Whenever a "trend" seems to be emerging for a specific type of taxpayer and/or their Payer Agent, POA, or RAA, compile documentation to show the "trend" .

Inform your local Technical Coordinator of the trend identified who will forward the documentation to the Headquarters CAWR analyst.

In the court case CSX Corporation v. United States, an opinion was issued regarding whether payments made pursuant to reduction in force programs are considered wages for purposes of FICA taxes and compensation for purposes of RRTA taxes. The court concluded that employment taxes apply to all payments at issue except those identified in the opinion as incident to an employee layoff. These types of claims should be disallowed. When a reply is received citing a CSX claim see IRM 21.7.2.4.18.6.11 and IRM 21.5.3.4.7.3.1:

A common paymaster (see glossary) is not required to disburse compensation to all of the employees of the related corporations.

The following information applies to CAWR replies with a Disaster indicator present on the CAP Detail Screen. CAWR disaster coordinators input Zip Codes for specific declared disaster area situations as necessary based on IRS Disaster Relief Memos.

Access http://www.tris.irs.gov/fema/ to retrieve the beginning and ending date of the disaster period.

Bankruptcy cases are assigned to the Centralized Insolvency Operation (CIO) at the Philadelphia Campus. See IRM 4.19.4.2.6. (1).

After the No Reply phase for SSA-CAWR cases, input to MFT 13, a TC 290 PRN 549 for $ .00. These cases are already closed on CAP with a status code 98 so it is not necessary to update the status on CAP.

After the TC 290 .00 posts for the SSA-CAWR case, BMF will forward status code 40 to CAP to confirm the posting of the TC 290.

For IRS-CAWR cases with a TC 530 closing code 7 or 10 or a TC 520 closing code 72 or 74 input the TC 290 for $.00 and close the case on CAP using CAWR closing code 98. Do not assess these cases.

For IRS-CAWR cases with a TC 530 with any closing code other than 7 or 10 adjust the case following normal processing procedures. Close CAP with CC 98.

For IRS-CAWR cases with a TC 520 with any closing code other than 72 or 74 contact Insolvency prior to making assessment so they can amend the proof of claim if applicable. Adjust the case following normal processing procedures. Close CAP with CC 98.

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

If no response was received to an IRS-CAWR case, input a TC 290 for .00 on the last available quarter for the tax year being worked. Consider the case closed.

If no response was received to an SSA-CAWR case, BMF will send a status code 40 to CAP when the 549 penalty posts.

All CP 251, CP 253, or 99C undeliverable mail is to be worked within 14 calender days of the IRS received date.

Verify Undeliverable and IDRS to ensure a new/better address is not available.

The Tax examiners will research IDRS for a new/better address using command codes ENMOD, INOLES, NAMEE, BMFOL, etc.

For IRS-CAWR if all fields are potential overpayments, close the case. Input a TC 290 for .00 and update the case on CAP using the appropriate undeliverable closing code.

If the suspense period has expired and the case has been assessed, re-file the undelivered notice (including the envelope) with the previous 55 block for IRS-CAWR cases.

If the suspense period has expired and the automatic penalty assessment has been made, file the undeliverable by inputting a TC 290 for .00 PRN 549 for .00 on MFT 13 and BS 15.

Check the MFT & ADJ Screen to determine if Schedule H was filed on the MFT 30. Research that SSN for another address. If a new address is found re-mailing the notice or letter. If a new address is not foundassess the tax on MFT 30 or 05 as appropriate.

Process undeliverable notices within 14 calender days of the IRS received date.

Research undelivered correspondence with operational errors, incomplete or incorrect name and erroneous or extraneous data. Make corrections and mail the letter.

Research for a better address. If a better address is found, re-mail all information, including the original envelope to this (new/better) address. Do not change IDRS.

If a better address is not found and the penalty assessment was made, file the undeliverable by inputting a TC 290 for .00 PRN 549 for .00 on MFT 13 and BS 15. If the penalty was manually assessed, attach the undeliverable notice to the penalty case file.

When a 2645C or 2644C is returned undeliverable, take the following actions:

Prior to abating a CAWR penalty (Late Filing and/or Intentional Disregard), be aware of the numerous attempts made by both the Service and SSA to solicit the correct information from the employer. Failure to secure and properly credit the missing Forms W-2 will impact an individual's SSA earnings record and ultimately that individual's retirement benefits. Given the history of correspondence sent to the taxpayer by SSA and the CAWR unit, caution should be used in abating the penalty. Careful consideration should be given to all filers claiming that they filed the required Forms W-2 timely.

When the employers response states they did not understand why the penalty was assessed, send Letter 2057C with the applicable paragraphs explaining the penalty.

