- 4.19.4.3 Replies
-
Work the penalty issues for these cases in accordance with IRM 20.1, Penalty Handbook.
-
If original Forms W-3c/W-2c are received for IRS CAWR cases:
-
Ensure legibility and that valid EIN, TIN, and dollar amounts are present
-
Post money changes to the CAWR module by completing Form 6209
-
Write "Recon" on the original Forms W-3c (copy A) and send it with all W-2c copies to SSA .
-
Photocopy the original Forms W-2c and attach the copies to the correspondence received or a printout of the first page of the CAP case file
-
Make a second copy for the W-2c program, if withholding changes are present on these documents for the work outlined in See IRM 4.19.4.8.
-
-
Annotate in red, "IRS RECON" on the Forms W-3 or transmittal forms and mail them to the following address:
Social Security Administration
Data Operations Center, ATTN: IRS Reconciliation
1150 E. Mountain Drive
Wilkes-Barre, PA 18702-7997
-
If the taxpayer states that all W-2s have been filed, are correct and provides Form 941c or 843 to correct the account:
-
Work in accordance with DP Tax Adjustments IRM 21.7, Business Tax Return and Non-Master File Accounts.
-
Do not decrease the 94X account below the amounts reported on the Forms W-3/W-2 and W-3c/W-2c.
IF THEN The reply is received with Form 941c requesting an increase in social security wages/tips, Medicare wages and/or federal income tax withheld. -
Input a TC 290 for the appropriate money amount and the applicable Item Adjustment Codes using Blocking Series 55 with the correct correspondence and IRS received date. Use the IRS Received date as the Amended Claims date.
-
Input the appropriate adjustment amount you will be adjusting and the number of tax modules (quarters) adjusted on the CAP Detail screen.
-
Close CAP using the appropriate closing code.
The reply is received with Forms 941c and/or Form 843 requesting a decrease and an Authorized Original Signature is present: -
Input a TC 291 for the appropriate money amount and the applicable item adjustment codes using blocking series 55 with the correct correspondence and IRS received date. Use the IRS Received as the amended claims date.
-
Input the appropriate adjustment amount you will be adjusting and the number of tax modules (quarters) adjusted on the CAP Detail Screen.
-
Close CAP using the appropriate closing code.
Note:
DO NOT decrease the Form94X account below the amounts reported on the Forms W-3/W-2 and W-3c/W-2c
If an Original Authorized Signature is not present. -
Return Form 941c and/or Form 843 to the taxpayer for an authorized signature.
-
Assess and close the case using the appropriate case processing procedures. See IRM 4.19.4.7.
-
-
When working replies always research IDRS for a X-Ref EIN. If found, check for the X-Ref EIN on CAP. If the X-Ref EIN is on CAP, work the cases together.
Note:
Notate the X-Ref EINs on the CAP detail screens.
.
-
If the X-Ref EIN is not on CAP:
-
Research the X-Ref number (i.e., CC BMFOL definer U, INOLE definer T.)
-
Request WIRS for the X-Ref number (if needed).
-
Correspond with the taxpayer for missing Forms W-3/W-2 (if needed).
-
If necessary, transfer the Forms W-3/W-2 to the appropriate EIN via Forms 6209 and 6494.
-
If the information balances the account, close the case by entering the appropriate closing code and file the correspondence.
-
If the information does not balance the case assess using the applicable procedures in See IRM 4.19.4.7.
-
-
Input a TC 971 on IDRS using CC REQ77 with action code 017 to identify the cross reference EIN.
-
If the taxpayer states that the W-2s were filed by a parent corporation or another EIN:
-
assess the necessary tax and /or penalty.
-
send 2057c requesting the EIN under which the Forms W-2 are filed and advising them that tax and/or penalty was assessed.
-
-
If WIRS are needed to resolve cases, order them through IDRS using CC MFTRA definer W (MFTRAW).
-
If the X-Ref EIN has an LCI contact the LCTU prior to adjusting any tax and/or penalties. See IRM 4.19.4.2.1.1.
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When the employer replies and a missing return is received, take the following actions:
IF THEN The employer replies, and furnishes the missing returns balancing the case. -
Check IDRS to see if a TC 150 is present.
-
If a TC 150 is not present, the returns are original returns and need to be processed.
-
Process the returns received as original, even if the return was marked "copy" .
-
Edit the return underlining the EIN, Tax Period, Name Control and IRS Received date, if not present. In the left hand margin of the return write "599" with appropriate closing code indicator. Make a copy to attach to the case file.
-
Send the original return to Submission Processing following local procedures.
-
Send a 2057c closing letter informing him/her the return has been sent to the appropriate area for processing.
-
Check IDRS for an open TDI indicator. If present and the current status on the module is 02 or 03 use CC FRM49 to input a TC 599 CC 94.
-
If the case is in any other status use CC FRM49 to input a TC 599 CC 18 on the missing tax return module.
-
File correspondence using the "No Assessment needed" case processing procedures. See IRM 4.19.4.7.1.
The reply states the return is for one tax period, but the actual return shows another tax period. -
Edit the correct tax period on the return and process as instructed above.
Note:
This allows Submission Processing to process the returns accurately.
The employer states they filed the returns in question and the return posted to Master File. -
File correspondence using the "No Assessment needed" case processing procedures. See IRM 4.19.4.7.1.
The employer replies furnishing the missing returns and the information does not balance the case. -
Check IDRS to see if a TC 150 is present.
-
If a TC 150 is not present, the returns are original returns and need to be processed.
-
Process the returns received as original, even if the return was marked "copy" .
-
Edit the return underlining the EIN, Tax Period, Name Control and IRS Received date, if not present. In the left hand margin of the return write (process as original, 599, and the appropriate closing code indicator). Make a copy to attach to the case file.
-
Send the original return to Submission Processing following local procedures.
-
Send a 2057c closing letter informing him/her the return has been sent to the appropriate area.
-
Check IDRS for an open TDI indicator. If present and the current status on the module is 02 or 03 use CC FRM49 to input a TC 599 CC 94
-
If the case is in any other status, use CC FRM49 to input a TC 599 CC 18 on the missing tax return module.
-
Assess the case following "IRS-CAWR Assessment Needed" case processing procedures. See IRM 4.19.4.7.1.
-
-
The following information applies to original Forms W/3W-2, copies of Forms W-3/W-2 and Forms W3c/W-2c. When reviewing a reply check any forms received in the correspondence for errors.
IF THEN The reply is received with Forms W-3/ W-2 and/or Forms W-3c/W-2c correcting social security wages, medicare wages, social security tips, AEIC, and/or Federal Income Tax withheld balancing the case. -
For W-2c only: Prepare automated Form 6209 to adjust the appropriate amounts.
-
Prepare Form 6494 or send copies of Forms W-3/W-2 and/or Forms W-3c/W-2c to SSA (if appropriate).
-
File Correspondence following the "IRS-CAWR No Assessment needed" case processing procedures. See IRM 4.19.4.7.1.
The reply is voiding Form(s) W-2 processed in error and the information will balance the case. -
Prepare automated Form 6209 to adjust the appropriate amounts.
-
Prepare Form 6494, using correction code (4) to void the attached Forms W-2s to correct SSA records.
Note:
If exact duplicates Form 6494 is not needed.
-
File Correspondence following the "IRS-CAWR No Assessment needed" case processing procedures. See IRM 4.19.4.7.1.
The reply indicates Forms W-3 and/or Forms W-2 were processed under an incorrect EIN and the information will balance the case. -
Prepare automated Form 6209 to transfer Forms W-2 to the correct EIN.
-
Prepare Form 6494 with correction code (3) to correct SSA records.
-
File Correspondence following the "IRS-CAWR No Assessment needed" case processing procedures. See IRM 4.19.4.7.1.
The reply indicates social security wages were reported over the maximum and the information will balance the case. Note:
Refer to Document 6209 Section 3.12, Social Security Tax Rates
-
Prepare Form 6209 to reduce social security wages to the maximum.
-
Do not prepare Form 6494.
-
Send a 2057c closing letter explaining the social security maximum wage amounts to the taxpayer and close the case on CAP using the appropriate closing code.
-
File Correspondence following the "IRS-CAWR No Assessment needed" case processing procedures. See IRM 4.19.4.7.1.
-
-
This section addresses any reply received for a case that has magnetic media attached or paper forms attached.
Note:
ALWAYS make a copy of any Forms W-3/W-2/W-3c/W-2c or substitute forms received. A copy must be attached to the CAWR file to substantiate any actions taken.
IF THEN The employer submits information on magnetic media. Examples: -
Full Size Tape Reel
-
Compact Disc
-
Floppy Disk
-
Send 2057c closing letter informing the taxpayer that SSA no longer accepts magnetic media and they must provide the IRS with paper copies of Forms W-2.
-
Properly dispose of magnetic media follow local security procedures.
-
Process the case following the appropriate procedures.
The employer submits a wage listing showing all required information to balancethe account. -
Prepare automated Forms 6209 .
-
Prepare Form 6494 and attach the wage listing and send to SSA.
-
Highlight and identify the data on the first employee for SSA to use as a guide to processing the submission.
-
File Correspondence following the "IRS-CAWR No Assessment needed" case processing procedures. See IRM 4.19.4.7.1.
The reply includes Form(s) W-2/W-2c that balance the case -
For Form W-2c only: Prepare automated Form 6209
-
Prepare Form 6494 and attach Forms W-2/W-2C and send to SSA.
-
File Correspondence following the "IRS-CAWR No Assessment needed" case processing procedures. See IRM 4.19.4.7.1.
The reply includes Form(s) W-2/W-2c that take the case below tolerance. -
For Forms W-2c only: Prepare automated Form 6209.
-
Attach copies of Forms W-3/W-2/W-2c/W-3c received to Form 6494.
-
File Correspondence following the "IRS-CAWR No Assessment needed" case processing procedures. See IRM 4.19.4.7.1.
The reply includes Forms W-2/W-2c that increasing any of the applicable fields (social security wages/tips, medicare wages, Federal Income Tax Withheld, and/or AEIC) to more than the 94X amounts, -
For Form W-2c only: Prepare automated Form 6209.
-
Prepare Form 6494 and attach Forms W-2/W-2C and send to SSA.
-
Assess the case following "IRS-CAWR Assessment Needed" case processing procedures. See IRM 4.19.4.7.1.
-
-
The Civil Penalty is due to IRS from the entity that incurred the liability.
Example:
If the corporation is T. Pine Enterprises and Tom Pine sold the entity (T. Pine Enterprises) to John Jones, the corporation itself, T. Pine Enterprises, is responsible for the liability, regardless of who the officers or owners are.
-
In TY 2005, a new Form 941, Schedule D was introduced. This Schedule D will allow the parties involved in Acquisitions, Statutory Mergers, or Consolidations to report discrepancies identified as a result of the merger.
IF THEN The taxpayer is a corporation and responds they bought the business and are not liable for the discrepancy and/or Civil Penalty OR The current or previous owner of the corporation can establish a payment arrangement, however, the payment arrangement does not have an impact on the Service's ability to assess the liability. -
Send a 2057c closing letter on CAP, explaining that the corporation (the entity as in the above example) is liable.
-
Assess the case following the applicable Assessment Needed case processing procedures. See IRM 4.19.4.7.
The taxpayer is other than a corporation and states he/she bought the Business and are not liable for the discrepancy. -
Send a 2057c closing letter on CAP informing the taxpayer he/she should have requested a new EIN when purchasing the business.
-
Assess the case following the applicable assessment needed case processing procedures. See IRM 4.19.4.7.
You receive Forms W-2c and Forms 941c but the taxpayer provides a new EIN -
Make the appropriate adjustments on IDRS See IRM 4.19.4.3.4.or transfer the return(s) to the new EIN if necessary using Form 12810.
-
Update CAP with the correct address to ensure notices are sent to the previous owner.
-
Send a 2057c closing letter explaining the adjustments made to the taxpayer's account and close the case on CAP using the appropriate closing code.
-
Forward Forms W-2c to SSA on Form 6494.
The taxpayer does not provide the information necessary to resolve the case -
Send a 2057c closing letter explaining why the reply was insufficient requesting the appropriate Forms to resolve the discrepancy.
-
Follow procedures in first If and Then statement.
the taxpayer provides a Schedule D with information that resolves the discrepancy -
Enter the x-ref EIN into the x-ref field on the CAP detail screen.
-
File Correspondence following the "IRS-CAWR No Assessment needed" case processing procedures. See IRM 4.19.4.7.1.
the taxpayer provides a Schedule D with information that does not resolve the discrepancy -
Assess the case using "IRS-CAWR Assessment needed" case processing procedures. See IRM 4.19.4.7.1.
-
-
Large food or beverage establishment employers are required to report allocated tips under certain circumstances.
IF THEN The reply indicates tips and no Form W-3c/W2c were received Note:
Forms W-3c/W-2c must be filed to correct the discrepancy.
-
Send a 2057c closing letter explaining that when we receive additional information we will reconsider the adjustment to their account.
Note:
If the taxpayer states the discrepancy is due to allocated tips explain amounts should be reported on the Allocated tips Line 8 on Forms W-2.
-
Assess the case using "IRS-CAWR Assessment needed" case processing procedures. See IRM 4.19.4.7.1.
The reply indicates tips were incorrectly reported and Forms W3c/W2c were received, -
Prepare automated Form 6209 to adjust all appropriate fields based on the Forms W3c/W-2c amounts.
-
Prepare Form 6494 using the correction code 5.
-
File Correspondence following the "IRS-CAWR No Assessment needed" case processing procedures. See IRM 4.19.4.7.1.
-
-
Household Employers must file Schedule H (Form 1040) to report wages to the IRS and Forms W-2 with SSA. Schedule H may be filed by both the Primary and Secondary taxpayers. Work any Schedule H issue as you would other CAWR issues. Actions specific to Schedule H are included in this TRIDOC.
-
Fiscal year filers must report wages paid on a calendar year basis. Fiscal year taxpayers filing individual income tax returns must include a Schedule H covering the period January 1 through December 31.
-
The household employment tax is reported on the appropriate line of Form 1040 and included in the TC 150 amount. If an adjustment is necessary, use Blocking Series 05, Reason Code (RC) 050, and Source Code 2 to adjust the appropriate line for employment taxes from Schedule H.
-
When making adjustments to Forms 1041 household employment tax from Schedule H, use Blocking Series 55.
-
Schedules H filed with Form 1040, Refer to IRM 21.6, Individual Tax Returns.
-
Schedules H Filed With Form 1041, Refer to IRM 21.7,Business Tax Return and Non-Master File Accounts.
-
The interest free provisions for adjustments on BMF employment taxes are in effect for errors discovered on IMF, Schedules H. Refer to IRM 21.6, Individual Tax Returns, for procedures. Reference Codes for Adjusting Schedule H are as follows:
To Correct the For the Primary Taxpayer, Use Reference Code For the Secondary Taxpayer, Use Reference Code EIN on CC ADJ54 — XREF/PRIM/SEC-EIN Field 993 for .00 994 for .00 Total FICA Wages 004 904 Total Medicare Wages 073 973 Federal Income Tax Withheld (if requested by employee) 003 903 SSA and Medicare Tax 007 907 AEIC (Do not use on MFT 05 adjustments.) 335 335 Note:
See IRM 21.6.4.4.8.2 for additional instructions on adj Sch H accounts.
-
IF THEN The reply indicates the employees are social security exempt and the discrepancy is only in social security (FICA) and Medicare wages for an employer -
Do not accept their explanation unless they provide documentation to show the employees are covered under a state or political subdivision retirement system, or qualifies for one of the exceptions listed in IRM 21.7, Business Tax Return and Non-Master File Accounts.
The documentation described above is provided by the taxpayer: -
Prepare automated Form 6209 if applicable.
-
Prepare Form 6494 to adjust the social security and/or Medicare wages if applicable.
-
File Correspondence following the "No Assessment needed " case processing procedures. See IRM 4.19.4.7.1.
If the documentation above is not provided by the taxpayer. -
Assess the case using "IRS-CAWR Assessment needed" case processing procedures. See IRM 4.19.4.7.1.
-
-
The Statute Awareness Program was created to minimize barred assessments and erroneous abatements.
-
For information on conditions which might extend the Assessment Statute Expiration Date (ASED), Refund Statute Expiration Date (RSED), or Collection Statute Expiration Date (CSED), see IRM 25.6, Statute of Limitations .
-
RSED Procedures —Claims for credit or refund of prepaid credits must be filed within three (3) years from the return due date or extended due date, whichever is later. Claims for credit or refund of non-prepaid credits must be filed within two (2) years from the date of the last payment.
Reminder:
Ensure the claim is for payment of tax, not penalties and/or interest.
-
This credit will be moved to the Excess Collection Files (XSF) and cannot be used to offset liabilities for other periods.
-
ASED Procedures — If the ASED on a tax increase case is within ninety (90) days, route the case to the Procedures Statute function using Form 3210, Document Transmittal. Notate on the transmittal "CAWR case," for each routed ASED case.
-
If the assessment is over $10 million dollars, send a complete copy of the IRS-CAWR or SSA-CAWR case file to the following address.
Office of Unpaid Assessments Analysis
Technical Analysis Section
P. O. Box 24551
ATTN: Mari McMahon Stop 1035 BB
OS:CFO:R:U:T
Kansas City, MO 64131
-
See LEM 4.19.4.3.13.
-
IRM 25.6 , Statute of Limitations, will provide instructions in the event that a taxpayer's claim is fully or partially disallowed even if the statute is imminent (within 90 days) or already expired.
-
Document 7368 , Basic Guide for Processing Statute Cases, is available to all service campuses and area offices. Order this document from the National Distribution Center using catalog number 10296C. Document 7368 contains valuable information on statute-specific topics; therefore, a copy should be present in each working group.
-
Reference the following IRMs, as necessary, in regards to erroneous abatements. The CAWR unit management will need to determine who takes care of the forms and where to send them.
-
IRM 21.6, Individual Tax Returns
-
IRM 21.7 , Business Tax Returns and Non-Master File Accounts
-
IRM 21.4.4 , Refund Inquires - Manual Refunds
-
IRM 25.6 , Processing Procedures Exempt Organization Business Master File, and
-
IRM 25.7 , Statutes of Limitations
Note:
To eliminate —D freeze issues use priority code 4 when abating any prior year civil penalties and tax assessments where there are applied payments.
-
-
When working the reply take into consideration the reason the PAL indicator is present, as it may resolve or help to resolve the discrepancy.
IF THEN The CAWR case has a PAL indicator (identified after screening) and the taxpayer replies resolving the discrepancy. Note:
Take into consideration the reason the PAL indicator is present
Note:
This indicator is used by Automated Under Reporters (IMF)
-
Prepare automated Form 6209 to adjust the appropriate amounts if applicable.
-
Prepare Form 6494 or send copies of Forms W-3/ W-2 and/or Forms W-3c/W-2c to SSA if applicable.
-
File Correspondence following the "No Assessment needed " case processing procedures. See IRM 4.19.4.7.
The CAWR case has a PAL indicator (identified after screening) the reply does not resolve the discrepancy. -
Assess and close the case using the appropriate case processing procedures. See IRM 4.19.4.7.
-
-
A delete case is one which has been brought into balance at Enterprise Computing Center-Martinsburg (ECC-MTB) through various updates to the module.
IF THEN A response is received and the taxpayer identifies an issue unrelated to previous correspondence -
If the taxpayer is addressing a CAWR issue, work the case according to the taxpayer's intent.
-
If the taxpayer's issue is unrelated to CAWR, forward the correspondence to the appropriate area.
The reply is received and the case has been " deleted " on Master File. (CAP shows closing code 11) -
Send a 2057c letter explaining IRS received additional information balancing your account. No further information will be necessary.
-
File Correspondence following the no assessment needed case processing procedures. See IRM 4.19.4.7.
-
-
A Sole Proprietorship is a business operated by the owner and as such has wage reporting requirements similar to a single member Limited Liability Corporation (LLC). The owner of a Sole Proprietorship and the single member LLCs must include all income and expenses on the owner's tax return.
Note:
The Sole Proprietor, who withdraws income from the business and reports total income and loss on Form 1040, acquires income from the business in the form of gains, not wages.
Reminder:
A Schedule C taxpayer (Sole Proprietor/LLC) does not give (or file) Form W-2 or file a Form 94X when the owner is the only worker.
-
The wages a Sole Proprietor pays to their employees should match the Schedule C wages, the Forms W-2, and the Form 94X wages.
-
The owner is the only one authorized to sign the tax returns unless there is an authorized POA or RAA on file. With respect to income tax returns on forms in the 1040 series, a POA entitles someone other than the owner to sign the return only under certain circumstances. See "Authority to Sign Your Return" section of Form 2848 instructions.
-
See IRM 21.7.13.5.4.2 , Assigning Employer Identification Numbers, for more information on these types of taxpayers.
IF THEN The Sole Proprietor has employees -
The taxpayer should show wages on Schedule C.
Note:
Although they are not the Sole Proprietor's wages, they are wages paid to their employees.
If the Sole Proprietor has employees, they must file: -
Form 941 and Forms W-2 for the employees.
Note:
Research CC NAMEE to determine if the Sole Proprietor/LLC had a previous EIN.
-
File Correspondence following the "No Assessment needed " case processing procedures. See IRM 4.19.4.7.
-
-
IF THEN The information provided resolves the discrepancy -
Process the information and close the case using the applicable no assessment needed case processing procedures. See IRM 4.19.4.7.
The case discrepancy is not resolved through research or by the correspondence received: -
Assess and close the case using the applicable Assessment needed case processing procedures. See IRM 4.19.4.7.
-
Forward a copy of the case to ACS using local procedures to accelerate processing.
-
Input a history item on TXMODA using CC ACTON "DEC'D Sole P. Referred to ACS on IDRS."
-
Do not input a STAUP.
-
-
If the taxpayer responds and explains that the discrepancy is due to a Third Party Sick Pay reporting problem follow the procedures below: See IRM 4.19.4.2.8.
