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Part 3. Submission Processing

Chapter 13. Campus Document Services

Section 2. BMF Account Numbers (Cont. 2)

3.13.2  BMF Account Numbers (Cont. 2)

3.13.2.10 
Correspondence Received

3.13.2.10.15  (01-01-2009)
Verification of EIN's for TIN Penalty/Backup Withholding Purposes

  1. Correspondence will be received requesting assistance because the taxpayer received a notice from a bank or other entity. If this is the second notice the taxpayer may be subject to backup withholding until the EIN is validated by IRS. The taxpayer should provide you with a copy of the notice. This notice is sent to entities that have not provided the correct name and/or Taxpayer Identification Number. If these entities are not added to or corrected on the BMF, backup withholding may be erroneously imposed on these accounts.

  2. Requests for a TIN validation will be handled on an expedite basis (same day) since the taxpayer must respond to the payor within a limited time frame.

  3. The taxpayer will request a 147C letter for the validation of the EIN and name as it appears on IRS records and the taxpayer may reference per requirements of Revenue Procedure 93–37. Provide the taxpayer with the information exactly as it is on IRS records, unless the taxpayer is requesting a valid name change.

  4. Do not tell the taxpayer the EIN is valid because it is in the valid range if research shows the EIN is not on the Master File. If taxpayer has supplied enough information to establish the account update the Master File without filing requirements via CC ESIGN. Suppress the notice of the EIN assignment. If taxpayer has not supplied enough information contact will be needed.

  5. If the EIN provided is incorrect, belongs to another taxpayer, is not valid or if the EIN is not provided and cannot be found through research, contact the taxpayer with a 131C letter requesting the correct EIN that needs to be verified. Include a Form SS-4.

  6. If taxpayer A inadvertently uses the EIN of taxpayer B, correspond using a 147C letter with special paragraph informing them of their correct EIN, and we have corrected our records.

  7. If the first and second name lines have been reversed, make the corrections according to procedures and send the taxpayer a 147C letter informing them of their correct name/EIN assignment.

  8. After a second notification of a name/TIN mismatch, the taxpayer (payee) is required to provide the bank, or other business entity (payor) with a copy of the 147C letter in order to stop backup withholding.

  9. Form 8821 is not a Power of Attorney (POA) form. Form 8821 authorizes any individual, corporation, firm, organization, or partnership the taxpayer wants to designate to inspect and/or receive confidential information in any office of the IRS for the type of tax and the years or periods he/she has listed on this form. Form 8821 does not authorize an appointee to advocate the taxpayer's position with respect to the Federal tax laws or to execute waivers, consents, or closing agreements; or to otherwise represent the taxpayer before the IRS. This form is good for only one year. If this form comes to Entity for verification of the EIN number, and it has a Centralized Authorization File (CAF) Number and an S-DLN number, it has been processed. Verify the EIN and send it to Files. If there is no CAF Number or S-DLN, after verification of EIN, return to Return and Income Verification Services (RAIVS) for processing.

3.13.2.10.16  (01-01-2009)
Correspondence Received From CP 57X

  1. If a taxpayer disagrees with any information on the CP 57X they received, they will return the notice indicating changes should be made to the account. Entity TE's should add any missing information and update any item the taxpayer indicates should be corrected. Send FTD's if needed.

  2. Correspondence may be received requesting assistance because the taxpayer received a notice or returns stating that based on information contained on their Form SS–4, they may be liable for past due or current due returns. Check the EIN and name on all returns or copies of returns that may be submitted. Ensure that the return is for the same taxpayer that any notice went out for. Ensure that all returns and copies of returns are date stamped. When a TC 594/599 has been input send a copy of the correspondence to the campus Compliance Operation with a note to file in suspense.

    If Then
    a. The taxpayer indicates no liability for the period indicated, Input TC 590 CC 20.
    b. The taxpayer indicates possible future liability, Input TC 590 CC 20 up to the present quarter or the date that may be indicated.
    c. The taxpayer indicates no employees and never will have employees, Input TC 591 CC 20 for all employment tax filing requirements. TC 591 should be input on the first period of no liability.
    d. The taxpayer indicates they are not a Form 941 filer but a Form 943 filer, Establish a Form 943 FRC and input TC 591 CC 20 on first quarter Form 941. Make sure they have a Form 940 FRC (repeat this transaction whenever a new employment tax FRC is added).
    e. The original tax returns are attached, Input TC 599 CC 24 on all returns secured and put the returns through for processing.
    f. Copies of the tax returns are attached, Input TC 594 CC 22 on appropriate modules.
    g. The taxpayer indicates they have 2 EIN's, Research both numbers. Consolidate if appropriate. CP 209 will generate to the taxpayer.
    h. The taxpayer stated they filed an extension, No action needed regardless of what type of tax is due.
    i. The taxpayer attaches a return and shows no liability and the document is not signed, Input TC 590 CC 20 and destroy the document.
    j. The taxpayer attaches a return and shows no liability and the document is signed, Send the return through for processing.
    k. The taxpayer changes their name and/or address, and the correspondence is signed, Make the name and address changes.
    l. The taxpayer gets a notice for current liability and sends the notice back stating the return is not yet due, Take no action.
    m. The taxpayers states they are an exempt organization that doesn't have to file Form 1023 and has no FRC's, Input TC 591 CC 20 on all FRC's.
    n. A consolidated return is filed and an original return is filed with the notice under the wrong EIN, Check to see if TC 150 posted. If so, send the return to Adjustments. If no TC 150 posted, correct the EIN and send for processing. If a copy of the return is submitted and a TC 150 posted, send the copy to Adjustments. No TC 150 posted, route return for processing.
    o. The taxpayer indicates nothing and just returns the notice, Take no action.
    p. The taxpayer states the business has discontinued, Input TC 591 CC 20 on the first period of each FRC.
    q. The taxpayer states they filed the return and it is less than 10 weeks, Take no action.
    r. The taxpayer states they filed the return and it is more than 10 weeks, Contact the taxpayer. Tell them we have no record of their return and to send us a copy of what was submitted.
    s. There is an open TDI status, Send a copy of the correspondence to SCCB.

  3. You must correspond with the taxpayer acknowledging the action taken.

3.13.2.10.17  (01-01-2009)
Correspondence of Bankruptcy, Receiver/Receivership and State Receivership

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3.13.2.10.18  (01-01-2009)
Correspondence For Reversal of TC 055

  1. The Adjustment/Correspondence Area will be forwarding requests for reversal of TC 055 to the Entity Control Section to disallow the posting of TC's 295/299 on carryback cases.

    1. If the corporation has a Sub-S election and has requested a fiscal year under Section 444, a TC 052 will be input with the following remarks: "NSD–TC 055 reversed to allow C/B adjustment to post." The TC 055 should be re-input with a PDC "5" and include the above remarks.

    2. If the taxpayer has revoked, terminated, or rescinded the Sub-S election indicated by TC 091, TC 092, or TC 096), do no re-input TC 055.

  2. Be sure the entity is not a Personal Service Corporation because PSC's are not eligible for carryback credit.

3.13.2.10.19  (01-01-2009)
Payroll Company

  1. If a payroll company with POA submits correspondence stating they are responsible for the payroll of their client, take no action. The POA has already established their filing obligation.

  2. If a payroll company with POA submits correspondence stating the company (client) is no longer liable for their tax obligation (leasing employees), See IRM 3.13.2.10.6.

  3. If a payroll company without a POA submits correspondence stating they are responsible for the payroll of their client for payroll purposes, take no action. Do not input a TC 591 CC 20 to shut down the taxpayer's filing requirement. Do not switch the taxpayer's filing obligation over to the payroll company.

3.13.2.11  (01-01-2009)
Form 8822, Change of Address Request

  1. Form 8822, Change of Address, is filed by taxpayers to furnish clear and concise written notification of a change of address to the Service.

    1. When Form 8822 is received with an Entity case or as a stand alone document, the change of address should be entered with any other required data.

    2. Before updating an address, you should verify that the correct EIN has been entered on Form 8822.

    3. Use the table below to process a Form 8822.

      If And Then
      Form 8822 clearly indicates a primary name change (FKA, previous name, etc), The Form 8822 is signed, Change the name
      The Form 8822 does not have an authorized signature, Correspond for verification with a 252C Letter
      Unable to determine if the taxpayer is changing their name,   Do not update the taxpayer's name. Send the 252C Letter asking the taxpayer to verify the name change.
      Entity receives an address change via telephone contact, There is an 'open' Entity issue, Update the taxpayer's address(es). Enter the taxpayer's name and phone number in the Remarks field.
      Any required information is missing, IDRS research provides the missing information, Update the taxpayer's address(es).
      Any required information is missing, IDRS research does not provide the missing information, Return Form 8822 to the taxpayer in a 104C letter. Ask the taxpayer to complete Form 8822 and return to us.
      The taxpayer is affected by a Presidentially Declared Disaster Area,   Change the address(es) via telephone call or any other way the taxpayer informs us to change the address.
      The taxpayer checks Box 2 in Part 1, indicating that gift, estate, or generation-skipping transfer tax will be filed (Form 706, 709, etc.), The BMF SSN (SSNV) is not established on the Master File, Input a TC 000 to establish the account.
      The SSNV is already established on the Master File, Update the address(es) as required.
      The EIN on Form 8822 is not on the Master File, IDRS research shows the EIN was assigned to the taxpayer on Form 8822, Input TC000 with no FRC's.
      The EIN on Form 8822 is not on the Master File, IDRS research shows no record of the EIN being assigned, Send the taxpayer a 104C asking for a copy of the notice assigning the EIN. When received, TC000 the EIN with no FRC's.
      Part II, Box 9 is checked,   Update the EPMF with the new address(es).

    Note:

    Do not send out an informational notice regarding address change, unless there is a direct demand from the taxpayer for confirmation of the change.

3.13.2.11.1  (01-01-2009)
Change in Address

  1. Correspondence indicating address changes may be directed to Entity for necessary action. However, if the correspondence involves an adjustment action, collection activity, or a TAS situation other than an entity issue, the address update will be acted upon by the function responding to the primary issue.

  2. Use the following table to process an address change:

    If Then
    a. The documentation is for an address change only (including Form 8822), Enter the entire taxpayer address into CC BNCHG. A TC 014 will generate from the input. The forms or documentation should be destroyed.
    b. A domestic street address is input, The mailing city, state and ZIP must be input.
    c. A foreign street address is input, The foreign city and foreign country must be input in the mailing street address and mailing city, state and ZIP lines.
    d. A foreign postal code is present and space allows, It must be input.
    e. A foreign city or postal code is input, The foreign street address must be input.
    f. A domestic mailing city, state and ZIP or major city code and ZIP code are input, The mailing street address must also be input.
    g. A major city code is input, A mailing ZIP code must be input.
    h. An FTD coupon has a change of address, Do not make address changes from FTD coupons that indicate a change to the address on Master File.
    i. It can be determined that the correspondence has been initiated by a third party, Research the CAF using CC CFINK.
    j. A proper authorization is not found, Send Letter 104C to the taxpayer.
    k. A proper authorization is found, Update the address as requested.
    l. The address change is for an IMF (SSN) account, If the MFR is 08, do not make any changes as they will unpost. When making an IMF change, enter '8' in the Blocking Series field of CC INCHG. This denotes that Entity made the change.

  3. General requirements for making address changes on Entity programs:

    If Then
    We have received a clear and concise unsolicited statement/correspondence signed by the taxpayer or an authorized representative, and the taxpayer's full name and EIN are present, Make the address change.
    A return has a different address and the address change box is not checked and it is signed by the taxpayer or an authorized representative and the taxpayers full name and EIN are present, Make the address change.
    Any of the required information is missing from the taxpayer's request for a change of address, Do not change the address. Correspond with the taxpayer at the new address and advise the taxpayer of the information needed. Enclose Form 8822. Annotate action taken in bottom left corner of return.
    Correspondence, notices, or C letters sent by the Service that solicits or requires a response from the taxpayer is returned to the Service by the taxpayer with corrections marked on the taxpayer's address information, the correspondence will constitute clear and concise written notification of a change of address. The taxpayer's signature is not required on the correspondence, notice, or C letter, Make the address change.
    The street address has typographical errors or misspelled words, Make the address change.
    A completed Form 8822 is received, Make the address change.
    The taxpayer requests a temporary address change, Advise the taxpayer a temporary address change will replace their permanent address on IRS records and they should use a Form 8822 for permanent address changes.

