This section should be used for working 941c, 941–X or 843 replies.

Work the penalty issues for these cases in accordance with IRM 20.1, Penalty Handbook.

If original Forms W-3c/W-2c are received for IRS CAWR cases:

Annotate in red, "IRS RECON" on the Forms W-3 or transmittal forms and mail them to the following address:

If the taxpayer states that all Forms W-2 have been filed, are correct and provides Forms 941c/941X or 843 to correct the account:

When working replies always research IDRS for a X-Ref EIN. If found, check for the X-Ref EIN on CAP. If the X-Ref EIN is on CAP, work the cases together.

If the X-Ref EIN is not on CAP:

Input a TC 971 on IDRS using CC REQ77 with action code 017 to identify the cross reference EIN.

If the taxpayer states Forms W-2 were filed by a parent corporation or another EIN:

If WIRS are needed to resolve cases after July 1st 2008, use the MFTRAW Request Form located on the CAWR/FUTA Home page. The forms are to be provided to your local Technical Coordinator for forwarding to WIRS on a weekly basis. If a response is not received within 7 business days of submission, contact your local Coordinator.

If the X-Ref EIN has an LCI contact the LCTU prior to adjusting any tax and/or penalties. See IRM 4.19.4.2.1.1.

When the employer replies and a missing return is received, take the following actions:

The following information applies to all original and copies of Forms W-3/W-2/W-3c/W-2c. When reviewing a reply, check any forms received in the correspondence for errors.

The Civil Penalty is due to IRS from the entity that incurred the liability.

In TY 2005, a new Form 941, Schedule D was introduced. This Schedule D will allow the parties involved in Acquisitions, Statutory Mergers, or Consolidations to report discrepancies identified as a result of the merger.

Large food or beverage establishment employers are required to report allocated tips under certain circumstances.

Household Employers must file Schedule H (Form 1040) to report wages to the IRS and Forms W-2 with SSA. Schedule H may be filed by both the Primary and Secondary taxpayers. Work any Schedule H issue as you would other CAWR issues. Actions specific to Schedule H are included in this subsection.

Fiscal year filers must report wages paid on a calendar year basis. Fiscal year taxpayers filing individual income tax returns must include a Schedule H covering the period January 1 through December 31.

The household employment tax is reported on the appropriate line of Form 1040 and included in the TC 150 amount. If an adjustment is necessary, use Blocking Series 05, Reason Code (RC) 050, and Source Code 2 to adjust the appropriate line for employment taxes from Schedule H.

When making adjustments to Forms 1041 household employment tax from Schedule H, use Blocking Series 55.

Schedules H filed with Form 1040, Refer to IRM 21.6, Individual Tax Returns.

Schedules H filed With Form 1041, Refer to IRM 21.7,Business Tax Return and Non-Master File Accounts.

The interest free provisions for adjustments on BMF employment taxes are in effect for errors discovered on IMF, Schedules H. Refer to IRM 21.6, Individual Tax Returns, for procedures. Reference Codes for Adjusting Schedule H are as follows:

Taxpayers must provide documentation they are covered under a state or political subdivision retirement system, or qualify for one of the exceptions listed in IRM 21.7, Business Tax Return and Non-Master File Accounts. When the reply indicates the employees are social security exempt and the discrepancy is only in social security (FICA) and Medicare wages for an employer see the table below.

The Statute Awareness Program was created to minimize barred assessments and erroneous abatements. The download will contain cases which have two statute situations that must be addressed. Cases where the statute date bars within 120 days will be worked on a priority basis. Refer to IRM 25.6, Statute of Limitations. Two types of statutes addressed in the CAWR processing are listed below.

The Assessment Statute Expiration Date (ASED). In general, the ASED is 3 years from the filing of the return, unless the return is filed before the due date (determined without regard to any extension of time to file), in which case the ASED is 3 years from the due date.

Refund Statute Expiration Date (RSED) A claim for credit or refund must be filed 3 years from the time the return was filed or two years from the time the tax was paid, whichever is later. If the claim is filed within the 3 year period, the amount to be credited or refunded is limited to the tax paid during the 3 years immediately preceding the filing of the claim plus the period of any extension of time to file (the 3 year look back rule). If the claim for refund is filed within the two year period, the amount is limited to the portion of tax paid during the 2 years immediately preceding the filing of the claim (the 2 year look back rule).

