21.7.2. Employment and Railroad Tax Returns

Form 941

Tax periods 201103 through 201703

The sum of IRNs 111, 112, 114, and 113.

Form 941

Tax periods 201706 and after

The sum of IRNs 111, 112, 114, and 113 less IRN 119.

Form 944

Tax periods 201112 through 201612

The sum of IRNs 111, 112, 114, and 113.

Form 944

Tax periods 201712 and after

The sum of IRNs 111, 112, 114, and 113 less IRN 119.

Form 943

Tax periods 201112 through 201612

The sum of IRNs 003 and 007.

Form 943

Tax periods 201712 and after

The sum of IRNs 003 and 007 less IRN 119.

The correct tax period cannot be determined

Make two attempts to contact the taxpayer by phone (if a telephone number is available) to determine the correct tax period:

• If the correct tax period can be determined, continue to process per the instructions in the following rows of this table.

• If unable to contact the taxpayer by phone, return the schedule and instruct the taxpayer to refile it with a newly signed copy of the related employment tax return.

The tax return for which the loose schedule was filed has not posted

Normal processing time for the original return has elapsed

Return the schedule and instruct the taxpayer to refile it with a newly signed copy of the related employment tax return.

The tax return for which the loose schedule was filed has not posted

Normal processing time for the original return has not elapsed

Suspend the case and allow for normal processing time. When the return posts, continue to process per the instructions in the following rows of this table.

The tax return for which the loose schedule was filed has posted

IDRS research indicates the loose schedule is a duplication or is unnecessary

Treat the loose schedule as classified waste.

The tax return for which the loose schedule was filed has posted

IDRS research indicates the loose schedule changes originally reported liability data

Follow procedures in IRM 20.1.4.21.2, Revised Record of Federal Tax Liability (ROFTL) Provided.

Loose Schedule R is received

The original return has posted (regardless if a Schedule R indicator is present)

No additional action is needed.

Loose Schedule R is received

The original return has not posted and the original return processing time for Form 941 has not elapsed

Suspend loose schedule pending posting of original return.

Loose Schedule R is received

The original return has not posted and the original return processing time for Form 941 has elapsed

Contact taxpayer, preferably by phone, to obtain a signed copy of the original return and suspend case for 40 days.

1. If taxpayer replies with a copy of the original return, process accordingly.

2. If the taxpayer does not reply, reject the Schedule R back to the taxpayer requesting the original Form 941 (and accompanying Schedule R) be filed.

The loose Form 8974 was filed for an employment tax return period beginning before April 1, 2017 for Form 941 or before January 1, 2017 for Form 943 and Form 944.

Contact the IRM author through your management chain and the site P&A Staff for guidance on handling the case.

The original employment tax return has not posted

The taxpayer does not have employment tax filing requirements

Reject the Form 8974 with Letter 916C. Advise the taxpayer in the letter that we cannot consider their Form 8974 because the credit must be taken on an original employment tax return and it does not appear that they file employment tax returns.

The original employment tax return has not posted

There is a TC 150 pending on the account in open reject status and it appears the loose Form 8974 was submitted in response to (or is related to) the reject condition

Close the case and route the Form 8974 to ERS as appropriate.

The original employment tax return has not posted

Normal processing time for the original employment tax return has not elapsed

Monitor the account for posting of the return or until normal processing time is elapsed.

The original employment tax return has not posted

Normal processing time for the original employment tax return has elapsed

Reject the Form 8974 using Letter 4384C and inform the taxpayer they must file the appropriate original employment tax return with Form 8974 attached to claim the credit.

The amount of QSB Research Credit claimed on the loose Form 8974 is equal to the amount of credit previously allowed for the tax period identified.

If the Form 8974 was submitted in response to a missing information request on a previous Form 94XX case, take action to associate the new case to the previous case. Otherwise, take no further action and close the case.

The loose Form 8974 reflects a decrease to a previously allowed credit amount (i.e., would result in a tax increase)

1. Input a TC 290 adjustment in Blocking Series 15 for the amount of the QSB Research Credit change along with IRN 119 (for the same amount but as a negative). If appropriate, adjust the FTD penalty (see IRM 20.1.4.21.3, Amended or Supplemental Return (Tax Decrease or Non-Interest-Free Tax Increase)).

2. Issue Letter 4384C stating we processed the Form 8974 but that in the future changes to previously reported QSB Research Credit amounts must be corrected by filing an amended return (specify form) with Form 8974 attached.

The loose Form 8974 reflects an increase to a previously allowed credit amount or no credit was previously claimed (i.e., would result in tax decrease)

The loose Form 8974 is a late response to a Letter 21C requesting a missing Form 8974 in support of a QSB Research Credit entry on an original employment tax return which was subsequently disallowed during pipeline processing

• Treat the issue as a substantiated math error response and allow the amount claimed (not to exceed the amount requested on the original return) so long as the Form 8974 is complete for processing. (see (4) in IRM 21.7.2.5.21.1, Processing Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities, for required verification items.

• Input a TC 291 adjustment in Blocking Series 15 for the amount of the QSB Research Credit change along with IRN 119 (for the same amount but as a positive).

The loose Form 8974 reflects an increase to a previously allowed credit amount or no credit was previously claimed (i.e., would result in tax decrease)

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• Input a TC 291 adjustment in Blocking Series 15 along with IRN 119 (for the same amount but as a positive) to allow the credit.

• Issue Letter 4384C stating we processed the Form 8974 but that in the future changes to previously reported QSB Research Credit amounts must be corrected by filing the appropriate X form (specify form) with Form 8974 attached.

The loose Form 8974 reflects an increase to a previously allowed credit amount or no credit was previously claimed (i.e., would result in tax decrease)

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Reject the Form 8974 using Letter 4384C and inform the taxpayer they must file the appropriate X form (identify the specific form to be used) to make the adjustment.

Form 941 or Form 941-SS

Form 941-X, Adjusted Employer's QUARTERLY Federal Tax Return or Claim for Refund

IRM 21.7.2.4.5.6

Form 943

Form 943-X, Adjusted Employer's Annual Tax Return for Agricultural Employees or Claim for Refund

IRM 21.7.2.4.6.3

Form 944 and Form 944-SS

Form 944-X, Adjusted Employer's ANNUAL Federal Tax Return or Claim for Refund

IRM 21.7.2.4.7.4

Form 945

Form 945-X, Adjusted Annual Return of Withheld Federal Income Tax or Claim for Refund

IRM 21.7.2.4.8.1

Form 941-PR

Form 941-X (PR), Adjusted QUARTERLY Federal Tax Return or Claim for Refund (Puerto Rican Version)

IRM 21.7.2.4.5.6

Form 943-PR

Form 943-X (PR), Adjusted Employer's Annual Tax Return for Agricultural Employees or Claim for Refund (Puerto Rican Version)

IRM 21.7.2.4.6.3

Form 944-PR

Form 944-X (PR), Adjusted Employer's ANNUAL Federal Tax Return or Claim for Refund (Puerto Rican Version)

IRM 21.7.2.4.7.4

Form 944(SP)

Form 944-X (SP), Adjusted Employer's ANNUAL Federal Tax Return or Claim for Refund (Spanish Version)

IRM 21.7.2.4.7.4

Form CT-1

Form CT-1X, Adjusted Employer's Annual Railroad Retirement Tax Return or Claim for Refund

IRM 21.7.2.6.5.10

The employer does not file the applicable Form 94XX by the due date of the tax return for the tax period in which the error was ascertained.

The adjustment will be input with a TC 290 transaction. Interest will be due as per normal underpayment interest rules.

The employer files the applicable Form 94XX by the due date of the tax return for the tax period in which the error was ascertained.

Fully pays the underpayment owed by the time the Form 94XX is filed.

The adjustment will be input with a TC 298 transaction. No interest will be due on the amount of the underpayment reported if it is paid by the time the Form 94XX is filed.

The employer files the applicable Form 94XX by the due date of the tax return for the tax period in which the error was ascertained.

Does not fully pay the underpayment owed by the time the Form 94XX is filed.

The adjustment will be input with a TC 298 transaction. Interest will be due on the amount of the underpayment from the interest computation date to the date payment is made.

A Form 94XX is filed requesting an adjustment to income tax withheld or AdMT

The correction is being made at IRC 3509 rates

Process the adjustment as requested so long as the form is complete and processable. See IRM 21.7.2.5.4, IRC Section 3509 for processing instructions.

A quarterly Form 941-X is filed requesting an adjustment (increase or decrease) to income tax withheld or AdMT

The Form 941-X indicates the error was discovered on or before December 31 of the year for which the adjustment is requested

Process the adjustment as requested so long as the form is complete and processable. Follow the general procedures in IRM 21.7.2.4.4, Adjusted Employer’s Federal Tax Return or Claim for Refund, and the specific procedures applicable to the type of Form 94XX filed (e.g., for a tax decrease - claim for refund filed on Form 941-X, follow IRM 21.7.2.4.5.6.2, Form 941-X Tax Decrease — Claim) to make any necessary account corrections.

A Form 94XX is filed requesting an adjustment (increase or decrease) to income tax withheld, BUWH, or AdMT

The explanation section indicates the correction requested is for an administrative error or the taxpayer checked box 4c or 5d in the certification section (does not apply to Form 945-X)

Process the adjustment as requested so long as the form is complete and processable. Follow the general procedures in IRM 21.7.2.4.4, Adjusted Employer’s Federal Tax Return or Claim for Refund, and the specific procedures applicable to the type of Form 94XX filed (e.g., for a tax decrease - claim for refund filed on Form 941-X, follow IRM 21.7.2.4.5.6.2, Form 941-X Tax Decrease — Claim) to make any necessary account corrections.

A Form 94XX is filed (after December 31 of the year for which the adjustment is requested) requesting a decrease to income tax withheld, BUWH, or AdMT

The explanation section indicates the correction requested is not for an administrative error.

Disallow the income tax withheld, BUWH, or AdMT portion of the claim and send Letter 105C or Letter 106C(as appropriate) per instructions in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures. The following language should be used in the disallowance letter open paragraph:
"Amounts reported as income tax withheld, backup withholding, or Additional Medicare Tax withheld in a prior year cannot be changed unless it is to correct an administrative error, Section 3509 applies, or as the result of an examination. An administrative error occurs if the amount you entered on your tax return is not the amount you actually withheld."

A Form 94XX is filed (after December 31 of the year for which the adjustment is requested) requesting a decrease to income tax withheld, BUWH, or AdMT

It cannot be determined from the explanation whether the correction requested is for an administrative error.

See IRM 21.7.2.4.4 (11) for information on explanation requirements. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

A Form 94XX is filed (after December 31 of the year for which the adjustment is requested) requesting an increase to income tax withheld, BUWH, or AdMT

The explanation section indicates the correction requested is not for an administrative error

1. Process the adjustment as requested so long as the form is complete and processable. Follow the general procedures in IRM 21.7.2.4.4, Adjusted Employer’s Federal Tax Return or Claim for Refund, and the specific procedures applicable to the type of Form 94XX filed (e.g., if filed on Form 941-X, follow IRM 21.7.2.4.5.6.3, Form 941-X Tax Increase — Adjusted Employment Tax Return) to make any necessary account corrections.

2. Send Letter 4384c and include the following language in the two open paragraphs:
   "We have processed your Form [specify]. However, amounts reported as income tax withheld, backup withholding, or Additional Medicare Tax withheld in a prior year cannot be changed unless it is to correct an administrative error or Section 3509 applies. An administrative error occurs if the amount you entered on your tax return is not the amount you actually withheld."
   "If the Form [specify] you filed included a correction to income tax withheld, backup withholding, or Additional Medicare Tax withheld in a prior year which was not the result of an administrative error, you may file a new Form [specify] to request a refund or credit of the tax reported in error."

A Form 94XX is filed (after December 31 of the year for which the adjustment is requested) requesting an increase to income tax withheld, BUWH, or AdMT

It cannot be determined from the explanation whether the correction requested is for an administrative error

See IRM 21.7.2.4.4 (11) for information on explanation requirements. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

941

202112

01-31-2022

04-15-2025

01-15-2025 or subsequent

943

202112

01-31-2022

04-15-2025

01-15-2025 or subsequent

944

202112

01-31-2022

04-15-2025

01-15-2025 or subsequent

945

202112

01-31-2022

04-15-2025

01-15-2025 or subsequent

CT-1

202112

02-28-2022

02-28-2025

12-1-2024 or subsequent

The adjusted return was intended for another tax period for which there is a posted TC 150.

1. Follow procedures in IRM 21.7.9.4.10.2, TC 976 Return Posted to Incorrect TIN/Tax Period, Account for Which It was Intended Contains the Original Return (TC 150), to resolve the E-freeze.

2. Adjust the correct account as appropriate.

An adjusted return was filed for an incorrect MFT (e.g., employer is Form 941 filer but files a Form 944-X).

The adjusted return reports a tax decrease or credit increase

1. Generate Letter 4384C to the taxpayer explaining their adjusted return cannot be processed and inform them of the proper form to be filed.

2. Input a TC 971 AC 002 to release the E- freeze if a TC 971 AC 010 was previously input.

An adjusted return was filed for an incorrect MFT (e.g., employer is Form 941 filer but files a Form 944-X).

The adjusted return reports a tax increase or credit decrease

1. Follow procedures in IRM 21.7.9.4.10.2, TC 976 Return Posted to Incorrect TIN/Tax Period, Account for Which It was Intended Contains the Original Return (TC 150), to resolve the E-freeze and adjust the correct account as appropriate.

2. Generate Letter 4384C explaining that the adjustment has been made, but in the future they must file the appropriate "X" form (identify the specific form to be used) to make corrections.

Less than 60 days have passed from the return due date for the tax period for which the adjusted return was filed

1. Monitor for the posting of the original return through the 60th day following the return due date.

2. If the original return posts, process the adjustment as requested on the Form 94XX as appropriate. Otherwise, continue processing per the following rows of this table.

More than 60 days have passed since the return due date for the tax period for which the adjusted return was filed

The Form 94XX is a claim for non-refundable and/or refundable credits only (i.e., the Form 94XX reports no other taxable wage figures or other tax figures)

1. Reject the Form 94XX. Indicate in the rejection letter that we cannot process the 94XX because we have no record of having received an original employment tax return. Advise the taxpayer to file an original return incorporating the changes reported on the Form 94XX.

2. Input a TC 971 AC 002 to release the E- freeze if a TC 971 AC 010 was previously input.

More than 60 days have passed since the return due date for the tax period for which the adjusted return was filed

The adjusted employer's tax return is intended to be an original return (e.g., Column 2 of the Form 94XX is blank or contains zero figures)

1. Contact the taxpayer (make two attempts to contact the taxpayer by phone if a telephone number is available) to obtain a signed copy of an original return including the corrected information along with any required schedules.

2. Suspend the case for 40 days.

3. Continue processing as per the table in (4) below for response and non-response cases.

More than 60 days have passed since the return due date for the tax period for which the adjusted return was filed

The adjusted employer's tax return is not intended to be an original return (e.g, Column 2 figures are not blank or zero)

1. Contact the taxpayer (make two attempts to contact the taxpayer by phone if a telephone number is available) to obtain a signed copy of their original return along with any required schedules. Advise the taxpayer to provide proof of timely filing if that information is available.

2. Suspend the case for 40 days.

3. Continue processing as per the table in (4) below for response and non-response cases.

Taxpayer responds with copy of original return

There is no proof of timely filing

Continue processing as per the following rows of this table. However, if the copy of the return provided by the taxpayer is routed to be processed, it must be processed using the response received date as the return received date. Do not code the return to suppress penalties or interest.

Taxpayer responds with copy of original return

There is proof of timely filing

Continue processing as per the following rows of this table. However, if the copy of the return provided by the taxpayer is routed to be processed, edit the return to reflect the timely received date and attach the supporting documentation.

Taxpayer responds with copy of original return

The wage and tax figures reported match the initial figures (Column 2) of the Form 94XX.

1. Process the copy of the return provided by the taxpayer as the original return (see first two rows of this table discussing proof of timely filing) and monitor for its posting.

2. When the original return posts, process the adjusted return as appropriate.

Taxpayer responds with copy of original return

The wage and tax figures reported match the corrected figures (Column 1) on the Form 94XX.

1. Attach the Form 94XX to the back of the return provided by the taxpayer. Edit (in green) a line across the applicable 94XX form and notate "Do Not Detach" in the margin.

2. Process the return provided by the taxpayer as the original return (see first two rows of this table discussing proof of timely filing).

3. Ensure all applicable deposits are correctly applied.

4. If a TC 971 AC 010 was previously input, input a TC 971 AC 002 to prevent a duplicate filing condition from generating when the return posts.

Taxpayer responds with copy of original return

The wage and tax figures reported don't match initial or corrected figures on Form 94XX and Form 94XX reflects a tax decrease or credit increase.

1. Research for other unprocessed Forms 94XX for the same tax period. If not found, process the copy of the return provided by the taxpayer as the original return (see first two rows of this table discussing proof of timely filing).

2. Reject the Form 94XX and indicate that we are processing their original return but cannot process the 94XX because the figures don't match.

3. Input a TC 971 AC 002 to release the E- freeze if a TC 971 AC 010 was previously input.

Taxpayer responds with copy of original return

The wage and tax figures reported don't match initial or corrected figures on Form 94XX and Form 94XX reflects a tax increase or a credit decrease

1. Research for other unprocessed Forms 94XX for the same tax period. If not found, process the copy of the return provided by the taxpayer as the original return and monitor for posting (see first two rows of this table discussing proof of timely filing).

2. When the original return posts, assess tax (TC 290 or TC 298 as appropriate) per the figures in Column 1 or Column 4 of the Form 94XX (whichever will result in the highest recorded tax).

3. Generate a letter to inform the taxpayer of the action taken.

Taxpayer does not respond

The Form 94XX does not report any changes to non-refundable or refundable credits

1. Prepare a "dummy" return using the corrected information from the "X" form. Do not code the return to suppress penalties or interest. On the signature line, indicate "Dummy Return - Do not correspond for signature".

2. Attach the Form 94XX to the back of the "dummy" return. Edit (in green) a line across the applicable 94XX form and notate "Do Not Detach" in the margin.

3. Process the "dummy" return as the original.

4. To the extent possible based on available information, ensure all applicable deposits are correctly applied.

5. If a TC 971 AC 010 was previously input, input a TC 971 AC 002 to prevent a duplicate filing condition from generating when the "dummy" return posts.

Taxpayer does not respond

The Form 94XX reports a mix of wage/tax items and either or both non-refundable/refundable credits

1. Prepare a "dummy" return using the corrected information from the "X" form.
   • Do not enter any non-refundable or refundable credits from the Form 94XX on the dummy return. Only enter wage and tax items from the Form 94XX on the dummy return. As needed, recompute mathematical calculation lines and make appropriate entries on the dummy return to account for any credits not being allowed with the dummy return.
   • Do not code the return to suppress penalties or interest.
   • On the signature line, indicate "Dummy Return - Do not correspond for signature".

2. Attach the Form 94XX to the back of the "dummy" return. Edit (in green) a line across the applicable 94XX form and notate "Do Not Detach" in the margin.

3. Process the "dummy" return as the original.

4. To the extent possible based on available information, ensure all applicable deposits are correctly applied.

5. If a TC 971 AC 010 was previously input, input a TC 971 AC 002 to prevent a duplicate filing condition from generating when the "dummy" return posts.

6. Send the taxpayer Letter 4384C informing them that since we did not receive a reply to our request for a copy of their original return, we are processing their Form 94XX (specify form type) as an original return but could not allow any credits claimed. Advise the taxpayer that they should file a new Form 94XX (specify form) with a copy of their original return attached if they disagree with our action.

The overpayment was created by the filing of a Form 94XX (filed either as a claim or as an adjusted return)

The credit is being applied to the tax period in which the Form 94XX was filed

Apply the credit to the account designated by the taxpayer using a TC 830/710 as per the appropriate adjusted return procedures. For example, if Form 941-X was filed, follow the directions in Step 2 of IRM 21.7.2.4.5.6.1 (7) to determine the appropriate credit availability date.

The overpayment was created by the filing of a Form 94XX (filed either as a claim or as an adjusted return)

The credit is being applied to a tax period earlier than that in which the Form 94XX was filed

Apply the credit to the account designated by the taxpayer using a TC 820/700 with the appropriate credit availability date. See IRM 21.5.8.4.2, Determining Correct Credit Transfer Format, and IRM 20.2.4.3, Availability Dates for Overpayments, for more information.

The overpayment was created by the filing of a Form 94XX as a claim

The credit is being applied to a tax period later than that in which the Form 94XX was filed

1. Apply the credit to the account designated by the taxpayer using a TC 820/700 with the appropriate credit availability date. See IRM 21.5.8.4.2, Determining Correct Credit Transfer Format, and IRM 20.2.4.3, Availability Dates for Overpayments, for more information.

2. Manually calculate and allow overpayment interest with a TC 770 and transfer the overpayment interest using TC 850/730 if appropriate. See IRM 20.2.4.6.1, Interest on Offsets, for more information.

The overpayment was created by the filing of a Form 94XX as an adjusted return

The credit is being applied to a tax period later than that in which the Form 94XX was filed

1. Follow the directions in the first row of this table to apply the overpayment to the tax period in which the Form 94XX was filed except freeze the credit on the receiving module.

2. Follow the directions in the last row of this table to apply the credit (if available) from the module the credit was applied to in Step 1 above to the account designated by the taxpayer.

The overpayment was created by any issue other than the filing of a Form 94XX (missed credit elect, penalty abatement, simple tax overpayment, etc.)

The credit is being applied to the same tax period or an earlier tax period

Apply the credit to the account designated by the taxpayer using a TC 820/700 with the appropriate credit availability date. See IRM 21.5.8.4.2, Determining Correct Credit Transfer Format, and IRM 20.2.4.3, Availability Dates for Overpayments, for more information.

The overpayment was created by any issue other than the filing of a Form 94XX (missed credit elect, penalty abatement, simple tax overpayment, etc.)

The credit is being applied to the immediately following tax period for the same MFT

Apply the credit using a TC 830/710. See (4) of IRM 21.5.8.4.2, Determining Correct Credit Transfer Format, for more information.

The overpayment was created by any issue other than the filing of a Form 94XX (missed credit elect, penalty abatement, simple tax overpayment, etc.)

The credit is being applied to a tax period later than that on which the overpayment exists but not to the immediately following tax period for the same MFT

1. Apply the credit to the account designated by the taxpayer using a TC 820/700 with the appropriate credit availability date. See IRM 21.5.8.4.2, Determining Correct Credit Transfer Format, and IRM 20.2.4.3, Availability Dates for Overpayments, for more information.

2. Manually calculate and allow overpayment interest with a TC 770 and transfer the overpayment interest using TC 850/730 if appropriate. See IRM 20.2.4.6.1, Interest on Offsets, for more information.

The Form 94XX was filed more than 90 days prior to the RSED

Box 2 is checked for the claim process

1. Net the corrections reported into a single adjustment and process as an adjusted employment tax return. Consider general procedures in IRM 21.7.2.4.4, Adjusted Employer's Federal Tax Return or Claim for Refund, and process as per the appropriate specific adjusted employment tax return procedures for the type of form filed (e.g., Form 941-X reporting net increase, follow procedures in IRM 21.7.2.4.5.6.3, Form 941-X Tax Increases — Adjusted Employment Tax Return).

2. If the net tax change is a decrease and credit will be applied to the tax period in which the Form 94XX was filed, issue Letter 4384C to inform the taxpayer we converted their claim to an adjusted employment tax return and indicate the quarter to which the credit is being applied.

The Form 94XX was filed within 90 days of the RSED (with either Box 1 for the adjusted employment tax return process or Box 2 for the claim process checked)

The ASED is within 90 days of expiring

1. Contact the Statute function per normal procedures to initiate a manual assessment of the underreported amount before the ASED expires. See IRM 25.6.1, Statute of Limitations Processes and Procedures, for additional guidance on handling statute imminent cases.

2. Follow procedures in IRM 21.5.3.4.3, Tax Decrease and Statute Consideration, to request a separate Form 94XX to claim the amount of the tax decrease. Inform the taxpayer that we are processing the reported tax increase but they must file a separate Form 94XX for the decrease requested as per the Form 94XX Instructions.

3. Monitor for the posting of the increase as a manual assessment and for the taxpayer’s response to the request for a separately filed Form 94XX for the tax decrease.

4. Complete processing of the case per (4), (5), or (6) of IRM 21.5.3.4.3 as appropriate.

The Form 94XX was filed within 90 days of the RSED (with either Box 1 for the adjusted employment tax return process or Box 2 for the claim process checked)

The ASED is expired and the net tax change reported on the Form 94XX is a decrease

1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡

2. ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

The Form 94XX was filed within 90 days of the RSED (with either Box 1 for the adjusted employment tax return process or Box 2 for the claim process checked)

The ASED is expired and the net tax change reported on the Form 94XX is an increase

Forward the Form 94XX to the Statute function as per instructions in (1) of IRM 21.5.3.4.1, Tax Increase or Credit Decrease Processing.

Form 94XX filed by a corporation

Any of these officers may sign the Form 94XX:

• President

• Vice President

• Other principal officer with authority to sign

Form 94XX filed by a partnership or Limited Liability Company (LLC) treated as a partnership (i.e., entity has MFT 06 filing requirements)

Any partner, member or authorized officer may sign.

Form 94XX filed by a sole-proprietor

The owner may sign.

Form 94XX filed by a single-member Limited Liability Company (LLC) treated as a disregarded entity for federal income tax purposes (i.e., account has no income tax return filing requirement)

The owner/member of the LLC may sign or a principal officer duly authorized to sign

Form 94XX filed by an exempt organization

Any of these officers may sign:

• Executive Director

• Director/President

• Vice President

• Treasurer

• Assistant Treasurer

• Chief Accounting Officer

• Any other officer with authority to sign

Form 94XX filed by a trust or estate

The fiduciary must sign.

Form 94XX signed under a power of attorney

Check Command Code CFINK to verify an authorization has been recorded for the individual signing the Form 94XX and authority to sign returns was granted.

Form 94XX signed by a Reporting Agent (i.e., “attorney in fact”, “agent”, or other title indicating individual who signed acts for a Reporting Agent firm)

Check Command Code RFINK to verify an authorization has been recorded.

The Form 94XX is not signed

There are other conditions present which make the Form 94XX unprocessable

Reject the Form 94XX using Letter 4384C and identify all items required to perfect the filing. Advise the taxpayer to resubmit a signed, complete Form 94XX.

The Form 94XX is not signed but is otherwise processable

The Form 94XX reports a net tax increase or credit decrease

1. Process the adjustment requested (as appropriate) and close the case.

2. Correspond for the missing signature (and any other missing information) using Letter 143C. Advise the taxpayer in the letter that we completed the changes requested on their Form 94XX (specify form type). See IRM 21.5.3.4.1, Tax Increase or Credit Decrease Processing, for more information.

The Form 94XX is not signed but is otherwise processable

The Form 94XX reports a net tax decrease or credit increase

Reject the Form 94XX using Letter 4384C and advise the taxpayer to resubmit a complete, signed Form 94XX.

The Form 94XX indicates the person who signed did so as per a power of attorney but there is no authorization recorded granting signature authority (could not be verified via CC CFINK) and there is no Form 2848 attached granting signature authority

The Form 94XX reports a net tax increase or credit decrease

1. Process the adjustment requested (as appropriate) and close the case.

2. Correspond for the taxpayer’s signature (and any other missing information) using Letter 143C. Advise the taxpayer in the letter that we completed the changes requested on their Form 94XX (specify form type) but that we have no record the person who signed was authorized to do so. See IRM 21.5.3.4.1, Tax Increase or Credit Decrease Processing, for more information.

The Form 94XX indicates the person who signed did so as per a power of attorney but there is no authorization recorded granting signature authority (could not be verified via CC CFINK) and there is no Form 2848 attached granting signature authority

The Form 94XX reports a net tax decrease or credit increase

Reject the Form 94XX using Letter 4384C. Advise the taxpayer in the letter that we have no record the person who signed the form was authorized to do so and request that they resubmit a complete Form 94XX (specify form type) signed by an individual authorized to do so for their business or organization.

The Form 94XX indicates the person who signed did so as a Reporting Agent (i.e., “attorney in fact”, “agent”, or other title indicating individual who signed acts for a Reporting Agent firm) but there is no authorization recorded (could not be verified via CC RFINK)

The Form 94XX reports a net tax increase or credit decrease

1. Process the adjustment requested (as appropriate) and close the case.

2. Correspond for the taxpayer’s signature (and any other missing information) using Letter 143C. Advise the taxpayer in the letter that we completed the changes requested on their Form 94XX (specify form type) but that we have no record the person who signed was authorized to do so. See IRM 21.5.3.4.1, Tax Increase or Credit Decrease Processing, for more information.

The Form 94XX indicates the person who signed did so as a Reporting Agent (i.e., “attorney in fact”, “agent”, or other title indicating individual who signed acts for a Reporting Agent firm) but there is no authorization recorded (could not be verified via CC RFINK)

The Form 94XX reports a net tax decrease or credit increase

Reject the Form 94XX using Letter 4384C. Advise the taxpayer in the letter that we have no record the person who signed the form was authorized to do so and request that they resubmit a complete Form 94XX (specify form type) signed by an individual authorized to do so for their business or organization.

-R Freeze

See (2) in IRM 21.5.6.4.35, -R Freeze, for guidance on identifying RIVO involvement on cases with -R freezes and IRM 21.5.6.4.35.3, -R Freeze Overview for Accounts With Return Integrity Verification Operations (RIVO) Involvement, for associated handling guidance.

E- Freeze

Open RIVO control, TC 971 AC 711, and TC 973 on module

Do not process the amended return/duplicate return as the original. Refer to IRM 25.23.11.6.3, BMF Returns Selected for RICS Review, for procedures on suspending and monitoring the case until a RICS determination is made.

TC 150 and "not IDT" determination has been made

TC 971 AC 712 or TC 971 AC 713 on module

Refer to IRM 25.23.11.6.3, BMF Returns Selected for RICS Review, for for procedures applicable to TC 971 AC 712 or TC 971 AC 713 scenarios.

IDT or Fabricated EIN determination has been made

AMS states IDT determination made

or

Unreversed TC 971 AC 522 (MISC contains IDTCLM, IDTDOC or CLSIDT) on module

or

Sort name line includes "POTENTIAL FAB EIN" or "Identity Theft", TC 971 AC 524 on module

1. Prepare Form 14566, BMF Identity Theft Referral. (See Exhibit 25.23.11-1, Accounts Management Form 14566 Instructions, for information on completing the form.)

2. Send the completed Form 14566 via secure email to the AM BMF IDT liaison at *W&I AM BMF IDT. If COVID related credits are claimed on the Form 94XX, include in subject line of the secure email the specific COVID related credit (i.e., "Sick and Family - Form 14566" or "ERC – Form 14566".

Exception: If sending an email as per this instruction and the case involves an ERC claim withdrawal request, enter "ERC - WD - Form 14566" in the subject line of the email.

3. Update the CII History Notes as follows: "Potential BMF IDT - Case referral to AM BMF IDT"

4. Suspend the case and monitor for a response from BMF IDT confirming whether they will accept the case. Do not close the case until a response is received.

The multiple quarter Form 941 has been posted

Advise the taxpayer (use the appropriate "C" letter if working paper correspondence) to take the following actions:

1. File a correct original Form 941 for each tax period (specify in the letter) for which wages/tax was incorrectly included on the multiple quarter Form 941.

2. File a Form 941-X to correct the tax period to which the multiple quarter Form 941 was processed (specify in the letter) and to attach a breakdown of the federal tax deposits or other payments which should be applied to the respective tax periods previously included on the multiple quarter Form 941.

The multiple quarter Form 941 has not been posted

There is no indication the multiple quarter Form 941 will post (i.e., not in ERS/Rejects or was previously deleted)

Advise the taxpayer (use the appropriate "C" letter if working paper correspondence) to take the following actions:

1. File a correct original Form 941 for each tax period (specify in the letter) for which tax was incorrectly reported on the multiple quarter Form 941.

2. Submit a breakdown of the federal tax deposits or other payments which should be applied to the respective tax periods previously included on the multiple quarter Form 941.

The multiple quarter Form 941 has not been posted

There is an indication that the multiple quarter Form 941 will post (i.e., return is in ERS/Rejects)

Monitor for posting or deletion of the return and then process as appropriate per the preceding rows in this table.

111

Federal income tax withheld from wages, tips, and other compensation (line 7 of Form 941-X - column 4).

004

Taxable social security wages (line 8 of Form 941-X - column 3 plus line 20 of Form 941-X - column 3).

005

Taxable social security tips (line 11 of Form 941-X - column 3).

073

Taxable Medicare wages and tips (line 12 of Form 941-X - column 3 plus line 21 of Form 941-X - column 3).

074

Taxable Wages & tips subject to Additional Medicare Tax withholding (line 13 of Form 941-X - column 3 plus line 22 of Form 941-X - column 3) (valid for tax periods beginning after December 31, 2012).

112

Total social security, Medicare tax, and (for tax periods beginning after December 31, 2012) Additional Medicare Tax.

114

Section 3121(q) Notice and Demand — Tax due on unreported tips (line 14 of Form 941-X - column 4). Only for MFT 01 tax periods 201103 and after.

104

Income tax withheld figured at IRC Section 3509 tax rate on Special addition to wages for federal income tax (line 19 of Form 941-X - column 4).

105

Social security, Medicare taxes, and (for tax periods beginning after December 31, 2012) Additional Medicare taxes figured at IRC Section 3509 tax rates on Special addition to wages for social security taxes, Special addition to wages for Medicare taxes, and Special addition to wages for Additional Medicare Tax (total of lines 20, 21, and 22 from Form 941-X - column 4).

106/107/108

Tax adjustments (line 15 of Form 941-X - column 4). See IRN 113 and Note below table.

113

Total adjustments (total of lines 15, 19, 20, 21, and 22 of Form 941-X - column 4). See IRN 106/107/108 above and Note below table.

119

Qualified Small Business Payroll Tax Credit for Increasing Research Activities (line 16 of Form 941-X - column 4).

Taxpayer has filed Form 943

Previously reported employment taxes related to agricultural employees on Form 941

Advise the taxpayer (use the appropriate "C" letter if working paper correspondence) to file a Form 941-X for each quarter in which they incorrectly reported employment taxes related to agricultural employees on Form 941 and attach a statement detailing the amounts of any federal tax deposits or other payments which should be reapplied to their Form 943 tax account.

Taxpayer has not yet filed Form 943

Previously reported employment taxes related to agricultural employees on Form 941

Advise the taxpayer (use the appropriate "C" letter if working paper correspondence) to take the following actions:

1. File a Form 943 reflecting the correct tax for the year

2. File a Form 941-X for each quarter in which they incorrectly reported employment taxes related to agricultural employees on Form 941 and attach a statement detailing the amounts of any federal tax deposits or other payments which should be reapplied to their Form 943 tax account.

004

Total wages subject to social security tax (line 6 of Form 943-X - column 3 plus line 17 of Form 943-X - column 3).

073

Taxable Medicare wages and tips (line 9 of Form 943-X - column 3 plus line 18 of Form 943-X - column 3).

074

Taxable Wages & tips subject to Additional Medicare Tax withholding (line 10 of Form 943-X - column 3 plus line 19 of Form 943-X - column 3). Valid for tax periods beginning after December 31, 2012.

007

Total social security, Medicare tax, and (for tax periods beginning after December 31, 2012) Additional Medicare Tax (combined figures in column 4 of Form 943-X - lines 6, 9, 10, 17, 18, and 19).

003

Federal income tax withheld (line 11 of Form 943-X - column 4 plus line 16 of Form 943-X - column 4).

185

Tax adjustments (line 12 of Form 943-X - column 4). For tax periods after 200812, IRN 185 is only used on Form 943 adjustments for fractions of cents and third-party sick pay.

119

Qualified Small Business Payroll Tax Credit for Increasing Research Activities

Taxpayer with Form 944 filing requirements wishes to file Form 941 for the current year (opt-out) for any reason

The taxpayer contact is on or before April 1 or is in correspondence postmarked by March 15th

Change the filing requirement from Form 944 to Form 941 and issue Letter 3007C to confirm filing requirement change.

Taxpayer with Form 944 filing requirements wishes to file Form 941 for the current year (opt-out) for any reason

The taxpayer contact is after April 1 or is in correspondence postmarked after March 15th

Instruct the taxpayer as follows:

1. They must file Form 944 for the current year.

2. If their Form 944 for the current year reports tax of $1,000 or more, they will be notified that they are no longer eligible to file Form 944.

3. They should contact us again after the close of the current year but before April 1 if they want to opt-out of filing Form 944 for the following year.

Taxpayer states they are not required to file an employment tax return (no employees, etc.)

An employment tax filing requirement is open

Close the open employment tax filing requirement.

Existing Form 941 filer (or existing taxpayer with no current employment tax filing requirement) wants to file Form 944

The taxpayer contact is on or before April 1 or is in correspondence postmarked by March 15th

Review the taxpayer's Form 941 accounts for the current and preceding tax years.

• If the tax reported for the preceding year is $1,000 or less, change filing requirement from Form 941 to Form 944 and issue Letter 3007C to confirm filing requirement change.

• If the tax reported for the preceding year is more than $1,000, inform the taxpayer that they must file Form 941 for the current year and can request to file Form 944 for the following year if they meet eligibility requirements and contact us after the close of the year but before April 1.

Existing Form 941 filer (or existing taxpayer with no current employment tax filing requirement) wants to file Form 944

The taxpayer contact is after April 1 or is in correspondence postmarked after March 15th

Instruct the taxpayer as follows that they must file Form 941 for the current year and to contact us again after the close of the current year but before April 1 if they want to file Form 944 for the following year.

Taxpayer states they are a new employer and believe their liability will not exceed $1,000 for the year and want to file Form 944

It is any time during the year

Research CC ENMOD. If CC ENMOD shows no filing requirement prior to the current year, establish filing requirements for Form 944 (delete Form 941 filing requirements if applicable) and issue Letter 3007C to taxpayer.

The taxpayer is a new employer that received a CP 575 stating they have Form 944 filing requirements and wants to file Form 941 instead because they expect to exceed the $1,000 threshold for the year

≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

Change the filing requirement from Form 944 to Form 941 and issue Letter 3007C to confirm filing requirement change.

111

Federal income tax withheld from wages, tips, and other compensation (line 7 of Form 944-X - column 4).

004

Taxable social security wages (line 8 of Form 944-X - column 3 plus line 19 of Form 944-X - column 3).

005

Taxable social security tips (line 11 of Form 944-X - column 3).

073

Taxable Medicare wages and tips (line 12 of Form 944-X - column 3 plus line 20 of Form 944-X - column 3).

074

Taxable Wages & tips subject to Additional Medicare Tax withholding (valid for tax periods beginning after December 31, 2012) (line 13 of Form 944-X - column 3 plus line 21 of Form 944-X - column 3).

112

Total social security, Medicare tax, and Additional Medicare Tax (for tax periods beginning after December 31, 2012).

106

Tax adjustments (line 14 of Form 944-X - column 4).

104

Income tax withheld figured at IRC Section 3509 tax rate on Special addition to wages for federal income tax (line 18 of Form 944-X - column 4).

105

Social security, Medicare taxes, and (for tax periods beginning after December 31, 2012) Additional Medicare taxes figured at IRC Section 3509 tax rates on Special addition to wages for social security taxes, Special addition to wages for Medicare taxes, and Special addition to wages for Additional Medicare Tax (total of lines 19, 20, and 21 from Form 944-X - column 4).

113

Total adjustments (total of lines 14, 18, 19, 20, and 21 of Form 944-X - column 4).

119

Qualified Small Business Payroll Tax Credit for Increasing Research Activities

Taxpayer has filed Form 945

Previously reported non-payroll withholding on Form 941

Advise the taxpayer (use the appropriate "C" letter if working paper correspondence) to file a Form 941-X for each quarter in which they incorrectly reported non-payroll withholding on Form 941 and attach a statement detailing the amounts of any federal tax deposits or other payments which should be reapplied to their Form 945 tax account.

Taxpayer has not yet filed Form 945

Previously reported non-payroll withholding on Form 941

Advise the taxpayer (use the appropriate "C" letter if working paper correspondence) to take the following actions:

1. File a Form 945 reflecting the correct non-payroll withholding for the tax year

2. File a Form 941-X for each quarter in which they incorrectly reported non-payroll withholding on Form 941 and attach a statement detailing the amounts of any federal tax deposits or other payments which should be reapplied to their Form 945 tax account.

Taxpayer files Form 941 indicating non-payroll items were included on the return

Code & Edit (C&E) identifies the situation

As per procedures in (4) of IRM 3.11.13.14, C&E will correspond with the taxpayer to determine their intent. If the taxpayer's reply indicates they should have filed Form 945, C&E will forward the Form 941 to Accounts Management on Form 3465 indicating "Non-payroll on Form 941" Take the following actions to resolve the situation:

1. If appropriate, delete the filing requirements for Form 941 and establish Form 945 filing requirements.

2. Return the Form 941 to the taxpayer using the appropriate "C" letter and inform the taxpayer of their correct filing requirements.

3. Input credit transfers as appropriate to move credits from the Form 941 account to the Form 945 account.

A Private Foundation filing Form 990-PF

Their Form 990-PF. See IRM 21.7.7.6.3.5, Backup Withholding, for more information.

An organization exempt from taxation under IRC 501(a) or an individual retirement plan

Form 990-T. See IRM 21.7.7.6.3.5, Backup Withholding, for more information.

One of the following organizations exempt from BUWH under IRC 3406(g)(1):

1. The United States, its wholly owned agency or instrumentality.

2. A State, the District of Columbia, a possession of the United States, any political subdivision of any of the foregoing, or any wholly owned agency, or instrumentality of these entities.

3. A foreign government, political subdivision of a foreign government, wholly owned agency or instrumentality of these entities.

A Form 843 with a statement attached as follows from each payor who erroneously withheld tax:

• The statement must be signed by the person authorized to sign the payor’s Form 945 and must list the EIN of the account the BUWH was paid under.

• The statement must include the amount of tax withheld, the date withheld, and a statement to the effect that the payor did not repay or reimburse the recipient and will not claim an adjustment for the amount on Form 945.

Reject the claim if it is incomplete or missing the required statement(s). Otherwise, process complete Form 843 claims with the required statement attached as follows:

1. Input a TC 291 and IRN 008 on the payor’s Form 945 account, with Blocking Series 15 and the appropriate Hold Code, to reduce BUWH for the amount of the claim.

2. Issue a manual refund to the payee/claimant. Prepare Form 5792, Request for IDRS Generated Refund, and compute interest from the Form 945 due date or payment date, whichever is later. (See IRM 20.2.4, Overpayment Interest.)

   Reminder: All procedures in IRM 21.4.4, Manual Refunds, must be followed, including input of a TC 971 Action Code 037 to cross-reference the payee's TIN.

3. Attach a copy of the claim to the refund document and route it to the Accounting Function.

A non-exempt entity required to file an income tax return

Their income tax return for the year in which the BUWH occurred. See IRM 21.7.4.4.10, Federal Income Tax Withheld (FITW)/Backup Withholding (BUWH) on Income Tax Returns, for more information.

No reply, or taxpayer states they do not want separate EINs

Input TC 290 to assess any additional tax.

Taxpayer requests separate EINs

Photocopy the case file and forward to Entity for assignment of EINs. When EINs are assigned, re-input the returns and transfer any credits to the new EINs.

Refunds were issued prior to the posting of the second return

Contact taxpayer as stated in (3) above.

A general inquiry is received regarding household employment taxes.

Research Pub 926, Household Employer's Tax Guide, forms, and form instructions as appropriate to provide the taxpayer with the guidance needed.

An inquiry is received about a Schedule H (Form 1040) which was or will be filed with Form 1041.

See IRM 21.7.4.4.1.11, Social Security Domestic Employment Reform Act and BMF Schedules H, for more information.

An inquiry is received about a Schedule H (Form 1040) which was or will be filed with Form 1040.

See IRM 21.6.4.4.8, Schedule H, Household Employment Taxes for more information.

An inquiry is received about a Form 941, Form 943, Form 944 filed to report household employment taxes (FICA and/or federal income tax withheld).

The household employment taxes (FICA and/or federal income tax withheld) should have instead been reported on Schedule H (Form 1040) with a Form 1040

See IRM 21.6.4.4.8.12, BMF Form 941 Filed Instead of IMF Schedule H, for more information.

An inquiry is received about a Form 941, Form 943, Form 944 filed to report household employment taxes (FICA and/or federal income tax withheld).

The household employment taxes (FICA and/or federal income tax withheld) should have instead been reported on Schedule H (Form 1040) with a Form 1041

See paragraph (5) of IRM 21.7.4.4.1.11.2.3, Adjustments (Amended Returns, TRNS 193s, etc.) Involving Forms 1041 With Schedule H, for more information.

An inquiry is received regarding a Form 940 filed to report FUTA taxes for household employees.

The FUTA tax should have instead been reported on Schedule H (Form 1040) with either a Form 1040 or Form 1041

See IRM 21.7.3.4.14, Schedule H FUTA Erroneously Reported.

An inquiry is received from an entity claiming to be a partnership

The entity has reported household employment taxes

Advise the taxpayer that a partnership cannot be a domestic employer. Instruct the taxpayer that they must follow one of the following options for reporting household employment wages and tax:

1. One member of the unit can report all taxes and wages on Schedule H filed with their Form 1040, or;

2. Each member can report their portion on Schedule H filed with their Form 1040.

An inquiry is received from a state or local government acting as an IRC 3504 agent on behalf of Home Care Service Recipients (HCSR)

An FTD penalty has been charged (on any tax module)

Abate any FTD penalties identified on these accounts even if taxpayer is not requesting abatement. Taxes can be paid with the return. No deposits are necessary. See IRM 20.1.4.4.2, State and Local Health and Welfare, for more information.

An inquiry is received from a party who is operating as an IRC 3504 agent for one or more household employers but is not a state or local government.

An FTD penalty has been charged

Do not adjust the penalty unless other abatement criteria applies. These agents are responsible for making timely federal tax deposits as any other employer or Section 3504 agent.