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Part 3. Submission Processing

Chapter 0. General

Section 230. Lockbox Processing Procedures (Cont. 1)

3.0.230  Lockbox Processing Procedures (Cont. 1)

3.0.230.12 
Submission Processing Campus Quality Review of Lockbox

3.0.230.12.9  (01-01-2009)
Electronic Files Transmission

  1. A 100 percent review of the files electronically received by the computing centers on a daily basis will be performed by the LEN coordinator.

  2. Record the number of files in error or missing on the DCI. Keep track of the specific errors. Record the number of files missing and the number deemed unusable for any other reasons by the Computing Center. Use the comments column to explain any errors.

    Note:

    Expect 6 files each day. The RPS files are RPS0103, RPS0505, RPS0523, and RPS9701. The RTR files are LB0516 (data file) and LB0515 (image files).

  3. Normally six files will be received. If five files are received, the "expected number of files" is six and the "number of files in error" is one. The following day, the "expected number of files" will be seven (the six expected daily plus the one missing from the day before).

3.0.230.12.10  (01-01-2009)
Unprocessable Items Review

  1. A daily sample review will be preformed by an employee from the Improvement Team Function in Receipt & Control on unprocessable work (with remittance and non-remittance) sent to the SPC.

  2. To sample, randomly select 15 with remittance documents and 15 non-remittance documents to review.

  3. Record the number of errors found (i.e. the number of processable items) found. In addition to recording the number of processable items found, it is also necessary to keep track of the common processing requirements not met among the unprocessable items. A list of the codes and corresponding processing requirements is provided on the DCI.

  4. If the "other" category is selected, explain the error in the comments column.

  5. Forward the DCI to the LFC by the third working day of the following month.

3.0.230.12.11  (01-01-2009)
Return Sort Review - IMF/BMF

  1. IMF returns will only be reviewed January through April at IMF Lockbox Sites. BMF work will be reviewed year round at BMF Lockbox Sites

  2. A daily sample review will be preformed by an employee from the Improvement Team.

  3. To sample, randomly select six batches from each category. Randomly select three returns from each sampled batch. If six batches are not available in a category. Randomly select three returns from each available batch. If sampled batches have less than three returns available, review all returns available. Do not sample another batch.

  4. Record the number of returns found in error on the DCI.

    Note:

    An error will result if a return is missorted or if a check is found with a return.

  5. Review the cover sheets associated with each sampled batch. Record the number of cover sheets reviewed and the number of cover sheets in error. Use the additional columns to identify number of each error type found. Results will filter to the cover sheets summary tab in the workbook.

    Note:

    The review of full-paid returns may be delayed during April peak because some work is shelved. Once work resumes on the shelved returns, they should then be sampled for this review.

  6. Forward the DCI to the LFC by the third working day of the following month.

3.0.230.12.12  (01-01-2009)
Return Sort Review - Form 1040X (April Only)

  1. A daily sample will be performed by an employee from the Improvement Team during the month of April.

  2. To sample, randomly select six batches of Form 1040X work. Randomly select three returns from each sampled batch. If six batches are not available, randomly select three returns from each available batch. If sampled batches have less than three returns available, review all returns available. Do not sample another batch.

  3. Record the number of returns in error on the DCI. Use the error codes on the DCI to identify the types of errors found among the sampled returns. If the "other" category is selected, explain the error using the comments column.

  4. Review the cover sheets associated with each sampled batch. Record the number of cover sheets reviewed and the number of cover sheets in error. Use the additional columns to identify number of each error type found. Results will filter to the cover sheet summary tab in the workbook.

  5. Forward the DCI to the LFC no later than the third working day of the month of May.

3.0.230.12.13  (01-01-2009)
Return Sort Review - Prior Year

  1. A daily sample will be performed by an employee from the Improvement Team.

  2. To sample, randomly select six batches of prior year returns. The sample should randomly include a mixture of both non-remit and part-paid batches. Randomly select three returns from each sampled batch. If six batches are not available, randomly select three returns from each available batch. If sampled batches have less then three returns available, review all returns available. Do not sample another batch.

  3. Record the number of returns found in error on the DCI. Use the error codes on the DCI to identify the types of errors found among the sampled returns. If the "other" category is selected, explain the error using the comments column.

    Note:

    The number of errors cannot exceed the number of sampled returns. One return can have multiple errors but only count one error. Detail the multiple errors in the "types of errors" section.

  4. Review the cover sheets associated with each sampled batch. Record the number of cover sheets reviewed and the number of cover sheets in error. Use the additional columns to identify number of each error type found. Results will filter to the cover sheet summary tab in the workbook.

