if required).
    TY10 and prior Reply is received for missing ROFTL entries, 1) Enter SIC 2 if the taxpayer replies with the missing weekly amounts and the total for the month is ≡ ≡ ≡ ≡ or more.
    2) Enter the amounts into the proper lines of the return and into the proper fields (and the CRD, if required).
    TY10 and prior only: NO Reply, 1) Enter CCC 3.
    2) Enter SIC 2.
    3) Enter the four weekly amounts by dividing the monthly total by 4.
    4) Enter CCC X if the return shows an overpayment.

Field 01QIN - Qualified/Non-Qualified (QI/NQI) Intermediary Indicator

  1. Field 01QIN is a 1-position field that may or may not be present.

  2. The valid characters are 1 or 2.

    • 1 indicates a valid Qualified intermediary (QI), Withholding Partnership (WP), or Withholding Trust (WT) EIN is present (referred collectively throughout the rest of the IRM as QI).

    • 2 indicates a valid QI/WP/WT EIN is not present (NQI).

  3. The QI checkbox was removed from Form 1042 in TY14 and is no longer a transcribed field. The computer automatically determines if the EIN is in the QI or NQI range and sets the indicator as appropriate.

Field 01CBI – Designee Checkbox Indicator

  1. Description: The designee checkbox indicator is transcribed from the bottom of Form 1042. The checkbox is used to indicate whether the filer has elected to allow a third-party designee to answer questions about the return as it is processed. Data may or may not be present in Field 01CBI.

  2. Valid Condition: Valid entries are "1" and blank.

  3. Invalid Condition: Field 01CBI will generate as an error when the Designee Checkbox Indicator is other than "1" or blank.

  4. Correction Procedures:

    1. Correct misplaced entries, coding and transcription errors.

    2. Enter a "1" in Field 01CBI on the screen if the "Yes" box is checked.

    3. Delete Field 01CBI if "No" box or both boxes are checked.

    4. If invalid, delete the entry in Field 01CBI.

Field 01CBT – Paid Preparer Telephone Number

  1. Description: The paid preparer telephone number is transcribed from the bottom Form 1042, below the paid preparer EIN. Data may or may not be present in Field 01CBT.

  2. Valid Condition: Field 01CBT must be alpha or numeric or a combination of alpha and numeric characters, not to exceed 10 characters or blank.

  3. Invalid Condition: Field 01CBT will generate as an error when the Paid Preparer Telephone Number is other than 10 alpha/numeric.

  4. Correction Procedures:

    1. Correct misplaced entries, coding and transcription errors.

    2. If a telephone number is invalid, delete the entry in Field 01CBT.

Field 01PSN - Paid Preparer PTIN

  1. Field 01PSN is a 9-position field that may be present. It is located below Line 71 to the right of Preparer's Signature.

    Note:

    If the Paid Preparer information is present, either field 01PSN or 01PEN should have an entry. Only one of these fields is required.

  2. Valid conditions:

    • Entry is blank

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

  3. Invalid conditions:

    • Field 01PSN is other than a "P" followed by eight digits,

    • Contains all zeroes,

    • Contains all nines, or

    • Contains all numeric characters.

  4. Correct Field 01PSN as follows:

    If... Then...
    A valid PTIN is present on the return, but incorrectly transcribed, Enter the correct valid PTIN in Field 01PSN.
    An SSN is present in Field 01PSN, Delete the SSN in Field 01PSN.
    An entry appears in both Field 01PSN and 01PEN, Delete Field 01PEN.
    A valid PTIN is present and an SSN is also present Enter the PTIN in Field 01PSN and delete the SSN.
    A valid PTIN cannot be located Delete the entry in Field 01PSN.

Field 01PEN - Paid Preparer's EIN

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

    Note:

    The Paid Preparer's EIN is located at the bottom, lower right hand side of the return, below the PTIN.

  2. Valid conditions:

    • Entry is blank

    • All numeric

  3. Invalid conditions:

    • Field 01PEN is other than nine numeric digits,

    • Contains all zeroes,

    • Contains all nines, or

    • The first two digits are invalid for Field 01EIN. See IRM 3.22.110.21.3, Field 01EIN.

  4. Correct Field 01PEN as follows:

    If... Then...
    Only a valid EIN is present, Enter the EIN in Field 01PEN.
    A valid PTIN is present and an EIN is also present, Enter the PTIN in Field 01PSN and delete the entry in Field 01PEN.
    Both an EIN and SSN are present, Delete the SSN in Field 01PSN and enter the EIN in Field 01PEN. Make sure the EIN is a valid EIN.
    The EIN is invalid on the return and a valid EIN cannot be located, Delete the entry in Field 01PEN.

Field 01CH3 - Chapter 3 Status Code

  1. This field contains the Chapter Three Status Code.

  2. This is a two-position numeric field and valid entries are 00-99.

  3. It is generally entered by the taxpayer from their Form 1042-S Box 12b.

  4. Blank is not valid.

  5. Correction Procedures:

    1. The only valid entry on G Coded returns is "00."

    2. The only valid entry on a zero return is "00" .

    3. If blank, and taxpayer has an entry on the return, enter the status code from the return unless it is a zero return then enter "00" .

    Note:

    For TY18, if Status Code is "08" or "09" and, there is an amount greater than zero in Field 0765B, enter CCC "J" and CCC "R" , if not already present.

Field 01CH4 - Chapter 4 Status Code

  1. This field contains the Chapter Four Status Code.

  2. This is a two-position numeric field and valid entries are 00-99.

  3. It is generally entered by the taxpayer from their Form 1042-S Box 12c.

  4. Blank is not valid.

  5. Correction Procedures:

    1. The only valid entry on G Coded returns is "00."

    2. The only valid entry on a zero return is "00" .

    3. If blank, and taxpayer has an entry on the return, enter the status code from the return unless it is a zero return then enter "00" .

Field TPNC - Taxpayer Notice Code (TPNC)

  1. Field TPNC is a 6-position field.

  2. The valid characters are 01, 02, 26, 90 or blank.

  3. This field is never entered or corrected by ERS or Rejects.

  4. This field is where the TPNCs appear after the return has posted.

  5. The list of available Taxpayer Notice Codes is as follows:

    TPNC Notice Text
    01 The balance due, or the amount you overpaid, was not correct.
    02 An error was made when the total tax you owe for the year was figured.
    26 The amount reported as Total Federal Tax Deposits for the year was not correct.
    90 Fill-in narrative. TPNC 90 is used when there is a taxpayer error not explained by the above codes (e.g., Negative amounts are not allowed on Lines 1-60, an error was made in totaling the credit amounts on Line 68, an error was made in adding or subtracting the adjustment amount on Line 64a, etc.)
  6. Do not use any other TPNC when sending TPNC 90. If TPNC 01 or 02 is also needed, add the wording from that TPNC to the wording for the error requiring the TPNC 90.

  7. Do not send a TPNC if:

    1. Field 0764E and Field 0764> (total tax liability) underprint ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ AND

    2. The balance due/refund Field 07B/D underprints ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    3. Correct Field 07B/D using the taxpayer's original amounts.

  8. Correction/Rejects Correction Procedures -

    1. Never correct, add or delete anything in this field.

    2. Do not send a TPNC if there is no underprint in the balance due/refund field (07B/D). If there are underprints in the tax fields (0763A and 0763C) but not in Field 07B/D, look carefully for transcription errors. A taxpayer notice code on the Form 1042 will not be released by the computer if there is no underprint in field 07B/D.

      Note:

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

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

  1. Field 01CBP is a 9-position field that may or may not have an entry.

    Note:

    There should be only five digits entered by the designee on the return. The field has nine positions, so it will be possible to enter as many as nine numbers and letters.

  2. This field is located at the right side of the Third-Party Designee Line (under Line 71).

  3. The designee is instructed to pick any five numbers and insert them into the blocks as a means of identification when IRS calls the designee.

  4. The valid characters are numeric (0 thru 9) and blank.

  5. This number cannot be researched using CFOL.

  6. Correction Procedures:

    1. If the designee enters any invalid or illegible characters, blank the field.

    2. Correct any transcription errors, if possible. If in doubt about what a digit may be, do not guess; blank the field

Section 02 - Form 1042

  1. Section 02 Alpha Field Designators (AFD), maximum field lengths, titles and the location on the return follows:

    Domestic or U.S. Possession Address Format

    Alpha Designator Field Length Title Location on Return
    02CON 35 In-Care-of Name Street Address Line
    02FAD 35 Foreign Address Street Address Line
    02ADD 35 Street Address/Post Office Box Street Address Line
    02CTY 22 City City/State/ZIP Line
    02ST 2 State Code City/State/ZIP Line
    02ZIP 12 ZIP Code City/State/ZIP Line

     

    Foreign Address Format

    Alpha Designator Field Length Title Location on Return
    02CON 35 In-Care-of Name Street Address Line
    02FAD 35 Foreign Address Street Address Line
    02ADD 35 Street Address/Post Office Box Street Address Line
    02CTY 22 City and Foreign Country City/State/ZIP Line
    02ST 2 Period (.) in first position City/State/ZIP Line (entered by C&E)
    02ZIP 12 Always blank  

     

  2. The valid characters are alpha (A thru Z), numeric (0 thru 9), dash/hyphen (-), slash (/), period (.) and blank (See instructions for each field for requirements and limitations.)

  3. All fields are variable (positive field breaker only). No field in Section 02 will take a negative field breaker.

  4. There are two different formats used for Section 02: one for U.S. and U.S. possessions addresses and one for foreign addresses.

♦Field 02CON - In-Care-of Name♦

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

  2. Field 02CON is a 35-position field that may or may not be present.

  3. Valid characters are alpha (A thru Z), numeric (0 thru 9), ampersand (), dash/hyphen (-), percent (%), slash (/) or blank.

    Note:

    A percent (%) is valid in the first position followed by a blank.

  4. Invalid Conditions:

    1. The first position of the field is blank, unless the entire field is blank.

    2. The first position is a percent (%) and second position is not blank.

    3. An entry other than the valid characters is present.

    4. There are two consecutive blanks between significant characters.

  5. Correction Procedures:

    1. Delete any invalid characters.

    2. If the entry exceeds 35 characters, abbreviate where possible.

    3. If it is not possible to determine the in-care-of name, delete the field.

    If... Then...
    A % (percent) is in the first position,
    1. Verify there is a blank in the second position.

    2. If not blank, enter a blank followed by the "in-care-of" name beginning with an alpha or numeric in Field 02CON.

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

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

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

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

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

♦Field 02FAD - Foreign Address (35 positions) (OSPC Only)♦

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

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

    • Field 02FAD should not be present on a "G" coded short length record.

  2. Valid Condition: Valid characters are alpha, numeric and special characters.

  3. Invalid Conditions: Field 02FAD will generate as an error when:

    • The first position is blank,

    • Any character follows two consecutive blanks, and/or

    • 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. If the foreign address is longer than 35 characters, continue the address in Field 02ADD.

  4. Correction Procedures:

    1. Correct all coding and transcription errors.

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

      2. Ensure Field 02CTY contains a foreign country code and Field 02ST contains a ". (period/space)" See Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries.

      Exception:

      Use the country code based on the province in Field 02CTY if the foreign address is from Canada and the address contains a province name or abbreviation. See IRM 3.22.110.22.4(5) for Province/Country Codes - Canada.

      A province abbreviation is not present for Australia, Brazil, Canada, Cuba, Italy, Mexico or The Netherlands but a province name is present, Enter the province abbreviation in the appropriate position in Field 02FAD. See Exhibit 3.22.110-6, ♦Province, Foreign State, and Territory Abbreviations
      A foreign address is not present on the return,
      1. SSPND 610.

      2. Renumber return with domestic DLN.

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

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

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

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

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

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

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

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

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

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

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

      Note:

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

Field 02ADD - Street Address

  1. Field 02ADD is a 35-position field that may or may not be present.

  2. Valid characters are alpha (A thru Z), numeric (0 thru 9), dash/hyphen (-), slash (/) and blank.

  3. Invalid Conditions:

    1. An entry other than the valid characters is present.

      Note:

      A pound sign (#) will be transcribed at the end of 35 spaces if the entry contains more than 35 characters.

    2. The first position of the field is blank, unless the entire field is blank.

  4. Correction Procedures:

    1. Delete any invalid character.

    2. If the entry exceeds 35 characters, abbreviate where possible.

    3. If unable to correct, delete Section 02.

      Note:

      This is not uncommon for foreign addresses.

    4. If the first position is blank, delete the blank.

Field 02CTY - City Field

  1. Description: Field 02CTY is in the entity section of the return.

  2. Valid characters are alpha (a-z) and blank.

  3. Invalid Conditions: Field 02CTY will generate as a field error when:

    • The first position is blank,

    • Any character other than blank or alpha is present,

    • Any character follows two consecutive blanks,

    • The Major City Code (MCC) does not match any of the valid codes in the Major City Code Table, and/or

    • The Foreign Country Code (FCC) does not match any of the valid codes in Document 7475.

  4. Correction Procedures:

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

      Note:

      For a listing of Major City Codes (MCC) (listed by state) and valid Foreign Country Codes (FCC) see Document 7475,State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries.

    2. If/Then:

    If... Then...
    An MCC is used, Field 02CTY must be present.
    Field 02CTY contains an error, Check if the MCC is correct.
    Field 02CTY is not valid and a MCC cannot be determined, Input the entire city name.
    A MCC is not used and Field 02CTY is present, Field 02ST (State) must be present.
    A foreign address is shown on the return, Enter the appropriate FCC in Field 02CTY.
    See Document 7475.
    Field 02CTY contains an incorrect country code or "XX" , Enter appropriate FCC in Field 02CTY. If there is no valid FCC, input the entire country name.
    See Document 7475.
  5. Special Considerations -

    1. APO/FPO/DPO Address Format:

      APO/FPO/DPO addresses use the following format

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

       

      Note:

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

    2. Canadian Province/Country Codes:

      Canadian Province Province Abbreviation Postal Code Beginning

      Note:

      If the Canadian Postal Code begins with one of the following, use the corresponding Country Code abbreviation in the right most column.

      Country Code Field 02CTY
      Alberta AB T XA
      British Columbia BC V XB
      Manitoba MB R XM
      New Brunswick NB E XN
      Newfoundland and Labrador NL A XL
      Northwest Territories NT X XT
      Nova Scotia NS B XS
      Nunavut NU X XV
      Ontario ON K, L, M, N, or P XO
      Prince Edward Island PE C XP
      Quebec QC G, H, or I XQ
      Saskatchewan SK S XW
      Yukon YT Y XY

Field 02ST - State Code

  1. Field 02ST is a 2-position field that may or may not be present.

  2. If Section 02 is present, this field must have an entry unless there is a MCC in Field 02ST.

  3. Valid characters are alpha (A thru Z), period (.) and blank.

  4. For domestic addresses, the entry must be one of the state codes shown in the list below.

  5. U.S. Possessions are indicated on the following list, as are their respective state codes. These are entered in the same way as in a domestic address.

  6. For foreign addresses, there will be a period "." in the first position of the field (the second position must be blank). If not send case to Rejects for correction to DLN.

  7. The list of valid state codes (including U.S. Possessions) is as follows:

    State Code ZIP Code Range
    (First 3 Digits)
    APO/FPO/DPO Miami, FL AA 340
    APO/FPO/DPO Europe AE 090–098
    APO/FPO/DPO Pacific AP 962–966
    Alaska AK 995–999
    Alabama AL 350–369
    American Samoa * AS 967
    Arizona AZ 850–865
    Arkansas AR 716–729
    California CA 900–928, 930–961
    Colorado CO 800–816
    Connecticut CT 060–069
    Delaware DE 197–199
    District of Columbia DC 200, 202–205
    Federated State of Micronesia* FM 969
    Florida FL 320–339, 341-342, 346, 347, 349
    Georgia GA 300–319, 399
    Guam * GU 969
    Hawaii HI 967–968
    Idaho ID 832–838
    Illinois IL 600–629
    Indiana IN 460–479
    Iowa IA 500–528
    Kansas KS 660–679
    Kentucky KY 400–427
    Louisiana LA 700–714
    Maine ME 039–049
    Mariana Islands * MP 969
    Marshall Islands * MH 969
    Maryland MD 206–219
    Massachusetts MA 010–027, 055
    Michigan MI 480–499
    Minnesota MN 550–567
    Mississippi MS 386–397
    Missouri MO 630–658
    Montana MT 590–599
    Nebraska NE 680–693
    Nevada NV 889–898
    New Hampshire NH 030–038
    New Jersey NJ 070–089
    New Mexico NM 870–884
    New York NY 005, 100–149
    North Carolina NC 270–289
    North Dakota ND 580–588
    Ohio OH 430–459
    Oklahoma OK 730–731, 734-741, 743–749
    Oregon OR 970–979
    Palau * PW 969
    Pennsylvania PA 150–196
    Puerto Rico * PR 006–007, 009
    Rhode Island RI 028–029
    South Carolina SC 290–299
    South Dakota SD 570–577
    Tennessee TN 370–385
    Texas TX 733, 750–799
    Utah UT 840–847
    Vermont VT 050–054, 056–059
    Virginia VA 220–246
    Virgin Islands * VI 008
    Washington WA 980–986, 988-994
    West Virginia WV 247–268
    Wisconsin WI 530-549
    Wyoming WY 820–831

    Note:

    Those States marked with an asterisk (*) are U.S. Possessions.

  8. Invalid Conditions:

    1. There is a non-alpha (except for period) character present.

    2. The entry is not on the list of valid codes.

    3. The field is blank (unless there is a MCC in Field 02CTY).

    4. The period is in the second position (with foreign address).

    5. There is an entry in Field 02ST and a period in Field 02CTY.

    6. The DLN begins with "60" and Field 02ST is other than a period (.) or blank.

  9. Correction/Rejects Correction Procedures:

    1. Verify the state code was transcribed correctly.

    2. Correct any invalid entry.

    3. If the state is missing from the line on the return, search any attachments. Research the state from the ZIP Code, if present.

    4. If the state and ZIP Code are both missing and it is impossible to determine them, delete Section 02.

    5. If the DLN begins with "60" and Field 02ST contains a valid state code, SSPND 610 to Rejects to be renumbered.

Field 02ZIP - ZIP Code

  1. Field 02ZIP is a 12-position field which may or may not be present.

  2. Valid characters are numeric (0 thru 9) and blank.

  3. There must be a minimum of five (5) numbers present.

  4. If there is a state code in Field 02ST there must be a ZIP Code present in Field 02ZIP.

  5. If there is a MCC in Field 02CTY, there must be a ZIP Code present in Field 02ZIP

  6. This field must be blank if there is a period in Field 02ADD.

  7. The ZIP Codes of U.S. Possessions are considered U.S. ZIP Codes and are entered in this field.

  8. Invalid Conditions:

    1. The field is blank and there is a state code in Field 02ST or a MCC in Field 02CTY.

    2. There is a non-numeric entry in the field.

    3. There are less than five digits in the field.

    4. There is an entry in the field but there is a period in Field 02ST.

      Note:

      A foreign (Non-U.S. Possession) ZIP/Postal Code is never entered in this field. The state code and ZIP Code for U.S. possessions follow the same format as for domestic addresses.

    5. There is a valid ZIP Code in the field but the first position of the field is blank.

    6. There is a discrepancy between the digits of the ZIP Code and the state code. (Each state has a certain range of applicable ZIP Codes).

    7. The ZIP Code is not on the list of valid ZIP Codes of the U.S. Post Office.

  9. Correction/Rejects Correction Procedures:

    1. Correct misplaced entries, coding and transcription errors.

    2. Perfect any non-numeric characters.

    3. Delete any ZIP/Postal Code belonging to a foreign country, except U.S. Possessions. (Foreign ZIP Codes are sometimes referred to as Postal Codes).

    4. Research any missing or incomplete ZIP Code using the ZIP Code Directory. Also, look on any attachments, especially an envelope.

    5. If the first position of the field is blank, but there is a valid code in the field, re-enter the entire field.

    6. If the ZIP Code is invalid, ensure the state code in Field 02ST is correct, per IRM 3.22.110.22.5, Field 02ST.

      Example:

      Alaska is AK, not AS or AA. These are valid state codes, but they would not match the applicable ZIP Code.

Sections 03-06 - Form 1042 - Record of Federal Tax Liability (ROFTL)

  1. Fields Displayed and General Information:

  2. Sections 03-06 Alpha Field Designators (AFD), applicable month and location on the return.

    Alpha Field Designator Month Lines on Return
    03A07 January Week 1 1
    03A15 January Week 2 2
    03A22 January Week 3 3
    03A31 January Week 4 4
    03ADJ>   Computer Underprint of Monthly Total
    03B07 February Week 1 6
    03B15 February Week 2 7
    03B22 February Week 3 8
    03B28 February Week 4 9
    03BDJ>   Computer Underprint of Monthly Total
    03C07 March Week 1 11
    03C15 March Week 2 12
    03C22 March Week 3 13
    03C31 March Week 4 14
    03CDJ>   Computer Underprint of Monthly Total
    03QR1> 1st Quarter Total Computer Generated (Lines 5, 10, 15) Underprint of 1st Quarter Total Liability
    Alpha Field Designator Month Lines on Return
    04D07 April Week 1 16
    04D15 April Week 2 17
    04D22 April Week 3 18
    04D30 April Week 4 19
    04DDJ>   Computer Underprint of Monthly Total
    04E07 May Week 1 21
    04E15 May Week 2 22
    04E22 May Week 3 23
    04E31 May Week 4 24
    04EDJ>   Computer Underprint of Monthly Total
    04F07 June Week 1 26
    04F15 June Week 2 27
    04F22 June Week 3 28
    04F30 June Week 4 29
    04FDJ>   Computer Underprint of Monthly Total
    04QR2> 2nd Quarter Total Computer Generated (Lines 20, 25, 30) Underprint of 2nd Quarter Total Liability
    Alpha Field Designator Month Lines on Return
    05G07 July Week 1 31
    05G15 July Week 2 32
    05G22 July Week 3 33
    05G31 July Week 4 34
    05GDJ>   Computer Underprint of Monthly Total
    05H07 August Week 1 36
    05H15 August Week 2 37
    05H22 August Week 3 38
    05H31 August Week 4 39
    05HDJ>   Computer Underprint of Monthly Total
    05I07 September Week 1 41
    05I15 September Week 2 42
    05I22 September Week 3 43
    05I30 September Week 4 44
    05IDJ>   Computer Underprint of Monthly Total
    05QR3> 3rd Quarter Total Computer Generated (Lines 35, 40, 45) Underprint of 3rd Quarter Total Liability
    Alpha Field Designator Month Lines on Return
    06J07 October Week 1 46
    06J15 October Week 2 47
    06J22 October Week 3 48
    06J31 October Week 4 49
    06JDJ>   Computer Underprint of Monthly Total
    06K07 November Week 1 51
    06K15 November Week 2 52
    06K22 November Week 3 53
    06K30 November Week 4 54
    06KDJ>   Computer Underprint of Monthly Total
    06L07 December Week 1 56
    06L15 December Week 2 57
    06L22 December Week 3 58
    06L31 December Week 4 59
    06LDJ>   Computer Underprint of Monthly Total
    06QR4> 4th Quarter Total Computer Generated (Lines 50, 55, 60) Underprint of 4th Quarter Total Liability
  3. The computer will generate its own monthly total liability underprint amounts to appear in Section 03, 04, 05 and 06 since the monthly total liability lines are not transcribed. The fields are:

    03ADJ> 04DDJ> 05GDJ> 06JDJ>
    03BDJ> 04EDJ> 05HDJ> 06KDJ>
    03CDJ> 04FDJ> 05IDJ> 06LDJ>
  4. The computer will generate Quarterly Total Liability underprint amounts only, to assist the ERS TE with several error code corrections. In addition, a total quarterly liability amount will be computer generated summarizing all four quarters. The screen displays are:

    • Screen Display 1042 #S03 (Section 03)

    • Screen Display 1042 #S04 (Section 04)

    • Screen Display 1042 #S05 (Section 05)

    • Screen Display 1042 #S06 (Section 06)

    • Screen Display 1042 #S07 (Section 07)

    • Screen Display 1042 #706 (Consistency Error 706)

    • Screen Display 1042 #716 (Math error 716)

    • Screen Display 1042 #720 Math error 720)

    03QR1> 04QR2> 05QR3> 06QR4> 07TQA>
  5. The valid characters are numeric (0 thru 9) and blank.

  6. Each section (03-06) is made up of 15 fields.

    • Section 03 contains weekly and monthly entries from January through March.

    • Section 04 contains weekly and monthly entries from April through June.

    • Section 05 contains weekly and monthly entries from July through September.

    • Section 06 contains weekly and monthly entries from October through December.

  7. Each field has 15 positions.

  8. All fields are DOLLARS and CENTS.

    Note:

    You may sometimes see entries where the comma and decimal point is reversed. This is sometimes seen on returns from Europe.
    e.g., 3.146,02 (European) = 3,146.02 (U.S.)
    The amount is usually correct (unless you can see that it is in foreign currency), but the format is reversed.

  9. All four sections will not necessarily appear on all the error screens.

  10. Section 03-06 make up the Record of Federal Tax Liability (ROFTL).

  11. All fields are positive only. If the transcriber attempts to enter a negative field breaker, it will appear as positive on the ERS screen.

  12. There must be at least one entry on the weekly tax lines in the ROFTL (Lines 1-60) whenever there is a tax amount on Line 64e.

  13. The Total Tax Liability will be the total of the entries in section 03 through 06, which include any two percent excise tax reflected on Line 64d.

  14. Section 03 thru 06 cannot appear on the error system with CCC G (Amended) in Field 01CCC.

  15. Invalid Condition: A non-numeric entry is present in the field.

  16. Special Error Conditions:

    1. If there are two entries on one line, neither will be transcribed. There will not be an invalid condition, but the total tax will underprint.

    2. The entries on Lines 1 thru 60 must be in United States dollars and cents. Foreign currency cannot be processed. (See IRM 3.22.110.16, Foreign Currency.)

    3. If there is a CCC G but it is found that the return is original, not amended (this may be seen on an attached Form 3893, Re-Entry Document Control, a Statute transmittal or from research), then: Circle-out CCC G. If all or nearly all the lines of the ROFTL (section 03 thru 06) have entries, SSPND 351. Rejects will input the missing data.

Section 03-06 Correction Procedures

  1. If there are two entries on one line, add them together and enter in the correct field.

  2. If there are negative amounts in Lines 1-60:

    If... Then...
    If C&E "X'd" out negative amounts, Send TPNC 90 #301 with literal:
    Negative amounts are not allowed on Form 1042, Record of Federal Tax liability section unless you are applying the reimbursement or setoff procedures to adjust over withholding. Amounts are increased to zero and the total tax liability recomputed.
    If there are two entries on one line, and one of the amounts is negative,
    1. "X" it on the return and enter only the positive amount into the field.

    2. Send TPNC 90 #301.

    If C&E did not "X" negative amounts,
    1. Delete the negative amounts on Lines 1- 60.

    2. Send TPNC 90 #301.

  3. If only monthly totals were entered,

    And... Then...
    The totals are less than ≡ ≡ ≡ ≡ ≡ ≡ , Enter the amount onto the last weekly line for that month on the return and into the corresponding field.

    Example:

    If the total is on Line 5, move the amount to Line 4 and into Field 03A31.

    The totals are more than ≡ ≡ ≡ ≡ , SSPND 21X for the missing weekly tax liability amounts on Lines 1-60.
  4. If only Line 59 has an entry:

    And... Then...
    Field 01QIN contains a 1, Enter the amount in Field 06L31.
    Field 01QIN contains a 2, SSPND 21X with literal:
    Because you did not provide a valid QI, WP, or WT EIN, Lines 1-60 of Form 1042 must be completed, as applicable.
  5. If Lines 1 thru 59 are blank and:

    If... And... Then...
    Line 64e (Field 0764E) has an entry that is less ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , An entry appears in Line 60, Enter the amount from Line 60 in Field 06L31 and Line 59.
    Line 64e is less ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , There is no entry in line 60, Enter the Line 64e amount into Field 06L31 and Line 59.
    Line 64e is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , None is notated on Line 61a, and a 0 has been entered in Field 0761A, Enter the amount into Field 06L31 and Line 59.

    Note:

    This may indicate a Procurement only return and should only be seen on TY13 and prior.

    Line 64e is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , The address in the entity area is in Canada, Enter the amount on Line 64e onto Line 59 and into Field 07B/D.
    Line 64e is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , The taxpayer indicates that the balance due will be paid on March 15th with the return and Lines 1-60 are blank, Enter the Line 64e amount onto Line 59 of the return and into Field 06L31.
    If Line 64e is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ,   SSPND 21X for the weekly tax liabilities information on Lines 1 thru 60.

Section 03-06 Rejects Correction Procedures

  1. When ERS corresponded for Lines 1-60:

    And... Then...
    If the REPLY is sufficient, Enter the amounts into the proper lines of the return and into the proper fields (and the CRD, if required).
    If the REPLY cites a specific section of the IRC or a specific Revenue Ruling or Procedure or stating Consent Dividend, Enter the amount from Line 64e to Line 59 and into Field 07B/D (and the CRD, if required).
    If the REPLY indicates that the balance due will be paid on March 15th with the return, Enter the amount onto Line 59 of the return and into Field 06L31 (and the CRD, if required).
    If there is NO REPLY or an insufficient reply, and Line 60 is empty,
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    If there is NO REPLY or an insufficient reply, and only Line 60 had an entry, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
  2. When ERS corresponded because only monthly totals were entered:

    And... Then...
    If the REPLY is sufficient, Enter the amounts into the proper lines of the return and into the proper fields (and the CRD, if required).
    If there is NO REPLY or an insufficient reply,
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Example:

    January's monthly total is $4,000, input $1,000 in Fields 03A07, 03A15, 03A22 and 03A31.

  3. If ERS corresponded because multiple entries in the ROFTL (Lines 1-60) are income, not tax:

    And... Then...
    If the REPLY is sufficient, "X" the amounts of income in the ROFTL and enter the TAX amounts to the left of the line. Also enter the CRD, if required, onto the return and into Field 01CRD.
    If there is NO REPLY or an insufficient reply,
    1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

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

    3. Add up the calculated amounts of tax to ensure the total equals the amount on Line 64e ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    4. Enter the calculated amounts of tax onto the appropriate lines of the ROFTL and into the fields on the ERS system.

    5. Enter CCC 3.

    6. Enter CCC X if the return shows an overpayment.

Section 07 - Total Tax, Credits, Balance Due/Refund

  1. Section 07 should always be present, unless CCC G is present. If there are no entries in Section 07 of the return, GTSEC to retrieve Section 07 and add a 1 in Field 0761A. Do this even if Sections 03-07 have no entries on the return.

  2. All fields are positive only except for Field 0764A, 0770A, 0770B, and Field 07B/D, which may be positive or negative. Field 07B/D will always be positive for TY14 Form 1042.

  3. All amounts are entered in DOLLARS and CENTS.

  4. Section 07 field designators, maximum field lengths, titles and locations are listed below:

    Designator Field Length Title Location on Return
    0761A 6 Number Filed on Paper (Form 1042-S) Line 61a
    0761B 6 Number Filed Electronically (Form 1042-S) Line 61b
    0762A 15 Total FDAP US Income Amt. Line 62a
    07SSD 15 Total US Dividend Payment Amt. Line 62b(1)
    07SSP 15 Total US Other Payment Amt. Line 62b(2)
    0762C 15 Gross Income Reported Amt. Line 62c
    07TQA> 15 Computed Total Quarterly Amount Computer Underprint
    0762D 15 Gross Income Paid Amt. Line 62d
    0763A 15 Taxes Withheld by Agent Amt. Line 63a
    07POD 15 Taxes Withheld Other than Substitute Dividend Amt. Line 63b(1)
    07SD 15 Taxes Withheld Substitute Dividend Amt. Line 63b(2)
    076AO 15 Adjustment to Overwithholding Line 63c(1)
    076AU 15 Adjustment to Underwithholding Line 63c(2)
    0763D 15 Taxes Paid by Withholding Agent Amt. Line 63d
    0763E 15 Taxes Withheld or Paid Amt. Line 63e
    0764A 15 Adjustment Amt. Line 64a
    0764B 15 Net Tax Liability Chapter 3 Amt. Line 64b
    0764C 15 Net Tax Liability Chapter 4 Amt. Line 64c
    0764D 15 Form 1042 Excise Tax Amt. Line 64d
    0764E 15 Total Liability Amt. Line 64e
    0765A 15 Total EFT Amt. Paid During Calendar Year Line 65a
    0765B 15 Total EFT Amt. Paid During Subsequent Year Line 65b
    0766 15 Overpayment Credit Amt. Line 66
    0767A 15 Other (than Substitute Dividend) Payment Amt. Line 67a
    0767B 15 Substitute Dividend Payment Amt. Line 67b
    0768 15 Total Payment Amt. Line 68
    07B/D 15 Balance Due/Overpayment Taxpayer Amt. Line 69
    0770A 15 Overpayment Us Income Foreign Amt. Line 70a
    0770B 15 Overpayment Excise Tax Amt. Line 70b
    0771 1 Applied Refund Indicator Line 71
  5. You may sometimes see entries where the comma and decimal point are reversed. This is sometimes seen on returns from Europe.

    Example:

    3.146,02 (European) = 3,146.02 (U.S.)

  6. The amount is usually correct (unless you can see that it is in foreign currency) but the format is reversed.

Field 0761A - Number of Form 1042-S Filed on Paper (1042 Line 61a)

  1. Field 0761A is a 6-position field which may or may not be present.

  2. Only numeric characters (0 thru 9) are valid.

  3. Field 0761A is Line 61a on Form 1042.

  4. Invalid Conditions:

    • A non-numeric character in the field.

    • The field is blank (if Field 0761B is also blank)

  5. Correction Procedures:

    1. Correct misplaced entries, coding and transcription errors.

    2. If there are no entries on Line 61, do not correspond for the number of Form 1042-S.

      Note:

      If the return is all zero's and/or Line 64e is blank or the taxpayer notates "No Taxable Income" , DO NOT CORRESPOND for Line 61a and 61b, Enter 000001 in Field 0761A. You must enter five zeros and a 1. Fields 0761A and 0761B are 6 position fields.

Field 0761B - Number of Form 1042-S Filed Electronically (1042 Line 61b)

  1. Field 0761B is a 6-position field which may or may not be present.

  2. Only numeric characters (0 thru 9) are valid.

  3. Field 0761B is Line 61b on Form 1042.

  4. Invalid Conditions:

    1. A non-numeric character in the field.

    2. The field is blank (if Field 0761A is also blank).

  5. Correction Procedures:

    1. Correct misplaced entries, coding and transcription errors.

    2. If there are no entries on Line 61, do not correspond for the number of Form 1042-S.

      Note:

      If the return is all zero's and/or Line 64e is blank or the taxpayer notates "No Taxable Income" , DO NOT CORRESPOND for Line 61a and 61b, Enter 000001 in Field 0761A. You must enter five zeros and a 1. Fields 0761A and 0761B are 6 position fields.

Field 0762A - Total U.S. Source FDAP Income

  1. Field 0762A is a 15-position field that may or may not be present.

  2. The field is found on Line 62a.

  3. The valid characters are numeric (0 thru 9) and blank.

  4. The amount must be positive and in DOLLARS and CENTS.

  5. Invalid Conditions:

    1. A negative amount in the field.

    2. Non-numeric character in the field.

  6. Correction Procedures:

    1. Correct misplaced entries, coding and transcription errors.

    2. Delete any negative entries.

Field 0762SSD - Total U.S. Substitute Dividends Reported

  1. Field 0762SSD is a 15-position field that may or may not be present.

  2. This field will only contain an amount (other than 0) if the withholding agent’s chapter 3 status code is "Qualified Securities Lender" (QSL) or "Qualified Derivatives Dealer (QDD)" .

  3. The field is found on Line 62b(1).

  4. If an amount is present in this field, CCC J should be present in Field 01CCC and 2 should be in Field 01SIC.

  5. The valid characters are numeric (0 thru 9) and blank.

  6. The amount must be positive and in DOLLARS and CENTS.

  7. Invalid Conditions:

    1. A negative amount in the field.

    2. Non-numeric character in the field.

  8. Correction Procedures:

    1. Correct misplaced entries, coding and transcription errors.

    2. Delete any negative entries.

    3. If an amount is present in Field 0762SSD, ensure CCC J and SIC 2 are present.

Field 0762SSP - Other Substitute Payments Reported

  1. Field 0762SSP is a 15-position field that may or may not be present.

  2. The field is found on Line 62b(2).

  3. The valid characters are numeric (0 thru 9) and blank.

  4. The amount must be positive and in DOLLARS and CENTS.

  5. Invalid Conditions:

    1. A negative amount in the field.

    2. Non-numeric character in the field.

  6. Correction Procedures:

    1. Correct misplaced entries, coding and transcription errors.

    2. Delete any negative entries.

Field 0762C - Gross Income Reported

  1. Field 0762C is a 15-position field that may or may not be present.

  2. The field is found on Line 62c.

  3. The valid characters are numeric (0 thru 9) and blank.

  4. The amount must be positive and in DOLLARS and CENTS.

  5. Invalid Conditions:

    1. A negative entry in the field.

    2. A non-numeric character in the field.

  6. Correction Procedures:

    1. Correct misplaced entries, coding and transcription errors.

    2. Delete any negative entries.

Field 0762D - Gross Income Paid

  1. Field 0762D is a 15-position field that may or may not be present. This field should be filled out unless withholding agent’s status code is a QI, WP, or WT.

  2. The field is found on Line 62d.

  3. The valid characters are numeric (0 thru 9) and blank.

  4. The amount must be positive and in DOLLARS and CENTS.

  5. The word income refers to all types of income: wages, interest, capital gains, dividends, etc., from which tax may or may not have been withheld.

  6. This field must have an entry if there is a difference in gross income reported (Line 62c).

  7. There can be an amount of income in Field 0762D without a tax being present on Line 64e (the tax is zero because of treaty provisions).

  8. Invalid Conditions:

    1. A non-numeric character in the field.

    2. A negative entry in the field.

  9. Correction Procedures:

    1. Correct misplaced entries, coding and transcription errors.

    2. Delete any negative entries.

Field 0763A - Taxes Withheld by Withholding Agent

  1. Field 0763A is a 15-position field that may or may not be present.

  2. The field is found on Line 63a

  3. The valid characters are numeric (0 thru 9) and blank.

  4. The amount must be positive and in DOLLARS and CENTS.

  5. Invalid Conditions:

    1. A non-numeric character in the field.

    2. A negative number in the field.

  6. Correction Procedures:

    1. Correct misplaced entries, coding and transcription errors.

    2. Delete any negative entries.

Field 07POD - Taxes Withheld by Other Withholding Agents, For Payments Other than Substitute Dividend

  1. Field 07POD is a 15-position field that may or may not be present.

  2. The field is found on Line 63b(1)

  3. The valid characters are numeric (0 thru 9) and blank.

  4. The amount must be positive and in DOLLARS and CENTS.

  5. Invalid Conditions:

    1. A non-numeric character in the field.

    2. A negative number in the field.

  6. Correction Procedures:

    1. Correct misplaced entries, coding and transcription errors.

    2. Delete any negative entries.

Field 07SD - Taxes Withheld by Other Withholding Agents, For Substitute Dividends

  1. Field 07SD is a 15-position field that may or may not be present.

  2. The field is found on Line 63b(2)

  3. The valid characters are numeric (0 thru 9) and blank.

  4. The amount must be positive and in DOLLARS and CENTS.

  5. Invalid Conditions:

    1. A non-numeric character in the field.

    2. A negative number in the field.

  6. Correction Procedures:

    1. Correct misplaced entries, coding and transcription errors.

    2. Delete any negative entries.

Field 076AO - Adjustments To Overwithholding

  1. Field 076AO is a 15-position field that may or may not be present.

  2. The field is found on Line 63c(1).

  3. The valid characters are numeric (0 thru 9) and blank.

  4. The amount must be negative and in DOLLARS and CENTS.

  5. Invalid Conditions:

    1. A non-numeric character in the field.

  6. Correction Procedures:

    1. Correct misplaced entries, coding and transcription errors.

Field 076AU - Adjustments To Underwithholding

  1. Field 076AU is a 15-position field that may or may not be present.

  2. The field is found on Line 63c(2).

  3. The valid characters are numeric (0 thru 9) and blank.

  4. Invalid Conditions:

    1. A non-numeric character in the field.

    2. A negative entry in the field.

  5. Correction Procedures:

    1. Correct misplaced entries, coding and transcription errors.

    2. Delete any negative entries.

Field 0763D - Taxes Paid by Withholding Agent

  1. Field 0763D is a 15-position field that may or may not be present.

  2. The field is found on Line 63d.

  3. The valid characters are numeric (0 thru 9) and blank.

  4. The amount must be positive and in DOLLARS and CENTS.

  5. Invalid Conditions:

    1. A non-numeric character in the field.

    2. A negative number in the field.

  6. Correction Procedures:

    1. Correct misplaced entries, coding and transcription errors.

    2. Delete any negative entries.

    3. If it appears that Field 0763D is being used as subtotal line, delete entry. (i.e. 0763A=0763D=0763E)

Field 0763E - Total Tax Reported as Withheld or Paid

  1. Field 0763E is a 15-position field that may or may not be present.

  2. This amount is found on Line 63e.

  3. Valid characters are numeric (0 thru 9).

  4. The amount must be positive and in DOLLARS and CENTS.

  5. Invalid Conditions:

    1. There is a non-numeric character in the field.

    2. Fields 0763A, 07POD, 07SD, 076AO, 076AU, and 0763D are all blank.

      Note:

      If Field 0763E is invalid, then 0763A thru 0763D will also be invalid, whether these fields have entries or not.

  6. Correction/Rejects Correction Procedures:

    • Correct misplaced entries, coding and transcription errors.

    • If there is no amount on Line 63e, make no entry on the line or in Field 0763E.

Field 0764A - Adjustments to Total Net Tax Liability

  1. Field 0764A is a 15-position field that may or may not be present.

  2. The valid characters are numeric (0 thru 9) and blank.

  3. The field is entered in DOLLARS and CENTS and can be positive or negative.

  4. Invalid Conditions: Non-numeric character in the field.

  5. Correction Procedures:

    1. Correct misplaced entries, coding and transcription errors.

    2. TY15 and prior: There must be a statement substantiating any negative adjustment amount. If statement is not attached, SSPND 21X with literal:
      Please provide the required substantiating statement showing the computation of the negative adjustment.

  6. Rejects Correction Procedures:

    1. TY15 and prior: SSPND 21X with literal:
      Please provide the required substantiating statement showing the computation of the negative adjustment.

    2. If the REPLY is sufficient, allow the adjustment (and enter Field 01CRD, if required).

    3. If there was NO REPLY, X the amount and blank the field. Enter CCC 3. Enter CCC X if the return shows an overpayment. Send TPNC 90 #302 with literal:
      The amount of your adjustment of under withheld tax on corporate distributions on Form 1042 was denied because you did not reply to our request for the required statement substantiating the adjustment.

      Note:

      If C&E corresponded for a statement for a positive adjustment amount (tax increase), do not delete the adjustment if there was no reply.

Field 0764B - Net Tax Liability Chapter 3

  1. Field 0764B is a 15-position field that may or may not be present.

  2. The field is located on Line 64b.

  3. The valid characters are numeric (0 thru 9) and blank.

  4. The amount must be positive only and in DOLLARS and CENTS.

  5. Invalid Conditions:

    1. A non-numeric character in the field.

    2. A negative amount in the field.

  6. Correction Procedures:

    1. Correct misplaced entries, coding and transcription errors.

    2. Delete any negative amount in the field.

    3. If Field 0764B is blank and Fields 0764A, 0764C, and 0764D are blank and an amount is present in Field 0764E, enter the Field 0764E amount into Field 0764B.

Field 0764C - Net Tax Liability Chapter 4

  1. Field 0764C is a 15-position field that may or may not be present.

  2. The field is located on Line 64c.

  3. The valid characters are numeric (0 thru 9) and blank.

  4. The amount must be positive only and in DOLLARS and CENTS.

  5. Invalid Conditions:

    1. A non-numeric character in the field

    2. A negative amount in the field.

  6. Correction Procedures:

    1. Correct misplaced entries, coding and transcription errors.

    2. Delete any negative amount in the field.

Field 0764D - Form 1042 Excise Tax Amount

  1. Field 0764D is a 15-position field that may or may not be present.

  2. This amount is found on Line 64d.

  3. Valid characters are numeric 0 thru 9.

  4. The amount must be positive and in DOLLARS and CENTS.

  5. The 2 percent excise tax paid on specified federal procurement payments reported on line 64d is already included in the ROFTL.

    Note:

    Only federal agencies (Employment Code F present in ENMOD) making federal procurement payments to a foreign person or foreign entity are required to pay this excise tax to the IRS via EFTPS.

  6. Invalid Conditions:

    1. There is a non-numeric character in the field.

    2. Field 0764D is a negative amount.

    3. An entry is present in Field 0764D, but Field 0764E is blank.

    4. Employment Code F is not present in the ENMOD.

  7. Error/Rejects Correction Procedures:

    1. Correct misplaced entries, coding and transcription errors.

    2. Compare the entry on the return to Field 0764D. If different, input the correct amount.

    3. If an amount is present in Field 0764D and ENMOD Employment Code is NOT F, delete the entry.

    4. If the amount in Field 0764D (Line 64d) is negative, delete the entry in Field 0764D.

    5. TY14 and subsequent- SSPND 21X for Sections 03-06 and Fields 0762D and 0763E when an amount is present in Field 0764D (Line 64D), but there is no entry in Fields 0762D, 0763E, and/or Field 0764E and the ROFTL (Sections 03-06) is blank.

  8. No-Reply Procedures:

    1. Enter CCC 3

    2. Divide the amount in Field 0764D by two percent (.02) and enter the result in Field 0762D.

    3. Enter the amount from Field 0764D in Fields 0763E, 06L31, and 0764E.

    4. Do not enter 000001 in Field 0761A.

    5. Send TPNC 90 #305 with literal:
      You did not correctly complete Form 1042 to report the two-percent excise tax on federal procurement payments to a foreign person or foreign entity.

Field 0764E - Total Net Tax Liability

  1. Field 0764E is a 15-position field that may or may not be present.

  2. The field is located on Line 64e

  3. The valid characters are numeric (0 thru 9) and blank.

  4. The amount must be positive only and in DOLLARS and CENTS.

  5. The amount is determined by computing Fields 0764A, 0764B, 0764C and 0764D.

  6. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  7. Invalid Conditions:

    1. There is a non-numeric character in the field.

    2. Field 0764E will be invalid if Field 0762D (income) is either blank or has an amount that is less than Field 07TQA, even if Field 0764E is entered correctly.

    3. Field 0764E will be invalid AND underprint zeros if the entry is greater than zero but sections 03-06 are all missing from the error screens.

  8. Special Error Conditions:

    1. Field 0764E can never have a negative amount. The computer will not accept a negative field breaker (-). (If the amount in Field 0764A (adjustments) exceeds field 07TQA, see (10)b2 below).

    2. If there is a positive amount on Lines 1-60, there must be an amount in Field 0764E, unless a negative amount in Field 0764A reduces Field 0764E to zero.

    3. If the total of entries on Lines 1-60 (sections 03-06) differs from the total tax ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ then Field 0764E will underprint, but will not be invalid.

    4. If Field 0764E underprints but Field 0764A does not, there is probably a transcription error in Field 0764A. (If Field 0764A is negative, the field breaker must be negative.)

  9. Correction Procedures:

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

    2. If Field 0764E is invalid, verify that Field 0762D (income) is entered correctly. If not, see IRM 3.22.110.24.7, Field 0762D.

    3. Field 0764E must be present if there is an entry in Field 07TQA unless reduced by a negative amount on Line 64a and will underprint if blank or not entered correctly.

    4. The field will underprint if the computer's computation (combining all allowable amounts on Lines 1-60 and Line 64a) differs from the taxpayer's amount ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  10. Correction Procedure for Line 64e Underprint:

    1. Correct misplaced entries, coding and transcription errors.

    2. If the taxpayer has computed Line 64e to a negative amount:
      1) And it is caused by a negative amount on Lines 1-60, assign TPNC 90 #301.
      2) If caused by a negative amount on Line 64a being larger than Field 07TQA, then reduce the adjustment amount on Line 64a so that it is equal to the amount in Field 07TQA (even if zero). Assign TPNC 90 #303, with literal:
      The negative adjustment amount for your adjustment of under-withheld tax on corporate distribution on Form 1042 cannot be larger than the total tax liability reported. We have reduced the amount accordingly.

    3. Assign TPNC 02.

Field 0765A - Total Paid by EFTPS During Calendar Year

  1. Field 0765A is a 15-position field that may or may not be present.

  2. The amount must be positive and in DOLLARS and CENTS.

  3. The valid characters are numeric (0 thru 9) and blank.

  4. The amount on this line can be substantiated by researching BMFOLT for the applicable credit transaction codes and amounts (e.g., TC 650, 660, 670, etc.)

  5. This entry reflects the amounts paid during the tax year by the taxpayer by Electronic Filing.

  6. Invalid Conditions: There is a non-numeric character in the field.

  7. Correction Procedures:

    1. Correct misplaced entries, coding and transcription errors.

    2. Do not change the taxpayer's amount unless instructed to do so.

      Note:

      If the taxpayer enters the same amount on Lines 65b, 66, 67a and 67b, SSPND 351 so Rejects can research whether Line 65a, 65b, 67a or 67b applies.

  8. Rejects Correction Procedures:

    1. Change this amount if directed to do so by Unpostables (the amount may not equal the amount on BMFOLT).

      Note:

      If the difference is substantial, it may be necessary to SSPND 21X for clarification (such as prior to issuing a manual refund), depending upon service center procedure.

    2. If the same amounts are on Lines 65a and 67a and 67b, look at the EIN (to see if it is within the valid QI range ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and check BMFOLT to determine on which line the credit belongs. See the instructions under IRM 3.22.110.24.23, Field 0767A, and IRM 3.22.110.24.24, Field 0767B.

  9. If Field 0765A is blank, add monthly total lines from the ROFTL area to come up with the correct figure.

Field 0765B - Total Paid by EFTPS During Subsequent Year

  1. Field 0765B is a 15-position field that may or may not be present.

  2. The amount must be positive and in DOLLARS and CENTS.

  3. The valid characters are numeric (0 thru 9) and blank.

  4. This entry reflects the amounts paid during the subsequent tax year via Electronic Filing.

  5. Invalid Conditions: There is a non-numeric character in the field.

  6. Correction Procedures:

    1. Correct misplaced entries, coding and transcription errors.

    2. Do not change the taxpayer's amount unless instructed to do so.

      Note:

      If the same amounts are on Lines 65b, 66, 67a and 67b, SSPND 351 so Rejects can research whether Line 65a, 65b, 67a or 67b applies.

Field 0766 - Overpayment Applied

  1. Field 0766 is a 15-position field that may or may not be present.

  2. If is found on Line 66 of the Form 1042.

  3. The amounts must be positive only and in DOLLARS and CENTS.

  4. The valid characters are numeric (0 thru 9) and blank.

  5. The entry reflects the amount of (overpayment) credit elect from the previous year. It can be seen on the current year BMFOLT usually as a TC 716 or on the previous year BMFOLT as a TC 836 (this amount may be smaller than the taxpayer's amount due to the imposition of penalties and interest).

  6. Invalid Conditions: There is a non-numeric character in the field.

  7. Correction Procedures:

    1. Correct misplaced entries, coding and transcription errors.

    2. Do not change this amount unless instructed to do so.

  8. Rejects Correction Procedures:

    1. Change this amount if directed to do so by Unpostables or if another condition warrants a change, such as the issuance of a manual refund.

    2. Before changing the amount or corresponding with the taxpayer (if the difference is substantial), research the previous year's BMFOLT if the amount was reduced by the computer because of penalties and/or interest being assessed, or if any of the amount was refunded or applied to a different module.

Field 0767A - Credit for Amounts Withheld by Other Agents (other than substitute dividends)

  1. Field 0767A is a 15-position field which may or may not be present.

  2. It is found on Form 1042, Line 67a.

  3. The valid characters are numeric (0 thru 9) and blank.

  4. The entry must be positive and in DOLLARS and CENTS.

  5. This field can only contain data if the taxpayer is an intermediary (QI or NQI). Field 01QIN must be a "1" or a "2" .

  6. All withholding agents must substantiate entries on Lines 67a and Line 67b by attaching a copy of Form 1042-S Copy B (C, D, and/or E) or they may attach a Form 1099. Review Form 1042 for supporting Form 1042-S or 1099. Do not detach Form 1042-S Copy B (C, D, and/or E) or other supporting documentation.

    Note:

    If Form 1042-S Copy A is attached along with a Form 1042-T and the Withholding Agent name is that of the Filer on the Form 1042, detach and route to Batching.

    1. The Recipient name on the Form 1042-S must be the same as the filer name on the Form 1042 and the Recipient Chapter 3 Status Code (Box 13f for 2019) must be 09, 11, or 12 or

    2. The Intermediary or Flow-through entity’s name (Box 15d for 2019) must be the same as the filer name on the Form 1042 and the Recipient Chapter 3 Status Code must be other than 09, 11, or 12.

    3. If neither a) or b) above apply, delete the amount claimed on Line 67a or 67b unless (7) or (8) applies.

    Caution:

    If Form 1042-S is attached and the taxpayer is a QI BUT the supporting Form 1042-S documentation for the entry on lines 67a/67b is not a different withholding agent (e.g. it is the same withholding agent/recipient), then SSPND 21X for the correct Form 1042-S document that does not list the taxpayer as both the withholding agent and recipient.

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

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

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

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

  8. If the taxpayer attached a letter signed by a "Competent Authority" instead of Form 1042–S Copy B, accept the withholding amounts claimed.

  9. Invalid Conditions:

    1. There is a non-numeric character in the field.

    2. Form 1042 Lines 67a/67b are valid for TY 2001 and subsequent. (Line 66 for TY13 and prior and Lines 67a/67b for TY14 and subsequent.)

  10. Correction Procedures:

    1. Correct misplaced entries, coding and transcription errors. Also, verify the taxpayer did not use Lines 67A/B as total lines for Lines 65 and 66. If so, move entry to Field 0768 and Line 68.

    2. Do not change this amount unless instructed to do so.

    3. When there is an amount on Lines 67a/67b, search the return for attached copies of Form 1042-S (Copy B).

    4. Check withholding agent chapter 3 status code for status of the withholding agent.

    5. If Form 1042-S Copy B or other documentation are not present to substantiate the entire amount in 67a/67b,

      And... Then...
      The withholding amount claimed in this field is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Do not correspond. Allow the credit.
      The withholding amount claimed in this field is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , SSPND 21X for the missing Form 1042-S.
      The filer included a supporting statement, per (7),
      1. If all info if present, allow the credit.

      2. If any info is missing, SSPND 21X for the missing Form 1042-S.

      The filer included a letter signed by a Competent Authority, per (8), Allow the credit.
      TY14 and prior: The withholding agent designates itself as a QI, but the EIN is NOT within the valid QI range (Field 01QIN is 2),
      1. Do not correspond.

      2. Delete the entries in Fields 0767A and 0767B.

      3. Send TPNC 90 #298 with literal:
        The credit or refund on Form 1042 was denied because the Employer Identification Number on your Form 1042 does not identify you as a Qualified Intermediary entitled to claim an overpayment attributable to withholding by others.

  11. Rejects Correction Procedures:

    1. When a REPLY is received, attach the copies of Form 1042-S, and enter the CRD (if required).

    2. If the REPLY states that Form 1042-S were attached to the return, research IRPTR to locate the withholding document. If found, substantiate the credit by attaching a print of the collaborating information to the tax return. Do not enter a CRD as the Form 1042-S were removed by IRS and the error is not the taxpayer's. If not found, then disallow the credit and send TPNC 90 #299, with literal:
      You did not provide substantiation (i.e. Forms 1042-S) to support your Form 1042 entry for the amounts withheld by other withholding agents.

    3. If there is NO REPLY, delete the credit, enter CCC "3" and send TPNC 90 #299. Enter CCC X if the return shows an overpayment.

    4. TY 2000 and prior:

      If... Then...
      The taxpayer uses a current revision of Form 1042 for a tax year prior to 2001, and there is an entry on Line 67a/67b, Research BMFOLT to see if the credit should be on a different line on the return.
      The amount does not appear on BMFOLT, SSPND 21X with literal:
      Please explain the entry on Line 67A/B on Form 1042 and provide official substantiation of the credit.
      The REPLY is acceptable, Process the return. Also enter the CRD (if required).

      Note:

      If the reply indicates that the amount is a QI credit see IRM 3.22.110.21.10, Field 01QIN.

      There is NO REPLY or the reply is insufficient, 1) Delete the credit.
      2) Enter CCC 3.
      3) Send TPNC 90, #300, with literal:
      There was either no reply to our request for substantiation to support your entry for the amount withheld by other withholding agents, or the reply was insufficient, so the credit was not allowed.
      4) Enter CCC X if the return shows an overpayment.

Field 0767B - Credit for Amounts Withheld by Other Agents (for substitute dividends)

  1. Field 0767B is a 15-position field that may or may not be present.

  2. The field is located on Line 67b.

  3. The valid characters are numeric (0 thru 9) and blank.

  4. The entry must be positive and in DOLLARS and CENTS.

  5. See IRM 3.22.110.24.23, Field 0767A, for invalid conditions and correction procedures.

Field 0768 - Total Payments

  1. Field 0768 is a 15-position field that may or may not be present.

  2. The field is located on Line 68.

  3. The valid characters are numeric (0 thru 9) and blank.

  4. The entry must be positive and in DOLLARS and CENTS.

  5. Invalid Conditions:

    1. There is a non-numeric character in the field.

    2. The field will underprint if blank or incorrect and there is at least one entry on Lines 65-67b

  6. Correction Procedures:

    1. Correct misplaced entries, coding and transcription errors.

    2. If the field underprints, ensure Fields 0765, 0766, 0767A and 0767B are entered correctly before perfecting Field 0768.

    3. Before correcting Field 0768, if there is an entry on Line 67a/b, review IRM 3.22.110.24.23, Field 0767A, and IRM 3.22.110.24.24, Field 0767B.

    4. If there is an entry on Line 68 but lines 65-67b are blank, SSPND 351 for Rejects to research BMFOLT.

    5. If the amount on Line 68 is negative (i.e., the amount is added to the balance due or subtracted from the refund) and no explanation can be found on the return, SSPND 21X. Use literal:
      Please provide an explanation why your Form 1042 Line 68 is negative.

  7. Rejects Correction Procedures:

    If... Then...
    Lines 65-67b are blank and there is an amount on Line 68, Research BMFOLT to see if the credits belong on Line 65a/b (TC 660 or TC 670) or 66 (TC 716).

    Note:

    Review the research procedures under IRM 3.22.110.24.23, Field 0767A, to determine if there should be a Line 67A entry, if the previous step does not resolve the underprint.

    The placement of the amounts cannot be resolved through research, SSPND 21X for entries on Lines 65-67b. If there is a REPLY, enter the amounts accordingly, if allowable. Also enter the CRD (if required).
    The taxpayer is using an unallowable credit, Delete the credit and send a TPNC 90 explaining why the credit was denied.
    There is NO REPLY, Delete the amount and send TPNC 90 #300. Enter CCC X if the return shows an overpayment.
    There is NO REPLY for an explanation of a negative credit on Line 68, Enter CCC 3 and move the negative credit amount to Line 64a (as a POSITIVE amount) and adjust the remaining fields accordingly. Enter CCC X if the return shows an overpayment.

    Note:

    The balance due or refund will agree with the taxpayer's amount.

Field 07B/D - Balance Due

  1. Field 07B/D is a 15-position field that may or may not be present.

  2. The field is located on Line 69.

  3. The valid characters are numeric (0 thru 9) and blank.

  4. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  5. The amount in the field is the positive difference between Field 0764E (net tax liability) and Field 0768 (payments).

  6. Invalid Conditions:

    1. There is a non-numeric character in the field.

    2. Interest or penalty was included as part of the balance due.

  7. Correction Procedures:

    1. Correct misplaced entries, coding and transcription errors.

    2. Delete any interest or penalty from the balance due.

      Note:

      Deleting penalty or interest will DECREASE a balance due amount.

    3. If it cannot be determined how the taxpayer computed the balance due, SSPND 351 for research by Rejects.

    4. Do not send a TPNC if the BAL-DUE-OVERPAYMENT-TXPYR amount (Field 07B/D) and the BAL-DUE-OVERPAYMENT-CMPTR amount (Field 07B/D>) differ by ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    5. If Field 07B/D does not match the underprint, ensure the tax and payments total are entered correctly and no penalty or interest is included. Assign TPNC 01.

  8. Rejects Correction Procedures:

    1. If researching the credits to determine how the taxpayer computed the balance due does not provide an answer:

      If... Then...
      The amount is significant ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ SSPND 21X with literal:
      Please explain how you computed the credits and balance due on your ____ Form 1042.

      Note:

      Insert the tax year of the Form 1042 for which you are corresponding.

      The amount is not significant ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Send TPNC 01.
      The REPLY is received, Adjust the return and fields accordingly. Also enter the CRD (if required).
      NO REPLY is received,
      1) Enter CCC 3.
      2) Adjust the amounts by using the underprint amount if it is more than the Field 07B/D amount.
      3) Assign TPNC 01.
      4) Enter CCC X if the return shows an overpayment.

Field 0770A - Overpayment US Income Foreign Amount

  1. Field 0770A is a 15-position numeric field.

  2. The field is located on Line 70a.

  3. The valid characters are numeric (0 thru 9) and blank.

  4. The amount must be in DOLLARS and CENTS.

  5. The amount in the field is the negative difference between Field 0764E (net tax liability) and Field 0768 (payments).

  6. If the overpayment is a refund, CCC S must appear in Field 01CCC and there must be a 2 in Field 0771. The exceptions are:

    Do not enter CCC S when... Instead...
    A refund is claimed, and the NQI does not show a chapter 4 status code as a PFFI or Reporting Model 1 FFI (codes 8-10), Enter CCC E.

    Note:

    Refunds are not allowed in this case.

    A refund is claimed, and the QI does not show a chapter 3 status code, Enter CCC E.

    Note:

    Refunds are not allowed in this case.

  7. If the overpayment is a credit elect or both Line 71 checkboxes are empty, CCC E must be in Field 01CCC and Field 0771 must be blank. The exceptions are:

    Do NOT enter CCC "E" when... Instead...
    The overpayment is≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , Remove CCC E if present.
    The taxpayer indicates that the overpayment is to be applied to a different tax period or return, SSPND 351 and notate TRANSFER OVERPAYMENT on Form 4227. Do not make any corrections to the return.
    There is no overpayment on Line 70a or 70b (either originally or removed due to a math error), Remove CCC S and CCC E if present.
    Neither or both checkboxes on Line 71 were checked and there is an overpayment and you are corresponding for another condition, SSPND 21X for other correspondence needs and also use literal:
    Please explain whether you want your overpayment applied as a Credit or as a Refund.
    (Enter CCC E if you have no other reason to correspond unless the return is truly a Final, then enter CCC S.)
  8. INVALID CONDITIONS:

    1. There is a non-numeric character in the field.

    2. The field will underprint if the computer's amount differs from the taxpayer's ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    3. Interest or penalty was included as part of the refund computation.

    4. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    5. A refund that is in Interest Jeopardy must be processed as a Manual Refund if the amount meets the Service Center criteria. See IRM 3.22.110.21.5.7, CCC O, for additional information.

      Reminder:

      The interest free period for a Chapter Three Withholding Credit on Form 1042 is 180 days.

    6. An overpayment on Form 1042 can be either a refund or credit elect to the following year, but not both. If the taxpayer indicates that part of the overpayment is to be refunded and part is carried forward to the following year, SSPND 351 to Rejects. Annotate on Form 4227, REFUND CREDIT ELECT.

  9. Remittance Correction: If there is a remittance amount with the return that is causing an overpayment.

    1. Look at Lines 65-67b to see if the remittance amount is equal to one of these credits. If so, delete the credit entry on the line and from the field.

    2. If it is not equal to Lines 65-67b, research BMFOLI to see if the remittance should be transferred to another tax period or return. If so, SSPND 351 to Rejects and notate Transfer Remittance on Form 4227.

    3. If research yields no results, SSPND 21X with literal:
      Does the remittance sent with your ____ Form 1042 belong to this EIN, and if so, to which tax return, tax year and quarter should it be applied?

      Note:

      Insert the tax year of the Form 1042 for which you are corresponding.

    4. Rejects will follow the Reply/No Reply instructions under IRM 3.22.110.21.4, Field 01TXP, to process the return and remittance.

  10. CORRECTION PROCEDURES:

    1. Correct misplaced entries, coding and transcription errors.

    2. If Field 0770A is blank but is underprinting an overpayment, check if Lines 67a and/or 67b (Fields 0767A/0767B) were erroneously used as a total line for Lines 65 and 66. If so, move the data to the correct line and field.

    3. If the overpayment or balance due is on the wrong line of the return, so that Field 07B/D has the correct ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ amount but the wrong sign (field breaker):

      If... Then...
      You change the plus to a minus,
      1. Enter CCC E or S into Field 01CCC (as appropriate) and
      2. Enter a 1 into Field 0771 if the overpayment is a refund.
      You change the minus to a plus,
      1. Delete CCC E or S from Field 01CCC and
      2. Delete the 1 from 0771, if present.
    4. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    5. SSPND 351 to Rejects:

        If...
      It cannot be determined how the taxpayer computed the balance due.
      Line 63c(1) has an entry, and the refund claimed includes that amount, Notate on Form 4227, Line 63c(1) REFUND CREDIT ELECT. The amount on Line 63c(1) is only allowed as a credit.
      The taxpayer wants all or part of the refund transferred to a different tax period or return. Notate Form 4227REFUND TRANSFER.
    6. Do not send a TPNC if there is no underprint in Field 07B/D. If there are underprints in Field 0764E, but NOT in 07B/D, verify all money fields in Section 07. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Fields 0763A and 0763C will underprint if the difference is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , but Field 07B/D will not underprint for an error ≡ ≡ ≡ ≡ ≡ ≡ ≡ In this case, bring up the underprint in Field 0764E. Do NOT send a TPNC in this case.

    7. If there is an underprint, ensure the tax and payments total are entered correctly and that there is no penalty or interest included. Assign TPNC 01.

  11. Rejects Correction Procedures:

    1. If researching the credits to determine how the taxpayer computed the refund does not provide an answer:

      If... Then...
      The amount is significant ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , SSPND 21X with literal:
      Please explain how you computed the credits and refund on your ____ Form 1042.

      Note:

      Insert the tax year of the Form 1042 for which you are corresponding.

      The amount is not significant ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , Send TPNC 01.
      The REPLY is received, Adjust the return and fields accordingly. Also enter the CRD (if required).
      NO REPLY is received, Enter CCC 3 and X.
      Adjust the amounts by using the underprint amount if it is less than the Field 0770A amount.
    2. Follow service center procedures concerning Manual Refunds, whether the Manual Refund Forms (5792 and 3753) are completed in Rejects or in Accounting. If in Rejects, see IRM 3.12.38.5.4.3, Form 1042 - Manual Refunds (Ogden Only).

      Note:

      Regardless of where the forms are prepared, Rejects must enter the CCC O into Field 01CCC (and on the return, in brown pencil). If there is an error affecting the refund amount, send the appropriate TPNC.

    If... Then...
    The taxpayer wants all or part of the overpayment transferred to a different return, tax year, EIN, etc., or indicates that part of the overpayment is to be refunded and part credit elect to the following year:

    Note:

    In this case the taxpayer may check both boxes on Line 71.

    Do not prepare a Form 3465 if there is a notation in the margin of the return indicating C&E already prepared and sent this form.
    The credit transfer can be done in the Rejects Unit, The Form 3465 is unnecessary.
    All of the overpayment is to be transferred, Enter CCC X.
    Only part of the overpayment is to be transferred (credit elect) and the rest refunded: 1. Reduce a credit amount (Lines 65-67b) by the amount to be transferred.

    2. Reduce the credit amount, total and overpayment on the return and ERS system to reflect only the amount to be actually refunded. This is true for both computer-generated and manual refunds.

    Note:

    Even though it is part of the overpayment that the taxpayer wants carried over to the following year, you are not transferring part of the REFUND, but part of the CREDIT amount leading up to the refund.



    3. The above is to be done whether the Form 3465 was prepared, or the credit transfer was done in the Rejects unit.

    4. Because what now shows on ERS is the refund amount, CCC S will be in Field 01CCC and on the return.

    Note:

    Do not enter a CCC X (to hold the credit to be transferred in the module) if any part of the overpayment is to be refunded as this will prevent the refund from being released.

Field 0770B - Overpayment Excise Tax Amount

  1. Field 0770B is a 15-position numeric field.

  2. Entries in this field are only valid if there is a valid entry in Field 0764D showing liability for Excise Tax. Employment Code F must be present on ENMOD.

  3. The field is located on Line 70b.

  4. The valid characters are numeric (0 thru 9) and blank.

  5. The amount must be in DOLLARS and CENTS.

  6. The amount in the field is the negative difference between Field 0764E (net tax liability) and Field 0768 (payments).

  7. If the overpayment is a refund, CCC S must appear in Field 01CCC and there must be a 2 in Field 0771. The exceptions are:

    Do not enter CCC S when... Instead...
    A refund is claimed, and the chapter 4 status code is not codes 8-10, Enter CCC E.

    Note:

    Refunds are not allowed in this case.

    A refund is claimed, and the return does not show a chapter 3 status code, Enter CCC E.

    Note:

    Refunds are not allowed in this case.

  8. If the overpayment is a credit elect or both Line 71 checkboxes are empty, CCC "E" must be in Field 01CCC and Field 0771 must be blank. The exceptions are:

    Do NOT enter CCC E when... Instead...
    The overpayment is≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , Remove CCC E if present.
    The taxpayer indicates that the overpayment is to be applied to a different tax period or return, SSPND 351 and notate TRANSFER OVERPAYMENT on the Form 4227. Do not make any corrections to the return.
    There is no overpayment on Line 70a or 70b (either originally or removed due to a math error), Remove CCC S and CCC E if present.
    Neither or both checkboxes on Line 71 were checked and there is an overpayment and you are corresponding for another condition, SSPND 21X for all other info needed and add literal:
    Please explain whether you want your overpayment applied as a Credit or as a Refund.
    (Enter CCC E if you have no other reason to correspond unless the return is truly a Final, then enter CCC S.)
  9. INVALID CONDITIONS:

    1. There is a non-numeric character in the field.

    2. The field will underprint if the computer's amount differs from the taxpayer's ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    3. Interest or penalty was included as part of the refund computation.

    4. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    5. A refund that is in Interest Jeopardy must be processed as a Manual Refund if the amount meets the Service Center criteria. See IRM 3.22.110.21.5.7, CCC O, for additional information.

      Reminder:

      The interest free period for a Chapter Three Withholding Credit on Form 1042 is 180 days.

    6. An overpayment on Form 1042 can be either a refund or credit elect to the following year, but not both. If the taxpayer indicates that part of the overpayment is to be refunded and part is carried forward to the following year, SSPND 351 to Rejects. Annotate on Form 4227REFUND CREDIT ELECT.

  10. Remittance Correction: If there is a remittance amount with the return that is causing an overpayment.

    1. Look at Lines 65-67b to see if the remittance amount is equal to one of these credits. If so, delete the credit entry on the line and from the field.

    2. If it is not equal to Lines 65-67b, research BMFOLI to see if the remittance should be transferred to another tax period or return. If so, SSPND 351 to Rejects and notate Transfer Remittance on Form 4227.

    3. If research yields no results, SSPND 21X with literal:
      Does the remittance sent with your ____ Form 1042 belong to this EIN, and if so, to which tax return, tax year and quarter should it be applied?

      Note:

      Insert the tax year of the Form 1042 for which you are corresponding.

    4. Rejects will follow the Reply/No Reply instructions under IRM 3.22.110.21.4, Field 01TXP, to process the return and remittance.

  11. CORRECTION PROCEDURES:

    1. Correct misplaced entries, coding and transcription errors.

    2. If Field 0770B contains and entry but Field 0764D is blank, move the data to the correct line and field (Field 0770A, Line 70a).

    3. If the overpayment or balance due is on the wrong line of the return, so that Field 07B/D has the correct ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ amount but the wrong sign (field breaker):

      If... Then...
      You change the plus to a minus,
      1. Enter CCC E or S into Field 01CCC (as appropriate) and
      2. Enter a 1 into Field 0771 if the overpayment is a refund.
      You change the minus to a plus,
      1. Delete CCC E or S from Field 01CCC and
      2. Delete the 1 from 0771, if present.
    4. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    5. SSPND 351 to Rejects:

        If...
      It cannot be determined how the taxpayer computed the balance due.
      Line 63c(1) has an entry, and the refund claimed includes that amount, Notate Form 4227, Line 63c(1) REFUND CREDIT ELECT. The amount on Line 63c(1) is only allowed as a credit.
      The taxpayer wants all or part of the refund transferred to a different tax period or return. Notate Form 4227REFUND TRANSFER.
    6. Do not send a TPNC if there is no underprint in the balance due/refund field (07B/D). If there are underprints in Field 0764E, but NOT in 07B/D, then verify all money fields in Section 07 are entered correctly. Remember that ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Fields 0763A and 0763C will underprint if the difference is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , but Field 07B/D will not underprint for an error ≡ ≡ ≡ ≡ ≡ ≡ In this case, bring up the underprints in Field 0764E. Do NOT send a TPNC in this case.

    7. If there is an underprint, ensure the tax and payments total are entered correctly and that there is no penalty or interest included. Assign TPNC 01.

  12. Rejects Correction Procedures:

    1. If researching the credits to determine how the taxpayer computed the refund does not provide an answer:

      If... Then...
      The amount is significant ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , SSPND 21X with literal:
      Please explain how you computed the credits and refund on your ____ Form 1042.

      Note:

      Insert the tax year of the Form 1042 for which you are corresponding.

      The amount is not significant ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , Send TPNC 01.
      The REPLY is received, Adjust the return and fields accordingly. Also enter the CRD (if required).
      NO REPLY is received, Enter CCC 3 and X.
      Adjust the amounts by using the underprint amount if it is less than the Field 0770B amount.
    2. Follow service center procedures concerning Manual Refunds, whether the Manual Refund Forms (5792 and 3753) are completed in Rejects or in Accounting. If in Rejects, see IRM 3.12.38.5.4.3, Form 1042 - Manual Refunds (Ogden Only).

      Note:

      Regardless of where the forms are prepared, Rejects must enter the CCC O into Field 01CCC (and on the return, in brown pencil). If there is an error affecting the refund amount, send the appropriate TPNC.

      If... Then...
      The taxpayer wants all or part of the overpayment transferred to a different return, tax year, EIN, etc., or indicates that part of the overpayment is to be refunded and part credit elect to the following year,

      Note:

      In this case the taxpayer may check both boxes on Line 71.

      Do not prepare a Form 3465 if there is a notation in the margin of the return indicating C&E already prepared and sent this form.
      The credit transfer can be done in the Rejects Unit, The Form 3465 is unnecessary.
      All of the overpayment is to be transferred, Enter CCC X.
      Only part of the overpayment is to be transferred (credit elect) and the rest refunded:
      1. Reduce a credit amount (Lines 65-67b) by the amount to be transferred.

      2. Reduce the credit amount, total and overpayment on the return and ERS system to reflect only the amount to be actually refunded. This is true for both computer-generated and manual refunds.

      Note:

      Even though it is part of the overpayment that the taxpayer wants carried over to the following year, you are not transferring part of the REFUND, but part of the CREDIT amount leading up to the refund.



      3. The above is to be done whether the Form 3465 was prepared, or the credit transfer was done in the Rejects unit.

      4. Because what now shows on ERS is the refund amount, CCC S will be in Field 01CCC and on the return.

      Note:

      Do not enter a CCC X (to hold the credit to be transferred in the module) if any part of the overpayment is to be refunded as this will prevent the refund from being released.

Field 0771 - Refund Indicator

  1. Field 0771 is a 1-position field that may or may not be present.

  2. The valid characters are 2 and blank.

  3. This field will contain a 2 if the Refund box on Line 71 is checked by the taxpayer.

  4. This field must be blank if the overpayment is to be credited to the following year or if there is a balance due on Line 69.

  5. This refund indicator is used in addition to the CCC S; it does not replace it.

  6. Invalid Conditions:

    1. Any character other than 2 or blank is present in the field.

  7. Correction/Rejects Corrections:

    1. If the field is invalid, look at Lines 70A/B to see if there is an overpayment.

    2. If there is a balance due, delete the entry in Field 0771.

    3. If there is an overpayment, look at which box is checked on Line 71.

      If... Then...
      The refund box is checked, Enter a 2 into Field 0771.
      The credit elect box is checked, "Blank" Field 0771.
      Neither box is checked, Follow IRM 3.22.110.24.27(7), Field 0770A.

Section 08 - Reconciliation of Payments of U.S. Source FDAP Income Form 1042, Page 2 Section 2

  1. For TY14 this Section was Optional, it is now required to be completed by the Withholding Agent for TY15 and subsequent.

  2. However, if return is for TY15 and subsequent and Section 08 is blank take no action.

  3. Section 2 field designators, maximum field lengths, titles and locations are listed below:

    Designator Field Length Title Location on Return
    0801 15 Total US Source FDAP Income required to be withheld under Chapter 4 Section 2, Line 1
    0802A 15 Amt. Paid to Recipients with no Chapter 4 withholding requirements Section 2, Line 2a
    0802B 15 Amt of Excluded Nonfinancial Payments Section 2, Line 2b
    0802C 15 Amt. of Income Paid for Grandfathered Obligations Section 2, Line 2c
    0802D 15 Amt. of Income connected with Conduct of Trade in the US. Section 2, Line 2d
    0802E 15 TOTAL US FDAP Income Reported but not withheld under Chapter 4 Section 2, Line 2e
    0802E> 15 Computer Amount  
    0803 15 Total US Source FDAP Income Reportable Under Chapter 4 Section 2, Line 3
    0803> 15 Computer Amount  
    0804 15 Total US Source FDAP Income Report on all Forms 1042-S Section 2, Line 4
    0805 15 Total Variance Section 2, Line 5
    0805> 15 Computer Amount  
    0806 1 Variance Explanation Indicator Section 2, Line 6

Line 1 - Total U.S. Source FDAP Income Required to be Withheld Under Chapter 4

  1. Field 0801 is a 15-position numeric field that may or may not be present.

  2. Entries are made in dollars and cents.

  3. Valid entries are numeric or blank.

  4. Invalid Condition: Entry other than numeric.

  5. Correction Procedures: Correct misplaced entries, coding and transcription errors.

Line 2a -Amount of Income Paid to Recipients With No Chapter 4 Withholding Requirements

  1. Field 0802A is a 15-position numeric field that may or may not be present.

  2. Entries are made in dollars and cents.

  3. Valid entries are numeric or blank.

  4. Invalid Condition: Entry other than numeric.

  5. Correction Procedures: Correct misplaced entries, coding and transcription errors.

Line 2b -Amount of Excluded Non-Financial Payments

  1. Field 0802B is a 15-position numeric field that may or may not be present.

  2. Entries are made in dollars and cents.

  3. Valid entries are numeric or blank.

  4. Invalid Condition: Entry other than numeric.

  5. Correction Procedures: Correct misplaced entries, coding and transcription errors.

Line 2c -Amount of Income Paid With Respect to Grandfathered Obligations

  1. Field 0802C is a 15-position numeric field that may or may not be present.

  2. Entries are made in dollars and cents.

  3. Valid entries are numeric or blank.

  4. Invalid Condition: Entry other than numeric.

  5. Correction Procedures: Correct misplaced entries, coding and transcription errors.

Line 2d - Amount of Income Connected With a Trade or Business in the U.S.

  1. Field 0802D is a 15-position numeric field that may or may not be present.

  2. Entries are made in dollars and cents.

  3. Valid entries are numeric or blank.

  4. Invalid Condition: Entry other than numeric.

  5. Correction Procedures: Correct misplaced entries, coding and transcription errors.

Line 2e- Total U.S. Source FDAP Income Required to be Reported Under Chapter 4 But Not Withheld

  1. Field 0802E is a 15-position numeric field that may or may not be present.

  2. Entries are made in dollars and cents.

  3. Valid entries are numeric or blank.

  4. Invalid Condition:

    1. Entries other than numeric.

    2. Field is blank and there are entries in any Fields 0802A–0802D.

    3. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  5. Correction Procedures:

    1. Correct misplaced entries, coding and transcription errors.

    2. If Section 2 Line 2e is blank and there are entries leading to a total, compute by adding Lines 2a-2d and enter the total in Field 0802E

Line 3 - Total U.S. Source FDAP Income Reportable Under Chapter 4

  1. Field 0803 is a 15-position field

  2. Entries are made in dollars and cents.

  3. Valid entries are numeric or blank.

  4. Invalid Conditions:

    1. Field 0803 is blank and there are entries in Field 0801 and Field 0802F.

    2. Field 0803 contains an entry and Field 0801 and Field 0802F are blank.

    3. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  5. Correction Procedures:

    1. Correct misplaced entries, coding and transcription errors.

    2. Correct any math errors on the form.

    3. If Field 0803 is blank and there are entries leading to a total, compute by adding Line 1 and Line 2e, and enter the total in Field 0803.

Line 4 - Total U.S. Source FDAP Income Reported on All Forms 1042–S

  1. Field 0804 is a 15-position field

  2. Entries are made in dollars and cents.

  3. Valid entries are numeric or blank.

  4. Invalid Conditions:

    1. Blank and there are entries in Fields 0762A, 07SSD and 07SSP.

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

  5. Correction Procedures: Correct misplaced entries, coding and transcription errors.

Line 5 - Total Variance, Subtract Line 3 From Line 4, If Amount Other Than Zero Provide Explanation on Line 6

  1. Field 0805 is a 15-position field that may be positive or negative.

  2. Entries are made in dollars and cents.

  3. Valid entries are numeric or blank.

  4. Invalid Conditions:

    1. If Field 0805 is other than zero ("0" ), and there is no explanation on Line 6 and Field 0806 contains a indicator of "0" .

    2. Field 0805 is zero (0) and the Field 0806 contains an indicator of "1"

  5. Correction Procedures:

    1. Correct misplaced entries, coding and transcription errors.

    2. If Field 0805 is zero (0) and Field 0806 contains a "1" , delete the "1" and enter a "0"

Line 6 - Explanation for Other Than Zero on Line 5

  1. Field 0806 is a 1 position numeric field. The valid characters are 0 or 1.

  2. Entry of "1" indicates that there is an explanation for any variance in the reconciliation of U.S. Source income. (Line 5 other than zero (0).)

  3. Entry of "0" indicates that Line 5 is zero (0) and there is no entry on Line 6.

  4. Invalid Conditions:

    1. Field 0806 entry is required if Field 0805 contains an entry other than zero (0).

    2. Field 0805 is other than zero (0) and there is a "0" in Field 0806.

    3. Field 0805 is zero (0) and Field 0806 contains a "1"

  5. Correction Procedures:

    1. Correct misplaced entries, coding and transcription errors.

    2. If Field 0805 is zero (0), then 0806 must be "0" , correct as needed.

    3. If Field 0805 is other than zero (0) and there is an entry on Line 6, enter a "1" in Field 0806.

Section 3 - Potential Section 871(m) Transactions

  1. Field 08CON is a 1 position checkbox field.

  2. Valid entries are "blank" and "1" .

  3. Invalid Condition: A "1" is entered in Field 08CON and the box on Page 2 Section 3 has not been checked.

  4. Correction Procedures: Delete the entry. If the box on Page 2 Section 3 is checked enter a "1" in Field 08CON, otherwise the field should be blank.

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

  1. Field 08QDD is a one position field; valid characters are 1 and blank.

  2. Field 08QDN is a 9 position field. Only numeric characters (0 thru 9) are valid or the field can be blank.

  3. Invalid Conditions: 08QDN will generate a field error

    • If it contains less than 9 digits for tax period 201812 and subsequent or

    • If the field is not blank for tax periods less than 201812.

  4. Correction Procedures:

    1. Correct misplaced entries, coding and transcription errors.

    2. If the tax period is 201812 or later and Field 08QDN is less than nine digits, delete the entry from Field 08QDN.

    3. If the tax period is prior to 201812 and an entry is present in Field 08QDN, delete the entry.

Priority IV Errors – Error Codes 001 through 999

  1. This section provides detailed error correction procedures for Error Codes 001 through 999. These errors will be displayed with the error code assigned to them for the specific error in ascending numerical order. The screen display will show the error code assigned and the fields needed to make the necessary correction.

♦Error Code 001 – Tax Year – Invalid Entry♦

  1. Fields Displayed – Error Code 001 will display as follows:

    Field Designator Field Name Length
    01TXP Tax Period 6
    01RCD Received Date 8
    01CCC Computer Condition Code 10
    01RDD Return Due Date 8
  2. Invalid Conditions: Error Code 001 will generate when:

    1. CCC "G" is Not Present – The processing date is equal to or more than two years and 10 months after the Return Due Date or the Received Date (whichever is later) and CCC "W" is not present,

    2. CCC "G" is Present – The processing date is equal to or more than two years and nine months after the Return Due Date and CCC "W" is not present, or

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

  3. Correction Procedures:

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

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

      Statute Control

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

      • Return is secured by Examination/Collections, secured by TE/GE, secured by TE/GE Employee Plan (EP) Exam,

      • Return has a Transaction Code (TC) 59X,

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

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

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

      Enter "W" in Field 01CCC and on the return and continue processing.

       

    3. Compare the displayed fields with the return and attachments. If incorrect, overlay the screen with the correct information.

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

      Exception:

      Do not use a Received Date in Field 01RCD that is prior to the end of the tax period.

    2. See IRM 3.22.110.21.6(5), Field 01RCD, to determine the Received Date.

    CCC "W" was entered incorrectly, Delete CCC "W" from Field 01CCC.
    The return has a stamp that indicates a previous clearance by Statute Control within the last 90 days, Enter CCC "W" in Field 01CCC and on the return.
    The return is not stamped by Statute Control within the last 90 days and the Received Date is equal to or more than two years nine months after the RDD,
    1. SSPND 310.

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

  4. Rejects Corrections:

    1. When Statute Control returns the cleared document, enter W in Field 01CCC and on the return. Continue processing.

    2. If Statute Control requests the record to be voided to them, RJECT 640.

♦Error Code 002 – Name Control Mismatch♦

  1. Fields Displayed – Error Code 002 will display as follows:

    Field Designator on Form 1042 Field Name Length
    CL Clear Code 1
    01NC Name Control 4
    >>>>> Name Control Underprint 4
    01EIN Employer Identification Number 9
    01CCC Computer Condition Code 10
    01TXP Tax Period 6
    02CON "In-Care-of" Name 35
    02FAD Foreign Address 35
    02ADD Street Address 35
    02CTY City 22
    02ST State 2
    02ZIP ZIP Code 12
  2. Invalid Condition: Error Code 002 will generate when the Name Control mismatched against the National Account Profile (NAP) or Entity Index File (EIF).

  3. Correction Procedures:

    1. Drop the cursor to the bottom of the screen and transmit. If Error Code 002 reappears, continue.

    2. When corrections are made to Field 01NC or Field 01EIN, the computer will validate the entries with the NAP and reset the OLE indicators as appropriate upon transmitting.

    3. Correct all misplaced entries, coding and transcription errors.

    4. Compare the displayed fields with the return and attachments. If incorrect, overlay the screen with the correct information.

    5. Refer to all of the following research instructions in this error code before taking any action.

    6. If Field 01NC and the Name on the return or attachments are the same but differ from the underprint in Field 01NC, research INOLES to determine the correct Name.

      If Then
      The Name on the return or attachment matches the Name Control on INOLES, Bring up underprint.
      The Name Control on INOLES is different from the Name on the return or attachment, Research NAMEE for a new EIN.
    7. If a new EIN is located, verify the Name Control using INOLES.

      If Then
      The Name Control on INOLES matches the Name on the return or attachment,
      1. Ensure that the entity information matches the return.

      2. Overlay Field 01EIN with the new EIN from NAMEB/NAMEE. Enter the new EIN on the return. When the EIN is changed from the one the taxpayer used, issue Letter 3875C, Missing or Incorrect EIN on Return, as a non-suspense letter to the address on the return. Ensure that the entity information matches the return

      Note:

      Do not send Letter 3875C when:
      • Three or less digits of the EIN are transposed, different or missing, or
      • The EIN is consecutive numbers (e.g., 12-3456789) or repeating numbers (e.g., 11-1111111), or
      • INOLES indicates the account has been "merged to" or "merged from" , or
      •The TIN on the return is the taxpayer's SSN (check INOLEG)

      Multiple EINs are located,
      1. SSPND 320 to Entity Control.

      2. Prepare Form 4227, Intra-SC Reject or Routing Slip, with the notation "MULTIPLE EINs" .

      INOLES indicates a "Merge To" (MT) EIN, Research the "MT" EIN on INOLES.
      The "MT" EIN matches the entity on the return or attachment, Enter the "MT" EIN in Field 01EIN and on the return.

      Note:

      Do not send Letter 3875C on MT EIN cases.

      The "MT" EIN does not match the entity on the return or attachment, SSPND 320 to Entity Control.
    8. If the Name on the return or attachment does not agree with the Name Control on INOLES or there is an indication of a name change on Form 1042, research ENMOD for a new name.

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

      2. Attach Form 4227, Intra-SC Reject or Routing Slip with the notation "NO RECORD" .

    9. If the Name change has not been made, research ENMOD for a pending TC 013.

      If... Then...
      A pending TC 013 is present, Enter "C" in the Clear Code field.
      A pending TC 013 is not present,
      1. SSPND 320 to route to Entity.

      2. Attach Form 4227, Intra-SC Reject or Routing Slip with the notation "REQUEST NAME CHANGE (TC 013)" .

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

    Note:

    The Entity Assignment Date will be indicated, in the left hand margin on the front of the return, by a capital E and date assigned in purple.

    If... Then...
    The Entity Assignment Date is past the Return Due Date and IRS Received Date,
    1. GTSEC 01.

    2. Enter the Entity Assignment Date in Field 01CRD.

    The Entity Assignment Date is not past the Return Due Date and IRS Received Date, Continue processing.

♦Error Code 003 – Check Digit Invalid♦

  1. Fields Displayed: Error Code 003 will display as follows:

    Field Designator Field Name Length
    01NC Name Control 4
    >>>>> Name Control Underprint 4
    01EIN Employer Identification Number 9
    01CCC Computer Condition Code 10

    Note:

    Check digits require the first two positions of the field be blank and the last positions alphabetic.

  2. Invalid Conditions: Error Code 003 will generate when:

    • A check digit is present but is not valid for the EIN, and/or

    • The letters "E" , "G" or "M" (in check digit only) are present in Field 01NC.

  3. Correction Procedures:

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

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

      If... Then...
      The check digit in Field 01NC does not match the return or is not legible, Enter the Name Control from the return in Field 01NC.
      The EIN on the return is not legible, Research NAMEB/NAMEE for correct EIN.
    3. Compare the EIN from NAMEB/NAMEE to the EIN on the return.

      If... Then...
      The EIN on Form 1042 matches the EIN on NAMEB/NAMEE, Enter Name Control from NAMEB/NAMEE in Field 01NC.
      Research indicates a different EIN, Verify the EIN and name on INOLES.
      Name Control on INOLES matches the name on the return or attachment,
      1. Overlay Field 01EIN with the EIN from INOLES. Enter the EIN from CC INOLES on the return.

      2. Issue Letter 3875C, Missing or Incorrect EIN on Return, as a non-suspense letter to the address on the return.

        Note:

        Do not send Letter 3875C when:
        • Three or less digits of the EIN are transposed, different, or missing, or
        • The EIN is consecutive numbers (e.g., 12-3456789) or repeating numbers (e.g., 11-1111111), or
        • INOLES indicates the account has been “merged to” or “merged from”, or
        • The TIN on the return is the taxpayer's SSN (check INOLEG).

      Unable to locate an EIN or more than one EIN is located,
      1. SSPND 320 to Entity.

      2. Prepare Form 4227, Intra-SC Reject or Routing Slip, with the notation "NO RECORD OF EIN" .

♦Error Code 004 – Name Control/EIN Validation♦

  1. Fields Displayed: Error Code 004 will display as follows:

    Field Designator Field Name Length
    CL Clear Code 1
    01NC Name Control 4
    >>>>> Name Control Underprint 4
    01EIN Employer Identification Number 9
    01CCC Computer Condition Code 10
  2. Invalid Conditions: Error Code 004 will generate when:

    • The EIN is not present at Master File (MF), and/or

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

    Note:

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

  3. Correction Procedures:

    1. Drop the cursor to the bottom of the screen and transmit. If Error Code 004 reappears, continue.

    2. When corrections are made to Field 01NC or Field 01EIN, the computer will validate the entries with the NAP and reset the OLE indicators as appropriate upon transmitting the ERS screen.

    3. Correct all misplaced entries, coding and transcription errors.

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

    5. Refer to all the following research instructions in this error code before taking any action.

    6. If Field 01NC and the Name on the return or attachments are the same but differ from the underprint in Field 01NC, research INOLES to determine the correct Name Control:

      If... Then...
      The Name on the return or attachment matches the Name Control on INOLES, Bring up underprint.
      The Name Control on INOLES is different from the NAME on the return or attachment, Research NAMEB/NAMEE for a new EIN.
    7. If a new EIN is located, verify the Name Control using INOLES.

      If... Then...
      The Name Control on INOLES agrees with the Name on the return or attachment,
      1. Ensure that the entity information matches the return.

      2. Overlay Field 01EIN with the new EIN from NAMEB/NAMEE. Enter the new EIN on the return. When the EIN is changed from the one the taxpayer used, issue Letter 3875C, Missing or Incorrect EIN on Return, as a non-suspense letter to the address on the return.

        Note:

        Do not send Letter 3875C when:
        • Three or less digits of the EIN are transposed, different, or missing, or
        • The EIN is consecutive numbers (e.g., 12-3456789) or repeating numbers (e.g., 11-1111111), or
        • INOLES indicates the account has been “merged to” or “merged from”, or
        • The TIN on the return is the taxpayer’s SSN (check INOLEG).

      Multiple EINs are located,
      1. SSPND 320 to Entity Control.

      2. Prepare Form 4227, Intra-SC Reject or Routing Slip, with the notation "MULTIPLE EINs" .

      INOLES indicates a "Merge To" (MT) EIN, Research the "MT" EIN on INOLES.
      The "MT" EIN matches the entity on the return or attachment, Enter the "MT" EIN in Field 01EIN and on the return.
      The MT EIN does not match the entity on the return or attachment, SSPND 320 to Entity Control.

      Note:

      Rejects will never correspond for an EIN. If the return cannot be perfected through research, it must go directly to Entity.

    8. If the Name on the return or attachment does not agree with the Name Control on INOLES or there is an indication of a name change on Form 1042, research ENMOD for a new name.

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

      2. Attach Form 4227, Intra-SC Reject or Routing Slip, with the notation "NO RECORD" .

    9. If the Name change has not been made, research ENMOD for a pending TC 013.

      If... Then...
      A pending TC 013 is present, Enter "C" in the Clear Code field.
      A Pending TC 013 is not present,
      1. SSPND 320 to route to Entity.

      2. Attach Form 4227, Intra-SC Reject or Routing Slip, with the notation "REQUEST NAME CHANGE" .

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

    Note:

    The Entity Assignment Date will be indicated, in the left-hand margin on the front of the return, by a capital E and date assigned in purple.

    If... Then...
    The Entity Assignment Date is past the Return Due Date and IRS Received Date,
    1. GTSEC 01.

    2. Enter the Entity Assignment Date in Field 01CRD.

    The Entity Assignment Date is not past the Return Due Date and IRS Received Date, Continue processing.

♦Error Code 005 – Invalid Tax Year or Received Date♦

  1. Fields Displayed: Error Code 005 will display as follows:

    Field Designator Field Name Length
    CL Clear Code 1
    01TXP Tax Period 6
    01RCD Received Date 8
    01CCC Computer Condition Code 10
  2. Invalid Condition: Error Code 005 will generate when the year-month of the processing date is later than the Tax Period plus six months and the Received Date is not present.

  3. Correction Procedures:

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

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

    3. A Received Date must be in Field 01RCD if the return is not timely filed.

    4. Use the earliest Received Date in Field 01RCD if there are multiple Received Dates on the return.

      Exception:

      Do not use a Received Date in Field 01RCD that is prior to the end of the tax period.

    5. Use IRM 3.22.110.21.6(5), Field 01RCD, when a Received Date is needed, but it is not stamped on the return, or a valid handwritten Received Date is not present.

  4. If a return has been faxed to another area of the service and then sent to Submission Processing, do not enter the Enterprise Electronic Fax (EEFax) Date as the IRS Received Date. Enter a Received Date according to IRM 3.22.110.21.6(5), Field 01RCD.

    Caution:

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

Error Code 006 – Remittance Without Received Date

  1. Fields Displayed: Error Code 006 will display as follows:

    Field Designator Field Name
    RMIT> Remittance Amount
    01TXP Tax Period
    01RCD Received Date
    01CCC Computer Condition Code
  2. Invalid Condition: Remittance is received with the return but a Received Date is not present.

  3. Correction Procedures:

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

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

    3. If the Received Date is missing or illegible, determine the date using IRM 3.22.110.21.6(5), Field 01RCD.

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

  1. Fields Displayed: Error Code 007 will display as follows:

    Field Designator Field Name Length
    01TXP Tax Period 6
    01RCD Received Date 8
    01CCC Computer Condition Code 10
  2. Invalid Condition: Error Code 007 will generate when the Received Date is earlier than the last day of the Tax Period/Year by two months or more.

  3. Correction Procedures:

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

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

    If... And... Then...
    The Received Date is invalid and it appears that the incorrect year was used (i.e., 20180115 instead of 20190115), and other information (Julian date, postmark date, and/or signature date) indicates that the Received Date should be a current year,   Change the Received Date year to the current year in Field 01RCD.
    The return is an early filed return, The Tax Period does NOT end with a calendar month (MM) of 12,
    1. Correct tax period to a calendar year end month "12 (i.e. 201811 to 201812)"

    2. Change the IRS Received Date to 01012019.

    The return is an early filed Final return,  
    1. Enter CCC "F" .

    The return is not an early filed Final return, The Tax Period ending is less than four months after the Received Date
    1. SSPND 480.

    2. Prepare Form 4227, with the notation "EARLY FILED" .

    The return is not an early filed Final return, The Tax Period ending is more than four months after the Received Date SSPND 21X with literal:
    We received your Form 1042 for tax period beginning _______ and ending _______. We cannot process it because Form 1042 must cover a calendar year. Please submit a new Form 1042 covering the appropriate calendar year. If your Form 1042 reflected monies paid during two calendar years, please submit a Form 1042 for each year.
  4. Rejects Corrections:

    If... Then...
    The taxpayer replies that the return is Final, Enter CCC F.
    The taxpayer replies that the return is not a final return, SSPND 480 until the end of the tax period provided by the taxpayer.
    The taxpayer fails to reply or the reply is not adequate,
    1. Enter CCC "3" .

    2. SSPND 480 until the end of the tax period indicated on the return.

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

  1. Fields Displayed: Error Code 010 will generate as follows:

    Field Designator Field Name Length
    RMIT Remittance Amount 11
    01NC Name Control 4
    01EIN Employer Identification Number 9
    01TXP Tax Period 6
    01RCD Received Date 8
    01CCC Computer Condition Code 10
    01SIC Special Income Code 1
    01CRD Correspondence Received Date 8
    01CH3 Chapter 3 Status Code 2
    01CH4 Chapter 4 Status Code 2
    01QIN Qualified Intermediary Indicator 1
    01PSN Preparer PTIN 9
    01PEN Preparer Employer Identification Number 9
    01CBI Paid Preparer Checkbox Indicator 1
    01CBT Paid Preparer Telephone Number 9
    01CBP Designee PIN 9
    S02DP Section Present  
    S03DP Section Present  
    S04DP Section Present  
    S05DP Section Present  
    S06DP Section Present  
    S07DP Section Present  
    S08DP Section Present  
  2. Invalid Condition: Error Code 010 will generate when CCC "G" is present and fields other than 01NC, 01EIN, 01TXP, 01RCD, 01CCC and 01CRD, 01CH3, 01CH4, 01QIN contain entries.

  3. Correction Procedures:

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

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

    3. Determine if CCC "G" was input correctly.

      If... Then...
      Return indicates amended, revised, supplemental, corrected or superseding, Research, e.g., BRTVU, BMFOL, SUMRY, and/or TXMOD to determine if information is exactly the same as a posted return.
      All information is not the same,
      1. Process the return with CCC "G" .

      2. DLSEC to delete all sections except Section 01.

      3. Delete the invalid entries that are present in Section 01. GTSEC 01, if necessary. Invalid entries are all except: 01NC, 01EIN, 01TXP, 01RCD, 01CCC, 01CRD.

      All information is exactly the same, SSPND 640 and route to Rejects.
      A return is not posted for the tax period and the return is an amended return, Continue processing as an amended return.
      A return is not posted for the tax period and the return is not amended (G coded in error),
      1. Circle-out CCC G.

      2. If all or nearly all of the lines of the ROFTL (section 03 thru 06) have entries, SSPND 351. Rejects will input the missing data.

      3. Otherwise, enter all data in Sections XXX as needed.

      4. Ensure that the Section 01 fields are correct.

      5. Delete CCC "G" .

      Note:

      When deleting CCC G and the sections required are shown as being present, no further verification of section entries is needed.

    4. Field 01CH3 and Field 01CH4 must contain "00" . If Field 01CH3 and/or Field 01CH4 contain any other entry, correct.

    5. CCC "W and 3" are the only CCCs that can be used with CCC G.

    6. Field 01QIN may or may not contain an entry.

♦Error Code 014 – Missing Address Entries♦

  1. Fields Displayed – Error Code 014 will display as follows:

    Field Designator on Form 1042 Field Name Length
    02CON "In-Care-of" Name 35
    02FAD Foreign Address 35
    02ADD Street Address 35
    02CTY City 22
    02ST State 2
    02ZIP ZIP Code 12
  2. Invalid Conditions: Error Code 014 will generate when:

    • If the street address is present, Field 02CTY must be present, unless an MCC is used,

    • If an MCC is used, Field 02ADD must be present,

    • A City must be present. If the city is not in the Major City format, Field 02ST must be present, and/or

    • An MCC is used and Field 02ST is present.

  3. Correction Procedures:

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

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

    3. Research any of the following for valid address information: Document 7475, State and Address Abbreviations, Major City Codes (MCCs), Zip Codes and Countries, or Command Codes INOLES, NAMEE and ENMOD.

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

    2. Enter the State Code in Field 02ST

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

♦Error Code 015 - Foreign Address/State♦

  1. Fields Displayed: Error Code 015 will display as follows:

    Field Designator on Form 1042 Field Name Length
    02CON "In-Care-of" Name 35
    02FAD Foreign Address 35
    02ADD Street Address 35
    02CTY City 22
    02ST State 2
    02ZIP ZIP Code 12
  2. Invalid Conditions: Error Code 015 will generate when:

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

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

  3. Correction Procedures:

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

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

    If... Then...
    A foreign address is present in Field 02FAD, 1. Field 02ST must contain"." (period/space)
    2. Delete any entry in Field 02ZIP.
    A foreign address is not present in Field 02FAD, Check return for foreign address.
    A foreign address is present on the return, 1. Enter the foreign address in Field 02FAD. If additional space is required, continue entering the address in Field 02ADD.
    2. Field 02CTY must contain the appropriate foreign country code (See Document 7475.

    Exception:

    Use the country code based on the province in Field 02FAD if the foreign address is from Canada and the address contains a province name or abbreviation. (See IRM 3.22.110.22.4(5) for the Province/Country Codes - Canada).


    3. Field 02ST must contain "." (period/space).
    4. Delete any entry in Field 02ZIP.
    A foreign address is not present on the return, 1. Verify the address on the return is not a foreign address.
    2. SSPND 610
    3. Renumber return with domestic DLN.

♦Error Code 016 – ZIP Code/State Mismatch♦

  1. Fields Displayed: Error Code 016 will display as follows:

    Field Designator on Form 1042 Field Name Length
    02CON "In-Care-of" Name 35
    02FAD Foreign Address 35
    02ADD Street Address 35
    02CTY City 22
    02ST State 2
    02ZIP ZIP Code 12
  2. Invalid Condition: Error Code 016 will generate when the ZIP Code is inconsistent with the MCC or State Code.

  3. Correction Procedures:

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

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

    3. Research Document 7475, State and Address Abbreviations, Major City Codes (MCCs), Zip Codes and Countries, or Command Codes INOLES, NAMEB/NAMEE or ENMOD for valid ZIP Code information:

      If... And... Then...
      Unable to determine a valid ZIP Code from the return or attachment, A valid ZIP Code is found through research, Enter the valid ZIP Code found through research in Field 02ZIP.
      Only the first three digits of the ZIP Code can be determined,   Enter 01 in the (4th) and (5th) position.
      A ZIP Code cannot be determined,   Enter the 3 digits followed by “01” of the first ZIP Code listed for the applicable state found in Document 7475 (e.g., 99501 for Alaska).
      The address is in a major city, A MCC can be determined, Enter MCC in Field 02CTY.
      The address is in a major city, A MCC cannot be determined,
      1. Enter the name of the city in Field 02CTY.

      2. Enter the State Code in Field 02ST.

      The address is not in a major city,  
      1. Enter the appropriate state abbreviation in Field 02ST.

      2. Enter ZIP Code in Field 02ZIP.

    4. Americas Post Office (APO)/Foreign Post Office (FPO)/Diplomatic Post Office (DPO) Addresses: An APO or FPO is not a foreign address. The U.S. Postal Service established new address requirements for APO//DPO/FPO addresses. If an address appears in the old APO/FPO format, convert to the new State Code abbreviation based on the ZIP Code. For example, if the old address appears as APO New York, NY 091XX, convert to read as APO AE 091XX. Refer to the APO/DPO/FPO conversion chart below:

      Zip Code State Code
      340 AA
      090 - 098 AE
      962 - 966 AP

Error Code 026 – Tax Period Mismatch

  1. Fields Displayed: Error Code 026 will display as follows:

    Field Designator Field Name
    CL X Clear Code
    01EIN Employer Identification Number
    01TXP Tax Period
    >>>>> Tax Period Underprint
    01CCC Computer Condition Code
  2. Invalid Conditions: Error Code 026 will generate when:

    • The Tax Period underprint does not agree with the month on the EIF, and/or

    • An "F" is not present in Field 01CCC.

  3. Correction Procedures:

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

    2. Verify the coding and transcription for the EIN, Tax Period, and CCC.

    3. Determine taxpayer information through research (ENMOD, BMFOLE, BMFOLI).

    4. Resolve Error Code 026. See Exhibit 3.22.110-8, Error Code 026 Resolution, and Exhibit 3.22.110-9, Error Code 026 Reply/No Reply Procedures.

      If... Then...
      ENMOD - FYM Matches, Clear.
      ENMOD/BMFOLE -PN TC016 and 090 with matching FYM TC XXX within 12 months, Clear.
      TC Tax Period Mismatch, SSPND 320 to Entity.
      BMFOLI - MFT Not Present, SSPND 610.
      MFT Present - No Postings Present, SSPND 351 - TC016.
      MFT Present - Postings all Subsequent, SSPND 351 - TC016.
      All Prior Posting Agree, SSPND 351 - TC016.
      Line 65/ Field 0765 has an entry amount, SSPND 351 to Rejects.
      All Prior Posting W/Doc but no Dates, Change the Tax Period to agree with Underprint.
      None of the above apply, SSPND 21X for clarification.

Error Code 028 – Received Date Missing

  1. Fields Displayed: Error Code 028 will display as follows:

    Field Designator Field Name
    01RCD Received Date
    01CCC Computer Condition Code
  2. Invalid Condition: Error Code 028 will generate when:

    • CCC(s) "R, D, or 7" , is present, AND

    • Received Date is not present.

  3. Correction Procedures:

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

      If... Then...
      CCC "R, D, or 7" , is present, Enter the Received Date in Field 01RCD.
      CCC "R, D, or 7" , is not present, Delete CCC "R, D, or 7" .
      The return is not"G" coded,
      1. GTSEC 02 and enter the data in the fields for Section 02 and transmit.

      2. When Error Code 010 generates, enter appropriate fields.

      3. Delete CCC "G" .

      The return is correctly "G" coded, Enter the Received Date in Field 01RCD, determined using IRM 3.22.110.21.6(5), Field 01RCD.
    2. If multiple dates are on the return, use the earliest date as the Received Date.

      Exception:

      Do not use a Received Date in Field 01RCD that is prior to the end of the tax period.

      Reminder:

      Received Date should always be present. After determining if the CCC is correct, always enter the Received Date as part of your correction.

      Note:

      Receipt and Control function will attach the USPS tracking page if the postmark date is missing from a piece of certified mail. Use the "Acceptance" and "Date and Time" as the postmark date.

Error Code 030 - Penalty and Interest Code

  1. Fields Displayed: Error Code 030 will display as follows:

    Field Designator Field Name
    01TXP Tax Period
    01RCD Received Date
    01RDD Return Due Date - Computer
    01CCC Computer Condition Code
    01PIC Penalty and Interest Code
  2. Invalid Condition: Error Code 030 will generate when the Penalty and Interest Code is present and the Received Date is on or before the Return Due Date≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

  3. Correction Procedures:

    1. If field 01PIC is correct, then enter the correct Received Date.

    2. If the correct Received Date is equal to or earlier than the Return Due Date, then delete Code 1 from Field 01PIC.

    3. If the Received Date is correct but is later than the Return Due Date≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , then delete code 1 from Field 01PIC.

    4. If more than one Received Date is present on Form 1042, use the earliest date.

      Exception:

      Do not use a Received Date in Field 01RCD that is prior to the end of the tax period.

Error Code 034 – Correspondence Received Date Not Valid

  1. Fields Displayed: Error Code 034 will display as follows:

    Field Designator Field Name
    01TXP Tax Period
    01RCD Received Date
    01CRD Correspondence Received Date
    01RDD Return Due Date - Computer
  2. Invalid Conditions: Error Code 034 will generate when:

    • The Correspondence Received Date is later than the processing date, and/or

    • Field 01CRD is equal to or earlier than Field 01RCD.

      Note:

      An entry in Field 01CRD does not require an entry in Field 01RCD.

  3. Correction Procedures:

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

    2. The Received Date will either be stamped or edited on the return. If the Received Date is missing or illegible, determine the date using IRM 3.22.110.21.6(5), Field 01RCD.

    3. The CRD will be determined from the date the reply was received at the Campus. Refer to the return for the CRD edited in the entity section of the return. This can be verified by checking the stamped Received Date on the correspondence attached to the return.

    If... Then...
    The CRD is present and later than the processing date Delete Field 01CRD.
    More than one Received Date is present
    1. Enter the earliest date.

      Exception:

      Do not use a Received Date in Field 01RCD that is prior to the end of the tax period.

    2. Enter CCC "3" .

Error Code 073 – Fields 01CCC 3 and 01CRD Present

  1. Fields Displayed: Error Code 073 will display as follows:

    Field Designator Field Name
    01CCC Computer Condition Code
    01CRD Correspondence Received Date
  2. Invalid Condition: Error Code 073 will generate when a "3" is present in Field 01CCC and an entry is present in Field 01CRD.

  3. Correction Procedures:

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

    2. If IRS correspondence is attached, determine if a reply has been received.

    If... Then...
    Reply has been received Delete the "3" in Field 01CCC.
    No reply received Delete entry in Field 01CRD.

Error Code 078 – Received Date Not Present

  1. Fields Displayed: Error Code 078 will display as follows:

    Field Designator Field Name
    01RCD Received Date
    01CRD Correspondence Received Date
  2. Invalid Condition: Error Code 078 will generate when the return has been processed through RPS and a Received Date is not present.

  3. Correction Procedures:

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

    2. Determine the Received Date using IRM 3.22.110.21.6(5), Field 01RCD.

Error Code 704 - EIN not Consistent with Credit Withholding

  1. Fields Displayed: Error Code 704 will display as follows:

    Field Designator Field Name
    0767A Credit from Other WH Agents for other than substitute payments
    0767B Credit from Other WH Agents for substitute payments
    01EIN EIN
  2. Invalid Condition:

    Error Code 704 will generate when an entry appears in Field 0767A and/or 0767B and the EIN is not between ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  3. Correction Procedures:

    1. Verify Field 01EIN against the EIN on the Form 1042 return. If the EIN is within range ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , the computer automatically sets Field 01QIN to "1" .

    2. If Field 01QIN is a 2, enter "0.00" in Fields 0767A/0767B to disallow the credit on Lines 67a/b. Also, assign TPNC 90 #298, with literal:
      The credit or refund on Form 1042 was denied because the Employer Identification Number on your Form 1042 does not identify you as a Qualified Intermediary entitled to claim an overpayment attributable to withholding by others.

    Note:

    This error condition applies only to Line 67a/b/Field 0767A/0767B on Form 1042. It does NOT apply for credits in Field 0765/Line 65 or Field 0766/Line 66. See Error Code 724 for specific directives for those fields.

Error Code 706 - Discrepancy with ROFTL and Total Monthly Liability

  1. Fields Displayed- Error Code 706 will display as follows:

    1. The Fields must be positive and must be numeric (0 thru 9) and blank.

    2. The Fields are found on Lines 1 thru 60 (ROFTL) of Form 1042.

    Field Designator Field Name
    03ADJ>
    03BDJ>
    03CDJ>
    03QR1>
    January Tax Liability Underprint
    February Tax Liability Underprint
    March Tax Liability Underprint
    1st Quarter Tax Liability Computed
    04DDJ>
    04EDJ>
    04FDJ>
    04QR2>
    April Tax Liability Underprint
    May Tax Liability Underprint
    June Tax Liability Underprint
    2nd Quarter Tax Liability Computed
    05GDJ>
    05HDJ>
    05IDJ>
    05QR3>
    July Tax Liability Underprint
    August Tax Liability Underprint
    September Tax Liability Underprint
    3rd Quarter Tax Liability Computed
    06JDJ>
    06KDJ>
    06LDJ>
    06QR4>
    October Tax Liability Underprint
    November Tax Liability Underprint
    December Tax Liability Underprint
    4th Quarter Tax Liability Computed
    07TQA> Total Quarterly Liability Amount Computed
    0764B Total Net Tax Liability, Chapter 3 Amount
    0764C Total Net Tax Liability, Chapter 4 Amount
    0764D 2% Excise Tax Amount
    S03NP Section 03 Not Present
    S04NP Section 04 Not Present
    S05NP Section 05 Not Present
    S06NP Section 06 Not Present
    S07NP Section 07 Not Present
  2. Invalid Conditions: Error Code 706 will generate when:

    1. An entry appears somewhere in the ROFTL (Sections 03, 04, 05, or 06) but Section 07 Field 0764E is blank.

    2. An entry appears in Section 07 Field 0764E, but the ROFTL (Sections 03, 04, 05, or 06) is blank or all zeros.

  3. Correction Procedures:

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

      If... Then...
      The QI (≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ) entered the total amount of tax withheld on Form 1042, Line 59, Enter the amount in Field 06L31.
      ROFTL Sections 03 thru 06 (Lines 1 thru 60) are blank and Field 0764E has an entry of ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , Enter the amount in Field 06L31.
      ROFTL Sections 03 thru 06 (Lines 1 thru 60) are blank and Field 0764E has an entry of ≡ ≡ ≡ ≡ ≡ ≡ , SSPND 21X for the weekly tax liability (Lines 1 thru 60).
      The REPLY is sufficient, Enter the amounts into the proper lines of the return and into the proper fields on the screen. Also enter the CRD (if required).
      The QI (≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ) replied and entered the total amount of tax withheld on Form 1042, Line 59, Enter the amount in Field 06L31.
      There is a NO REPLY or an insufficient reply, Enter CCC 3.
      Divide the amount in Field 0764E by 4 and enter the result into Fields 03C31, 04F30, 05I30 and 06L31 as applicable and into the corresponding lines on the return.
      Enter CCC X if the return shows an overpayment.

Error Code 716 - Total Monthly Liability and Computer Amounts Differ

  1. Fields Displayed: Error Code 716 will display as follows:

    Note:

    Error Code 716 should not display on TY13 and prior returns.

    Field Designator Field Name
    TPNC Taxpayer Notice Code 02 or 90

    03ADJ>
    03BDJ>
    03CDJ>
    03QR1>

    January Monthly Tax Liability Underprint
    February Monthly Tax Liability Underprint
    March Monthly Tax Liability Underprint
    1st Quarter Tax Liability Computed

    04DDJ>
    04EDJ>
    04FDJ>
    04QR2>

    April Monthly Tax Liability Underprint
    May Monthly Tax Liability Underprint
    June Monthly Tax Liability Underprint
    2nd Quarter Tax Liability Computed

    05GDJ>
    05HDJ>
    05IDJ>
    05QR3>

    July Monthly Tax Liability Underprint
    August Monthly Tax Liability Underprint
    September Monthly Tax Liability Underprint
    3rd Quarter Tax Liability Computed

    06JDJ>
    06KDJ>
    06LDJ>
    06QR4>

    October Monthly Tax Liability Underprint
    November Monthly Tax Liability Underprint
    December Monthly Tax Liability Underprint
    4th Quarter Tax Liability Computed
    0764A Adjustment Amount
    0764B Total Net Tax Liability, Chapter 3 Amount
    0764C Total Net Tax Liability, Chapter 4 Amount
    0764D 2% Excise Tax Amount
    0764E Total Net Tax Liability
    >>>>>>> Total Net Tax Liability Computer Underprint
    07TQA> Total Quarterly Liability Amount Computed
  2. Invalid Conditions: Error Code 716 will generate when the transcribed Lines 64b plus Line 64c plus Line 64d on Form 1042 differs from the 07TQA Computer amount by ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

  3. Correction Procedures:

    1. Compare the entries on the screen with the entries on the return. (ROFTL) Lines 1 thru 60 on Form 1042.

    2. Correct all misplaced entries, coding and transcription errors.

    If... Then...
    Any negative amounts are present on Lines 1 thru 60, DELETE the negative amounts and send TPNC 90 #301.
    I ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , SSPND 21X to determine total monthly tax liability (Lines 1-60).
    The error in Total Monthly Tax Liability is +≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , Send TPNC 02.
    ALL Fields 0764A, 0764B, 0764C, 0764D, and 0764E are blank, SSPND 21X for ALL missing information.
    Field 0764E contains an entry and Fields 0764A, 0764B, 0764C and 0764D are blank, Enter the Field 0764E amount into Field 0764B.
    TY15 and prior: Field 0764A equals Field 0764E and Fields 0764B, 0764C and 0764D are blank, SSPND 21X for missing Line 64b thru 64d information and documentation for Line 64a.
  4. Reply/No Reply procedures:

    If... Then...
    The REPLY is sufficient, Enter the amounts into the proper lines of the return and into the proper fields on the screen. Also enter the CRD (if required).
    There is a NO REPLY or an insufficient reply,
    1. Enter CCC “3” on all No Reply to Correspondence.

    2. Enter the greater amount of Field 0763E or Field 07TQA in Field 0764B and Field 0764E.

    3. TY15 and prior: Delete the entry in Field 0764A if it matches Field 0764E and there is no documentation to substantiate the entry.

    4. Send TPNC 90 #306 with literal:
      Because you did not respond to our request for information, we have adjusted your Form 1042. The liability you reported in the Record of Federal Tax Liability Section was used as your Net Tax Liability. Your balance due or refund may have been adjusted based on this information.

    5. Enter CCC X if the return shows an overpayment.

Error Code 718 -Total Gross Amounts Reported Inconsistency

  1. Fields Displayed - Error Code 718 will display as follows:

    Note:

    Error Code 718 should not display on TY13 and prior returns.

    Field Designator Field Name
    CL Clear Code
    06JDJ October Total Liability
    06KDJ November Total Liability
    06LDJ December Total Liability
    06QR4 Quarterly Total (4th Qtr)
    07TQA Total All Quarters
    0762A Total US Source FDAP
    07SSD Total US Dividend Payment Amount
    07SSP Total US Other Payment Amount
    0762C Total Gross Amount Reported
    >>>>>> Total Gross Amount Reported Underprint
    0764E Total Liability Amount
    >>>>>> Total Liability Computer Amount
    S06NP S06 Not Present
    S07NP S07 Not Present
  2. Invalid Conditions - Error Code 718 will generate when the difference between the Total Gross Amount reported (Field 0762C) and the Total Gross Computer amount is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    1. Field 0762C is blank and Field 0764E has an entry.

    2. Field 0762C is equal to or smaller than Field 0764E.

    3. Field 0762C differs from the computer underprint by ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  3. Correction Procedures

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

    2. If Field 0762A equals 07SSD and/or 07SSP and 0762C, delete 07SSD and/or 07SSP as misplaced entries.

    3. If the taxpayer did not total the amounts on lines 62a, 62(b)1, and 62(b)2, add fields and enter sum in Field 0762C.

    4. SSPND 21X with literal:
      The amount on your Form 1042 for your total gross amounts reported is smaller than (or equal to) the amount you reported as your total net tax liability. Please explain.

  4. Reply/No Reply procedures:

    If... Then...
    The REPLY is sufficient, Enter the amounts into the proper lines of the return and into the proper fields on the screen. Also enter the CRD (if required).
    There is a NO REPLY or an insufficient reply,
    1. Enter CCC “3” on all No Reply to Correspondence.

    2. When the amount on Line 62c is the same as the amount on Line 64e:
      1. Divide the amount of tax on Line 63a by .30.
      2. Enter the result on Line 62a and Line 62c and into Field 0762A and Field 0762C.
      3. Use the Clear Code field.

    3. Enter CCC X if the return shows an overpayment.

Error Code 719 - Tax Reported as Withheld or Assumed

  1. Fields Displayed - Error Code 719 will display as follows:

    Note:

    Error Code 719 should not display on TY13 and prior returns.

    Field Designator Field Name
    TPNC Taxpayer Notice Code 90
    0763A Taxes Withheld by Withholding Agent
    07POD Payments Other Than Substitute Dividends
    07SSD Payments for Substitute Dividends
    076AO Adjustment to Overwithholding
    076AU Adjustment to Underwithholding
    0763D Tax Assumed by Withholding Agent
    0763E Total Tax Reported as Withheld or Assumed
    >>>>>> Field 0763E Computer Underprint
  2. Invalid Conditions: when the Field 0763E differs from the computer amount 0763E> by≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  3. Correction Procedures

    1. Correct misplaced entries, coding and transcription errors.

    2. If it appears that Field 0763D has been used as a subtotal line, treat as a misplaced entry and delete (ie. 0763A=0763D=0763E).

    3. Send TPNC 90 #297 with literal:
      The amounts you reported on Form 1042 as withheld by a withholding agent, withheld by other withholding agents, reimbursements, and tax paid by a withholding agent, do not equal your total tax reported as withheld or paid on Line 63e.

Error Code 720 – Total Tax Liability and Computer Amounts Differ

  1. Fields Displayed: Error Code 720 will display as follows:

    Field Designator Field Name
    TPNC Taxpayer Notice Code (02 or 90)
    05GDJ>
    05HDJ>
    05IDJ>
    05QR3>
    July Monthly Tax Liability Underprint
    August Monthly Tax Liability Underprint
    September Monthly Tax Liability Underprint
    3rd Quarter Tax Liability Computed
    06JDJ>
    06KDJ>
    06LDJ>
    06QR4>
    October Monthly Tax Liability Underprint
    November Monthly Tax Liability Underprint
    December Monthly Tax Liability Underprint
    4th Quarter Tax Liability Computed
    07TQA> Computed Total Quarterly Amount
    0764A Adjustment Amount
    0764B Net Tax Liability Chapter 3 Amount
    0764C Net Tax Liability Chapter 4 Amount
    0764D 2% Excise Tax Amount
    0764E Total Net Liability Amount
    0764E> Computer Underprint
  2. Invalid Condition: Error Code 720 will generate when the transcribed Total Monthly Tax Liability amount (Field 0764E) differs from the Total Monthly Tax Liability Underprint amount ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

  3. Correction Procedures:

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

    2. If the error in Total Net Tax Liability (Field 0764E) Line 64e on Form 1042≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , SSPND 21X to request clarification on the total net tax liability for line 64e.

    3. If the error in Total Net Tax Liability (Field 0764E) is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , send TPNC 02.

  4. Reply/No Reply procedures:

    If... Then...
    The REPLY is sufficient, Enter the amounts into the proper lines of the return and into the proper fields on the screen. Also enter the CRD (if required).
    There is a NO REPLY or an insufficient reply,
    1. Enter CCC “3” on all No Reply to Correspondence.

    2. Enter CCC “X” for all Refund or Credit Elect returns.

    3. Send TPNC 02.

Error Code 724 – Total Payments and Computer Amounts Differ

  1. Fields Displayed: Error Code 724 will display as follows:

    Field Designator Field Name
    TPNC Taxpayer Notice Condition Code (26 or 90)
    0765A Total Paid by EFTPS During Calendar Year
    0765B Total Paid by EFTPS during Subsequent Year
    0766 Overpayment Credit Amount
    0767A Other Than Substitute Dividend Payment Amount
    0767B Substitute Dividend Payment Amount
    0768 Total Payment Amount
    >>>>> Total Payments Underprint
  2. Invalid Condition: Error Code 724 will generate when the transcribed Total Payments differs from the computer amount ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Note:

    The Total Payments Amount on Form 1042 (Field 0768, Line 68) is the Total of Fields: Field 0765/ Line 65, Field 0766/ Line 66, Field 0767A/ Line 67a, and Field 0767B/ Line 67b.

  3. Correction Procedures:

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

    If... Then...
    Fields 0765A/B are identical to Field 0766 or Fields 0767A/B.

    Refer to IRM 3.22.110.24.23, Field 0767A, for additional information.

    The Line 68 entry may be in Fields 0766, 0767A and/or 0767B. Delete the entries in Field 0766, 0767A and/or 0767B and enter it in Field 0768. If uncertain, then follow the step list below.
    1. Research BMFOLT for any payments or credits.

      • Enter the total of TC 650 and TC 670 (EFTPS amounts) in Field 0765A/B.

        Note:

        Only allow credit for deposits if they match the amount the taxpayer has claimed, or it is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

      • Enter the total of TC 710 and TC 716 (Credit Elect) in Field 0766.

    2. If the QI Indicator (Field 01QIN) is 1, enter the amounts in Fields 0767A/B if Form 1042-S is present. SSPND 21X for Form 1042-S if not present. See IRM 3.22.110.24.23, Field 0767A.

    3. If the QI Indicator is 2 delete the entry in Field 0767A/0767B.

    4. If BMFOLT research leads to no findings, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ SSPND 21X for lines 65 thru 68.

      Reminder:

      You may need to ask for Form 1042-S Copy B to verify Fields 0767A/B. See IRM 3.22.110.24.23, Field 0767A and IRM 3.22.110.24.24, Field 0767B.

    Field 0768 has an amount and Fields 0765A/B, 0767A and 0767B are blank, Follow the step list above.
    Field 0768 is blank, but there are amounts in Fields 0765A/B thru 0767B, Enter the verified total of Fields 0765A/B thru 0767B in Field 0768 and on Line 68, if different. See step list above.
    No transcription errors are found Verify that the entries on Lines 65a and 65b thru 67b have been brought forward correctly from attachments and correctly totaled on Line 68.
    The taxpayer made a math computation error in adding Lines 65a/b thru 67b resulting in incorrect entry on their Total Payments (Field 0768/Line 68) Assign TPNC 26.
  4. Reply/No Reply procedures:

    If... Then...
    The REPLY is sufficient, Enter the amounts into the proper lines of the return and into the proper fields on the screen. Also enter the CRD (if required).
    There is a NO REPLY or an insufficient reply,
    1. Enter CCC “3” on all No Reply to Correspondence.

    2. Enter CCC “X” for all Refund or Credit Elect returns.

    3. Disallow any credit not shown on BMFOLT. Send TPNC 90 #296 with literal:
      Because you did not respond to our correspondence, we reduced your total payments to match your tax deposits and have reduced your credit or refund accordingly.

Error Code 728 – Tax Due/Overpayment and Computer Amounts Differ

  1. Fields Displayed – Error Code 728 will display as follows:

    Field Designator Field Name
    TPNC Taxpayer Notice Code (01 or 90)
    07TQA> Total Quarterly Liability Amount
    0764E Total Liability Amount
    >>>>>> Total Liability Computer Amount
    0765A Total EFTPS Amount Paid During Calendar Year
    0765B Total EFTPS Amount Paid During Subsequent Year
    0766 Overpayment Credit Amount
    0767A Other Payment Amount
    0767B Sub Dividend Payment Amount