  4. If you are making a change to the taxpayer's filing requirement, employment code, or sort name, send an FTD coupon booklet (if applicable). If you are making a change to the taxpayer's address or care of name, do not send a FTD coupon booklet.

  5. If you are on the phone with a taxpayer regarding an Entity issue and the taxpayer asks for an address change, you may accept oral authority for the address change. Put the taxpayer's name and phone number in the transaction's remarks field.

  6. If communication is received from a third party (CPA, agent, etc) indicating the taxpayer is no longer a client and their address should be removed from the account, research for the taxpayers Last Known Address (LKA) using CC's FINDE, FINDS, and IRPTR. Update the Master File with the LKA. If unable to determine the LKA, update the taxpayer's address to the campus address and input TC593-82 on all open FRC's.

3.13.2.12  (01-01-2009)
Requests from SSA

  1. Various types of correspondence are received from the Social Security Administration (SSA) regarding missing Forms SS–4, errors in assignment of EIN's, and discrepancies between EIN's assigned and data reported to the SSA by the IRS on magnetic tape.

    1. Process this correspondence within TWO WEEKS of the day of receipt.

    2. Enclose a copy of the incoming correspondence with the reply. Mail reply to

      Social Security Administration
      Office of Central Records Operations
      OCRO–RCB
      301 North Greene Street
      Baltimore, MD 21201
      ATTN: Records Classification Branch 5–H–16NB

  2. SSA receives from Martinsburg Computing Center a monthly tape of entity changes on the Business Master File. Discrepancies in EIN assignment are determined by SSA when:

    1. The EIN on tape and on the related Form SS–4 differ.

    2. An EIN is received on tape, but not on a Form SS–4.

    3. An EIN is received on Form SS–4, but not on tape.

    4. An EIN is assigned to an entity, and SSA records indicate a previously assigned EIN for that entity.

    5. The same EIN is assigned to more than one entity.

    6. The EIN not within an established series, or is out of sequence. When an error condition exists, SSA will forward request for correction to the appropriate campus.

  3. Discrepancies in EIN's Form SSA–L361, Discrepant Forms SS–4 Memorandum—

    1. Background information—This Correction Notice is forwarded to the Campus by the SSA in duplicate. Photocopies of a Form SS–4 (SSAs copy) and a Form SS–12AT are superimposed on the Correction Notice. The Form SS–12AT reflects the name, address and EIN that was reported to SSA by IRS on magnetic tape.

    2. Use the following procedures below when Examination of this type of correspondence normally reflects that the same EIN has been assigned to two different taxpayers:

      If And Then
      a. Search to determine the Taxpayer Information File, NAMEE, BMFOL, INOLE and other files as applicable. If it is determined that a return was processed under an incorrect EIN Initiate action using a Form 3465, Adjustment Request, to reprocess the return under the correct EIN. Note on the front or back of the Correction Notice, the action taken.
      b. It is necessary to assign a new EIN to replace the erroneously assigned EIN (CC ESIGN).   Notify the taxpayer of the reason for assigning a new EIN.

  4. EIN Not Within Established Series take the following steps:

    If Then
    a. The discrepancy is identified as an EIN not within an established series, Research to determine what number was actually assigned to the entity.
    b. There is a transcription error that resulted in an erroneous EIN being established on the BMF. 1. Input (TC 011) to resequence the account to the correct EIN as reflected on the Form SS–4.
    2. A CP 209 will be generated unless suppressed with paragraph select code "Z." .
    3. Inform SSA of the correction.

3.13.2.12.1  (01-01-2009)
SSA Forms 4479, Unidentified Employer Identification Numbers (CAWR)

  1. Under Combined Annual Wage Reporting (CAWR), SSA processes Forms W–3. When SSA receives a Form W–3 without an EIN, research is performed to obtain the EIN.

  2. When this effort is not successful, SSA will request the IRS to research the files and either provide the EIN on the file or assign an EIN. SSA Form 4479 is used to request this information.

  3. The Entity department will receive the requests and will perform the research.

  4. SSA Forms 4479 are to be processed and completed within 30 calendar days of receipt in Entity.

    Note:

    Annotate the audit trail in blue or black ink for copies that may be faxed.

    1. Research IDRS to ensure that the employer has not been assigned an EIN, and process as follows:

      If And Then
      a. An EIN is found,   Enter the EIN in the appropriate box on the SSA Form 4479.
      b. An EIN is found for a taxpayer and it appears there is a typographical error on the SSA Form 4479,   Correct the typo.
      c. No EIN can be located, If is determined that an EIN is to be assigned 1. Follow standard Form SS–4 assignment procedures.
      2. Suppress the notice and send Letter 147(C) (see note below).
      d. "FICA" data or "Income Tax" data is present,   Assign an EIN
      e. "Total Compensation," Or "Annuities" are the only data present. Do not assign an EIN

    Note:

    The 147C should include similar language to the following: "We received information from the Social Security Administration (SSA) asking us to verify your correct Employer Identification Number (EIN). SSA received your Form W-3 without an EIN and we have no record of an EIN being assigned to you. Therefore, we have assigned you the EIN shown above. Please complete and return the enclosed Form SS-4."

  5. Establish the filing requirements based on the following:

    • Agricultural Filer—Form 943 FR.

    • Government Filer—Form 941 FR, Employment Code G.

    • Railroad Filer—Form CT–1 FR.

    • Any other type of combination—Form 941 FR.

    • Forward completed SSA Forms 4479 to the originating Data Operating Center (DOC) as indicated on the top of the form.

      If Then
      a. An EIN is to be assigned. Enter the assigned number in the appropriate box on the SSA Form 4479.
      b. No EIN is to be assigned. Notate "None" in the appropriate EIN box on the SSA Form 4479.

3.13.2.12.2  (01-01-2009)
SSA Requests For Verification of FICA Liability

  1. The Social Security Administration (SSA) at times will request verification of an exempt organization's status in regard to FICA coverage for their employees for tax years prior to 1–1–84.

  2. SSA will request this verification in a memo format. You should include the name and EIN of the subject organization and the periods in question along with a designated address with your response.

3.13.2.13  (01-01-2009)
Undeliverable Mail and Notices

  1. Undelivered CP 576 notices (Notices of EIN Assigned) will be returned to Entity for research and correction of entity data. If received in Entity, CP's 575 should be routed to Accounts Management-EIN Function.

  2. Undeliverable mail will often have a yellow sticker from the United States Postal Service (USPS) showing the taxpayer's new address. Re-mail the undelivered mail to the address on the yellow sticker. Include a Form 8822.

  3. Research CC's INOLE, IRPTR, ENMOD, BMFOL'E', and FINDE/FINDS for a better address for the taxpayer. In most cases the address on CC INOLE will be the same as the notice.

  4. CC INOLE can give you alternatives to locating the taxpayer such as

    1. BMF sole proprietor—the IMF account for this taxpayer may contain a different address.

    2. Any BMF account can be checked with CC INOLE 'P' to show an address from the EPMF and vice versa.

    3. Research for another address under the XREF TIN. If address is found, re-mail notice using 6800sce in care of the individual found from the XREF TIN.

    4. Follow the steps below for processing:

      If And Then
      A new address cannot be found via IDRS, All X-REF TIN's have been researched without finding a better address, Contact the taxpayer via telephone.
      Taxpayer can be reached via telephone, taxpayer supplies you with better address, Mail the notice/correspondence to the new address using 2475C and enclose a Form 8822.
      Unable to locate a better address, Unable to reach taxpayer via telephone, Update Master File with the campus address. Remove any active FRC's. Prepare notice/correspondence for destruction per local procedures.
      Better address is found by researching X-REF TIN,   Mail the notice/correspondence to the new address using 2475C and enclose a Form 8822.
      If there is indication the taxpayer is deceased, There are no active FRC's on the EIN, Prepare undeliverable for destruction per local procedures.
      If there is indication the taxpayer is deceased, There are active FRC's on the EIN, Research IDRS for an ESTATE EIN. If found, update the taxpayer's address to match the address on the estate EIN.
      If unable to locate an estate EIN, remove the FRC's from the EIN and update the taxpayer's address to that of the campus.

  5. Undelivered CP's 26X notices (Notices of Form 2553—Election by a Small Business Corporation) will be returned to Entity for research and correction of entity data. You may need to ESTAB Form 2553 to secure a shareholder's address.

  6. It is acceptable to re-mail a notice to another address. The taxpayer must provide clear and concise written notification of a change of address and the notification must be signed by the taxpayer. A different address on a letterhead or return address on an envelope is not acceptable for updating Master File. Correspond with the taxpayer at the 'better' address asking for a completed Form 8822.

3.13.2.13.1  (01-01-2009)
Undelivered Correspondence

  1. Undelivered correspondence initiated by Entity will be returned to Entity for research and correction of entity data. CC's INOLE, IRPTR, FINDE/FINDS can be used to locate a different address. Use the following procedures:

    If Then
    a. A different address is found, Re-mail the correspondence to the new address using the 6800sce or 2475C Letter and enclose a Form 8822, without updating the address on Master File.
    b. A new address cannot be found, Input TC 593 CC 82 on the current tax period for all active FRC's.

  2. Undeliverable Federal Deposit Books (FTD's) returned by the US Post Office as undeliverable mail will be sent to Entity. Entity will check for a new address. Process as follows:

    If Then
    a. A new address is found, A reorder will be placed via FTDRQ.
    b. A new address is not found, Update the taxpayer's address to that of the campus. Remove any active FRC's.

3.13.2.14  (01-01-2009)
Multiple EIN

  1. Multiple EIN's are usually discovered through research within the campus or through taxpayer correspondence.

  2. All consolidation requests will be sent to Entity. These cases should be worked within 30 calendar days from the Entity Received date.

    Exception:

    Priority will be given to Collection consolidations involving balance due accounts. They should be worked within 10 days of receipt in Entity. The proper research should be attached to these requests or the case should be rejected back to the originator.

  3. A consolidation request from any other area should have all research attached. Process as follows:

    If Then
    There are any doubts whether the consolidation should be done Return to the originator.
    The proper research is not attached. Return to the originator.
    There is any consolidation request that may have an EPMF (Forms 5500, 5500 C/R, 5500–EZ) implication or needs a consolidation on the EPMF account Forward to Ogden Campus for the consolidation.
    If there is a question whether the EPMF entities need to be consolidated, A copy of the complete consolidation request should be forwarded with an explanation to the Ogden Campus ATTN: EPMF Entity Control Mail Stop 6273
    Never send the original request.

  4. Because failed consolidation attempts are a time-consuming process to correct, it is imperative to verify that the taxpayers are the same and to recognize account module and entity conditions that would prevent a successful consolidation.

  5. Entity Control will maintain source documents related to EIN Consolidation by the documentation associated with TC 011 for a one year period. Dispose of the documentation using proper security guidelines, after the one year period.

3.13.2.14.1  (01-01-2009)
Consolidating Accounts

  1. ) Both the "To" and the "From" numbers should be researched using CC's INOLE, ENMOD, and BMFOL. Ensure that both accounts are for the same entity.

    Note:

    Due to the potential impact of merging accounts, all consolidations should be approved by a Lead Tax Examiner prior to the input of the TC 011.

  2. When the entity of the consolidation action is a financial institution, do not attempt to consolidate the account of the EIN assigned from the six million series. Financial institutions reporting withholding from pension trust under their control, requesting an EIN solely for use in reporting this tax, have been assigned a second EIN. This EIN will be assigned from the six million series for ease in identifying its purpose. The name of the financial institution will also show a sort name line—Account under TEFRA.

  3. Prior to consolidating the EIN's research to ensure:

    1. The name controls on both EIN's are the same.

    2. The filing requirement codes are compatible. See the chart in IRM 3.13.2.14.1(5).

      Note:

      When consolidating accounts involving both a Form 1120 filing requirements of 02 (Form 1120S) and a Form 1120 filing requirement of 01, you must zero out the Form 1120 filing requirement of 01 to ensure the surviving account will contain the Form 1120-02 filing requirement. If both accounts contain 1120-02 filing requirements input TC 092 on the EIN with the latest effective date to ensure that the earliest effective date is retained and then zero out the 1120 filing requirement on that EIN. Don't forget to use a posting delay code.

    3. If the filing requirements are not compatible, complete research must be done to determine the correct FRC's. If research indicates Form 944 is correct, delete the 941 FRC on both EIN's. If research indicates Form 941 is correct, delete the FRC for Form 944 on both EIN's. If both Form 941 and Form 944 FRC's are present and you cannot determine the correct FRC, remove the filing requirement for Form 941 before consolidating.

    4. Input the necessary transactions to correct the name control and filing requirements as needed to ensure that the TC 011 will post. Update the primary and sort names of the "to" account to the current information. Send FTD's if applicable.

  4. Once it has been determined that a taxpayer has been assigned more than one EIN, and no previous action has been taken, initiate the following action:

    1. Using CC BRCHG, input TC 011 (See Figure 3.13.2-31). This generated transaction code will change the EIN of an account already on Master File, or it will consolidate two EIN's. No other entity change can be made with this transaction code. The TC 011 will always 'wait' for any other input transaction to post before it attempts to post. It will re-sequence to the next cycle.

    2. Retain the EIN preferred by the taxpayer. If no preference is indicated, retain the EIN with a Form 941 filing requirement.

    3. If both EIN's have Form 941 filing requirements, retain the oldest EIN.

    4. If one EIN is not on the BMF, and the BMF EIN is still active, retain the BMF EIN.

    5. If the BMF EIN is not active, retain the EIN that has a filing requirement, regardless of the Master File.

    6. If neither EIN is active, retain the lower EIN.

    7. CP 209 will be generated to the taxpayer upon completion of the consolidation.

    8. If duplicate tax modules are present, suppress the notice and send a 139C Letter to the "To" account. Duplicate modules will cause a NO MERGE transcript to generate in Accounts Management.

    9. CC BRCHG will allow for notice suppression. Paragraph select code "Z" will suppress CP 209 from being generated.

      Note:

      If the "To" EIN has fallen off of Master File, it is not necessary to input a TC000 before you consolidate the taxpayer's EIN's. However, the 'from' EIN must be on Master File before it can be consolidated.

    .

    Figure 3.13.2-31

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

  5. When posting Transaction Code 011 to the Master File, the following occurs:

    1. The complete BMF account data is extracted from the Master File and placed on the Resequence File with the new EIN. This resequence record is given computer generated TC 001 for posting in the next processing cycle.

    2. The entity section of the account remains on the Master File under the old number, with the new number as a cross reference.

    3. The filing requirements are not changed. However, the account is frozen so that it will only accept computer generated Transaction Codes 002, 003, or 026.

    4. If the BMF Account contained a tax module in Taxpayer Delinquent Account (TDA) Status or Taxpayer Delinquent Investigation (TDI) Status, a Campus Notice, CP 187, "TDA Taxpayer Entity Change" will be issued. This will cause a NO MERGE transcript to generate in Accounts Management.

    Filing Requirement Incompatible Filing Requirements
    1120 990-T (FRC=1 unless 1120 FRC=03, 04, 09
    990-T (FRC=2), 1041-A, 5227, 1066
    990-PF (FRC=1 unless EO status is 19 or 22)
    990 (FRC=03 or 07) 990 (FRC=04, 06, 13 unless 1120 FRC=09)
    990 (FRC=01 or 02 unless 1120 FRC=03, 04, or 09) 1041, 1065, 4720, 706GS(T), 1066, 5227, 1041-A, 8752 (unless 1120 FRC=02)
    1041 990-T, 990 (FRC=03 thru 07, 13) 990-PF (unless EO Subsection is 92) 1120, 1066, 8752, 1065, 5227 (FRC=01)
    1065 990-T, 1041-A, 5227, 990-PF, 4720, 990, 1120, 1066, 1041, 706GS(T)
    1066 990-T, 1041-A, 5227, 990-PF, 4720, 990, 1120, 1065, 1041, 706GS(T), 8752
    8752 1041, 1066 , 990-T, 1041-A, 5227, 990-PF, 4720, 990, 706GS(T), 1120 (unless FRC=02)
    990-T 1041, 1065, 8752 , 1041-A, 5227, 706GS(T), 1120 (FRC=01, 02, 06, 07, 10, 11, 14, 15, 16, 17, 18, 19) 990 (FRC=03)
    5227 1120, 1065, 1066, 8752 , 990-T, 990-PF. 990, 1041, 706GS(T) (unless EO subsection is 90 and 5227 FRC=2)
    990-PF 1065, 1066, 8752, 1041-A, 5227, 1120 (unless EO status 10 or 22), 990, 1041, 706GS(T), (unless EO subsection is 92)
    4720 1065, 1066, 8752, 990 (FRC=03), 1120 (FRC=02, 06, 07, 10, 11)
    990 1065, 1066, 8752, 1041-A, 5227, 990-PF, 1120 (FRC=02, 06, 07, 10, 11, 14, 15, 16, 17, 18, 19) 1041, 706GS(T) (unless EO subsection is 91), 1120 (FRC=01 unless 990 FRC=01/02 and EO subsection is 12)
    706GS(T) 8752, 1066, 990-T, 990 (unless EO subsection is 91), 990-PF, (unless EO subsection is 95), 1120 (unless 1120 FRC=09), 1065
    941 941-M, 941-NMI, 941-SS, 941-PR, 944
    1120-C 1065, 1066, 8752, 1041-A, 5227, 990-PF, 1120, 1041,

  6. Transaction Code 001 is generated as a result of TC 011. A TC 001 accomplishes a consolidation of accounts or a resequence of an account to a new EIN. If the "TO" EIN does not match a number on the BMF, the TC 001 establishes the account in the vacant slot under the new EIN. If the "TO" EIN matches a number on the BMF, a consolidation of accounts takes place unless either account contains an unreversable TC 914, or the "TO" account is INACTIVE, or the Name Controls do not match.

  7. If conditions for consolidating accounts are present, the entire "TO" account's data is placed on the Resequence File with a 005 Transaction Code together with the 001 Transaction Code. A memo type entity is retained in the vacated BMF slot, to reserve the slot for the consolidated account. The 005 and 001 entities are consolidated and the consolidated entity is resequenced to the Master File with a 006 Transaction Code. The tax modules for both accounts are consolidated unless the following conditions are present:

    1. Both accounts are in TDA status with unequal TDA Controlling Location Codes.

    2. Tax modules have equal MFT and Tax period and either or both contain an unreversed TC 400 Vestigial Record, or both contain a posted return (TC 150).

  8. When a consolidation fails, one of the following will be issued:

    1. For unreversed TC 914, complete transcripts identified as INTEL–914 will be issued for both accounts.

    2. For an inactive "TO" account, a CP 200 "EIN CHANGE—INACTIVE ACCOUNT" will be issued. See IRM 3.13.2.21 for resolution of this notice.

    3. For Name Control Mismatch, a CP 201 "EIN CHANGE NAME CONTROL MISMATCH" will be issued. See IRM 3.13.2.21 for resolution of this notce.

    4. For Filing Requirement Mismatch a CP 202 "EIN CHANGE—FILING REQUIREMENTS MISMATCH" will be issued. See IRM 3.13.2.21 for resolution of this notice.

  9. For tax module consolidation fail conditions the following will be issued:

    1. For unequal TDA Location Codes, a CP 206 "NOTICE OF NO MERGE–TDA MODULE" will be issued. This notice is worked by the Collection Operation.

    2. For duplicate tax modules a "TRANSCRIPT OF NO MERGE–MODULE" will be issued.

    3. If more than one TC 001 attempts to post, the first TC 001 will post and remaining 001 transaction will resequence to post in the following cycle(s).

  10. Transactions are generated (TC 002, 003, 005, 006, and 026) for Consolidation of Accounts. See KEY TO CONSOLIDATION TRANSACTION CODES Table.

    1. Transaction Code 002—When the TC 001 matches an EIN and incompatible FRC's are present, the 001 Transaction Code is resequenced back to its old EIN with an 002 Transaction Code and reestablishes the entire old account.

    2. For SSN accounts, when an account consolidation fails, the SSN of the account that is resequencing is validated. If the validity status of this account is the reverse of the current DM–1 validity status, REVAL transcripts will be issued.

    3. If NOMRG transcript would be issued, the first five letters of the transcript title will be changed from NOMRG to REVAL.

    4. If a NOMRG transcript would not be issued, a regular REVAL transcript will be issued. For resolution action, see IRM 3.13.2.21.1.

    5. Transaction Code 003—When duplicate modules are present the respective tax modules are not consolidated. The 001 Transaction tax module(s) is resequenced to its old EIN with a 003 Transaction Code. Upon posting, the filing requirements for the account are changed to INACTIVE (all 8's).

    6. Transaction Code 005—Generate when an 001 Transaction matches the Master File Account on EIN, and the consolidation provisions are NOT present. The entire Master Account is placed on the resequence file with a 005 Transaction. A memo type entity remains on the BMF to reserve the slot for the to-be-consolidated account.

    7. Transaction Code 006—When the consolidation of entity and tax module(s) is complete, the module(s) are resequenced to the Master File with a 006 Transaction Code.

    8. If a consolidation was done in error and a TC 003 is shown on the account, you must input a TC 012 to reopen the account. If a TC 026 is shown on the account, you must input a TC 000 to re-establish the taxpayer's account.

      KEY TO CONSOLIDATION TRANSACTION CODES
      TC 001 Carries complete account of the old (FROM) TIN to the new TIN. Generates as a result of TC 011
      TC 002 Post on the old (FROM) TIN. Carries complete contents of TC 001 carrier back to the (FROM) TIN if name controls mismatch. Reestablishes entire old account
      TC 003 Post on the old (FROM) TIN and contain a cross-reference TIN. Carries the duplicate tax module only to the old (FROM) TIN and Changes all filing requirements to INACTIVE (8's).
      TC 004 IDRS transaction only. Shows on good (TO) TIN indicating duplicate module condition in attempted consolidation.
      TC 005 Posts on the new (To) TIN as a TC 005/006 combination if consolidation is successful. Indicates a cross-reference TIN.
      TC 006 Posts on good (TO) TIN without the TC 005 if consolidation attempt is unsuccessful.
      TC 008 IDRS transaction only. Posts on the good (TO) TIN indicating a complete consolidation has been made. Contains a cross-reference TIN.
      TC 011 Posts to the old (FROM) TIN to change EIN of an account on MF and prevents other postings except TC's 002, 003, or 026.
      TC 026 Posts on the old (FROM) TIN to indicate a successful consolidation. Account deleted. TIN changed.
      RELATED TRANSACTION CODES
      TC 012 Reopens accounts on MF - ACTIVE
      TC 020 Account deleted from MF - INACTIVE

3.13.2.15  (01-01-2009)
Processing Requests for FTD's

  1. A book of Federal Tax Deposit (FTD) coupon forms will be automatically generated upon establishment of an entity on the BMF (TC 000) if the EIN has a FRC that normally makes FTD payments. A book will also be generated upon use of CC FTDRQ when establishing a filing requirement on an account which does not have any active filing requirements. Filers of the following BMF forms make payments, possibly via FTD's:

    • Form 940

    • Form 941

    • Form 943

    • Form 944

    • Form 945

    • Form 1120

    • form 720

    • Form 990–T

    • Form 990–PF

    • Form CT-1

    • Form 1042

    Process as follows:

    If And Then
    a. The taxpayer requests an FTD Coupon Booklet   Send them one via CC FTDRQ.
    b. The taxpayer has written on the FTD coupon It is exactly as it is on Master File Research CC BMFOL'F'. If coupons have not been sent within last 45 days, send one booklet via CC FTDRQ.
    c. The FTD coupon is different FTD's have NOT been sent within the last 45 days Send the FTD coupon booklet with the new information.

  2. The form will be issued in books of 24 coupons. The deposit coupon will be used for depositing any tax payable through the FTD system for any tax period. The form contains the taxpayer's name, address, EIN, check digit and FYM (when applicable); however, the taxpayer will be required to identify the type of tax and the tax period by filling in the applicable box and to enter the amount of the deposit.

  3. Changes to the name, or TIN—The taxpayer is instructed to correct their name and/or TIN on either the deposit coupon or the FTD Address Change Form. Name and TIN corrections made to the coupon will appear on the Taxpayer Entity or Tax Class Change Report and will be processed in Entity. If they checked the box to indicate a name change, make the change to Master File.

  4. Address changes are to be made on the FTD Address Change Form, not on the deposit coupon. However, the taxpayer is changing addresses on the coupon and x'ing the change box. If the box is X'd the document may appear on the Entity Change Report if the OCR review does not catch it. This record is not to be worked. Address changes from the FTD coupon will not be processed in Entity. Reorder Address changes are to be made with input of CC FTDRQ (NOT BNCHG). Process as follows:

    If Then
    a. It can be clearly determined that an error was made because the payment was incorrectly applied to a different tax return or tax period or incorrect EIN on their FTD coupon, 1. Prepare Form 3465, Adjustment Request, and attach a copy of the FTD coupon and forward to Adjustments for action.
    2. Notate on the Form 3465 "Possible Misapplied FTD Payment—Incorrect Tax Return/EIN" .
    3. The adjustment function will either apply the FTD credit to the correct account, cycle the account until the payment has posted or take other appropriate action.
    b. A taxpayer that is currently filing an electronic payment requests a new FTD coupon booklet, Send the FTD booklet per the taxpayers request.

3.13.2.15.1  (01-01-2009)
Taxpayer Entity or Tax Class Change Report (MicroStar)

  1. This report will now include entities where a change to the EIN or name was indicated on the FTD coupon and will either be accompanied by photocopies of associated FTD coupon or by the actual FTD coupon. This report must be processed within 7 calendar days from the date of the report. See IRM 3.30.123, Processing Timeliness, Cycles, Criteria and Critical Dates.

  2. Always research before taking action on FTD changes.

    1. Name changes - If there is a clear indication the entity remains the same (no change of ownership indicated), input a name change (BNCHG) to correct the name on the Master File. Input CC FTDRQ Definer Code 'I' and research using BMFOL "T" to change the name or the name and address if applicable on the FTD data base and to reorder coupons with updated information.

    2. Name changes to Exempt Organization accounts (EO submodule present) must be substantiated by Articles of Amendment, etc. See IRM 3.13.12.

    3. When a correction has been made to the Sort Name (TC 016 CC BNCHG) from Form 8109, send FTD coupon book to the taxpayer (CC FTDRQ) Definer 'I' to update the FTD Database.

    4. If a correction has been made to the Care of Name do not correct on the Master File from Form 8109 via (TC 016 CC BNCHG). Send FTD coupon book to the taxpayer with Care of Name (CC FTDRQ) Definer 'I' to update the FTD Database. (No correction will be made to the Master File).

    Exception:

    If the Care of Name is the General Partner of a partnership, update the Master File (TC 016 CC BNCHG) with the General Partner's name and send a coupon book to the taxpayer (CC FTDRQ) Definer 'I' to update the FTD Database.

  3. If the taxpayer requests an FTD Coupon Booklet, you should send them one. If the taxpayer has written on the FTD coupon and it is exactly as it is on Master File, do not send out a new FTD coupon booklet. If the FTD coupon is different, and no FTD has been sent out within the last 45 days, send the FTD coupon booklet.

3.13.2.15.2  (01-01-2009)
EIN Change

  1. Research to verify the correct EIN. If more than one EIN has been assigned to this entity, proceed as directed in IRM 3.13.2.14.

    If Then
    The EIN is found on another Master File (EPMF) Input CC ESIGN and overlay the EIN. This action causes FTD's to generate if the EIN has a FRC that utilizes FTD coupons.
    The EIN is located on the BMF Input the change from the information provided on the FTD (for example name change, consolidation, etc.). Request new FTD's using CC FTDRQ (Definer Code 'I' if a change is made to the name or address.
    The change is made exactly as it appears on the Taxpayer Entity or Tax Class Change Report No contact with the taxpayer is necessary
    The name change is not made or a new EIN is assigned Correspond with the taxpayer explaining why a new EIN was issued or why the name was not changed and what FTD's to use. Advise taxpayer to destroy the previously issued FTD's after new book is received
    The change indicated on the coupon is already reflected on the FTD data base Do not issue additional coupons

  2. When the change requested is made with CC BNCHG or EOCHG, a new FTD book will not be issued automatically. If a new FTD book should be issued CC FTDRQ, Definer 'I' must be used.

    • If it is determined from examining the Taxpayer Entity or Tax Class Change report and the FTD (or photocopy), that a payment has been misapplied to an incorrect EIN, prepare Form 3465, Adjustment Request, and attach a copy of the FTD as back-up information. Annotate the Form 3465 with the following: "Misapplied FTD payment—Incorrect EIN" and forward to the Adjustment Branch so that the misapplied payments can be transferred to the correct account.

    • FTD's related to Forms 1042 and 1120–FSC having entity changes should be corrected by phone conversation with the Ogden Processing Site.

3.13.2.15.3  (01-01-2009)
Requests for FTD forms.

  1. The FTD coupon booklet is automatically reordered when the taxpayer uses the sixth and seventh FTD coupons. The taxpayer is issued a Form ID Number. The special ID numbers will automatically trigger a reorder request from the Business Master File (BMF) to the FTD Coupon vendor for the generation of one FTD Coupon Book to the taxpayer.

  2. A new "FTD Address Change Form" will be included in the FTD Coupon Book. The taxpayer is to complete the form and submit it to the campus when they request to have the FTD Coupon Book sent to a different mailing address.

  3. The FTD Coupon Book will no longer contain an FTD "Reminder" Form. In its place will be an additional FTD Coupon, thereby increasing the number of FTD Coupons from 23 to 24 per book.

  4. BMF will contain an FTD Mailing Address Line. The FTD Mailing address will be updated by the input of IDRS CC's FTDRQ, EOCHG, or ESIGN.

  5. When the FTD Coupon with the special Form ID Number is processed, specific information will be extracted from the coupon (EIN, Check Digit, FYM and Magnetic Tape Processing Date). This information will be formatted as a Transaction Code 016 and included in the daily EOD 29 tape sent to Martinsburg. The computer routine will automatically search the "FTD Mailing Address" section for an address. If no "FTD Mailing Address" line is present, the routine will default to and use the BMF Address Line as the address information to place on the FTD Coupon Book reorder tape.

  6. The FTD Database will be expanded to include the "Date the FTD Coupon Book was generated" .

  7. The FTD system will suspend the issuance of the FTD coupon request if the FTD coupon information has generated onto the "TAXPAYER ENTITY CHANGE REPORT" .

3.13.2.15.4  (01-01-2009)
Forms 8109B—Over-the-counter FTD coupon

  1. Coupons mismatching on name control (against the FTD data base) will be identified on the FTD Error Register as Error Code 38.

  2. Those cases that cannot be corrected on the register will be transferred to Entity for resolution, Master File action, reorder and input of correction through CC FTDRQ, Definer 'i'.

  3. EIN and/or name changes must be input by Entity only. Definer Code 'I' allows input of an EIN, name or address change to update the vendor tape.

3.13.2.15.5  (01-01-2009)
Correspondence Requesting FTD Coupons

  1. When the account is not located on the FTD data base and the research request does not provide data, the case will be sent to Entity.

  2. Research to verify the account is not established under another variation of the name.

  3. If you determine the account information is correct, establish on the BMF with CC BNCHG, TC 000.

3.13.2.15.6  (01-01-2009)
FTD's—Assignment of EIN's if not provided

  1. If an EIN is not located through research, assign an EIN and use the first month of the Quarter as WP or BO date. Follow normal EIN assign-procedures. When new EIN's are assigned through CC ESIGN for FRC's 941, 940, 943, 944, 945, 720, and/or 1120, FTD's will be automatically generated.

  2. If an EIN is not located through research and there is not enough information to assign an EIN, return the FTD to the FTD Team for more information. Inform the FTD Team not enough information to assign an EIN, please provide a copy of the check.

3.13.2.15.7  (01-01-2009)
FTD Error Register

  1. FTD's that do not match the FTD data base on name control, EIN, FRC or check digit will be reported on the FTD Error Register. The FTD Team in Accounting Services Operation will perform research to determine the proper account information for the entity. If the team cannot determine the correct information, they will forward the register with their research attached to Entity for determination of the correct information. There will be three different types of errors on Register that will be sent to Entity.

    • Error Code 30—EIN problem

    • Error Code 38—Name control and check digit problem

    • Error Code 40—Filing requirement problem.

  2. All FTD Error Register items must be processed and returned to the FTD function as soon as possible (if possible on a two day turnaround). Only those cases requiring further research should be held in Entity until corrected. Process as follows:

    If And Then
    a.Error Code 30   Research using NAMEE or INOLE for the correct EIN. (Even though FTD's may have been researched (prior), the account may have been established or updated since the last research.)
    b. No other EIN can be found. The FTD team did not contact the taxpayer for a better number Assign a new EIN to the taxpayer using Notice Information Code 'A' and '08.'
    c. Research indicates that the account has two EIN's Needs to be consolidated. Line through the generated EIN and/or name control and write the corrected EIN and/or name control on the register.
    d. The EIN provided belongs to another entity   1. Assign a new EIN to the taxpayer.
    2. Inform the FTD Team of action taken within 8 days.
    e. Error Code 38   Research the account for the correct name control.
    f. The correct name control is found   1. Correct the name control on the register and Master File.
    2. Notate the date the correction was input on the register.

    Note:

    If the FTD is faxed, annotations must be in black or blue ink.

  3. Error Code 40—The FTD Coupon has a designated tax type which is not consistent with the filing requirement established on the FTD Database. Asterisks will appear in column D (Type of Tax) on the Error Register.

  4. To determine the filing requirement, compare the tax type on the register in Column D with the Tax Type chart below

    Tax Class Form
    01 941
       
    03 1120
       
    04 720
       
    06 943
       
    07 CT–1
       
    08 940
       
    09 1042
       
    DC 1120C
       
    DL 990T
       
    DP 990PF
       
    DX Schedule A

  5. Process as follows:

    Note:

    If the FTD has filing requirement discrepancies with Form(s) 944 & 941 please refer to IRM 3.13.2.9.3(4).

    If And Then
    a. There are other filing requirements on the Master File,   Verify that they are compatible with the filing requirements you are establishing.
    b. They are not compatible,   1 Research to determine the correct filing requirements.
    2. Contact the taxpayer if necessary.
    3. Input any filing requirement changes via CC BNCHG.
    c. Research indicates the account has two EIN's and needs to be consolidated,   1. Line through the generated EIN and/or name control and write the correct EIN and/or name control on the register
    2. Update any other account information and notate any changes on the register.
    3. Code these errors with an Error Action Code C on the register directly below the error sequence number for each highlighted error item corrected.
    d. During contact with the taxpayer it is determined that they are exempt from submitting an FTD for Form 940 Taxpayer requests a refund of the payments Issue an 858C letter and inform taxpayer that they must file a "FINAL" Form 940 return with a -0- (zero) tax liability.
    e. A Form 940 has already been filed   The taxpayer must file a Form 843, Claim for Refund and Request for Abatement, to receive the refund.

  6. They may request a refund by either filing a Final Form 940, or a Form 843, Claim for Refund.

  7. A refund may be requested only for the three year period from the time the return was filed or within two years from the time the tax was paid, whichever is later.

  8. When all corrections have been completed, indicate on the control form the date the corrections were input. Also indicate the date of the cycle (3 cycles later) that the FTD team can release their correction to DIS for input. The register should be completed by Entity and returned to the FTD team within 10 workdays.

  9. If all of the corrections on the register have not been made, retain a copy of the register along with a copy of the control sheet in Entity for further resolution. Release the register with the completed corrections to the FTD function. When the error condition is resolved, indicate on the copy of the control sheet the date the correction was made and the cycle date the FTD correction can be input.

3.13.2.16  (01-01-2009)
Form SS-16, Certificate of Election of Coverage Under the Federal Insurance Contributions Act (FICA)

  1. Religious Orders whose members are required to take a vow of poverty may file an election to have their members subject to FICA (PL 92–603).

  2. In order to make this election the religious order must file a Form SS–16, Certificate of Election of Coverage Under the Federal Insurance Contributions Act, in triplicate.

  3. This election is irrevocable and applies to all current and future members of the order or religious subdivision. The order or religious subdivision must pay Social Security and Medicare taxes for each active member. The taxes are reported on Form 941 and can be filed for the last five years.

  4. The prior year rate is the combined social security tax rate for both the employer and employee. The current withholding rate for an employee is 6.2%. If the employer withholds that 6.2% amount, the employee must match it before Form 941 is filed.

3.13.2.16.1  (01-01-2009)
Processing Procedures Form SS–16

  1. Verify the effective date on the Form SS-16 is correct. The effective date must be the first day of:

    • The calendar quarter in which the Form SS-16 was filed, or

    • The calendar quarter immediately after the calendar quarter in which Form SS-16 is filed, or

    • Any one of the 20 quarters before the quarter in which the Form SS-16 was filed.

  2. If the effective date does not follow the guidelines listed above or is missing, return the Form SS-16 to the order or religious subdivision explaining the Form SS-16 cannot be processed with an incorrect or missing effective date.

  3. If the effective date is correct, mark each copy of the Form SS-16 "Accepted by the IRS (date)" .

  4. Annotate the EIN of the entity on each copy of Form SS-16.

  5. Prepare Pattern Letter 2191P in triplicate. Until this letter is made a national correspondex letter, the Entity Department Management Assistant should prepare the three copies of 2191P so a professional appearance is maintained.

    Figure 3.13.2-32

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

  6. File Copy A of Form SS–16 and one copy of the 2191 letter in a manual file in researchable order.

  7. Forward Copy B of the Form SS–16 and one copy of the 2191 letter to the Social Security Administration at the following address:
    Social Security Administration
    Bureau of Data Processing
    6401 Security Blvd.
    Baltimore, MD 21235
    Attn: Earnings Report Branch

  8. Return Copy C and one copy of the 2191 letter to the order or religious subdivision.

3.13.2.17  (01-01-2009)
Form 2678, Employer Appointment of Agent

  1. The instructions in this sub-section are for the processing of Form 2678 with a revision date of October 2007. This revision does not require "letters of authorization."

  2. Earlier revisions of Form 2678 will NOT be accepted for new appointments. If you encounter a prior revision (earlier than May 2007) of the Form 2678, return the Form to the taxpayer using Letter 4228C and enclose a blank copy of the current revision of the form. This instruction applies to new appointments only. See IRM 3.13.2.17.4 for processing revocations.

  3. An Employer may designate an agent under IRC Section 3504 to withhold, report, and pay federal employment taxes. These agents may refer to themselves as household employer agents, fiscal agents, employer agents, or fiscal intermediaries.

  4. The employer may be disabled or other welfare recipient receiving home health care services through a state or local program. These taxpayers are referred to as Home Health Care Service Recipients (HHCSR's) and should not be treated as regular household employers. The acronym HHCSR should always be placed on the primary name line behind a closing bracket. For example, JON]DOE]HHCSR

  5. Form 2678 should never be submitted by an agent to allow them to file Forms 1042/1042-S on behalf of their clients. If one is received, return it to the agent explaining there is no legal authority under Internal Revenue Code 3504 to allow them to file Forms 1042/1042-S.

  6. If a surrogate or POA signs for the employer/payer the proper authorizing documentation should be attached

  7. Once Form 2678 is processed, the TC 971/38X will be displayed on CC ENMOD or BMFOLE. See Figures 33 and 34 for an example of Form 2678.

3.13.2.17.1  (01-01-2009)
Form 2678 Completeness

  1. Review Form 2678 for completeness. If any of the following information is missing, take action as described in the table below in (2). Refer to Figures 3.13.2-33 and 3.13.2-34. The following items must be present on the Form 2678:

    • Employer’s/payer’s EIN

    • Employer’s/payer’s name

    • Employer’s/payer’s address

    • Appropriate boxes checked for question 5 of Form 2678

    • Employer’s/payer’s signature (See Note below)

    • Agent’s EIN

    • Agent’s name

    • Agent’s address

    • Agent’s signature (See Note below)

    Note:

    Both the employers/payer’s signature and the agents signature are required for appointment of an agent; however, only one signature (either the employer/payer or the agent) is required for revocation.

    Figure 3.13.2-33

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

    Figure 3.13.2-34

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

  2. Research IDRS for any information missing from Form 2678. If unable to locate the missing information, take the following actions:

    IF THEN
    a. The employer's/ payer’s EIN, name, address, or signature is missing Return Form 2678 to the agent in Letter 4228C to request the missing information. If the EIN is missing, instruct the taxpayer to visit www.irs.gov to acquire a Form SS-4.
    b. The agents EIN, name, address, or signature is missing Return Form 2678 to the agent in a 4228C to request the missing information. If the EIN is missing, instruct the taxpayer to visit www.irs.gov to acquire a Form SS-4.
    c. None of the boxes in line 5 are checked Correspond using Letter 4228C to request the missing information.
    d. correspondence is received indicating none of the boxes below Line 5 apply, Return to Employer using Letter 4228C informing them they do not qualify to file Form 2678.

  3. If Form SS-4 is attached to the Form 2678, take the following actions:

    IF THEN
    a. Form SS-4 is attached requesting an EIN for the agent who has been requested to file Form 941, 943, 944, 945, or CT-1 Assign an EIN and the appropriate filing requirements to the agent as indicated on the agents Form SS-4.
    b. Form SS-4 is attached requesting an EIN for the employer/payer Assign an EIN and the appropriate filing requirements to the employer/payer as indicated on employers/payer’s Form SS-4.
    c. Form SS-4 is attached and the checkbox following line 8 on Form 2678 is checked. Assign the EIN for the employer to the "O" tape with no filing requirements

3.13.2.17.2  (01-01-2009)
Form 2678 - Agent's Account

  1. Ensure the agent has the filing requirement(s) indicated in Part 2, Item 5.

  2. If an employer designates an agent for all employees for Form 944, remove the Form 944 FRC from the employers account but do notestablish a Form 944 FRC on the agents account. Ensure the agent has a Form 941 FRC.

  3. If the address on Form 2678 is different than the address on Master File, update the agent's address with the address on Form 2678.

3.13.2.17.3  (01-01-2009)
Form 2678 - Employer/Payer's Account

  1. After determining the completeness of Form 2678, remove the FRC's indicated in Part 2, Item 5 of Form 2678 from the employer/payer's EIN. If the boxes in Part 2, Item 5 are marked for some employees,do not delete the FRC's.

  2. Establish the cross reference for the agent using CC FRM77.

  3. When processing Form 2678, research CC's ENMOD and BMFOL'E' for a previously posted TC971.

    IF AND THEN
    TC 971 Action Code (AC) 382, 383, 384, or 385 is present, Agents EIN and AC is the same. No action is necessary
    TC 971 AC 382, 383, 384, or 385 is present, Agents EIN is different and the AC is the same,

    1. Input a TC 972 to reverse the posted TC 971.

    2. Input TC 971 and appropriate AC and cycle delay for one cycle.
    TC 971 AC 382, 383, 384, or 385 is present, Agents EIN is the same and the AC is different,

    1. Input a TC 972 to reverse the posted TC 971.

    2. Input TC 971 and appropriate AC and cycle delay for one cycle.
    TC 971 AC 382, 383, 384, or 385 is present, Agents EIN and the AC are different,

    1. Input a TC 972 to reverse the posted TC 971.

    2. Input TC 971 and appropriate AC and cycle delay for one cycle.
    TC 971 AC 382, 383, 384, or 385 is not present,   Continue processing Form 2678.

  4. Overlay CC ENMOD with CC REQ77 to generate CC FRM77.

  5. Input the following fields into CC FRM77 using the employer/payer’s EIN:

    1. MFT>00

    2. TX-PRD>000000

    3. TC>971

    4. TRANS-DT>(current date, which is the effective date)

    5. TC971/151-CD>(See the If and Then table below in para (4)

    6. XREF-TIN>(agent’s EIN)

    7. MISC>Form 2678 Agent

  6. Use the chart below to determine the appropriate Action Code to be used with the TC 971 input:

    IF AND THEN
    (a) A box below Part 2, Item 5 referencing Forms 941, 941-PR, 941-SS, 943, 943-PR, 944, 944-PR, 944-SS, and 944 (SP) is checkedFor ALL employees/payees The box below Part 3, Item 9 of Form 2678 is also checked, Input a TC 971 AC 382 on the employer/payer's EIN.
    Update 'In Care Of' name and address on employer/payer's EIN to that of the agent on Form 2678.
    Delete the necessary FRC's from the employer/payer's EIN.
    (b) A box below Part 2, Item 5 referencing Forms 941, 941-PR, 941-SS, 943, 943-PR, 944, 944-PR, 944-SS, and 944 (SP) is checkedFor ALL employees/payees The box below Part 3, Item 9 of Form 2678 is not checked, Input a TC 971 AC 383 on the employer/payer's EIN.
    Delete the necessary FRC's from the employer/payer's EIN.
    (c) A box below Part 2, Item 5 referencing Forms 941, 941-PR, 941-SS, 943, 943-PR, 944, 944-PR, 944-SS, 944 (SP), 945, CT-1, and CT-2 is checkedFor SOME employees/payees The box below Line 9 on Page 2 of Form 2678 is also checked The Form 2678 is not processable. Route the document to SBSE Employment Tax Policy per address provided in IRM 3.13.2.17.5(2).
    (d) A box below Part 2, Item 5 referencing Forms 941, 941-PR, 941-SS, 943, 943-PR, 944, 944-PR, 944-SS, and 944 (SP) is checkedFor SOME employees/payees The box below Part 3, Line 9 is not checked, Input TC 971 AC 385 on the employer/payer's EIN
    (e) A box below Part 2, Item 5 referencing Forms 941, 941-PR, 941-SS, 943, 943-PR, 944, 944-PR, 944-SS,944 (SP), 945, CT-1 and CT-2 is not checked The box below Part 3, Item 9 of Form 2678 is checked, Input TC 971 AC 382 on the employer/payer's EIN
    Add HHCSR to the primary name line behind the employer/payer's with a closing bracket.
    Update the In Care Of name and address on employer/payer's EIN to that of the agent on Form 2678.
    Delete the necessary FRC's from the employer/payer's EIN.
    (f) A box below Part 2, Item 5 referencing Forms 941, 941-PR, 941-SS, 943, 943-PR, 944, 944-PR, 944-SS, and 944 (SP) is checked For SOME employees/payees The box below Line 9 on Page 2 of Form 2678 is NOT checked Input TC971 AC 385 on the employer/payer's EIN
    (g) A box below Part 2, Item 5 referencing Forms 945, CT-1, or CT-2 is checked For ALL employees/payees   Input TC 971 AC 384 on the employer/payer's EIN. Delete the necessary FRC's from the employer/payer's EIN.
    (h) A box below Part 2, Item 5 referencing Forms 945, CT-1, or CT-2 are checked For SOME employees/payees   Input TC 971 AC 384 on the employer/payer's EIN
    Do not delete FRC's from the employer/payer's EIN.

  7. After completion of the above actions use Letter 1997C to notify the agent that the appointment has been approved. Ensure that the letter contains the name and EIN for each employer.

  8. Send a 1997C to the employer/payer confirming their authorization of the agent.

3.13.2.17.4  (01-01-2009)
Form 2678 Revocation Procedures

  1. Taxpayers file a revocation of their appointment by checking the box in Part I of the 2007 revision of Form 2678 labeled"You want to revoke an existing appointment" . Revocations are acceptable on prior revisions of Form 2678 or by correspondence.

  2. Revocations require only one signature. The signature may be that of the agent or employer/payer. If the signature is missing, return Form 2678 to the employer/payer with a 4228C.

  3. Research the employer's/payer's account for the presence of a TC 971 Action Codes 382, 383, 384, or 385 with the same X-Ref-TIN as the revoking agent.

    Note:

    The requirements to enter TC971 to record these transactions started in January, 2007. A TC971 may not be present. Ensure the cross referencing agent on the TC971 is the same as the revoking agent. If TC971 is not present or for a different agent do not input a TC972.