IF THEN Employer is an insurance company involved in paying disability benefits and the discrepancy can be attributed to the Federal Income Tax Withheld sick pay issue,
OR,
There is an amount in Box 14 of Form W-3 that is equal to the FIT discrepancy-
If this is the only discrepancy file the correspondence following the "IRS-CAWR No Assessment needed" case processing procedures. See IRM 4.19.4.7.1.
The discrepancy is an incorrect line adjustment and the correct tax has been paid -
Input TC 290 for $.00 and correct the wage fields.
-
File Correspondence following the "IRS-CAWR No Assessment needed" case processing procedures. See IRM 4.19.4.7.1.
The discrepancy is an incorrect line adjustment and the correct tax has not been paid -
Send Letter 2057c and close the case following the case processing procedures below.
-
-
If the discrepancy is an incorrect line adjustment and the correct tax has not been paid take the following actions:
-
If third-party sick pay wages are not reported on lines 6a and 7a of the Form 941, but the credit was taken on line 9 of Form 941, or on 2005 or newer version of Form 941, lines 5a and 5c of the Form 941, but the credit was taken on line 7b of Form 941, or assess the sick pay wages and the full tax (12.4% for social security and 2.9% for Medicare) on the employer's account.
-
If the employer did not report the wages or the tax, assess the sick pay wages and half the tax (6.2% for social security and 1.45% for Medicare) on the employer's account.
-
If the employer states that there is a discrepancy for income tax withheld by the third-party, accept the employer's word. This type of discrepancy cannot be avoided and does not indicate a reporting error by the employer. If no other discrepancies exist, input a TC 290 for .00 on the employer's account.
-
Refer to IRM 21.7, Business Tax Return and Non-Master File Accounts and Publication 15-A, Employers' Supplemental Tax Guide for any additional information for working the case that are not covered here.
-
-
Forms W-2 should be issued to employees for the wages actually paid during a calendar year, not the wages earned during that time. Discrepancies may result if employers report earned, rather than paid, wages on Forms W-2.
-
If the taxpayer states that the wages were earned in the current CAWR tax year being worked, but reported on a Form 941 for a different year:
IF THE REPLY THEN The tax was paid in subsequent tax year periods, indicating Wages Earned vs. Wages Paid. -
Research CC TXMODA to make sure the proper amount of tax was paid in the subsequent tax year.
-
When payments are identified, send a 2057c Letter informing the taxpayer of the adjustment made to their account and explain that the same discrepancy situation will occur for the subsequent tax year.
-
Input the appropriate adjustment amount you will be assessing and the number of tax modules (quarters) adjusted on the CAP Detail Screen and close the case with the appropriate closing code.
-
Input (TC 291) for appropriate money amount (with a credit bar) using BS 55 to decrease the quarter to which the wages were erroneously paid on the subsequent tax year.
-
Transfer the credit amount using the appropriate payment transfer codes to the prior tax period using the credit transfer IDAP.
-
Input (TC 298) interest free assessment using BS 55 on the prior tax period and the appropriate interest computation date or payment date.
-
Input TC 180 for .00 to suppress the penalty.
-
-
Eligible employees may receive EIC on their Form 1040 or may receive AEIC during the year from their employer.
-
If the employer pays AEIC to the employee, this is shown as a credit on the employer's Form 941.
-
AEIC is indicated by Transaction Code (TC) 766 on the module.
-
See LEM 4.19.4.3.19
-
Use the web site http://iuud.web.irs.gov/iuud.asp to obtain the CIFDC for your campus. This website provides the following CIFDC information:
-
Manager name,
-
Drop points, and
-
Telephone numbers.
.
Reminder:
Use TC 766 to increase AEIC and TC 767 to decrease this credit.
-
-
If Forms W-2c are received, but they do not resolve the discrepancy and they cause the Form W-2 AEIC to exceed the Forms 941, creating a credit owed to the employer, a Form 843, amended Form 941, or Form 941c is needed before the credit (TC 766) can be allowed on the account.
-
Enter the amount of the TC 29X adjustment on the CAP detail screen.
-
See Circular E and IRM 21.7 , Business Tax Return and Non-Master File Accounts , for more information on this subject.
-
-
If Forms W-2c are received, but they do not resolve the discrepancy and they cause the Form W-2 AEIC to be less than Forms 941, creating a debit to the employer, assess the account using TC 767.
Reminder:
The TC 767 amount cannot exceed the TC 766 amount reported for a specific quarter. Multiple quarters may need adjusting when assessing AEIC.
-
Correspond with the taxpayer, explaining the adjustment.
-
Enter the amount of the TC 29X adjustment and on CAP detail screen.
Reminder:
Do not add AEIC amounts to any TC 29X adjustment amount. This is a separate figure.
-
See Circular E and IRM 21.7 , Business Tax Return and Non-Master File Accounts , for more information on this subject.
IF THEN The reply shows there is more AEIC on Forms W-2 than on Forms 941 and the taxpayer submits Forms W-2c decreasing AEIC to match the Forms 941: -
Prepare automated Form 6209 to decrease AEIC. Do not use the minus sign.
-
File Correspondence following the "No Assessment needed " case processing procedures. See IRM 4.19.4.7.
The taxpayer submits Form 941c or Form 843 to increase the AEIC amounts to agree with the Forms W-2: -
Close CAP with the appropriate closing code.
-
Input TC 290 for .00 with a Reference Number (RN) 766 to increase the AEIC using BS 55 to the appropriate quarter(s) based on Form 941c or Form 843.
If there is less AEIC on Forms W-2 than on Forms 941 and the taxpayer submits an amended Form 941 or Form 941c to decrease AEIC to match Forms W-2 -
Close the case using the appropriate closing code.
-
Input TC 290 .00 with Reference Number (RN) 767 (with a credit bar after the $ amount) to decrease AEIC using BS 55 to decrease the appropriate quarter(s) based on Form 941c.
Note:
The decrease should not exceed the amount of AEIC shown on the quarter being adjusted. If the TC 767 amount exceeds the TC 766 amount reported for a specific quarter, the adjustment will unpost. Adjust multiple quarters, if necessary, according to Form 941c).
the AEIC on Forms W-2 are less than AEIC on Forms 941 and the taxpayer submits Forms W-2c increasing AEIC on Forms W-2 to match Forms 941: -
Prepare automated Form 6209 to increase AEIC (using the minus sign).
-
File Correspondence following the "No Assessment needed " case processing procedures. See IRM 4.19.4.7.
-
-
IF THEN The reply states the discrepancy is related to family employment but the age of the child is not given. Note: A child under age 18 working for a parent causes most family employment discrepancies. -
Verify the age and date of birth of the child using IDRS CC INOLE definer S.
Note:
Be sure you compute the child's age for the year the wages were earned, not the year the case is being worked
Exempt wages and non-exempt wages are reported on Form W-2. -
Form W-2c should be filed to correct the discrepancy.
-
See Items 2 through 4 below.
The child is under 18,
OR
The child is between 18 and 21 and services are not in the course of the parent's trade or business.-
Wages are exempt.
-
See Items 2 through 4 below.
The child is between 18 and 21 and the work is done in the course of the parent's trade or business. -
Wages are subject to social security (FICA) taxes
-
Prepare automated Form 6209, if appropriate.
-
Prepare Form 6494, if applicable. Attach copies of the appropriate Form W-2 behind Form 6494 to correct SSA records.
-
File Correspondence following the "IRS-CAWR No Assessment needed" case processing procedures. See IRM 4.19.4.7.1.