  5. Forward the DCI to the LFC no later than the third working day of the following month.

3.0.230.12.14  (01-01-2009)
Return Sort Review - Delinquent

  1. A daily sample will be performed by an employee from the Improvement Team will review a sample of current year delinquent returns on a daily basis.

  2. To sample, randomly select six batches of delinquent returns. The sample should randomly include a mixture both non-remit and part-paid batches. Randomly select three returns from each sampled batch. If six batches are not available, randomly select three returns from each available batch. If sampled batches have less then three returns available, review all returns available. Do not sample another batch.

  3. Record the number of returns found in error on the DCI. Use the error codes on the DCI to identify the types of errors found among the sampled returns. If the "other" category is selected, explain the error using the comments column.

    Note:

    The number of errors cannot exceed the number of sampled returns. One return can have multiple errors but only count one error. Detail the multiple errors in the "types of errors" section.

  4. Review the cover sheets associated with each sampled batch. Record the number of cover sheets reviewed and the number of cover sheets in error. Use the additional columns to identify number of each error type found. Results will filter to the cover sheet summary tab in the workbook.

  5. Forward the DCI to the LFC no later than the third working day of the following month.

3.0.230.12.15  (01-01-2009)
Blocks Out of Balance Report

  1. Each month Accounting will complete a report tracking the types of errors of out of balance blocks. Record the errors found in the corresponding columns on the DCI.

    Note:

    If there are no blocks out of balance, do not enter anything.

  2. Forward the DCI to the LFC by the third working day of the following month

3.0.230.12.16  (01-01-2009)
Deposit Error Review (DER)

  1. Each Lockbox Site will pull a random sample of eight envelopes for each day that they receive mail, utilizing a schedule provided by LPO, for scannable and non-scannable documents.

  2. All copies will be placed in a larger envelope labeled "Deposit Error Copy or Deposit Accuracy Copy, Improvement Team," along with the appropriate Mail Stop number. This package will be put in Box #1 along with the cartridge tapes and reports.

  3. An employee from the Improvement Team will review the selected samples provided by the Lockbox. The sample could include either IMF or BMF items.

    Note:

    This review must be performed throughout the year for each day the Lockbox receives mail.

  4. The following procedures provide basic instructions for performing the SPC DCI Lockbox DER utilizing the RTR system. If necessary, adapt the procedures to better fit the needs of a particular reviewer or SPC. The LFC must approve the methodology of review.

    1. Access RTR

    2. Click on "Research" in tool bar at top of screen

    3. Screen will come up: Enter criteria

    4. Query by entering a deposit date range which is the received date plus five calendar days

    5. Enter the TIN, name control and payment amount

    6. Click on "Lockbox Only" at the bottom of the screen

    7. Click on "Submit"

    8. Screen will display "Filter results: 1 Transaction found"

    9. Click on the date in the Deposit Date cell

    10. The screen will display "ISR1340 Document Remittance Register Details"

    11. Print screen display (landscape)

    12. Using the information in the print, verify that the payment was processed accurately (correct MFT, TIN, name control, money amount, transaction date, tax period and transaction code)

      Note:

      If a payment was not processed correctly, notate the correct information on the RTR ISR1340 screen print below the data in error. Attach the screen print to each case file

      Special Instructions for split payments or multiple payments:

      • Verify all data available.

      • Charge only one error per case.

  5. Place an "X" in the worksheet cell of the DCI when an error is found. Provide copies of the RTR ISR1340 and copies of the sampled case to the LFC.

3.0.230.12.16.1  (01-01-2009)
Deposit Error Review DCI Instructions

  1. Record the number of cases received on the DCI, using the received date from the sample. The scans and non-scans should be reported on their respective DCIs.

  2. Use the file location code of the payment as shown on RTR to determine whether the case should be reported as a scan or non-scan.

    Note:

    You do not have to enter zeros for days when the review is not performed.

  3. Record the number of cases found in error on the DCI. Use the "Lockbox Error" column to document these errors. An error will result when a case was not processed accurately.

  4. Use the error codes on the DCI to identify the types of errors found among the selected items.

  5. If the "Other" category is used, record an error and use the Comment column to explain the error.

    Note:

    A case may have more than one error code identified, but only one error per case may be charged.

  6. Forward the DCI to the LFC by the third working day of the following month

3.0.230.12.16.2  (01-01-2009)
DCI Column Explanations

  1. Taxpayer Error - Used when an error occurred due to information provided by the taxpayer. This may include illegible or unclear information. For taxpayer errors, "no errors" will be notated in the categories under "Types of Errors" .

  2. Unprocessable - Used when a case is a true with/remittance unprocessable and was handled correctly by the Lockbox Site . If the Lockbox Site incorrectly sent the case to the center as an unprocessable, the case should not be entered in this column. It should instead be marked as a "Lockbox Error" .

