3.21.110. Processing Form 1042 Withholding Returns

(1) The purpose of Document Perfection is to code and edit (perfect) returns and other documents for input to the Master File (MF) through the Integrated Submission and Remittance Processing System (ISRP) or the Service Center Recognition Image Processing System (SCRIPS). In addition, Document Perfection forwards any other documents or attachments not related to the processing of the returns to function responsible for handling them

(2) It is not the purpose of Code and Edit to mathematically verify or to check the validity of the returns and other documents being processed unless otherwise specified in the applicable section. The computer and/or Error Correction (Resolution) performs these functions if the returns and other documents are coded and edited as prescribed in applicable subsections of this section.

(3) Instructions in this manual are for Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons.

(1) Authority for these procedures includes the following sections of the Internal Revenue Code (IRC) and their corresponding Treasury Regulations:

• IRC 1441-1446

• IRC 1461-1464

• IRC 1471-1474

• IRC 6201(a)

• IRC 6213(b)

• IRC 6302

• IRC 6402(a)

• IRC 6511

(1) The Director, SP Office monitors operational performance for the Submission Processing campus.

(2) The Operations Manager monitors operational performance for the operation.

(3) The team manager/lead performance and ensures employees have the tools to perform their duties.

(4) The team employees follow the instructions contained in this IRM and maintaining updated IRM procedures.

(1) Program Reports: The Monitoring Section under Submission Processing Program Management/Process Assurance monitors the Code and Edit reports.

(2) Program Effectiveness: The program goals are measured by the following reviews:

• Embedded Quality Submission Processing (EQSP)

• Balanced Measures

• Managerial Reviews

(3) Annual Review: This IRM is updated and published annually after review by affected offices according to the clearance process established in IRM 1.11.9, Internal Management Documents, Clearing and Approving Internal Management Documents (IMDs).

(1) Quality Review is conducted following Embedded Quality Submission Processing (EQSP) procedures in IRM 3.30.30. The EQSP system provides a method to monitor, measure, and improve the quality of the work throughout Submission Processing. Review data is used to identify trends, problem areas, training needs, and opportunities for improvement. A statistical valid sample size of returns are pulled weekly and input into the EQSP system for review and to ensure IRM guidelines are followed.

(1) See Exhibit 3.21.110-8 for a list of terms and definitions used within this IRM.

(1) The Submission Processing Design Center has created Job Aid 2544-701 to help tax examiners with processing this form.

(1) The Form 1042 is processed under:

• Program Code: 12500

• File Source: BMF

• Tax class: 1

• Master File Transaction Code (MFT): 12

• Document Code: 25

• DLN: XX125-ddd-501-999

• File Location Code (FLC) 29 (Domestically filed), 60 (Internationally filed) and 78 (filed from a U.S. Possession).

(1) The National Taxpayer Advocate reached agreements with the Commissioners of the Wage and Investment (W&I) Division, Small Business and Self-Employed (SBSE) Division, Tax Exempt Government Entities (TEGE) Division, Criminal Investigation (CI), Appeals, and Large Business and International (LB&I) Division, that outline the procedures and responsibilities for processing Taxpayer Advocate (TAS) casework when either the statutory or delegated authority to complete case transactions rests outside of TAS. The agreements are known as Service Level Agreements (SLAs).

(2) The SLAs are found at https://irssource.web.irs.gov/TAS/SitePages/SLA.aspx

(1) Correspondence is all written communications from a taxpayer or his/her representative, excluding tax returns, whether solicited or unsolicited. This includes:

1. Written communications in response to IRS requests for information or data

2. Written communications, including annotated notice responses, that provide more information or dispute a notice

3. A telephone call that results in a written referral or research Form 4442, Inquiry Referral.

(2) The key to identifying taxpayer correspondence is to ask the following questions:

1. Is taxpayer waiting for a response from IRS?

2. Is taxpayer waiting for IRS to take an action?

3. Is taxpayer asking a question?

(1) Issue correspondence to resolve any conditions causing the return to be unworkable or unprocessable.

(2) If the return is incomplete and doesn’t appear to be a return meant for filing or is a conduit for providing information (e.g., indicates "payment only"), give the return to the lead. The lead must determine the correct course of action. The lead researches for a Transaction Code (TC) 150 and any other information necessary to determine if the return should continue processing, is as an amended return, or must be routed to another function. An incomplete return could include any of the following:

• A one-page return, with or without a signature

• Incomplete returns indicating, "Payment Only"

• Incomplete returns indicating they have previously e-filed

(3) Examine the return for all unprocessable conditions before initiating correspondence.

(4) If missing page 2, correspond using Letter 1791-C CAS, and mark Line 22.

(1) Correspondence Imaging System (CIS) is an inventory system for scanning all Account Management (AM) receipts into digital images and working the cases from those images.

(2) "CIS" returns show a "CIS Image-Do not correspond for Signature" stamped below the signature line or a "CIS" annotation on the front of the return.

(3) Verify all edit marks and ensure placement is correct on a "CIS" return.

(4) Follow the correspondence instructions below for "CIS" returns:

(1) Early-filed returns must be held for processing at the beginning of the appropriate processing year. See Figure 3.21.110-1.

(2) An early-filed Form 1042 for Tax Period 202212 (filed before January 1, 2023) must be held for processing until January 2023.

(3) Edit Action Code 480 on early-filed returns to suspend them to Rejects until the returns can be processed.

(1) Process a signed return containing no line entries as a non-taxable return. This includes a signed return with notations such as Not Liable, etc.

(2) Process as final any return stating Final, No longer in business, Do not file this form, etc. if the required signature is shown. A signature is not required if the taxpayer shows he/she received the wrong type of return, and another type of return is filed provided the following actions are taken before CCC "F" is entered:

1. Prepare Form 4227 (or Form 6882, IDRS/Master File Information Request, if your Center prefers), for research to be performed to determine whether the proper filing requirement was established for the return the taxpayer states was filed. Notate in the remarks area, "research for the entity and MFT" of the appropriate return.

2. If research shows the taxpayer has a filing requirement for the appropriate return, process the incorrect return as final to turn off the filing requirement.

3. If research shows the taxpayer does not have a filing requirement for the return, he/she states should be filed, attach the research papers to the invalid return and forward to Entity Control on Form 4227 for filing requirement determination. If the filing requirement is incorrect, Entity Control changes it and notate the change on Form 4227. The return is sent back to Document Perfection to be converted to the proper return.

(1) If the Form 1042 shows it is a Fiscal Year return:

1. Change the return to show the current calendar year.

2. Prepare Letter 1791-C CAS, to inform the withholding agent Form 1042 must be filed on a calendar year basis with the following literal:
   “We received your Form 1042 for tax period beginning _______ and ending _______. We cannot process it because Form 1042 must cover a calendar year. Please submit a new Form 1042 covering the appropriate calendar year. If your Form 1042 reflected monies paid during two calendar years, please submit a Form 1042 for each year.”

(1) Any return with a received date two years and nine months or more after the Return Due Date is a potential statute control return.

(2) Route Statute returns to the Statute Control Unit daily or more often if needed.

(3) If any of the conditions listed below are present, don’t route to Statute Control Unit for clearance. Instead, edit CCC "W", and continue processing.

• Compliance IRC 6020(b) returns.

• Secured by Examination/Collections, secured by TEGE, secured by TEGE Employee Plan (EP) Exam.

• Returns with Transaction Code "TC 59X" or "ICS" (Integrated Collections System) notated on the face of the return.

• Returns showing "substitute returns prepared by Examination (SFR)" in top margin of the return.

• Returns with a stamp indicating a previous clearance by Statute Control within the last 90 days.

(4) If a return has any of the following computer paragraphs (CPs) or letters attached, do not route to Statute Control Unit for clearance. Edit CCC "W" if the return needs processing. See IRM 3.21.110.15, Routing Guide for Attachments, for more information.

