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Part 3. Submission Processing

Chapter 12. Error Resolution

Section 15. Return of Partnership Income

3.12.15  Return of Partnership Income

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3.12.15.1  (01-01-2003)
Overview

  1. The information captured on Form 1065 and Form 1065-B is used by several functions within the Internal Revenue Service such as Exam Classification and Statistics of Income (SOI). SOI tabulates the data and shares it with agencies outside of the Internal Revenue Service such as the Office of Tax Analysis (OTA), Bureau of Economics (BEA) and the Joint Commerce.

  2. Form 1065, U.S. Return of Partnership Income is an information return used to report the income, deductions, gains, losses, etc., from the operation of a partnership. A partnership does not pay tax on its income but "passes through" any profits or losses to its partners. Partners must include partnership items on their tax returns.

    Exception:

    Partnership returns identified as a "Publicly Traded Partnership" (PTP) will pay a tax on income derived from the active conduct of all trades and businesses of the partnership. These returns will have the annotation "3.5% GROSS INCOME TAX" on Line 22 of the Form 1065 (above or below the Ordinary Business Income (Loss) amount) and the amount of tax owed. These returns are processed in the Ogden Submission Processing Center.

  3. Form 1065-B, U.S. Return of Income for Electing Large Partnerships was created as a result of the Tax Reform Act (TRA) of 1997 to reduce the burden for the partners and increase the IRS' ability to match income and deduction amounts reported to individual partners on their individual income tax returns. These returns are processed in the Ogden Submission Processing Center.

    1. A partnership may elect to file Form 1065-B if the partnership had 100 or more partners during the preceding tax year.

    2. A partnership cannot make the election to file Form 1065-B for its first tax year.

3.12.15.1.1  (01-01-2008)
IRS Employee Contacts – Section 3705(a)

  1. The Restructuring and Reform Act of 1998, Section 3705 provides identification requirements for all IRS employees working tax related matters. IRS employees are required to give their name and unique identification number during taxpayer telephone, face to face and written contact. In addition, a telephone number is required on all taxpayer correspondence. This will provide taxpayers with enough information to identify an IRS employee who has previously assisted with tax related matters.

  2. All IRS employees, in the field, national and regional offices, who communicate, by telephone, correspondence or face to face, with taxpayers or their personal representatives, on tax-related matters are required to provide (at a minimum) the following information:

    1. Telephone Contact – Their title (e.g., Mr., Mrs., Ms., Miss), last name and badge identification (ID Card) number.

    2. Face to Face Contact – Their title (e.g., Mr., Mrs., Ms., Miss), provided as appropriate during the conversation, their last name and badge identification (ID Card) number.

    3. Correspondence – All correspondence must include a telephone number where the taxpayer's question can be answered. In addition, manually generated and handwritten correspondence must have their title (e.g., Mr., Mrs., Ms., Miss), last name, and IDRS, letter system, or their badge identification (ID Card) number.

    4. The IDRS number and numbers for some other letter systems are automatically generated. If it is not generated, or a handwritten note is prepared, the badge identification (ID Card) number must be used. Toll-free employees may also provide their location for identification purposes. Faxes to taxpayers on tax related matters are considered manually-generated correspondence and must include the required information. (See IRM 11.3.1.10 for faxing guidelines.)

    5. Correspondence, whether sent directly to the taxpayer or to the taxpayer's personal representative, must contain the required information.

    6. When a taxpayer asks to speak with a specific employee who previously handled the inquiry or request, or complains about the level of service previously provided, every attempt should be made to resolve the taxpayer's inquiry. If the issue cannot be resolved, the employee should refer the inquiry using established procedures to his or her manager.

    7. Correspondex letters will require a specific employee name and telephone number only if the employee initiating the correspondence is in the best position to respond to any questions that the taxpayer may have about the correspondence, or the employee is asking the taxpayer to provide additional case-related information.

    8. Otherwise, if the taxpayer does not need to contact a specific employee, the correspondence needs only an IRS telephone number and standard signature.

    9. Secretaries, receptionists or other people who answer the telephone in functional offices need to identify themselves and should provide their badge identification (ID Card) number only if they are answering telephones that are routinely used to provide tax or account information.

    10. It is not necessary to repeat the badge identification (ID Card) number on a subsequent contact, when the nature of an employee's work involves multiple contacts with the same taxpayer, and the employee has given the taxpayer (either by telephone or in-person) their ID Card (badge) number on the first contact.

  3. During a taxpayer contact,

    If... And... Then...
    • It appears that there may be a hardship situation,
    • The taxpayer asks to be referred to the Taxpayer Advocate Service (TAS), or
    • The contact meets TAS criteria     		You can't resolve the taxpayer's issue the same day (See (4) below). Prepare and forward Form 911, Request for Taxpayer Advocate Service Assistance, to the Local Taxpayer Advocate (see IRM Part 13, Taxpayer Advocate Service.)

  4. If you are able to resolve and close the TAS issue on the same day as the taxpayer contact, do not refer the inquiry to TAS. The definition of "same day" is within 24 hours. There will be times you can resolve the issue completely within 24 hours. There will be times you cannot resolve the taxpayer issue completely within 24 hours but have taken steps within 24 hours to resolve the issue, these cases meet the definition of "same day" also. Do not refer these cases to TAS unless the taxpayer asks to be transferred to TAS. Refer to IRM 13.1.7.4, Same-Day Resolution by Operations.

3.12.15.1.2  (01-01-2009)
♦Taxpayer Advocate Service - Service Level Agreement (SLA)♦

  1. The National Taxpayer Advocate and the Commissioner, W&I Division have reached an agreement (effective February 1, 2008) outlining the procedures and responsibilities for processing Taxpayer Advocate Service (TAS) casework when either the statutory or delegated authority to complete a case transaction rests with the W&I Division.

  2. In preparation for a case being referred to a W&I Division function, the TAS employee is responsible for:

    1. Preparing Form 12412, Operations Assistance Request.

    2. Securing all necessary supporting documentation.

    3. Forwarding Form 12412 and documentation with Form 3210, Document Transmittal, to the W&I Division Liaison.

  3. W&I is responsible for:

    1. Assigning a liaison in each office or Campus where a Taxpayer Advocate is located.

    2. Acknowledging receipt of the case via Form 3210 within one (1) workday for cases involving economic hardship or within three (3) workdays for cases involving systemic hardship (delay or procedural/systemic failure).

    3. Responding to TAS within three (3) workdays for cases involving economic hardship in writing, via facsimile or hand delivery, regarding his or her relief/no relief decision.

    4. Providing TAS with the name and telephone number of the W&I employee assigned the case.

    5. Negotiating with TAS a reasonable timeframe for resolution of cases involving systemic hardship.

  4. For further information, refer to IRM 13.1.16, Taxpayer Advocate Case Procedures, National Service Level Agreements.

3.12.15.1.3  (01-01-2007)
♦Frivolous Returns and Claims♦

  1. A frivolous argument is used for the purpose of expressing dissatisfaction with the substance form or administration of the tax laws by attempting to illegally avoid or reduce tax liabilities.

  2. Code and Edit has been instructed to extract any questionable return(s) meeting the criteria (e.g. shown in IRM 3.11.15 or in Examination IRM 4.10.12) and to place them into a designated basket for Examination review.

    If... Then...
    Examination has selected the return as frivolous, e.g. indicated by an Action Code 440 (OSPC) or 336 (CSPC), and Form 4227 with the remarks, "Refer to Exam FRP for audit after processing" but sends the return for processing Continue processing the return using the procedures in IRM 3.12.15. However, do not circle or void the Action Code indicating a frivolous return.

3.12.15.1.4  (01-01-2003)
Error Correction Process

  1. All Forms 1065 Error Screen Displays will display as follows:

    • Tax Class – 2

    • Document Code 65 – Form 1065

    • Document Code 67 – Form 1065 (Publicly Traded Partnerships or "PTP" )

    • Document Code 68 – Form 1065-B

3.12.15.1.5  (01-01-2005)
♦BMF Consistency♦

  1. The purpose of this initiative is to achieve consistency in the BMF ERS processing IRMs.

  2. Topics for the BMF Consistency were identified and developed as a coordinated effort between Cincinnati, Ogden and BMF Policies, Procedures and Guidance Branch.

  3. Subsections are identified by a ♦ (diamond) before and after the title.

  4. Text in normal print is the common processes for BMF returns. The text in BOLD print is form specific and applies to this IRM only.

3.12.15.1.6  (01-01-2003)
Inventory/Reports

  1. Records will be placed into the Error Inventory or the Workable Suspense Inventory for correction. Once the Error Resolution Tax Examiner accesses the record and it is displayed on the screen, it must be:

    1. Corrected in full by correcting errors in editing or transcription and/or correcting math errors.

    2. Placed in suspense for additional information.

    3. Rejected from pipeline processing.

  2. Each day the Error Inventory Report will be furnished showing:

    1. Blocks, by the block control number, and block DLN in DLN order.

    2. Each batch will be on a separate page.

    3. Blocks received from BOB Correction will be listed separately.

    4. A copy of the report must be on the carts of documents and used as a charge-out to determine when a cart is completed.

    5. The first line of the Error Inventory Report will show the number of working days the records on that page have been in the Error Inventory. This will enable work left from a previous day to have priority.

3.12.15.1.7  (01-01-2003)
Workable Suspense Inventory Report

  1. Each day the Workable Suspense Inventory Report will be furnished showing the records by Program in DLN order for various status situations. Separate pages for each program, with totals, will be provided.

  2. The first line of the report will show the number of working days that the records have been in the Workable Suspense Inventory. This will allow priority to be given to the older work.

3.12.15.1.8  (01-01-2003)
Error Displays and Corrections

  1. All Form 1065 and 1065-B Error Screen Displays will display as follows:

    • Each field is identified by an Alpha/Numeric Field Designator (AFD) displayed before the field.

    • Fields are displayed with no breaker.

    • Negative values are indicated by a minus (−) sign following the amount.

    • Decimal points are displayed beginning in the left position.

    • Leading zeroes in amount fields are suppressed and the significant digits are displayed beginning in the left position.

    • If more than one amount field of a record is to be shown, the units positions are aligned beneath one another.

    • Sufficient leading blanks are displayed preceding the shorter amounts so that the unit position of these amounts are directly in line with the unit position of the longest amount.

    • The cents digits are not displayed for "dollars only" fields. So that the unit position will remain in line with the other fields of the section, two asterisks (**) are displayed in the cents position of the dollars only field.

  2. Corrections are entered starting with the left-most position of the field. Blank-out unused positions.

    • If fewer than the maximum number of positions is required, the program will automatically move to the right of the digits.

    • It is not necessary to enter the decimal point. If the decimal point is entered, it will be ignored.

    • A minus sign (−) must be entered as the last numeric if the amount is negative.

  3. Be careful not to enter more than the number of positions allowed for a particular field. If more data is entered, the overflow characters will display on the screen but are dropped when the field is added to the record. This is especially important for the TIN, name and address.

  4. Corrections can be made to a displayed field by overlaying only the digits in error and not re-entering the entire field. It is not necessary to eliminate the decimal point when correcting in this manner.

  5. If it is necessary to add a missing section:

    1. Transmit with Command Code GTSEC, followed by the desired Section Number.

    2. When the empty section format is displayed, enter the missing data in the proper fields and transmit with Command Code CRECT.

  6. If it is necessary to see a field or section of the record other than that shown in the display:

    1. Enter Command Code GTSEC, followed by the desired Section Number.

    2. If a correction is not made to the section, drop to the bottom of the screen, and transmit.

    3. Any error display not showing all fields necessary for resolution should be reported to the National Office.

      Reminder:

      When transmitting corrections to a screen display, move the cursor below the last field containing data before transmitting.

  7. If it is necessary to delete a section of the record, enter Command Code DLSEC, followed by the desired Section Number.

  8. If it is determined during the course of correcting a Priority II, III or IV Error, that additional information or research is necessary to resolve the error (or if the error is rejected), enter the appropriate Action Code with either Command Code SSPND or RJECT.

3.12.15.1.9  (01-01-2008)
Command Codes

  1. The Command Codes needed for correcting the Error Inventory and the Workable Suspense Inventory are briefly described below. Any Command Code in the Employees Security Profile will be available:

    Command Code Description
    ACTVT Used to transfer unworkable suspense records to workable suspense inventory.
    CRECT

    • Used to enter a correction.

    • Valid only after an error has been displayed in response to the GTREC command.
    DLSEC To delete a section within the record in progress.
    ENMOD Used to research a name control.
    ERINV Used to research a DLN or TIN on the ERS Control File.
    ERVOL

    • Used with a Status Code to display the number of ERS records in the current Workable Inventory.

    • Used to obtain the actual count of records to be worked.

    • Printed reports for ERS are updated nightly.
    FRM49 Used to input a fact of filing when an unnumbered return is withdrawn from normal processing, i.e., correspondence.
    GTREC

    • Used to access the first error record in an ERS error block.

    • Used to access a specific record in the Workable Suspense Inventory.
    GTRECQ Used to access a worked record that has been held for Quality Review.
    GTRECW

    • Used to recover an ERS data record that has already been worked.

    • Can be used at any time on the same processing day.

      Note:

      Errors discovered on subsequent days must be corrected by using Notice Review and Adjustment procedures.
    GTSEC

    • Used to obtain the display of any data section within the record in progress.

    • Response is the display of all correctable fields of the requested section, including blank fields.

    • Computer generated fields and error indicators will not be shown.

    • If no data is present in the specified section, the empty format of the requested section is displayed.
    INOLE Used to access the National Account Profile (NAP) which contains selected entity information for all Master File accounts.
    MFTRA Used to request a hard copy transcript for a specific TIN.
    NAMEE

    • Used to research a missing or incomplete EIN/TIN.

    • Name and address data is input to search the Key Index File.
    NWDLN Used to assign a renumbered DLN on an ERS record.
    RJECT Used to delete a record from ERS.
    SINOF

    • Used to sign off the computer.

    • SINOF will be used by all terminal users, including ERS, GUF and IDRS.

    • SINOF is displayed, but must be keyed onto the screen when signing off.

    • Response is "Request Completed"

    SINON

    • Used to sign on to the computer.

    • SINON is displayed but must be keyed onto the screen when signing on.

    • Password is entered but does not appear on the screen.
    SSPND

    • Used with an ERS Action Code to place a record into Suspense status.

    • SSPND is valid for Error Correction and Suspense Correction.
    TRDBV Tax Return Data Base

    • Used to access 100% of return data as well as all subsequent corrections entered via ERS and GUF.

    • Used to verify specific line items (including any correction activity), resolve taxpayer inquiries, identify refund issues, and verify filing and return status.

3.12.15.1.10  (01-01-2003)
Action Codes

  1. The ERS Action Code indicates that specific information is missing or that the record is to be rejected from processing. The code will have sufficient detail to indicate if correspondence is to be sent to the taxpayer or specific in-house research or action(s) required.

  2. For a listing of valid ERS Action Codes, See Exhibit 3.12.15-1.

  3. Document Perfection Tax Examiners will assign a three digit code to numbered returns when they determine that the document is unprocessable in its present form either by needing additional information or some manual intervention is required. This code will be entered in the bottom left margin of the return.

  4. Form 3696, Correspondence Action Sheet or other approved Correspondence Action Sheet is used for initiating correspondence. This form is attached by Document Perfection. When routing within the campus (in-house research), an explanation concerning the missing information will need to be attached to the return.

  5. The Action Code assigned by Document Perfection will be transcribed into the record of the Form 1065 or 1065-B.

  6. The presence of a valid Action Code other than 001 will place the record in the Suspense Inventory, either Workable or Unworkable.

  7. If the Action Code assigned by Document Perfection is invalid or incomplete, the record will be assigned to the Error Inventory for correction or deletion of the code.

  8. Only one Action Code may be assigned at one time to a record. The priority of the Action Codes will be 320, 4XX, 6XX, 3XX, 2XX.

  9. An ERS Tax Examiner may:

    1. Enter an Action Code on a record.

    2. Delete or correct an invalid code.

    3. Overlay the present Action Code with another to either resuspend or reject from ERS. This is done by entering a valid Action Code with a Command Code SSPND, RJECT or NWDLN. See IRM 3.12.38, Error Resolution System (ERS), General Instructions for additional information.

    4. Enter a valid Action Code with the SSPND Command Code to clear the record from the screen and place the record in either Workable Suspense or Unworkable Suspense.

    5. Enter a valid Action Code with the RJECT Command Code to reject the record from ERS. Generally SCCF will be automatically updated for the rejected records.

3.12.15.1.11  (01-01-2009)
Correspondence

  1. DO NOT correspond with the partnership when there is an indication on the return that no transactions transpired during the tax year.

    Reminder:

    A partnership is not considered to engage in a trade or business and is therefore not required to file for any tax year in which it neither receives income nor incurs any expenditures treated as deductions or credits for federal income tax purposes.

  2. Correspondence records with Action Code 21X will be automatically suspended for a predetermined number of days or until the taxpayer replies, whichever is earlier.

    Note:

    Do not correspond for information on any return "SECURED BY EXAMINATION OR COLLECTIONS" or reprocessable/reinput returns identified as "CIS" returns.

    See IRM 3.12.15.1.11.1. for correction procedures for "CIS" returns.

  3. ERS tax examiners issuing correspondence may perform either of the following:

    1. Use the IDRS Command Code LETER.

    2. Initiate correspondence by using the Form 3696, Correspondence Action Sheet,Form 3696-A, IDRS Correspondence Action Sheet or other approved Correspondence Action Sheet. An IDRS operator or typist will use the form in issuing the actual correspondence. ( See Figure 3.12.15-1. )

    Figure 3.12.15-1

    This image is too large to be displayed in the current screen. Please click the link to view the image.

    Correspondence Action Sheet

  4. No reply to correspondence requires a CCC "3" in Field 01CCC. See specific IRM procedures and See Exhibit 3.12.15-14.

  5. Most correspondence is either computer generated notices, computer generated letters or preprinted letters.

  6. All correspondence now reflects a response period within 30 days and the consequence for no reply

  7. If special notes or letters are developed, conform to the language and response periods that are used in (4) above. Use the following guidelines:

    1. All correspondence to the partnership requesting information should indicate that a response is required. Specify the length of time the partnership has to respond (generally 30 days) and include a statement on the action IRS will take if the response is not received timely. Be sure to include the following statement:
      "WHEN YOU REPLY, PLEASE INCLUDE YOUR TELEPHONE NUMBER AND THE MOST CONVENIENT TIME FOR US TO CALL SO WE MAY CONTACT YOU IF WE NEED ADDITIONAL INFORMATION" .

    2. Provide for a purge date at least 10 days after the date provided in the letter.

    3. Whenever possible, form letters should be used to correspond with the partnership. If a C-NOTE or QUICKNOTE is used, be sure that it clearly communicates the message in simple language and contains the required information.

    4. When partnerships make errors that cause delays, advise the partnership that they made the error and explain what the error was that caused the delay.

    5. Specific turnaround times for working correspondence as outlined in IRM 3.30.123.12.3 must be followed and monitoring reports must be instituted to ensure that these guidelines are met.

3.12.15.1.11.1  (01-01-2009)
♦Correspondence Imaging System (CIS) Returns♦

  1. Correspondence Imaging System (CIS) is an inventory system for scanning all Accounts Management (AM) receipts (including Forms 1065 and 1065-B) into digital images and working the cases from those images.

  2. "CIS" returns are identified with "CIS Image-Do not correspond for Signature" stamped below the signature line or "CIS" annotated on the front of the return.

  3. Follow the instructions below for processing "CIS" returns:

    If... And... Then...
    The "CIS" return has a Form 13596 or Form 3893 attached,

    Note:

    If there is an indication on the return that correspondence has been sent (e.g., CCC "3" is edited on the return), do not route return to Accounts Management. Continue processing return.

    		The return is not complete (e.g., missing signature, schedules or forms),

    1. Remove the return from the batch.

    2. Void the DLN.

    3. Attach Form 4227 to the return and route to Accounts Management to secure missing information.

    Note:

    Do not correspond for missing information on "CIS" reprocessable/reinput return.

    The "CIS" return does not have a Form 13596 or Form 3893 attached The return is not complete (e.g., missing signature, schedules or forms), Follow normal correspondence procedures.

3.12.15.1.12  (01-01-2003)
Perfection of Attachments

  1. Review all attachments to determine proper disposition:

    If... Then...
    Unrelated, unanswered partnership correspondence is attached and no action has been taken Detach and route to the appropriate area using Form 4227.
    Unanswered partnership correspondence relating to the Form 1065 or 1065-B is attached

    1. Make a photocopy of the attachment, and

    2. Forward to the appropriate area using Form 4227.

  2. Any attachment or photocopy of an attachment that is routed elsewhere must contain name, address, EIN and received date.

3.12.15.1.13  (01-01-2009)
Special Conditions

  1. The following instructions are provided for these special condition returns:

    • Short Length Records

    • Non-ADP Return

    • Section 6020(b) Returns

    • Publicly Traded Partnerships (PTP) (Ogden Submission Processing Center)

3.12.15.1.13.1  (01-01-2009)
Short Length Records

  1. The following types of return are processed as short length records:

    • Amended returns ("G" Coded).

    • Common Trusts.

    • Nominee returns ( See IRM 3.12.15.1.13.1.1. ).

    • Section 761(a) Elections ( See IRM 3.12.15.1.13.1.2. )

    • Inactive returns (returns with no income or deductions on pages 1, 2, 3, 4 and 5 of Form 1065, Line 17, Form 8825 (Rental Real Estate Income (REMIC) and Expenses of a Partnership on an S Corporation) and Line 11 on Schedule F (Profit or Loss From Farming)).

      Note:

      An inactive return with an audit code, correspondence received date or nonrecourse loan present is processed as a long record.

  2. Only the following fields may be present on short length records:

    • 01NC Name Control
    • 01EIN Employer Identification Number
    • 01TXP Tax Period
    • 01RCD Received Date
    • 01CCC Computer Condition Code
    • 01NOP Number of Partners (except Amended Returns)
    • Section 05 Address (only if address has changed) on Form 1065
    • Section 06 Address (only if address has changed) on Form 1065-B

    Note:

    On short length records, do not correspond for missing information or attachments and do not apply missing schedule codes.

  3. Code & Edit must edit "SR" in the top margin between the form number and form title for all short record returns except amended returns.

3.12.15.1.13.1.1  (01-01-2009)
Nominee Return

  1. Partnerships that are formed solely for the purpose of acting as a "nominee" or "agent" are not required to file a partnership return. They are required to file Form 1099 showing the actual owner of the income.

  2. Although they are not required to do so, some of these partnerships may file Form 1065 solely for the purpose of telling IRS that they are not required to file.

  3. These returns will usually contain only partnership entity information and a statement that the partnership is a nominee and is not required to file.

  4. Process nominee returns as "Final" , short record returns.

  5. CCC "F" is required.

3.12.15.1.13.1.2  (01-01-2009)
Section 761(a) Return/Election

  1. The term "partnership" includes a syndicate, group, pool, joint venture or other unincorporated organization through or by means of which any business, financial operation or venture is carried on, and which is not a corporation, trust or estate.

  2. Under IRC 761(a), certain arrangements treated as partnerships (investing partnerships and operating agreements) may elect to be excluded from the partnership rules. Form 1065 need only be filed for the year of the election and a statement of the election should be attached to the return. If the return show any tax data relating to an entity level computation of income, it cannot be treated as a Section 761(a) election.

  3. Returns can be identified as potential Section 761(a) elections if the return contains all of the following:

    • Name, address, and EIN but no tax data entries.

    • An attachment listing the names and addresses of all the members of the organization.

    • A statement to elect not to be treated as a partnership.

    • CCC "8" is present.

  4. Or, the partnership has referenced one of the following on the return or attachments:

    • Section 761(a) or Treas. Reg. 1.761-2 annotated;

    • Rev. Proc. 2002–68 (for tax years beginning before 01/01/2004);

    • Rev. Proc. 2003-84 (for tax years beginning after 01/01/2004);

    • Publication 541 (Partnerships) or Publication 550 (Investment Income and expenses)

    • Lottery Club

    • Exclusion filed under Subchapter K

  5. Code & Edit is instructed to refer the return to Examination. Examination will determine if the election is accepted, rejected or selected for Examination. After Examination has made their determination, process each return as directed. If correspondence is required, issue Letter 1355C as directed by Examination.

    If... Then...
    The election is "Accepted" by Examination

    1. Complete the processing of the return as a "short record" .

    2. Edit CCC "F" and CCC "8" .

    3. Edit the number of partners to "2" on the return and enter in Field 01NOP.

    Examination determines that the response is less than satisfactory, but does not request additional information to be obtained from the partnership

    1. Consider the election "Rejected" .

    2. Process as a Form 1065 long record.
    Examination determines the return is "Selected for Examination" Document Perfection will complete the processing of the return by deleting any money amount in Sections 02, 03, 04 and 05 and editing Audit Code "1" .

3.12.15.1.13.2  (01-01-2009)
Non-ADP Return

  1. When a Form 1065 is for a Non-ADP period, reject the record from ERS, and process as Non-Master File.

    1. Use RJECT command code and reject the record with Action Code 620.

    2. If RJECT command code in not in your profile, use SSPND command code and suspend the record with Action Code 620.

  2. For NMF items with payment–

    1. Follow instructions in Error Resolution System (ERS), General Instruction, IRM 3.12.38.

    2. Use Action Code 343 and suspend to Accounting for research.

    3. Reject from ERS.

    4. Transfer to NMF or Unidentified, dependent upon instruction from Accounting.

  3. For international returns – with and without remittance – follow instructions in IRM 3.12.38, Error Resolution System (ERS), General Instructions.

3.12.15.1.13.3  (01-01-2009)
Section 6020(b) Returns

  1. When the partnership fails to file a return, IRC 6020(b) of the Internal Revenue Code is the authority for the IRS to prepare a return.

  2. CCC "4" is required.

  3. The return must be signed by a Revenue Officer or Revenue Agent.

  4. If the return is not signed by a Revenue Officer or Revenue Agent, return the document to Collections using Form 4227.

3.12.15.1.13.4  (01-01-2009)
Publicly Traded Partnerships (PTP)

  1. All coding and correction of Forms 1065 with Doc. Code 67 (publicly traded partnerships) is worked in Ogden Submission Processing Center (OSPC).

  2. Publicly traded partnerships (Doc. Code 67) are corrected using the same correction procedures as Forms 1065 and 1065-B.

  3. See IRM 3.12.15.10.24. for correction procedures for Error Code 737 that, if generated, applies only to these PTP returns.

3.12.15.2  (01-01-2003)
Types of Errors

  1. This section provides a description of the types of errors generated during Form 1065 and 1065-B processing.

  2. The Error Resolution System (ERS) will identify errors according to type and priority. This will show in the record heading.

    • Action Code Error (Priority I)

    • Section Error (Priority II) – includes terminus error and ISRP problem code.

    • Validity Error (Priority III)

    • Math/Consistency Error (Error Codes) (Priority IV)

  3. There may be records where the tax examiner finds that programming has not furnished a section or a field that is needed to solve an error. In this event, the tax examiner can use command code GTSEC. (See IRM 3.12.15.1.6) This should be reported to Headquarters for correction of the display.

3.12.15.2.1  (01-01-2005)
Priority I Errors – Action Code/Unpostable Code Errors

  1. Description:

    • All records with an invalid Action Code assigned by Document Perfection will be placed in the Error Inventory and will be displayed as a Priority I Error.

    • All records with a valid Action Code will be assigned to a Suspense Inventory and will be displayed as a Priority I Error.

  2. Display – The Action Code for the record with the literal description of the action or unpostable condition will be shown.

  3. Correction Procedures – Process Priority I errors as follows:

    If... Then...
    Suspense action is required Enter CC SSPND with the correct Action Code.
    Suspense action is not required Enter "000" in the Clear field (CL) field.

    Note:

    Except for priority statute and manual refund cases, do not remove the document from the block.

  4. See IRM 3.12.38.0 procedures for correcting Priority I Action Code errors in Suspense and Unpostable Code Correction.

3.12.15.2.2  (01-01-2003)
Priority II Errors – Section Errors

  1. Most edit, missing section and terminus errors should be eliminated by the ISRP system. However, edit errors and/or terminus errors may be present if normal ISRP validity checks have been bypassed.

  2. Edit Error – A section with an error detected by ISRP. Edit errors will be coded as follows:

    • Code 1 – Split screen transmission, key verifier attempted to change Check Digit, key verifier changed 4 or more digits of TIN, or the original entry operator indicated that a required section is missing.

    • Code 2 – CATCH-ALL ISRP ERROR: Any error attributed to ISRP that is not described below, such as invalid characters in a field, or a combination of errors listed below.

    • Code 3 – Invalid Section ending point.

    • Code 4 – Invalid field length.

    • Code 5 – Questionable section - the ISRP operator input the same section more than once. The computer program will drop all duplicate sections and display on the error screen the first one encountered.

      Note:

      When displayed, this type of error will display all input fields, except for the Remittance in Section 01 of the section in error. Transcribed data will be present. Computer generated data will not be present.

  3. Correction Procedures:

    • Check all fields of the section when this condition exists verifying that fields are entered as coded.

    • If no correction is needed, or once the section is correct, transmit from the bottom of the screen.

    • If the section needs to be deleted, enter Command Code DLSEC with the section number.

  4. Terminus Error – This error is caused by a section with variable length input fields containing an erroneous size field.

    • When displayed, this type of error will show all input fields of the terminus section. Transcribed data will be present. Computer generated fields or Remittance Field for Section 01 will not be present.

    • All fields present for the section must be examined and the necessary correction(s) made to all the fields.

  5. Correction Procedures:

    • Command Code CRECT will be displayed. If the section needs to be deleted, use Command Code DLSEC to delete the section.

    • If no corrections are needed, transmit from the bottom of the screen.

3.12.15.2.3  (01-01-2003)
Priority III – Field Errors

  1. Definition – Any field that does not meet the requirement(s) for that field will be shown as a Priority III error. Consistency and or relationships with other fields will not be a factor.

  2. Some reasons for this type of error are:

    • Non-numeric character in a numeric field.

    • Non-alphabetical character in an alpha field.

    • Blank space in a numeric field.

    • Blank in the first position of an alpha field if followed by significant data.

  3. Display – Every field displayed is in error.

    • All fields with a Priority III error will be displayed in columnar format in the order encountered in the record.

    • An overflow field is identified by all question marks for a money field or a single pound sign in the last position of a Name Line.

  4. Correction Procedures:

    1. Correct every error field displayed using the specific instructions within each section for the field in error.

    2. Check the information on the source document to determine if each displayed field has been correctly coded and transcribed.

    3. Enter the correct data for each field displayed.

    4. If no data is to be in a displayed field, blank the field.

    5. Transmit.

3.12.15.2.4  (01-01-2003)
Priority IV Errors – Consistency/Math Errors

  1. Definition – Any valid field used in any computation in which the result is inconsistent with (or contrary to) any other valid field will have Error Code 001–999 assigned and will be shown as a Priority IV Error.

  2. Display – These errors will be displayed with the Error Code assigned to them for the specific error in ascending numerical order. The screen display will show the error code assigned and the fields needed to make the necessary correction.

    1. The blank field "CL" will be displayed for the entry of a Clear Code on records where the possibility exists that a change or correction may not be needed.

    2. All errors must be resolved by either eliminating the error or entering a Clear Code.

  3. Correction Procedures:

    • Correct all coding and transcription errors.

    • If the data in the field is correct, enter a "C" in the Clear Code field.

3.12.15.3  (01-01-2003)
Section 01 Errors

  1. This section provides instructions for correcting Section 01 error conditions.

3.12.15.3.1  (01-01-2003)
General Information

  1. Section 01 contains entity data and codes for returns and is required for every record.

3.12.15.3.1.1  (01-01-2003)
Remittance (RMIT)

  1. This entry represents prepayment of a penalty.

  2. It must be blank or numeric.

  3. If a numeric amount is present, it must be dollars and cents.

  4. The Remittance field cannot be changed by ERS.

3.12.15.3.2  (01-01-2009)
Error Record Format

  1. Listed below are the fields contained in Section 01 of Form 1065 and 1065-B. ( See Exhibit 3.12.15-2. )

  2. The field designator, field length (maximum length for variable fields), the title and the location where the data is obtained on the return is shown below:

    Field Field Length Title Location on Form 1065 or 1065-B
    01NC 4 Name Control/Check Digit Form 1065 or 1065-B, page 1, First Name Line
    01EIN 9 Employer Identification Number Form 1065 or 1065-B, page 1, Box "D"
    01TXP 6 Tax Period Form 1065 or 1065-B, page 1, between Form Title and OMB Number
    01RCD 8 Received Date Form 1065 or 1065-B, page 1, Deduction Area
    01CCC 10 Computer Condition Code Form 1065 , page 1, Dotted Portion of Line 1a or 1065-B, page 1, Dotted Portion of Line 3.
    01NAI 6 North American Industry Classification Code System (NAICS) Form 1065 or 1065-B, page 1, Box "C" or label
    01DOB 6 Date Business Started Form 1065 or 1065-B, page 1, Box "E"
    01NOP 6 Number of Partners Form 1065 or 1065-B, page 1, Line I
    01IRC 1 Initial Return Code Form 1065, page 1, to the left of Box "G"
    01TT 1 Technical Termination Form 1065, page 1, Box "G(6)"
    01AMC 1 Accounting Method Code Form 1065 or 1065-B, page 1, Box "H"
    01LPC 1 Limited Partnership Code Form 1065 or 1065-B, page 2, Schedule B, Line 1
    01DPC 1 Dual Partner Code Form 1065 or 1065-B, page 2, Schedule B, Line 2
    01FDC 1 Foreign/Domestic Corporation Code Form 1065, page 2, Schedule B, Line 3a
    01INE 1 Individual/Estate Ownership Code Form 1065, page 2, Schedule B, Line 3b
    01PCS 1 Ownership of Foreign or Domestic Corporation Code Form 1065, page 2, Schedule B, Line 4a
    01DPT 1 Ownership of Foreign Partnership or Trust Code Form 1065, page 3, Schedule B, Line 4b
    01PTT 1 Partnership Level Tax Treatment Election Code Form 1065, page 3, Schedule B, Line 5
    01DPA 1 Distribution of Property Code Form 1065, page 3, Schedule B, Line 12a
    01DRE 6 Number of Forms 8858 Attached Form 1065, page 3, Schedule B, Line 15
    01FPI 6 Number of Forms 8805 Attached Form 1065, page 3, Schedule B, Line 16
    01FPC 1 Foreign Partner Code Form 1065, page 3, Schedule B, Line 16 (Form 1065-B, page 2, Schedule B, Line 4)
    01IR1 6 Number of Forms 8865 Attached Form 1065, page 3, Schedule B, Line 17 (Line 9 on Form 1065-B)
    01ADC 9 Audit Code Form 1065, page 1, left margin next to Line 9. Form 1065-B, page 1, left margin next to Line 12.
    01SIC 1 Special Income Code Form 1065, page 1, left margin next to Line 9. Form 1065-B, page 1, left margin next to Line 12.
    01CRD 8 Correspondence Received Date N/A, no longer edited by Code & Edit
    01ISI 1 Installment Sales Indicator Form 1065, page 1, left margin next to Line 9. Form 1065-B, page 1, left margin next to Line 12.
    01NRL 1 Nonrecourse Loan Code Form 1065, page 1, left margin next to Line 9. Form 1065-B, page 1, left margin next to Line 12.
    01MSC 2 Missing Schedule Code Form 1065, page 1, left margin next to Line 9. Form 1065-B, page 1, left margin next to Line 12.
    01HSC 1 Historic Structure Code Form 1065, page 1, left margin next to Line 9. Form 1065-B, page 1, left margin next to Line 12.
    01SWC 1 Salary and Wage Code Form 1065, page 1, right margin next to Line 9. Form 1065-B, page 1, right margin next to Line 12.
    01EP 1 EPMF Code Form 1065, page 1, right margin next to Line 19. Form 1065-B, page 1, right margin next to Line 22.
    01PSN 9 Preparer SSN (PTIN) Form 1065 and 1065-B, page 1, Preparer SSN or PTIN area
    01PEN 9 Preparer Employer Identification Number Form 1065 and 1065-B, page 1, Preparer EIN area
    01CBI 1 Paid Preparer Checkbox Indicator Form 1065 and Form 1065-B, bottom page 1 to the right of signature date.
    01PTN 10 Paid Preparer Phone Number Form 1065 and Form 1065-B, bottom page 1 below preparer EIN.

3.12.15.3.3  (01-01-2006)
Field 01NC – Name Control/Check Digit

  1. Description – Field 01NC is located in the Entity Section of Form 1065 and 1065-B.

  2. Valid Condition – Field 01NC has four positions and the valid characters are alpha, numeric, hyphen, ampersand and blank.

    • A Check Digit is present only on a pre-addressed return when the EIN has been validated. If a check digit is present, the computer makes an additional mathematical test of the EIN.

    • A check digit must have blanks in the first 2 positions and a letter other than "E" , "G" or "M" in the last 2 positions.

  3. Invalid Condition – Field 01NC is invalid if any of the following conditions are present:

    • The first position is blank.

    • The second, third or fourth position is not an alpha, numeric, hyphen, ampersand or blank.

    • There are any intervening blanks between significant characters.

  4. Correction Procedures:

    1. Correct coding and transcription errors.

    2. Correct using the Check Digit, if present. Delete the entry in Field 01NC and enter the correct Check Digit.

    3. If the correct Check Digit cannot be determined, enter the Name Control.

    4. If the Name Control cannot be determined, research following instructions in Document 7071-A, Name Control Job Aid.

3.12.15.3.4  (01-01-2009)
Field 01EIN – Employer Identification Number

  1. Description – Field 01EIN is located in the Entity Section of Form 1065 and 1065-B, Box "D" or on the preprinted label.

  2. Valid Condition – Field 01EIN must contain nine numeric digits.

  3. Invalid Condition – Field 01EIN is invalid if any of the following conditions are present:

    • The EIN is not numeric.

    • The EIN is less than nine characters.

    • The first two digits of the EIN are: 00, 07, 08, 09, 17, 18, 19, 28, 29, 49, 78, 79, or 89 .

    • The EIN is all zeroes or nines.

  4. Correction Procedures:

    1. Correct coding and transcription errors.

      If... Then...
      The EIN was transcribed correctly Research for another EIN on the return or attachments and enter in Field 01EIN.
      The EIN cannot be determined

      1. Research IDRS for the correct EIN using Command Code NAMEE.

      2. If located, enter the correct EIN. ( See Figure 3.12.15-2 )

      No EIN can be found 1) SSPND record with Action Code "320" .
      2) Route to Entity Control using Form 4227.
      3) Notate Form 4227 "ASSIGN EIN" . ( See Figure 3.12.15-2 ).

      Caution:

      Always ensure that the Name Control matches the Master File record whenever you change an EIN.

    2. If the EIN is changed from the one the taxpayer used, issue Letter 3875C as a non-suspense letter to the address on the return. Continue processing the return.

      Note:

      Do not send Letter 3875C if three or less digits of the EIN are transposed, different or missing or when INOLES indicates the account has been "merged to" or "merged from" .

3.12.15.3.4.1  (01-01-2009)
Field 01EIN – Suspense Correction

  1. Determine if Entity Control has found the correct EIN.

    If... Then...
    Entity located the correct EIN Enter in Field 01EIN
    Entity assigned an EIN

    1. Enter in Field 01EIN.

    2. GTSEC 01 and enter the Entity Assignment Date (from the lower left corner of the return) in Field 01CRD if it is after the Return Due Date.

  2. If the EIN is changed from the one the taxpayer used, issue Letter 3875C as a non-suspense letter to the address on the return. Continue processing the return.

    Note:

    Do not send Letter 3875C if three or less digits of the EIN are transposed, different or missing or when INOLES indicates the account has been "merged to" or "merged from" .

    Figure 3.12.15-2
    This image is too large to be displayed in the current screen. Please click the link to view the image.

    Employer Identification Number (01EIN)

3.12.15.3.5  (01-01-2008)
Field 01TXP – Tax Period

  1. Description – Field 01TXP is located in the upper right corner of Page 1 of Form 1065 and 1065-B. Tax period ending is printed in year (YYYY), month (MM) format e.g., Dec. 31, 2007 is printed 200712.

  2. Valid Condition – The tax period must be present and contain six numeric digits.

  3. Invalid Condition – Field 01TXP is invalid if any of the following conditions are present:

    • The tax period is not all numeric.

    • The last two digits (month) are not 01-12.

    • The tax year (first four digits) is after the current year.

    • The tax year is equal to the current year (i.e., 2007), but the month is after the current processing month.

  4. Correction Procedures:

    1. Correct coding and transcription errors.

    2. Determine the correct Tax Period from Form 1065 and attachments.

    If... Then...
    The tax period cannot be located Enter the current year.
    A non-final return and the tax period ending is equal to or later than the current year-month by not more than four months

    1. SSPND 480.

    2. Attach Form 4227 and notate "EARLY FILED" .

    A non-final return and the tax period ending is later than the current year-month by four months or more

    1. SSPND 211.

    2. Attach Form 3696 or other approved Correspondence Action Sheet and request confirmation of the tax period ending.

      Note:

      When confirmed, the return will be processed after the end of that tax period.
    A "final" return and the tax period ending is the same as or later than the received date Change the tax period to the month preceding the received date.

3.12.15.3.6  (01-01-2009)
Field 01RCD – Received Date

  1. Description – Field 01RCD is a numeric field that is either the date stamped by Receipt and Control or edited by Code and Edit.

    • The legal due date is the 15th day of the fourth month after the tax period ending.

    • Partnerships whose partners are all Nonresident Aliens must file their return by the 15th day of the sixth month following the close of the year.

    • If the 15th is a Saturday, Sunday or holiday, the due date is the first workday thereafter.

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    • When the due date falls on a weekend or legal holiday, the return is timely if postmarked by the first business day following the due date.

    • Consider the return timely if:

      1 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
      2 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ or before the legal due date.
      3 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ attached or the postmark is illegible, but the IRS date stamp ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  2. Valid Condition – Field 01RCD must be present and entered in "YYYYMMDD" format.

  3. Invalid Condition – Field 01RCD is invalid if any of the following conditions are present:

    • The Received Date is not present.

    • The Received Date is not in "YYYYMMDD" format.

    • The Received Date is later than the current processing date.

    • The Received Date is not all numeric.

    • The Received Date is not within the valid month, day range detailed below:

      Month Day
      01, 03, 05, 07, 08, 10 and 12 01-31
      04, 06, 09 and 11 01-30
      02 01-28 (29 leap year)

  4. Correction Procedures:

    1. Correct coding and transcription errors.

      If ... Then ...
      The Received Date is invalid and it appears that the incorrect year was used (i.e., 20080115 instead of 20090115), and other information (Julian date, postmark date, and/or signature date) indicates that the received date should be a current year Change the Received Date year to the current year.
      Multiple Received Dates are present 1) Use the earliest IRS stamped Received Date.
      2) Circle out all other dates.
      The return was addressed to the IRS and delivered to a State agency Use the postmark date as the Received Date
      The return was addressed to a State agency Use the IRS date stamp as the Received Date ( See Figure 3.12.15-3 )
      The Received Date cannot be determined Determine the entry to Field 01RCD using the following priority order:
      1) Postmark date
      2) Revenue Officer's signature date
      3) Return signature date (current year only)
      4) Julian date minus 10 days
      5) Current date minus 10 days

      Figure 3.12.15-3

      This image is too large to be displayed in the current screen. Please click the link to view the image.

      Received Date (01RCD)

    2. Determine the postmark date as listed below:

      • Only legible official postmark date and/or label dates (Killer Bar Strips or Postage Validation Imprinted Labels) and/or the date of submission to a designated private delivery service are accepted as proof of filing timely.
      • Valid official Killer Bar Strips are identified by a series of solid or broken lines containing a date, city and state that is used to cancel postage stamps. Accept the postmark date as the Received Date if it is on or before the due date.
      • The official marking of arrows easily identifies metered Postmarks. These types of markings are not found on a privately metered postmark.
      • For further information and procedures on Postmarks, see IRM 3.10.72.

    3. A private delivery service (PDS) is a business that delivers packages. The "Timely Mailing as Timely Filing" rule now applies to some PDS. When the rule applies to a PDS, it is referred to as a "Designated" PDS.

      1) Do not use marks from a non-designated PDS to determine the IRS Received Date. The "Timely Mailing as Timely Filing" rule applies only to the USPS and to a PDS.
      2) Accept all designated PDS marks. The only designated delivery services are listed below:
      Private Delivery Service
         
        DHL Express:
      • DHL "Same Day" Service
      • DHL Next Day (10:30 am, 12:00 pm and 3:00 pm)
      • DHL 2nd Day Service
        Federal Express (FedEx):
      • FedEx Priority Overnight
      • FedEx Standard Overnight
      • FedEx 2 Day
      • FedEx International Priority
      • FedEx International First
        United Parcel Services (UPS):
      • UPS Next Day Air
      • UPS Next Day Air Saver
      • UPS 2nd Day Air
      • UPS 2nd Day Air A.M.
      • UPS Worldwide Express
      • UPS Worldwide Express Plus

      Note:

      Private delivery services do not deliver to P.O. Boxes. Partnerships must use the U.S. Postal Service to mail items to an IRS P.O. Box address.

3.12.15.3.7  (01-01-2009)
Field 01CCC – Computer Condition Code

  1. Description – Field 01CCC is an alpha or numeric field edited on the dotted portion of Line 1a, Form 1065 and 1065-B.

  2. Valid Condition – Valid characters are "A" , "B" , "D" , "F" , "G" , "I" , "L" , "P" , "Q" , "R" , "T" , "W" , "X" , "Y" , "1" , "3" , "4" , "5" , "6" , "7" , "8" and "9" .

  3. Correction Procedures -: Correct Field 01CCC using the following procedures:

    If... Then...
    Field 01CCC was transcribed incorrectly, Enter the correct Computer Condition code from the dotted portion of Line 1a on Page 1.
    The computer condition code was edited incorrectly,

    1. Examine the document to determine the correct CCC.

    2. Enter the correct code in Field 01CCC and on the return. ( See Figure 3.12.15-4.)

    The computer condition code(s) edited on Form 1065 or 1065-B is illegible or invalid,

    1. Examine the document to determine the correct CCC.

    2. Enter the correct code in Field 01CCC and on the return.
    No reply to correspondence or the correspondence was undeliverable, Enter "3" in Field 01CCC and on the return.
    CCC "G" is deleted from Field 01CCC,

    1. GTSEC to review all sections.

    2. Enter data where necessary.
    CCC "5" is present with a computer condition code other than A, B, F, P, R, W, 4, 6 and/or 8, Delete the invalid computer condition code(s).
    CCC "6" is present with a computer condition code other than A, B, F, P, R, W, 4, 5, 8 and/or 9, Delete the invalid computer condition code(s).
    CCC "8" is present with a computer condition code other than A, B, F, P, R, W, 4, 6 and/or 9. Delete the invalid computer condition code(s).

    Figure 3.12.15-4
    This image is too large to be displayed in the current screen. Please click the link to view the image.

    Computer Condition Codes (01CCC)

  4. Listed below are the valid Computer Condition Codes for Form 1065 and 1065-B.

    ≡ ≡ ≡ Description
    ≡ ≡ ≡ Date Business Started is blank.
    ≡ ≡ ≡ Schedule M-3 is attached or Line J is checked "YES" .
    ≡ Partnership provided Reasonable Cause for Failure to Pay Penalty
    ≡ ≡ ≡

    • Final return (Line J on Form 1065 or 1065-B is checked)

    • Nominee return

    • Accepted Section 761(a) election

    • Deceased

    • Dissolved

    • Liquidation

    • Out-of-Business

    • IRC 501(c)(3)

    • IRC 708(b)(1)(B)

    • Filed in accordance with Rev. Proc. 2003–84
    ≡ ≡ ≡ Amended, corrected or superseding return.
    Note: CCC "G" is invalid if any other CCC is present except"W" and/or "3" and must have a Received Date.
    ≡ ≡ Tax period is 198106 or later and Form 6781, Gains and Losses from Section 1256 Contracts and Straddles, is attached.
     

    • Form 8833, Treaty-Based Return Position Under Section 6114 or 7701(b), is attached.
    ≡ ≡ ≡ Indicator to establish mailout of tax package
    ≡ ≡ ≡ Form 8913 attached and no other income or deductions entered.
    ≡ ≡ ≡

    • IRC 6031

    • IRC 6081

    • Rev. Proc. 84–35

    • Partnership's electronic return was rejected and the paper return is postmarked within 10 days of receipt of rejection notification.

    • Form 13133, Expedite Processing Cycle, is attached and Examination indicates application of the condition code.
      Requires a Received Date.

    ≡ ≡ ≡ Form 8271, Investor Reporting of Tax Shelter Registration, is attached.
    ≡ ≡ Record cleared by Statute Control Unit.
    ≡ ≡ ≡ Prevents the refund of prepaid credits or credit offset on publicly traded partnerships.
    ≡ ≡ ≡ Return was filed for a short period due to a change in accounting period.
    ≡ Form 8824, Like-Kind Exchanges, is attached and Line 7, Box "YES" is checked or entries are present in Part II.
    ≡ Correspondence Received Date - reply is missing, incomplete or notice was undeliverable.
     

    • IRC 6020(b)
    ≡ ≡

    • Common trust

    • IRC 6032

    Note:

    CCC 5 is valid with CCC A, B, F, P, R, W, 4, 6 and/or 9 only.
    ≡ Suppresses the Failure to File on Correct Media Penalty when a short record return is filed. (Form 1065 only)

    • inactive return

    • 501d religious organization

    • §6020(b) return

    Note:

    CCC "6" is valid with CCC A, B, "F" , "P" , "R" , "W," "4" , "5" , "8" and/or "9" only.

    ≡ ≡ Reasonable cause for failure to file a delinquent return was considered and denied
    ≡ ≡ ≡

    • IRC §761(a)

    Note:

    CCC 8 is valid with CCC A, B, F, P, R, W, 4, 6 and/or 9 only.
      Foreign Partnership (OSPC only)
    Note: address on the return is foreign.

3.12.15.3.8  (01-01-2009)
Field 01NAI – North American Industry Code System (NAICS)

  1. Description – Field 01NAI is a numeric field located on page 1, Box "C" of Form 1065 and 1065-B. The NAICS code identifies the partnership's principal business activity.

  2. Valid Condition:

    • Six numeric digits within a range of 000001–999000 on all full length records.

    • Blanks on all short length records. ( See IRM 3.12.15.1.13.1. )

  3. Invalid Condition:

    • Not numeric

    • Entry not within range of 000001-999000 for full length records.

    • Entry present and Section 02 is not present.

    • Entry contains six of the same digit.

  4. Correction Procedures – Determine the correct NAICS Code in the following order:

    1. Form 1065 or 1065-B, Box "C" , Business Code Number.

    2. Form 1065 or 1065-B, Preprinted label, 1st line, right side ( See Figure 3.12.15-5 ).

    3. Form 1065 or 1065-B, Box "A" , Principal Business Activity.

    4. Form 1065 or 1065-B, Box "B" , Principal Product or Service.

    5. See Exhibit 3.12.15-4. for a listing of NAICS Codes.

    If ... Then ...
    Preprinted label is used and Box "C" is complete, compare NAICS on label and Box "C"

    • If they are different, enter NAICS from Box "C" .

    • If they are the same, enter NAICS from the label.

    The correct code cannot be determined on a full length record

    • If you can determine that the business is some kind of service, enter 899000 in Field 01NAI.

    • If you cannot make the determination that the business is some kind of service, enter 999000 in Field 01NAI. ( See Figure 3.12.15-5 )

    Field 01NAI is present on short record returns Delete the entry.
    Return is a prior year return with a PIA code or a PIA code with leading zeroes Enter the correct NAICS code using PBA/NAICS Conversion Table. ( See Exhibit 3.12.15-13. )
    Field 01NAI is present and Section 02 was not entered when required Enter Section 02.

    Figure 3.12.15-5
    This image is too large to be displayed in the current screen. Please click the link to view the image.

    NAICS Code (01NAI)

3.12.15.3.9  (01-01-2009)
Field 01DOB – Date Business Started

  1. Description – Field 01DOB is a numeric field located on page 1, Box "E" of Form 1065 and 1065-B.

    • Date Business Started is entered in year (YYYY), month (MM) format e.g., Dec. 31, 1994 is printed 199412.

  2. Valid Condition:

    • Valid characters are numeric only.

    • Field 01DOB may be blank.

  3. Invalid Condition:

    • The Date Business Started is not all numeric or blank.

    • The last two digits (month) are not 01–12.

  4. Correction Procedures:

    If ... Then ...
    Field 01DOB was transcribed or coded incorrectly Enter the correct date from page 1, Box "E" . ( See Figure 3.12.15-6 )
    A month is present but a year is not present Enter "1950" for the year.
    A year is present but a month is not present Enter "01" for the month.
    A year and month is not present in Box "E" or cannot be determined DO NOT enter any data in Field 01DOB. Enter Computer Condition Code "≡ ≡ ≡ " in Field 01CCC.
    The partnership enters a future date as Date Business Started DO NOT enter any data in Field 01DOB. Enter Computer Condition Code "≡ " in Field 01CCC.

    Figure 3.12.15-6
    This image is too large to be displayed in the current screen. Please click the link to view the image.

    Date Business Started (01DOB)

3.12.15.3.10  (01-01-2009)
Field 01NOP – Number of Partners

  1. Description – Field 01NOP is located on page 1, Line I on Form 1065 and 1065-B.

    • This entry consists of the number of Schedules K-1 attached to the return.

    • It can be used to determine the number of partners in the partnership.

  2. Valid Condition:

    • Must be numeric, 2 through 999,999. ( See Figure 3.12.15-7 )

  3. Invalid Condition:

    • Not numeric.

  4. Correction Procedures:

    1. Correct coding and transcription errors.

    2. If Form 1065, Line I (i) is zero or blank, check the return and attachments for any indication of the number of partners and enter in Field 01NOP.

    3. If the number of partners is not found, correspond for the missing information if any of the following conditions is not present:

      If... And... Then...
      Amended return ("G" coded)   1) Enter "2" in Field 01NOP.
      2) GTSEC 01 and enter "G" in Field 01CCC.
      Final return   1) Enter "2" in Field 01NOP.
      2) GTSEC 01 and enter "F" in Field 01CCC.
      IRC 736 or Treas. Reg. 1.736–1 (Payment to a retiring partner)   1) Enter "2" in Field 01NOP.
      Reinput/Re-entry document   1) Enter "2" in Field 01NOP.
      Returns filed for tax periods prior to 200512   1) Enter "2" in Field 01NOP.
      Section 501(d) return (Religious and Apostolic Organizations)   1) Enter "2" in Field 01 NOP.
      Section 6020(b)   1) Enter "6" in Field 01NOP.
      2) GTSEC 01 and enter "4" in Field 01CCC.
      Short record return   1) Enter "2" in Field 01NOP.
      TETR ONLY return   1) Enter "2" in Field 01NOP.
      Form 1065, Line 22 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ . Form 8825 is notattached 1) Enter "2" in Field 01NOP.
      Form 1065, Line 22 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ . Form 8825 is attached and Line 21 of Form 8825 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ 1) Enter "2" in Field 01NOP.
      Form 1065, Line 22 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ . Form 8825 is attached and Line 21 of Form 8825 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ 1) Correspond for the missing Schedule K-1.
      Line I (i), page 1 is zero or blank, There is no indication that Letter 1355C was sent.

      Note:

      Code & Edit is instructed to notate in the lower right-hand corner of Form 1065 or 1065-B if the issue the 1355C letter.

      		 1) Check the return and attachments for any indication of the number of partners.
      2) If found, enter the number of partners in Field 01NOP.
      3) If the number of partners is not found, enter "2" in Field 01NOP.
      4) GTSEC 01 and enter "33" in Field 01MSC.
      Line I (i), page 1 is zero or blank, There is an indication that Letter 1355C was sent.

      Note:

      Code & Edit is instructed to notate in the lower right-hand corner of Form 1065 or 1065-B if the issue the 1355C letter.

      		 1) Check for a response to the correspondence.
      2) Change the number of partners to the number provided in the partnership's reply.
      3) For no replies, enter "2" in Field 01NOP.
      4) GTSEC 01 and enter "33" in Field 01MSC.

    4. If the partnership indicates that the number of Schedules K-1 is "1" or the attached Schedule K-1 shows 100% interest in the partnership, follow the procedures below:

      If... Then...
      Schedule K-1 shows two names in the partners' name and address section Correspond requesting separate Schedules K-1 using Letter 1355C.
      Partnership entity section indicates:

      • "Limited Partnership" (LP)

      • "Limited Liability Partnership" (LLP)

      • "Limited Liability Company" (LLC)

      • "Limited Liability Land Trust" (LLLT)

      • "Unincorporated Business Organization" (UBO) or

      • "2" , "3" or "4" is present in Field 01LPC.

      		1) GTSEC 01 and enter CCC "F" in Field 01CCC.
      2) Enter "2" in Field 01NOP.
      3) Advise the taxpayer that we are deleting the partnership filing requirement with a non-suspense Letter 3733C.
      Partnership indicates payment to a retired or deceased partner or cites IRC 736 or Treasury Regulations 1.736–1 Enter "2" in Field 01NOP.
      The partnership indicates this is a Final Return 1) Enter "2" in Field 01NOP.
      2) GTSEC 01 and enter CCC "F" in Field 01CCC, if necessary.
      The partnership submits a response to our request for Schedules K-1 1) Change the number of Schedules K-1 to the number provided by the partnership.
      2) Write the DLN of the parent return in the upper left corner of the first Schedule K-1.
      3) Place Schedules K-1 in a gusset folder.
      4) Forward the folder with the K-1s to Batching & Numbering to continue processing the Schedules K-1.

    5. If the partnership does not indicate this is a final return or does not notate IRC 736 or Treasury Regulations 1.736–1, Limited Liability Partnership (LLP), Limited Liability Company (LLC), Limited Liability Land Trust (LLLT) or Unincorporated Business Organization (UBO), correspond informing the partnership that the partnership cannot have one partner and ask for an explanation using Letter 1355C.

    Figure 3.12.15-7
    This image is too large to be displayed in the current screen. Please click the link to view the image.

    Number of Partners (01NOP)

3.12.15.3.11  (01-01-2006)
Field 01IRC – Initial Return Code

  1. Description – Field 01IRC is edited to the left of Line G, page 1 of Form 1065. ( See Figure 3.12.15-8. )

  2. Valid Condition – Blank or "2" .

  3. Invalid Condition – Entries other than "2" or blank.

  4. Correction Procedures–

    1. Correct coding and transcription errors. Code and Edit will edit to the left of Line G. ( See Figure 3.12.15-8. )

    2. Field 01IRC must contain a "2" if any of the following conditions is present:
      • Page 1, Box E has a date business started that is within 12 months from the Tax Period Ending date.
      • The "Initial return" box on Line G is checked.
      • There is a taxpayer notation of "initial filing" , such as, "FIRST RETURN" , "NEW PARTNERSHIP" , etc.

    Figure 3.12.15-8
    This image is too large to be displayed in the current screen. Please click the link to view the image.

3.12.15.3.12  (01-01-2009)
Field 01TT - Technical Termination

  1. Description - Field 01TT is located on Line G, Box (6) Technical termination - also check (1) or (2), page 1 of Form 1065.

  2. Valid Condition - Blank or "1" .

  3. Invalid Condition - Entries other than "1" or blank.

  4. Correction Procedures:

    If... Then...
    Box (6) on Line G is checked Enter "1" in Field 01TT.
    Box (6) on Line G is not checked Leave Field 01TT blank.

3.12.15.3.13  (01-01-2006)
Field 01AMC – Accounting Method Code

  1. Description – Field 01AMC is located on Line H, page 1 of Form 1065 and 1065-B.

  2. Valid Condition – Entry must be numeric or blank.

  3. Invalid Condition – Field 01AMC will generate as an error if the Accounting Method Code is other than "1" , "2" , "3" or blank.

  4. Correction Procedures:

    1. Correct coding and transcription errors.

    2. Code Field 01AMC as follows

      If... Then...
      "Cash" box is checked, Enter "1" in Field 01AMC.
      "Accrual" box is checked, Enter "2" in Field 01AMC.
      "Other" box is checked, Enter "3" in Field 01AMC.
      No box is checked, Leave Field 01AMC blank.

3.12.15.3.14  (01-01-2006)
Field 01LPC – Limited Partnership Code

  1. Description – Field 01LPC is located on Page 2, Schedule B, Line 1 of Form 1065 and 1065-B.

  2. Valid Condition – Must be blank or numeric "1" , "2" , "3" , "4" , "5" or "6" .

  3. Invalid Condition – Entry other than "1" , "2" , "3" , "4" , "5" , "6" or blank.

  4. Correction Procedures:

    1. Correct coding and transcription errors. If Field 01LPC was transcribed incorrectly, enter the correct code from Page 2, Schedule B, Line 1. ( See Figure 3.12.15-9. )

    2. Determine the correct code as follows:

      If ... Then ...
      The "Domestic General Partnership" box is checked Enter "1" in Field 01LPC.
      The "Domestic Limited Partnership" box is checked Enter "2" in Field 01LPC.
      The "Domestic Limited Liability Company" box is checked Enter "3" in Field 01LPC.
      The "Domestic Limited Liability Partnership" box is checked Enter "4" in Field 01LPC.
      The "Foreign Partnership" box is checked Enter "5" in Field 01LPC.
      The "Other" box is checked Enter "6" in Field 01LPC.
      Multiple boxes are checked Enter code for the first box checked.
      No box is checked Leave blank.

    Figure 3.12.15-9
    This image is too large to be displayed in the current screen. Please click the link to view the image.

    Limited Partner Code (01LPC)

3.12.15.3.15  (01-01-2009)
Field 01DPC – Dual Partner Code

  1. Description – Field 01DPC is based on the partnership's response to the question on Page 2, Schedule B, Line 2 of Form 1065 and 1065-B.

  2. Valid Condition:

    • Blank or numeric.

    • "1" , "2" , "3" or blank on full length records.

    • Blank on short length records.

  3. Invalid Condition:

    • Other than "1" , "2" , "3" or blank on full length records.

    • Other than blank on short length records.

  4. Correction Procedures:

    If ... Then ...
    Field 01DPC was transcribed incorrectly Enter the correct Dual Partner Code from Page 2, Schedule B Line 2.
    The "YES" box is checked Enter "1" in Field 01DPC.
    The "NO" box is checked Enter "2" in Field 01DPC.
    Both boxes are checked, Enter "3" in Field 01DPC.
    Neither box is checked, Leave Field 01DPC blank.

    1. If Schedule B is not attached and the tax year is 1991 and subsequent, determine and correct Field 01DPC as follows:

      If... Then...
      Schedule K-1 is attached and Question I (i) indicates type of entity is "partnership" (Question K on tax years 2004-2006, Question B on tax years 1993-2003 or Question C on tax years 1991-1992), Enter "1" in Field 01DPC.
      Schedule K-1 is not attached, Enter "2" in Field 01DPC.

3.12.15.3.16  (01-01-2009)
Field 01FDC - Foreign/Domestic Corporation Code

  1. Description - Field 01FDC is based on the partnership's response to the question on page 2, Schedule B, Line 3a of Form 1065.

  2. Valid Condition:

    • Blank or numeric

    • "1" , "2" , "3" or blank on full length records

    • Blank on short length records

  3. Invalid Condition:

    • Other than "1" , "2" , "3" or blank on full length records

    • Other than blank on short length records.

  4. Correction Procedures:

    If... Then...
    Field 01FDC was transcribed incorrectly Enter the correct Foreign Domestic Corporation Code from Page 2, Schedule B. Line 3a.
    The "Yes" box is checked Enter "1" in Field 01FDC.
    The "No" box is checked Enter "2" in Field 01FDC.
    Both boxes are checked Enter "3" in Field 01FDC.
    Neither box is checked Leave Field 01FDC blank.

3.12.15.3.17  (01-01-2009)
Field 01INE - Individual/Estate Ownership Code

  1. Description - Field 01INE is based on the partnership's response to the question on page 2, Schedule B, Line 3b of Form 1065.

  2. Valid Condition:

    • Blank or numeric

    • "1" , "2" , "3" or blank on full length records

    • Blank on short length records

  3. Invalid Condition:

    • Other than "1" , "2" , "3" or blank on full length records

    • Other than blank on short length records.

  4. Correction Procedures:

    If... Then...
    Field 01INE was transcribed incorrectly Enter the correct Individual/Estate Ownership Code from Page 2, Schedule B. Line 3b.
    The "Yes" box is checked Enter "1" in Field 01INE.
    The "No" box is checked Enter "2" in Field 01INE.
    Both boxes are checked Enter "3" in Field 01INE.
    Neither box is checked Leave Field 01INE blank.

3.12.15.3.18  (01-01-2009)
Field 01PCS - Ownership of Foreign or Domestic Corporation Code

  1. Description - Field 01PCS is based on the partnership's response to the question on page 2, Schedule B, Line 4a of Form 1065.

  2. Valid Condition:

    • Blank or numeric

    • "1" , "2" , "3" or blank on full length records

    • Blank on short length records

  3. Invalid Condition:

    • Other than "1" , "2" , "3" or blank on full length records

    • Other than blank on short length records.

  4. Correction Procedures:

    If... Then...
    Field 01PCS was transcribed incorrectly Enter the correct Ownership of Foreign or Domestic Corporation Code from Page 2, Schedule B. Line 4a.
    The "Yes" box is checked Enter "1" in Field 01PCS.
    The "No" box is checked Enter "2" in Field 01PCS.
    Both boxes are checked Enter "3" in Field 01PCS.
    Neither box is checked Leave Field 01PCS blank.

3.12.15.3.19  (01-01-2009)
Field 01DPT - Ownership of Foreign Partnership or Trust Code

  1. Description - Field 01DPT is based on the partnership's response to the question on page 3, Schedule B, Line 4b of Form 1065.

  2. Valid Condition:

    • Blank or numeric

    • "1" , "2" , "3" or blank on full length records

    • Blank on short length records

  3. Invalid Condition:

    • Other than "1" , "2" , "3" or blank on full length records

    • Other than blank on short length records.

  4. Correction Procedures:

    If... Then...
    Field 01DPT was transcribed incorrectly Enter the correct Ownership of Foreign Partnership or Trust Code from Page 3, Schedule B. Line 4b.
    The "Yes" box is checked Enter "1" in Field 01DPT.
    The "No" box is checked Enter "2" in Field 01DPT.
    Both boxes are checked Enter "3" in Field 01DPT.
    Neither box is checked Leave Field 01DPT blank.


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