  3. Residual - Used when the sample case does not involve a remittance. No errors will be notated on residual cases.

  4. Taxpayer Impact - Used when a Lockbox error case results in a notice, letter, penalty, and/or interest charge to the taxpayer. The number of cases in error that result in one of these should be entered under this column. If there is a case that causes taxpayer impact, the type of impact must be described in the comments column.

3.0.230.13  (01-01-2009)
Lockbox Field Coordinator On-site Reviews

  1. The LFCs will perform on-site reviews during mandatory trips as outlined in IRM 3.0.230.6. LFCs will use the most current PIC and Procedural DCIs and instructions.

  2. The reviews ensure that the IRS Lockbox Sites' work meet the standards in the LPG. Each review examines the critical elements of the Lockbox Sites processing procedures that could cause a work stoppage if not executed accurately.

  3. Any errors that are found during on-site reviews should be photocopied as documentation to the DCI report. All photocopied errors will be sent back to the respective SPC via the Daily Mail-out Package.

  4. Maintain these reports for the length of the contract. The contract period is for five years with up to two one year extensions.

3.0.230.13.1  (01-01-2009)
Performance Standards

  1. Results from certain procedural reviews (high priority reviews) will be factored into the Lockbox performance standards, which assess the overall performance of each Lockbox site.

  2. The "High priority" reviews must be performed every day during each visit that coordinators are on-site and all the review instructions, including sample size, must be followed. The following have been designated as priority reviews. Each DCI has been marked as high priority:

    • Return Sort (IMF, BMF)

    • Form 1040X Sort (April Only)

    • Prior Year Return review

    • Delinquent Return Review

    • Candling

    • Unprocessables Items (with remittances and non-remittance)

    • Voucher and Check in Deposit Area (scan and non-scan after quality review)

    • Candling Bags

    • Form 4868s Review in Extraction (after quality review - April only)

  3. LFCs should do the other reviews (not high priority) whenever possible.

3.0.230.13.2  (01-01-2009)
Procedural Review General Guidelines

  1. Enter the following information on each DCI review sheet:

    • Month

    • Lockbox Site

    • Date

    • Actual Number Sampled

    • Number of Errors Found

    • Comments (document all pertinent comments regarding 'Other' errors not identified on the appropriate DCI or on the comments sheet provided)

  2. The DCI shows the type of work to be sampled, sample size, error descriptions, and other information needed to complete the review. Read both the instructions and the DCI carefully before beginning each review.

  3. Things to keep in mind:

    1. Take sample from the correct universe (i.e., blocks, transactions, returns, vouchers, checks, etc.)

    2. Sampled items are counted differently for some reviews

    3. Errors are tracked differently depending on work being reviewed

    4. "Randomly Select" means to select cases without conforming to a specific pattern

3.0.230.13.3  (01-01-2009)
Return Sort Review IMF - High Priority

  1. After all Lockbox Site quality reviews are completed, review sorted returns in the batching/return preparation area.

    Note:

    Perform this review during January and April visits at IMF Lockbox Sites only.

  2. Randomly select six batches of returns for each category. Randomly select three returns from each sampled batch. If less than six batches in a category, randomly select three returns from each available batch. If there are not six batches available within a category, randomly select three returns from each batch that is available.

  3. Record the number of returns found in error on the DCI.

    Note:

    The number of errors cannot exceed the number of sampled returns.

    Note:

    Use the error codes on the DCI to identify any errors found. Use the comments column to explain each error in the "other" category.

  4. Review the cover sheet associated with each sampled batch. On the DCI, record the number of cover sheets reviewed and the number of cover sheets in error. Use the additional columns to show the number of each error type found. Results will filter to the cover sheets summary tab in the workbook.

3.0.230.13.4  (01-01-2009)
Return Sort Review Form 1040X - High Priority (April Only)

  1. After all Lockbox Site quality reviews are completed, review sorted returns in the batching/return preparation area.

    Note:

    Perform this review during the April visit at the IMF Lockbox Sites only.

  2. Randomly select six batches of Form 1040X returns. Randomly select three returns from each sampled batch. If six batches are not available within a category, randomly select three returns from each available batch. If there are not six batches available, randomly select three returns from each batch that is available.

  3. Record the number of returns found in error on the DCI.

    Note:

    The number of errors cannot exceed the number of sampled returns.

    Note:

    Use the error codes on the DCI to identify any errors found. Use the comments column to explain each error in the "other" category.

  4. Review the cover sheet associated with each sampled batch. On the DCI record the number of cover sheets reviewed and the number of cover sheets in error. Use the additional columns to show the number of each error type found. Results will filter to the cover sheets summary tab in the workbook.

3.0.230.13.5  (01-01-2009)
Return Sort Review BMF - High Priority

  1. After all Lockbox Site quality reviews are completed, review sorted returns in the batching/return preparation area.

    Note:

    Perform this review at BMF Lockbox Sites only year round.

  2. Randomly select six different batches of returns for each category. Randomly select three returns from each sampled batch. If six batches are not available within a category, randomly select three returns from each available batch. If there are not six batches available, randomly select three returns from each batch that is available.

  3. Record the number of returns found in error on the DCI.

    Note:

    The number of errors found cannot exceed the number of sampled returns.

    Note:

    Use the error codes on the DCI to identify any errors found. Use the comments column to explain each error in the "other" category.

  4. Review the cover sheet associated with each sampled batch. On the DCI record the number of cover sheets reviewed and the number of cover sheets in error. Use the additional columns to show the number of each error type found. Results will filter to the cover sheets summary tab in the workbook.

3.0.230.13.6  (01-01-2009)
Return Sort Review Prior Year - High Priority

  1. After all Lockbox Site quality reviews are completed, review sorted returns in the batching/return preparation area.

  2. Randomly select six batches of returns from different form types for each category. Randomly select three returns from each sample batch. If six batches are not available within a category, randomly select three returns from each available batch. If there are not six batches available, randomly select three returns from each batch that is available.

  3. Record the number of returns found in error on the DCI.

    Note:

    The number of errors found cannot exceed the number of sampled returns.

    Note:

    Use the error codes on the DCI to identify any errors found. Use the comments column to explain each error in the "other" category.

  4. Review the cover sheet associated with each sampled batch. On the DCI record the number of cover sheets reviewed and the number of cover sheets in error. Use the additional columns to show the number of each error type found. Results will filter to the cover sheets summary tab in the workbook.

3.0.230.13.7  (01-01-2009)
Return Sort Review Delinquent - High Priority

  1. After all Lockbox Site quality reviews are completed, review sorted returns in the batching/return preparation area.

  2. Randomly select six batches of returns from different form types for each category. Randomly select three returns from each sample batch. If six batches are not available within a category, randomly select three returns from each available batch. If there are not six batches available, randomly select three returns from each batch that is available.

  3. Record the number of returns found in error on the DCI.

    Note:

    The number of errors cannot exceed the number of sampled returns.

    Note:

    Use the error codes on the DCI to identify any errors found. Use the comments column to explain each error in the "other" category.

  4. Review the cover sheet associated with each sampled batch. On the DCI record the number of cover sheets reviewed and the number of cover sheets in error. Use the additional columns to show the number of each error type found.

3.0.230.13.8  (01-01-2009)
Candling Review - High Priority

  1. Review a sample of candled envelopes to ensure that no checks or pertinent taxpayer information are destroyed. Randomly select a sample of 200 items following the final pass of the envelopes through candling. The sample should be from various bins and/or shifts.

  2. An error will result if anything other than an empty envelope is found.

3.0.230.13.9  (01-01-2009)
Unprocessable Items Review - High Priority

  1. Review a sample of unprocessable items to ensure that processable items are not included. Select the sample after the Lockbox Site completes its review.

  2. Randomly select 25 "with remit" and 25 "non-remit" items in the exceptions/unprocessable/manual area. Do not select every item from the same bundle/box of work. Collect items from separate locations in order to obtain a more extensive sample.

  3. If a processable item is found, charge an error. Verify if the Lockbox processed the sample to the fullest extent before deeming it unprocessable using the codes on the DCI.

  4. If the error code "Other" is selected, use the comments column to explain the error.

3.0.230.13.10  (01-01-2009)
Voucher & Check in Deposit Area After Quality Review - High Priority

  1. After the Lockbox Site quality reviews the work, review a sample of vouchers and checks before their separation.

  2. Randomly select 150 scannable documents and 300 non-scannable documents for review. Use the error codes provided on the DCI.

  3. The sample selected should include all types of work including Form 4868, Application of Automatic Extension of Time To Files U.S. Individual Income Tax Return during the month of April.

  4. If the error code "Other" is selected, use the comments column to explain the error.

  5. Keep a separate count of the number of encoding errors from the other types of errors found.

    Note:

    Illegible Audit Trail - If the batch you are reviewing has numerous illegible audit trails due to ink problems, charge only one error and indicate in the comments column, "throughout the batch." Do not charge an error for each document in error.

3.0.230.13.11  (01-01-2009)
Candling Bags Review - High Priority

  1. A sample review of candling bags received in first candling will be performed to ensure they are tagged properly identifying the extractor or equipment (OPEX) and the received date.

  2. Randomly select 10 bags of envelopes from the candling area.

  3. An error will result if the tag on the candling bag is missing or incomplete. Use the error codes provided on the DCI.

3.0.230.13.12  (01-01-2009)
Form 4868 Review - High Priority (April Only)

  1. Sample review Forms 4868 in extraction area AFTER Lockbox Site's quality review.

    Note:

    Perform this review during the April visit at the IMF Lockbox Sites only.

  2. Randomly select five blocks and select five items from each block.

  3. Record the number of Forms 4868 reviewed and the number in error.

3.0.230.13.13  (01-01-2009)
Mail Review

  1. A review of the mail will be performed after it is prepared for distribution to the floor to determine whether the Lockbox Site correctly labeled the mail trays/tubs with the correct date and time.

  2. Randomly select 25 mail trays/tubs for review. Select trays/tubs from various mail drops to comprehensively cover the mail coming into the Lockbox Site.

  3. Charge an error if:

    • tray/tub tag is missing or incorrect

    • tray/tub contains mixed tax types

    • tray/tub is out of date/or time order

3.0.230.13.14  (01-01-2009)
Voucher and Check Review in Extraction

  1. Review a sample of pairs of vouchers and checks in Extraction after the Lockbox Sites's quality review, to determine whether the lockbox is correctly processing/batching vouchers and checks.

  2. Randomly select 25 scannable and 25 non-scannable batches from various extractors.

  3. Review each batch header ticket and record the number of errors in the space provided.

  4. Randomly select one voucher and check combination from each selected batch. Review using the error codes provided on the DCI.

  5. If the error code "Other" is selected, use the comments column to explain the error.

    Note:

    Only one error can be assessed per item. Count a voucher/check combination as one item.

3.0.230.13.15  (01-01-2009)
Items to be Shred Review

  1. Review a sample of the items to be shredded, following managerial review, to ensure that no pertinent taxpayer information or requests are destroyed. Randomly select 200 items without looking at any taxpayer information to obtain an unbiased selection.

  2. Charge an error if you find information that should be sent to the SPC or a payment that should be processed.

3.0.230.13.16  (01-01-2009)
Multiple Payments Review

  1. Review a sample of multiple payments to ensure they were processed correctly after the Lockbox Site completes its quality review. The LFC should contact Lockbox Site personnel to find processed multiple payments.

  2. Randomly select for review 25 multiple payments. If 25 multiple payments are not available, review all available multiple payments.

  3. Charge an error if a payment is not processed correctly.

  4. Ensure that multiple payments are correctly annotated with "M-2" , "M-3" , etc.

3.0.230.13.17  (01-01-2009)
Split Payments Review

  1. Review a sample of split payments to ensure they were processed correctly after the Lockbox Site completes its quality review. The LFC should contact Lockbox Site personnel to find processed split payments.

  2. Randomly select for review 25 split payments. If 25 split payments are not available, review all available split payments.

  3. If a payment is not processed correctly, charge an error.

  4. Ensure that split payments are correctly annotated with "S-2" , "S-3" , etc.

3.0.230.13.18  (01-01-2009)
Certified / Registered Mail Review

  1. Review a sample of certified/registered mail cards to ensure they are properly stamped using IRS Certified Date Stamp.

  2. Randomly select five bundles of stamped cards. Randomly select five cards from each sampled bundle. If there are not five bundles available, randomly select five cards from each available bundle.

  3. An error will result if the IRS Certified Date Stamp is missing, illegible or the date is incorrect. Report using the error codes provided on the DCI.

  4. If the error code "Other" is selected, use the comments column to explain the error.

3.0.230.13.19  (01-01-2009)
Processing Internal Controls (PIC) Review

  1. Results from this review will be used to assess the overall performance of each Lockbox Site. Reviewing as described on the DCI and below is very important.

    Note:

    Detail all "partially met" and "not met" observations on the comments sheet.

3.0.230.13.20  (01-01-2009)
Checkpoint Frequencies

  1. Perform checkpoints 1, 2, and 3 should only be reviewed once per Lockbox Site.

    Note:

    Checkpoint 1 is reviewed at IMF Lockbox Sites from January through October and does not apply to BMF Lockbox Sites.

  2. Checkpoints 4-7 should be reviewed three times during the January (BMF) / April (IMF) peak visit and only once for all other on-site visits.

3.0.230.13.21  (01-01-2009)
Checkpoint Instructions

  1. Each checkpoint has a list of requirements that need to be checked. Each LPG reference is stated on the DCI. All listed requirements must be reviewed. Checkpoints will be assessed as follows:

    • Fully Met (FM) - All requirements must be met.

    • Partially Met (PM) - Half of the requirements must be met in order for the checkpoint to receive a PM. Guidelines for this are included on the DCI.

    • Not Met (NM) - If less than half of the requirements listed are met, the checkpoint will receive NM.

3.0.230.13.22  (01-01-2009)
Repeat Finding

  1. Each checkpoint has a "Repeat Finding" entry. Lockbox Field Coordinators will complete this on the DCI after returning home from the on-site visit.

  2. Go back to the previous Processing Internal Controls (PIC) review. Check each checkpoint to see what the Lockbox Site received for the same checkpoint on the previous DCI.

  3. If the Lockbox Site received the same rating, the DCI should be marked "yes" as a "Repeat Finding" . Otherwise it should be marked "no" .

3.0.230.13.23  (01-01-2009)
Checkpoint 1 – Taxpayer Usage Study (TPUS) (IMF Only January to October)

  1. Checkpoint 1 covers the TPUS requirements.

  2. Review to ensure the following:

    • The Lockbox Site has a systematic sampling method to select cases.

    • The sample is only Form 1040 family (1040, 1040A, 1040EZ ) and is take from every type of mail received (regular, bulk, and certified).

    • The sample rate is set at one envelope for every 6,000 envelopes received.

    • The count of the Form 1040 envelopes are tracked on a daily basis.

3.0.230.13.24  (01-01-2009)
Checkpoint 2 – Deposit Error Rate Sampling (DER)

  1. Checkpoint 2 covers the DER requirements.

  2. Review to ensure the following:

    • The Lockbox Site maintains a "Sampling Tracking Sheet" .

    • The sampling methods incorporates multiple P.O. Boxes.

    • The sampling method varies in the mail delivery times.

3.0.230.13.25  (01-01-2009)
Checkpoint 3 – Managerial Quality Reviews

  1. Checkpoint 3 covers the Lockbox Managerial Quality Reviews requirements.

  2. Review to ensure the following:

    • Manager is performing quality reviews on candling.

    • Manager is performing quality reviews on shreds.

    • Manager maintains logs of the desk and work area reviews. Review the previous month's log.

3.0.230.13.26  (01-01-2009)
Checkpoint 4 – IRS Date Stamps

  1. Checkpoint 4 covers the IRS date stamp safeguard against unauthorized usage requirements.

  2. Review to ensure the following:

    • The date stamps have a date stamp number and / or unique serial number.

    • There is a record of the date stamp number and / or unique serial number.

    • The date stamps are issued to a specific individual.

3.0.230.13.27  (01-01-2009)
Checkpoints 5a - 5d – Log Reviews

  1. Checkpoints 5a - 5d cover the four Log reviews (Date Stamp, Candling (Form 9535), Cash and Mail).

  2. Review to ensure the following:

    • 5a - The stamp log includes current date, date stamp number and/or unique serial numbers, name of employee, shift, time issued and return time.

    • 5b - All items found in candling are handled correctly and documented on Form 9535 designated for Candling.

    • 5c - All cash payments are handled correctly and documented on Form 9535 designated for Cash.

    • 5d - The Lockbox Site is maintaining a daily mail log of incoming receipts and completing the log after every mail drop.

    Note:

    Review the daily logs beginning with the first day of the month. For example, if you are performing the review on April 17, review the daily log sheets from April 1 to the day prior to your review. For January (BMF) and April (IMF) peaks, perform these reviews three times. If your second review is on April 22, review daily logs from April 17-21.

3.0.230.13.28  (01-01-2009)
Checkpoint 6 – Candling Envelopes

  1. Checkpoint 6 covers the envelopes candled requirements.

  2. Review to ensure the following:

    • Envelopes are opened (either manually or by OPEX) on three or more sides and must be candled once on the candling tables.

    • All other envelopes must be candled twice on the candling tables.

3.0.230.13.29  (01-01-2009)
Checkpoint 7 – High Dollars

  1. Checkpoint 7 covers the High Dollar ($50,000 or more) requirements.

  2. Review to ensure the following:

    • An internal control is in place to expedite these remittances.

    • Management is ensuring these remittances are collected from all areas at the end of each shift and prior to break periods, then batched and sent for processing.

  3. For remittances of $50,000 or more, ensure the following:

    • $50,000 or more is discovered in any type of work, it should be expedited and deposited on the first available deposit.

    • $100 million or more is discovered, it must be immediately hand-carried to the manager with the return/document for split-payment processing.

3.0.230.13.30  (01-01-2009)
Checkpoint Descriptions and LPG References

  1. Following is a listing of the PIC Reviews and their respective LPG references.

    1. Checkpoint 1 - Taxpayer Usage Study (TPUS) - LPG 8.3

    2. Checkpoint 2 - Deposit Error Rate Sampling (DER) - LPG 8.4

    3. Checkpoint 3 - Managerial Quality Reviews - LPG 8.1

    4. Checkpoint 4 - IRS Date Stamping Safeguards - LPG 3.2.2.2

    5. Checkpoint 5a - 5d - Log Review (Date Stamp, Candling, Cash, Mail) - LPG 3.2.2.2

    6. Checkpoint 6 - Candling Requirements - LPG 3.2

    7. Checkpoint 7 - High Dollar Requirements - LPG 3.2

3.0.230.13.31  (01-01-2009)
BMF and IMF Peak Readiness Review

  1. The purpose of the BMF/IMF Readiness Review is to determine if the Lockbox Site is prepared for peak processing. Before the start of the peak processing season, each Lockbox Site prepares a readiness package.

  2. The Readiness package addresses:

    • Communications

    • Courier Service (SPC Mail-out Package/Return Shipments)

    • GAO/TIGTA Findings (Processing Issues)

    • LPG/LEB Bulletins and Alerts

    • Processing and Production

    • Quality Standards

    • Remittances

    • Lockbox Site specific processing issues

    • Staffing

    • Training

    • Workload Realignment

  3. The LFC will review the individual readiness packages with the Lockbox, either on-site or by telephone prior to January.

3.0.230.14  (01-01-2009)
Definitions of Terminology

  1. The following terminology has been used in the text of this document.

    TERM DEFINITION
    Acceptable payments Payments made in cash, check, or money order that can be processed by the lockbox.
    April Peak (IMF) April 15th through a pre-determined PCD.
    Audit trail Contains both taxpayer and deposit information that is printed on the back of all processed checks.
    Block A group of 100 documents or less sequentially numbered from 00 through 99.
    Block Out-of-Balance The total block or item amount does not agree with the totals on the check lister.
    Business Master File (BMF) Income tax forms related to business filers.
    Candling The process of using an illuminated table to scan envelopes prior to destroying them in order to ensure that all of the contents have been removed.
    Check Lister A document which identifies all items within a block.
    Correspondence Communications received from taxpayers on separate letters or notes, or written on vouchers/documents (excluding name/address or tax period ending changes.)
    Data Collection Instrument (DCI) A form used for collecting data for reporting quality review results.
    Depositary The Lockbox Site contracted by FMS to process IRS deposits and establish credit for the Treasury's general account.
    Deposit Ticket (SF–215A) The standard government accounting document used to constitute a deposit to the IRS' Lockbox account.
    Deposit Ticket (SF–215) (Credit Voucher) The standard government accounting document used to increase the amount of the deposit previously made to the IRS Lockbox account.
    Document Locator Number (DLN) A 14–digit control number assigned to every document and check input through the remittance processing system for identification purposes.
    Due Date The date a tax payment or tax return is legally due and payable. It is formally defined by a combination of Internal Revenue Code (IRC) Sec. 6654 and IRC Sec. 7503.
    Employer Identification Number (EIN) A nine digit number used to identify a taxpayer's business account.
    Encoding Errors An error that occurs when the dollar amount on the check is keyed incorrectly from the actual amount written on the check.
    Entity The area on a document where the name, address, SSN/EIN, and tax period appear.
    File Location Code (FLC) First two digits of the DLN assigned to indicate the Submission Processing Campus and to designate whether the voucher was scannable or non-scannable.
    Financial Management Service (FMS) Agency of the Department of the Treasury responsible for outside contracting and cash management.
    Holdover Remittances that have not been deposited within the timeframes specified in LPG 2.2.4.
    Individual Master File (IMF) Income tax forms related to individual filers.
    Installment Agreement An arrangement between IRS and taxpayers to make partial payments until the balance of a tax debt is paid in full.
    Integrated Data Retrieval System (IDRS) A computerized system used by IRS for adjusting, researching, and monitoring tax accounts.
    January Peak (BMF) January 31 until site is back on a 24 hour deposit schedule.
    Lockbox Commercial Financial Agency designated by FMS to process federal tax payments.
    Lockbox Electronic Network (LEN) The system used to electronically transmit all RPS and RTR files directly from the Lockbox Sites to a Martinsburg Computing Center drop box.
    Lockbox Field Coordinator(s) (LFC) Designated Headquarters representatives responsible for ensuring the processing and deposit requirements stated in the LPG are followed by performing the on-site reviews.
    Lockbox Policy and Oversight (LPO) Analyst Designated Headquarters representatives responsible for the development of system, security and processing requirements for the Lockbox program.
    Lockbox Processing Guidelines (LPG) Manual providing instructions detailing remittance processing requirements for the commercial Lockbox Depositaries.
    Multiple Checks Two (2) or more remittances submitted with one document.
    Multiple documents Two (2) or more vouchers or documents submitted with one remittance.
    Prior Year A tax year with a due date prior to the current processing year.
    Quality Review The appraisal of processed remittances to ensure the quality standards stated in the LPG are maintained.
    Remittances Any cash, check, draft or money order drawn on and payable through financial institutions in the US.
    TGAnet The Treasury General Account Deposit Reporting Network.
    Unpostables Transactions that fail the consistency and validity checks at master file.
    Unprocessables Any document, item, or correspondence that cannot be processed by the Lockbox and must be sent to the SPC.
    Voucher The document the taxpayer submits with his or her remittance for a federal tax obligation.

Exhibit 3.0.230-1  (01-01-2009)
Submission Processing Campus/Lockbox State Realignment

Description: An IMF and BMF table showing the SPC and their corresponding Lockbox Sites listing states they process payments for.

2009 IMF SPC & Lockbox State Realignment
Andover and Bank of America - Windsor Fresno and Bank of America - Hayward
Maine New Hampshire Alaska Nevada
Maryland Vermont California Oregon
Massachusetts   Hawaii Utah
    New Mexico  
       
Atlanta and Bank of America - College Park Austin and Bank of America - JP Morgan Chase- Charlotte
Alabama N. Carolina IMF International Mississippi
Florida S. Carolina Kentucky Tennessee
Georgia Virginia Louisiana Texas
       
Kansas City and Bank of America - Windsor Fresno and US Bank - Cincinnati
Pennsylvania New Jersey Arizona Nebraska
New York   Colorado N. Dakota
    Iowa Oklahoma
Kansas City and US Bank - St. Louis Idaho S. Dakota
Arkansas Missouri Illinois Washington
Connecticut Ohio Kansas Wisconsin
Delaware Rhode Island Minnesota Wyoming
Indiana W Virginia Montana  
Michigan      
2009 BMF SPC & Lockbox State Realignment
Cincinnati and US Bank - Cincinnati Ogden and Bank of America - Tucker
Connecticut New Jersey BMF International Mississippi
Delaware New York Alabama Missouri
District of Columbia N. Carolina Alaska Montana
Georgia Ohio Arkansas Nebraska
Illinois Pennsylvania Arizona Nevada
Indiana Rhode Island California New Mexico
Kentucky S. Carolina Colorado N. Dakota
Maine Tennessee Florida Oklahoma
Maryland Vermont Hawaii Oregon
Massachusetts Virginia Idaho S. Dakota
Michigan West Virginia Iowa Texas
New Hampshire Wisconsin Kansas Utah
    Louisiana Washington
    Minnesota Wyoming

Exhibit 3.0.230-2  (01-01-2009)
File Location Code Table

Description: A table used to specify the Submission Processing Campus or Lockbox Site that processes the documents. File Location Code is a unique two position numeric code found in the first two positions of the DLN.

LOCATION CAMPUS CODE Lockbox Site CODE
Andover SPC - Bank of America - Windsor 08 02 = Scan 05= Non Scan
Atlanta SPC - Bank of America - College Park 07 59 = Scan 65 = Non Scan "Overflow" 69 = Scan 67 = Non Scan
Austin SPC - JP Morgan Chase - Charlotte 18 73 = Scan 75 = Non Scan "Overflow" 50 = Scan 53 = Non Scan
Cincinnati SPC - US Bank - Cincinnati 17 35 = Scan 31 = Non Scan"Reserved" 26 = Scan 27 = Non Scan
Fresno SPC - Bank of America - Hayward 89 68 = Scan 94 = Non Scan "Overflow" 15 = Scan 24 = Non Scan
Fresno SPC - US Bank - Cincinnati 89 33 = Scan 77 = Non Scan"Overflow" 80 = Scan 90 = Non Scan
Kansas City SPC - US Bank - St. Louis 09
MMIA 		36 = Scan 39 = Non Scan "Overflow" 40 = Scan 44 = Non Scan
Kansas City SPC- Bank of America - Windsor 09 47 = Scan 48 = Non Scan
Ogden SPC - Bank of America - Tucker 29 91 = Scan 92 = Non Scan

Exhibit 3.0.230-3  (01-01-2009)
Lockbox Remittance Theft Report

Description: This form is used by the Lockbox Field Coordinator to report a theft of a payment that went through the Lockbox Site processing. It includes the injured taxpayer's name, the taxpayer's EIN, money amount lost, date of remittance, and name of Lockbox Site. It also lists the name of the Remittance Security Coordinator and the name of the TIGTA agent as well as actions taken to recover the funds from the perpetrator and Lockbox Site.

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