• CP 259, Master File Generated 1st TDI Notice

• CP 959, Master File Generated 1st TDI Notice (Spanish version)

• CP 518, Final Notice - Return Delinquency

• Letter 112-C, Payment/Overpayment/Credit Applied; No Record of Return Filed

• Letter 282-C, Return Not Received: Copy Requested/Received

• Letter 2255-C, Delinquent Return (Forms 720, 1041, 1065, 1120)

• Letter 2284-C, Delinquent Return (Form 940, 941, 942, 943)

(5) If a return has a Form 12412, Operations Assistance Request (OAR), from TAS and is a potential statute control return but is not stamped, "Cleared by Statute", give it to the lead. The lead contacts the TAS employee listed on the OAR for rejection of the return and sends it back to TAS for clearance by the Statute Control Unit.

(6) Statute returns are unprocessable until cleared by Statute Control.

(7) Edit CCC "W" if the Statute Control Unit stamps or shows clearance on the front of the return.

(8) Follow the chart below to determine if CCC "W" is needed:

(1) Reprocess a return posted to the wrong account or module to post it to the correct account module.

(2) Some re-entry returns may have originally been filed electronically (E-File) or via Modernized E-file (MeF). These returns may be identified by the presence of Mod E-File printouts in lieu of the actual return. Do not correspond for missing signatures on these documents.

(3) Each re-entry return must have a Form 3893, Re-Entry Document Control, or Form 13596, Reprocessing Returns, attached.

• Form 3893 is used to re-input documents not posted to an account or module.

• Form 13596 is used to reprocess documents to the correct account or module, when they had previously posted to the wrong account or module.

(4) Always leave Form 3893 or Form 13596 on the front of the return. It must remain as a permanent part of the document.

(5) Examine Form 3893 or Form 13596 to determine the action needed to make the return processable (See Figure 3.21.110-2):

(6) If it is determined an unprocessable condition exists, edit the proper CCC. Circle out any incorrect CCC(s) and any other edit marks no longer applicable. Re-edit according to current processing instructions.

(7) Line through DLN.

3.21.110.16.5.1 (01-01-2023)

♦Form 3893 - Re-Entry Document Control♦

(1) Form 3893, Re-Entry Document Control, is used to re-input a return not posted to an account or module.

(2) If more than one return is in the batch and only the top Form 3893 has an entry in Box 1 (Alpha/Numeric block control no.), edit all returns using current processing instructions, and keep all returns clipped together.

(3) Circle the CCC "G", if present.

(4) Do not edit CCC "G" on amended returns.

(5) Do not send Letter 1382-C, if a request for reasonable cause is attached.

(6) If the return is not edited according to current processing instructions, circle any Action Codes, Computer Condition Codes, and any other edit marks no longer applicable. Re-edit according to current processing instructions.

(7) If the return is edited according to current processing instructions, ensure the information from Form 3893 is edited on the return.

Form 3893	Action Taken
Box 14 (Remarks)	Ensure the information is edited to the return.
Box 15 (Process as)	Circle any green rocker and edit marks indicating a receipt of remittance. Do not change any tax due amounts.

(8) Examine returns with any color other than red editing in the tax data section to determine if the corrections are due to improper perfection or taxpayer error.

If	Then
Improper perfection,	Edit the same correction in red/green (per local procedure) to the correct area.
Taxpayer error,	Leave the entries as shown on the document.

(9) An IRS received date must be present on all re-input returns.

If	Then
IRS received date is not present,	Edit an IRS received date to the middle of the return.
Multiple IRS received dates present,	Circle all but the earliest date.

(10) When more information is still needed to make the return processable, prepare approved Correspondence Action Sheet or Form 4227, for the proper action (e.g., correspondence, research).

(11) When perfection is not possible, edit Action Code 640 on the return, and attach Form 4227 noting, "perfection not possible", and leave in batch.

(1) A return is considered Amended based on the following:

• The Amended Box is checked.

• Words such as "Supplemental", "Corrected", or "Additional" are present.

• Any indication from the taxpayer a previous return was filed.

Note: Words such as Copy or Duplicate are not sufficient indicators and must be accompanied by a statement from the taxpayer a previous return was filed.

(2) Examine the return for attachments:

• Do not separate any related attachments submitted to explain the reason for the Amended Return. Accounts Management may use the information.

• Detach any unrelated documents and route them to correct function using Form 4227, Intra-SC Reject or Routing Slip, and edit the Action Trail on the return.

(3) Follow the instructions in the chart below when there is an indication of an amended return.

(4) The following data must be present on all amended returns:

• Name Control

• EIN

• Tax Period

• CCC "G"

• IRS Received Date

• Signature

(1) A return is normally delinquent if it is not received on or before the Return Due Date (RDD). However, accept the return as timely filed if the received date is within the ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ See IRM 3.10.72, Receiving, Extracting, and Sorting or IRM 3.10.73, Batching and Numbering.

(2) Accept a return as timely if:

1. The return was mailed in time to reach the IRS through normal handling within the legal period but,

2. Through no fault of the taxpayer, it was not delivered.

(3) Consider a return timely if the Post Office might have sent it to another government agency in error, or if the original envelope bears a timely postmark or a timely date stamp by that agency. However, if the return was erroneously addressed to another agency, it is date stamped with the current date when the IRS received it.

(4) See IRM 3.21.110.17.4.1, for information on the due date of Form 1042.

(5) If a return is delivered to the IRS after the date prescribed for filing, but the postmark date falls on or before the prescribed date for filing the return, then consider the return timely, and edit the timely postmark date in MMDDYY format on the dotted part of Line 62b(1).

(6) If the Form 1042 is delinquent, check the return for an explanation of late filing. If the taxpayer attaches correspondence with a reasonable cause explanation for failure to file a timely return, take the following action:

1. Detach the reasonable cause explanation correspondence from the return.

2. Complete Form 3499, Informational Transmittal, and forward to Ogden International Accounts Management Campus (OAMC), BMF INT'L unit 1973 N Rulon White Blvd., Ogden, Utah 84404 M/S 6552. In the remarks area write "Process attached Reasonable Cause Correspondence. TC 150 to post in 4 weeks."

3. Prepare Correspondence Action Sheet for IDRS Letter 1382-C (use paragraphs "A and S") and assign it to a clerk for input to IDRS or follow local procedures. It may or may not include the Rejects function. Photocopy page 1 of the Form 1042 , LTR and attach to 1382C. Edit action trail 1382C sent on the return and continue processing.

   Note: Do not edit CCC "R or 7" on the return. OAMC will address the taxpayers reasonable cause letter.

   Exception: Edit CCC "R" and continue processing if the return is stamped by the IRS: "Do not assess late file penalty"

   See IRM 3.21.110.17.3.7.

4. Continue processing Form 1042. Do not attach the Correspondence Action Sheet, Letter 1382C to the return.

(1) Compliance functions secure returns from the taxpayer and prepare returns if the taxpayer does not provide them.

(2) Compliance notates:

1. Prepared tax returns with "6020(b)" or "SFR" (Substitute for Return).

2. Secured tax returns with "TC 59X" or "ICS" or "Process as Original" with a Form 13133, Expedite Processing Cycle, attached with the "Delinquent Return" box checked.

(1) Businesses use frivolous arguments for expressing dissatisfaction with the substance, form or administration of the tax laws by trying to illegally avoid or reduce tax liabilities. See IRM 3.25.110, Frivolous Return Program, and Exhibit 3.21.110-7, Potential Frivolous Arguments for Examination Review, for a list of recognized frivolous arguments made by businesses.

(2) Review the return to decide if it is a frivolous return.

(3) Do not consider the following returns as frivolous, unless there is other evidence of a frivolous argument:

• Returns with only zeros, blanks, or no entries.

• Returns showing "None", "Not Liable", etc.

(1) Document Perfection identifies refunds in jeopardy and requests manual refunds Use the chart below for manual refund procedures.

(1) Upon receipt of a prior year Form 1042 return with a tax year prior to the current processing tax year, first determine if the return is for the year shown on the return or for the current year.

(2) If the return is for the current processing tax year,

1. edit the correct tax year,

2. draw a line thru prior year line numbers that have been changed, and

3. edit new Line numbers on form to conform to current year format.

4. If necessary, dummy the current year form.

(3) If the return is for a prior tax year:

1. Edit the prior year return to conform to current year line format

2. Draw a line thru prior year line numbers that have been changed.

3. Edit new Line numbers on form to conform to current year format.

4. If not possible to edit the form, dummy the current year form

(1) Action Codes are used to indicate whether correspondence, research, or some other action is needed. The Action Code sets the suspense period for the return and places the return in the workable or unworkable suspense inventory.

(2) When necessary, assign a three-digit Action Code.

(3) Edit the Action Code in the bottom left margin of the return.

(4) Assign Action Codes in the following priority:

1. Action Code 310 (Statute Control)

2. Action Code 320 (Entity Control)

3. Action Code 4XX

4. Action Code 6XX

5. Action Code 3XX

6. Action Code 2XX (Correspondence)

(5) Temporary Guidance - Due to processing delays, more suspense time is needed in Rejects for correspondence. Use the table below and replace current Action Codes (211,215,225 and 226) with Action Codes 231 and 232 whenever they are listed throughout the IRM.

(6) Use the following table if more than one Action Code is needed:

(7) Edit the following Action Codes when a return cannot be perfected:

(8) Continue perfecting the return after editing the Action Codes. For a valid list of Action Codes, see Exhibit 3.21.110-6.

(9) For more information and applicable Action Codes, see IRM 3.12.38.3.4, Error Resolution System (ERS) Action Codes, and the exhibit in IRM 3.12.38-1, Action Codes.

(1) If the Form 1042 shows bankruptcy (e.g., shows "Receiver", "Trustee", or "Debtor in Possession") in the entity area or on an attachment, route to Entity Control. Follow local procedures using Form 13934, Entity Document/C&E Merge Transmittal.

(2) Completely edit the return except the name control prior to routing to Entity Control.

(1) Identifies whether the return is an amended return or original. See IRM 3.21.110.16.6 Amended Returns.

(1) The IRS Use Only box is used to list:

• Computer Condition Codes (CCC) IRM 3.21.110.17.3

• Penalty and Interest Codes (PIC) IRM 3.21.110.17.5

• Schedule Indicator Codes (SIC) IRM 3.21.110.22

(1) Computer Condition Codes (CCC) identify special conditions or computations for the computer. CCCs post to the Master File.

(2) CCC’s are edited on the CC line of the For IRS Use Only box in the upper right corner of Form 1042.

(1) The date a document is received in the Campus or IRS Office is the date stamped as the "IRS Received Date."

(2) All 1042 returns require an IRS received date.

(3) When a Form 1042 is delinquent and the taxpayer explains the return is late due to the rejection of a timely filed electronic return, check the return for a MeF rejection notification.

(4) If a MeF rejection notification is not attached, perfection of the Received Date is not necessary. If a notification is attached, edit the IRS Received Date in MMDDYY format as follows:

(5) The received date may or may not be stamped on the face of the return.

(6) A valid received date Stamp may consist of the following (MMDDYY):

• The word "Received"

• Month (alpha or numeric)

• Day (numeric 01-31)

  Example: "1" or "01"

• Year (numeric) - four digits

• "Area Office", Campus, "Field Office", "Taxpayer Assistance Center (TAC)" plus the city, location, or functional area within one of these sites (e.g., Compliance Services Collection Operations (CSCO), Examination, Image Control Team (ICT). Correspondence Imaging System (CIS), Accounts Management (AM), etc.).

Exception: Not all IRS offices are designated places for filing, and not all IRS employees are authorized to accept a tax return for processing. If a return has a received date stamp from other than a Taxpayer Assistance Center (TAC), Lockbox, or IRS campus (Compliance, Accounts Management (AM), or Submission Processing (SP)), circle out the invalid received date and edit the correct received date according to instructions below. For example, returns received by the Taxpayer Advocate Service (TAS) or the IRS Office of Chief Counsel are not properly filed and a received date by that office is not the "IRS Received Date".

(7) If the IRS received date stamp is not present or the date is illegible or invalid, edit the IRS received date in MMDDYY format to the dotted part of Line 62b(1) on the Form 1042. Edit the IRS received date according to the following priority:

1. The earliest legible Postmark Date (U.S. Postal Service, Foreign Postmark, or Private Delivery Service) on the envelope. Rules for using the U.S. Postal Service Postmark (USPS), Foreign Postmark, or Private Delivery Service are as follows:

If	Then
An envelope is not attached,	Use the date stamped on the face of the return.
A document was returned for insufficient postage,	Use the postmark date that coincides with the correct delivery of the return.
The postmark is missing and the envelope is certified	Look for the "USPS.com Track & Confirm" record that was attached to the return (should be in front of the envelope). Use the "acceptance" date on the record to determine timeliness and follow normal editing procedures. If the "USPS.com Track & Confirm" record is not attached, take no action.
An envelope has a USPS and private metered postmark,	Always use the USPS postmark.
An envelope has a foreign and private metered postmark,	Always use the foreign postmark.
An envelope has two private metered postmarks,	Always use the latest private metered postmark.
An envelope has only one private metered postmark,	Use the private metered postmark.

Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

2. Service Center Automated Mail Processing System (SCAMPS) digit date.

3. Revenue officer's signature date.

4. Signature date (only if within current year).

   Exception: Use the signature date on prior year returns only when it is signed in the current year. DO NOT use the signature date stamp to determine the received date for replies to correspondence.

5. Julian control date minus 10 days.

6. Current date minus 10 days.

(8) Edit the received date as follows:

(9) If a return was faxed to another area of the IRS and then sent to Submission for processing, do not edit the Enterprise Electronic Fax (EEFax) Date as the IRS received date. Edit a received date according to normal procedures. See IRM 3.21.110.17.4

(1) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(2) Valid characters are 1 and blank.

(3) Edit this code on the "I" line of the For IRS Use Only box in the upper right corner of Form 1042 when the pre-computed delinquency penalty and/or interest is shown on a return with a received date (stamped or improvised) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(1) The EIN is a nine-digit number (XX-XXXXXXX) assigned to identify the taxpayer.

(2) The EIN is in the upper right of Form 1042.

1. Form 1042 cannot be processed with an SSN or an IRS ITIN.

2. Do not accept an SSN or ITIN in place of an EIN.

(3) Determine the EIN as follows:

(4) Listed below are the most common conditions indicating an entity change requiring a new EIN.

1. Individual owner dies and estate takes over business.

2. Individual owner dies, Surviving Spouse takes over when no estate is involved.

3. Individual ownership changes to a corporation.

4. Individual ownership changes to a partnership.

5. Partnership changes to individual ownership or disregarded entity (except where the resulting business changes from an individual owner to another individual owner).

6. Partnership changes to corporation (except for elective change caused by filing Form 8832).

7. There is a sale or exchange of 50 percent or more of the interests in a partnership within a 12-month period.

8. Corporation changes to an individual ownership or disregarded entity (except where the resulting owner already has an EIN).

9. Corporation changes to a partnership (except for elective change caused by filing Form 8832).

10. Sole proprietor shows bankruptcy.

(1) The type of entity present on the return determines the name control procedures.

• Individuals

• Corporations

• Partnerships

• Trusts and Estates

• Other organizations

(2) The name control consists of four characters or less.

1. Valid characters are alpha, numeric, ampersand (&), hyphen (-), and blank. However, blanks are only valid in the last three positions.

2. Disregard the word "THE" in the name control only when more than one word follows.

(3) See Document 7071-A BMF Name Control Job Aid to properly determine the name control.

(4) Edit the name control as follows:

(1) An in-care-of name can be identified by the words "in-care-of" or the symbols "c/o" or "%" (percent).

(2) Ensure the in-care-of name is located above the street address.

(3) Determine a change in the in-care-of name by any of the following:

• A check mark in the "Name Change" box, or

• A check mark in the "Address Change" box, or

• Taxpayer edits or added to the "in-care-of" name (e.g., original "in-care-of" name crossed out, new name added, etc.

(4) "Special Considerations"

1. APO/FPO/DPO addresses us the following format:

Line	EXAMPLE:	Applicable Field
Payee Name	PVT. Willard J. Doe	02ADD
Mailing Address	Company F. PSC Box 100 167 Infantry REGT	02ADD
Payee City	APO, FPO or DPO	02CTY
Payee State	AE, AA, or AP*	02ST
Payee ZIP Code	09801	02ZIP

Note: *AE is the designation for ZIPs beginning with 090-098, AA for ZIP 340, and AP for ZIPs 962-966

(1) Perfect the address when the mailing address (Street or P.O. Box) is not easily identified.

(2) A business may have two addresses. One is the mailing address, and the other is the location address or physical location of the business.

(3) Perfect the address as follows:

(4) The U.S. Postal Service established new address requirements for APO/FPO/DPO addresses. If it is an old address (i.e., APO New York, NY 191XX), convert to the new state code abbreviation based on the zip code (i.e., the previous example would be converted to APO AE 091XX). Consider APO/FPO/DPO addresses as domestic addresses. Refer to the Conversion Chart below:

1. APO/FPO/DPO addresses use the following format:

Line:	EXAMPLE:
Payee Name	PVT. Willard J. Doe
Mailing Address	Company F. PSC Box 100 167 Infantry REGT
Payee City	APO, FPO or DPO
Payee State	AE, AA, or AP*
Payee ZIP Code	09801

Note: *AE is the designation for ZIPs beginning with 090-098, AA for ZIP 340, and AP for ZIPs 962-966

2. The following table is an APO/FPO/DPO Conversion Chart.

City Code: APO/FPO/DPO	State Code: AA/AE/AP	State Location	ZIP Code
APO	AA	Americas	34000–34049
FPO	AA	Americas	34050–34099
DPO	AA	Americas	340XX-340XX
APO	AE	Europe	090XX-094XX and 096XX
FPO	AE	Europe	095XX
DPO	AE	Europe	090XX-098XX
APO	AP	Pacific	962XX–965XX and 98700-98759
FPO	AP	Pacific	966XX and 98760-98799
DPO	AP	Europe	962XX-966XX

(1) Use Job Aid 2324–002, Coding and Editing BMF Tax Returns, Foreign Addresses Job Aid, to edit foreign addresses.

(2) A foreign (international) address is any address not in the 50 states or the District of Columbia.

(3) Consider returns with Army Post Office (APO)/Fleet Post Office (FPO)/Diplomatic Post Office (DPO) addresses as domestic addresses. See IRM 3.21.110.19.4, Entity Perfection - Domestic Address.

(4) Route returns with a foreign address to Ogden Submission Processing Center (OSPC) for processing. Prepare Letter 86-C, Referring Taxpayer Inquiry/Forms to Another Office, to inform the taxpayer IRS sent the return to Ogden.

(5) Consider returns with addresses in the following U.S. possessions/territories as foreign for processing purposes. Edit in the same way as domestic addresses.

1. Edit a two-character alpha code for the Possession/Territory name:

U.S. Possession/Territory	Abbreviation
American Samoa	AS
Federated States of Micronesia	FM
Guam	GU
Marshall Islands	MH
Northern Mariana Islands	MP
Palau	PW
Puerto Rico	PR
Virgin Island (U.S.)	VI

2. A ZIP code must be present for U.S. Possessions/Territories. Edit the ZIP code if one is not provided. See Exhibit 3.21.110-3, U.S. Possessions ZIP Codes.

(6) All other foreign addresses are edited the same as a domestic address with the following exceptions:

1. Ensure the foreign country is the last entry in the address.

2. Circle the foreign country and edit the country code preceded by a / and followed by a" /$" (e.g., /GM/$ is edited for Germany). See Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries, for official foreign Country Codes.

3. Edit a unique country code for returns filed with an address in Canada. /$ (e.g., /CA/$).

4. If the foreign address is from Australia, Brazil, Cuba, Italy, Mexico, or the Netherlands, check if the address has a province, state, or territory.

   Note: There may be other countries with provinces, states, and territories not listed above. See Coding and Editing BMF Tax Returns, Foreign Addresses Job Aid (Number 2324-002), for more information.

