3.24.213 Real Estate Mortgage Investment Conduit Income Tax Returns

Manual Transmittal

December 15, 2017

Purpose

(1) This transmits revised IRM 3.24.213, ISRP System, Real Estate Mortgage Investment Conduit Income Tax Returns.

Material Changes

(1) Editorial changes made throughout IRM.

(2) IRM 3.24.213.1 Program Scope, added as required in IRM 1.11.2.2.5, Address Management and Internal Controls. All subsequent sections in the IRM were updated to reflect the addition

(3) IRM 3.24.213.1 added the Purpose Scope and Objectives

(4) IRM 3.24.213.1.1 added Background information

(5) IRM 3.24.213.1.2 added Authority information for this IRM

(6) IRM 3.24.213.1.3 added Roles and Responsibilities

(7) IRM 3.24.213.1.4 added Program Management and Review

(8) IRM 3.24.213.1.5 added Program Controls

(9) IRM 3.24.213.1.6 added Terms/Definitions/Acronyms

(10) IRM 3.24.213.1.7 added Related Resources

(11) Exhibit 3.24.213-1 edited the table to comply with 508 Compliance requirements and retitled the exhibit to include missing forms/instruction.

(12) Reviewed and updated website addresses, legal references and IRM references, as necessary

(13) IPU 16U1159 issued 06/29/2016 IRM 3.24.213 no changes to instructions, edited the table to comply with 508 Compliance requirements

Effect on Other Documents

IRM 3.24.213, ISRP System, Real Estate Mortgage Investment Conduit Income Tax Returns, dated October 09, 2015 (effective January 1, 2016) is superseded. IPU 16U1159 issued 06-29-2016 is incorporated into this IRM.

Audience

Wage and Investment (W& I), Submission Processing Employees, Data Conversion Operations

Effective Date

(01-01-2018)

Linda J. Brown
Director, Submission Processing
Customer Account Services
Wage and Investment

Program Scope and Objectives

  1. Purpose: Daily processing of processable paper filed Form 1066, U.S. Real Estate Mortgage Investment Conduit (REMIC) Income Tax Return on the Integrated Submission and Remittance Processing System (ISRP) are covered in this IRM. This processing will convert the taxpayer data reported to electronic data records for further validations to be applied to determine if the employers return is acceptable to fulfill the filing requirement.

  2. Audience: The users of the IRM are Submission Processing Data Transcribers; Data Conversion Operation and their support staff which includes but is not limited to the following: clerks, leads and supervisors. These instructions apply to all campuses.

  3. Policy Owner: The Director of Submission Processing

  4. Program Owner: Paper Processing Branch, Mail Management/Data Conversion (an Organization within Submission Processing)

  5. Primary Stakeholders: Affected by these procedures or have input to the procedures which may include a change in work flow, additional duties, change in established time frames, and similar issues are:

    • Accounts Management (AM)

    • Small Business/Self Employed (SB/SE)

    • Large Business and International (LB&I)

    • Chief Financial Officer (CFO)

    • Tax Payer Advocate (TAS)

    • Chief Counsel, Information Technology programmers

    • Statistics of Income (SOI)

    • Tax Exempt/Government Entities (TEGE)

    • Compliance Strategy and Policy and Operations Business Support

    • Office of Servicewide Penalties are affected by the completion of these data records to posting.

  6. Program Goals: This information is used to provide instruction for accurate transcription of data into the ISRP system. The Integrated Submission and Remittance Processing (ISRP) is an application designed to capture, format, and forward information related to tax submissions and remittances in electronically readable formats to downstream IRS systems. Any remittances received with a tax document are forwarded and processed for deposit to the Remittance Processing function.

Background

  1. U.S. Real Estate Mortgage Investment Conduit (REMIC) Income Tax Returns are sent to the Service by filers to fulfill their requirement to report the income, deductions, and gains and losses from the operation of a real estate mortgage investment conduit (REMIC). In addition, the form is used by the REMIC to report and pay tax on net income from prohibited transactions. The returns must be converted to an electronic data record for use by the Service. Input of data present and validation of the data records during conversion of these paper returns to electronic data records is required.

Authority

  1. Authority for these procedures is found in Title 26 of the United States Code (USC) or more commonly known as the Internal Revenue Code (IRC). The IRC has been amended by acts, public laws, treasury determinations, rules, and regulations.

  2. All policy statements for Submission Processing are contained in IRM 1.2.12, Servicewide Policies and Authorities, Policy Statements for Submission Processing Activities:

    • Code sections which provide the IRS with the authority to issue levies.

    • Congressional Acts which outline additional authorities and responsibilities like the Tax Act of 1986.

    • Policy Statements that provide authority for the work being done.

Roles and Responsibilities

  1. The Operations manager is responsible for securing, assigning and providing training for the staff needed to perform the task required throughout this instruction.

  2. The Planning and Analysis Staff is responsible for providing feedback and support to local management to achieve and effectively monitor scheduled goals.

  3. The team manager/lead is responsible for and assigning, monitoring and controlling the work flow to accomplish timely completion of the tasks required throughout this IRM.

  4. The team employee is responsible for applying the instruction present to the assigned task on the ISRP system to accurately convert paper data to electronic data record for proper posting for use by the Service.

Program Management and Review

  1. Program Reports: Below are a list of reports to use to show receipts, production and inventory for the paper return to electronic data conversion process. These reports will be utilized to report and monitor daily and weekly status of the program to completeness.

    • PCC 2240, Daily Production Report - Program Sequence

    • PCC 6040, SC WP&C Performance and Cost Report

    • PCC 6240, SC WP&C Program Analysis Report

    • PCB 0440, Daily Workload and Staff hours Schedule

    • PCB 0540, Weekly Workload and Staffing Schedule

  2. Program Effectiveness: Goals will be measured utilizing standard managerial reports by documents processed per hour and completion of each function compared to the established schedule for completion each week. Each functionality is expected to retain or exceed schedule prior to the program completion date stated in IRM 3.30.123, Work Planning and Control Processing Timeliness: Cycles, Criteria, and Critical Dates.

  3. Annual Review: Review the processes included in this manual annually to ensure accuracy and promote consistent tax administration. This may be included under responsibilities for a manager.

Program Controls

  1. Local reports may be utilized to establish additional information for maintaining daily program control. Local reports do not replace the established official reports and required production reports.

Terms/Definitions/Acronyms

  1. The following is a list of the acronyms that are used in this IRM section, this IRM uses prompts for data entry and are defined in the charts.

    Acronyms Definition
    ABC Alphanumeric Block Control
    BMF Business Master File
    CCC Computer Condition Code
    DLN Document Locator Number
    EIN Employer Identification Number
    EOP Entry Operator
    IRM Internal Revenue Manual
    ISRP Integrated Submission and Remittance Processing System
    KV Key Verification
    OE Original Entry
    PTIN Preparer Taxpayer Identification Numbers
    REMIC Real Estate Mortgage Investment Conduit
    RPS Remittance Processing System
    TEFRA Tax Equity and Fiscal Responsibility Act

Related Resources

  1. The following table lists the IRM primary sources of guidance on the processing of paper filed Form 1066, U.S. Real Estate Mortgage Investment Conduit (REMIC) Income Tax Return.

    IRM Title Guidance on
    IRM 3.10.5 Campus Mail and Work Control - Batch/Block Tracking System (BBTS) utilizing BBTS to drop unit production cards for daily incoming receipts and production
    IRM 3.10.72 Campus Mail and Work Control - Receiving, Extracting, and Sorting receiving, extracting, sorting, and routing mail within the Submission Processing campuses
    IRM 3.10.73 Campus Mail and Work Control - Batching and Numbering batching and numbering with a document locator number (DLN) of documents
    IRM 3.11.213 Returns and Documents Analysis, Form 1066, Real Estate Mortgage Investment Conduit Income Tax Return document perfection to code and edit (perfect) returns and other documents for input to the Master File (MF) through the Integrated Submission and Remittance Processing System (ISRP)
    IRM 3.24.38 BMF General Instructions workstation functions, workstation keyboard, windows environment and general instruction for entering data for tax returns and related data through ISRP
  2. Document 7071-A, Name Control Job Aid - For Use Outside of the Entity Area

  3. The IRS adopted the Taxpayer Bill of Rights in June 2014. Employees are responsible for being familiar with and acting in accord with taxpayer rights. See IRC 7803(a)(3), and the following site for additional information about the Taxpayer Bill of Rights.

Introduction

  1. This IRM provides instructions for entering and verifying data from control documents and Form 1066, U.S. Real Estate Mortgage Investment Conduit (REMIC) Income Tax Return, using the Integrated Submission and Remittance Processing (ISRP) system.

  2. Data transcribers will also need to refer to IRM 3.24.38, ISRP System-BMF General Instructions, for general procedures.

  3. IRM deviations must be submitted in writing following instructions from IRM 1.11.2.2, Internal Management Documents System - Internal Revenue Manual (IRM) Process, IRM Standards, and elevated through appropriate channels for executive approval.

Control Documents

  1. The control documents from which data may be transcribed are:

    • Form 813, Document Register

    • Form 1332, Block and Selection Record

    • Form 3893, Re-entry Document Control

Source Document

  1. The source document from which data may be transcribed is:

    • Form 1066, U.S. Real Estate Mortgage Investment Conduit (REMIC) Income Tax Return

Form/Program Number/Tax Class and Document Codes

  1. The following table illustrates the form, program number, tax class and document code.


    FORM
    PROGRAM NUMBER TAX CLASS &
    DOCUMENT CODE
    Form 1066 12201 360

Systemically Required Sections

  1. Section 01 will be entered and verified in all cases.

  2. Sections 02, 03 and 07 will be entered and verified if data is present.

Integrated Submission and Remittance Processing (ISRP) Transcription Operation Sheets

  1. The following exhibits represent specific data entry procedures.

Block Header Data Entry-Form 813 or Form 1332 for Original Input Documents and Form 3893 for Re-Entry Document Control.

Elem. No. Data Element Name Prompt Fld. Term. Instructions
(1) Service Center (SC) Block Control ABC No entry is required The screen displays the Alphanumeric Block Control (ABC) that was entered in the Entry Operator (EOP) Dialog Window. It cannot be changed.
(2) Block Document Locator Number (DLN) DLN <Enter> Enter the first 11 digits from:
(a) Form 813 — the "Block DLN" box.
(b) Form 1332 — the "Document Locator No." box.
(c) Form 3893 — box 2.
The key verification (KV) EOP will verify the DLN from the first document of the block.
(3) Batch Number BATCH <Enter> Enter the batch number from:
(a) Form 813 and Form 1332 — the "Batch Control Number" box.
(b) Form 3893 — box 3.
If not present, enter the number from the batch transmittal sheet.
(4) Document Count COUNT <Enter> Enter the document count from:
(a) Form 813 and Form 1332— the circled serial number. If a full block (100 documents) or if a number is not circled, enter 100.
(b) Form 3893 — box 4.
(5) Prejournalized Credit Amount CR <Enter> Enter the amount from:
(a) Form 813 — shown as the "Total" or "Adjusted Total" .
(b) Form 3893 — box 5.
Enter in dollars and cents.
(6) Filling <Enter>s   <Enter> Press <Enter> 5 times.
(7) Source Code SOURCE <Enter> If the control document is Form 3893, enter from box 11 as follows:
(a) R = "Reprocessable" box checked.
(b) N = "Reinput of Unpostable" box checked.
(c) 4 = "SC Reinput" box checked.
If none of the boxes are checked, consult your supervisor who will determine if a source code is required.
If any other control document, press <Enter>.
(8) Year Digit YEAR <Enter> If the control document is Form 3893, enter the digit from the box 12; otherwise, press <Enter>.
This is a MUST ENTER field if the source code is "R" , "N" , or "4" .
(9) Filling <Enter>   <Enter> No entry required.
Press <Enter>.
(10) Remittance Processing System (RPS) Indicator RPS <Enter> Enter a "2" if:
(a) "RPS" is edited or stamped in the upper center margin of Form 813 or Form 1332 or "RRPS" is in the header of Form 1332.
(b) box 13 is checked on Form 3893.

