AccessibilitySkip to Top NavigationSkip to Main ContentHome  |  Contact IRS  |  About IRS  |  Site Map  |  Español  |  Help  

Part 4. Examining Process

Chapter 4. AIMS Processing

Section 9. Delinquent and Substitute for Return Processing

4.4.9  Delinquent and Substitute for Return Processing

4.4.9.1  (02-01-2006)
Introduction

  1. This section contains procedures for processing and closing delinquent returns secured by examination and substitute for returns (SFR).

4.4.9.2  (02-01-2006)
Research

  1. Before forwarding a secured delinquent return for the posting of the TC 150, or requesting an SFR, the examiner must request research. Use Form 6882, IDRS/Master File Information Request, or perform online research using Command Code IMFOL/BMFOL/INOLE.

4.4.9.2.1  (02-01-2006)
Spousal Research

  1. For IMF accounts, both the primary and secondary SSN's must be researched for prior filing and/or pending activity.

4.4.9.2.1.1  (02-01-2006)
Closing Controls if TP has Filed as the Spouse on a Joint Return

  1. If you discover that your non-filer taxpayer filed as the spouse on a joint return, the disposition depends on the type of controls you have on the account.

    • If you have controls for the primary SSN on the filed return, or will establish controls, transfer the time applied on ERCS on your non-filer case to the primary SSN's case. Complete Form 10904, Request for Record Deletion from AIMS(disposal code 38) and forward the form to your AIMS/ERCS Analyst following local procedures.

    • If you do not have controls for the primary SSN on the filed return, nor plan on establishing controls, complete Form 10904, Request for Record Deletion from AIMS(disposal code 38) and forward the form along with the workpapers to your AIMS/ERCS following local procedures. Do not modify the time on the case.

4.4.9.2.2  (02-08-1999)
Transcripts/IDRS

  1. Review transcript/IDRS to see if any of the following are present.

4.4.9.2.2.1  (02-01-2006)
CI Freeze

  1. If a CI freeze ("–Z" ) is present on the account, coordinate with CI to determine if Examination can work the case. If CI approves, use Push Code 049 on the requisition. This will cause the TC 424 to bypass the CI unpostable. A TC 150 does not have to be on the module to use Push Code 049. If there is no TC 150, the account will remain a skeletal record for 26 months and then age off of AIMS. Push Code 036 will unpost if there is a CI freeze at Master File. You cannot request an SFR if the account has a CI freeze.

4.4.9.2.2.2  (02-01-2006)
TC 150 Present on MF

  1. Do not send a delinquent return to the campus or request an SFR if a TC 150 has posted.

4.4.9.2.2.2.1  (02-08-1999)
Dummy Present on MF

  1. A TC 150 posting with no tax liability followed by a TC 240 posting for $500 (W–4 penalty) indicates that the campus has posted a dummy return. Any adjustments must be made as subsequent adjustments (i.e. TC 300).

4.4.9.2.2.3  (02-08-1999)
TC 595

  1. If research shows that the taxpayer is in TDI status (Master File status 02) input a TC 595 with Closing Code 57 to close the Collection control. Extreme care should be taken when using this transaction code since it will prevent the issuance of TDI notices to the taxpayer.

4.4.9.2.2.3.1  (02-01-2006)
Automatic TC 595

  1. For all tax years in TDI status 03, inputting a TC 424 with a push code of 020, 021, 036 or 037 will automatically generate a TC 595.

4.4.9.2.2.3.2  (02-08-1999)
Reversing TC 595

  1. The TC 595 must be reversed by Examination if a determination is made to not pursue the examination. The posting of a TC 150 (not an SFR) also satisfies the TC 595 and a reversal is not necessary.

4.4.9.2.2.4  (02-01-2006)
Credits on the Module

  1. SFR's - For both BMF and IMF, the computer generated SFR will automatically freeze the prepayment credits.

    • BMF - the posting of the SFR TC 150 will generate a TC 570 if there are credits on the module when the SFR posts.

    • IMF - the posting of the SFR TC 150 will generate a TC 570 if there are credits on the module or credits post to the module after the SFR posts.

  2. Secured Returns (No TC 150 Posted) - If payments are posted to the module and you want to prevent the credits from refunding when the TC 150 posts, enter the following codes on the Form 13133, Expedite Processing Cycle.

    • BMF - Enter an "X" in the box to the left of the CCC "X" . See IRM 2.24.1.

    • IMF - Enter an "X" in the box to the left of the CCC "3" . See IRM 2.24.1.

4.4.9.3  (02-01-2006)
Payments

  1. If payment is secured, prepare Form 3244-A, Payment Posting Voucher-Examinationfollowing procedures found in IRM 4.4.24, Payments and Remittances.

4.4.9.4  (02-01-2006)
Establishing AIMS/ERCS Controls

  1. Before AIMS/ERCS Controls can be established, research must be conducted. Instructions vary depending on type of return.

    • If you secure a delinquent return and there is no TC 150 posted, See IRM 4.4.9.5.

    • If your case file contains an SFR, See IRM 4.4.9.6.3.

    • If you need to generate an SFR, See IRM 4.4.9.6.2.

    • If you secure a delinquent return and want to accept it as filed and there is a TC 150 posted, See IRM 4.4.9.7.3.

    • If you secure a delinquent return with audit potential and there is a TC 150 posted, See IRM 4.4.9.7.4.

  2. Most non-filer accounts are created at the campus. For non-filer cases that are created in the field, establish the non-filer account on AIMS/ERCS as soon as it is known that an examination will take place or when examination time is first applied. For secured delinquent returns, establish AIMS/ERCS control as soon as a return is secured or time is first applied whichever is earlier.

4.4.9.4.1  (02-01-2006)
Form 5345, Examination Request

  1. Form 5345-Bis the Examination Request for Non-ERCS (Examination Return Control System) Users

  2. Form 5345-Dis the Examination Request for ERCS Users

4.4.9.4.1.1  (02-01-2006)
Form 5345-B, Examination Request Non-ERCS Users

  1. When completing Form 5345-B, Examination Request Non-ERCS Users,to establish a non-filer directly onto IDRS, include the following entries:

    1. Return Requested, do not leave blank which denotes return requested, since there is no return to request. Enter a "1" , which denote Form 5546, Examination Return Charge-Out& labels requested, or a "3" , which denotes, No Form 5546, Examination Return Charge-Out, No Labels, No Return requested.

    2. Push Code, enter 020, 021, 036 or 037. A push code must be used when establishing AIMS controls if there is no TC 150 posted at Master File. The Push Code holds the TC 424 at Master File until a TC 150 posts.
      Use 020 for delinquent returns.
      Use 021 if no return is secured and an SFR is not desired at the present time.
      Use 036 to cause a computer generated SFR to post to Master File. If input before close of business Thursday, the TC 150 will post on Saturday (if the TC 424 does not unpost).
      Use 037 for potential CID Referral/Non-filer.

    3. Source Code
      Use 024 for non-filers not related to any other return. This source code should rarely be used.
      Use 025 for the primary return of the non-filers built in Memphis.
      Use a related non-filer source code for returns related to returns already open.

    4. Reason for Request must be entered and consistent with the Push Code used:
      If Push Code 020 - write: "DELINQUENT RETURN SECURED BY EXAMINATION " .
      If Push Code 021 - write: "NONFILER" .
      If Push Code 036 - write: "EXAM/SFR" .
      If Push Code 037 – write: "POTENTIAL CI / NONFILER" .

4.4.9.4.1.2  (02-01-2006)
Form 5345-D, Examination Request ERCS (Examination Return Control System) Users

  1. When completing Form 5345-D, Examination Request ERCS Usersto establish a non-filer via ERCS, include the following entries:

    1. Do you want the original return? --- Answer "N" for no, since there is no return to request.

    2. Do you want Labels? --- "Y" for yes and " N" for no.

    3. Push Code, enter 020, 021, 036 or 037. Provide the appropriate push code for each tax period listed. A push code must be used when establishing AIMS controls if there is no TC 150 posted at Master File. The Push Code holds the TC 424 at Master File until a TC 150 posts.
      Use 020 for delinquent returns.
      Use 021 if no return is secured and an SFR is not desired at the present time.
      Use 036 to cause a computer generated SFR to post to Master File. If input before close of business Thursday, the TC 150 will post on Saturday (if the TC 424 does not unpost).
      Use 037 for potential CID Referral/Non-filer.

    4. Source Code:
      Use 24 for non-filers not related to any other return. This source code should rarely be used.
      Use 25 for the primary return of the non-filers built in Memphis.
      Use a related non-filer source code for returns related to returns already open.

    5. Reason for Request must be entered and consistent with the Push Code used:
      If Push Code 020 - write: "DELINQUENT RETURN SECURED BY EXAMINATION " .
      If Push Code 021 - write: "NONFILER" .
      If Push Code 036 - write: "EXAM/SFR" .
      If Push Code 037 – write: "POTENTIAL CI / NONFILER" .

4.4.9.4.2  (02-01-2006)
AIMS Control When TP does not have a TIN

  1. For returns where the taxpayer does not have a TIN, the group should request that the taxpayer submit Form SS-4, Application for Employer I.D. Number,for EIN to the Internal Revenue Service, or Form SS-5, Application for a Social Security Number Card (Original, Replacement or Correction),for SSN to the Social Security Administration. Also request the taxpayer furnish the IRS with the SSN assigned by SSA as soon as possible.

  2. In the interim, the group should request a dummy TIN (via Command Code AMTIN7) from the local AIMS/ERCS unit. Establish NMF AIMS control using Form 5354, Examination Request Non-Master File. See IRM 4.4.9.4.2. for additional information. The NMF control is to provide AIMS/ERCS controls until a TIN is secured. After the TIN is secured, close the NMF control with a DC 28.

  3. If the taxpayer will not request their own EIN, contact the campus Entity Control section to obtain the assignment of a permanent EIN.

  4. A computer generated SFR cannot be done on a temporary or invalid TIN.

  5. The case cannot be forwarded to CCP for closing unless a TIN has been secured.

4.4.9.5  (02-01-2006)
Delinquent Return Secured - No TC 150 Posted

  1. Upon receipt of a delinquent return, ensure that the following items are completed:

4.4.9.5.1  (02-08-1999)
Name

  1. The taxpayer's name must be typed or printed legibly, with no strikeovers. The name used with a recently acquired EIN should duplicate the taxpayers' Form SS-4, Application for Employer I.D. Number.

4.4.9.5.1.1  (02-01-2006)
Incorrect Name

  1. If the name is not correct, prepare or secure a corrected return and solicit the taxpayer’s signature on the corrected delinquent return. Mark an "X" across the face of the incorrect return. Write the word "Invalidated" , sign and date below the notations. Keep the invalidated return in the case file.

4.4.9.5.2  (02-01-2006)
Address

  1. Verify with the taxpayer that the address shown on the return is the taxpayer's current address. If it is not, cross out the address on the return and enter the taxpayer's current address. Compare the address on the return with the address on ENMOD or INOLES. The posting of the return will update the address at Master File but it will delay the posting of the TC 150 by one cycle. If the address is different and you do not want a one cycle delay, prepare a Form 2363reflecting the address change and fax it to Centralized Case Processing (CCP). Fax numbers for CCP can be found in the Contact Listing posted to the AIMS website: http://sbse.web.irs.gov/AIMS.

4.4.9.5.3  (02-08-1999)
SSN/EIN

  1. Verify the TIN shown on the return is correct by researching Master File. If the taxpayer does not have a TIN, See IRM 4.4.9.4.2..

4.4.9.5.4  (02-08-1999)
Forms/Schedules

  1. Verify that all W–2’s, required forms and schedules are present and the computations are correct.

4.4.9.5.5  (02-08-1999)
Signature

  1. Verify the presence of the taxpayer’s original signature and the date the return was signed.

4.4.9.5.6  (02-01-2006)
Prior Year Return

  1. To call attention to a prior year return, enter the tax period in YYYYMM format in bold numbers above the tax period printed on the form. If the appropriate tax year form was not used, Submissions Processing will accept a current year form.

4.4.9.5.7  (02-08-1999)
Date Received

  1. Date stamp the delinquent return when it is received. If a date stamp is not available, annotate on the return in the upper left side margin, "Received" , the date received, and the examiner’s name and title.

4.4.9.5.8  (02-01-2006)
Research Master File/Establishing Case on ERCS/AIMS

  1. BMF - Check ENMOD or INOLES.

    • Does the entity already exist? If it does not, complete a Form 2363and fax to CCP. To create an account, enter an "X" in box to the right of the Trans Code 000 and enter the earliest tax year that you are working. If input successfully, the account will establish the Monday after the 2nd weekend from the input date. Do not send the return to Submissions Processing until the account is created.

    • ERCS controls can be requested even though an account does not exist.

    • AIMS controls cannot be requested until the account is created.

  2. IMF - Check ENMOD or INOLES.

    • An account does not have to exist for an IMF return to post. The posting of an IMF TC 150 will create the module.

    • ERCS controls can be requested even though an account does not exist.

    • AIMS controls cannot be requested until the account is created either by the posting of the return, or submission of Form 2363. To create an account, enter an "X" in box to the right of the Trans Code 000 and enter the earliest tax year that you are working. Fax the form to CCP. If input successfully, the account will establish the Monday after the 2nd weekend from the input date. If you are creating an account, do not send the return to Submissions Processing until the account is created.

4.4.9.5.8.1  (02-01-2006)
Filing Requirement

  1. BMF: Displayed as "Filing Requirements" on ENMOD and INOLES.

    • For income tax returns, check to see if there is a filing requirement for an income tax return. If there is a filing requirement, ensure that it is consistent with the secured return. Example: If the filing requirement is for a Form 1065 or Form 1120Sand you secure a Form 1120, a Form 2363must be completed (check Item 016, Change misc. codes), enter the appropriate filing requirement code and fax to CCP. See Document 6209 for a list of filing requirement codes.

    • If no filing requirement is present, it is not necessary to create one unless you are attempting to post a Form Form 1120S . Entity must show that an 1120S election was filed or the TC 150 will unpost UPC 310 RC 4. For all other returns, the posting of the return will create the filing requirement.

    • For non-income tax returns, a filing requirement is not necessary. The posting of the return will create a filing requirement.

  2. IMF: Displayed as MAIL-FR>XX on ENMOD; Displayed as MFR XX on INOLES.

    • A filing requirement is not necessary. The posting of the return will create a filing requirement.

4.4.9.5.9  (02-01-2006)
Photocopy the Return

  1. Make a copy of the delinquent return to maintain in the case file. On the copy, write in red on the top margin COPY OF RETURN . The original return will be filed under the TC 150 DLN. The examination should be conducted using "Copy of Return Procedures" which will cause the original return to be pulled and associated with the copy under the TC 421 DLN after the case is closed.

4.4.9.5.10  (02-01-2006)
Original Return

  1. Write in red on top margin of the original return, "DELINQUENT RETURN SECURED BY EXAMINATION." The original return WILL NOT be returned to the group but will be filed under the TC 150 DLN. When case is closed with a Copy of Return blocking series, Files will pull the original return, associate it with the Exam case file which will be filed under the TC 421 DLN.

4.4.9.5.11  (02-01-2006)
Form 13133, Expedite Processing Cycle

  1. Attach a completed Form 13133, Expedite Processing Cycleto the front of EACH return paying special attention to the following:

    • Check box for "DELINQUENT RETURN" . It is essential that a separate Form 13133, Expedite Processing Cycle be prepared for each tax period. If there are multiple tax periods for the same taxpayer indicate on the first Form 13133, Expedite Processing Cycle, "BLOCK TOGETHER—Related tax periods/do not separate "

    • Contact name - This can be the Examining Officers' Information or the group secretary.

    .

4.4.9.5.11.1  (02-01-2006)
Penalties

  1. If you want penalties assessed, make NO notations in the penalty area of the Form 13133, Expedite Processing Cycle. Failure to Pay, Failure to Deposit, Failure to File, and Estimated Tax Penalty, are all automatically computer generated and assessed if applicable.

    Note:

    Certain penalties such as the Fraudulent Failure to File (FFTF) penalty, cannot be assessed during the initial processing of the return. This penalty must be put on an RAR, a Form 5344, Examination Closing Record prepared, and assessed as a partial or during the final closing of the examination. If you enter an "R" on the Form 13133, Expedite Processing Cycle, you will not have to abate the previously assessed Failure to File (FTF) before assessing the FFTF.

  2. If you DO NOT WANT penalties assessed during the initial processing of the TC 150, notate this on the Form 13133, Expedite Processing Cycleby putting an "X" in the box to the left of the applicable Computer Condition Codes/Return Processing Code..

    CCC Definition
    BMF
    D Do Not assess Failure to Pay Penalty
    J Do NOT asses Failure to Deposit Penalty
    (Forms 720, 940, 941, 943, 945, and 1042).
    R Do NOT assess Failure to File Penalty
    8 Do NOT assess Estimated Tax Penalty
    IMF
    M Do NOT assess Failure to Pay Penalty
    P Do NOT assess Estimated Tax Penalty
    R Do NOT assess Failure to File Penalty

4.4.9.5.12  (02-01-2006)
Statute Issues

  1. Secured delinquent returns may have RSED and ASED issues.

4.4.9.5.12.1  (02-01-2006)
Refund Statute of Expiration Date (RSED)

  1. If the IRS received date is later than the RSED (Refund Statute Expiration Date) but the post mark is on or prior to the RSED, DO NOT enter a Computer Condition Code (CCC) as stated below. By NOT entering a CCC, the campus will forward the delinquent return to the Statute Unit. The Statute Unit will code the return to allow a refund to be released if it is a refund return. The refund will not be released if this process is not followed.

4.4.9.5.12.2  (02-01-2006)
Assessment Statute of Expiration Date (ASED)

  1. If the normal ASED has expired or is within 3 months of expiration, a code must be entered on the Form 13133, Expedite Processing Cyclewhich will cause the return to bypass the statute unit. Examination has verified the ASED therefore it is not necessary to have the return go to the statute unit. On the Form 13133, Expedite Processing Cycleplace an "X" in the box to the right of the:

    1. "K" for IMF

    2. "W" for BMF

4.4.9.5.13  (02-01-2006)
Sending the Returns to Submissions Processing

  1. After all the steps above are completed, the delinquent return, Form 13133, Expedite Processing Cycle and Form 3210must be mailed to Submissions Processing at the appropriate campus using the table below.

    IMF returns:
    With International Aspects, send to: IRS
    PO Box 245
    Philadelphia, PA 19020
    All other IMF send to: IRS: Stop 515
    310 Lowell Street
    Andover, MA 05501

    If group securing BMF return is in LMSB, send to:
    IRS - Stop 6054
    1973 North Rulon White Blvd.
    Ogden, UT 84404

    If group securing BMF return is Not in LMSB, send to:
    With International Aspects send to: PO Box 245
    Philadelphia, PA 19020
    All other BMF, send to: IRS - Stop 31
    201 W. Rivercenter Blvd.
    Covington, KY 41011

4.4.9.5.13.1  (02-01-2006)
Monitoring for the Posting of the TC 150

  1. The group will monitor for the posting of the TC 150. The ERCS Overage Requisitions Report may be helpful in monitoring for the posting.

  2. When the TC 150 posts, AIMS and ERCS will become full records.

  3. If AIMS and ERCS do not become full records within 6 weeks, the following steps should be followed to determine the cause of the delay.

    Review CC TXMOD
    a. If pending (PN) TC 150, wait 1-2 weeks for TC 150 to post.
    b. If rejected (RJ) TC 150, the return may not post for some time. For BMF, refer to IRM 3.12.38, Error Resolution - General Instructions, Exhibit 21 if the ERS-STS-CD is present. For IMF, refer to IRM 3.12.37, Error Resolution - General Instructions.
    Research CC UPTIN to see if TC 150 unposted.
    a. UPC and reason code identifies the reason why the transaction went unpostable. Refer to Document 6209, Section 8.
    b. Status Code identifies the status of the unpostable.
    A = Opened/Assigned
    B = Special Closure
    C = Suspense
    c. Contact your local AIMS/ERCS analyst who will in turn contact the person working the unpostable to offer assistance in resolving the unpostable.
    Research prior and subsequent tax periods to see if return posted to the wrong tax period. If so, contact Centralized Case Processing and request that Reprocessing procedures be initiated.

  4. If after 8 weeks there is no record of a posted TC 150, pending TC 150, rejected TC 150 or unposted TC 150, resubmit the return to Submissions Processing. Notate on the copy of the return "Original return was lost, process as original" .

4.4.9.5.14  (02-01-2006)
Group Procedures After Delinquent Return TC 150 Has Posted

  1. Follow normal examination procedures paying special attention to the following.

    • Use the amounts from the delinquent return as the starting figures on the RAR.

    • Notate in red at the top of the copy "Copy of Return" and include in case file.

    • Identify the return on RGS as a "Copy of Return" to ensure proper blocking series on the Form 5344, Examination Closing Record.

4.4.9.5.14.1  (02-01-2006)
No Change to Original Return

  1. If no changes are warranted, close case as a no-change case and include the following entries on the Form 5344, Examination Closing Record.

    • Item 13, Disposal Code of 01

    • Item 37, Delinquent Return. This entry should reflect a " T" for the first return secured, an "R" for the subsequent returns secured. See IRM 4.4.12.4.47, Examined Closings, Surveyed Claims, and Partial Assessments.

    • Item 414, Delinquent Return Amount. This entry should reflect the refund or balance due shown on the return. See IRM 4.4.12.4.72, Examined Closings, Surveyed Claims, and Partial Assessments.

  2. Prepare a "no change" RAR.

4.4.9.5.14.2  (02-01-2006)
Changes to Original Return

  1. If changes are warranted, follow normal closing procedures for changed cases but include the following entries on the Form 5344, Examination Closing Record.

    • Item 13, Disposal Code - use the applicable disposal code of the examination, agreed, unagreed, etc.

    • Item 37, Delinquent Return. This entry should reflect a " T" for the first return secured, an "R" for the subsequent returns secured. See IRM 4.4.12.4.47, Examined Closings, Surveyed Claims and Partial Assessments..

    • Item 414, Delinquent Return Amount. This entry should reflect the refund or balance due shown on the return. See IRM 4.4.12.4.72, Examined Closings, Surveyed Claims and Partial Assessments.


More Internal Revenue Manual