This credit will be moved to the Excess Collection Files (XSF) and cannot be used to offset liabilities for other periods.

ASED Procedures —See Table Below:

If the assessment is over $10 million dollars, send a complete copy of the case file to the following address on Form 3210 Document Transmittal.

See LEM 4.19.4.3.12.

IRM 25.6 , Statute of Limitations, will provide instructions in the event that a taxpayer's claim is fully or partially disallowed even if the statute is imminent (within 90 days) or already expired.

Document 7368 , Basic Guide for Processing Statute Cases, is available to all service campuses and area offices. Order this document from the National Distribution Center using catalog number 10296C. Document 7368 contains valuable information on statute-specific topics; therefore, a copy should be present in each working group.

Reference the following IRMs, as necessary, in regards to erroneous abatements. The CAWR unit management will need to determine who takes care of the forms and where to send them. For assistance, see the CAWR/FUTA Web page http://wc.web.irs.gov/CAWR-SSA/Address%20and%20mail%20stop.htm

Statute Searches: All Tax Examiners are responsible to expedite statute imminent cases. Each tax examiner is to perform a statute search on their inventories (paper and electronic) beginning 90 days prior to the statute expiration date as illustrated below. In addition, all new receipts to their inventory must be reviewed for statute criteria.

Each search is to be documented using Form 11122 which will be maintained by management. See the CAWR/FUTA Home page http://wc.web.irs.gov/ for Forms 11122 and additional statute guidelines.

When working replies take into consideration the reason why the PAL indicator is present, as it may help to resolve the discrepancy.

A delete case is one which has been brought into balance at Enterprise Computing Center-Martinsburg (ECC-MTB) through various updates to the module.

A Sole Proprietorship is a business operated by the owner and as such has wage reporting requirements similar to a single member Limited Liability Corporation (LLC). The owner of a Sole Proprietorship and the single member LLCs must include all income and expenses on the owner's tax return.

The wages a Sole Proprietor pays to their employees should match the Schedule C wages, the Forms W-2, and the Form 94X wages.

The owner is the only one authorized to sign the tax returns unless there is an authorized POA or RAA on file. With respect to income tax returns on forms in the 1040 series, a POA entitles someone other than the owner to sign the return only under certain circumstances. See "Authority to Sign Your Return" section of Form 2848 instructions.

See IRM 21.7.13.5.4.2 , Assigning Employer Identification Numbers, for more information on these types of taxpayers.

The Sole Proprietor is the owner and must show wages on Schedule C. If the Sole Proprietor has employees he must file Forms 941 and Forms W-2 for his/her employees. File Correspondence following the "No Assessment needed" case processing procedures. See IRM 4.19.4.7.

If the taxpayer responds and explains that the discrepancy is due to a Third Party Sick Pay reporting problem follow the procedures below: See IRM 4.19.4.2.8.

Forms W-2 should be issued to employees for the wages actually or constructively paid during a calendar year, not the wages earned during that time. Discrepancies may result if employers report earned, rather than paid, wages on Forms W-2.

If the taxpayer states that the wages were earned in the current CAWR tax year being worked, but reported on a Form 941 for a different year:

Eligible employees may receive EIC on their Form 1040 or may receive AEIC during the year from their employer.

If the employer pays AEIC to the employee, this is shown as a credit on the employer's Form 941.

AEIC is indicated by Transaction Code (TC) 766 on the module.

See LEM 4.19.4.3.18

Use the web site http://iuud.web.irs.gov/iuud.asp to obtain the CIFDC for your campus. This web site provides the following CIFDC information:

If Forms W-2c are received, but they do not resolve the discrepancy and they cause the Form W-2 AEIC to exceed the Forms 941, creating a credit owed to the employer, a Form 843, amended Form 941, or Form 941c/941X is needed before the credit (TC 766) can be allowed on the account.

If Forms W-2c are received, but they do not resolve the discrepancy and they cause the Form W-2 AEIC to be less than Forms 941, creating a debit to the employer, assess the account using TC 767.

Correspond with the taxpayer, explaining the adjustment.

Occasionally, discrepancies occur because the employer reports wages less than $150 incorrectly. To determine if farm workers are subject to FICA and Income Tax Withholding see IRM 21.7.2.4.13.1

For assistance in working these case types, see the table below:

At times, employers pay the employees' share of the social security tax without withholding it from his or her wages. When this happens, there are two ways to calculate the correct amounts to be shown on the Form W-2 .

The taxes on the social security wages are not to be included in the social security wage box on Form W-2 if the employee did not have the social security taxes withheld from his or her salary and the following conditions apply:

If the employer is a Form 941/944 filer and social security taxes are not withheld from the employees' salary, include the amount on which the social security taxes are figured in both the Total Compensation box and the social security wages box on Form W-2.

Forms W-2c are required if Form W-2 have been completed incorrectly because of a situation in either of the preceding examples. The employer is required to report and pay taxes on the amounts reported in the social security wage box of Form W-2 in the second example.

If the taxpayer requests an installment agreement, either in his reply or by submitting a Form 9465determine:

Faxed Signature General Guidelines — These general guidelines are applicable to all divisions and cover operations related to income tax, employment tax, excise tax, estate tax, gift tax, and generation skipping tax, as well as tax exempt and employee plans determinations.

In certain situations, submission of documentation, forms, letters, and returns related to CAWR inquires and interactions can be allowed via fax through taxpayer or IRS request. Chief Counsel has advised that in circumstances where contact with the taxpayer has been made and documented, faxed signatures are legally sufficient.

Taxpayer signed agreements (assessments or abatement) involving tax amounts of $25,000 or less can be accepted by fax if taxpayer contact has been made, the case history documents the date of contact, and the desire of the taxpayer to submit the consent by fax. A faxed signature for a Form 941c/941X decrease where we are only lowering the wages and no refund will be issued is acceptable.

The Deputy Commissioner of Services and Enforcement limited accepting faxes for consents to assess additional tax of $25,000 or less. Any agreement of over $25,000 should be secured with original signatures that are delivered in person or by mail.

Faxed signatures will not be accepted for any tax decreases (this is not an abatement of tax assessed and not yet paid, but a decrease to what is already on Master File) in which the taxpayer would be issued a refund of the taxes he/she has paid.

When an employer states any or all of their employees are foreign students they may be exempt from SSA and Medicare tax. The procedures in this subsection are necessary.

Check TXMODA for an adjustment containing information defined below.

Research adjustment to verify the below criteria.

Check CC IRPTRL on the student's SSN. There should be a Form W-2 for the adjusted reference amount from the EIN (employer) on the CAWR case.

SSA will remove the Form W-2 submitted and notate on the reply that the Forms W-2 were received by SSA.

See LEM 4.19.4.3.25.

Do not penalize these employers. Assume the submitted forms resolved the SSA issue.

At times a taxpayer may state their case was being worked by their Payroll Service

If the taxpayer is bankrupt or the business is defunct, research IDRS CC ENMOD to check for the CNC Indicator utilizing the TC 520/530 IDAP.

If a payment posted to the account or is moved into the account, the TC 530 will release and the account will return to notice status.

If the last quarter filed is a final return withno tax liability reported, check previous quarter(s) for TC 530 with cc 07 or 10. If found, close with closing Code 98.

The following procedures are for handling CAWR cases with any proposed penalties against institutions that are under the control of the Federal Deposit Insurance Corporation (FDIC).

FDIC cases are self identified by the taxpayer. No indicator shows on CAP for FDIC cases, therefore when an indication is notated on the correspondence, accept the taxpayer's word and follow the procedures below.

When the employer states they have already filed Forms W-2 and gives an indication that the Forms W-2 were filed under another name, EIN, etc., research using information provided. If necessary, correspond with the taxpayer and request additional information needed to locate forms (i.e., EIN used, date filed, entity name used, copies of the Forms W-3/W-2, etc.).

If the forms are found, notate in the remarks section of the case file and include any pertinent material. If they are not located, assess the penalty.

If the taxpayer states they filed Forms W-2 with SSA research ORS, ERQY or prepare Form 9337 , Social Security Administration (SSA) Reconciliation Referrals, and submit it to SSA via fax. If no new is information is recovered, follow (2) above.

A maximum of two cases (or EINs) can be entered on each Form 9337.

Complete all the information requested:

When a reply is received requesting additional time and an assessment is required, suspend the case for 30 days from the date of the employer's correspondence.

After the 30 days suspense period expires, assess the case following normal procedures.

Review the CC BMFOLU for the page with the TC 980. Research ORS, ERQY, or CC IRPTRR with Doc Code WW, and when received, review them utilizing ORS screening procedures found in IRM 4.19.4.2.2. Otherwise follow items (2) through (5) below.

Route Employer Requests for copies of Forms W-3/W-2 as follows:

If copies of each document he/she filed cannot be provided, explain the reason and prepare a listing of copies not being sent. Include the following information:

Once the data is received and provided to the taxpayer assess the case following the appropriate closing procedures in See IRM 4.19.4.7.

Taxpayers reporting exempt wages incorrectly may cause discrepancies. Some of the mistakes commonly made are:

After researching for clergyman's W-2 or SSN follow the chart below

Discrepancies are usually caused by the withholding on Forms 1099-R, Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. (Doc Type 98), or Forms W-2G, Certain Gambling Winnings (Doc Type 32) if reported as Backup Withholding. These forms are not subject to Backup Withholding, so the amount shown is Federal Income Tax Withheld. Once the withholding is verified as Federal Income Tax Withheld process the case accordingly.

Discrepancies are usually caused when the taxpayer fails to file Forms 945/1099R or has a third party administrator.

Certain government agencies are empowered to collect, from employers, wages erroneously not paid to employees (or former employees). Agencies are allowed to disburse these wages to the employees concerned, and withhold income taxes and employee’s share of FICA tax. Agencies allowed to take this action and the provisions which allow such action are:

When an SSA-CAWR case type 08 (without Compliance Indicator) contains either a Large Corporation Indicator (LCI) or a proposed tax and/or penalty assessment of $1 million dollars or more that cannot be resolved through the information provided in the response, you must coordinate with your local Large Corporation Coordinator. See IRM 4.19.4.2.1.1.

Follow the procedures below for cases that contains either a Large Corporation Indicator (LCI) or a proposed tax and/or penalty assessment of $1 million dollars or more below:

When the taxpayer responds and includes a payment to the Civil Penalty (PRN 549):

When taxpayers or their representatives request Blank Forms W-3c/W-2c in order to correct a discrepancy, provide the IRS web site to the taxpayer to obtain the forms they are requesting. The web site is www.irs.gov or have them call 1 800 TAXFORM (829-3676).

If the correspondence is from a Power of Attorney (POA) or other third party make sure the criteria in IRM 21.3.7, Processing Third Party Authorizations onto the Centralized Authorization File is adhered to.

Form 2848 tax periods must be specific for Form 941 quarterly returns. Form 941 must show 1st, 2nd, 3rd, and 4th quarters of a specific tax year using YYYYMM format. Annual returns (Forms 943, 944, 945, 1041 on BMF and Form 1040 on IMF), the (POA) must enter the ending year using a specific YYYY format.

Specific instructions for the following types of adjustments and other subjects are listed here or in IRM 21.5.1, General Adjustments:

Copy A of original Forms W-2G, 1099-R or a photocopy of an unprocessed Form 1096 may be received in the CAWR unit.

These are forwarded to the CAWR unit because they have not been received in time to process through the normal processing for information returns; therefore, the information has not been available for the reconciliation phase of the CAWR program.

Forms W-2G may be received from Receipt and Control stating that the information is really for a tax year CAWR is working although it is on the wrong year's form. The date in the "Date Won" box will verify which tax year is affected.

To avoid erroneous taxpayer contact, or failure to consider the additional information received, process them as follows:

Never prepare a Form 6209 for Forms 1099R or W-2G.

Forms W-2c/W-3c should not be forwarded to SSA unless social security amounts have changed or if the employee SSN is being changed.

When the employee's SSN is the only change on the form, write "URI" across the top of the Form W-2c/W-3c and give to clerical for proper routing to SSA.