When Forms W2c are submitted in response to CAWR correspondence and:

If you receive a Form 941c/941X or Form 843 claim adjusting the SS wages, SS tips, medicare, FIT, and/or AEIC, to match the Forms W-2/W-3, adjust the account and remove the appropriate amount of the penalty assessment.

If Forms W-2/W-2c are received with the late reply, order the original CAWR documents from Files if necessary to ensure the new submission is not duplicating the original reply to our correspondence.

If Forms W-2 are received after the Service assesses the Intentional Disregard Penalty has been assessed, follow the procedures below:

Abate the penalties using TC 290, the negative dollar amount being abated, with Reason Code 062 and the appropriate Penalty Reason Code must be entered in the fourth RC position on CC ADJ 54

When a taxpayer responds to the penalty assessment after the Statute has expired and provides reasonable cause, abate the penalty.

If the taxpayer responds to any collection notice issued after the CP 215, reasonable cause must be provided in order to abate the penalty. If reasonable cause or due diligence is denied take the following actions:

If the taxpayer corresponds AFTER a reasonable cause is denied, route all 854C information to the Service Campus Appeals Coordinator.

If the taxpayer provides an explanation citing a problem with their RAA(for TY 2001 only), check IDRS for the name of their Reporting Agent Authorization (RAA) (if they didn't provide it). There should be Forms W-2c processed if this is the problem. Check the name of the RAA. See LEM 4.19.4.6.2 .

When a case is being worked by the field, the revenue officer will submit a Form 3870 Request for Adjustment to request an adjustment or abatement of the CAWR tax assessment and/or civil penalty. These cases will be worked within 45 days of receipt into the department in a first-in-first-out basis while workload permits.

Points of Contact (POCs) were established at each campus for the field ROs or managers to seek assistance from. For a list of these contacts see http://wc.web.irs.gov/CAWR-SSA/Revenue%20Officer%20Contacts.htm.

A 2644C interim letter is not required on these cases since the RO has already made contact with the taxpayer.

IRS-CAWR Assessment Needed Processing Procedures: When a CAWR case results in a tax assessment on a Form 94X module follow the procedures below:

IRS-CAWR No Assessment Needed Processing Procedures: When an IRS-CAWR case results in no assessment needed follow the procedures below:

SSA-CAWR Intentional Disregard Penalty (PRN 549) Needed Processing Procedures: When an SSA-CAWR case results in an Intentional Disregard penalty assessment follow the procedures below:

SSA-CAWR Late Filing Penalty (PRN 550) Needed Processing Procedures:If the taxpayer responds filing ALL or PART of the required Forms W-2, use the following procedures to compute the Late Filing penalty (PRN 550):

SSA-CAWR— No Penalty Needed Processing Procedures: When as SSA-CAWR reply results in no penalty follow the procedures below:

The Failure To Deposit (FTD) Penalty may be assessed whether or not the adjustment is interest free. Tiered penalty assessments for CAWR apply only to Forms 941, 943, 944, and 945. The additional penalty is assessed when additional tax is assessed that causes a FTD penalty to be due or there is a previous TC 180 or 186 for a money amount on the module being assessed. See IRM 21.7.2.4.4Employment Tax Returns Procedures (Deposits). to determine if the FTD penalty should be assessed. See IRM 20.1.4.2.2.1 Then follow the procedures below:

IRC section 6651(a)(1) imposes a penalty for failure to file a tax return by the date prescribed (including extensions) (see IRM 20.1.2.3.1), unless it is shown that the failure is due to reasonable cause and not due to willful neglect. See IRM 20.1.1.3 for a discussion of penalty relief.

IRS-CAWR- Late Reply Case Processing Procedures: When an IRS-CAWR case results in an abatement of tax assessed on a Form 94X module follow the procedures below:

SSA-CAWR- Late Reply Case Processing Procedures: When an SSA-CAWR case results in an abatement of the penalty assessed follow the procedures below:

Research IDRS using all tools available to determine if the correct withholding has been reported on the original Form 1040 or if an amended Form 1040 was filed to correct the withholding.

After all research has been completed and it is determined that the correct withholding has not been used:

If correspondence received raises any other issues (tax computation, deductions, credits, exemptions, etc.), or if a Form 1040X is received (even if no other issue is raised), transfer the cases to the Campus IMF AM area, unless an active Automated Underreporter (AUR) case exists. If a TC 922 without a process code is present in the MFT 30, transfer the reply to the AUR section. If there is a process code present, check Document 6209 to determine if the process code indicates that the case is still being worked by AUR or another area.

If the taxpayer disagrees with the amounts on the Form W-2c, and provides verification that the original withholding amount was correct (this verification may take the form of copies of all pay stubs or copies of the original Form W–2 that may differ in the amount from the As Previously Reported figure on the Form W-2c and/or the tax return) input 290 .00 and close the IDRS control.

If the taxpayer states that they have been in contact with the employer (who maintains that the amounts on the Forms W-2c are correct) and:

See LEM 4.19.4.8.2. Refer cases to Criminal Investigation (CI) to review and determine if their area should pursue the issue. Consider the case closed.

If the taxpayer sends in a second Form W-2c or a letter from the employer that provides withholding information differing from the Form W-2c that the employer sent to us, the case must be held in suspense for 30 days until the new Form W-2c can be obtained from the employer.

If taxpayer provides reasonable verification of actual withholding which is in disagreement with the amounts on the Form W-2c and the employer is out of business, input TC 290 .00 and close the IDRS control.

If the taxpayer indicates that he or she has not contacted the employer and provides no reasonable verification of the original amounts, close the case with TC 290 .00 and item Reference Number 807 for the withholding decrease amount.

If the taxpayer agrees with the amount on the Form W-2c but does not include any payment, close the case with TC 290 .00 and item Reference Number 807 for the withholding decrease amount.

If the taxpayer states that they have already filed an amended return ( Form 1040X) to correct the error, research again to determine if the amended return has been received (and if the correction to the withholding has been made).

If the amended return has not posted, suspense the case for 30 days for the amended return to post.

If after this suspense period there is no indication of an amended return with a pending TC 807, close the case with a TC 290 .00 and item Reference Number 807 for the withholding decrease amount.

If only a payment is received, close the case with a TC 290 .00 and item Reference Number 807 for the withholding decrease amount.

If the initial correspondence has been returned undeliverable, research for a new address.

Close no reply cases, after the suspense period has expired, with TC 290 .00 and item Reference Number 807 for the withholding decrease amount.

Generally, assessment of an overstated withholding credit that has been refunded or credited must be made within three (3) years from the return due date or the date the return was filed, whichever is later (ASED).

If no refund or credit has been allowed, an overstated withholding credit may be reversed without assessment, and any balance due collected within ten (10) years of the assessment of the tax shown on the return (CSED).

However, in situations where the taxpayer relied on the employer to furnish correct information and in good faith filed a tax return claiming the credit as indicated on the Form W-2, reversal of the withholding credits must be made prior to the ASED.

If the taxpayer requested a refund or credit, notice of claim disallowance should be mailed by certified or registered mail to the taxpayer, which will start the running of the 2 year period for the taxpayer to file a refund suit.

If the withholding credit was not overstated, but was allowed by IRS in error (e.g., $100 withholding credit per Form W-2 and IRS allowed $500), the error cannot be assessed. Instead, it must be recovered as an erroneous refund by bringing suit, within two (2) years from the date of the refund.

The requirement to provide volumes of Form W-2c case counts to Headquarters on a monthly basis is still in effect when working the IRS-CAWR program.

A copy of reports Form 9335 , Social Security Administration (SSA) Reconciliation Referrals, and Form 9339 , IMF Correspondence Status Report For Form W-2c Cases, must be provided to Headquarters by the 15th of the following month (i.e., June 30 report is due July 15).

Statute Awareness - Communicating the importance of statutes to all employees is very important and the responsibility of every manager/statute coordinator. On an annual basis, management is expected to issue Statute reminders to the employees. These reminders will be procedures which include contact information (phone numbers, coordinator name, TOD), instructions to follow for last minute statutes discovered, and the local routing procedures to RACS. Refer to See IRM 4.19.4.3.12.. Contact names and numbers can be located on the CAWR/FUTA Web page http://wc.web.irs.gov/CAWR-SSA/Statute%20Aids%20and%20Forms.htm . It is the responsibility of the campus to alert the web master if a change in contact information is necessary.

Document 7368 Basic Guide for Processing Statute Cases, is available to all campuses and area offices. Management must maintain a sufficient supply of this document from the National Distribution Center using catalog number 10296C. Document 7368 contains valuable information on statute-specific topics; therefore, a copy will be given to each employee.

Statute Searches must be performed beginning 90 days prior to statute expiration date. All inventories (paper and electronic) must be reviewed for statute imminent criteria and documented See IRM 4.19.4.3.12.

In addition, all new receipts must be reviewed as received, prior to controlling to a tax examiner beginning with the dates above and continuing through to the statute expiration date. If the case is statute imminent, it needs to be labeled as such and expedited for processing.

Perform and Document searches using:

Utilizing Form 6759, management must request running a monthly IDRS utility run for each program, beginning 90 days prior to the statute expiration date. These runs should be increased to weekly beginning 30 days prior to the Statute expiration date. The Form 6759 requests an output file showing the following information: TIN, MFT, Tax Period, ASED Date, DLN of Pending Adjustment Transaction, and Dollar Amount of Transaction. This report is to be used to identify CAWR/FUTA adjustments that have been input to statute imminent accounts and will eventually become unpostables. Accounts identified must have quick assessments input to protect the statute.

The following are CAWR related listings which are available weekly on CAP:

All CAWR reports, except the TE Age Listing and Monthly Reports, are generated weekly for on CAP. Access and save in MS Word allows a paperless file for these reports. The weekly information generated in the CRON will be lost if they are not accessed and saved.

The TE Age Listing is generated daily and may be accessed by anyone with Coordinator access to CAP. It may be printed and/or electronically saved daily and/or weekly, as needed.

The SC 26 Unpostable Manager's Listing will be generated when a status code 91 is received at Master File for a case without an SSA IND = 2. Research must be done to correct the status code. If status code 91 was automatically generated by CAP, issue an ITAMS and provide the listing as a part of the ITAMS report.

The SC 91 Unpostable TE Listing shows all status codes 91 that did not post at Master File. These unpostables need to be researched to determine the appropriate status code to close the case. The report will be separated by:

The CAWR No Reply Reportgenerates weekly with a listing of all new No Replies. This is not a cumulative report, which must be printed and worked weekly to meet program goals.

A Managers/Coordinators at each campus must monitor these reports on a weekly basis:

Inventory management: Monitor the CCA 4243 paying special attention to the following:

The CAWR unit manager/coordinator/lead will receive for review the Notice Review listing. Identify the CP 215s with PRN 550. Follow the instructions on the listing received, to determine if the notice should be mailed or voided. Fax or hand carry the listing back to Notice Review by the date requested.

OUT OF BALANCE (OOB) INDICATOR— If an account is identified as out of balance during the matching phase of the CAWR process, an OOB indicator appears on CC BMFOLU for MFT 88. The indicator appears as OOB CAWR on the second line directly below the name control. The accounts identified as OOB CAWR ARE NOT ALL worked. If the indicator is present, review the status code on BMFOLU to determine if correspondence or returns should be routed to CAWR.

It is important to determine the type of correspondence the taxpayer received.

The taxpayer may have specific questions the CSR can answer. Research IDRS for tax return information (specific or missing). Research CAWR cases and cross reference EINs using CC BMFOL with definer U and MFT 88. If CC BMFOLU shows the discrepancy is related to Doc Type 98 (1099–R), ask the taxpayer if withholding could have been reported under the plan administrator's EIN.

See the table below.

The taxpayer may state he/she has previously sent information in response to the correspondence from SSA or IRS. If so, verify whether taxpayer has sent information to SSA or IRS. Follow the table below.

Advise the taxpayer that failure to respond to the CAWR Unit or provide the requested information within the time period indicated in the letter/notice he/she received can result in additional tax due and/or a penalty assessment for failure to file Forms W-2.

The taxpayer must respond immediately to the address shown on the notice/letter with a clear and complete explanation of the reason for the discrepancy and the appropriate correcting documents. You may provide the fax number of the CAWR unit if the taxpayer wants to fax his reply. Never provide the voice number of the CAWR unit to the taxpayer or transfer the call to the CAWR unit.See the prior sections of this IRM for specific CAWR information.

Schedule H CAWR cases have special problems. The notices and letters issued to the taxpayer may only contain the EIN that the SSN on the Schedule H has been associated with. Verify the EIN and SSN (shown on CC BMFOLU) belong to the same taxpayer.

Late Reply Responsibilities

If the taxpayer is not addressing a CAWR issue, it is to be worked in AM regardless of the fact that a CAWR case is or was worked for the tax period of the taxpayer inquiry. If AM receives a CAWR reply, AM must address the Action 61 requirements if the taxpayer response is 14 days or older before forwarding it to the appropriate campuses' CAWR unit.

Inquiries or replies addressing issues unrelated to the IRS-CAWR/SSA-CAWR issues must be worked in AM.

CAWR Interest Free Adjustments

Manually input an IDRS control, using "TPCI" in the Category Code. Be sure to close the control base after resolving the taxpayer inquiry.

Generally, Form 941c/941X is filed to make corrections to CAWR related cases.

If a Form 941c/941X is received and there is no CAWR issue, process using normal Form 941c/941X guidelines. (More information on Forms 941c/941X can be found in IRM 21.7, Business Tax Return and Non-Master File Accounts.)

If an employer files Forms W-2/W-2c, route the Forms W-2/W-2c to the CAWR unit. Indications that the case is CAWR related could be: