Paper Employer's Annual Federal Unemployment (FUTA) Tax Returns are sent to the Service by filers to fulfill their requirement to file an annual unemployment tax return with the Service and provide their taxpayer identification number (TIN). 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 for these procedures is found in Title 26 of the United States Code (USC) commonly known as the Internal Revenue Code (IRC). The IRC has been amended by acts, public laws, treasury determinations, rules, and regulations such as the following:

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

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

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

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

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

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.

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.

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

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.

The following are terms or acronyms utilized throughout this instruction.

The following table lists the IRM primary sources of guidance on the processing of paper filed Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return.

Document 7071-A, Name Control Job Aid - For Use Outside of the Entity Area

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.

Must be submitted in writing following instructions from IRM 1.11.2.2, Internal Revenue Manual (IRM) Process Standards, and elevated through appropriate channels for executive approval.

Some Submission Processing Campuses have developed local use Desk Procedures.

Such procedures are only to be used:

All existing local procedures must be reviewed by the Operations Manager or designated employee upon receipt of Information Alerts, Questions and Answers (Hot Topics) or a new IRM revision to ensure conformance with Headquarters Procedures.

Unit managers must have a signed approval, on file, from the responsible Operations Manager for all Submission Processing Local Desk Procedures.

The system will automatically re-prioritize the work every time the cycle on the system changes.

The system will automatically set the Unit Task Prioritization using the following criteria:

From the Workstation Main Menu, select Original Entry (OE)

From the Original Entry (OE) Selection Menu, select Forms Identification Selection Menu.

From the Forms Identification Selection Menu select 940 Forms Identification.

The first group of images from a Unit of Work (UW) requiring identification opens.

If you need to stop FI:

The system returns you to the Forms Identification Selection Menu when you complete the last image in the UW.

If you can identify the image, make the appropriate letter or number selection from the template.

Always press the <Enter> key to complete a selection.

Some documents are scanned backwards. These will require research to determine exactly which document type they are, if you cannot identify the image,

Some unprocessable conditions are:

To end a session, press <Ctrl>-<P> key combination to set post-to-close. The system returns you to the Forms Selection Menu when you complete the last image in the Unit-of-Work (UW).

From the Workstation Main Menu, select Original Entry (OE)

From the Original Entry (OE) Selection Menu, select OE Image Selection Menu.

From the OE Image Selection Menu, select 940 OE Image Selection Menu.

From the 940 OE Image Selection Menu, select one of the following:

The first whole Unit-of-Work (UW), or first individual document (because an entire UW may not require OE from image) requiring OE opens. See Exhibit 3.41.277-1, Transcription Sheets.

If an incorrect option was selected, press the <Ctrl>-<P> key combination and then suspend this UW. Notify your supervisor.

If the last data entered is not the last field of the page and there is no other data present on the page, press <F6> key to release a document and display the next template.

Press the <Ctrl>-<P> key combination (post-to-close) to end OE from Image.

The system will return you to the Original Entry (OE) Selection Menu when you complete the last document in the current UW.

The Status Line at the bottom of the screen displays the following information:

In OE from image, you manually enter information into the template using a scanned image of the return as a source.

From the Workstation Main Menu, select Original Entry (OE).

From the Original Entry (OE) Selection Menu, select OE Paper Selection.

From the OE Paper Selection menu, select 940 OE Paper Selection Menu.

From the 940 OE Paper Selection Menu, select the form type:

If the wrong program was selected and the first page of the first document has not been completed, press the <Esc> key to cancel the entry. A window will display asking "Are you sure you want to cancel the inserted document?" Answer "YES" to go back to the 940 OE Paper Selection Menu.

In OE from Paper, the workstation operators will manually enter the information into the system and eliminate all transport processing.

The reason a document is processed using OE Paper is because it cannot be scanned (oversized pages, tissue paper, writing too light, substitute forms, or half pages, etc.)

These documents should be batched separately and the BBTS Transmittal clearly marked as "OE Paper" .

Once the Workstation Operator has successfully completed steps 1 through 4 in IRM 3.41.277.11.3, OE From Paper QUICK START, they will input the following information:

A blank Form 940 template will be displayed for the first document in the block. You will input the information from the document starting with the DLN taken from the first document in the block which MUST contain 14-digits (e.g., LC840102790000). When all fields have been input, press <F6> to get the next template.

For tax year 2011 and subsequent once you have input the Schedule A or pressed <F6> a drop down window will appear listing Next Page Selection and the options are:

If you select Form 940, you will then be asked for the next sequence number (located in the 12th and 13th position of the DLN) for each additional document input (01, 02, 03, etc.). A sequence number cannot be skipped or repeated.

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The system will return you to the 940 OE Paper Selection Menu when you release the last document in the UW.

The Status Line at the bottom of the monitor screen contains the following information:

For OE Image, when you release the last document in a UW, a question will appear asking if you want to release the UW.

For "OE Paper" , to end a block for Tax Year 2011 or prior, once the last document is input, press <F8> and answer the question Do you want to release this UW?.

For OE Paper, to end a block for Tax Year 2012 and subsequent:

A specific Form 940 UW may be selected for OE by following these steps:

From the Workstation Main Menu, select Data Validation (DV).

From the DV Selection Menu, select 940 DV Selection Menu.

From the 940 DV Selection Menu, select one of the following:

The first unit-of-work opens and the cursor stops at the first highlighted field.

Press the <Ctrl>-<P> (post-to-close) key combination to end the current Unit-of-Work (UW) upon completion of DV from Image.

The system will return you to the Data Validation (DV) Selection Menu when you release the last document.

The Status Line at the bottom of the screen displays the following information:

To begin DV on a specific UW of Form 940 documents, open that UW by doing the following:

The procedures for performing DV from Select Block on Form 940 documents are identical to performing DV from Image of Form 940 documents once the UW is opened.

For DV Image, when you release the last document in a UW, a question will appear asking if you want to release the UW.

All money fields are dollars and cents.

Enter negative amounts (identified with a minus "-" before the amount or the amount is within brackets), where allowed, by leading the amount with a hyphen.

If a negative money amount appears in a positive only field, enter amount as positive.

Enter money amounts as follows:

If two or more money amounts are on the same line, press <F3> to clear the field, and then press <Enter>, unless otherwise instructed.

If the money amount is illegible, suspend the UW as "Poor Quality Image" (<F9>; press "S" ; select "Poor Quality Image" ).

If after suspending for "Poor Quality Image" you are still unable to determine the correct money amount, press <F3> to clear the field and then press <Enter>.

When the Name control is illegible, enter four hyphens "- - - -" , if the EIN is present. If EIN is not present, delete the document as "Unprocessable 940. "

When the EIN is illegible, press <F3> and clear the field, if Name Control is present. If the Name Control is not present, delete the document as "Unprocessable 940" .

If the EIN is unaltered on a preprinted label and the Check Digit is presented, enter the Check Digit, if legible. Otherwise, enter the Name Control. If Name Control is presented instead of a Check Digit, always use the name control.

An In Care of Name can be identified by the presence of a "%" (percent sign) or "C/O" followed by a name.

Search the Name Line, Trade Name Line and Street Address for an In Care of Name.

Enter "%" , space, and then the name immediately following the "%" or "C/O" indicator.

Some forms have IRS labels printed under the National Change of Address (NCOA) program. These returns can be identified by a solid black line above and to the left of the entity area or pound (#) signs to the left of the entity area. These labels do not contain a check digit and are not considered an IRS pre-printed label. The In Care of Name (%) information MUST BE entered if present.

Valid characters are alpha, numeric, "-" hyphen, "&" ampersand, and "%" percent sign. The field length is 35 positions long. You must spell out any other symbols (e.g., "$" should be input as Dollar).

If the In Care of Name is illegible, enter "%-" (percent hyphen without a space between) which will send the document to Error Resolution System (ERS) for additional work.

If the document contains an IRS pre-printed label without changes to the "%" name line, leave blank.

Edit marks and their descriptions are as follows:

Code and Edit fields are listed and described in Exhibit 3.41.277-1, Transcription Sheets.

Code and Edit fields along with page 1 of the image will be presented to the Operator.

Press the <CTRL>-<S> to get out of the Code and Edit fields (during OE and DV).

Computer Conditions Codes (CCC) will be written either to the right of "You MUST fill out both pages of the form and SIGN IT" , in the center of the return below Line 15 or in the bottom middle margin of the return. The Data Entry Clerk will be responsible for entering all CCC edited on the return.

The following Computer Conditions Codes (CCC) will automatically generate:

CCC "F" and "G" will require sight verification by the Operator. For CCC "G" the system will prompt ONLY for the following fields if they are flagged for OE:

The IRS Received Date, often referred to as Received Date, is the date when a document is first received by the IRS. It is stamped or edited on page 1 of the return.

An "Official Received Date Stamp" may consist of no less than:

The Received Date is input in MMDDYY format. For Example:

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The "Received Date" has to be an "Official" stamp or be edited on the return. If the return contains multiple received dates, enter the earliest received date that is not circled.

If the return contains a "Post Mark Date" and a "Received Date" , and the Received Date has been circled, leave the field blank.

If the Post Mark Date is the only date on the document, enter 022222.

If the Received Date is incomplete, illegible, an invalid day of the month, or a future date, enter 022222. If unsure if the received date should be input, enter 022222.

The EIN on the Form 940 page one must be 9 numeric characters or blank.

If the EIN is more than or less than 9-digits, illegible, or missing, or there is more than one EIN present, press <F3> to clear the field and <Enter>.

For Schedule R EIN instructions, see Exhibit 3.41.277-2, Transcription Sheet (Page 1, Page 2, Schedule A, Schedule R and Schedule R Continuation Sheet).

With the implementation of the Enhanced Entity Index File (EEIF) a window may appear asking Is "Address changed?." This message includes the In Care Of (c/o) name line, street address, city, state and ZIP code. If the document contains an IRS pre-printed address with no changes, you should answer "NO" . You should answer "YES" if the IRS pre-printed address contains changes (including % name line).

If the return contains an IRS pre-printed label without changes to the street address, city, state or ZIP, all these fields should be left blank during OE and/or DV. If any of the fields contain information, press <F3> and <Enter> to remove the information from the field.

If the return contains an IRS pre-printed label without changes to the In Care of name line but contains a change to the address, leave the In Care of name line blank and enter the street address, city, state and ZIP.

Some forms have an IRS label printed under the National Change of Address (NCOA) program. These returns can be identified by a solid black line above and to the left of the entity area or pound (#) signs to the left of the address. These returns do not contain Check Digits and are not considered to be an IRS pre-printed label, therefore all In Care of name line and street information must be entered.

Enter the street address from the return. See Exhibit 3.41.277-8, Valid Characters.

Enter street abbreviations as shown in Exhibit 3.41.277-3, Street Abbreviations.

If the street address and/or city are illegible, suspend the UW as "Poor Quality Image" . If you are unable to correct the street address and/or city from the paper document, leave the address field, city field, state field and ZIP code field blank. If necessary, press <F3> and <Enter> to remove any information that may be in the fields.

If the street address and/or city are missing, leave the address field, city field, state field and ZIP code field blank. If necessary, press <F3> and <Enter> to remove any information that may be in the fields.

If return contains a US Possession or other foreign address, delete the document as "Unprocessable 940" .

If an address is input during OE or DV, all elements (street, city, state and ZIP code) must be entered.

If two street addresses are present with the same city, state and ZIP code, enter the first street address.

If two addresses are present with different cities, states and ZIP codes, enter the first address.

If there is a Street address and a PO Box, enter the PO Box. Both "POB" and "PO Drawer" should be treated as if they read PO Box.

If a document has PO BOX, POB, PO Drawer or Post Office Box, you can enter an asterisk (*) followed by a space in the first two positions of the street address instead of "PO BOX" . It is not necessary to change "PO BOX" to an asterisk if "PO BOX" was scanned.

Omit C/O or % (In care of, percent symbol) if shown with an address.

Always enter "AND" if an ampersand "&" is shown in the address line.

If @ is shown in the street address, enter "AT" .

Major City Codes listed in Exhibit 3.41.277-4 may be used. If a Major City Code is used and a ZIP code is not present, a valid five-digit ZIP code for that city will be generated by the system.

If North, South, East, or West is shown as part of the city name, use the standard abbreviation (i.e., North = N, South = S., etc.). Do Not use a major city code in this instance unless found in Exhibit 3.41.277-4, Major City Codes. Example: East Lansing, Mi = ET and South Bend, IN = SB.

If city is present, it must be all alpha.

Enter standard abbreviations for states.

If the system presents all nine-digits of the ZIP code and they are correct, accept them. If there is a change to be made only the first five-digits of the ZIP code need to be entered.

If there is no state, but a ZIP code is present, press the <Enter> key in the ZIP code field. This will generate the state code for this ZIP code in the Status Line. Follow the screen prompts to accept this code or to enter a different code.

If there is no ZIP code but a state is present, press the <Enter> key in the ZIP code field. The system will generate the default ZIP code for that state.

If the state does not match the ZIP code presented, delete the ZIP code and generate the default ZIP code for this state.

If both the state and ZIP code are blank, leave the street address, city, state and ZIP code blank. If necessary, press <F3> and <Enter> to remove any information that may be in the fields.

APO, DPO or FPO addresses must be transcribed with the appropriate two-character state code followed by the corresponding unique five-digit ZIP code.

Enter all APO/DPO/FPO addresses as follows:

Occasionally the Image of the return presented to the OE or DV Operator is unreadable. Some reasons for this are:

When working in OE Image or DV Image, if you cannot determine the data for ANY field including the street address, city, state and ZIP code, suspend the UW as "Poor Quality Image" . (<F9>; press "S" ; select "Poor Quality Image" )

The Lead Data Entry Clerk/designated employee will review the Work Status Report for suspended "Poor Quality Image" items and pull the original return/document from the block and give to the employee that suspended the UW.

The employee will resume the suspended block, correct the data using the paper return and then give the paper return back to the Lead Data Entry Clerk/designated employee.

The Lead Data Entry Clerk/designated employee will re-file the return in its original block.

Currently some returns cannot be processed via SCRIPS or must be processed as OE paper.

All returns determined to be unprocessable should be deleted as "Unprocessable Form 940" for the Pull-Doc Report. (<Ctrl>-<Shift>-<Delete/Del>; select "Unprocessable Form 940" )

Listed below are some of these conditions: