3.12.14. Income Tax Returns for Estates and Trusts (Forms 1041, 1041-QFT, and 1041-N)

(1) The purpose of Error Resolution is to resolve validity errors, field errors, consistency errors, and math errors in returns and other documents for posting to the Master File. Records fall out in ERS due to the Generalized Mainline Framework (GMF). The entries from transcription are transferred to ERS fields.

(2) The GMF programming causes record to fall out to the Error Resolution System (ERS) if they fail to meet certain criteria, including:

• Invalid characters in a field (i.e., numeric instead of alpha).

• Invalid length of field (i.e., EIN with 8 digits instead of 9).

• Invalid codes in field (Valid Action Codes, Audit Codes, etc., are programmed in GMF.)

• Consistency errors - Any valid field used in any computation where the result is inconsistent with (or contradictory to) any other valid field.

• Math errors - computer does math computation and it differs from the taxpayer’s amount.

• Invalid tax periods and eligibility for certain credits.

(3) Employees use the ERS system and the return to correct these conditions and use IDRS (when necessary) to research.

(4) While working assigned cases, SP employees may come across some that are blocked on IDRS and can be identified by an IDRS security violation message, "Unauthorized Access to This Account". Forward the return to your manager. Managers will notify the local Planning & Analysis Staff who will scan the case and send encrypted information to the "≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡" mailbox requesting access to the account. Managers will retain the original case in a file awaiting access (can take up to 5 business days). Once notified access has been granted, the case can be worked following applicable procedures.

(1) The Internal Revenue Code of 1986 or more commonly known as the Internal Revenue Code (IRC) is the authority for these procedures. Treasury/IRS rules and regulations interpret the law. The IRC has been amended by acts and public laws such as the following:

• The Protecting Americans from Tax Hikes (PATH) Act

• Hiring Incentives to Restore Employment (HIRE) Act

• Consolidated Appropriations Act (Extenders)

• American Taxpayer Relief Act (ATRA)

• Health Care and Education Reconciliation Act

• Patient Protection and Affordable Care Act (ACA)

• Foreign Account Tax Compliance Act (FATCA)

• Internal Revenue Service Restructuring and Reform Act of 1998 (RRA 98)

• Section 2006(a) of the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, Public Law (PL) 114-41, changed the return due dates for returns of partnerships, and C corporations.

(2) All Policy Statements for Submission Processing are contained in IRM 1.2.12, Servicewide Policies and Authorities - Policy Statements for Submission Processing Activities.

(1) The Director of the Submission Processing Campus (SPC) is responsible for monitoring operational performance for that SPC.

(2) The Operations Manager is responsible for monitoring operational performance for their operation.

(3) The team manager/lead is responsible for performance monitoring and ensuring employees have the tools to perform their duties.

(4) The team employees are responsible to follow the instructions contained in this IRM and maintain updated IRM procedures.

(1) System Control Reports: The reports are stored on 4 ECC Z/OS Mainframes and can be retrieved through Control-D/ Web Access Server. See IRM 3.12.38, Error Resolution, BMF General Instructions, for a general listing of the reports.

(2) Program Effectiveness: Is measured through Embedded Quality Submission Processing (EQSP) application used for quality review of the returns corrected in ERS. The applications capture evaluative and non-evaluative data obtained from monitoring submission processing activities. Reports can be generated for planning and training purposes.

(3) Annual Review: Is performed by Federal Managers Financial Integrity Act (FMFIA) to ensure accuracy and promote consistent tax administration.

(1) Quality Review is conducted using the Embedded Quality Submission Processing (EQSP) application. A statistical valid sample size of corrected returns are pulled weekly for all tax examiners and reviewed to ensure IRM guidelines are followed.

(1) The following is a list of words in this IRM that may need clarification:Interpretation Words

(2) There are specific terms used when dealing with estates and trusts. See below:

(3) There are many types of trusts as shown in the following:

(4) There are many types of estates, as shown below:

(5) See Exhibit 3.12.14-44, Acronyms and Abbreviations.

(1) The following is a list of resources available:

• Servicewide Electronic Research Program (SERP)

• Instructor’s Corner for Submission Processing

• Integrated Automation Technologies (IAT)

• Integrated Data Retrieval System (IDRS)

(1) See Exhibit 3.12.14-44, Acronyms and Abbreviations.

(1) The Taxpayer Advocate Service is an independent organization within the Internal Revenue Service (IRS), led by the National Taxpayer Advocate, that helps taxpayers and protects taxpayer rights. TAS offers free help to taxpayers when a tax problem is causing a financial difficulty, when they’ve tried and been unable to resolve their issue with the IRS, or when they believe an IRS system, process, or procedure just isn't working as it should. TAS strives to ensure that every taxpayer is treated fairly and knows and understands their rights under the Taxpayer Bill of Rights. TAS has at least one taxpayer advocate office located in every state, the District of Columbia, and Puerto Rico.

(2) TAS uses Form 12412, Operations Assistance Request (OAR), to start the OAR process of referring a case to the Taxpayer Services (TS) Division, to affect the resolution of the taxpayer’s problem. For more information, refer to IRM 13.1.19, Taxpayer Advocate Service, Taxpayer Advocate Case Procedures, Advocating with Operations Assistance Requests (OARs).

(3) Refer taxpayers to TAS when the contact meets TAS criteria or when Form 911, Request for Taxpayer Advocate Service Assistance (and Application for Taxpayer Assistance Order), is attached and steps cannot be taken to resolve the taxpayer's issue the same day. See IRM 21.1.3.18 , Taxpayer Advocate Services (TAS) Guidelines.

(4) The definition of "same day resolution" is within 24 hours. The following two situations meet the definition of "same day resolution":

• The issue can be resolved within 24 hours.

• The IRS takes steps within 24 hours to resolve the taxpayer’s issue.

(5) When making a TAS referral, use Form 911, and forward to TAS following your local procedures.

(6) For more information, see IRM 13.1.7, Taxpayer Advocate Service (TAS) Case Criteria, and IRM 13.1.7.4 , Exceptions to Taxpayer Advocate Service Criteria. for more information.

(1) IRM deviations must be submitted in writing following instructions from IRM 1.11.2.2.3, When Procedures Deviate from the IRM, and elevated through appropriate channels for executive approval.

(1) BMF Identity Theft is increasing. If a tax examiner in Submission Processing (SP) Error resolution System (ERS) finds a case with attachments or correspondence indicating the taxpayer is a victim of ID Theft:

1. SSPND 360 to route the return to Planning & Analysis (P&A).

2. Attach Form 4227 (or other appropriate routing slip) with the notation “ID THEFT”.

3. Provide the entire case to your senior/lead.

(1) Taxpayers may send tax return information via fax as part of return perfection even when submitting a signature. In circumstances where contact with the taxpayer was made and documented, faxed signatures are acceptable.

(2) Contact with the taxpayer may be by telephone or correspondence. Follow local procedures to decide which method of contact to use.

(3) Indicate the fax paragraph on the approved Correspondence Action Sheet to inform the taxpayer of the fax options.

(4) Use the following resources to make sure you are speaking with the taxpayer or authorized representative before disclosing any tax information:

• IRM 21.1.3.2.3, Required Taxpayer Authentication

• IRM 21.1.3.2.4, Additional Taxpayer Authentication

(5) Before leaving any messages on a taxpayer's answering machine, review:

• IRM 10.5.1.6.7.2, Answering Machine or Voicemail

• IRM 11.3.1.14, Facsimile (FAX), Electronic Facsimile (E-FAX), and the IRS Internal Enterprise Electronic Facsimile (EEFAX) Transmission of Tax Information

(1) The Internal Revenue Service Restructuring and Reform Act of 1998 (RRA98), 3705(a), provides identification requirements for all IRS employees working tax-related matters. IRS employees are required to give their name and unique identification number during taxpayer telephone, face to face, and written contact. In addition, a telephone number is required on all taxpayer correspondence. This will provide taxpayers with enough information to identify an IRS employee who has previously assisted with tax related matters.

(2) All IRS employees who communicate by telephone, correspondence or face to face, with taxpayers or their personal representative, on tax-related matters are required to provide (at a minimum) the following information:

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

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

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

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

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

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

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

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

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

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

(1) The Customer Account Data Engine (CADE) 2 Program Office in Headquarters, is charged with the primary goal to implement a single, modernized programming solution which provides daily processing of taxpayer accounts.

(2) The CADE 2 solution is comprised of several components, to modernize the IRS to a daily processing environment with several Transition States.

(3) The BMF campus cycles are:

• Campus Cycle: Thursday - Wednesday

• Master File Processing: Friday - Thursday

• Notice Review: Saturday - Monday (8+ days)

• Unpostables: New available Tuesday; Closing Tuesday

(4) BMF transaction posting time frames are outlined as follows:

1. Transactions will be viewable using CFOL command codes on Saturday following the weekly Master Files processing run on Thursday.

2. Transactions will be viewable as posted transactions using IDRS command codes on Monday, following the weekly Master File processing run on Thursday.

Note: With the acceleration of the IDRS weekly analysis being performed the weekend directly after the Master File processing on Thursday, transactions will be posted instead of in pending status on Monday.

(5) Transaction posting dates will reflect a format of YYYYCCDD. YYYY will indicate the year. CC will indicate the posting cycle. For IMF transactions, the following values for DD are defined:

• 01 = Friday

• 02 = Monday

• 03 = Tuesday

• 04 = Wednesday

• 05 = Thursday

Note: BMF cycle posting dates on BMFOL will continue to reflect YYYYCC. YYYY will indicate the year. CC will indicate the posting cycle. BMF posting cycles in TXMOD will reflect a format of YYYYCCDD. The DD value will be 08.

(1) Criminal Investigation (CI) investigates potential criminal violations of the Internal Revenue Code (IRC) and related financial crimes. Criminal violations of the IRC include willful attempts to evade or defeat the income tax. Criminal tax violations also include the willful failure to collect or pay over tax and false claims for refunds based on bogus return information.

(2) If CI has stamped the return, no further CI action is required.

(3) For returns with refund claims of ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ or more, do the following:

(4) Because of the repetitive nature of the ERS/Rejects function, ERS/Rejects Tax Examining Technicians often recognize income tax return data which is outside of the norm for data found on similar returns for each income tax return type. If ERS identifies return characteristics not meeting Audit Code or Exam referral criteria it deems suspicious, CI is available to review the referral.

(5) If a suspicious return is identified, and there is no indication Code and Edit (C&E) made a copy and sent to CI Referral, then, do the following:

1. Make a copy of the first two pages of the tax return along with any page of the return that appears suspicious.

2. Attach Form 4227, Intra-SC Reject or Routing Slip, with a statement identifying what is suspicious about the return, to the copy.

3. Route the copy as indicated in the table below.

CI Referral Routing

Ogden	Kansas City
Mail Stop 9001, Criminal Investigation (CI)	Mail Stop S2 9000, Criminal Investigation (CI)

4. Edit an action trail "Copy to CI", or "CI Referral", or similar language in the lower left corner going vertically up the side of the return.

5. Continue processing the return.

(6) If the return fits other criteria (e.g., Frivolous Argument), take appropriate action.

(1) The primary objective in identifying tax returns for examination is to promote the highest degree of voluntary compliance. Examination will provide support and assist Submission Processing (SP) with any questionable return identified during processing. Exam has a vast multitude of programs and tolerance criteria already identified in various IRM sections. Exam does not restrict SP with the flexibility to refer questions returns other than what is currently identified in various IRMs.

(2) Some returns will need special care. If the withholding is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, attach Form 4227 and place in the locally designated basket for Examination, Frivolous Return Program (FRP) for review. Pay particular attention to returns with Form 1099-OID attached.

(1) A frivolous argument is used for the purpose of expressing dissatisfaction with the substance, form or administration of the tax laws by attempting to illegally avoid or reduce tax liabilities. Recognized frivolous arguments made by businesses include, but are not limited to, the examples in IRM 25.25.10, Frivolous Return Program (FRP), shown in Exhibit 3.12.14-40 , Potential Frivolous Arguments for Examination Review.

(2) Review the return to determine whether it appears to be a frivolous argument reported on return.

(1) This provides general correction procedures for perfecting Form 1041.

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

(2) ERS tax examiners issuing correspondence may perform either of the following:

• Command Code LETER.

• Initiate correspondence by using the Form 3696, Correspondence Action Sheet, Form 3696-A, IDRS Correspondence Action Sheet or other locally approved Correspondence Action Sheet (CAS).

(3) Most correspondence is either a computer-generated notice, a computer-generated letter or a pre-printed letter.

(4) If special notes or letters are developed, ensure that the following guidelines are used:

• All correspondence to taxpayers requesting information should indicate that a response is required.

• Specify the length of time the taxpayer has to respond.

• Include a statement about the action the IRS will take if the response is not received timely.

• Be sure to include the following statement: 
  "When you reply, please send us your telephone number and the most convenient time for us to call so we may contact you if we need additional information".

• Provide for a purge date at least 10 days after the date provided in the letter to the taxpayer.

• Whenever possible, form letters should be used to correspond with taxpayers. If a CNOTE or QUICKNOTE is used, be sure that it clearly communicates the message in simple language and contains the required information.

• When taxpayers make errors that cause delays, advise the taxpayer that they made the error and explain what the error was that caused the delay.

• Before initiating manual correspondence on an account dealing with anything other than a recently filed return, check the Centralized Authorization File (CAF) to ensure that the information will be mailed to the taxpayer's representative (if one is on record).

(5) Missing Signature - A signature is required on most returns. If no signature is present:

• If a signature is not present in the Signature Section of Form 1041 (below Line 30), SSPND 225 and correspond. (If multiple issues SSPND 211).

• If no reply, follow "No Reply" procedures. See Exhibit 3.12.14-38, No Reply Procedures.

• For additional instructions for processing missing signatures, see IRM 3.11.14.27, Returns and Documents Analysis, Income Tax Returns for Estates and Trusts (Forms 1041, 1041-QFT, and 1041-N).

(1) The ERS Action Codes (AC) are used to indicate whether correspondence, research or some other action is necessary. These codes reject or suspend records, placing them in Suspense Inventory (either Workable or Unworkable) and identify the specific action taken. A listing of valid ERS Action Codes is available, see Exhibit 3.12.14-36, ERS Action Code.

(2) Action Code 001 occurs when the Block out of Balance (BOB) Resolution Function has added a missing document by only inputting the Taxpayer Identification Number (TIN) and the Name Control for the missing document. For procedures for determining and correcting Priority I Errors, IRM 3.12.14.7.2, Priority I Errors - Action Code/Unpostable Code Errors.

(3) Code & Edit assigns Action Codes to numbered returns if the document is unprocessable. This code is edited in the lower left margin of the return and the letters "AC" may precede the code. "AC" may be omitted at the option of the Campus.

(4) Correspondence Action Sheets are used for initiating correspondence and are attached by the Tax Examiner suspending the document. The Action Codes and descriptions should be sufficient for routing these returns within the Campus.

• If Code & Edit has not assigned an Action Code (or if Integrated Submission and Remittance Processing [ISRP] did not transcribe the AC), enter the AC on Form 1041 and on the Screen Display.

(5) If the AC assigned by Code & Edit is invalid, incomplete, or is "001," the record is assigned to the Error Inventory for correction or deletion of the code.

(6) Only one AC can be assigned to a record at one time. Assign Action Codes in the following priority order:

1. AC 310

2. AC 320

3. AC 4XX

4. AC 6XX

5. AC 3XX

6. AC 2XX

   Note: If multiple conditions are present and one of them is an entity condition, enter AC 320 (Entity) as the primary code, except when AC 310 (Statute Control) is also needed. Action Code 310 will always have first priority.

(7) If more than one Action Code of the same priority is required (i.e., 342 and 355), use the code with the shortest suspense period and attach Form 4227 to indicate the second unprocessable condition.

(8) An ERS Tax Examiner may enter an Action Code on a record, correct or delete an invalid code or overlay the present AC with another to re-suspend or reject from ERS.

• Enter a valid Action Code with a Command Code (CC) SSPND, RJECT, or NWDLN.

(9) CC SSPND -When entered by an ERS Tax Examiner, SSPND clears the record from the screen and places it in either Workable or Unworkable Suspense.

(10) CC RJECT -When entered by a Rejects Tax Examiner, RJECT rejects the record from ERS. Generally, Service Center Control File (SCCF) is automatically updated for the rejected record.

(11) CC NWDLN -When entered by a Rejects Tax Examiner, NWDLN rejects the record from ERS and establish the new DLN under which the record is to be input.

(12) Management Suspense - Management may direct that certain documents be held for further processing instructions. Some reasons for such a suspension are:

• A computer program bug exists for a particular type of record.

• Master File programs are not yet available or are incorrect for a specific type of document.

• These documents will remain in the Unworkable Suspense Inventory until requested to be placed in the Workable Suspense Inventory (via the ERS Control File or until the Workable Suspense period expires, whichever comes first).

(1) The Command Codes needed for correcting the Error Inventory and the Workable Suspense Inventory are briefly described below. They are also explained in IRM 3.12.38, ERS, General Instructions. Any Command Code permitted by the Employees Security File is available.

(2) Command Codes are used to tell the system which function to perform.

(3) Command Codes must be entered in a valid format. Otherwise, a field error displays.

• Correct the data entered using the applicable Command Code (CC).

(4) The valid Command Codes are:

(1) This code is used when a math error is present involving Tax liability or Tax Due/Overpayment. Each math error display requires a correction to a field or the assignment of a TPNC.

• TPNCs are entered on the terminal screen following the literal "NC" and in the upper left corner of Form 1041.

  Reminder: The transmission of a TPNC cannot be accompanied by any other correction.

(2) A TPNC is entered only after determining that no other corrections to the record can be made. Before assignment of a TPNC:

• All corrections must be entered and transmitted for each error condition.

• A working trail showing the changes made must be edited on the return at the point of error.

• The Total Tax (Line 23) must be present.

(3) Each math error has certain TPNCs that are valid to clear that error. If an invalid code is assigned, the error will re-display.

(4) Each Form 1041 can have a maximum of three TPNCs.

• If more than three TPNCs are needed, assign TPNC 90 as the third notice code and list the errors for Notice Review to type and send to the taxpayer.

(5) TPNC 90 is a "fill-in" and should be used when no other TPNC fully explains the correction(s) made or when more than three or more notice codes are necessary. In January 2014, The Taxpayer Notice Code (TPNC) 90 Math Error (ME) Code literals were programmed into the Online Notice Review (OLNR) Retype Application for Notice Review (NR). This addition will eliminate the need for the NR tax examiner to manually type the notice literal and reduce potential copying/typing incorrect paragraphs/messages in the notices. For a full listing of the programmed TPNC 90 Math Error Codes, see TPNC 90 Math Error Code Job Aid, http://serp.enterprise.irs.gov/databases/portals/sp/bmf/ers/job-aids.html.

(6) When the ERS tax examiner sends a TPNC 90, they will do the following:

• Write on the returns "TPNC 90 - ##" (where ## represents the programmed TPNC 90 Math Error Code number.

• Notate TPNC 90 (or similar language) and the date of Form 1332, Block and Selection Record or Form 813, Document Register.

• Place the return in the TPNC 90 designated area (basket/tub).

(7) If there is not an applicable TPNC 90 Math Error Code, then the ERS tax examiner will do the following:

• Attach the applicable TPNC 90 slip of paper to the front of the return, after completing applicable fields.

• Notate TPNC 90 (or similar language) and the date of Form 1332, Block and Selection Record or Form 813, Document Register

• Place the return in the TPNC 90 designated area (basket/tub).

(8) Make sure that the return needing a TPNC 90 leaves Error Resolution System (ERS) with the correct TPNC 90 language for the applicable form. For questions, please contact your Lead and/or Manager.

(9) Once a TPNC is transmitted to the record, it may be changed or removed in the following manner:

• For records which have not cleared the terminal (errors remain after transmitting the TPNC), create an error with a higher priority.

  Note: This causes all clear codes and any TPNCs previously assigned to a lower priority error, to be deleted from the record. TPNCs are deleted from the header display. Beginning with the higher Priority IV error created, all subsequent error codes are displayed for resolution, even though they may have been displayed previously.

• For records which have cleared the terminal, the "C" or TPNC on this error and all subsequent error codes are displayed for resolution whether they were displayed previously, or not. TPNCs previously assigned for this error and subsequent error codes will be deleted from the screen.

• Records which have been worked may be reworked using Command Code GTRECW. See IRM 3.12.38, BMF General Instructions, for further details.

(10) All TPNCs are erased when a record is suspended with Command Code SSPND.

(11) Unfinished records from the previous day will contain none of the TPNCs that were assigned to the records that were not completely worked.

(12) For a listing of valid TPNCs and the information communicated to the taxpayer, see Exhibit 3.12.14-35, Taxpayer Notice Codes for Form 1041.

(1) Certain error codes will display with a clear code. A clear code is used, when appropriate, to clear the error code.

(1) If Form 1041 with Form 4720, Form 5227, and/or any Form 990 Series return attached is received at any Submission Processing Campus other than OSPC, process as follows:

1. Detach Form 1041 from Form 4720, Form 5227, and/or Form 99X.

2. Copy the Received Date from Form 1041.

3. If not already present, copy the EIN from Form 1041 to each detached document.

4. Prepare Form 4227 and notate "Form 1041 - Exempt Organization - Transfer To OSPC".

5. Transfer all credits to the correct Tax Period and MFT before forwarding to OSPC.

6. Route Form 4720, Form 5227, and/or Form 99X to OSPC.

7. Continue normal processing of Form 1041.

(2) If Form 1041 with Form 4720, Form 5227, and/or any Form 990 Series return attached is received at the Ogden Submission Processing Campus (OSPC), process as follows:

1. Detach Form 1041 from Form 4720, Form 5227, and/or Form 99X.

2. Copy the Received Date from Form 1041 to each detached document.

3. If not already present, copy the EIN from Form 1041 to each detached document.

4. If Reasonable Cause For Failure To Pay Taxes Timely has been granted for Form 1041, notate "Reasonable Cause Granted" on each detached document. For instructions for determining Reasonable Cause, see IRM 3.11.14.20.1 and 3.11.14.20.6.

5. Route Form 4720, Form 5227, and/or Form 99X to the function responsible for processing.

6. Continue normal processing of Form 1041.

(3) For additional procedures for processing Split-Interest Trusts, see IRM 3.12.14.26.11.2, Correction Procedures - Error Code 026.

(1) It is important to leave a legible Working Trail (or Action Trail) using blue ink for those who may work with the return later.

(2) Write all Taxpayer Notice Codes (TPNCs) 90 on the front of the return in the upper left corner (or use Form 12648 , Error Correction 90 TPNC). See form specific IRM reference and title and Taxpayer Notice Codes, for additional information.

(3) If corresponding with a non-suspense letter, "X" and write the corrected money amounts to the left of each original point(s) of error. Money amounts are to be written in dollars only or dollars and cents, as applicable. Arrowing is allowed for money amounts when there are no intervening entries between the arrow and the line to which the money is to be entered.

(4) Leave a working trail on the return when changes are made to the following items:

• Tax Period (Field 01TXP).

• Name Control (Field 01NC).

• Employer Identification Number (Field 01EIN).

• Computer Condition Code (CCC)

• Received Date

• Correspondence Received Date (Field 01CRD).

Reminder: Circle out incorrect Tax Periods, Received Dates, Employer Identification Numbers (EINs), and Social Security Numbers (SSNs).

(5) When working Reject re-inputs, circle out any previous Action Codes shown on the front of the return, if no longer applicable.

(6) When working Rejects, edit "640" at the bottom of the page to indicate the DLN has been voided.

(1) If the return has a statement that it was "Secured Under the Authority Of Section 6020(B)":

1. GTSEC 01.

2. Enter "4" in Field 01CCC.

3. If the return is stamped "Do Not Assess Failure to Pay", GTSEC 01 and enter "D" and "4" in Field 01CCC.

(2) If any unprocessable conditions exist, contact the Revenue Officer (RO) that prepared and signed the return. Use Discovery Directory to email the RO and SSPND AC 360. Do not contact the taxpayer on any secured return.

(1) Only decedent estate 1041 returns, both original and amended can participate in this program.

(2) Returns are identified by the taxpayer writing "Streamline" on the top of the return. There will also be an audit trail notated that the package was complete.

(3) Streamline original 1041 returns will have the following CCCs:

• D,

• P,

• R, and

• 8

(4) Streamline amended 1041 returns will not be processed by SP if found in the pipeline SSPND 640, so ERS/Rejects can void the DLN and route to ICT for scanning with a special cover sheet. They will be scanned into CII and worked by specific people in AM.

(1) Document Perfection and ERS are responsible for identifying refunds and for initiating requests for manual refunds.

(2) Action Code 341 should be input by Code & Edit to show that a manual refund is needed. If these conditions are not identified in Code & Edit, ERS must follow the following criteria:

(1) Taxpayers reporting a Section 965 net tax liability on their 201712 - 201911 tax returns can make certain elections, including:

(2) A TY 2020 Section 965 return can be identified by any of the following:

• Amount present on Line 25 (Form 1041) or Line 19 (Form 1041-N).

• Amount present on Form 965-A, Part II, Line 4, column (k).

• Amount present on Form 1041, Sch. G, Part II, Line 15.

• Amount present on Form 965-A, Part I, Line 4, column (f).

• "Section 965" or "965 Tax" (or similar language) notated on the return, attachments, or statements.

(3) A TY 2019 Section 965 return can be identified by any of the following:

• Amount present on Line 25 (Form 1041) or Line 19 (Form 1041-N).

• Amount present on Form 965-A, Part II, Line 3, column (k).

• Amount present on Form 1041, Sch. G, Part II, Line 15.

• Amount present on Form 965-A, Part I, Line 3, column (f).

• "Section 965" or "965 Tax" (or similar language) notated on the return, attachments, or statements.

(4) A TY 2018 Section 965 return can be identified by any of the following:

• Amount present on Line 24 (Form 1041) or Line 19 (Form 1041-N).

• Amount present on Form 965-A, Part II, Line 2, column (k).

• Amount present on Line 25f (Form 1041).

• Amount present on Form 965-A, Part I, Line 2, column (f).

• "Section 965" or "965 Tax" (or similar language) notated on the return, attachments, or statements.

(5) A TY 2017 Section 965 return can be identified by any of the following:

• Amount included on line 8, (Form 1041).

• Section 965 Amount to be paid in installments include on Line 24a (Form 1041).

• Section 965 net tax liability amount included in the total on Form 1041, Schedule G, Line 7.

• Section 965 Transition Tax Statement attached and an amount present on Lines 1, 3, 6 or 7.

• Amount present on Form 965-A, Part II, Line 1, column (k).

• Amount present on Form 965-A, Part I, Line 1, column (f).

• "Section 965" or "965 Tax" (or similar language) notated on the return, attachments, or statements.

(6) If the Tax Period is 201712 and later:

• Enter CCC "J" if the return is identified as section 965 return as indicated in paragraphs (2), (3), (4) or (5) above.

• Enter CCC "B" if the return has a section 965(i) election as listed in paragraph (1), above.

(7) Modernized e-File (MeF) created naming conventions to identify "965" on the return. Some returns may not be true Section 965 returns. The numbers "965" may appear in the address, banking account number, EIN or anywhere on the return. If determined that the return is not Section 965, delete CCC "J" and continue processing.

(8) For TY 2017, the placement of Net 965 Tax Liability Paid and Net 965 Tax Liability on the form was designed to cause the return to generate an error code. The error code and/or Action Code "460" ensures the return will be examined by an ERS/Rejects tax examiner.

(9) If Form 965-A is attached, GTSEC 20 and ensure all fields have been transcribed into the correct fields. See IRM 3.12.14.18, Section 20 - Form 965-A, Individual Report of Net 965 Tax Liability

(10) Tax Period 202112 and subsequent correction procedures:

(1) Under the Inflation Reduction Act (IRA) of 2022 and CHIPS and Science Act of 2022, the taxpayer can elect to:

• Take certain credits as an "Elective or Deemed Payment".

• Transfer certain credits to another taxpayer.

• Claim the credit as a General Business Credit.

(2) For tax periods 202201 through 202212 only, identify an "Elective or Deemed Payment Election" when the taxpayer writes "IRA22DPE" on Form 3800, an attachment, or on any of the following lines:

(3) When a 202201 through 202212 return is identified with an "Elective or Deemed Payment Election", and Code and Edit has not done so, do the following:

1. Enter RPC "J."

2. Place a flag at the top of the return and attach the "IRA22 DPE/TRE Reminder" sheet under the Entity portion of the return.

   Note: P&A will provide the pre-printed half-sheets for ERS to use.

3. Suspend with Action Code "450".

4. Sign the DLN out of the block using Form 1332, Block and Selection Record.

5. Give the return to the lead. The lead will place the return in the designated area for LB&I review.

(4) When a 202201 through 202212 return is identified In ERS with a "Credit Transfer", and Code and Edit has not done so, do the following:

1. Enter RPC "K."

2. Place a flag at the top of the return and attach the "IRA22 DPE/TRE Reminder" sheet under the Entity portion of the return.

   Note: P&A will provide the pre-printed half-sheets for ERS to use.

3. Suspend with Action Code "450".

4. Sign the DLN out of the block using Form 1332, Block and Selection Record.

5. Give the return to the lead. The lead will place the return in the designated area for LB&I review.

(5) Treat taxpayers who claim the credit on Form 3800 with no other indication of claiming the "Elective or Deemed Payment Election" or "Credit Transfer" as normal. See IRM 3.12.14.26.45 , Error Code 866 - General Business Credits.

(1) The Error Resolution System identifies errors according to type and priority. The record heading shows the type of error:

• Action Code Error (Priority I).

• Section Error (Priority II) - Includes Terminus and ISRP errors.

• Validity Error (Priority III).

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

(2) There may be records where the tax examiner finds that programming has not furnished a section that is needed to solve an error. If this occurs:

1. Enter Command Code GTSEC.

2. Report to the National Office for correction of the display.

(1) Description:

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

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

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

(3) Error Correction - Process Priority I errors as follows:

(4) Action Code 001 is a Priority I error. This condition occurs whenever the BOB Resolution function has added a document to a block by entering only the Name Control and TIN. The remainder of the record must be added by ERS.

• Enter Command Code GTSEC for each record section that should contain data.

• Add the required data.

• When all the sections have been entered, enter "C" in the Clear Field.

(5) See IRM 3.12.38, BMF General Instructions, for procedures for correcting Priority I Action Code errors in Suspense and Unpostable Code Correction.

(1) Most edit, missing section, and terminus errors should be eliminated by Integrated Submission and Remittance Processing (ISRP). However, edit errors and/or terminus errors may be present if normal ISRP validity checks have been bypassed.

(2) Edit Error - A section with an error detected by ISRP. Edit errors are coded as follows:

• Code 1 - Split-screen transmission. Occurs when the Key Verifier attempted to change the Check Digit or changed four or more digits of the Primary TIN. Also, occurs when the Original Entry Operator indicates that a required section was missing.

• Code 3 - Invalid section ending point.

• Code 4 - Invalid field length.

• Code 5 - Questionable section. Occurs when a section is entered twice or is entered out of sequence by ISRP.

(3) Terminus Error - A section with variable length fields containing an erroneous size field or otherwise being of erroneous size.

(4) Display - All fields except the ERS Action Code and the Remittance (Payment Received) fields are displayed in columnar format with or without data. The error type is indicated for ISRP Problem Code errors. Only one section (error) is displayed at a time.

(5) Content - Any individual section excluding computer-generated fields and the Action Code. The Action Code is an uncorrectable field, except as defined for SSPND and RJECT.

(6) Correction Procedures:

• ISRP Errors - All fields in the section must be examined when a ISRP error is present. If Section 01 of a return is coded, examine the section for an error to ensure that the return is for the taxpayer whose name is in Section 01. Correct the section and transmit.

• Questionable Section - Verify and enter all the data for the displayed section. Transmit when all the data is correct.

• Terminus Errors - All fields of the section must be examined when a terminus error is present. Correct the section and transmit.

(7) For any returns suspended prior to the beginning of a new processing year, that are reactivated in the next year to be worked via the Error Resolution System (ERS), the following action will need to be taken to revalidate the return through the updated ERS systemic processes...

1. Access the return record using IDRS Command Code GTREC.

2. Drop the cursor to bottom of the screen and transmit.

(1) Definition - Any field failing to meet the requirements for that field (and that field only) is shown as a Priority III error. Consistency and/or relationships with other fields are not a factor. Individual field validity errors to be bypassed after initial consideration, are shown as Priority IV Errors.

(2) Some reasons for field errors include the following:

• Non-numeric character in a numeric field.

• Non-alphabetic character in an alpha field.

• Blank space in a number field.

• Blank in the first position of an alpha field.

(3) Display - Every field displayed is in error.

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

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

(4) Correction Procedures:

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

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

3. Enter the correct data for each field displayed.

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

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

• If the result of the computer computation of an amount differs from the record, the computation fields are shown as a Priority IV Error.

(2) Display - Priority IV errors are displayed with the Error Code for the specific error. The screen display shows the Error Code assigned and the fields needed to make the necessary correction.

1. Compare the displayed fields with the return. If the field was coded or transcribed incorrectly, overlay the screen display with the correct data.

2. For those amounts entered from ERS Input Only Fields (e.g., Field 05GVT), the first corrections will be entered to the taxpayer's amount.

3. For all math Error Codes, a field labeled "NC" followed by "XX" will generate. The "NC" field is located on Line 4 of the screen display (to the right of CRECT). Multiple TPNCs may be entered when multiple XXs are shown.

4. Previously assigned TPNCs are displayed on Line 3 preceded by the literal "NC".

5. If determined that the generated Math Error Code was the direct result of a previous error, any previously assigned TPNC may be entered.

6. A field labeled "CL" is displayed for the entry of a Clear Code on records where the possibility exists that a change or correction may not be needed. The "CL" field is located on Line 4 of the screen display (to the right of CRECT). All coding and transcription errors displayed must be corrected and IRM procedures for each field shown on the screen display must be applied before entering a "C" in the Clear Field.

7. All errors must be resolved by eliminating (or suspending) the error, entering the Clear Code, or entering a Taxpayer Notice Code.

(3) Correction Procedures:

(4) For specific correction instructions for each Error Code, see IRM 3.12.14.24 Priority IV Errors - Error Codes 001 Through 999.

(1) Section 01 contains entity data, remittance, fields for codes, Received Date, and miscellaneous information.

(2) The Remittance field cannot be changed by ERS.

• Non-Remittance Returns -This field must be blank.

• Remittance Returns -This field must be present and all numeric.

(1) Listed below are the fields contained in Section 01. Data in this section is obtained from Form 1041, Form 1041-QFT, and Form 1041-N:

(1) Description - Field 01NC is located in the entity section of Form 1041.

• Valid characters are alpha, numeric, hyphen, ampersand, and blank.

(2) Invalid Condition - Field 01NC is invalid if any of the following conditions are present:

• The first position is not alpha or numeric.

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

• There are any intervening blanks between characters.

(3) Correction Procedures:

1. Correct all misplaced entries, coding errors, and transcription errors.

2. If the Name Control cannot be determined, research ENMOD or INOLE to secure the Name Control.

If...	Then...
Able to locate	Enter the correct Name Control in Field 01NC.
Unable to locate	SSPND 320. Note: If IDRS is not available, SSPND 351/352.

(4) For information on determining the Name Control for an Estate or Trust, refer to Document 7071-A, BMF Name Control Job Aid.

(1) Description - Field 01EIN is located in the entity section of Form 1041/1041-QFT/1041-N.

• Only numeric characters are valid.

(2) Invalid Condition - Field 01EIN is invalid if any of the following conditions are present:

• The EIN is not numeric.

• The EIN is less than nine characters.

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

• The EIN is all zeros or all nines.

(3) Correction Procedures:

1. Correct all misplaced entries, coding errors, and transcription errors.

If...	Then...
The EIN was transcribed correctly	Research for another EIN on the return or attachments and enter in Field 01EIN.
The EIN can’t be determined	Research IDRS for the correct EIN using the IAT name search tool. (Note: If IAT is not available, use CC NAMEB/NAMEE, ENMOD, or INOLE). If located, enter the correct EIN. If more than one EIN is located or the correct EIN cannot be located, SSPND 320. Note: If research command codes are not available, SSPND 351.
No EIN can be found	SSPND record with Action Code 320. Route to Entity Control using Routing Slip notated "NO RECORD FOUND".

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

   Note: Do not send Letter 3875C: if 3 or less digits of the EIN are transposed, different, missing, when INOLES indicates the account has been merged, EIN is consecutive numbers (e.g., 12-3456789) or repeating numbers (e.g., 11-1111111), or If the EIN on the return is the taxpayer's SSN and research shows there is a valid EIN for that taxpayer.

(4) Suspense Correction:

1. Enter the EIN assigned by Entity in Field 01EIN and the entity assignment date in Field 01CRD.

2. If the EIN is changed from the taxpayer's entry and Entity has not already issued Letter 3875C, issue Letter 3875C as a non-suspense letter to the address on the return.

   Note: Do not send Letter 3875C: if 3 or less digits of the EIN are transposed, different, missing, when INOLES indicates the account has been merged, EIN is consecutive numbers (e.g., 12-3456789) or repeating numbers (e.g.,11-1111111), or when an SSN is used on a BMF return and research has shown there is no entity on Master File when the number is in EIN format.

(1) Description - Field 01TXP is in the upper right corner of Page 1 of Form 1041. The pre-printed calendar year Tax Period is located in the top center margin of Form 1041. If other than the pre-printed calendar year, the Tax Period is indicated under the heading "U.S. Income Tax Return for Estates and Trusts".

• The Tax Period will be shown in "YYYYMM" format.

  Example: Tax Period 2012 will display as 202012.

• Only numeric characters are valid.

• The Tax Period is the basis for all Tax Period related mathematical comparisons and validity checks.

(2) Invalid Condition - Field 01TXP is invalid if any of the following conditions are present:

• The Tax Period is not all numeric.

• The month (last two digits) is not 01 through 12.

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

• The Tax Year is equal to the current year, but the month is after the current processing month.

• Form 1041 - The Tax Period is before 196112.

• Form 1041-QFT - The Tax Period is before 199708.

• Form 1041-N - The Tax Period is before 200312.

(3) Correction Procedures:

1. Correct all misplaced entries, coding errors, and transcription errors.

2. Determine the correct Tax Period from Form 1041 and attachments.

(4) The following applies to all returns if Field 01TXP has been changed or needs to be changed:

(1) Description - Field 01FID is a single numeric field edited to the right of the "Simple Trust" box (Box "A" of Form 1041).

(2) Valid characters are as follows:

(3) Correction Procedures:

1. Correct all misplaced entries, coding errors, and transcription errors.

2. Ensure that the type of entity box checked agrees with what the name line and exemption amount indicate. If not, treat as a misplaced entry.

   Example: If the type of entity is checked for a decedent's estate but the name line says a trust and the exemption is for $300, then the taxpayer has checked the wrong box. The Simple Trust box needs to be checked and "2" entered into Field 01FID.

Note: The table below shows fiduciary codes and exemption amounts per return type.

Type of Return	Fiduciary Code	Trust Code	Exemption Amount
Decedent's Estate	1	-	$600
Simple Trust	2	-	$300
Grantor Trust (Partially Taxable)	2	3	$100 or $300
Complex Trust	3	-	$100 or $300
Generation Skipping Trust	3	1	$100 or $300
Grantor Trust (Non-Taxable)	4	3	$0
Bankruptcy Estate - Ch. 7	5	-	$0
Bankruptcy Estate - Ch. 11	6	-	$0.00
Qualified Disability Trust-IRC 642(b)(2)(C)	8	-	($5,000 for tax year 2024) ($4,700 for tax year 2023) ($4,400 for tax year 2022) ($4,300 for tax years 2020 through 2021)
Non-Exempt Charitable or Split Interest Trust Described in IRC 4947(a)(2)	9	-	$100 or $300

3. If Field 01FID is other than "1" through "6", "8", or "9", correct as follows:

If...	Then...
The "Decedent's Estate" box is checked	Enter "1" in Field 01FID.
The "Simple Trust" box is checked	Enter "2" in Field 01FID.
The "Complex Trust" box is checked	Enter "3" in Field 01FID.
The "Qualified Disability Trust" box is checked or "Section 642(b)(2)(C)" is notated on the dotted portion of Line 21 and Field 0421 contains an entry of $4,700 or less.	Enter "8" in Field 01FID.
The "Grantor Trust" box is checked, or you have determined that the return is for a Grantor Trust and the return is taxable, entries are present on any of Lines 1 through 30 of Form 1041	Enter "2" in Field 01FID and enter "3" in Field 01TRC. Exception: Process Form 1041 as a Non-Taxable Grantor Trust (a "4" in Field 01FID) if it is apparent that the return is non-taxable, and the taxpayer has erroneously entered data to Lines 1 through 22.
The "Grantor Trust" box is checked, or you have determined that the return is for a Grantor Trust and the return is non-taxable, no entries on Lines 1 through 23 or the taxpayer has erroneously entered data to Lines 1 through 23	Enter "4" in Field 01FID and enter "3" in Field 01TRC.
The "Bankruptcy Estate - Ch. 7" box is checked	Enter "5" in Field 01FID.
The "Bankruptcy Estate Ch. 11" box is checked	Enter "6" in Field 01FID.
If neither Bankruptcy box is checked	Enter "5" in Field 01FID, if the return indicates it is for a "Bankruptcy Estate".
Only the "Pooled Income Fund" box is checked	Enter "3" in Field 01FID. GTSEC 01 and enter "1" in Field 01PII.
A 1985 or subsequent Form 1041 is received with a notation that it is for a Testamentary Trust, or the Testamentary Trust box is checked on a 1984 or prior Form 1041	Enter "3" in Field 01FID.
A current year Form 1041 is received with the Yes box checked on Line 9 of the Other Information Section (Page 2) or a notation that it is for a GENERATION SKIPPING TRUST, or A prior year Form 1041 is received with a notation that it is for a Generation Skipping Trust, or the Generation Skipping Trust box is checked (Tax Year 1986 or prior)	Enter "3" in Field 01FID and "1" in Field 01TRC.
The Described in Section 4947(a)(2) box is checked	Enter "9" in Field 01FID and enter "6" in Field 01ADC.
No box is checked, and the Name Line contains a notation that it is for Estate Trust.	Enter "1" in Field 01FID.

Caution: In addition to checking the applicable Type of Entity in Section A of Form 1041, taxpayers are instructed to check the ESBT (S-Portion Only) box in Section A when ESBT (Electing Small Business Trusts) tax applies (if ESBT box is checked, "1" should be in Field 01ESB). Determine the Fiduciary and Trust Code from the box checked, other than the ESBT box. If no other box is checked, follow the procedures below.

4. If no boxes (or multiple boxes) are checked in the entity section of the return and the type of return cannot be determined from the Name line, Exemption amount, or there isn't a notation on the return indicating the entity type, or the taxpayer notates Nominee enter "3" in Field 01FID.

   Exception: If the taxpayer has notated "Receivership", "Substantial Owner", "Revocable (Living) Trust", "Generation Skipping Trust", or "IRC Section 671 - 678)", code as a Grantor Trust.

If...	Then...
Grantor Trust (Non-Taxable)	Enter a "4" in Field 01FID and "3" in Field 01TRC.
Grantor Trust (Partially Taxable)	Enter a "2" in Field 01FID and "3" in Field 01TRC.

Note: If Government National Mortgage Association (GNMA - Ginnie Mae) Pool is notated on Form 1041, but entries are present on any of Lines 1 through 21, and Line 22 has a positive amount, then Code & Edit (C&E) has been instructed to correspond to determine if Form 1041 is a Taxable or Non-taxable return. GNMA Pool returns are Non-taxable returns only.

(1) Description - Field 01TRC is a single numeric field edited to the right of the "Pooled Income Fund" box (Box "A" of Form 1041).

(2) Valid characters are "1," "2," "3," "4," and blank:

• Trust Code 1 - Generation Skipping Trust (should only be present with Fiduciary Code "3").

• Code 2 - Reserved.

• Code 3 - Grantor Trust (should only be present with Fiduciary Codes "2" or "4").

• Code 4 - Family Estate Trust (should only be present with Fiduciary Code "4").

Note: Use Trust Code "3" for a Family Estate Trust when the Grantor Trust box has been checked on the return.

(3) Correction Procedures:

1. Correct all misplaced entries, coding errors, and transcription errors.

2. If Field 01TRC is other than "1" through "4", or blank, correct as follows:

(1) Description - Field 01CCC is an alpha or numeric field edited in the center of Line 1 of Form 1041.

• Computer Condition Codes post to the Master File and are used to identify a special condition or computation for the computer.

(2) Correction Procedures:

1. When the code(s) edited on Form 1041 are illegible or invalid, examine the return to determine the correct code(s) and enter on the screen.

2. If no reply to correspondence or if the correspondence was undeliverable, enter a "3" in Field 01CCC.

(3) Listed below are the valid Computer Condition Codes for Form 1041:

(4) When CCC "G" is present, no other CCC's are valid except "W", "T", and "3".

• If a CCC other than "W", "T", or "3" is present with CCC "G", delete the invalid CCC.

(1) Description-- Field 01RCD is a numeric field, which is either date stamped or edited in the center of Page 1 of Form 1041.

• Field 01RCD must be present and entered in YYYYMMDD format.

(2) Invalid Condition - Field 01RCD is invalid if any of the following conditions are present:

• The Received Date is not present.

• The Received Date is not in YYYYMMDD format.

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

• The Received Date is not all numeric.

• The Received Date is before 19620101.

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

(3) Correction Procedures:

• Correct all misplaced entries, coding errors, and transcription errors.

(4) Determining Postmark Dates:

• Only legible official postmark date and/or label dates (Killer Bar Strips or Postage Validation Imprinted Labels) are accepted as proof of filing timely.

• Metered Postmarks are easily identified by the official marking of arrows. These types of markings are not found on a privately metered postmark.

• Valid official Killer Bar Strips are identified by a series of solid or broken lines containing a date, city, and state that is used to cancel postage stamps. Accept the postmark date as the Received Date.

• For further information and procedures on Postmarks, see IRM 3.10.72, Receiving, Extracting, and Sorting.

(5) Private Delivery Services - A private delivery service (PDS) is a business, designated by the IRS (rather than by the U.S. Postal Service), to send returns to the IRS. Private delivery services do not deliver to P.O. Boxes. Taxpayers must use the U.S. Postal Service to mail items to an IRS P.O. Box address. The postmark date is the date the private delivery service records in its database or marks on the mailing label.

1. Accept all designated PDS marks. Do not use marks from a non-designated PDS to determine the IRS Received Date. See www.irs.gov/pds for a list of currently designated Private Delivery Services.

2. The "Timely Mailing as Timely Filing" rule applies only to the U.S. Postal Service and to a designated PDS. When the rule applies to a PDS, it is referred to as a "Designated" PDS.

3. Currently, only FedEx marks air bills with the mailing date. Do not use FedEx "Power ship 3" air bills for determining the mail date. Accept all other FedEx air bills.

4. Use the instructions in IRM 3.10.72 for determining the Received Date when the mail marks are not from a designated PDS.

(1) Description - Transcribed from the right of the Signature Section of Form 1041.

(2) Invalid Condition - Field 01FIN is invalid if any of the following conditions are present:

• Field 01FIN is not nine numbers.

• Field 01FIN is all zeros or all nines.

• The first two digits (Area Office Code) are: 00, 07, 08, 09, 17, 18, 19, 28, 29, 49, 78, 79, or 89.

(3) Correction Procedures:

1. Correct all misplaced entries, coding errors, and transcription errors.

2. If the Fiduciary EIN is still invalid or if the return is nontaxable, amended or for an Estate, delete Field 01FIN.

(4) Do not enter the Fiduciary EIN if any of the following conditions exist:

• The return is for an Estate (Box A).

• Field 0525A is blank.

• Field 0423 is blank.

• The Fiduciary's EIN is illegible or less than nine numeric digits.

• The Fiduciary's EIN is the same as the Trust's EIN (Box C).

• The fiduciary is not a trust or financial institution (i.e., bank, credit union, savings and loan).

• The return is amended (Box F).

(1) Description -Transcribed from the right of Field 01FIN (Fiduciary EIN) in the Signature Section of Form 1041. The Paid Preparer check box is used to indicate whether the taxpayer has elected to allow the Paid Preparer to answer questions about the taxpayer's return as it is processed.

• Valid characters are "1" and blank.

• If the taxpayer checks only the Yes box, Code & Edit should edit a "1" in the margin to the right of the Paid Preparer check box.

(2) Invalid Condition - Field 01CBI is invalid if other than "1" or blank

(3) Correction Procedures:

• Correct all misplaced entries, coding errors, and transcription errors.

(1) Description - Transcribed from the right of the Paid Preparer's Section of Form 1041.

• Data may or may not be present in Field 01PSN.

• Valid characters are all blank, or with a "P" in the first character followed by eight numerics (PTIN).

  Note: The first character in the PTIN must begin with the alpha "P". The range for a valid PTIN is P00000001 through P99999998. A "P" followed by all zeroes, or all nines, is not valid.

(2) Invalid Condition - Field 01PSN is invalid if any of the following conditions are present:

• Field 01PSN is other than a "P" followed by eight numeric digits,

• Field 01PSN is all zeros or all nines.

(3) Correction Procedures:

1. Correct all misplaced entries, coding errors, and transcription errors.

2. If "P" is missing, add to Field 01PSN.

3. If unable to determine a valid entry, delete Field 01PSN.

(1) Description - Transcribed from the right of the Paid Preparer's Section of Form 1041.

• Data may or may not be present in Field 01PEN.

• Valid characters are all blank or all numeric.

  Exception: Field 01PEN will be invalid if all nines, all zeroes, or less than nine digits.

(2) Invalid Condition - Field 01PEN is invalid if any of the following conditions are present:

• Field 01PEN is not nine numeric digits.

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

• Field 01PEN is all zeros or all nines.

(3) Correction Procedures:

1. Correct all misplaced entries, coding errors, and transcription errors.

2. If unable to determine the valid entry, delete Field 01PEN.

(1) Description - Transcribed from the right of the Paid Preparer's Section of Form 1041.

• Data may or may not be present in Field 01PTN.

• Valid characters are alpha and numeric.

(2) Invalid Condition - Field 01PTN is invalid if other than alpha, numeric or blank.

(3) Correction Procedures:

1. Correct all misplaced entries, coding errors, and transcription errors.

2. If invalid, delete Field 01PTN and continue processing.

(1) Field 01CRD is a numeric field edited on the front of the 1041.

• The Correspondence Received Date (CRD) should be present when returns have been held in Suspense and the reply is received after the Return Due Date.

• If present, Field 01CRD must be entered in YYYYMMDD format.

(2) Invalid Condition - Field 01CRD is invalid if any of the following conditions are present:

• Not numeric.

• Not in YYYYMMDD format.

• Not a valid date.

(3) Correction Procedures - Correct all misplaced entries, coding errors, and transcription errors.

• Compare the field with the return:

If...	Then...
The Correspondence Received Date cannot be determined (i.e., illegible)	Check the attached correspondence for the CRD.
Multiple Correspondence Received Dates are present	Use the CRD that made the return processable in Field 01CRD.

(4) Determining the CRD - If the reply was not date stamped, determine the CRD in the following priority order:

1. The IRS Date Stamp - Placed on the return or reply by the Receipt and Control function when the return is received with a reply to the correspondence.

2. The U.S. Postal Service postmark or metered date on the reply envelope.

3. The current date.

(5) Enter the CRD (YYYYMMDD) in Field 01CRD except in the following situations:

• Correspondence was not necessary or was issued in error.

• The correspondence reply was received before the Return Due Date.

• The correspondence was required because an IRS processing error was identified.

(6) If no reply or the correspondence was undeliverable, enter "3" in Field 01CCC.

(7) On returns, which have been sent back to the taxpayer (correspondence is attached), the original stamped Received Date should be circled-out and the date on which the correspondence is received should be edited as the Received Date in the Deductions Section on Form 1041.

(8) If there is an indication that Entity has assigned an EIN to the return, enter the entity assignment date (lower left corner of Form 1041) in Field 01CRD, if the entity assignment date is later than the Received Date and Return Due Date.

(1) Description - Field 01ADC is a numeric field transcribed from the left margin next to Line 10 identified by "1 -" followed by the appropriate audit code(s). Audit Codes are used to alert Examination to a particular condition on the return.

(2) Up to fifteen Audit Codes may be entered in Field 01ADC. Enter Audit Codes using the following priority order:

(3) Invalid Condition - Field 01ADC will generate as a field error if the Audit Code is other than blank or the valid codes listed above.

(4) Field 01ADC will also generate when Audit Code "8" is present and the Document Code is not "39".

(5) Correction Procedures - Correct all misplaced entries, coding errors, and transcription errors.

(6) Determine the appropriate Audit Code as follows:

(1) Description - Field 01ESB is a numeric field edited in the left margin next to Line 10 as "2 - 1" when the ESBT (S portion only) box is checked in "Box A, Type of Entity" in the upper left on page 1.

(2) Valid characters are "1" and blank. "1" indicates the "ESBT" box is checked.

(3) Invalid Condition - Field 01ESB will generate as an error if the ESBT Indicator is other than "1" or blank.

(4) Correction Procedures:

1. Correct all misplaced entries, coding errors and transcription errors.

2. Compare the screen entry with the entry on the return. If the field was coded or transcribed incorrectly, correct the screen display and the return when necessary.

(1) Description -- Field 01PII is a numeric field edited in the left margin next to Line 10 as "3 - 1" when the Pooled Income box is checked (upper left corner of Page 1).

(2) Valid characters are "1" and blank.

• PII Code "1" is entered to identify when the Pooled Income Fund box is checked on Form 1041 (Box A, Type of Entity).

(3) Invalid Condition - Field 01PII will generate as a field error if the PII Code is other than "1" or blank.

(4) Correction Procedures:

1. Correct all misplaced entries, coding errors, and transcription errors.

2. Compare the screen entry with the entry on the return. If the field was coded or transcribed incorrectly, correct the screen display and the return when necessary.

(1) Description - Field 01PIC is a numeric field edited in the left margin next to Line 10 as "4 - 1".

• The Penalty and Interest Code is edited when Form 1041 is received after the Return Due Date ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and the taxpayer has included penalty and/or interest.

(2) Valid characters are "1" and blank.

(3) Invalid Condition - Field 01PIC will generate as a field error if the Penalty and Interest Code is other than "1" or blank.

(4) Correction Procedures:

1. Correct all misplaced entries, coding errors, and transcription errors.

2. Compare the screen entry with the entry on the return. If the field was coded or transcribed incorrectly, correct the screen display and the return when necessary.

(1) C&E is no longer going to edit Missing Schedule Codes in the left margin of the return. Instead, they are to correspond for the missing schedules.

(2) Correction Procedures:

1. Delete the entry in Field 01MSC.

2. If there is no indication C&E has requested the missing form(s)/schedule(s), SSPND and correspond if credit is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(1) Description - Field 01ISI is edited in the left margin next to Line 12 as "6 -" followed by the appropriate code when Form 6252 (Installment Sale Income) is attached.

(2) Valid characters are "1," "2," "3," and blank.

(3) Invalid Condition - Field 01ISI will generate as a field error if the Installment Sales Indicator Code is other than "1," "2,""3," or blank.

(4) Correction Procedures:

1. Correct all misplaced entries, coding errors, and transcription errors.

2. Correct the return when necessary.

(1) Description - The Historic Structure Code applies to any return for Tax Periods 198212 and subsequent.

(2) Field 01HSC is edited in the left margin next to Line 12 as "7 - 3" when the Form 3468 (Investment Credit) has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ on the following:

• TY 2010 and subsequent: If there are entries under Part III, Line 11; specifically, Lines e, f, g, h, i, or j.

• For TY 2008 and subsequent - Code 3 if an amount is present in Part III, on Line 10, e, f, g, h, i, or j.

• For tax year 2006 - 2007 - Code "3" if an amount is present on Line 1, e, f, g, or h.

• For tax years 1995 through 2005 - Code "3" if an amount is present on Line 1, b, or c.

(3) Valid Historic Structure Codes are "3" and/or blank.

(4) Invalid Condition - Field 01HSC will generate as a field error when the Historic Structure Code is other than "3" or blank.

(5) Correction Procedures:

1. Correct all misplace entries, coding errors and transcription errors.

2. Leave Field 01HSC blank if there are no entries on Lines 1a through 1d, or if question is not on Form 3468 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

(6) If a Department of Interior Certification letter or form is attached to the return, do not detach it from Form 1041.

(1) Description - Field 01QNT is in the entity section (Part I) of Form 1041-QFT only. Valid characters are numeric only.

• Form 1041-QFT - Transcribed from Line 4 (Part I).

(2) Invalid Condition - Field 01QNT will generate as a field error if other than numeric.

(3) Correction Procedures -Correct all misplaced entries, coding errors, and transcription errors.

(1) Description - will be edited on the bottom center margin of the 1041 return, page 1. It will be used whether or not the Form 8948, Preparer Explanation for Not Filing Electronically, has been attached to the 1041 return. Valid characters are the following numeric one-digit code:

• Blank - No E-file waiver Form 8948 attached.

• 1 - Taxpayers elected to file return on paper.

• 2 - Waiver from requirements to electronic file applied for and received.

• 3 - Taxpayers are members of a religious group exempt from electronically filing the return.

• 4 - Return was rejected by IRS E-File and the preparer was unable to resolve the reject condition.

• 5 - E-File software package does not support forms or schedules attached to the return.

• 6 - Other circumstances prevented taxpayers from filing the return electronically.

• If multiple boxes are checked the priority order would be: 6a or 6b, 3, 2, 1, 4, 5, 6c.

(1) Description - Return Processing Code (RPC) is an alpha or numeric character used to identify a specific condition on the return.

(2) RPCs are edited on Page 1, to the right of Line 1 in the margin area for Form 1041, Form 1041-QFT, and Form 1041-N.

(3) A maximum of 35 RPCs can be entered into Field 01RPC.

(4) The valid RPC codes are:

(1) A foreign address will contain:

• Street Address or P.O. Box

• City or town name

• Other principal subdivision (i.e., province, state, county, etc.)

• Postal code, if present

• Foreign country

(2) Returns with addresses in the U.S. Territories or Freely Associated State (FAS) are considered to be a foreign return for processing purposes but are entered the same as domestic addresses.

1. A two-character alpha code must be entered in Field 02ST for the territory or Freely Associated State (FAS) name.

U.S. Territory or Freely Associated State	Abbreviation
American Samoa	AS
The Federated States of Micronesia	FM
Guam	GU
The Republic of the Marshall Islands	MH
Northern Mariana Islands	MP
The Republic of Palau	PW
Puerto Rico	PR
Virgin Islands (U.S.)	VI

2. A ZIP Code must be present.

(1) Listed below are the fields contained in Section 02. Data in this section is obtained from Forms 1041, 1041-QFT, and 1041-N:

(1) Description - Field 02CON is in the entity section of the return.

(2) Valid Condition - Field 02CON has 35 positions and valid characters are alpha, numeric, ampersand, dash, slash, or percent (%).

(3) Invalid Condition - Field 02CON is invalid if any of the following conditions are present:

• The first position is % (percent) and the second position is not blank, or

• The first position is blank, or

• The first character of the in-care-of name is not alpha or numeric, or

• There are two consecutive blanks between significant characters.

(4) Correction Procedures - Correct coding and transcription errors.

(1) Description - Field 02FAD is in the entity section of the return.

• This field will contain an entry when there is a foreign address present on the return.

• Field 02FAD should not be present on "G" coded short length returns.

(2) Valid Condition - Valid characters are alpha, numeric and special characters.

(3) Invalid Condition - Field 02FAD will generate as an error when any of the following conditions are present:

• The first position is blank.

• Any character follows two consecutive blanks.

• There are more than 35 characters present in the field.

Note: ISRP is instructed to input a pound sign (#) as the 35th character if there are more than 35 characters present for this field on the return.

(4) Correction Procedures:

1. Correct all coding and transcription errors.

If…	Then…
Field 02FAD is present	GTSEC 02 Ensure Field 02CTY contains a foreign country code and Field 02ST contains a ". (period/space)". See Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries. Exception: Use the country code based on the province in Field 02CTY if the foreign address is from Canada and the address contains a province name or abbreviation. See Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries. .
A province abbreviation is not present for Australia, Brazil, Canada, Cuba, Italy, Mexico, or The Netherlands but a province name is present,	Enter the province abbreviation in the appropriate position in Field 02FAD. See IRM 3.12.14.6.12.4., Province, State and Territory Abbreviations.
A foreign address is not present on the return	SSPND 610 Renumber return with domestic DLN.

Caution: Domestic addresses are required on all 1041-N returns.

2. If Form 8822, Change of Address, or Form 8822-B, Change of Address or Responsible Party- Business, is attached to the return, compare the name and address information on the Form 8822 or Form 8822-B to the return.

Note: A business may have two addresses. One is the mailing address and the other is the location address or physical location of the business.

If...	And...	Then...
The information is the same,	All the following applies: Mailing address information is the same, No location address is listed on Form 8822/8822-B, Line 7, No entry on Form 8822-B, Lines 8 or 9,	Take no action and continue processing.
The information is different,	Any of the following applies: Mailing address information is different, Location address is listed on Form 8822/8822-B, Line 7, An entry is listed on Form 8822-B, Lines 8 or 9,	Enter address shown on Form 8822/Form 8822-B in Field 02FAD. Notate "Form 8822 or Form 8822-B detached" on tax return. Detach Form 8822/Form 8822-B and route to Entity Control using Form 4227Intra-SC Reject or Routing Slip, or follow local procedures (e.g., Form 13934, Merge Sheet) Notate on Form 4227, "Change Of Address Per Form 8822 or Form 8822-B".

Note: The lead tax examiner is required to batch all Form 8822 or Form 8822-B daily and hand carry to Entity Control for expedite processing.

(1) Description - Field 02ADD is in the entity section of the return.

• Field 02ADD should not be present if Field 01CCC contains a "G" (Amended Return).

(2) Valid Condition - Valid characters are alpha, numeric, blank, dash, or slash.

(3) Invalid Condition - Field 02ADD will generate as a field error when any of the following conditions are present:

• Any character is present other than alpha, numeric, blank, dash, or slash.

• The first position is blank.

• Any character follows two consecutive blanks.

• There are more than 35 characters present in this field.

  Note: ISRP is instructed to input a pound sign (#) as the 35th character if more than 35 characters are present for this field on the return.

(4) Correction Procedures:

• Correct all misplaced entries, coding errors, and transcription errors.

(5) If Form 8822, Change of Address, or Form 8822-B, Change of Address or Responsible Party- Business, is attached to the return, compare the name and address information on the Form 8822 or Form 8822-B to the return.

(6) Multiple Addresses -If more than one Address is present, research INOLE and determine the correct Address as follows:

(1) Description - Field 02CTY is in the entity section of the return.

(2) Valid characters are alpha and blank.

(3) Invalid Condition - Field 02CTY will generate as a field error when any of the following conditions are present:

• The first position is blank.

• Any character is present other than blank or alpha.

• Any character follows two consecutive blanks.

• The Major City Code does not match any of the valid codes in the Major City Code Table.

• The Foreign Country Code (FCC) does not match any of the valid codes in Document 7475.

(4) Correction Procedures:

• Correct all misplaced entries, coding errors, and transcription errors.

Note: For a listing of Major City Codes (listed by state) and valid Foreign Country Codes (FCC) see Document 7475,

(1) Description - Field 02ST is in the entity section of the return.

(2) Valid characters are alpha and blank.

(3) Invalid Condition - This field is invalid if it is not contained in the State Code Table.

(4) Correction Procedures:

1. Correct all misplaced entries, coding errors, and transcription errors.

2. For a description of valid State Codes, Document 7475.

3. If unable to perfect, DLSEC 02.

(5) Foreign Address Processing - International Fiduciary Returns are all Form 1041 with a foreign Address in the Name and Address section of the return. All foreign/international Address returns will be processed at the Ogden Submission Processing Campus (OSPC).

• The determination of a foreign address is based on the address of the estate or trust located on Page 1 of Form 1041.

• A foreign address is any address that is not in one of the 50 states or the District of Columbia.

• All returns with a foreign address must be shipped to Ogden Submission Processing Campus. SSPND 650 and attach Form 4227 with the notation "Forward To Ogden Submission Processing Center".

(6) APO/DPO/FPO Addresses -An APO, DPO or FPO address is not a foreign address.

• The U.S. Postal Service established new requirements for APO/DPO/FPO addresses.

• If the old address appears (i.e., AP New York, NY 091XX), convert the address to the new state code abbreviations based on the ZIP Code:

ZIP Code	State Code
34000	AA
090-098	AE
962-966	AP

(1) Description -Field 02ZIP is in the entity section of the return.

(2) Valid characters are numeric and blank.

(3) Invalid Condition -Field 02ZIP will generate as a field error when any of the following conditions are present:

• Any character is other than numeric or blank.

• An entry is other than five or nine positions.

• The entry is not within the range of 00401 and 99999.

• The first five positions are blank, and an entry is present in the last four positions.

• The entry does not match the Major City Code or State Code.

(4) Correction Procedures:

1. Correct all misplaced entries, coding errors, and transcription errors.

If...	Then...
Field 02ZIP is transcribed incorrectly.	Enter the correct ZIP Code from the return. Only the first five digits are required.
A valid ZIP Code is not available from the return or an attachment.	Determine the first three digits of a valid ZIP Code for the Major City from see Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries and enter "01" for the fourth and fifth digits.
The Major City is not listed in Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries or the first three digits cannot be determined.	Enter the ZIP Code of the State shown in the address from Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries

2. If Form 8822. Change of Address or Form 8822-B, Change of Address or Responsible Party is attached to the return, compare the Name Control, EIN, Address, City, State and ZIP Code information on Form 8822 to the information on Form 1041.

Note: A business may have two addresses. One is the mailing address and the other is the location address or physical location of the business.

If	And	Then
The information is the same,	All the following applies: Mailing address information is the same, No location address is listed on Form 8822/8822-B, Line 7, No entry on Form 8822-B, Lines 8 or 9,	Take no action and continue processing.
The information is different,	Any of the following applies: Mailing address information is different, Location address is listed on Form 8822/8822-B, Line 7, An entry is listed on Form 8822-B, Lines 8 or 9,	Enter address shown on Form 8822/Form 8822-B in Field 02FAD. Notate "Form 8822 or Form 8822-B detached" on tax return. Detach Form 8822/Form 8822-B and route to Entity Control using Form 4227Intra-SC Reject or Routing Slip, or follow local procedures (e.g., Form 13934, Merge Sheet) Notate on Form 4227, "Change Of Address Per Form 8822 or Form 8822-B".

Note: The lead tax examiner is required to batch all Form 8822 or Form 8822-B daily and hand carry to Entity Control for expedite processing.