-
-
Occasionally, discrepancies occur because the employer reports wages less than $150 incorrectly. A new test to determine if employees are exempt has been added to the $2,500 test. See IRM 21.7.2.4.13.1 for help while working these cases.
-
IF THEN The total amount of wages paid (under $150) is the amount of the discrepancy and no tax was reported on Forms W-2. -
Prepare automated Form 6209 , if applicable.
-
Prepare Form 6494 using the appropriate correction code.
-
File Correspondence following the "IRS-CAWR No Assessment needed" case processing procedures. See IRM 4.19.4.7.1.
Wages (under $150) were reported incorrectly. -
Determine if the employee(s) with (less than $150) are subject to social security taxes.
Social security tax has been reported on Forms W-2 for agricultural wages under $150. -
Send a 2057c closing letter to determine if any of these employees meet the four conditions in IRM 21.7.2.4.13.1 required for exemption or if the employer paid wages totaling (less than $2,500).
The four conditions in IRM 21.7.2.4.13.1 (2) were not met, -
The employees are subject to social security tax.
-
Prepare automated Form 6209 to adjust the CAWR module.
-
Prepare Form 6494
-
On MFT 11, assess and close the case using "IRS-CAWR Assessment needed" case processing procedures. See IRM 4.19.4.7.1.
The taxpayer states all employees with wages (less than $150) are exempt: -
File Correspondence following the "IRS-CAWR No Assessment needed" case processing procedures.
-
-
At times, employers pay the employees' share of the social security tax without withholding it from his or her wages. When this happens, there are two ways to calculate the correct amounts to be shown on the Form W-2 .
-
The taxes on the social security wages are not to be included in the social security wage box on Form W-2 if the employee did not have the social security taxes withheld from his or her salary and the following conditions apply:
-
The employee is a household employee and the employer files Form 1040 Schedule H or
-
The employer files Form 943, Employer's Annual Tax Return for Agricultural Employees.
Example:
In 2006, a household or agricultural employee is paid $1,100. The social security tax rate for that year is 6.2% and the medicare tax rate is 1.45% for a total of 7.65%. The amounts to be entered in each of the boxes on Form W-2 are as follows:
W-2 Information fields Amount fields Total Compensation $1,184.15 Social Security Wages $1,100.00 Medicare Wages $1,100.00 Social Security Tax $68.20 Medicare Tax $15.95
-
The first figure above is arrived at by using the following calculation:
• The sum of $1,100 multiplied by 7.65% added to $1,100 = $1,184.15. -
The second and third figures above are the amount actually paid to the employee.
-
The fourth figure above is arrived at by using the following calculation:
• $1,100 multiplied by 6.2% = $68.20
• $1,100 multiplied by 1.45% = $15.95
-
-
If the employer is a Form 941/944 filer and social security taxes are not withheld from the employees' salary, include the amount on which the social security taxes are figured in both the Total Compensation box and the social security wages box on Form W-2.
Example:
In 2006, an employee is paid $1,100. The total tax rate is 7.65%. The amounts to be entered in each of the boxes on Form W-2 are as follows:
W-2 Information fields Amount fields Total Compensation $1,191.12, Social Security Wages $1,191.12 Medicare Wages $1,191.12 Social Security Tax $73.84 Medicare Tax $17.27 -
The first three figures above are arrived at by using the following calculation:
• $1,100 divided by (1.0 − .0765 = .9235) = $1,191.12 -
The tax figures shown above after that are computed at the usual 6.2% and 1.45%, respectively.
-
-
Forms W-2c are required if Form W-2 have been completed incorrectly because of a situation in either of the preceding examples. The employer is required to report and pay taxes on the amounts reported in the social security wage box of Form W-2 in the second example.
-
If the taxpayer requests an installment agreement, either in his reply or by submitting a Form 9465 determine:
-
The taxpayer has provided adequate information, either in writing or by phone, for positive identification.
Note:
Name, TIN, and tax year of the reply matches the case.
-
The CAWR tax discrepancy to be covered by the installment agreement in a tax period is also the tax period of the CAWR discrepancy case.
-
If the taxpayer has proposed a monthly or other periodic payment for a specific amount.
-
Assess and close the case as appropriate.
-
Input a TC 971 with AC 043.
-
Send a copy of the case to Campus Installment Agreement Unit (CIAU) for processing utilizing Form 3210.
-
Send a 2057c Letter to the taxpayer explaining that his/her request for an installment agreement is being processed and he/she will be contacted later by another IRS office.
Note:
The CIAU will correspond with the taxpayer regarding their inability to grant the installment agreement.
-
-
Faxed Signature General Guidelines — These general guidelines are applicable to all divisions and cover operations related to income tax, employment tax, excise tax, estate tax, gift tax, and generation skipping tax, as well as tax exempt and employee plans determinations.
-
In certain situations, submission of documentation, forms, letters, and returns related to CAWR inquires and interactions can be allowed via fax through taxpayer or IRS request. Chief Counsel has advised that in circumstances where contact with the taxpayer has been made and documented, faxed signatures are legally sufficient.
-
Taxpayer signed agreements (assessments or abatement) involving tax amounts of $25,000 or less can be accepted by fax if taxpayer contact has been made, the case history documents the date of contact, and the desire of the taxpayer to submit the consent by fax. A faxed signature for a Form 941c decrease where we are only lowering the wages and no refund will be issued is acceptable.
-
The Deputy Commissioner of Services and Enforcement limited accepting faxes for consents to assess additional tax of $25,000 or less. Any agreement of over $25,000 should be secured with original signatures that are delivered in person or by mail.
-
Faxed signatures will not be accepted for any tax decreases (this is not an abatement of tax assessed and not yet paid, but a decrease to what is already on Master File) in which the taxpayer would be issued a refund of the taxes he/she has paid.
IF THEN Taxpayer contact has been made; Document the date of contact and the desire of the taxpayer to submit by fax -
Assessments of tax are acceptable.
A Form 941c decrease (we are only lowering the wages, no refund will be issued) -
A faxed signature is acceptable.
A Form 941c shows a decrease in tax, the taxpayer would be issued a refund of taxes paid. Note:
This is not an abatement of tax assessed and not yet paid, this would be a decrease to what the TC 150 is already showing on Master File.
-
A faxed signature is not allowed.
-
-
Certain Foreign Students/Non-Resident Visitors are exempt from social security (FICA) and medicare tax.
-
When an employer states any or all of their employees fit this category, the procedures in this TRIDOC are necessary.
IF AND THEN Social security and medicare tax is erroneously withheld by the employer The foreign student is unable to obtain reimbursement from the employer The student files Form 843 to receive a refund of the erroneously withheld taxes. Note:
The original Form 843 claims for Foreign taxpayers are processed in Philadelphia.
-
Check TXMODA for an adjustment containing information defined below.
-
291 10162003 1,721.24- 200340 98154-123-45678-3
-
004 22,499.77- 007 1,721.24-
-
073 22,499.77-
-
820 01312004 200340 98124-123-45678-3
-
XREF-TIN> 123-45-6789 XREF-MFT> 30 XREF-TX-PRD> 200312
-
-
Research adjustment to verify the below criteria.
-
The Reference amounts (004, 005, 073) may match the Form 941/944/W-2 CAWR discrepancy
-
The tax amount is 1/2 of the social security and medicare tax amount (wage amount X 7.65%)
-
A TC 820, Credit Transfer, has been input with X-Ref SSN (The Foreign Student's SSN) to X-Ref MFT 30.