Section 01 Form 1066, U.S. Real Estate Mortgage Investment Conduit (REMIC) Income Tax Return, and Edit Sheet (Program 12201)

Elem. No. Data Element Name Prompt Fld. Term. Instructions
(1) Section Number SECT: No entry is required. Section "01" will always be generated. No entry is required.
(2) DLN Serial Number SER# <Enter> Enter the last two digits of the 13-digit DLN from the upper portion of the form.
If the serial number has been generated by the system, verify that it matches the document being entered.
(3) Check Digit CD <Enter> Enter the check digit if present.
(4) Name Control NC <Enter> If the check digit is not present, enter the name control.
(5) Employer Identification Number (EIN) EIN <Enter> Enter the EIN from the preprinted label or from the "EIN" block.
(6) Address Check ADDRESS CHECK? <Enter> Enter "Y" or "N" as appropriate.
(7) Street Key STREET KEY <Enter> Enter the street key
(8) ZIP Key ZIP KEY <Enter> Enter the zip key.
(9) Tax Period TAXPR <Enter> Enter the edited or underlined tax period from the upper right corner of the return.
(10) Received Date RDATE <Enter> Enter the date as stamped or edited on the face of the return.
(11) Computer Condition Codes (CCC) ES–1 <Enter> Enter the edited code(s) from the dotted portion of Section 1, Line 1.
If computer condition code "G" is present and the document is a non-remittance return, end the document after this element.
If computer condition code "G" is present and the document is a remittance return, press <F6> to proceed to Section 03.
(12) Date Real Estate Mortgage Investment Conduit (REMIC) Started ES-2 <Enter> Enter the date shown or edited in box B in YYMM format.
(13) Number of Residual Holders ES-3 <Enter. Enter from the margin to the left of the Deductions section.
(14) Tax Equity and Fiscal Responsibility Act (TEFRA) Indicator ES-4 <Enter> Enter from the margin to the left of the Deductions section.
(15) Missing Schedule Code ES-5 <Enter> Enter from the margin to the left of the Deductions section.
(16) Audit Code ES-8 <Enter> Enter from the margin to the left of the Deductions section.
(17) Installment Sales Indicator ES-9 <Enter> Enter from the margin to the left of the Deductions section.
(18) Error Resolution System (ERS) Action Code ES-10 <Enter> Enter the edited digits from the bottom left margin.

Note:

Data for prompts ES-3 through ES-10 will no longer appear on an attached edit sheet. Instead, this data will be edited in the margin to the left of the Deductions section. The data will be edited in X-Y format: where X represents the edit sheet line number and Y represents the data to be transcribed. ES-10 will not be preceded by 10

Example:

Edited DataEnter on Screen
1-235…Enter "235" for prompt "ES-1"
9–1…Enter "1" for prompt "ES-9"

Section 02 Form 1066, U.S. Real Estate Mortgage Investment Conduit (REMIC) Income Tax Return, (Program 12201)

Elem. No. Data Element Name Prompt Fld. Term. Instructions
(1) Section Number SECT: <Enter> Press <Enter> if already present on the screen; otherwise enter "02" .
(2) In Care of Name Line C/O NAME <Enter> Enter the in care of name exactly as shown.
(3) Foreign Address FGN ADD <Enter> Enter the foreign address information as shown or edited from the entity area.
(4) Street Address ADDR <Enter> Enter the street address information as shown or edited from the entity area.

Caution:

If inputting a foreign address, enter the foreign city, province, and postal code in this field exactly as edited.

(5) City CITY <Enter> Enter the city from the entity area.

Caution:

If inputting a foreign address, only enter the edited foreign country code in this field.

(6) State ST <Enter> Enter the standard state abbreviation from the entity area.

Caution:

If inputting a foreign address, enter a period (.) in this field.

(7) ZIP Code ZIP <Enter> Enter the zip code from the entity area.

Caution:

If inputting a foreign address, leave this field blank. Press <Enter> to continue.

Section 03 Form 1066, U.S. Real Estate Mortgage Investment Conduit (REMIC) Income Tax Return, and Edit Sheet (Program 12201)

Elem. No. Data Element Name Prompt Fld. Term. Instructions
(1) Section Number SECT: <Enter> Press <Enter> if already present on the screen; otherwise enter "03" .
(2) Payment Received RMT <Enter> Enter the green rockered amount from the balance due area of the return or an attached cash register receipt.
If no amount is edited or the edited amount is illegible, check the control document for the correct amount.
This is a MUST ENTER field if a Prejournalized Credit Amount (prompt "CR" ) was entered in the Block Header.
(3) Total Assets BOXC $ <Enter> MINUS (−) Enter the amount from Box C.
(4) Net Short Term Capital Gain/Loss ES11 <Enter> MINUS (−) Enter the edited digits from the bottom right margin.
(5) Net Long Term Capital Gain/Loss ES12 <Enter> MINUS (−) Enter the edited digits from the bottom right margin.

Note:

Data for prompts "ES-11" through "ES-12" will no longer appear on an attached edit sheet. Instead, this data will be edited in the margin to the left of the Deductions Section. The data will be edited in "X-Y" format: where "X" represents the edit sheet line number and "Y" represents the data to be transcribed.

Example:

Edited DataEnter on Screen
11-100…Enter "100" for prompt "ES-11"
12–1500…Enter "1500" for prompt "ES-12"

Section 07 Form 1066, U.S. Real Estate Mortgage Investment Conduit (REMIC) Income Tax Return, Section II (Program 12201)

Elem. No. Data Element Name Prompt Fld. Term. Instructions
(1) Section Number SECT: <Enter> Press <Enter> if already present on the screen; otherwise enter "07" .
(2) Total Tax II1 <Enter> Enter amount form Section II, Line 1.
(3) Tax Paid on F7004 LN2 <Enter> Enter amount from Section II, line 2.
(4) Federal Telephone Excise Tax Paid 4... <Enter> For TY2006 returns, enter amount from Section II, line 2b; otherwise, press <Enter>.
(5) Discuss with Preparer Checkbox CKBX <Enter> Enter "1" if only the "Yes" box is checked; otherwise, press <Enter>.
(6) Preparer's PTIN PTIN <Enter> Enter the preparer's PTIN.
(7) Preparer's EIN PEIN <Enter> Enter the preparer's EIN.
(8) Preparer's Telephone # TEL# <Enter> Enter the preparer's telephone number.

Section 20 Form 8913 Credit For Federal Telephone Excise Tax Paid, (Program 12201)

Reminder:

Only transcribe this section for TY2006 returns.

Elem. No. Data Element Name Prompt Fld. Term. Instructions
(1) Section Number SECT: <Enter> Press <Enter> if already present on screen; otherwise, enter "20" .
(2) Tax Refund 15(D) <Enter> Enter the amount from line 15, column (d).
(3) Interest on Tax Refund 15(E) <Enter> Enter the amount from line 15, column (e).