    IF THEN
    TC 971 with Action Code 382, 383, 345, or 385 is located on the employer/payer's account 1. Reverse the previous transaction with a TC 972. Use the same Action Code from the TC 971 record.
    2. Activate the appropriate Form 941, 943, 944, 945, CT-1, and CT-2 filing requirements of the employer/payer whose agency relationship is terminated.
    3. Research employer/payer's TIN to determine if taxpayer is deceased or no longer in business. If so, do not add any FRC's to the account.
    4. If AC 382 was used for the original TC 971 posting, open a Form 940 filing requirement for the employer as well. Remove 'HHCSR' from taxpayer's nameline.
    If new address is provided for Employer/Payer, Update the Master File
    TC 971 is not located on the employer/payer's account Activate the appropriate Form 941, 943, 944, 945, CT-1, and CT-2 filing requirements of the employer/payer whose agency relationship is terminated.
    Research employer/payer's TIN to determine if taxpayer is deceased or no longer in business. If so, do not add any FRC's to the account.

  4. Send a 4228C to inform the filer the revocation has been approved.

    IF AND THEN
    A revocation is approved it is filed by the agent Send correspondence to both the Agent and the Employer/Payer.
    Research employer/payer's TIN to determine if taxpayer is deceased or no longer in business. If so, do not send letter.
    A revocation is approved it is filed by the Employer/Payer Send correspondence to the Employer/Payer only.

3.13.2.17.5  (01-01-2009)
Disposition of Completed Forms 2678

  1. Do NOT send completed Forms 2678 to Files.

  2. The Entity clerical team should forward the completed forms to:
    Internal Revenue Service
    SB/SE Employment Tax Policy
    c/o Elizabeth Wagner, Team 201
    201 W. Rivercenter Blvd Stop 5701G
    Covington, KY 41011

3.13.2.18  (01-01-2009)
Form 2032, Contract Coverage under Title II of the Social Security Act

  1. An American employer with foreign affiliates will file Form 2032 to extend social security coverage to United States citizens and resident aliens employed by their foreign affiliate.

  2. The term "American Employer" means an employer which is:

    1. The United States or any instrumentality thereof;

    2. An individual who is a resident of the United States;

    3. A partnership, if two thirds or more of the partners are residents of the United States;

    4. A trust, if all the trustees are residents of the United States;

    5. A corporation organized under the laws of the United States or of any state.

  3. Forms 2032 should be filed with the service center where the American employer files their Forms 941. All corporations that electronically file their Forms 941 should send the Forms 2032 to Cincinnati. Forms 2032 received in other than Ogden and Cincinnati should tranship the form to the applicable service center. Ogden and Cincinnati will work the Forms 2032 in the center they are received in.

  4. Form 2032 procedures are not applicable to a "Foreign Affiliate" when services performed by its employees are within the U.S.A. If a Form 2032 is received indicating the employees work within the U.S.A., send the form back to the taxpayer explaining they do not qualify for filing the form.

  5. Forms 2032 are filed in triplicate with the area office in which the principal place of business within the United States is located. The area offices will forward Form 2032 without examination, to the campus.

3.13.2.18.1  (01-01-2009)
Processing Form 2032

  1. This section contains all information needed for processing of Forms 2032 and amendments to Form 2032.

  2. Expedite processing will apply. See IRM 3.30.123.

  3. Examine all three copies for completeness.

  4. Secure the Director's signature and the date on all three copies of the Form 2032. The Forms 2032 should be routed to the Director's office through the Planning and Analysis staff. The Entity Department Management Assistant will assist the TE with this process.

    Note:

    Delegation Order SB/SE 4.31 re-delegates the "Authority to Sign Form 2032, Contract Coverage Under Title II of the Social Security Act" , to managers with the responsibility for employment tax matters.

  5. Examine the effective date on the Form 2032. The effective date of the election is determined by the signature date of the Director's approval. The effective date of an original election is the first day of the quarter in which the election is filed (and approved) or the first day of the next calendar quarter if requested by the taxpayer. If a previous revision to Form 2032 is filed, annotate the effective date in the area pertaining to the agreement effective date.

  6. Assign only one EIN in the name of the Domestic Corporation, including the words "Foreign Affiliates" in the primary name line, Employment Code"S" and Form 941 FRC. Do not use a Notice Information Code when assigning this EIN.

  7. Entity's management assistant or designated employee should prepare a letter (in triplicate) explaining that an EIN has been assigned for exclusive use by the corporation in reporting wages paid to employees of its foreign subsidiaries. Tell the taxpayer that a pre-printed Form 941 bearing the new EIN is being mailed separately.

  8. Distribute the letters as follows:

    • Corporation-One copy of letter, a blank Form 941 for the appropriate year, and one copy of accepted Form 2032

    • SSA-One copy of letter and one copy of accepted Form 2032. Mail to:
      Social Security Administration
      ATTN: OEO DES RECON SS4
      3–A-14 North-Metro West
      300 N. Greene St
      Baltimore, MD 21290

    • Entity - Input TC 930 to have the Form 2032 and a copy of the letter attached to the applicable Form 941, when it is filed.

3.13.2.18.2  (01-01-2009)
Form 2032 Amendments/Supplements

  1. Amendment to Form 2032, previously filed under Section 3121(1) of the IRC, to broaden the coverage as provided by section 3121(a). A statement indicating the intention of the amendment must be included with the election. Generally the effective date of the amendment is the first day of the quarter following the quarter in which it is filed. However, an amendment filed in the same quarter as the original election is filed or in the first month following the quarter in which the original election is filed is retroactive to the effective date of the original election. Remember to annotate the amended Form 2032 to reflect the effective date of the coverage.

  2. Entity's management assistant or designated employee should prepare a letter (in triplicate) explaining that an EIN has been assigned for exclusive use by the corporation in reporting wages paid to employees of its foreign subsidiaries. Tell the taxpayer that a pre-printed Form 941 bearing the new EIN is being mailed separately.

  3. Distribute the letters as follows:

    • Corporation-One copy of letter, a blank Form 941 for the appropriate year, and one copy of accepted Form 2032

    • SSA-One copy of letter and one copy of accepted Form 2032. Mail to:
      Social Security Administration
      ATTN: OEO DES RECON SS4
      3–A-14 North-Metro West
      300 N. Greene St
      Baltimore, MD 21290

    • Entity - Input TC 930 to have the Form 2032 and a copy of the letter attached to the applicable Form 941, when it is filed.

  4. Once an agreement is made it cannot be terminated, either in its entirety or with respect to any foreign affiliate. However, the agreement will terminate for a foreign entity at the end of any quarter in which the foreign entity at any time in that quarter, ceased to be a foreign affiliate.

3.13.2.19  (01-01-2009)
Processing Form 56

  1. Form 56, Notice Concerning Fiduciary Relationship, is filed to notify the IRS of a fiduciary relationship. There is no restriction concerning the information a fiduciary can receive for the entity for whom he/she is acting. A fiduciary assumes the powers, rights, duties and privileges of the taxpayer, until notice is given that the fiduciary is terminated.

  2. Forms 56 received with a Form SS–4 attached are both to be processed under the timeliness guidelines for Forms SS–4. The EIN should be annotated on the Form 56 when establishing the account. Update the Form SS–4 with the fiduciary information shown on Form 56.

    Note:

    An EIN should not be assigned from a Form 56.

    1. If the signature is missing on the Form 56, correspond with the taxpayer.

    2. Send Form 56 to taxpayer. Inform taxpayer to access www.irs.gov to download a copy of Form SS - 4, and to complete and return both documents to us.

    3. Follow IRM 3.13.5.12.10 for Forms 56 indicating form 1040 in Part III. If the Form 1040 was filed electronically, send the form 56 to Files to be filed in alphabetical order.

  3. If Part III of Form 56 indicates the taxpayer is filing the form for delinquent income taxes under Offer and Acceptance, send the Form 56 to the Fraud Detection Center.

    Note:

    A facsimile stamped signature may be acceptable for a fiduciary. A group of Form 56 requests, with a stamped signature, must be accompanied with a letter signed under "Penalties of Perjury" , by the person authorized to sign the Form 56, indicating the stamped signature is approved to sign the Form 56. A copy of this letter must be attached to each Form 56 and retained for inspection.

  4. If Form 56 is received and research determines a taxpayer account does not exist on Master File to update/establish/revoke a fiduciary relationship, do not establish an account based only on receipt of Form 56. After entering the information, send the Form 56, Form 8822 (if applicable) and any supporting documentation to Files for retention.

3.13.2.19.1  (01-01-2009)
Establishing or Changing Fiduciary Using CC BNCHG

  1. Use the table below to establish a fact of filing:

    If And Then
    a. The taxpayer files a Form 56 or correspondence to establish a fiduciary on their account, The form is complete Input a TC 098 using CC BNCHG on every Form 56. Note: Multiple TC's 098 are acceptable on same account.
    b. The taxpayer is changing their fiduciary relationship (compare ENMOD with the Form 56 fiduciary's name and address), check the box on Line 9, Form 56, or submitted correspondence,   1. Input a TC 098.
    2. Input a "1" in the FORM-56-CHG-IND field using CC BNCHG.
    Input the XREF-TIN-ITIN-IND field using CC BNCHG if taxpayer is using SSN
    Update the fiduciary's name and/or address as needed.
    c. The taxpayer is terminating their fiduciary relationship or check the box on Line 7,   Input a TC 099 using CC BNCHG. Note: Multiple TC 099's can be input on an account.
    The account has fallen off the Master File Take no action
    d. The taxpayer is a 706 or Form 709 filer (Lines 3 and 4), The taxpayer is using an SSN. 1. Input TC 000 if the account is not established.
    2. Input a TC 098 on the 'V' tape and cycle appropriately.
    e. The taxpayer is a 706 or Form 709 filer (Lines 3 and 4), The taxpayer is using an EIN 1. Research for SSN.
    2. If found, input a TC 098 using CC BNCHG.
    3. If not found, return Form 56 to taxpayer asking for SSN.
    f. The taxpayer is a Form 1041 and a Form 706 or Form 709 filer (Lines 3 and 4), The taxpayer is using an EIN and SSN 1. Make one copy of Form 56 for the source document.
    2. Input a TC 098 on the SSNV and EIN accounts using CC BNCHG.
    The EIN and SSN are missing and the correct numbers cannot be found via research Send Form 56 to taxpayer. Tell taxpayer to access www.irs.gov to down load a copy of Form SS-4 and to complete both documents and return to us.
    The signature is missing Return Form 56 to the taxpayer using appropriate letter. Inform taxpayer to access www.irs.gov for a Form SS - 4, and to complete and return both documents to us.

  2. If TC 098/099 is already on IDRS, check the date of the TC 098/099. If the date is after the date on Form 56, destroy the Form 56. If the Form 56 was filed after the date of the TC 098/099, input another transaction for Form 56 and the XREF EIN or SSN and send it to files.

3.13.2.19.2  (01-01-2009)
Termination of a Fiduciary Relationship

  1. If the fiduciary notifies the IRS that (either through correspondence or Form 56 by checking the termination block in Part IV, Section A) the fiduciary relationship has terminated, or revoked their relationship, update the account as follows:

    1. Input a TC 099 through BNCHG to terminate the relationship on the BMF. The input of TC 099 represents a terminated fiduciary relationship.

    2. If the account has fallen off the Master File, take no action.

    3. Once the account is terminated, follow the disposition procedures.

3.13.2.19.3  (01-01-2009)
Form 56 Disposition

  1. Send Form 56 to Files as a source document for TC's 098 and/or 099 using Doc Code 63.

  2. "Remarks" must be entered. Enter SD in the Remarks field to alert Files.

  3. The Form 56 and Form 5147 must be maintained in DLN order.

  4. If a TC 098/099 was not input, send the Form 56 to files on a routing slip indicating it should be filed in the 'ALPHA FILE.'

3.13.2.19.4  (01-01-2009)
Processing Form 56-F, Notice Concerning Fiduciary Relationship of Financial Institution

  1. The following information must be completed on Form 56-F:

    1. Part I—Identification (line 20 must be checked only if line 7 and line 15 are checked). If line 20 is not checked, call FDIC/RTC to get another Form 56-F with line 20 checked or return the Form 56-F for line 20 to be checked. If line 15 is checked, and line 7 is not checked, line 20 does not have to be checked.

    2. Part II—Authority or

    3. Part IV—Revocation or Termination of Notice

    4. Fiduciary's Signature

  2. If any of the information listed above is missing, return Form 56-F to the Fiduciary (line 9) to be completed.

3.13.2.19.5  (01-01-2009)
Processing Form 56-F

  1. Research to determine if the financial institution's address may have been updated to the fiduciary's address.

  2. Update the name lines via CC BNCHG to include the fiduciary's name and title (for example, contact person) as sort name information.

    Note:

    Do not change the primary name line, add FDIC/RTC to the sort line.

  3. Update the address information via CC BNCHG to reflect the fiduciary's address (line 11).

  4. (4) Input a REQ77 over command code ENMOD to generate the FRM77. On the FRM77 screen input a TC 971 with a AC 076.
    a. MFT>02
    b. TX-PRD>current TXPD
    c. TC>971
    d. TRANS-DT>(current date, which is the effective date)
    e. TC971/151-CD>076
    f. MISC>Form 56-F

  5. Forward Form 56-F to files.

    Note:

    If Form 56-F is received with a Form SS–4 attached, process according to Form 56 instructions.

3.13.2.20  (01-01-2009)
Notices and Transcripts, Master File Notices—CP 192, 200, 201, 202

  1. The BMF Entity Notices and Transcripts are currently worked through Desktop Integration (DI). The processing instructions have not changed, DI allows the routing of the notices and transcripts to be paperless.

  2. CP 192 Non-FICA/FUTA Entity Filing on FICA/FUTA Return.

    Figure 3.13.2-35

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

  3. This notice is generated when:

    • A Form 941 with FICA wages reported posts to an EIN that has an Employment Code G, or

    • A Form 940/940-EZ reporting FUTA tax posts to an EIN that has an Employment Code W, F, C,or T.

    See Figure 3.13.2–35.

  4. For FUTA Filers (EC–F, W, C, or G), determine if the return posted to the correct entity. If not, forward the notice and the research information to Adjustments for disposition.

  5. Determine if the employment code on the BMF is correct. See IRM 3.13.2.5. Process as follows:

    1. If Then
      a. Research indicates that the organization is no longer exempt under Subsection 501(c)(3), 1. Contact the KDO for a copy of the redetermination letter.
      2. (Request that they reply within 15 days.)
      3. When the response is received, input TC 016 to delete the EC and to correct the FRC's, if necessary.
      4. Use the redetermination letter as authorization for this transaction.
      b. The EC is incorrect, Input the correct EC or delete the EC as applicable.
      c. The EC is correct, indicating the entity is not liable for FUTA. And The return shows a taxable wages amount, 1. There are several Federal Agencies with civilian employees that are required to file Form 940. Contact the Federal Agency Delinquency (FAD) Team in Brookhaven prior to requesting an adjustment to the accounts identified as a Federal Agency (employment code "F" ). The telephone number for FAD is 631–447–4126.
      2. Prepare a Form 3465, Adjustment Request.
      3. Attach the return, the CP 192, and any taxpayer correspondence to the Form 3465 and route to Adjustments for a refund of FUTA tax.
      4. Notify the organization, via Letter 858C, that they are not required to file the Form 940.
      5. Input TC 016 to correct the filing requirement, if necessary.
      d. If the CP 192 indicates "No Liability" , 1. Input Letter 858C and destroy the notice.
      2. Input TC 016 to correct the FRC, if necessary.
      e. If you are unable to determine if the EC is correct, 1. Correspond with the organization to clarify the type of organization.
      2. Suspend the case for thirty (30) days.
      3. If at the end of 30 days you have not received a reply delete the EC.
      4. When the reply is received, process as stated above.

  6. CP 200—Taxpayer Identification Number Change, Inactive Account is generated when a consolidation of accounts is attempted and the "TO" account is inactive (all filing requirements are "8" ). Process as follows:

    1. If Then
      a. Research is performed. And If transposition or other mechanical error was made, 1. Consolidate the accounts via CC BRCHG, TC 011.
      2. Input the correct data.
      b. Entity Control receives these notices, 1. Perform appropriate research.
      2. If transposition or other mechanical error was made, initiate (TC 011–Doc Code 63) with correct data.
      c. No error was made, 1. Reject the request for consolidation and forward a copy of notice CP 200 to the originator on a memo routing slip.
      2. Inform the originator to determine the reason for the inactive status (an account that is inactive due to a previous consolidation FROM that account would not normally be the "TO" Account for a subsequent consolidation attempt) and to take action to reactivate the account, if applicable.
      3. Also inform the originator to submit a new Request for Consolidation, if applicable.
      4. Telephone contact with originator must be authorized by SC Management.

  7. CP 201—Taxpayer Identification Number Change—Name Control Mismatch is generated when a consolidation of accounts is attempted and the name controls do not match. See Figure 3.13.2–36.

    1. Perform appropriate research to determine if these accounts are for the same entity. If an error was made in transcribing the data, initiate a TC 011, Doc Code 63 with correct data.

    2. If no error was made and it is clearly determined that the accounts should be consolidated, input a name change via CC BNCHG to change the name control, as required. Also, input a TC 011.

  8. Use the following procedures for all accounts with a temporary TIN:

    1. If Then
      a. The accounts are the same, Input TC 013 to correct the name of the account that is incorrect.
      b. The accounts are BMF, 1. Use Doc Code 63 or 80.
      2. Input a TC 011 to consolidate the accounts.
      3. Use the account with the temporary number (200xxxxxx) as the "FROM Account" .
      c. The accounts are not the same entity, Research for another number (TIN). Be sure to include EACS in your research if EO is indicated.
      d. Another TIN is found, Input TC 011 using the temporary TIN as the "FROM" number.
      e. Another TIN is not found, Use CC ESIGN MFI 'O' NID to assign another (new) number to the account with the temporary TIN.
      f. There is an open case on EACS, 1. Input the Case Control Number.
      2. Input TC 011 with the temporary number as the "FROM" number. A CP 209 will be generated to notify the taxpayer of the number assigned.
      g. It cannot be clearly determined to consolidate the accounts, 1. Reject the Request for Consolidation with the CP 201 to the originator on a memo routing slip.
      2. Request additional information to verify the consolidation.
      h. Sufficient information is received, 1. Change the name (TC 013).
      2. Input TC 011 to consolidate the accounts.
      i. Consolidation cannot take place, Destroy the notice.

    Figure 3.13.2-36

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

  9. CP 202—Taxpayer Identification Number Change—Filing Requirement Mismatch is generated when a consolidation of accounts is attempted and the accounts have conflicting filing requirements for income returns. For example, the consolidation would result in a combination of Form 1120 and Form 1065, Form 1120 and Form 1041, Form 1065 and 1041, Form 990–C and Form 990, Form 990–PF and Form 1041–A, or Form 1120 and Form 990–T filing requirements; or one account has an unreversed TC 090 or a Form 1120S filing requirement (02) and the other account has a Form 1120 filing requirement other than 00 or 02; or one account has a Form 1120 filing requirement of 14 and the other account has a Form 1120 filing requirement other than 00, 01, or 14. See Figure 3.13.2–37.

    1. Determine the correct filing requirements through IDRS and additional research as necessary. Also, research for a Form 2553, if a Form 1120–S is involved.

    2. If it cannot be determined from research that the entities are the same, reject the request for consolidation to the originator on a memo routing slip. Ask the originator to determine if the entities are the same taxpayer.

    3. When information reveals that the filing requirement in one of the accounts is erroneous and the consolidation of the accounts should be made, input a TC 016 to correct the filing requirements. Also, input a TC 011 to consolidate the accounts. A CP 209 will be generated to the taxpayer.

      Note:

      If this is a second consolidation, input paragraph selection code "Z" to suppress the CP 209 notice.

      Note:

      If the incompatible FRC's are for Forms 941 and 944, use CCs BMFOL'I' and BMFOL'T' to determine which FRC is correct. Remember, the tolerance for Form 944 is $1,000 or less a year.

    4. When information reveals that two different entities are involved and the consolidation should NOT be accomplished review both accounts. Correct name lines as applicable.

    Figure 3.13.2-37

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3.13.2.20.1  (01-01-2009)
Transcripts

  1. No-Merge Transcripts—No-Merge transcripts for the same Area Office will all contain the same DLN. In order to associate the two TIN's involved, verify the posted TC 011 on the transcript containing the temporary TIN. Use the cross reference TIN associated with the TC 011 to locate the transcript for the good BMF TIN.

  2. REVAL Transcripts are generated when an account consolidation fails and true validity of the SSN/name control combination is opposite to the validity of the portion of the BMF to which it attempted to return (for example, a valid account attempts to return to the invalid portion or vice versa).

    1. Process as follows:

      If Then
      a. The account consolidation fails, Research to determine if consolidation information was input correctly.
      b. A transcription error was made, 1. Input TC 011 with the correct information.
      2. Research to determine if an IMF CP 54 has been issued to the taxpayer.
      c. A CP 54 has been issued, Associate the transcript with the notice, if possible, so the taxpayer's entire account can be resolved simultaneously.
      d. A CP 54 has not been generated, 1. Research for a valid SSN.
      2. Forward all research results as background.
      e. The SSN is valid on the IMF, Input TC 011 to make the SSN valid on the BMF.
      f. The SSN is not valid on the IMF, Reject the case back to the originator.
      g. Entity Control originated the transaction, 1. Correspond with the taxpayer.
      2. Indicate the SSN and name combination we have on file and request verification.
      h. The taxpayer indicates our files are correct, 1. Verify and Inform the taxpayer that we continue to have a problem with the SSN and the taxpayer should contact SSA to resolve the discrepancy.
      2. No further action is needed by Entity.
      3. File the transcript in an "unresolved" file.
      i. The taxpayer submits a different SSN, 1. Make the necessary changes to the account.
      2. Input a TC 011 or TC 041 to resequence the taxpayer's account to the valid portion of the BMF.
      j. The taxpayer submits a new name, Input CC BNCHG to change the name and input a TC 041 to move the account to the valid portion of the BMF.
      k. No response is received within 45 days, 1. Place the transcript and all background material in an "unresolved" file.
      2. When additional correspondence is received, check the file to see what action was previously taken.
      l. Corrective action can now be taken, Use the transcript and all background material as the source document for any action taken.

  3. BMF Invalid SSN Transcripts are generated when a change is made to the first name line of an SSN account on the 'V' tape and the new name control does not pass DM–1 validation. Process as follows:

    1. If And Then
      a. Research NAMEI for a valid SSN is found for the taxpayer.   Input a TC 041 on the invalid number to consolidate to the valid SSN.
      b. A valid SSN is not found If the name on the transcript is a man's name. Correspond with the taxpayer (Letter 1408C) requesting the correct SSN or name.
      c. The name on the transcript is a woman's name.   Research via CC NAMEI for a SSN for a possible husband.
      d. SSN is found   Check CC ENMOD for a valid SSN for the woman.
      e. SSN is not found,   Correspond with the taxpayer (Letter 1408C) requesting the correct SSN or name.
      f. Taxpayer is foreign   Do not send 1408C letter.

  4. When the taxpayer's response is received, proceed as follows

    1. If Then
      a. The taxpayer indicates our files are correct, 1. Further correspondence is needed (Letter 685C).
      2. Inform the taxpayer we continue to have a problem with the SSN/name combination and he/she should contact SSA to resolve the discrepancy.
      3. No further action is needed by Entity Control.
      4. Destroy the transcript.
      b. The taxpayer gives us a correct name or SSN, Input this information via CC BNCHG
      c. No response is received after 45 days, Place the case file in the unresolved file.

  5. NOMRG CAF are generated when the "FROM" account has a significant CAF indicator. Action has been taken by the CAF to resolve the CAF no-merge situation; the transcript is then forwarded to Entity Control for input of TC 011.

  6. Entity Control will identify the "TO" account and the "FROM" account from the following criteria displayed in the transaction explanation field on the transcript:

    1. FROM ACCOUNT—TC 011 and/or 003

    2. TO ACCOUNT—TC 005 and/or 006

    3. Input TC 011–DOC CODE 63 with account information on the transcript. Annotate the transcript with the TC 011 input date and forward to the CAF Team.

3.13.2.21  (01-01-2009)
International Returns and Documents

  1. This section provides instructions for working unprocessable foreign returns. The Estate and Gift program (Forms 706 and 709 series) and Excise (Forms 2290, CT-1, 11–C, 720, and 730) are centralized at the Cincinnati Submission Processing Center. All other foreign returns are processed at Ogden Submission Processing Center.

  2. If it is necessary to assign an EIN to an international taxpayer, you should use prefix 98. The prefix 66 should be used for taxpayers residing in Puerto Rico, Guam, Virgin Islands, American Samoa, Northern Mariana Islands and Palau.

3.13.2.21.1  (01-01-2009)
Form 1120-F

  1. Return is filed to report a foreign corporation's income, deductions, credits and tax to the United States.

  2. This return must be filed by any foreign corporation that

    1. Has income from any US source subject to U.S. withholding tax that was not paid to the U.S. government and reported on a U.S. withholding tax return by a U.S. withholding agent;

    2. Is engaged in a trade or business in the U.S;

    3. Has tax preference items that affect the corporation's computation of its unrelated business income;

    4. Has overpaid income tax that it wants refunded;

    5. Is no longer engaged in a U.S. trade or business, but has deferred income from that US trade or business, or has gain from the disposition of property that ceased to be used in a U. S. trade or business within the last 10 years;

    6. Or concludes that its U.S activities do not give rise to gross income which is effectively connected with the conduct of a trade of business within the U.S., but wishes to preserve its right to claim deductions and credits attributable to such gross income by filing a protective return. See Treas. Reg 1.882–4(a)(3)(iv).

    7. Claims the benefits of an income tax treaty with the U.S.

  3. An agent in the U.S. must file the return if the foreign corporation has no office or place of business in the U.S.

  4. For foreign corporations with no office or place of business in the U.S., this return is due no later than the 15th day of the 6th month after the end of the tax year.

  5. For foreign corporations with an office or place of business in the U.S., this return is due no later than the 15th day of the 3rd month after the end of the tax year.

  6. Foreign corporations with an office or place of business in the U.S. must make FTD payments.

3.13.2.21.2  (01-01-2009)
Form 1120-FSC

  1. This return is filed to report the income, deductions, credits, and tax of a foreign sales corporation (FSC).

  2. This return is filed by corporations that have elected (by filing Form 8279) to be taxed as a FSC or small FSC. Form 8279 is no longer valid. If Form 8279 is filed, stamp on the Form 8279 "DENIED" and return to taxpayer and explain to the taxpayer that this form is no longer a valid form.

  3. Form 1120-FSC, U.S. Income Tax Return of a Foreign Sales Corporation, for which no EIN is located should be researched and processed as follows:

    1. If And Then
      a. The EIN is not on the BMF,   Research to ensure the EIN is for that taxpayer, and establish on the BMF via CC BNCHG with a TC 060.
      b. The EIN is on the BMF, IDRS does not have a TC 060 posted. 1. Input a TC 060.
      2. Transcribe the EIN from the letter to the Form 1120-FSC and route the Form 1120-FSC for processing.
      3. If applicable, annotate the Form 1120-FSC "Form 8279 received, approved and input"

  4. If a taxpayer terminate their existing FSC election, input TC 065 - Notification of Revocation received.

  5. If an existing FSC is terminated, input TC 061 - Revocation of a FSC or Small FSC election.

3.13.2.21.3  (01-01-2009)
Passive Foreign Investment Company (PFIC)

  1. A PFIC can elect to defer their tax on undistributed earnings and capital gains.

  2. Assign an EIN to a PFIC that has made an election to be a Qualified Electing Fund (QEF). This should be stated in the taxpayer's letter.

  3. Establish the account with MFI "O" as no return will be filed.

  4. Use N/A with RI 00 when establishing this type of account.

3.13.2.21.4  (01-01-2009)
U.S. Real Property Holding Corporation under Foreign Investment Real Property Tax Act (FIRPTA) for Corporation Filing Election Under IRC § 897(i)

  1. Remittances may be received when an electing foreign corporation requests to be treated as a domestic corporation for the purpose of FIRPTA as prescribed by IRC § 1.897–3(c) of the regs.

  2. These remittances may be routed to Entity for the assignment of an EIN.

  3. EIN's should be assigned to these entities on the BMF, MFI "O" .

  4. Use NID when assigning the EIN to this type of entity.

3.13.2.21.5  (01-01-2009)
Captive Insurance Elections

  1. Section 953(c)(3)(C) elections by foreign corporations may be routed to entity for assignment of an EIN.

  2. All information needed to establish the entity will be on the first page of the election.

  3. Establish the account with either a Form 1120–PC or 1120L filing requirement. This will be indicated on the election.

  4. Use NIA when assigning the EIN to this type of entity.

3.13.2.21.6  (01-01-2009)
Form 8804—Annual Return for Partnership Withholding Tax (Section 1446)

  1. This return is used to report the total liability under Section 1446 for the partnership tax year.

  2. This return is also a transmittal form for Form 8805.

  3. Refer to Form 8805 for processing procedures.

3.13.2.21.7  (01-01-2009)
Form 8805—Foreign Partner's Information Statement of Section 1446 Withholding Tax

  1. This form is used to show the amount of effectively connected taxable income and tax payments allocated to the foreign partner for the partnership's tax year.

  2. A separate Form 8805 must be filed for each foreign partner. Process as follows:

    If Then
    a. The partner is a foreign corporation, Establish on the BMF with a Form 1120–FRC of 06.
    b. The partner is a foreign partnership, Establish on the BMF with a Form 1065 FRC of 1.
    c. The partner is a foreign trust or estate, Establish on the BMF with a Form 1041 FRC of 1.

3.13.2.21.8  (01-01-2009)
Form 8813—Partnership Withholding Tax Payment (Section 1446)

  1. This form is used to make payment to the Internal Revenue Service of withholding tax under Section 1446.

  2. Establish on the BMF with MFI "O" .

3.13.2.22  (01-01-2009)
Form 1128—Application to Adopt, Change or Retain a Tax Year

  1. A tax year is an annual accounting period for keeping records and reporting income and expenses. Once the tax year is established, the taxpayer continues to use that tax year until permission is granted by IRS to change it. Form 1128 is filed to request a change in tax year. The types of tax periods are:

    • Calender Year -12 consecutive months beginning January 1 and ending December 31

    • Fiscal Year -12 consecutive months ending on the last day of any month except for December

    • 52-53 Week Tax Year - A tax year that ends on the same day of the week every year, usually the Saturday that is closest to the end of the month.

  2. Below are some terms that you may encounter when working with a taxpayer's tax year:

    • Required Tax Year - The Tax Reform Act of 1986 required Partnerships, Personal Service Corporations (PSC's), Subchapter S corporations and certain trusts to file on the same tax year ending as their owner. In most cases this is a December 31 tax year ending.

    • Natural Business Year - Section 5.07 of Rev. Proc. 2006-46 allows an entity to use a tax year other than the required tax year. This requires the taxpayer submit a statement showing separately for each month the gross receipts for the most recent 47 months. An FYM approved under this section can be identified by a TC054 on the Entity module of an EIN.

    • Ownership Tax Year - Section 5.08 of Rev. Proc. 2006-46 describes the issue of the majority of the owners (shareholders, partners) currently using or currently changing to the tax year of the owner. An FYM under this section can be identified by a TC054 on the Entity module.

    • Business Purpose - A 'Business Purpose' FYM must be approved by Chief Counsel. The taxpayer will submit a Form 2553 along with a statement describing the relevant facts and circumstances and, if applicable, the gross receipts from sales and services. See IRM 3.13.2.24.13 for additional information. A 'Business Purpose' FYM can be identified by a TC054 on the Entity module.

    • Grandfathered Fiscal Year - This is a fiscal year (other than a tax year that results in a three-month or less deferral period) that a partnership or S corporation received permission to use on or after July 1, 1974, by a letter ruling. These are identified by a TC054 on the Entity module.

  3. Corporations and other filers are required to attach a copy of Form 1128 to their tax returns. Code and Edit forwards the tax return with the attached copy of Form 1128 to Entity. Detach the Form 1128 and process it using the procedures in this subsection. After processing Form 1128, use it as a source document and send the tax return back to Code and Edit with a Form 4227. The Form 4227 must state whether the Form 1128 was accepted or denied, and the words "Process Return" .

  4. The following are not examples of a valid change in tax year:

    • Filing of extension (Form 7004)

    • Submitting a Form SS-4 application

    • Payment of Estimated Tax.

  5. All taxpayers must complete Page 1, Part I of Form 1128. Depending on the type of entity and the type of the requested change, the taxpayer may also be required to complete the following sections of Form 1128:

    • Part II, Section A. (Automatic Revenue Procedure 2006-45) - TC 053

    • Part II, Section B. (Automatic Revenue Procedure 2006-46) - TC 054

    • Part III, (Ruling Request from Chief Counsel)

  6. If during the course of researching IDRS to work Form 1128 you discover the taxpayer has been filing on an invalid FYM, you should update IDRS to reflect the required FYM.

  7. Do not reject Form 1128 if the FYM on IDRS has been inaccurate or invalid.

  8. Occasionally, Taxpayers will submit Forms 1128 unnecessarily. Below are some scenarios you may encounter. You should either return Form 1128 to the taxpayer with a 6800sce or send a 2314C and prepare the Form 1128 for destruction.

    • Form 1128 is requesting an FYM (that may be different than what is on IDRS) and a return has not posted to establish the FYM.

    • A TC 055 (or TC 054 for a PSC) on the account designates a Section 444 election. Taxpayers will mistakenly file Form 1128 attempting to terminate their Section 444 election. Instead, they should write across the top of their short period return "Terminate Section 444 Election."

    • A regular corporation simultaneously changing to a PSC and to the required tax year ending (usually December 31).

    • An Estate attempting to adopt a tax year that is the month prior to the date of death.

      Note:

      Any other Form 1128 received for an Estate should be referred to Chief Counsel.

3.13.2.22.1  (01-01-2009)
Processing Form 1128 - Processing Location

  1. Form 1128 is processed at the following locations:

    • Taxpayers requesting automatic approval (Form 1128, Section II) are instructed to send Form 1128 to the Cincinnati or Ogden Processing Site.

    • Taxpayers requesting a Ruling (Form 1128, Section III) are instructed to send Form 1128 to Chief Counsel. If a ruling request is received at the Cincinnati or Ogden Processing Site, it should be sent to Chief Counsel for processing. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
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      Note:

      Forms 1128 sent to Chief Counsel in error are sometimes returned to the taxpayer with a letter advising the filer to send the form to the appropriate campus. Refer to the Timeliness instructions below in 3.13.2.22.2 if this is the case.

    • Exempt Organization requests - these are identified on Form 1128, Part II, Section D, and should be transhipped to the EO Team at the Ogden campus if they are received in another area.

    • Any Form 1128 relating to an Estate should be referred to Chief Counsel. Send the Form 1128 to the Chief Counsel. Send Letter 086C to the taxpayer. Input TC 059 with a paragraph "Z" and in the remarks field, input"86C letter sent."

3.13.2.22.2  (01-01-2009)
Processing Form 1128 - Timeliness

  1. To request Automatic Approval to change a tax year, Form 1128 must be filed by the due date of the return (including extensions) for the short tax period. If Form 1128 is filed early, do not return the Form 1128 back to the taxpayer to be filed later. The Form 1128 must be held until it can be processed timely.

    • Corporations - Generally due on the 15th day of the 3rd month following the end of the tax period

    • Partnerships - Generally due on the 15th day of the 4th month following the end of the tax period.

    • Trusts - Generally due on the 15th day of the 4th month following the end of the tax period.

    Note:

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  2. Review the Received Date stamp to determine if the Form 1128 is timely

    If Then
    a. The Received Date indicates that Form 1128 is timely, Continue processing
    b. The Received Date indicates that Form 1128 is not timely, Determine the timeliness of the 1128 by reviewing the postmark and ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    c. Form 1128 is received with a letter from Chief Counsel advising the taxpayer to file within 30 days of the date of their letter, and it is received within this time period, accept it as timely
    d. The 1128 is determined to be late based on the above actions, Deny Form 1128
    1) Use copy of Form 1128 as the source document for the input of TC 059
    2) Use Paragraph Selection Code "Z" to suppress CP285.
    3) Use Letter 2233C (or other appropriate letter) to return the denied Form 1128 to the taxpayer.
    e. Correspondence is received from the taxpayer as a result of Form 1128 being denied because it was filed late, Return the request to the taxpayer explaining that these requests should be filed at the Chief Counsel per instructions on Form 1128.

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