-
The DLN begins with 98
-
The original adjustment is done in Philadelphia.
-
-
Check CC IRPTRL on the student's SSN. There should be a Form W-2 for the adjusted reference amount from the EIN (employer) on the CAWR case.
IF THEN you see the adjustment above -
Complete Form 6209 to decrease social security and medicare wages. In the remarks, select " Other" and enter "Exempt Foreign Student. "
-
Complete Form 6494 using correction code 4 and notate the need to cancel the Form W-2 due to the foreign student criteria.
-
Attach a copy of the Form W-2 or give employee name, SSN, and wage amount to be canceled.
-
Send a 2057c letter to notify the employer the employee's half of the social security and medicare tax was refunded to his foreign employee.
-
File Correspondence following the "IRS-CAWR No Assessment needed" case processing procedures. See IRM 4.19.4.7.1.
If the employer files a Form 941c/ Form 843 for his half of the tax, -
Send 2057c letter and close CAP with the appropriate closing code.
-
Input TC 291 with item adjustment code 112 for the tax amount. Do not decrease the Reference amounts 004, 073, or 005 a second time.
Note:
if the adjustment document is requested (using CC ESTAB) and the DLN begins with 98 it should show a copy of the student's Form W-2 and VISA. In addition a letter stating the foreign student was unable to obtain reimbursement from their employer along with Form 843 .
-
-
SSA will remove the Form W-2 submitted and notate on the reply that the Forms W-2 were received by SSA.
-
See LEM 4.19.4.3.26.
-
Do not penalize these employers. Assume the submitted forms resolved the SSA issue.
Note:
Unfortunately, there could be up to a two month delay before SSA can open and return these notices/letters to us. Therefore, we will work these as late replies.
-
IF THEN If the taxpayer states the case is being worked by their Payroll Service and no correcting info has been received -
Prepare automated Form 6209, (if appropriate).
-
Prepare Form 6494, if appropriate.
-
Assess and close the case using the appropriate assessment needed case processing procedures. See IRM 4.19.4.7.
If the taxpayer states the case is being worked by their Payroll Service and correcting info is provided
OR
updates to the module have balanced the case-
Determine the effects on the case.
-
Input automated Form 6209 if necessary.
-
Prepare Form 6494 if applicable.
-
Assess or file the correspondence using the applicable case processing procedures. See IRM 4.19.4.7.
-
-
If the taxpayer is bankrupt or the business is defunct, research IDRS CC ENMOD to check for the CNC Indicator utilizing the TC 520/530 IDAP.
IF THEN IRS-CAWR TC 530 cc 07 or 10 is present on any prior or subsequent module -
Send a 2057c closing letter.
-
Close the case on CAP using CC 98.
-
File Correspondence following the "IRS-CAWR No Assessment needed" case processing procedures. See IRM 4.19.4.7.1.
IRS-CAWR TC 530 with a cc other than 07 or 10 -
Close the case on CAP using CC 98.
-
Assess and close the case using "IRS-CAWR Assessment needed " case processing procedures. See IRM 4.19.4.7.1.
-
On IDRS, re-input the TC 530 with CC REQ77 with the Responsible Unit Code (RUC) 3 and a Posting Delay Code "2"
IRS-CAWR TC 520 with cc 72 or 74 is present. -
The case is in tax court. Close CAP 98.
-
File Correspondence following the "IRS-CAWR No Assessment needed" case processing procedures. See IRM 4.19.4.7.1.
IRS-CAWR TC 520 with any other cc than 72 or 74. -
Liabilities, as well as deficiencies should be assessed. Contact Insolvency prior to making assessment so they can amend their proof of claim if applicable.
-
Input closing code 98 on the CAP.
-
Send a 2057c closing letter informing the taxpayer of the assessment and explain payment of tax is his/her responsibility.
-
Assess and close the case using "IRS-CAWR Assessment needed " case processing procedures. See IRM 4.19.4.7.1.
SSA-CAWR TC 530 cc 07 or 10 is present on any prior or subsequent module -
Close the case on CAP using the CC 98.
-
File correspondence using the "SSA-CAWR – No Penalty needed" case processing procedures. See IRM 4.19.4.7.2.
SSA-CAWR TC 530 with a cc other than 07 or 10 -
Close the case on CAP using CC 98.
-
Assess a civil penalty following "SSA-CAWR – Intentional Disregard Penalty Assessment" case processing procedures. See IRM 4.19.4.7.1.
-
If tax is also due follow IRS-CAWR procedures.
SSA-CAWR with TC 520 and any CC present -
We will not assess a Civil Penalty in these instances but try to obtain the Forms W-3/W-2.
-
Send a 2057c letter and explain the need for the taxpayer's cooperation in obtaining the Forms W-2.
-
File correspondence using the "SSA-CAWR – No Penalty needed" case processing procedures. See IRM 4.19.4.7.2.
-
-
If a payment posted to the account or is moved into the account, the TC 530 will release and the account will return to notice status.
Note:
BE EXTREMELY CAREFUL WHEN MOVING PAYMENTS FROM ONE ACCOUNT TO ANOTHER.
-
If the last quarter filed is a final return withno tax liability reported, check previous quarter(s) for TC 530 with cc 07 or 10. If found, close with closing Code 98.
-
The following procedures are for handling CAWR cases with any proposed penalties against institutions that are under the control of the Federal Deposit Insurance Corporation (FDIC).
-
FDIC cases are self identified by the taxpayer. No indicator shows on CAP for FDIC cases. Instructions for working identified CAWR Cases:
Note:
See for ECS contacts.
IF THEN The Taxpayer responds and indicates they are FDIC -
Accept the taxpayer’s word.
-
Close the case using normal procedures.
A tax assessment is needed -
Assess and close the case using "IRS-CAWR Assessment needed " case processing procedures. See IRM 4.19.4.7.1. .
-
Print a copy of the CAP CDC and the taxpayer's correspondence, if applicable, forward the copies to the Examination Classification Specialist (ECS) identified for your Campus.
If a civil penalty (RN 549) assessment is required -
Assess a civil penalty following "SSA-CAWR – Intentional Disregard Penalty Assessment" case processing procedures. See IRM 4.19.4.7.2.
-
Print a copy of the CAP CDC case and the taxpayer's correspondence, if applicable, and Forward the copies to ECS following local procedures.
-
-
If the employer states they have already filed Forms W-2 and gives an indication that the W-2s were filed under another name, EIN, etc., research using information provided. If necessary, correspond with the taxpayer and request additional information needed to locate forms (i.e., EIN used, date filed, entity name used, copies of the Forms W-3/W-2, etc.).
-
If the forms are found, notate in the remarks section of the case file and include any pertinent material. If they are not located, assess the penalty.
Reminder:
LOOSE FORMS W-2 have been entered onto CAP. There will be an indicator and a serial number on CAP which alerts that there are loose Forms W-2 from the employer.
-
If the taxpayer states that they filed the statements with SSA and the information received supports that they did, research ERQY or prepare Form 9337 , Social Security Administration (SSA) Reconciliation Referrals, and submit it to SSA via fax.
-
A maximum of two cases (or EINs) can be entered on this form.
-
DO NOT USE THIS FORM — If the taxpayer does not state he filed with SSA.
-
DO NOT USE THIS FORM — If the taxpayer responds by sending the W-2s or provides the information in another form, such as a list.
-
-
Complete all the information requested:
-
Item 1 — Write the EIN of the employer.
-
Item 2 — List any other EINs the employer may have supplied. Check CC BMFOL or order REL (through WIRS) to ensure the Forms W-2 are not under the new EIN before forwarding the request to SSA
-
Item 3 — Tax year of the case.
-
Item 4 — Notate Tape or Paper if the method of submission to SSA is known. Leave this item BLANK if not known.
-
Item 5 — Answer all the questions a, b, and c.
-
Item 6 — Answer if known.
-
Leave the SSA Response and For SSA Use Only blank.
-
Under the For IRS Use Only — This section must be filled out entirely if a reply is expected. SSA has received many forms with only a name of the tax examiner. Please give SSA the information it needs to respond back to IRS.
-
FAX the Form 9337 daily to SSA. See LEM 4.19.4.3.30.
-
SSA will FAX the Form 9337 back to inform the examiner of the information already posted as well as any additional information they have received from the taxpayer since referring the case to IRS.
-
-
When a reply is received requesting additional time and an assessment is required, suspend the case for 30 days from the date of the employer's correspondence.
-
After the 30 days suspense period expires, assess the case following normal procedures.
-
Review the CC BMFOLU for the page with the TC 980. The DLN shown (which starts with 06) is the MSN where the W-3/W-2 copies should be. Request WIRS or CC IRPTRR with Doc Code WW, and when received, review them utilizing WIRS screening procedures found in IRM 4.19.4.2.2. Otherwise follow items (2) through (5) below.
-
Route Employer Requests for copies of Forms W-3/W-2 as follows:
-
If the request is based on a discrepancy case (ie., the employer needs the copies before he/she can respond to a CAWR notice or letter), the IRS site receiving the request will service it.
-
If the employer's request does not specify a certain group of forms to be provided, attempt to contact the taxpayer if a telephone number can be located. If not, attempt to determine his/her needs by analyzing the discrepancy case.
-
-
Use CC MFTRAW with the appropriate request code to obtain the required copies from the WIRS operation.
-
If copies of each document he/she filed cannot be provided, explain the reason and prepare a listing of copies not being sent. Include the following information:
-
Establishment number (if present);
-
Number of Forms W-2 reported;
-
Form W-3 FICA (social security) wages amount;
-
Form W-3 Federal Income Tax amount; and,
-
Form W-3 Medicare wages amount.
-
-
Once WIRS are ordered and provided to the taxpayer assess the case following the appropriate closing procedures in See IRM 4.19.4.7.
-
Taxpayers reporting exempt wages incorrectly may cause discrepancies. Some of the mistakes commonly made are:
-
Form W-2 wages not reported in Box 1.
-
Social security wages not reported in Box 3.
-
Medicare wage not reported in Box 5, other than zero.
If ... And ... Then ... If it appears the discrepancy may be the result of wages paid to a clergyman -
Research reply for copy of clergyman's Form W-2 or SSN OR
-
Order WIRS using IDRS CC MFTRA (W) and suspend the case until WIRS are received.
If the discrepancy amount is found belongs to a clergyman (Form W-2 indicates Minister, Pastor, Father) or Form W-2 is showing no social security Ttax withheld and Federal Income Tax Withheld is balanced. You may need to research IDRS CC IRPTRL to confirm. -
Prepare automated Form 6209.
-
Prepare 6494 (attaching Form W-2) to correct the social security and medicare wages using CC 4.
-
File Correspondence following the "IRS-CAWR No Assessment needed" case processing procedures. See IRM 4.19.4.7.1.
If the discrepancy amount is not found -
Assess and close the case using "IRS-CAWR Assessment needed " case processing procedures. See IRM 4.19.4.7.1.
-
Send a Letter 2057c letter requesting a copy of the Form W-2c or the Clergyman's name and SSN.
-
-
Discrepancies are usually caused by the withholding on Forms 1099-R, Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. (Doc Type 98), or Forms W-2G, Certain Gambling Winnings (Doc Type 32) if reported as Backup Withholding. These forms are not subject to Backup Withholding, so the amount shown is Federal Income Tax Withheld. Once the withholding is verified as Federal Income Tax Withheld process the case accordingly.
IF THEN A Form 945 was previously filed and the taxpayer states that Federal Income Tax Withheld is included in/or reported as Backup Withholding on Form 945. -
Research IDRS CC TXMOD on MFT 16 for the year worked to verify.
-
Send a 2057c informing the taxpayer that Forms 1099R are not subject to Backup Withholding and that we have adjusted their account accordingly.
-
Close the case on CAP using the appropriate closing code.
-
Input a TC 290 .00 with Reference Code 003, (positive amount) and Reference Code 008 (negative amount) to correct the out of balance condition on MFT 16 using blocking series 55.
Note:
Close any open CAWR controls on MFT 01.
-
-
Discrepancies are usually caused when the taxpayer fails to file Forms 945/1099R or has a third party administrator.
If ... Then ... The reply shows Forms 941/943/944 and Forms W2 are in balance but no Forms 1099R (Doc Code 98) were filed under the employer EIN and a Form 945 was not received, but the taxpayer provides a cross-reference (x-ref) EIN for a third party administrator (401k) plan that resolves the discrepancyOR The reply shows Forms 941/943/944 and Forms W2 in balance. The reply received has no Form 945 filed but the taxpayer provides a cross-reference (x-ref) EIN for a Pension 401k third party administrator that resolves the discrepancy. -
Verify third party EIN.
-
Do not prepare automated Form 6209 or Form 6494.
-
Send a 2057c closing letter .
-
Close the case on CAP with the appropriate closing code.
-
Input a TC 290 for .00 on MFT 16 with BS 55 for the appropriate tax year.
-
Input a TC 971 on IDRS using CC REQ 77 with Action Code 017, identifying the Cross-reference (x-ref) EIN to the last available return (quarter) posted for the appropriate tax year.
The reply shows 945 filed but Forms 1099R (Doc Code 98) money amounts are more than Form 945 and does not provide information to resolve the discrepancy -
Input the appropriate adjustment amount you will be assessing and the number of tax modules (quarters) adjusted on the CAP Detail Screen.
-
Send 2057c and close the case on CAP with the appropriate closing code.
-
On MFT 16, input a TC 290 for the appropriate money amount and the applicable item adjustment codes using blocking series 55 with the correct correspondence and IRS received date.
-
Assess FTD Penalty if necessary. Refer to 4.19.4.7.3.
-
-
Certain government agencies are empowered to collect, from employers, wages erroneously not paid to employees (or former employees). Agencies are allowed to disburse these wages to the employees concerned, and withhold income taxes and employee’s share of FICA tax. Agencies allowed to take this action and the provisions which allow such action are:
-
Department of Labor - Fair Labor Standards Act
-
General Accounting Office - Davis-Bacon Act
-
National Labor Relations Board - Labor Management Relations Act.
-
When the reply indicates Federal Labor Law, check for line item adjustments.
IF THEN The amounts were reported on the original returns Follow Third Party Sick Pay instructions. The out of balance was caused by a subsequent adjustment Order the TC 290 adjustment if necessary to verify Form 941c notation "Department of Labor" (DOL). Forms W-2 were filed by the employer, as well as "Department of Labor" (DOL). -
Prepare Form 6494 to notify SSA DOL filed Forms W-2.
-
Notify the employer not to file Forms W-2, DOL already filed.
-
File Correspondence following the applicable no assessment needed case processing procedures. See IRM 4.19.4.7.
The discrepancy amount is Federal Income Tax Withheld (only) and the amounts match Federal Income Tax Withheld on the DOL and they fall under the corresponding provisions: -
Do not assess the employer for Federal Income Tax Withheld.
-
File Correspondence following the applicable no assessment needed case processing procedures. See IRM 4.19.4.7.
Note:
Do not prepare an automated Form 6209.
-
-
When an SSA-CAWR case type 08 (without Compliance Indicator) contains either a Large Corporation Indicator (LCI) or a proposed tax and/or penalty assessment of $1 million dollars or more that cannot be resolved through the information provided in the response, you must coordinate with your local Large Corporation Coordinator. See IRM 4.19.4.2.1.1.
Note:
Coordination with the LCTU is required during screening for all cases other than SSA-CAWR case type 08 (without Compliance Indicator). Since Case Type 08 (without Compliance Indicator) notices are auto-generated they are the onlycases that need to be referred to the Large Corp. Unit during the reply or late reply phase of the CAWR program.
-
Follow the procedures below for cases that contains either a Large Corporation Indicator (LCI) or a proposed tax and/or penalty assessment of $1 million dollars or more: below:
IF THEN The reply resolves the discrepancy. -
Large Corp Contact is not necessary.
-
Utilize the information provided in the reply and take the necessary actions.
-
File Correspondence following the appropriate case processing procedures. See IRM 4.19.4.7.
The reply is a partial compliance and brings the case below a $100,000 civil penalty (PRN 549) or tax increase, -
Utilize the information provided in the reply and take the necessary actions.
-
Assess and close the case using the appropriate Assessment needed case processing procedures. See IRM 4.19.4.7.
The partial compliance leaves the case above $100,000 civil penalty (PRN 549) or tax increase, -
Contact the officer of the corporation and explain the need for the adjustment.
-
Consider any additional information the officer supplies.
-
Ensure proper managerial signatures are obtained.
-
Assess and close the case using the applicable assessment needed case processing procedure. See IRM 4.19.4.7.
-
-
IF THEN The taxpayer responds and includes a payment to pay Civil Penalty (RN 549). -
Research IDRS and/or utilize the payment tracer IDAP to locate the payment .
-
If the payment posted to the incorrect module, transfer the payment to the MFT 13 using the credit transfer tool IDAP prior to assessing the civil penalty.
-
Follow the "SSA-CAWR Intentional Disregard Penalty needed " case processing procedures. See IRM 4.19.4.7.2.
-
-
During the reply phase, taxpayers or their representatives may request Blank Forms W-3c/W-2c in order to correct the discrepancy.
-
Provide the IRS website to the taxpayer to obtain the forms they are requesting. The website is www.irs.gov
-
The employer may also request additional forms by calling 1 800 TAXFORM (829-3676)
-
-
If the correspondence is from a Power of Attorney (POA) or other third party make sure the criteria in IRM 21.3.7, Processing Third Party Authorizations onto the Centralized Authorization File is adhered to.
-
Form 2848 tax periods must be specific for Form 941 quarterly returns.
-
Form 941 must show 1st, 2nd, 3rd, and 4th quarters of a specific tax year using YYYYMM format.
-
Do not accept general references such as ("All years" , "All periods" , or "All taxes" or a entire tax year i.e. 2004).
-
For annual returns (Forms 943, 944, 945, 1041 on BMF and Form 1040 on IMF), the (POA) must enter the ending year using a specific YYYY format.
IF THEN A taxpayer or his representative sends Form 2848, Power of Attorney and Declaration of Representative, or Form 8821, Tax Information Authorization Research IDRS CC CFINK for POA registration on CAF. The POA is registered on CAF for the specified quarters and/or tax periods. -
Keep a copy of the Form 2848 or 8821 with the case file.
-
Work the case using normal procedures.
The POA is not registered on CAF for the specified quarters and/or tax periods. -
Keep a copy of the Form 2848 or 8821 with the case file.
-
Send or fax the original form to the CAF Unit for processing.
-
Work the case using normal procedures.
Note:
An authorization may be limited to a specified quarter, tax period, or specified tax issue. The CAF can be updated to show authorization for Civil Penalty (RN 549) issues, as well as specific tax issues.
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Specific instructions for the following types of adjustments and other subjects are listed here or in IRM 21.5.1, General Adjustments:
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Credit Transfers — Involves moving payments or credits to the correct EIN, quarter, or tax year.
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TC 470 — Used to delay issuance of a TDA notice and to stop offsets into an account because of a pending claim or adjustment
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CC STAUP — Used to interrupt normal notice routine by delaying, accelerating, or skipping notices
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Inputting an Adjustment Transaction — Use CC REQ54 to request the adjustment format ADJ54
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Hold Codes — Used with TC 29X or TC 30X when it is desired to prevent or delay the issuance of a refund and/or notice
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Priority Codes — Used in order to post adjustments (Doc. Code 47 and 54) to the Master File when certain module conditions exist
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Posting Delay Code — Used when multiple transactions are required to adjust an account and some must post in a later cycle than others. A posting delay code may be input with the adjustment transaction to be cycled
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Freeze Conditions/Releases — Affect normal refund operations and normal credit offset. They should be considered when researching and inputting adjustment transactions
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Claims — Requests for credit, refund, or abatement
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IRM 20.1 , Penalty Handbook— Penalties are applicable when taxpayers fail to: file timely, make deposits, or pay taxes when due unless that failure is due to reasonable cause and not willful neglect
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IRM 20.2 , Interest — Interest may be charged on the additional tax that resulted from the examination of a return. Interest is figured from the due date of the return to the date of full payment. If the employer discovers an error and corrects it in the same tax period, interest is figured from the due date of the return for that tax period
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IRM 21.5.5 , Unpostables — An input transaction that fails to pass a series of validity checks on Master File at the Enterprise Computing Center-Martinsburg (ECC-MTB) is called an unpostable. A 3 digit unpostable code is given to the unpostable transaction
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IRM 21.5.7, Payment Tracers — Payments that are not applied to balances within one year from the time they are received are put in the Unidentified Remittance File (URF) and are transferred to the Excess Collection File
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CC BMFOL — CC BMFOLU contains CAWR modules for the current CAWR and two other processing years. Tax years are available until December, four years after the tax year. Make adjustments to all years on CC BMFOL via Forms 6209.
Note:
CAP is generating the Form 6209, even if the case is not on CAP and only on BMFOLU . Do not manually prepare one. If Forms 6209 are not posting to Master File, inform the unit manager to alert HQ of the problem.
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Copy A of original Forms W-2G, 1099-R or a photocopy of an unprocessed Form 1096 may be received in the CAWR unit.
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These are forwarded to the CAWR unit because they have not been received in time to process through the normal processing for information returns; therefore, the information has not been available for the reconciliation phase of the CAWR program.
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Forms W-2G may be received from Receipt and Control stating that the information is really for a tax year CAWR is working although it is on the wrong year's form. The date in the "Date Won" box will verify which tax year is affected.
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To avoid erroneous taxpayer contact, or failure to consider the additional information received, process them as follows:
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If a tax year prior to the current processing year for CAWR is received, determine if it is a late reply or a reply to an assessment.
If ... Then ... a TC 29X in Blocking Series 55 is found -
determine if the information from the returns effects the CAWR case and follow procedures in IRM 4.19.4.6
there is not a TC 29X adjustment -
Follow procedures in IRM 1.15.1, Records Control Schedule 206 for Service Campuses/Centers
the forms are not needed for a CAWR discrepancy case -
forward them to the Campus IRP Civil Penalty unit.
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Never prepare a Form 6209 for Forms 1099R or W-2G.