4.19.6 SSA Correspondence and Minister and Religious Waiver Programs

Manual Transmittal

February 15, 2019

Purpose

(1) This transmits revised IRM 4.19.6, SSA Correspondence and Minister and Religious Waiver Programs.

Material Changes

(1) References to Letters 2644C and 2645C have been removed since Letter 5825C is now the only approved interim letter.

(2) 4.19.6.1.2, Authority: Added IRC 3127 to (2)c.

(3) 4.19.6.1.6, Acronyms: added "aka" , CCA, TC and "DM" with definitions.

(4) 4.19.6.1.7, Related Resources: Added Publication 517.

(5) Created new section 4.19.6.1.8 about the Taxpayer Advocate Services.

(6) Created new section 4.19.6.1.8.1 for Operations Assistance Request (OAR), Form 12412.

(7) 4.19.6.3.1.3, Procedures for SSA-DPR: updated SSA contact information in (1).

(8) 4.19.6.4, Minister/Religious Waivers Overview. This is a new section. This section also contains the following new subsections:

  1. 4.19.6.4.1, Controlling Minister Waiver Cases

  2. 4.19.6.4.1.1, Lost and/or Extra Cases

  3. 4.19.6.4.2, Third Party or Authorized Representative (Form 2848 or Form 8821)

  4. 4.19.6.4.3, FEMA Declared Disaster Area

  5. 4.19.6.4.4, Minister Waiver Program Organization Function Program (OFP) Codes

(9) 4.19.6.5: This section addresses evaluating/processing Form 4361. Information in this section and subsections have been: revised for clarity and improved readability, rearranged to follow process workflow, sections merged to improve usability via SERP application, section(s) deleted due to outdated information and expanded to include additional guidelines. The following provides a mapping of prior version section titles to placement/status in this IRM revision:

Prior version section number and title Current revision section number, title and status
4.19.6.4, Introduction to Religious Waivers 4.19.6.5, Form 4361 Applications for Exemption from Self-Employment Tax for Ministers, Members of Religious Orders and Christian Science Practitioners
4.19.6.4.1, Copies of Returns Exempt from Self-Employment Tax Received from Submission Processing 4.19.6.5.11.6, Form 1040/1040X or Other Referrals Indicating Self-Employment Tax Exemption
4.19.6.4.2, Minister Waivers - Form 4361 Deleted. Information merged into 4.19.6.5
4.19.6.4.3, General Guidelines for Form 4361 4.19.6.5.1, General Guidelines for Form 4361
4.19.6.4.4, Criteria for Approving Form 4361 4.19.6.5.2, Criteria for Approving Form 4361
4.19.6.4.5, Response to Request for Taxpayer's Declaration 4.19.6.5.7, Form 4361 Declaration Statement Verifying the Grounds for Exemption and Response to Declaration Request. Section expanded to include Letter 287C issuance/suspense procedures.
4.19.6.4.6, Was the Application Timely? 4.19.6.5.3, Was the Application Timely?
4.19.6.4.7, Is Form 4361 Complete? 4.19.6.5.4, Is Form 4361 Complete? Expanded procedure to address Letter 287C issuance/suspense procedures.
4.19.6.4.8, Does the Organization Qualify? 4.19.6.5.5, Does the Organization Qualify? Merged with 4.19.6.4.9, Qualifying Organizations.
4.19.6.4.9, Qualifying Organizations Information merged into 4.19.6.5.5. This section was deleted.
4.19.6.4.9.1, Processing Forms 4361 Filed by Ministers of Church of Scientology 4.19.6.5.5.1, Processing Forms 4361 Filed by Ministers of Church of Scientology.
4.19.6.4.10, Religious Orders 4.19.6.5.6, Religious Orders.
4.19.6.4.11, Form 2031 — Election Back into Social Security Coverage 4.19.6.5.11.5, Form 2031 - Election Back into Social Security Coverage. Merged with 4.19.6.4.11.1, Form 2031 General Guidelines.
4.19.6.4.11.1, Form 2031 General Guidelines Information merged into 4.19.6.5.11.5. This section was deleted.
4.19.6.4.12, Approving Form 4361 4.19.6.5.8, Approving Form 4361
4.19.6.4.13, Disapproving Form 4361 4.19.6.5.9, Disapproving Form 4361
4.19.6.4.14, Previously Disapproved Form 4361 4.19.6.5.11.1, Previously Disapproved Form 4361
4.19.6.4.15, Revocation of Exemption - Economic Considerations (Form 4361) 4.19.6.5.11.3, Revocation of Form 4361 Exemption due to Economic Considerations. Merged with 4.19.6.4.15.1 Procedures to Revoke Exemption – Economic Considerations (Form 4361)
4.19.6.4.15.1, Procedures to Revoke Exemption - Economic Considerations (Form 4361) Information merged into 4.19.6.5.11.3. This section was deleted.
4.19.6.4.16, When Taxpayer Claims Form 4361 Previously Approved — Internal Revenue Service Has No Record 4.19.6.5.11.2, Taxpayer Claims Form 4361 Previously Approved and Internal Revenue Service Has No Record
4.19.6.4.17, Appeals and Refunds Related to Form 4361 4.19.6.5.11.4, Appeals and Refunds Related to Form 4361
4.19.6.4.18, MINISTER-SE-TX-EXEMP-CD Form 4361 4.19.6.5.10 MINISTER-SE-TX-EXEMP-CD Form 4361

(10) 4.19.6.5.6, Religious Orders. Corrected Rev. Proc. reference in (2).

(11) 4.19.6.5.11, Form 4361 Case Types – Miscellaneous or Responses Needing Further Action. New section to house subsections not directly related to evaluating/processing original Form 4361 applications.

(12) 4.19.6.5.11.7, Loose Forms 4361. New section.

(13) 4.19.6.6: This section addresses evaluating/processing Form 4029. Information in this section and subsections have been: revised for clarity and improved readability, rearranged to follow process workflow, sections merged to improve usability via SERP application, section(s) deleted due to outdated information and expanded to include additional guidelines. The following provides a mapping of prior version section titles to placement/status in this IRM revision:

Prior version section number and title Current revision section number, title and status
4.19.6.5, Religious Waivers /Form 4029 4.19.6.6, Form 4029 Applications (Exemption from Social Security and Medicare Taxes and Waiver of Benefits)
4.19.6.5.1, Form 4029 - Procedures 4.19.6.6.1, Form 4029 - Procedures
4.19.6.5.2, Forms 4029 with Missing or Incorrect SSNs section deleted due to outdated information.
4.19.6.5.3, Forms 4029 with Missing or Incorrect Information section deleted due to outdated information.
4.19.6.5.4, Loose Forms 4029 4.19.6.6.2, Loose Forms 4029
4.19.6.5.5, Form 4029 - Revocation/Withdrawal 4.19.6.6.3, Form 4029 - Revocation/Withdrawal
4.19.6.5.6, MINISTER-SE-TX-EXEMP-CD-Form 4029 4.19.6.6.4, MINISTER-SE-TX-EXEMP-CD Form 4029

(14) 4.19.6.6.1, Form 4029 - Procedures: Removed reference to sending the disapproval letter via certified mail because the employee doesn’t control if a CRX letter is sent via certified mail or not.

(15) 4.19.6.7, Minister and Religious Waiver Clerical Procedures: This is a new section. This section also contains the following new subsections:

  1. 4.19.6.7.1 Received Dates

  2. 4.19.6.7.2, Controlling Incoming Mail

  3. 4.19.6.6.7.2.1, Batching and Controlling Minister Waivers

  4. 4.19.6.6.7.2.2, Batching and Controlling Minister Waiver Reconsiderations

  5. 4.19.6.7.3, Inventory Management - Clerical Function

  6. 4.19.6.7.4, Routing Documents

  7. 4.19.6.7.5, Discovered Remittance

(16) 4.19.6.8, Manager/Coordinator Responsibilities - General: This is a new section. This section also contains the following new subsections:

  1. 4.19.6.8.1, Employee Performance Reviews

  2. 4.19.6.8.1.1, Workload Management/Efficiency Reviews

  3. 4.19.6.8.1.2, Mandatory Evaluative Reviews

  4. 4.19.6.8.1.3, Non-Evaluative or Coaching Reviews

  5. 4.19.6.8.2, Operational Reviews

  6. 4.19.6.8.3, Other Reviews

  7. 4.19.6.8.3.1, Physical Inventory Review

  8. 4.19.6.8.3.2, Program Reviews

  9. 4.19.6.8.4, Statute of Limitations - Minister Waiver Manager/Statute Coordinator

  10. 4.19.6.8.4.1, Statue Searches

  11. 4.19.6.8.5, Inventory Reports

  12. 4.19.6.8.5.1, CCA 42-42 IDRS Inventory Control Report

  13. 4.19.6.8.5.2, CCA 42-43 IDRS Overage Report

  14. 4.19.6.8.5.3, CCA 42-44 IDRS Multiple Case Control Report

(17) Exhibit 4.19.6-1, Activity Codes for Minister Waiver Processing. This is a new Exhibit.

(18) Exhibit 4.19.6-2, Physical Inventory Certificate: This is a new Exhibit.

(19) Exhibit 4.19.6-3, Wall Inventory Instruction and Certification: This is a new Exhibit.

(20) Exhibit 4.19.6-4, Batch Control Sheet: This is a new Exhibit.

(21) Editorial changes and annual updates have been made throughout this IRM.

Effect on Other Documents

This material supersedes IRM 4.19.6, dated August 14, 2017.

Audience

Employees responsible for processing SSA Correspondence and/or Minister/Religious Waivers at the Small Business/Self Employed site.

Effective Date

(02-15-2019)

Daniel R. Lauer
Acting Director, Exam Field and Campus Policy
Small Business Self Employed

Program Scope and Objectives

  1. Purpose. This IRM is designed to instruct the employees in the Small Business/Self Employed (SB/SE) Operating Division in processing Social Security Administration (SSA) Correspondence and Minister/Religious Waivers. Specifically, IRM 4.19.6:

    1. Describes the steps for processing the various types of correspondence from the Social Security Administration (SSA) that includes the Self-Employment Determination Posting Record (SE-DPR), the Wage Determination Posting Records (Wage DPR), and Unreported Tip Income.

    2. Provides instructions for processing Form 4361, Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners, and Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits.

  2. Audience. These procedures apply to IRS employees who are responsible for processing SSA Correspondence and/or Minister/Religious Waivers including:

    • Management Officials

    • Lead Tax Examiners

    • Tax Examiners

    • Lead Clerks

    • Clerks

  3. Policy Owner. Examination Field and Campus Policy is under the Examination Field and Campus Policy, Small Business/Self-Employed (SB/SE) Division.

  4. Program Owner. BMF Document Matching, under Exam Field and Campus Policy is responsible for the content of this IRM and providing guidance.

Background

  1. SSA Correspondence - The Internal Revenue Service receives various types of miscellaneous correspondence from the Social Security Administration (SSA). When SSA determines that a taxpayer’s self-employment (SE) earnings have been omitted or incorrectly reported on Form 1040, they notify the IRS via the SE Determination Posting Record (SE-DPR). SSA sends the IRS a Wage DPR when wages or tips to an employee (or a third party name holder) have been omitted from their earnings record or reported incorrectly.

  2. Minister Waivers - Qualifying taxpayers may file for an exemption from:

    1. Social security and medicare tax by filing Form 4029, Application for Exemption from Social Security and Medicare Taxes and Waiver of Benefits.

    2. Self-employment tax by filing Form 4361, Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners.

  3. This IRM contains instructions for evaluating and processing these forms.

Authority

  1. For the SSA Correspondence program, the Internal Revenue Service receives various types of miscellaneous correspondence from the Social Security Administration (SSA). These are:

    • Self-Employment Determination Posting Record (SE-DPR) - a determination by SSA that, as a result of an investigation, a taxpayer’s SE earnings have been omitted or incorrectly reported on Form 1040, U.S. Individual Income Tax Return.

    • Wage Determination Posting Record (Wage DPR) - a determination by SSA identifying when wages or tips to an employee (or a third party name holder) have been omitted from their earnings record or were reported erroneously or inaccurately.

  2. For the Minister Waiver program:

    1. Rev. Proc. 91–20, 1991–1 C.B. 524, provides guidance in determining whether an organization constitutes a religious order under the IRC.

    2. IRC 1402(e) provides exemption from the definition of net earnings from self-employment income to ministers, members of religious orders, and Christian Science practitioners.

    3. IRC 1402(g)(1) and IRC 3127 provide exemption for members of certain religious faiths from all benefits and other payments under Titles II and XVIII of the Social Security Act on the basis of wages and self-employment income.

Responsibilities

  1. The Director, Small Business/Self-Employed (SB/SE), Exam Field and Campus Policy is the executive responsible for the SSA Correspondence and Minister Waiver programs.

  2. Management officials are responsible for:

    1. Providing internal controls relating to each program, process or activity.

    2. Ensuring the instructions are communicated to and carried out by the proper officers and employees.

Program Reports

  1. Inventory is monitored through the use of the Control-D reporting system.

Terms

  1. SSA Correspondence - Correspondence received from the Social Security Administration (SSA) in the form of:

    • Form 7000, Self-Employment Determination Posting Record (SE-DPR),

    • Form 7010, Wage Determination Posting Records (Wage DPR), and

    • Unreported Tip Income

  2. Religious Waiver - Religious waivers are requests for exemption from social security and medicare taxes and are filed with the IRS using:

    • Form 4361, Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners

    • Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits

Acronyms

  1. The following acronyms apply to this IRM:

    Acronym Definition
    aka also known as
    BMF Business Master File
    CAF Centralized Authorization File
    CCA Case Control Activity
    CFOL Corporate File On-line
    DLN Document Locator Number
    DPR Determination Posting Record
    DM Document Matching
    EIN Employer Identification Number
    FICA Federal Insurance Contributions Act
    IAT Integrated Automation Technologies
    IDRS Integrated Data Retrieval System
    IMF Individual Master File
    IRC Internal Revenue Code
    MFT Master File Tax Account Code
    PGLD Privacy, Government Liaison and Disclosure
    POA Power of Attorney
    RSED Refund Statute Expiration Date
    SE Self-Employment
    SE-DPR SE Determination Posting Record
    SP Submission Processing
    SSA Social Security Administration
    SSN Social Security Number
    TC Transaction Code
    TDI Taxpayer Delinquency Investigation
    TEGE Tax Exempt & Government Entities
    TIA Tax Information Authorization
    TIN Taxpayer Identification Number
    TY Tax Year

Related Resources

  1. The following additional resource material is listed when it is determined that in-depth research is required to resolve unusual technical issues not covered in this IRM. When reference to one of the related IRMs is required, the complete IRM reference will be stated in this IRM.

    Note:

    Technical issues that occur frequently should be brought to the attention of the IRM 4.19.6, SSA Correspondence and Minister and Religious Waiver Programs, author for consideration for inclusion in this IRM.

    IRM Title Summary
    IRM 11.3.1 Introduction to Disclosure Provides an overview of the disclosure program and addresses the instructions, guidelines, and procedures necessary for the introduction to Disclosure.
    IRM 2.3 IDRS Terminal Responses Provides instructions for the use of the Integrated Data Retrieval System (IDRS) terminal displays.
    IRM 2.4 IDRS Terminal Input Provides instructions for the input and use of IDRS command codes.
    IRM 3.13.5 Individual Master File (IMF) Account Numbers Provides information relating to establishing Social Security Numbers (SSNs) for the Entity function.
    IRM 21.6 Individual Tax Returns Provides instructions for making adjustments specific to individual taxpayer (IMF) accounts.
    Pub 517 Social Security and Other Information for Members of the Clergy and Religious Workers Provides information about the collection of social security and Medicare taxes from members of the clergy and religious workers, including how members of the clergy can apply for exemption from self-employment tax.

Taxpayer Advocate Service (TAS)

  1. Even though the IRS strives to improve its systems and provide better service, some taxpayers still have difficulty in getting solutions to their problems or appropriate responses to their inquiries. The purpose of the Taxpayer Advocate Service (TAS) is to give taxpayers someone to speak for them within the Service - an Advocate. TAS is an independent organization within the IRS whose employees assist taxpayers who are experiencing economic harm, who are seeking help in resolving tax problems that have not been resolved through normal channels, or who believe that an IRS system or procedure is not working as it should.

  2. TAS and SB/SE have a Service Level Agreement (SLA) between them outlining the procedures and responsibilities for the processing of TAS cases whenever the statutory or delegated authority to complete case transactions rests outside of TAS. The SB/SE SLA covers the SSA Correspondence and Minister Waiver programs. An Addendum to the SLA lists contacts from various Operations in the Philadelphia Service Center. Visit the Service Level Agreement (SLA) at http://tas.web.irs.gov/policy/sla/default.aspx.

  3. Refer taxpayers to the Taxpayer Advocate Service (TAS), when the contact meets TAS criteria (see IRM 13.1.7, Taxpayer Advocate Service Case Criteria), and you cannot resolve the taxpayer's issue the same day. The definition of same day is within 24 hours. Same day cases include cases you can completely resolve within 24 hours, as well as cases in which you have taken steps within 24 hours to begin resolving the taxpayer's issues. Do not refer these cases to TAS unless they meet TAS criteria and the taxpayer asks to be transferred to TAS. Refer to IRM 13.1.7.4, Same Day Resolution by Operations.

  4. All potential TAS referrals must be approved by the TAS Liaison.

  5. The TAS Liaison will complete Sections I, II and III of Form 911, Request for Taxpayer Advocate Service Assistance (And Application for Taxpayer Assistance Order) and forward to TAS. The taxpayer's problem and the taxpayer's relief sought must be clear and specific in Items 12a and 12b of Section I. The liaison is also required to document the reason why the relief action was not taken.

    Note:

    It is important all IRS employees handle cases with the taxpayer's best interest in mind.

Operations Assistance Request (OAR), Form 12412
  1. A Form 12412, Operations Assistance Request, is sent by TAS for cases when there is an issue they do not have the authority to resolve. An OAR can be received by fax, mail or email and will have a Form 3210, Document Transmittal, attached.

  2. The Form 12412 will contain the name, telephone, and fax number of the TAS employee making the request. An OAR package will also include an explanation of what is being requested and any documentation obtained by the TAS employee.

  3. Acknowledge the Form 12412 within 1 day for expedited cases (or 3 days for all other cases). The acknowledgement on the Form 3210 sent with the OAR will include the name and phone number of the assigned person (or team/manager).

  4. The following are addressed when working an OAR:

    1. An expedited Form 12412 has three days to be completed.

    2. For Form 12412 that does not require expedited processing, the SB/SE employee assigned the OAR will negotiate with the TAS employee a reasonable time frame for OAR resolution.

    3. Sections V and VI of Form 12412 must be completely filled out by the liaison, including any actions taken and the reasons behind those actions.

    4. A file copy of the OAR is kept for at least 6 months.

    5. The completed OAR package is returned to the TAS employee.

Policy Statement P-21-3 (formerly P-6-12) Guidelines (Action 61)

  1. Policy Statement P-21-3 (formerly P-6-12) Guidelines (Action 61) are the result of a task force initiated to provide timely, quality responses to taxpayer correspondence. The general guidelines are:

    • A quality response is an accurate and professional communication which, based on information provided, resolves the taxpayer issues.

    • Requests additional information from the taxpayer, or

    • Notifies the taxpayer we have requested information from outside the IRS.

  2. A quality response is timely when initiated within 30 calendar days of the IRS Received Date.

    Note:

    Use the CCA 4243 report to determine cases that require an interim letter.

  3. When a quality response cannot be issued timely, an interim response must be initiated by the 30th calendar day from the IRS Received Date.

    1. An interim letter Letter 5825C is generated when the Clerical Function controls an incoming receipt with an IRS received date that exceeds 23 days.

    2. Subsequent interim letters must be issued when a final resolution cannot be provided as indicated in the previous interim letter.

  4. All interim letters should inform the taxpayer when a final response can be expected and provide a contact name and number for additional inquiries.

SSA Correspondence

  1. Internal Revenue Service receives various types of miscellaneous correspondence from the Social Security Administration (SSA). This subsection provides procedures for processing:

    • Self-Employment Determination Posting Record (SE-DPR),

    • Wage Determination Posting Records (Wage DPR), and

    • Unreported Tip Income

  2. Appropriate Integrated Automation Technology (IAT)/Quick Command Code (CC) Tools must be used when working cases where applicable.

SE Determination Posting Record (AKA 7000)

  1. When SSA determines, as a result of an investigation, taxpayer's self-employment (SE) earnings have been omitted or incorrectly reported on Form 1040, they notify the Internal Revenue Service via the SE Determination Posting Record (SE-DPR).

  2. An SSA internal earnings record adjustment does not constitute a claim per Rev. Rul. 56-297.

  3. Adjustments based on SSA determination cannot be made after statute expiration date unless accompanied by a taxpayer claim filed prior to statute expiration date.

  4. See IRM 21.5.3.4, General Claims Procedures.

SSA Address for Corrections
  1. Notify SSA of changes in SE earnings that do not agree with those on the SE-DPR.

    Note:

    All information sent to SSA disclosing taxpayer information, beyond what SSA originally provided, must be signed by one of the following: Division Commissioner, TEGE; or the Director, Privacy, Government Liaison and Disclosure (PGLD); or the Director, Exam Policy. These officials may re-delegate disclosure authority to any supervisor under their authority, however, there must be an actual delegation order in existence at the time the supervisor exercises the disclosure authority.

  2. If there are other apparent errors on the SE-DPR, notify the SSA field office where the determination originated.

Description of SSA SE Determination Posting Record (SE-DPR)
  1. Entity portion of SSA record contains the following:

    • Number holder's name

    • SSN

    • Address and phone number

    • Nature of business

    • Business address

  2. The fields of the SE-DPR are as follows:

    1. NET CHANGE SE EARNINGS reports the net change to SE Earnings.

    2. NET CHANGE SE MEDICARE reports the net Medicare change.

    3. TOT SE FICA/YR reports the FICA.

    4. TOT SE MEDI/YR reports Medicare.

    5. NON FARM OPTION reports "N" (for no) or "Y" (for yes).

    6. BASIS FOR CHANGE includes a description of the reason for the change.

    7. STAT LIM EXCEPTION refers to SSA statue and states "apparent error" or other SSA statue exception.

      Note:

      This is not the IRS Statute of Limitation field.

    8. DATE 1040 FILED

    9. TAXPAYER NAME

    10. SSN OF REL ADJ

    11. JOINT RETURN reports N (for no) or Y (for yes).

    12. SPOUSE NAME

    13. SPOUSE SSN

    14. TAX LIABILITY reports N (for no) or Y (for yes).Y

    15. ACTION describes the type of action

    16. RATIONALE may display a more detailed explanation of the change.

      Note:

      Based on the "Rationale" given by SSA, you may want to consider all years listed in possible fraud cases. Refer to the Campus Examination Fraud Coordinator.

    17. SSA OFFICE ADDR reports the SSA field office address.

  3. When reviewing SSA SE-DPR fields:

    If Then
    "NET CHANGE SE EARNINGS" field displays a positive number and ACTION field displays "Add" , "Change" or "Move" Subtract it from "TOT SE FICA/YR" figure to determine previously posted earnings

    Example:

    NET CHANGE SE EARNINGS is $924, TOTAL SE FICA/YR is $10,767. Then the previously posted SE earnings were $9,843 ($10,767 - $924 = $ 9,843). This results in an increase to SE tax.

    "NET CHANGE SE EARNINGS" field displays a negative number (e.g., $1,800.00–) and the “ACTION” field displays "Delete" , "Change " , "Partial Move" or "Disclaimed " Add the absolute figure to the TOT SE FICA/YR figure to determine previously posted earnings

    Example:

    NET -CHANGE SE EARNINGS is $1,800.00–, TOTAL ,SE FICA/YR is $10,800. Then the previously posted SE earnings were $12,600 ($10,800 + $1,800 = $12,600).This results in an decrease to SE tax.

    "NEW SE EARNINGS" and "NET CHANGE" fields display same figure and “ACTION” listed is "Add" Adjustment to increase SE tax is needed. SSA is establishing earnings for this taxpayer (e.g., Net Change $5,000.00. New SE Earnings $5,000.00 ). Previously posted earnings were zero. This results in a tax increase to SE tax.
    "NON-FARM OPTION" field shows a "Y" (yes) SE net earnings were computed using an optional "Non-Farm" method on Form 1040, Schedule SE.

    Note:

    This option may only be used five times by taxpayer. An "N" (no) indicates regular self employment or "FARM OPTION."

    "NEW SE MEDICARE/NET CHANGE" field
    1. Process following "Net Change" (positive/negative) procedures in this table to determine previously posted amounts.

    2. Beginning with tax year 1994, all covered earnings are subject to Medicare taxes.

    Note:

    Document 6209, IRS Processing Codes and Information.

    "CHANGE FROM WAGES" field Entries are usually "no." Can be "yes" if SSA deleted wages from employer due to SE income determination (e.g., independent contractor issue).
    "BASIS FOR CHANGE" field Contains a statement regarding reason for change.
    "Statute of Limitations" field Refers to SSA statute and states "apparent error" or other SSA statute exception.

    Note:

    This is not the IRS Statute of Limitation field.

    "SSN OF RELATED ADJUSTMENT" field SSN of person who is also affected by adjustment.
    "TAX LIABILITY CHANGE" field Usually annotated "yes." If yes, this indicates that the tax year is within the Statute period and can be worked by IRS. If no, check IDRS to determine that Statute date work accordingly.

    Note:

    See "Rationale" field instructions.

    "RATIONALE" field May contain a more detailed explanation of change.

    Note:

    Based on the "Rationale" given by SSA, you may want to consider all years listed in possible fraud cases. Refer to the Campus Examination Fraud Coordinator.

Procedures for SSA SE-DPR
  1. Research primary or secondary TIN on SSA SE-DPR, using appropriate Corporate File Online (CFOL) command codes. Compare new SE Income amount against IDRS SE Income figure. Take the appropriate action indicated below:

    Note:

    Keep in mind that SE income and SE tax may not have been properly adjusted with prior TC 290 or 291 adjustments.

    If And Then
    SE tax amount(s) on SSA SE-DPR matches posted Master File SE tax no tax liability change is required Process as classified waste.
    If the tax year is within 90 days of statute expiration date N/A Research for extensions, amended returns, late payments, etc. Follow Statute Guidelines found in IRM 4.19.6.3.1.3, Statutes Procedures for SSA SE-DPR.
    There is an increase in tax (positive figure in "net change" field) N/A Process in accordance with IRM 21.5, Account Resolution and IRM 21.6, Individual Tax Returns.
    Tax decreases (a negative figure in "net change" field) the statute of limitations is open Research for a related claim. Request all returns and TC 29X adjustments on account to locate taxpayer's claim.

    Note:

    If claim is located, adjust SE income and tax using information on claim and SSA SE-DPR.

    If claim not located:
    1. send taxpayer Letter 2528C (with Form 843 enclosed),

    2. advise taxpayer he/she may be entitled to a refund based on information received from SSA and invite a claim. See IRM 21.5.3.4, General Claims Procedures.

    3. Input TC 290–0 with Reason Code 044 in appropriate blocking series to file with original return.

    4. When taxpayer's claim is received, request original return and SSA listing.

    5. Adjust SE income and tax using information on claim and SSA SE-DPR.

    Note:

    If taxpayer is due a refund resulting from a claim, make the necessary adjustments to return amounts affected by changes to SE income or SE tax, including: deductible part of SE tax, Taxable Social Security benefits, Child Care Credit, EITC, Computation of estimated tax penalty/alternative minimum tax, Medical deduction, Additional Medicare Tax, etc.

    Reminder:

    In certain circumstances, a letter can be an informal claim for refund. You should review accounts for indications that correspondence may have been received that could qualify as a timely filed claim for refund.

    There is no record of a return filed N/A
    1. Research for a TDI assignment code. If there is an open TDI, annotate SSA SE-DPR with assignment code, tax period and cycle of TDI issuance, and forward to Campus Collection Operations.

    2. If there is no open TDI, initiate phone contact or correspond (Letter 4268C) with taxpayer. Request information to assist in locating return or obtain return(s) if none is filed. See IRM 21.1.3.2, General Disclosure Guidelines.

    1. Suspend 45 days for a response.

    2. If taxpayer does not respond (no return secured) and no record of an open TDI exists, notate on the SE-DPR "No Reply TDI" for each tax period reflected on SE-DPR. Forward to the TDI unit. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    3. If original return is received, forward for processing, with a copy of the SSA SE-DPR attached.

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    Statute of Limitations has expired for period shown on SE-DPR no Form 843/Form 1040X was filed timely
    1. Process as classified waste if none are found.

    2. Destroy SE-DPR if the return was destroyed.

    Reminder:

    In certain circumstances, a letter can be an informal claim for refund. You should review accounts for indications that correspondence may have been received that could qualify as a timely filed claim for refund.

    You receive a claim but no SSA SE-DPR N/A
    1. Input TC 290–0 in appropriate blocking series to file claim pending receipt of SE-DPR.

    2. Acknowledge claim. Advise taxpayer no adjustment can be made until SSA SE-DPR is received. Taxpayer may contact SSA at:


    SSA
    Division of Business Services
    2-B-02 NT Wabash Building
    6100 Wabash Ave
    Baltimore, MD 21215
    Attn.: SPOSS/SE Determination Listings
    A conflict exists that may affect taxpayer's earnings record (e.g., MF records show taxpayer is no longer liable) or SSA SE-DPR is incorrect N/A Note on SE-DPR and forward to appropriate SSA field office. If field office address is unavailable, use headquarters SSA office. Reference SSA contact name in "Rationale Field" of listing, if available.
    SE tax amount(s) on SSA SE DPR matches original return or no additional tax due if moved from primary to secondary tax payer N/A Process as classified waste.
    Identity theft has been established with presence of TC 971 with AC 501, 504, 505, 506 or 522 N/A Process as classified waste.
Statute Procedures for SSA SE-DPR
  1. If statute has expired for period shown on SE-DPR, and research shows no claim was timely filed, process as classified waste.

  2. If statute expires within 90 days, follow Statute guidelines and hand carry SE-DPR to the Statute Unit.

Wage Determination Posting Records (AKA 7010)

  1. SSA sends Internal Revenue Service a Wage DPR when wages or tips to an employee (or a third party name holder) whose wages or tips have been:

    • omitted from their earnings record, or

    • reported erroneously/inaccurately,

      Note:

      These are BMF "E" transcripts only.

  2. A subsequent increase or decrease in FICA wages, resulting from information on this list, could result in an increase or decrease in FICA tax.

  3. An adjustment could lead an employer to request a refund of excess FICA taxes or paying additional FICA taxes.

Description of SSA Wage DPR
  1. Entity portion of listing contains following information:

    • NH Name (Number holder's)

    • SSN

    • ADD (address)

    • PHONE

    • ER NAME (Employer Name)

    • Employer contact name and phone number

    • Tax Period

    • Employment Type

    • EO/NR (Employee Omitted/No Record Indicator) "E" or "N" transcripts.

    • Net changes of the adjustment made

    • Total Earnings under Employer Identification Number (EIN) and Tax Year

  2. The fields of the Wage DPR are as follows:

    1. Net Change Wages field is the field that reports the net wages change.

    2. Net Change Medi field is the field that reports the net Medicare change.

    3. Net Change Tips field is the field that reports the net Tips change.

    4. The Basis for Change field defines what generated the change (for example: Form W-2).

    5. The "Statute of Limitations" field is the SSA statute (not the IRS Statute). It will either read "apparent error" or is blank.

    6. The Tax Liability field will indicate whether there is a tax liability change or not (y or n).

    7. The Rationale field contains a more detailed explanation of the change.

  3. When reviewing SSA Wage DPR fields:

    If Then
    Amount in "Net Change" field is a positive number and type of action listed is "Add" or "Change"
    1. Subtract this figure from "Net Changes Wages" figure to determine previously posted earnings. (

      Example:

      Net Change = $567. New Detail Wages = $967.00, Previously posted earnings would be $400).

    2. This may result in an increase to FICA taxes due.

    Amount in "Net Change" field is a negative number (e.g., $1,800.00–) and type of action listed is "Delete" or "Change " Add absolute figure to "New Detail Wages" figure to determine previously posted earnings.

    Example:

    Net Change = $8,520.00– and New Detail Wages = 0, then the Previously posted earnings would have be $8,520.00.

    Note:

    This may result in a decrease in FICA taxes due.

    "New Detail Medicare/Net Change" field is a positive/negative number They are worked the same as procedures for "Net Change" (positive and negative) shown in this table to find previously posted amounts.
    "New Detail Tips Change" field is a positive/negative number They are worked the same as procedures for "Net Change" (positive and negative) shown in this table to find previously posted amounts.
    "Tax Liability Change" field reads "yes" (generally the case) FICA taxes may change.
    There is a conflict between SSA and Internal Revenue Service information Forward information to the SSA field office on the Wage DPR.
Statute Procedures for SSA Wage Listing
  1. If statute has expired for period shown on Wage DPR, and research shows no claim was timely filed, process as classified waste.

  2. If statute expires within 90 days, follow Statute guidelines and hand carry Wage DPR to the Statute Unit.

Adjustments to Tax Based on SSA Findings
  1. If the employee wages decrease (a negative figure in Net Change field) and type of action listed is "Change" or "Delete" , take the following action:

    1. Advise employer of SSA's findings using Letter 2528C.

    2. Request employer correct its records if it agrees with findings.

    3. Employer should file an adjusted return on Form 941-X to correct the employee/employer FICA tax over reported on the Form 941 it filed.

    4. Suspense for a response and update CCA control to "S" status.

  2. If the employee wages increase (a positive figure in Net Change field) and type of action listed is Add or Change, check for the following information:

    Note:

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

    If Then
    A "Z freeze code" is found notate "Z Freeze " on transcript with TC 914, 916, or 918, attach ENMOD and TXMOD print and forward to Criminal Investigation Branch.
    TDI 1 (open TDI) is found forward to TDI.
    TDI 2 (closed TDI is found Process as classified waste.
    Transaction Codes
    1. TC 530 with CC 07,10

    2. TC 590, 591, 598, 599, or 986: process as classified waste.

    3. TC 520 with CC 81, 82, 84, 86, 88, or 89: process as classified waste. Status Code 71 forward to OIC. If Status Code 72 send to District Office of Document Locator Number (DLN) 520.

    4. CNC: ENMOD "Currently Not Collectable " , process as classified waste.

Processing Responses to SSA Findings
  1. Process responses as follows:

    If Then
    You receive a response (Form 941-X) decreasing Social Security and Medicare taxes Process in accordance with IRM 21.5, Account Resolution and IRM 21.6, Individual Tax Returns and IRM 21.7, Business Tax Returns and Non MF.
    You receive a response that increases tax due Process in accordance with IRM 21.5, Account Resolution and IRM 21.7, Business Returns and Non MF.
    Response indicates employee was reported under an erroneous SSN, a different TIN, or other account changes Verify on IDRS and process as classified waste.
    You receive an original return Note on Wage DPR the return you have received, attach Wage DPR to return, and forward for processing.
No Response Received
  1. If no response is received, process as follows:

    If Then
    It is a potential refund case
    1. Stamp "No Reply" on copy of form letter.

    2. Attach form letter and Wage DPR to original case file and return to Return Files, or send to files as an attachment to refile DLN.

    There is no response and it involves potential additional assessment and affects one or more employee(s) (not including undeliverable mail) Process in accordance with IRM 21.5, Account Resolution and IRM 21.7, Business Returns and Non-Master File.
SSA - Indicated Problem Relating to a Return
  1. If problem relates to a return, examine SSA Wage DPR and original return. Process as follows:

    If And/Or Then
    Wage DPR is annotated "N" for no earnings record at SSA for employee Only additional information we can provide SSA is total payroll information on which FICA taxes were paid Do not correspond with SSA. Process as classified waste.
    Wage DPR is annotated "N" for no earnings record at SSA for employee We can provide additional information Note on Wage DPR and forward to SSA.
    Wage DPR indicates employee omitted income ("E" coded at SSA) There is an additional assessment, or return filed with Internal Revenue Service shows no FICA tax
    1. Inform employer of discrepancy found at SSA.

    2. Advise employer to submit payment if it agrees with proposed assessment or to advise Internal Revenue Service if information reported is incorrect.

    3. Process as classified waste.

    There is no record employer filed a return with Internal Revenue Service N/A
    1. Prepare Letter 3802C to advise employer SSA has informed Internal Revenue Service of wages paid to an employee, but we have no record of a return.

    2. Instruct employer to file a return if it was not filed. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

Undeliverable Procedures on SSA Findings
  1. Process as follows, undeliverable items for which you cannot locate a current address and have no record of a return filed:

    1. Research for TDA/TDI Assignment Code(s). If located, and there is an open TDI, annotate Wage DPR with assignment code and route to Campus Collection Operation.

    2. If there is no open TDI, annotate "No Reply TDI" . ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Route to the Campus Collection Branch.

Minister/Religious Waivers Overview

  1. Taxpayers file:

    1. Form 4361, Application for Exemption From Self-Employment Tax for Use by Ministers, to apply for exemption from Self-employment tax.

      Note:

      Once the Form 4361 is approved, the exemption is irrevocable. See IRM 4.19.6.5.11.5, Form 2031 - Election Back into Social Security Coverage, for additional information.

    2. Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits, to apply for exemption from Social Security and Medicare tax.

      Note:

      Form 4029 is filed with the Social Security Administration (SSA), which determines whether the religious sect or division meets requirements for exemption from Social Security and Medicare taxes.

  2. IDRS CC:IMFOLE is used to determine the status of a processed application (or no indication of a previously processed application). The Minister Self-Employment Code (MINISTER SE CD) field displays one of the following values:

    • blank = no previously processed application

    • 1 = Form 4361 Approved

    • 2 = Form 4361 Denied

    • 3 = Form 2031 Processed

    • 4 = Form 4029 Approved

    • 8 = Form 4029 Denied

    Additional MINISTER SE CD field values include:

    • 5 = Combination of 1 and 4

    • 6 = Combination of 2 and 4

    • 9 = Combination of 1 and 8

    • A = Combination of 2 and 8

    • B = Combination of 1, 2 and 8

    • C = Combination of 4 and 8

    • D = Combination of 1, 4, and 8

    • E = Combination of 2, 4, and 8

    • F = Combination of 1, 2, 4 and 8

  3. Use the appropriate IAT/Quick Command Code (CC) Tools when working cases where applicable.

    Caution:

    If the IAT/Quick CC tools do not cover all situations or are not functioning, the appropriate steps must still be taken to manually process cases throughout all work processes.

Controlling Minister Waiver Cases

  1. Minister Waiver cases are assembled into batches.

  2. Activity Codes and/or IDRS History Items provide an audit trail for case processing. See Exhibit 4.19.6-1, Activity Codes for Minister Waiver Processing, for more information.

  3. When inventory is assigned to the tax examiner, verify that there is a case for every TIN listed on the Batch TIN Listing. If a case is missing or there is an extra case NOT on the Batch TIN listing, see IRM 4.19.6.4.1.1, Lost and/or Extra Cases, for more information.

  4. Whenever an action is taken on the case, update the IDRS Activity Field and/or Status Code, as appropriate. See Exhibit 4.19.6-1, Activity Codes for Minister Waiver Processing, for more information.

Lost and/or Extra Cases
  1. When a TIN is assigned to a batch, but the corresponding case is missing, it is considered a "lost" case.

  2. When a lost case is identified, provide the information to the Lead Tax Examiner who will attempt to locate the case:

    IF THEN
    The Lead Tax Examiner locates the case Continue processing.
    The Lead Tax Examiner cannot locate the case (Form 4361 or Form 4029)
    1. Send Letter 3025C advising the taxpayer to resubmit their Form 4361 (or Form 4029) and any supporting documentation.

    2. Update the IDRS control base with the activity code "LSTCSEMMDD" where "MMDD" represents the end of the suspense period.

    3. Suspend the case for 60 days (45 days + 15 days).

    The Lead Tax Examiner cannot locate a case that was batched as a Min Waiver Reconsideration (MLR). Send Letter 3025C advising the taxpayer to resubmit their response and any supporting documentation and close the IDRS control base.
  3. If a case is NOT on the Batch TIN Listing, research IDRS and determine the proper location of the case.

    IF THEN
    The case is not batched
    1. Open an IDRS control to yourself.

    2. Update the activity field to the same batch number as on the Batch TIN Listing.

    3. Inform the Lead Tax Examiner/Manager of the additional receipt.

    The case is batched, but not assigned to a Tax Examiner (e.g., on the inventory wall) Give the case to the Lead Tax Examiner/Manager for association.
    The case is batched and assigned to another Tax Examiner Give the case to the Lead Tax Examiner/Manager for association.

Third Party or Authorized Representative (Form 2848 or Form 8821)

  1. No tax information can be sent to or discussed with an unauthorized third party. All correspondence should be sent directly to the taxpayer. Include a paragraph to notify the taxpayer we have no record that the third party is authorized to act for them, and we have replied directly to the taxpayer.

  2. Accountants, attorneys, enrolled agents, or other representatives from whom a taxpayer has requested assistance on tax issues submit inquiries to the IRS. The third party representative expects a reply to the inquiry so the issue can be explained to the taxpayer.

  3. To authorize the third-party reply, the representative may submit a:

    • Form 2848, Power of Attorney and Declaration of Representative, or

    • Form 8821, Tax Information Authorization

    Note:

    The power of attorney request is referred to as "POA" and the tax information authorization request is referred to as "TIA" .

  4. POA/TIA documentation received with Form 4361 (or Form 4029) are considered "specific use" (that is, not related to a specific tax period) and are not recorded on the Centralized Authorization File (CAF) system. To ensure that valid POA/TIAs are recognized, they should be kept with the case file.

  5. Each Form 2848 or Form 8821 must be validated before being accepted. The form must be signed by the taxpayer. Immediately reject any unsigned Form 2848 or Form 8821 and return to the taxpayer.

  6. In addition to the required signature, a valid Form 2848 or Form 8821 also contains:

    1. Taxpayer’s name, address and TIN.

    2. Representative’s (or appointee’s) name, address, CAF number and other contact information.

      Note:

      In order for the representative/appointee to receive copies of IRS notices, they must check the box indicating they can be sent copies of notices and communications.

    3. A description of the matter the representative is allowed to act on (or the appointee is allowed to inspect and/or receive).

    4. For Form 2848 only: The Representative’s signature(s) in the declaration section along with their designation code(s).

  7. If a Form 2848 or Form 8821 is determined to be invalid, return it to the taxpayer with an explanation.

  8. When issuing correspondence to a taxpayer with a valid POA/TIA (that is authorized to receive correspondence), generate a copy of the correspondence to the POA/TIA.

  9. If the taxpayer submits a complete Form 2848 or Form 8821, that lists other tax matters, check to see if the authorization is on file. If the authorization is not on file, fax the form for processing based on the state mapping table in IRM 21.3.7-1, State Mapping Where to File, and keep the original with the case file.

FEMA Declared Disaster Area

  1. Taxpayers residing in a ZIP Code located in a designated Federal Emergency Management Agency (FEMA) Declared Disaster area will have a disaster related Freeze Code posted to their account. There are two types of disaster freeze codes, the "–O" freeze and the "–S" freeze.

    1. The –O Freeze Code is used for significant major disasters (examples include: Hurricane Katrina in 2005, Super Storm Sandy in 2012 and Hurricane Florence in 2018). As a general rule, no compliance action is taken until after the relief time frame has expired.

    2. The –S Freeze is used for other federally declared disaster areas. Impacted taxpayers are granted additional time to perform time sensitive actions.

    Note:

    IDRS CC:TXMODA displays a disaster related Freeze Code (-S or -O) on impacted accounts for the duration of the disaster relief time frame.

  2. The Technical Coordinator will monitor ZIP Codes for specific declared disaster area situations as necessary based on IRS Disaster Relief Memos.

  3. The Technical Coordinator will provide the tax examiners instruction for the states with declared disasters.

  4. Additional information (including special case handling requirements) is provided at www.tris.irs.gov/fema/.

  5. Take the following action based on the application type, the disaster type and the timing of the submission:

    If... And... Then...
    The taxpayer submits the Form 4029 application to SSA before the disaster start date. Freeze Code "-O" is present on the account
    1. Complete processing of the Form 4029, including updating the MIN-SE-TX-EXEMPT-CD. See IRM 4.19.6.6.4, MINISTER-SE-TX-EXEMP-CD Form 4029 for additional information.

    2. DO NOT return the approved/disapproved Form 4029 to the taxpayer until after the FEMA disaster date has passed.

    3. Suspend the case with Control Status "S" and update IDRS activity with "FEMA-OMMDD" (where MMDD represents the disaster end date). See Exhibit 4.19.6-1, Activity Codes for Minister Waiver Processing, for additional information.

    4. Maintain the case in suspense until the disaster end date expires.

    5. Once the disaster end date passes, continue processing (that is, issue the appropriate closing letter and include the processed Form 4029).

    If the taxpayer submits the Form 4361 application to IRS before the disaster start date Freeze Code "-O" is present on the account
    1. Suspend the case with Control Status "S" and update IDRS activity with "FEMA-OMMDD" (where MMDD represents the disaster end date). See Exhibit 4.19.6-1, Activity Codes for Minister Waiver Processing, for additional information.

    2. Maintain the case in suspense until the disaster date expires.

    3. Once the disaster end date passes, continue processing (that is, request the signed declaration and/or other needed information from the taxpayer).

    The taxpayer submits the Form 4361 IRS application before the disaster start date A Freeze Code "-S" is present on the account
    1. Suspend the case with Control Status "S" and update IDRS activity with "FEMA-SMMDD" (where MMDD represents the disaster end date). See Exhibit 4.19.6-1, Activity Codes for Minister Waiver Processing, for additional information.

    2. Maintain the case in suspense until the disaster end date expires.

    3. Once the disaster end date passes, continue processing (that is, request the signed declaration and/or other needed information from the taxpayer).

    The taxpayer submits the Form 4029 to SSA or Form 4361 to IRS after the disaster start date A Freeze Code "-S" or "-O" is present on the account Follow normal procedures.
  6. Consider any requests for additional time to provide information, based on the taxpayer self-identifying as having been impacted by the disaster (that is, a disaster Freeze Code is not present on the account), on a case-by-case-basis.

Minister Waiver Program Organization Function Program (OFP) Codes

  1. OFP codes are used in preparation of the business operating divisions work plans/work schedules. This data shows historic staff-hour and volume usage. Because of the many uses for this data it is imperative that reporting be as accurate, consistent and error free as possible.

  2. Organization, Function, and Program (OFP) codes are recorded on Form 3081, Employee Time Report, to identify Minister Waiver programs IRS employees perform daily.

    1. An organization code is a five-character code used to describe where the work is being performed, (for example: 84000 CAWR/FUTA).

    2. A function code is a three-digit code used to describe what is being done, (for example: 700 Telephone Activity, 710 Tax Account Activity or 790 Tax Account Support - Clerical).

    3. A program code is a five-digit code that used to describe the program being worked.

    OFP-Program Code and Description
    • 39410 - Forms 4361

    • 39411 - Forms 4029

    • 39412 - Reconsiderations (aka Minister Waiver Late Replies)

Form 4361 Applications for Exemption from Self-Employment Tax for Ministers, Members of Religious Orders and Christian Science Practitioners

  1. Form 4361, Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners, is submitted by:

    • duly ordained, commissioned, or licensed minister of a church or a member of a religious order (other than a member of a religious order who has taken a vow of poverty as a member of such order) or

    • a Christian Science practitioner

  2. To be approved the applicant must for reasons of either conscientious or religious principles, oppose the acceptance (with respect to services performed in his or her capacity as a minister, member of a religious order not under a vow of poverty, or Christian Science practitioner) of any public insurance which makes payments in the event of death, disability, old age, or retirement, or makes payments toward the cost of, or provides services for, medical care (including the benefits of any insurance system established by the Social Security Act).

    Note:

    For duly ordained, commissioned, or licensed ministers or members of religious orders who have not taken a vow of poverty, the applicant must also make a statement that they have informed the ordaining, commissioning, or licensing body of the church or order that they are opposed to such insurance.

General Guidelines for Form 4361

  1. Except as otherwise instructed, take the following actions when processing Form 4361:

    If Then
    Applicant resubmits previously disapproved Form 4361 application See IRM 4.19.6.5.11.1, Previously Disapproved Form 4361.
    You receive correspondence related to Form 4361 Stamp the first page of the document with the received date.
    Form 4361 is attached to a tax return Detach the tax return from the Form 4361 and send it to the appropriate area for processing.
    The taxpayer indicates he/she is a member of a religious order under vow of poverty
    1. Neither approve nor disapprove application.

    2. Return Form 4361 to taxpayer with Letter 286C. Inform the applicant that they are automatically exempt from paying self-employment tax.

  2. Form 4361 are filed in triplicate. Maintain completed original copy of Form 4361 in a permanent file.

  3. You may send photocopies to Internal Revenue Service offices on request.

  4. If you have any questions about releasing the Form 4361 information, contact the Disclosure Office at https://portal.ds.irsnet.gov/sites/vl003/lists/dbasicscontacts/contactdisclosure.aspx for additional information.

  5. You may accept a timely filed letter in lieu of a timely filed Form 4361:

    • if it contains all required information, and

    • contain complete certification language as it appears on Form 4361.

  6. Complete all Campus research and processing BEFORE corresponding for the taxpayer’s signed declaration. This allows you to identify other items that are needed in order to process the Form 4361. This research includes checking both the online CAF (IDRS Command Code CFINK) and the RAF (IDRS Command Code RFINK) as well as the paper file for either the Form 8821 or the Form 2848 to ensure that copies of all letters go to the taxpayer’s representative.

  7. Input all necessary information in query database from the Form 4361 paper documents.

Criteria for Approving Form 4361

  1. Five criteria must be satisfied before the application can be approved:

    1. The application must be filed timely. See IRM 4.19.6.5.3, Was the Application Timely?, for additional information.

    2. The application must be complete (Bylaws, Certificate or license, and list of sacerdotal duties). See IRM 4.19.6.5.4, Is the Form 4361 Complete?, for additional information.

    3. The ordaining organization must qualify for exemption (Church or Denomination Exemption Letter or written letter from the Church stating they are exempt under the specific Internal Revenue Code section applicable.). See IRM 4.19.6.5.5, Does the Organization Qualify? and IRM 4.19.6.5.6, Religious Orders, for additional information.

    4. The minister has not filed a Form 2031.

    5. The minister must sign and return Letter 287C declaration verifying he/she is aware of grounds for exemption. See IRM 4.19.6.5.7, Form 4361 Declaration Statement Verifying the Grounds for Exemption and Response to Declaration Request, for additional information.

Was the Application Timely?

  1. Form 4361 must be filed by the due date (including any extensions) of the income tax return for the second taxable year in which applicant has self-employment income of $400 or more, any part of which was from the performance of services in the exercise of his ministry.

    Example:

    M was ordained a minister in November 2015. M had net earnings from self-employment of $1,000 in 2016 and $1,500 in 2017 some part of which was from service performed in the exercise of his ministry in each year. Form 4361 was due when the 2017 Form 1040 individual income tax return was due.

    Note:

    Generally individual income tax returns must be filed April 15. However, taxpayers who live outside the U.S. and Puerto Rico on the due date and whose main place of business is outside the U.S. and Puerto Rico receive an automatic extension of two months (until June 15 for calendar year filers).

    Note:

    Housing allowances are considered self-employment income, per IRC Section 1402(a)(8).

    Note:

    If Form 4361 is received by FAX, a date stamp is required.

  2. Taxpayer enters years he/she has earnings from self-employment of $400 or more on Line 5 of Form 4361. It is possible only one entry will be made, or entry may not be for a recent year. For example, if a minister is ordained in 2014 and has net earnings from self-employment of $1,000 in 2014, but has not worked as a minister since then, application could still be timely.

  3. A minister may apply for exemption from self-employment tax upon changing churches and beliefs. A minister who is ordained by a second church and who previously was not conscientiously opposed to the acceptance of public insurance can qualify for the self-employment tax exemption, by claiming exemption within the prescribed period after the second ordination.

    Example:

    S, an ordained deacon by Denomination X, had net self-employment income, including ministerial income, $400 or more in both 2012 and 2013. The taxpayer's activities as a deacon made him potentially eligible to apply for an exemption. Due to his beliefs and that of his church, S was not eligible and did not apply for an exemption. He left the ministry, obtaining employment outside of his ministry. In 2015, he was ordained by another denomination, denomination Y. S developed a belief in opposition to the acceptance of public insurance. S may qualify for the self-employment tax exemption, by claiming exemption within the prescribed period after the second ordination.

  4. Consider the Form 4361 timely filed when:

    1. There are two years indicated on Form 4361, line 5 and the later year is current, OR

    2. There is only one year indicated on Form 4361, line 5 and the year is current.

  5. DO NOT consider the Form 4361 timely filed when there are two years indicated on Form 4361, line 5 AND the later year is not current. See IRM 4.19.6.5.9, Disapproving Form 4361, for more information.

  6. When Form 4361, line 5 contains only one year and the year indicated is not current, research IDRS CC:IRPTRL for the type of earned or self-employed income the taxpayer received (for example: Wages on Form W-2 or Non-Employee Compensation on Form 1099-MISC) and IDRS CC:RTVUE for indication that the applicant filed either Form 1040, Schedule C with self-employment income of $400 or more or Form 1040, Schedule SE claiming self-employment tax was reported since the year(s) indicated on Form 4361, line 5.

    Example:

    The Form 4361 was submitted on 05/01/2018. The taxpayer enters "2014" Form 4361, line 5. Research IDRS CC:RTVUE for Tax Years: 2015, 2016 and 2017 for an indication that the taxpayer filed a Schedule C or Schedule SE for any of those years.

    Caution:

    Be aware that taxpayers may include Non-Employee Compensation on the line for reporting wages or other income instead of on Schedule C.

    If Then
    The taxpayer has not filed a Schedule C or Schedule SE and there is no other indication of earned income from church related activity (Form W-2 or Form 1099-MISC) in any of the subsequent years

    Note:

    Be mindful that the taxpayer may have filed as a secondary filer on a joint return and research the proper TIN to determine if a tax return was filed.

    Consider the application timely.
    There is an indication that the taxpayer reported income from church related activities on Schedule C ($400 or more) or Schedule SE in any of the subsequent years.

    Note:

    If Schedule C or Schedule SE is present on a jointly filed tax return , be sure that the Schedule C/Schedule SE is for the applicant.

    1. Issue Letter 287C, and inform the taxpayer that we’ve identified that they reported self-employment income in [list the tax year(s)] and that we need further clarification on the nature of the self-employment income. Update control status to "S" , Activity Code to "287CMMDD" (where MMDD is the end of the suspense period) and suspend the case for the appropriate amount of time.

      Reminder:

      Include the declaration certification information. See IRM 4.19.6.5.7, Form 4361 Declaration Statement Verifying the Grounds for Exemption and Response to Declaration Request, for additional information.

      Note:

      IDRS CC:IRPTRL provides the information return data issued to the taxpayer (Form W-2, Form 1099-INT, Form 1099-MISC, and so forth). It provides gross income amounts. If the Form 1099-MISC related gross income amounts match the gross receipts line on Schedule C and the payer name clearly indicates ministerial income, disapprove the application. IRM 4.19.6.5.9, Disapproving Form 4361, for additional information.

    2. If the response indicates that the income was not related to church activity then consider the application timely.

    3. If there is an indication that the income was related to church activity OR there is no response at the end of the Letter 287C suspense period, disapprove the application. See IRM 4.19.6.5.9, Disapproving Form 4361, for additional information.

  7. If Form 4361 is not received timely, disapprove the application. See IRM 4.19.6.5.9, Disapproving Form 4361, for additional information.

    Note:

    If the Application was disapproved due to untimely filing, inform the taxpayer that there are no Appeal Rights. See IRM 4.19.6.5.11.4, Appeals and Refunds Related to Form 4361, for more information.

Is Form 4361 Complete?

  1. Consider Form 4361 complete under the following circumstances:

    1. Line 1 must be complete. Research for SSN. If not found, correspond with taxpayer.

    2. Line 2 can only have one box checked. If taxpayer is applying as a commissioned or licensed minister of a denomination that also ordains ministers, check line 6 for an entry and for an attachment containing the bylaws or articles or constitution.

    3. Line 3 must be completed (month, day, year). If date on Line 3 is after earliest date on Line 5, consider Line 3 incomplete. A copy of an ordination/license certificate or a letter from the organization must be attached.

      Exception:

      Line 3 is within last two years or later date on Line 5 is within one year. Then accept it as filed.

      Note:

      If taxpayer states in an authorized letter that his/her ministerial position is a Reader, accept as a substitute for certificate, if confirmation date matches Line 3 on Form 4361. Consider as an ordained minister, priest, rabbi, and so on and request for Declaration statement.

    4. Line 4 should be completed. However, if just EIN is missing, research using IDRS CC:NAMEE. If it cannot be found, or more than EIN is missing, correspond with the taxpayer.

    5. Line 5 must be completed. If not, correspond with the taxpayer using Letter 287C.

      Exception:

      Taxpayers may file Form 4361 before the due date of the income tax return for the second year in which they have self-employment earnings of $400 or more, part of which are from ministerial duties. For example: Taxpayer E has self-employment earnings of $500 from ministerial duties in 2016 (Tax Year 2016). In January of 2017 (Tax Year 2017) the taxpayer has self-employment earnings of $450 from ministerial duties. The taxpayer may file Form 4361 at this time.

    6. Line 6 should have an entry if "Commissioned or Licensed Minister" is checked on line 2. However, Line 6 may be N/A or blank if the denomination does not ordain ministers. If the taxpayer was not ordained, consider all available facts including whether they are licensed or commissioned. Taxpayer must perform ministerial duties to qualify for tax treatment as a minister. Ministerial duties include: the performance of sacerdotal functions, such as Marriages, Baptisms, Funerals and Holy Communion, as well as the conduct of religious worship, the performance of services in the control, conduct and maintenance of religious organizations. (Treas. Reg. 1.1402(c)-5(b)(2)). Whether the church or denomination recognizes the taxpayer as a religious leader has also been considered indicative. See Knight v. Commissioner, 92 T.C. 199 (1989); Wingo v Commissioner, 89 T.C. 922 (1987).

    7. Line 7 must be signed and dated. If statement is altered, it may indicate taxpayer is not requesting exemption for religious reasons. If alteration indicates request is for economic reasons (for example: "I have paid into Social Security for 10 years so I want to stop now" ), deny application using procedures in IRM 4.19.6.5.9, Disapproving Form 4361.

      Note:

      Alert Headquarters analyst of any cases with an indication of fraud or criminal activity.

    8. If an item above is incomplete after corresponding with taxpayer, disapprove per IRM 4.19.6.5.9, Disapproving Form 4361.

  2. If Form 4361 is not complete:

    1. Return the form to the taxpayer using Letter 287C

    2. Advise the taxpayer of the missing information that needs to be completed and returned to the IRS.

      Reminder:

      Include the declaration statement paragraph. See IRM 4.19.6.5.7, Form 4361 Declaration Statement Verifying the Grounds for Exemption and Response to Declaration Request, for additional information.

    3. Update the control status to "S" (suspend).

    4. Update the case control with Activity "287CMMDD" (where MMDD represents the last date of the suspense period). See IRM 4.19.6.5.7, Form 4361 Declaration Statement Verifying the Grounds for Exemption and Response to Declaration Request, for additional information.

    5. Suspend the case for 105 days (90 days + 15 days).

      Exception:

      If the taxpayer has already provided the signed declaration statement and you are now issuing a subsequent Letter 287C because of missing information that was not addressed in the initial Letter 287C, then inform the taxpayer to provide the missing information within 45 days and then suspend the case for 60 days.

    If Then
    The taxpayer returns a completed Form 4361 within the suspense period, Mark the form as timely filed.
    The taxpayer does not respond within the suspense period, Disapprove the Form 4361 using the procedures in IRM 4.19.6.5.9, Disapproving Form 4361.

Does the Organization Qualify?

  1. To qualify for exemption, the minister must be ordained, licensed, or commissioned by an organization that:

    • Can qualify as exempt from income tax under IRC 501(a) as a religious organization described in IRC 501(c)(3), and

    • Can establish it is a church, convention, or association of churches described in IRC 170(b)(1)(A)(i)

    Note:

    The religious organization does not need to have filed Form 1023, Application for Recognition of Exemption Under IRC Section 501(c)(3). It only needs to show that it would qualify if requested.

  2. A copy of exemption letter issued to organization by Internal Revenue Service, or a letter signed by an individual authorized to act for organization, stating the organization meets requirements is sufficient to establish that the organization qualifies.

  3. If the taxpayer’s organization falls under the umbrella of a broader organization (for example: Baptist Churches in the United States) and the taxpayer’s organization does not have an EIN, the taxpayer will not be required to have an entry on Form 4361, Line 4 (EIN).

    Note:

    Foreign organizations listed on Form 4361, Line 4 are not required to have an EIN on Form 4361. This does not mean they are exempt. Work the Form 4361 in the same manner as any other forms received.

  4. Consider the Organization as "qualifying" when the name listed on Form 4361, Line 4, is included in the following list:

    • Apostolic Lutheran Churches and Congregations in the United States

    • Assemblies of God in the United States

    • Baptist Churches in the United States

    • Catholic (Roman) Churches in the United States, its territories, and possessions

    • Christian Reformed Churches in the United States

    • Christian Science Churches

    • Church of Christ in the United States

    • Church of Jesus Christ of Latter Day Saints

    • Church of the Nazarene, in the United States

    • Church of Scientology

      Note:

      See IRM 4.19.6.5.5.1, Processing Form 4361 Filed by Ministers of Church of Scientology, for more information.

    • Congregational Churches in the United States

    • Episcopal Churches and Dioceses in the United States

    • Evangelical Lutheran Church in the United States, its Synods and local churches

    • General Council of the Christian Church of North America

    • Greek Orthodox Archdiocese of North and South America, Inc.

    • Holy Church of God and its subordinate local churches

    • Jehovah's Witnesses in the United States

    • Jewish Congregations, Synagogues, Temples and Seminaries

    • Methodist Episcopal Churches in the United States

    • Nazarene Churches in the United States

    • Presbyterian churches in the United States

    • Protestant Episcopal Churches and Dioceses in the United States

    • Quakers (Friends) Churches

    • Unitarian Universalist Churches in the United States

    • United Methodist Church in the United States

  5. If the taxpayer did not include a copy of an IRS exemption letter issued to organization (or a signed affidavit stating organization meets requirements) or the organization is other than those listed in (4) above, research the organization name using IDRS CC:INOLES, and CC:BMFOLO, to verify tax exempt status of the ordaining religious organization. The organization must have the following codes to qualify for tax exempt status:

    1. Status Code of 01 or 02 and

    2. EO Foundation Code (FNDTION-CD) of 10 or 15.

    If Then
    Organization is found with matching Status and Foundation Codes The organization qualifies as tax exempt.
    Organization is found but the Status and Foundation Codes are other than those listed above. The organization does not quality as tax exempt. Disapprove the Form 4361. See IRM 4.19.6.5.9, Disapproving Form 4361, for additional information.
    Organization is not found The Form 4361 is not complete. See IRM 4.19.6.5.4, Is Form 4361 Complete?, for additional information.
  6. See IRM 4.19.6.5.6, Religious Orders, for additional information on criteria needed to determine if a religious order qualifies for exemption.

  7. Disapprove the Form 4361 when a determination cannot be made after performing research and contacting the taxpayer. See IRM 4.19.6.5.9, Disapproving Form 4361, for additional information.

Processing Forms 4361 Filed by Ministers of Church of Scientology
  1. Use the following guidelines to approve applications from ordained ministers from this church:

    1. Form 4361 by these ministers must include an ordination certificate or letter from the governing body of church establishing the individual as an ordained minister.

    2. For purposes of determining if Form 4361 is timely filed, October 1, 1993 is considered the date of ordination for ministers ordained on or before that date. Ministers who file on a calendar year basis are considered to be timely filed if the form is filed by April 15, 1995, or the due date of the income tax return for the second taxable year (including extensions) in which he or she had net earnings of $400 or more that included earnings from ministerial services.

  2. If Scientology minister filed a Form 4361prior to October 1, 1993, process as follows:

    If Then
    Previous application was denied Instruct minister to prepare a new Form 4361.
    Previous application was approved No further action is needed.
  3. Follow usual procedures for ministers ordained after October 1, 1993.

Religious Orders

  1. Rev. Proc. 91–20, 1991–1 C.B. 524, provides guidance in determining whether an organization constitutes a "religious order" under the IRC. Remuneration for services performed by members of qualified religious orders in the exercise of duties required by their orders may be exempt from FICA tax, self-employment tax and federal income tax withholding.

    1. If the member is required to take a vow of poverty, the services are exempt from FICA tax unless the religious order elects coverage under IRC 3121(r) and self-employment tax.

    2. If the member is not required to take a vow of poverty, the services are subject to self-employment tax unless Form 4361 is filed and approved.

  2. The term "religious order" is not defined in the Code or Regulations. Organizations and individuals may request rulings from the Service on whether they are religious orders, or members of a religious order, for FICA, self-employment and federal income tax withholding purposes by following procedures in Rev. Proc. 20XX–1 (updated annually). Also, individuals may apply for exemption from self-employment tax as members of religious orders by filing Form 4361.

  3. When the taxpayer files Form 4361 stating he/she is a member of a religious order AND includes a copy of a private letter ruling issued by the Service stating the organization is a religious order, the private letter ruling is considered sufficient evidence that the organization is a religious order.

  4. If the taxpayer files a Form 4361 stating he/she is a member of a religious order without a private letter ruling, determine whether the taxpayer is a member of a qualified religious order. Research the information provided on Form 4361, Line 4 to see if the religious order is part of a qualifying organization. See IRM 4.19.6.5.5, Does the Organization Qualify?, for additional information. If your research is inconclusive, issue Letter 287C and request that the taxpayer provide either a private letter ruling or give detailed information based on Rev. Proc. 91-20 criteria:

    Note:

    See IRM 4.19.6.5.4, Is Form 4361 Complete?, for additional information on issuing and suspending Letter 287C.

    1. The organization is described in IRC section 501(c)(3).

    2. The members of the organization vow to live under a strict set of rules requiring moral and spiritual self-sacrifice and dedication to the goals of the organization at the expense of their material well-being.

    3. The members, after successful completion of the organization's training program and probationary period, make a long-term commitment to the organization (normally more than two years).

    4. The organization is, directly or indirectly, under the control and supervision of a church or convention or association of churches, or is significantly funded by a church or convention or association of churches.

    5. Members normally live together as part of a community and are held to a significantly stricter level of moral and religious discipline than required of lay church members.

    6. Members work or serve full-time on behalf of the religious, educational, or charitable goals of the organization.

    7. Members participate regularly in activities such as public/private prayer, religious studies, teaching, care of the aging, missionary work, church reform/renewal.

    Note:

    If taxpayer is a missionary worker or a member of Campus Crusades For Christ, they may not perform certain duties, except as qualifying under the guidelines.

    If Then
    An organization meets all of the criteria in Rev. Proc. 91-20. The organization is a religious order.
    An organization does not have characteristics as described in IRC 501(c)(3). The organization cannot be a religious order.
    An organization has characteristics as described in IRC 501(c)(3), but does not have all of the other characteristics as described by Rev. Proc. 91–20. The organization may be a religious order. Consider all facts and circumstances before making a determination.

    Note:

    If you are still unsure whether an organization is a religious order, consider contacting the parent organization of church affiliation for its views on its qualification as a religious order. Carefully consider these views.

Form 4361 Declaration Statement Verifying the Grounds for Exemption and Response to Declaration Request

  1. As part of the Form 4361 approval process, you must obtain the taxpayer’s signature declaring that they understand the grounds for the exemption. Before requesting the taxpayer’s signed declaration:

    1. Thoroughly review the application and perform all needed research to ensure that there aren’t any conditions that would result in an automatic disapproval (for example: the application was not timely filed, the organization does not qualify for exemption or the taxpayer previously filed Form 2031). If those types of conditions are present, disapprove the application and do not request the declaration statement.

    2. Review the application for any missing information that the taxpayer needs to address. See IRM 4.19.6.5.4, Is Form 4361 Complete?, for additional information.

  2. Issue Letter 287C and:

    1. Select the declaration statement paragraph.

    2. Include any additional paragraph(s) to advise the taxpayer of any missing information that needs to be completed or provided. See IRM 4.19.6.5.4, Is Form 4361 Complete?, for additional information.

      Note:

      You must also return the Form 4361 to the taxpayer to complete any missing information on the Form 4361.

    3. Select PARAGRAPH "V" and advise the taxpayer that we must receive their response within 90 days (input a date that is 90 days from the Letter 287C date).

    4. Update the control status to "S" (suspend).

    5. Update the case control with Activity Code "287CMMDD" (where MMDD represents the last date of the suspense period). See Exhibit 4.19.6-1, Activity Codes for Minister Waiver Processing, for additional information.

    6. Suspend the case for 105 days (90 days + 15 days).

  3. If by the 60th day after issuing the Letter 287C, the taxpayer has not provided the declaration statement, issue a follow-up Letter 287C:

    1. Select the declaration statement paragraph.

    2. Select PARAGRAPH "Y" and advise the taxpayer that we must receive the declaration statement by the same date that date that was entered in the original Letter 287C.

    3. Input History Item "2ND287CSNT" to indicate the follow up Letter 287C was sent.

    4. Continue to monitor for the remainder of the original Letter 287C suspense period.

  4. Take the following actions based on taxpayer response to Letter 287C:

    If Then
    Taxpayer signs and returns declaration within the initial suspense period Consider this with other factors that would determine if the application can be approved.
    Taxpayer returns a signed and dated declaration and states he/she would like to discontinue processing of Form 4361 (only the box to discontinue is checked)

    Note:

    If the taxpayer checks both boxes of the declaration statement, request another Letter 287C declaration to determine taxpayer's intent. Taxpayer must mail the corrected copy back.

    1. Attach Letter 287C declaration to the originalForm 4361 for historical files.

    2. Return all copies of Form 4361 and associated documents to the taxpayer.

  5. DO NOT disapprove Form 4361 when the taxpayer did not provide the signed declaration statement. If no response is received by the end of the Letter 287C suspense period:

    1. Make a copy of Form 4361 for local suspense file.

    2. Circle out all received dates.

    3. Leave the "For Internal Revenue Service Use" section of Form 4361blank.

    4. Issue Letter 286C to return the unprocessedForm 4361 to the taxpayer. Advise the taxpayer that no action will be taken on the application until all necessary information is received.

    5. Close suspense control base.

Approving Form 4361

  1. Generally, if all five criteria are met (see IRM 4.19.6.5.2, Criteria for Approving Form 4361, for more information), approve the application. Process the approval as follows:

    1. Stamp with the Director's signature. Mark the box "approved" on all three copies of Form 4361 in the section titled, "For Internal Revenue Service Use" .

    2. Date all copies to agree with date entered on the declaration statement. If the declaration statement received date is after a previous determination, use the correspondence IRS received date on all three copies.

    3. Return an approved copy to SSA.

    4. Return a copy to the taxpayer using Letter 398C. Instruct taxpayer to retain the approval documentation indefinitely.

    5. Place the original copy in permanent file.

  2. Exemption begins at ordination or commissioning if Letter 287C declaration was signed and mailed within the initial time frame allocated in the correspondence issued to the taxpayer.

  3. Update IDRS with the applicable actions. See IRM 4.19.6.5.10, MINISTER-SE-TX-EXEMPT-CD Form 4361, for additional information.

Disapproving Form 4361

  1. The Form 4361 will be disapproved when:

    1. Any of the five criteria described in IRM 4.19.6.5.2, Criteria for Approving Form 4361, are not met.

    2. The Form 4361 was not submitted timely. See IRM 4.19.6.5.3, Was the Application Timely?, for additional information.

  2. Take the following actions when disapproving the Form 4361:

    1. Notate and mark the box "disapproved" in the section For Internal Revenue Service Use, on all three copies of Form 4361.

    2. Stamp the Director's signature and date on all three copies.

    3. Place the original copy in permanent files.

    4. Send a copy to SSA.

    5. Return a copy to the taxpayer as an enclosure to Letter 286C. You must circle out all "received dates" on the taxpayer’s copy of Form 4361.

    6. Include an open paragraph on Letter 286C using the following verbiage as an example: If you have any additional information that you want us to consider, please submit a newly signed Form 4361 and include all supporting documentation relevant to your claim.

      Reminder:

      If the application was disapproved due to untimely filing, inform the taxpayer that there are no Appeal Rights. See IRM 4.19.6.5.11.4, Appeals and Refunds Related to Form 4361, for additional information.

    7. Update IDRS with the applicable actions. See IRM 4.19.6.5.10, MINISTER-SE-TX-EXEMPT-CD Form 4361, for additional information.

    8. Leave a History Item on IDRS CC:ENMOD, to explain the reason for disapproving the application.

  3. DO NOT disapprove the Form 4361 when the taxpayer did not provide the signed declaration statement. If no response is received by the end of the Letter 287C suspense period, see IRM 4.19.6.5.7, Form 4361 Declaration Statement Verifying the Grounds for Exemption and Response to Declaration Request, for additional information.

MINISTER-SE-TX-EXEMP-CD Form 4361

  1. Enter IDRS CC:ENMOD, followed by CC:ENREQ, which becomes CC:INCHG, which indicates "MIN-SE-TX-EXEMP-CD" , using TC 016, Doc Code 63 for each approved or disapproved Form 4361. If TC 000 is also being input, use Posting Delay Code 1 to input the TC 016 with one cycle delay.

  2. Input the appropriate code as follows:

    • 1 - Form 4361 Approved

    • 2 - Form 4361 Denied

    • 9 - To reverse an entry (returns Master File setting to 0)

  3. Input the code on the SSN of the Form 4361 applicant, even if that person files as a secondary filer with another number. The code is then reflected on the entity of the applicant in case the taxpayer later files alone or with another spouse.

Form 4361 Case Types - Miscellaneous or Responses Needing Further Action

  1. The following sections provide guidance for situations and/or taxpayer responses after the original Form 4361 was processed.

Previously Disapproved Form 4361
  1. If the taxpayer re-submits a previously disapproved Form 4361 (that is, stamped "disapproved" under "For Internal Revenue Service Use" ) with additional information, return the Form 4361 and any additional information provided to the taxpayer with Letter 287C. Advise the taxpayer to submit a new signed Form 4361 with the additional information.

  2. If the taxpayer submits a new Form 4361 application because the previous application was disapproved, review the disapproved Form 4361 as part of the evaluation of the new application.

    If Then
    No new information is provided or the information provided with the new Form 4361 is the same as the previously disapproved application. Disapprove the new Form 4361. See IRM 4.19.6.5.9, Disapproving Form 4631, for additional information.
    The taxpayer provides new and/or additional information Consider application on its own merits. If it meets all necessary criteria, approve application.

    Caution:

    Carefully review and research the new information to determine its validity.

Taxpayer Claims Form 4361 Previously Approved and Internal Revenue Service Has No Record
  1. When a taxpayer indicates Form 4361 was previously filed, but the Internal Revenue Service has no record of it, research IDRS CC:IMFOL for the MINISTER SE CD indicator for approved or disapproved code. If necessary take the following actions:

    1. Contact SSA for a copy of the Form 4361.

    2. If SSA responds that they have an approved exemption, process the copy from SSA as approved.

    3. If SSA responds that they do not have an approved exemption, instruct the taxpayer to provide a copy of their duplicate approved exemption or provide a new Form 4361. If a copy of approved exemption is received, process it as approved.

    4. Process reapplication, except for timeliness criteria. Determine if exemption was allowed on prior year returns, either through normal processing or examination.

    5. Disallow reapplication for exemption as not being timely if taxpayer has not claimed the exemption previously.

    Note:

    Taxpayer bears burden of providing information or verification concerning previously filed Form 4361. An affidavit stating the application was previously filed is not sufficient to grant an exemption. Minister must show that he/she was eligible at time of filing the previous form.

Revocation of Form 4361 Exemption due to Economic Considerations
  1. Generally, once an exemption has been granted, it is irrevocable. However, if it becomes evident that application was made solely for economic considerations rather than religious opposition, then Rev. Rul. 70–197 allows for revocation.

  2. If the taxpayer requests a revocation of his/her exemption because the application was made solely for economic considerations, rather than religious opposition:

    1. Advise taxpayer that the exemption has been revoked because it was originally based on economic considerations.

    2. Notify SSA and forward copies of all material related to the revocation.

    3. Associate all material related to revocation with a copy in the permanent file, noting the change.

    4. Update the "MIN-SE-TX-EXEMP-CD" with "9" to reverse the previous status. See IRM 4.19.6.5.10, MINISTER-SE-TX-EXEMP-CD Form 4361, for additional information.

  3. If application was not made solely for economic considerations, process the revocation request as follows:

    If Then
    Original copy is in the permanent file Advise the taxpayer that it is irrevocable.
    Original copy is not in the permanent file
    1. Check open cases.

    2. If found, return application to the taxpayer with no further action.

    Original copy is not in either the permanent file or open cases
    1. Send a request to SSA for verification of the exemption.

    2. Once verified, advise taxpayer the exemption is irrevocable.

  4. In all cases, attach a copy of the request and a copy of our letter to the original copy in the permanent file.

Appeals and Refunds Related to Form 4361
  1. A minister who is granted exemption may file a claim for refund of payments paid prior to his/her exemption if they are still within their statute of limitations.

  2. There are no "appeal rights" to the Form 4361 election decision.

  3. A minister may use normal appeal rights to an assessment of tax.

Form 2031 - Election Back into Social Security Coverage
  1. The Tax Relief Extension Act of 1999, Public Law 106–170 provided a limited period, during which ministers, certain members of religious orders, and Christian Science practitioners, who have an approved Form 4361 in place for tax year 1999, could file Form 2031, Waiver Certificate for Use by Ministers, Members of Religious Orders, and Christian Science Practitioners. This is an irrevocable election back into Social Security and Medicare coverage for their ministerial earnings. This opportunity does NOT apply to Form 4029 filers. Congress provided a similar limited time for ministers as a part of Tax Reform Act of 1986 for tax years 1986 and 1987. Form 2031 was also used for this period.

    Note:

    Congress has not provided such an election since 1999. Unless Congress passes a similar act, any Form 2031 generally should have been received by the due date of the 2002 individual income tax return. The Form 2031 indicator will remain on IDRS even though the form is now obsolete. This form may be reactivated for use if Congress passes a law to allow taxpayers to opt out of the exemption.

  2. If a Minister elected before 1968 to be covered under Social Security for their ministerial services they cannot file for an exemption from self employment tax. Therefore, Form 2031 would not apply to these individuals.

  3. If a taxpayer submits a newly completed Form 2031:

    1. Date stamp Form 2031 or correspondence regarding Form 2031. Enter "postmark date" in the bottom portion of the form and staple the envelope (or postmark portions of an oversized envelope) to the form.

    2. Verify the indicator for the "MINISTER-SE-CD" field on IDRS CC:IMFOLE.

    If Then
    a value of "3" is displayed,
    1. Return the Form 2031 to the taxpayer using Letter 315C.

    2. Advise the taxpayer that they already have an approved Form 2031 on file and that the election is irrevocable.

    any other value is displayed,
    1. Return the Form 2031 to the taxpayer using Letter 315C.

    2. Advise the taxpayer that there is no longer legislation in place that allows for revocation of exemption from self-employment tax using Form 2031, that their exemption from self-employment tax is still valid and that they may submit a detailed explanation for their revocation request.

  4. If an original tax return is received attached to Form 2031, detach the return and forward it for processing.

  5. This exemption does NOT apply to filers of Form 4029.

Form 1040/1040X or Other Referrals Indicating Self-Employment Tax Exemption
  1. When a referral from another area is received indicating that the taxpayer is exempt from self-employment tax (Form 1040, Form 1040X, Form 4442 and so on), research to verify the exemption.

    Note:

    On a daily basis report the volume of these referrals to your Lead Tax Examiner/Manger.

  2. If IDRS CC:IMFOLE shows a Minister self-employment code (MINISTER SE CD) with a value other than blank, then:

    1. Update the Activity Code to “SETEXMPVER” and close the control base. See Exhibit 4.19.6-1, Activity Codes for Minister Waiver Processing for further information.

    2. Send the 1040/1040X/referral to Accounts Management to complete processing.

  3. If IDRS CC:IMFOLE shows a blank MINISTER SE CD and sufficient verification is found to support the exemption:

    1. Update MINISTER-SE-TAX-EXEMPT-CD and the administrative file. See IRM 4.19.6.5.10, MINISTER-SE-TX-EXEMP-CD Form 4361, or IRM 4.19.6.6.4 MINISTER-SE-TX-EXEMPT-CD Form 4029 for additional information.

    2. Update the Activity Code based on the final determination and close the control base. See Exhibit 4.19.6-1, Activity Codes for Minister Waiver Processing, for further information.

    3. Send the 1040/1040X/referral to Accounts Management to complete processing.

  4. If IDRS CC:IMFOLE shows a blank MINISTER SE CD and the information/documentation is not sufficient to verify the exemption, perform additional research (for example: contact SSA for confirmation of a previously submitted application) or, if necessary, correspond with the taxpayer.

    1. Advise the taxpayer to submit a copy of their Form 4361, Form 4029, or other verification of their exemption.

    2. Suspend the case for 60 days (45 days + 15 days).

    If Then
    The taxpayer responds with sufficient documentation:
    1. Update the MINISTER-SE-TAX-EXEMPT-CD. See IRM 4.19.6.5.10, MINISTER-SE-TX-EXEMP-CD Form 4361 or IRM 4.19.6.6.4, MINISTER-SE-TX-EXEMP-CD Form 4029, for additional information.

    2. Place the documentation in a permanent administrative file.

    3. Update the Activity Code based on the final determination and close the control base. See Exhibit 4.19.6-1, Activity Codes for Minister Waiver Processing for further information.

    4. Send the 1040/1040X/referral to Accounts Management to complete processing.

    The taxpayer does not respond or does not provide sufficient information:
    1. Do not make a determination. Do not update the MINISTER-SE-TAX-EXEMPT-CD

    2. Update the Activity Code with "MW-NDTPNRX" and close the control base. See Exhibit 4.19.6-1, Activity Codes for Ministerial Waiver Processing, for additional information.

    3. Forward the 1040/1040X/referral along with any insufficient information received from the taxpayer to Accounts Management and advise them that a determination could not be made.

Loose Forms 4361
  1. When a loose copy of a processed Form 4361 is identified, research IDRS CC:IMFOLE to confirm that the applicable Minister Self-employment (MINISTER SE CD) Code is present. If present, take no further action. If the code is not present, contact SSA for confirmation that they approved the application.

    Note:

    On a daily basis, report the volume of loose Form 4361 received to your Lead Tax Examiner/Manger.

    If Then
    SSA confirms that the application was approved Update the MIN-SE-TAX-CD. See IRM 4.19.6.5.10, MINISTER-SE-TX-EXEMPT-CD Form 4361, for additional information.
    SSA doesn’t confirm that the application was approved. Request the original application from the Federal Records Center.
    1. If the records are found, then approve the application.

    2. If the records are not found, then determine if an exemption was allowed on prior year returns, either through normal processing or examination. Reprocess the application accordingly.

  2. If a loose unprocessedForm 4361 is received, follow normal procedures to process the application.

Form 4029 Applications (Exemption from Social Security and Medicare Taxes and Waiver of Benefits)

  1. Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits, is filed by members of certain religious groups (primarily Amish and Mennonites) to apply for exemption from Social Security and Medicare taxes based on their religious beliefs. They waive all rights to Social Security benefits under Titles II and XVIII of the Social Security Act. The exemption is for individuals, partnerships (if all partners have approved certification), and employers (if the employer has an approved certification).

Form 4029 — Procedures

  1. Form 4029 is:

    1. Filed with the Social Security Administration (SSA), which determines whether the religious sect or division meets requirements for exemption from Social Security and Medicare taxes.

      Note:

      Prior to changes effective with the April 1989 revision of Form 4029, the IRS was responsible for receiving, evaluating and processing the application.

    2. SSA forwards the application with its determination to the IRS.

    3. IRS reviews and finalizes the approval (or disapproval), records the final results and returns the application to the taxpayer.

  2. If the SSA approval section on Form 4029is not completed, immediately forward to SSA at the following address:
    Social Security Administration
    Security Records Branch,
    Attn: Religious Exemption Unit
    P.O. Box 7
    Boyers, PA 16020

  3. Taxpayers waiting on a Form 4029 approval must inform their employers to continue to withhold and pay their share of Social Security and Medicare taxes.

  4. For employer and employee submissions, the effective date is the first day of the first quarter after the quarter in which the application was filed. It lasts as long as both employer and employee continue to meet requirements. Exemption is effective for non-employee individual for the first year that the taxpayer met the requirements.

  5. Note on all copies of Form 4029 whether application is approved or disapproved and stamp/date with Director's signature. Distribute copies of completed Forms 4029 as follows:

    1. Send a copy to applicant.

      IF THEN
      The Form 4029 is approved Return to applicant with approval Letter 398C.
      The Form 4029 is disapproved
      1. Circle out all received dates on the copy of the Form 4029.

      2. Return to applicant with disapproval Letter 401C.

    2. Forward one copy to SSA.

    3. Maintain original copy in the case file.

  6. Update IDRS with the final determination. See IRM 4.19.6.6.4, MINISTER-SE-TX-EXEMP-CD Form 4029, for more information.

  7. Input all necessary information in query database from the Form 4029 paper documents.

Loose Forms 4029

  1. When a loose copy of a processed Form 4029 is identified, research IDRS CC:IMFOLE to confirm that the applicable Minister Self-employment (MINISTER SE CD) Code is present. If present, take no further action. If the code is not present, contact SSA for confirmation that they approved the application.

    Note:

    On a daily basis, report the volume of loose Form 4029 received to your Lead Tax Examiner/Manger.

    If Then
    SSA confirms that the application was approved Update the MIN-SE-TAX-CD. See IRM 4.19.6.6.4, MINISTER-SE-TX-EXEMPT-CD Form 4029, for additional information.
    SSA doesn’t confirm and the application was filed before April 1989. Request the original application from Federal Records Center.
    1. If the records are found, approve the application.

    2. If the records are not found, determine if an exemption was allowed on prior year returns, either through normal processing or examination. Reprocess the application accordingly.

    SSA doesn’t confirm and the application was filed after April 1989. Send to SSA to have them reprocess the application. See IRM 4.19.6.6.1, Form 4029 - Procedures for additional information.
  2. If a loose unprocessedForm 4029 is received, forward it to SSA. See IRM 4.19.6.6.1, Form 4029 - Procedures, for additional information.

Form 4029 — Revocation/Withdrawal

  1. When an individual signs Form 4029 the jurat criteria includes an agreement that the individual will notify the Internal Revenue Service within 60 days of any event that results in the individual leaving the religious group described in the Form 4029, or in the individual disavowing the established teachings of the group.

  2. If you receive correspondence or a copy of Form 4029 where the taxpayer is informing the IRS that they have left their religious group or disavowed the established teachings of the religious group, process the request as follows:

    1. Research IDRS to verify entity.

    2. Input TC 016 to change the MIN-SE-TX-EXEMP-CD to 0. See IRM 4.19.6.6.4, MINISTER-SE-TX-EXEMP-CD Form 4029, for more information.

    3. Notify taxpayer via Letter 401C using the appropriate paragraph.

    4. Notate incoming correspondence with action taken and make one copy.

    5. Attach original correspondence to Form 4029 in file.

    6. Send a copy of the Letter 401C and correspondence to SSA.

    7. Update the query database with the revocation/withdrawal information.

MINISTER-SE-TX-EXEMP-CD Form 4029

  1. Enter IDRS CC ENMOD, followed by CC ENREQ, which becomes CC INCHG which indicates MIN-SE-TX-EXEMP-CD, using TC 016, Doc Code 63 for each approved or disapproved Form 4029. If TC 000 is also being input, use Posting Delay Code 1 to input the TC 016 with one cycle delay.

  2. Determine and input the appropriate code as follows:

    1. TC 016 input value of 3 = approved. This transaction will allow the indicator on IDRS for the account to become a 4 = Form 4029 approved.

    2. TC 016 input value of 4 = disapproved. This transaction will allow the indicator on IDRS for the account to become an 8 = Form 4029 denied.

    3. TC 016 input value of 9 = reverse entry. (returns Master File setting to 0).

  3. Input the code on the SSN of the Form 4029 applicant, even if that person files as a secondary filer with another number. The code is then reflected on entity of the applicant in case the taxpayer later files alone or with another spouse.

Minister and Religious Waiver Clerical Procedures

  1. The Minister and Religious Waiver Clerical Function sorts incoming mail into the following categories:

    1. Minister and Religious Waiver mail.

    2. Non-Minister and Religious Waiver mail.

  2. All incoming mail must be stamped with the PSC Operation received date.

  3. The Minister Waiver mail is then broken down into a finer sort by form or request type (Form 4361, Form 4029, or Reconsideration) and then by IRS received date.

  4. Non-Minister Waiver mail should be routed to the appropriate area for processing. See IRM 4.19.6.7.4, Routing Documents, for more information.

  5. The finer sorted Minister Waiver mail is bundled into batches according to batch type (see (3) above) of no more than 30 and filed to be queued for input into the SBSE Document Matching (DM) Batcher Tool.

    Note:

    Previously processed applications (loose Form 4361 or Form 4029), Form 4442, Inquiry Referral, from Account Management, Form 1040/Form 1040X and other referrals are routed directly to the technical unit for evaluation. They are not queued for input into the SBSE DM Batcher tool.

  6. The SBSE DM Batcher Tool is utilized to control incoming mail. See IRM 4.19.6.7.2, Controlling Incoming Mail, for more information.

    Caution:

    If the IAT/Quick CC tools do not cover all situations or are not functioning, the appropriate steps must still be taken to manually process cases throughout all work processes.

  7. Work is staged to make it available to the technical units.

  8. Approval/Denial packages are routed to the Files Function.

Received Dates

  1. The IRS received date for a mailed response is determined by following the priority criteria listed below:

    1. Oldest IRS received date stamped on correspondence.

    2. Envelope postmark date.

    3. Signature date.

    4. Current date.

  2. The IRS received date for a faxed response is determined by the following priority criteria listed below:

    1. Fax date (printed on fax).

      Caution:

      The fax date is sometimes incorrect, use caution when determining whether to use this date.

    2. The PSC Operation received date stamped on correspondence.

    3. Signature date.

    4. Current date.

Controlling Incoming Mail

  1. All clerical processing of Minister and Religious Waivers as well as Reconsiderations must be completed within 14 business days of IRS receipt or 3 business days from receipt into the operation, whichever is later.

  2. Use the SBSE DM Batcher Tool to:

    1. Build a Form 4361 batch.

    2. Build a Form 4029 batch.

    3. Build a Minister Waiver Reconsideration (aka Minister Late Reply or MLR) batch.

    4. Generate an interim Letter 5825C when the IRS received date exceeds 23 days.

    5. Identify mail that is already in process or under an active control.

    Caution:

    If the IAT/Quick CC tools do not cover all situations or are not functioning, the appropriate steps must still be taken to manually process cases throughout all work processes.

  3. Route Form 4442, Inquiry Referral, from Accounts Management, Form 1040 /Form 1040X, other referrals and previously processed applications (loose Form 4361 or Form 4029) to the appropriate technical unit. Do not input into the SBSE DM Batcher tool.

  4. Additional research may be required to ensure the mail belongs to the Minister and Religious Waiver program. Route all other mail as appropriate. See IRM 4.19.6.7.4, Routing Documents, for more information.

Batching and Controlling Minister Waivers
  1. Retrieve cases already sorted (no more than 30 cases) as Minister Waivers. Assign the next available batch number from the appropriate log book.

  2. Minister Waivers will be batched using the SBSE DM Batcher Tool.

    1. Minister Waiver batches will be numbered as follows:

      Tax Year Program Batch Number
      YY (where "YY" represents the last two digits of the tax year) "361" - Form 4361 XXXXX (where "XXXXX" represents the next sequential number available in the log)
      YY (where "YY" represents the last two digits of the tax year) "029" - Form 4029 XXXXX (where "XXXXX" represents the next sequential number available in the log)

      Example:

      "1836100001" = the first Minister Waiver batch created for TY 2018 cases.

    2. The control status will be "A" .

    3. The Control Category will be "SSA-" .

    4. The Assignee Employee Number will be "05840XXXXX" .

    5. The appropriate IRS received date must be input. See IRM 4.19.6.7.1, Received Dates, for more information.

    6. The SBSE DM Batcher Tool will send interim Letter 5825C when the IRS received date exceeds 23 days.

    7. A cover sheet listing each TIN in the batch, the IRS received date, and batch number will be generated. Place the cover sheet on top of the batch.

    Reminder:

    The SBSE DM Batcher Tool must be used for this process. The tool streamlines the clerical batching process and allows the user to send interim Letter 5825C and alerts the clerical staff when a case has an ASED expiring within 90 days. Use of this tool is mandatory.

    Caution:

    If the IAT/Quick CC tools do not cover all situations or are not functioning, the appropriate steps must still be taken to manually process cases throughout all work processes.

  3. When updating IDRS controls manually (for example, the SBSE DM Batcher Tool is unavailable), follow the procedures below to update the IDRS control:

    1. Search IDRS CC:INOLE for an entity. If taxpayer entity is not present, use IDRS CC:MFREQ to establish a dummy entity.

    2. Access IDRS CC:TXMOD for the applicable TIN, MFT, and tax year.

    3. Access IDRS CC:ACTON and establish the control base with the following:

      IDRS CC: ACTON Elements Description
      Case Control Status A
      Activity Code YY361XXXXX or YY029XXXXX
      Control Category Code SSA-
      Assignee Employee Number 0584012345
      IRS Received Date MMDDYYYY

      Example:

      ACTON
      C#,1836100001,A,SSA-
      0584012345,09292018

    4. Input interim Letter 5825C when the IRS received date exceeds 23 days. See IRM 4.19.6.2, Policy Statement P-21-3 (formerly P-6-12) Guidelines (Action 61), for more information.

    5. Create a cover sheet listing each TIN in the batch, the IRS received date, and batch number. See Exhibit 4.19.6-4, Batch Control Sheet, for a sample cover sheet. Place the cover sheet on top of the batch.

  4. File the completed batch in the inventory staging area separated by program and in batch number order.

Batching and Controlling Minister Waiver Reconsiderations
  1. Retrieve cases already sorted (no more than 30 cases) as Minister Waiver Reconsiderations (MLRs). Assign the next available batch number from the appropriate log book.

  2. Reconsiderations will be batched using the SBSE DM Batcher Tool.

    1. These batches will be numbered as follows:

      Tax Year Batch Type Batch Number
      YY
      (where "YY" represents the last two digits of the tax year)
      "MLR" - Minister Reconsideration XXXXX
      (where "XXXXX" represents the next sequential number available in the log)

      Example:

      18MLR00001 = the first Reconsideration batch created for TY 2018.

    2. The control status will be "A" .

    3. The Control Category will be "SSA-" .

    4. The Assignee Employee Number will be "05840XXXXX" .

    5. The appropriate IRS received date must be input. See IRM 4.19.6.7.1, Received Dates, for more information.

    6. The SBSE DM Batcher Tool will send interim Letter 5825C when the IRS received date exceeds 23 days.

    7. A cover sheet listing each TIN in the batch, the IRS received date, and batch number will be generated. Place the cover sheet on top of the batch.

    Reminder:

    The SBSE DM Batcher Tool must be used for this process. The tool streamlines the clerical batching process and allows the user to send interim Letter 5825C. Use of this tool is mandatory.

    Caution:

    If the IAT/Quick CC tools do not cover all situations or are not functioning, the appropriate steps must still be taken to manually process cases throughout all work processes.

  3. When updating IDRS controls manually (for example, the SBSE DM Batcher Tool is unavailable), follow the procedures below to update the IDRS control:

    1. Access IDRS CC:TXMOD for the applicable TIN, MFT, and tax year.

    2. Access IDRS CC:ACTON and establish the control base with the following:

      IDRS CC: ACTON Elements Description
      Case Control Status A
      Activity Code YYMLRXXXXX
      Control Category Code SSA-
      Assignee Employee Number 0584012345
      IRS Received Date MMDDYYYY

      Example:

      ACTON
      C01,18MLR00001,A,SSA-
      0584012345,09292018

    3. Input interim Letter 5825C when the IRS received date exceeds 23 days. See IRM 4.19.6.2, Policy Statement P-21-3 (formerly P-6-12) Guidelines (Action 61), for more information.

    4. Create a cover sheet listing each TIN in the batch, the IRS received date, and batch number. See Exhibit 4.19.6-4, Batch Control Sheet, for a sample cover sheet. Place the cover sheet on top of the batch.

  4. File the completed batch in the inventory staging area separated by program and in batch number order.

Inventory Management - Clerical Function

  1. The following Organization Function Program (OFP) codes should be used with the 790 (tax account support activity - clerical) function code:

    OFP-Program Code and Description
    • 39410 - Forms 4361

    • 39411 - Forms 4029

    • 39412 - Reconsiderations

  2. Completed work must be staged within 3 business days of being controlled/updated.

Routing Documents

  1. The Clerical Function is responsible for all outgoing mail. This mail may consist of internal mail, mis-routed mail, or external mail.

  2. Internal mail is routed to other areas using Form 3210, Document Transmittal. The receiving area will acknowledge receipt by sending a signed copy of the Form 3210 back to the originating area. These forms must be maintained in a log in the Clerical Function.

  3. When mis-routed mail is identified, it must be routed back to the mail room for proper routing if the mail room was the originating office.

  4. If the mail was addressed to Minister Waivers, but did not fit that criteria, route the correspondence to the proper area and issue Letter 86C to the taxpayer. For additional information on issuing Letter 86C, see IRM 21.3.3.4.2.1, Use of 86C Letter - Referring Taxpayer Inquiry/Forms to Another Office, for more information. Also see http://serp.enterprise.irs.gov/databases/who-where.dr/form-4442-erroneous-referral-coordinators.html for instructions in routing mis-routed Forms 4442.

  5. Taxpayers may request assistance from the Taxpayer Advocate Service (TAS). TAS is an independent organization within the IRS created by Congress to help taxpayers resolve issues with the IRS. Form 12412, Operations Assistance Requests (OARs), are received from TAS in the Clerical Function both by mail and FAX. The Clerical Function must take the following actions for all OARs received:

    1. Date stamp each Form 12412 with the date it was received.

    2. Hand carry the Forms 12412 to the TAS Liaison within 24 hours of receipt.

Discovered Remittance

  1. Cash or non-cash remittances found outside of the Receipt and Control secured/restricted area are "discovered remittances" .

  2. When a "discovered remittance" is identified:

    1. Notify your manager/lead immediately.

    2. Access IDRS CC:INOLES to verify the taxpayer’s name.

    3. At the bottom of the IDRS CC:INOLES screen, type the MF, tax year, TC 670/570, the received date, and the money amount.

    4. Print three (3) copies of the IDRS CC:INOLES screen. One copy is attached to the case and the two other copies are attached to the discovered remittance.

    5. Complete Form 4287, Payment Posting Voucher.

    6. Hand carry the Form 4287, the remittance and the IDRS CC:INOLES prints to your manger/lead.

Manager/Coordinator Responsibilities - General

  1. Managers are responsible for:

    • Evaluating employees

    • Managing inventories within their responsibility

    • Managing resources within their responsibility

  2. The Coordinator is responsible for:

    • Acting as a liaison with other program areas (e.g., Headquarters, Appeals, Accounts Management, TAS, etc.)

    • Monitoring the status of Minister Waiver inventory

    • Serves as the statute coordinator for the Operation

Employee Performance Reviews

  1. Managers perform the following types of reviews:

    • Workload reviews

    • Evaluative case reviews

    • Non-evaluative case reviews

    Note:

    For additional information refer to the Training Course 22394-002, Employee Performance Feedback for Correspondence Examination Managers.

  2. Managers are required to perform a minimum of two workload reviews per quarter for each employee. These workload reviews consist of:

    • Bin reviews

    • Day after/time utilization reviews

  3. Managers are required to perform evaluative case reviews. See IRM 4.19.6.8.1.2, Mandatory Evaluative Reviews, for more information.

  4. The primary purpose of a non-evaluative review is to help the employee develop and enhance their job skills. See IRM 4.19.6.8.3.1, Non-Evaluative or Coaching Reviews, for more information.

  5. The number of reviews should be increased when warranted.

  6. These reviews, as in all case reviews, should be documented in a Performance Review Worksheet.

Workload Management/Efficiency Reviews
  1. Workload reviews are performed primarily for the following reasons:

    • Make an objective assessment of an employee's performance

    • Protect the rights of customers

    • Identify training needs

  2. Work reviews should focus on effective case resolution according to IRM guidelines.

  3. In addition, reviews should focus not only on the employee's ability to complete his/her assignments, but also on their ability to set priorities and complete assignments independently and expeditiously.

    Note:

    Perform workload reviews for each employee a minimum of two times per quarter. Conduct a balance of these reviews throughout the year and include a variety of types of reviews.

Mandatory Evaluative Reviews
  1. Evaluative reviews must be recorded in accordance with the National Agreement established between National Treasury Employees Union (NTEU) and management.

  2. Conduct a minimum of two mandatory EQRS reviews for each employee per month. Additional reviews may be completed as needed.

  3. Evaluative reviews must be conducted by a manager or an individual in an official acting manager capacity.

  4. When conducting reviews, ensure recordation is input into the Embedded Quality Review System (EQRS).

    Note:

    EQRS is a standardized data repository with trend analysis capabilities and reporting capabilities to use for employee evaluations.

  5. Use the Employee Feedback Report on EQRS for sharing evaluative review results within the required time frame as outlined in the National Agreement. Notate the reason on the review sheet if you do not meet these time frames, (for example: due to unexpected leave).

  6. Obtain the employee's acknowledgment on the designated form. Provide one copy to the employee and retain the other copy for the Employee's Performance Folder (EPF). Be sure to sanitize when appropriate.

Non-Evaluative or Coaching Reviews
  1. The primary purpose of a non-evaluative review is to help the employee develop and enhance their job skills as determined by the manager. Effective non-evaluate reviews foster open lines of communication between the employee, the manager, and the lead technical employee. This enables the manager and/or their lead to receive employee feedback and transfer operational goals informally.

  2. Non-evaluative reviews do not contain a written rating. Share the results orally. Some documentation is appropriate to establish that it actually occurred. (EQRS may be used to track employee development for this purpose.) Have the employee initial and date any documentation. Provide one copy for the employee and retain the other copy in the employee's drop file.

Operational Reviews

  1. An operational review is a review of a subordinate manager and his/her organizational component and is imperative for his or her growth. It provides an opportunity to improve overall effectiveness of the team and/or department. The review should cover Employee Satisfaction in the unit and include receiving feedback from the manager’s employees.

  2. Be sure to praise all accomplishments, identify areas needing improvement, target completion dates established and schedule a follow-up review.

  3. These reviews may be of organizational as well as individual performance. These reviews should be:

    • Evaluative and direct

    • Completed annually unless more frequent reviews are warranted either to address inexperience or poor performance.

  4. The scope of operational/team reviews by upper management should include at least the following issues. Others may be added at the discretion of the reviewer:

    • Desk instructions (adequacy, need, technical accuracy) maintained in the unit

    • Work schedules (timeliness, how backlogs are handled)

    • Schedule of employee work reviews

    • Quality of supporting narratives for workload reviews in EPFs

    • Quality of supporting documentation for annual ratings (relationship between EPF documentation and assigned ratings)

    • Communications within the unit (meeting minutes, floor supervision, informal communication, listening skills, etc.)

    • Use of time, identification of problems, implementation of solutions

    • A sampling of work (open and closed cases)

    • Timekeeping and employees' time reporting

    • The unit manager's technical and/or administrative skills

    • Staff utilization

    • Use of management information reports

    • Clerical support

    • Cover a representative sampling of all work under the jurisdiction of the team or group manager being reviewed

Other Reviews

  1. Management performs other reviews that are not employee performance related.

Physical Inventory Review
  1. Management must sort the weekly CCA 42-43 report by tax examiner IDRS number. Provide a copy of each listing to the appropriate tax examiner by either printing or sending an electronic copy to them to review.

  2. In addition, each manager will sign and complete a Quarterly "Physical Inventory Certification" sheet after receiving their employee’s inventory forms and submit to the Department Manager for consolidation. See Exhibit 4.19.6-2, Physical Inventory Certificate, for more information. Management must complete a Wall Inventory, by running the CCA 42-43. See below:

    1. Sort the program listing by age beginning with the earliest received date.

    2. Verify each of the cases on the wall to the cases listed on the CCA 42-43.

    3. Verify the count in each open batch listed in the log book with the CCA 42-43.

    4. Provide results to the Department Manager.

      Note:

      The Overage Report Compiler and Sorter (ORCAS)-Manager can be utilized to review the CCA report on a weekly basis.

  3. The Department Manager will:

    1. Consolidate all tax examiner and the "Wall" physical inventory results.

    2. Complete Exhibit 4.19.6-3, Wall Inventory Instruction and Certification.

    3. Submit the completed certification to the Operation for signature.

  4. The Operation will notify their Director’s Office this was completed 10 business days following the end of each quarter and provide his/her office documentation for review.

  5. All results of the physical inventory review must be shared with the Coordinator to ensure all necessary actions are taken to update the WP&C.

Program Reviews
  1. Headquarters plans to conduct program reviews for each Campus at least once per fiscal year. The reviews will target recommendations made during the prior visitations, resource expenditures from fiscal year allocations, work plan schedules and accomplishments, adherence to the IRM and Policy directives, movement of inventory, manager and employee reviews and feedback, and any areas of concern.

Statute of Limitations – Minister Waiver Manager/Statute Coordinator

  1. Statute Awareness - Communicating the importance of statutes to all employees is very important and the responsibility of every manager/statute coordinator. On an annual basis, management is expected to issue Statute reminders to the employees. These reminders will be procedures which include contact information, phone numbers, coordinator name, tour of duty (TOD), instructions to follow for last minute statutes discovered, and the local routing procedures to the statute unit or RACS (depending on time frame). Contact names and numbers can be located on the CAWR/FUTA Web page. It is the responsibility of the campus to alert the web master if a change in contact information is necessary.

  2. Document 7368, Basic Guide for Processing Statute Cases, is available to all campuses and area offices. Management must maintain a sufficient supply of this document from the National Distribution Center using catalog number 10296C. Document 7368 contains valuable information on statute-specific topics; therefore, a copy will be given to each employee. No Statute imminent case will be transshipped within 90 days of the statute expiration date, the case must be worked by the campus with current ownership.

  3. Campuses will work together to ensure Statutes receive priority.

Statute Searches
  1. Statute Searches must be performed beginning 90 days prior to statute expiration date. For Form 4029 or Form 4361 applications, use the Form 1040 statute expiration date (generally April 15th). All inventories (paper and electronic) must be reviewed for statute imminent criteria and documented.

  2. In addition, all new receipts must be reviewed as received, prior to controlling to a tax examiner. If the case is statute imminent, it needs to be labeled as such and expedited for processing.

  3. Use the following Forms and Procedures for Statute searches:

    1. Form 11122, Employees Statute Certification: Campuses must have all employees complete Form 11122, taking responsibility and documenting the biweekly statute searches beginning 90 days prior to the statute expiration date. These searches are to be increased to weekly searches 30 days prior to the statute expiration date. During the final week prior to the statute expiration date, increase the searches to daily. Each search performed must be documented.

    2. Form 11122-A, Managers Statute Certification: Campuses must have two levels of management complete Form 11122-A, taking responsibility and documenting the biweekly statute searches beginning 90 days prior to the statute expiration date. These searches are to be increased to weekly searches 30 days prior to the statute expiration date. During the final week prior to the statute expiration date, increase the searches to daily. Each search performed must be documented.

    3. The Operation is to confirm to HQ the statute searches have been completed via faxing the results within 10 business days following the end of each quarter.

    4. The Operation Manager is to ensure Form 11122 and Form 11122-A are completed and maintained in the employee’s/manager’s Unofficial Personnel Folder drop file for three years. After three years, dispose of forms using classified waste procedures.

Inventory Reports

  1. There are various CCA reports used to track and manage inventory within the Minister Waiver program:

    • CCA 42-42: IDRS Inventory Control Report

    • CCA 42-43: IDRS Overage Report

    • CCA 42-44: IDRS Multiple Case Control Report

  2. These reports are available on a weekly basis on Control D.

    Note:

    The ORCAS-Manager can be utilized to review the CCA report on a weekly basis.

CCA 42-42 IDRS Inventory Control Report
  1. This report summarizes inventory, receipts, closures, and age by category. It gives a broad picture of the inventory in the entire operation by category.

  2. This report is available on Control-D on Monday mornings, Report Name: "Team Inv Report" , Job Name: CCA4242D.

  3. Items on the Report - For each case shown, the following information is provided:

    • Case Category - Category of case (See Document 6209, Section 13, IDRS).

    • Begin on Hand - Ending inventory volume from prior week's report.

    • Total Receipts - Total number of new cases for current report.

    • Aged Receipts - Number of cases aged as determined by category code.

    • Case Transfer In/Out - Number of cases transferred in or out from one team to another.

    • Category Change - Number of cases transferred from one category to another.

    • Cases Closed - Total number of cases closed.

    • Ending on Hand - Ending inventory volume.

    • Status of Cases in Ending Inventory - Suspense, Assigned, Background Monitoring.

    • 0 Days - Number of cases in ending inventory within that age range.

    • 1-99 Days - Number of cases in ending inventory within that age range.

    • 100 Days or Over - Number of cases in ending inventory within the age range.

    • Stat Age - Number of cases that fell within the statute age range.

  4. The Manager/Lead should utilize CCA 42-42 as a tool to identify the weekly receipts and closures under each category and the number of cases that are aged upon receipt. No annotation is needed on this report; however, this report is a tool to monitor inventories and should be reviewed within 30 days of receipt.

  5. It has been suggested that the Department Manager or a delegate should review the report to monitor the number of cases and age of inventory in each category to determine if resource changes are needed. The Department Manager should maintain a copy of these reports for one year.

CCA 42-43 IDRS Overage Report
  1. This report contains all cases controlled to an IDRS employee number and can be used to:

    • Identify cases that require action.

    • Identify specific cases for review.

    • Monitor the size of the employees' inventories.

    • Determine if employees are working inventory in the proper order.

    • Set closure expectations.

    • Identify potential management problem cases.

    • Monitor for the prevention of premature STAUP/TC 470.

  2. This report is available on Control-D every Monday morning, Report Name: "Overage Report" , Job Name: CCA 4243D. The ORCAS coordinator will load the CCA report through the ORCAS delivery database. Then the CCA report will be available to the ORCAS managers and ORCAS TE.

  3. Items on the Report - For each case shown, the following information is provided:

    • TIN - Taxpayer Identification Number

    • IRS Rcd Date - The date IRS received the case

    • Status - Case History Status Code (A - Active, B- Background, C - Closed, M - Other long term delay, and S - Suspense)

    • BOD - Business Operating Division

    • CLC - Client Code

    • Category - Category of case

    • Freeze Codes - Freeze Codes that are on the IDRS account

    • MFT - Master File Tax

    • Mod Per - Tax Period on assigned account

    • Assigd Date - The date the case was assigned to a tax examiner

    • Plan No - If applicable

    • Activity Code - A 10 character field on IDRS that the tax examiner uses to enter actions taken on the case

    • Name Ctrl - Name Control on taxpayer's account

    • Action Date - Date of last action input on the account

    • Age - Number of days case has aged on IDRS

    • MF Mod Balance - Module Balance on IDRS

    • Stat Age - Indicates statute conditions for current and previous years returns - over, expired, or days remaining on statute

    • STAUP Cycle - Stops notices from generating until cycle listed

    • C Letter and Date - Date and type of CRX letter sent

  4. The Manager/Lead must review this report to ensure staged inventory cases are being assigned according to IRS receive dates. Annotate cases for follow-up actions by COB Monday. The reports should be maintained for two months. Highlight the cases on the report where:

    • The TE has failed to take timely actions such as follow-up on a case when the purge date has passed.

    • The case is in Nullified Unpostable (NLUN) category over 14 days old.

    • The Statute of Limitations will expire within 180 days.

    • The STAUP has expired or there is no STAUP on a balance due account.

  5. Manager/Lead will provide the tax examiner with the page(s) of the report where the cases are controlled to their IDRS number. Tax examiner will notate the actions taken on each case worked. Annotations should include:

    • "C" - Case moved to closed status.

    • "M" - Case moved to monitor status.

    • "S" - Case moved to suspense status.

    • Updated activity (for example: received an ATAO request, SSA lookup, etc.).

  6. The report should be returned to the Manager/Lead by the end of the employee’s work week. The tax examiner should work cases in the following priority order:

    • NLUN category cases.

    • The statute will expire within 180 days.

    • Taxpayer was contacted and purge date has passed.

    • Remaining cases in oldest date received order.

CCA 42-44 IDRS Multiple Case Control Report
  1. This report identifies cases when two or more employees have an open control base on the same TIN. It identifies the employee's IDRS numbers, tax year, and category for the duplicate controls.

  2. This report is available on Control-D every Monday morning. Report Name: "Multi Case Report" , Job Number: CCA 4244D.

  3. Items on the Report - For each case shown, the following information is provided:

    • TIN - Taxpayer Identification Number

    • BOD - Business Operating Division

    • BOD CLC - Business Operating Division Client Code

    • F/S - File Source

    • MFT - Master File Tax Account Code

    • Tax Period - Identifies the tax period that was controlled

    • PLN - Plan number, if applicable

    • N/C> - Name Ctrl

    • C# - Control Base Number

    • Employee # - Employee number whom case is assigned to

    • Status - Case History Status Code

    • Category - Category of first case

    • IRS Rcd Date - The first IRS received date

    • C# - Second Control Base Number

    • Employee # - Second employee number whom case is assigned to

    • Status - Second Case History Status Code

    • Category - Category of second case

    • IRS Rcd Date - The second IRS received date

  4. The Manager should:

    • Provide the report by COB Monday to the employee identified as having controls on the case, highlighting the control number assigned to their team member.

    • Instruct the employee to write the actions taken on the case on the report and return the annotated report to the Manager no later than close of business Wednesday.

    • After it is returned by the employee, review the report to determine if the correct actions were taken or return to the employee with feedback on the actions that need to be taken.

    • Maintain these reports for three months.

Activity Codes for Minister Waiver Processing

The following Activity Codes provide additional information about the action taken on the case. They will be used, along with appropriate History Items to leave an adequate audit trail. This will assist with any subsequent review of the account. This list is not all inclusive:

Suspense and Monitoring Activity Codes (IDRS CC:ACTON): Use this information to update the IDRS control base and/or to manage suspense inventory to take next action in a timely manner.

Activity Code Status Code Description
287CMMDD "S" Letter 287C sent where "MMDD" represents the end of the suspense period.
401CMMDD "S" Letter 401C sent where "MMDD" represents the end of the suspense period.
FEMA-OMMDD "S" Disaster type "-O Freeze" case identified where "MMDD" represents the disaster end date.
FEMA-SMMDD "S" Disaster type "-S Freeze" case identified where "MMDD" represents the disaster end date.
LSTCSEMMDD "S" When requesting a copy of lost application or correspondence where "MMDD" represents the end of the suspense period.

Activity Codes for Minister Waiver Closing Actions: Use the following Activity Codes when taking closing actions on the case.

Activity Code Status Code Description
4361DISAPP C Form 4361 is disapproved
4361APPRVD "C" Form 4361 is approved
4029DISAPP "C" Form 4029 is disapproved
4029APPROVD "C" Form 4029 is approved
4361NODECL "C" Form 4361 is returned to the taxpayer due to not receiving the declaration.
4361DISCNT "C" Form 4361 is being discontinued per the taxpayer’s request.
SETEXMPVER "C" Form 1040/1040X referral for SE Tax exemption determination: taxpayer status verified per IDRS CC:IMFOLE research showing existing MINISTER SE TAX CD.
MW-NDTPNRX "C" Form 1040X referral for SE Tax exemption determination: no decision based on taxpayer providing insufficient information (or no reply).

Physical Inventory Certificate

Tax Examiner Name:
IDRS#:
Date of CCA 4243:
Number of cases listed on your CCA 4243:
Action Taken YES/NO
Verify received dates are correct.  
Verify case was classified as correct program.  
Correct MFT was input.  
If case is missing, have followed the missing case procedure?  
Ensured all appropriate interim letters have been issued.  
Verified need for STAUPS and input if necessary.  
Ensured you are working your cases in FIFO (First-In-First-Out) order.  
Are cases in the correct status? (A-Assigned, M-Monitored, S-Suspense, etc)  
Program (Minister Waiver) Number of cases
Cases listed on your CCA 4243  
Missing  
Closed  
Added (newly controlled)  
TOTAL  
Number of cases currently in your possession:
I certify I have taken all actions stated above.
Print Name:
Sign Name:
Date:

Wall Inventory Instruction and Certification

Print Name:
Sign Name:
Date:
Wall Instruction and Certification

Run the CCA 42-43 for Minister Waiver. Sort the listing by age beginning with the earliest received date. This simplifies the process to verify each of the cases on your wall to the cases listed on the CCA 42-43.

Verify that the count in each open batch listed in the log book matches with the CCA 42-43.

Minister Waiver Program Number of Cases
Cases listed on your CCA 42-43  
Missing  
Closed  
Added (Newly Controlled)  
Total  

I certify that I have reviewed the process used to complete this physical inventory and am confident it reflects true volumes currently in the Operation. I certify the actions taken by the TEs are correct and warranted.

Department Manager Signature:
Date:
Operation Manager Signature:
Date:

Batch Control Sheet

Min Waiver Batch Cover Sheet
IRS Rec’d Date: Batch #: Case Type:
TIN MFT Tax Period Program Control STAUPS Interim Letter Issued Additional Issues