If	Then
A foreign state, province, or territory is present,	Circle out the foreign state, province or territory name Edit correct abbreviation.
A province, state or territory is not present,	Continue editing the return.
province, state or territory is shown in abbreviated format,	Continue editing the return.

Note: ISRP enters the two-digit state code

5. A zip code is not required on a foreign address. Foreign addresses use a postal code that is entered before the foreign country and is part of the address.

(1) "X" any negative entries.

(2) If blank, take the following action:

1. Enter the amount from Form 1042-T, Line 2.

2. If no Form 1042-T is attached, total the amounts from Box 2 of all Form 1042-S Copy A, attached and edit the total to Form 1042, Line 62a. DO NOT include any amounts from Form 1042-S Copy B (C, D, and/or E).

(3) If required to edit, entries should be made in Dollars and Cents.

(1) May or may not be present.

(2) "X" any negative entries.

(1) May or may not be present.

(2) "X" any negative entries.

(1) May or may not be present.

(2) If blank and there are entries leading to a total, compute and enter by adding lines 62a-b.

(3) If required to edit, entries should be made in dollars and cents.

(4) "X" any negative entries.

(1) May or may not be present.

(2) All amounts must be positive.

(3) "X" a negative entry.

(4) If required to edit, entries should be edited in dollars and cents.

(5) If the return is completely blank, follow instructions in IRM 3.21.110.16.2, Non-Taxable Returns With No Line Entries.

(1) May or may not be present.

(2) "X" any negative entry.

(1) May or may not be present.

(2) "X" any negative entry.

(1) May or may not be present.

(2) "X" any negative entry.

(1) Line 63c is not a reporting field and contains header information only.

(2) Reporting information is broken down in 63c(1) and 63c(2).

(1) May or may not be present.

(2) "X" any negative entry.

(3) Delete entry if that line is being used as a subtotal line (i.e., Line 63a=63d=63e).

(4) This line should be the total of amounts in box 11 on all Form 1042-S.

(1) "X" a negative entry.

(2) If Line 63e is blank:

(1) May or may not be present.

(2) May be positive or negative.

(3) TY15 and prior: A statement justifying the adjustment must be attached. Correspond if missing using Letter 1791-C CAS, and open paragraph 0 (zero) with the following literal: "Your Form 1042 for tax year xxxx contains an amount listed as an adjustment to total net tax liability. A statement justifying the adjustment must be attached. Please submit the required statement."

(1) May or may not be present.

(2) "X" any negative entries.

(3) If Line 64a-64d are blank and 64e has an entry, edit the Line 64e amount to Line 64b.

(1) May or may not be present.

(2) "X" any negative entries.

(1) May or may not be present.

(2) "X" any negative entry.

(1) Perfect Line 64e as follows:

(1) May or may not be present.

(2) X a negative amount.

(1) May or may not be present.

(2) X a negative amount.

(1) Accept taxpayer's entry.

(1) Section 2 Line 2 is not a reporting field and is header information only.

(2) Reporting components are broken down into Lines 2a, 2b, 2c, 2d, and 2e.

(1) Accept taxpayer's entry.

(2) If blank and there are entries leading to a total, compute and edit by adding Lines 2a-2d.

(1) Accept taxpayer's entry.

(2) If blank and there are entries leading to a total, compute and edit by adding Lines 1 and 2e.

(1) Accept taxpayer's entry.

(2) If blank, compute and edit by adding Lines 62a, 62b(1) and 62b(2) in Section 1.

(1) Accept taxpayer's entry.

(2) If blank, compute and edit by subtracting Line 3 from Line 4.

(3) Entry may be positive or negative.

(1) If explanation is present, edit a "1" in the right margin area of Line 6. See Figure 3.21.110-10.

(2) If explanation is NOT present, but is required, edit a "0" in the right margin area of Line 6.

(1) the Third Party Designee checkbox is located above the taxpayer signature line. It shows whether the taxpayer has elected to allow the third-party Designee to answer questions about the taxpayers return as it is processed. No action is required.

(1) The Third Party designee phone number is located below the checkbox. No action is required.

(1) Circle out if illegible. This field can be up to 5 characters long. The entry may be any alpha (i.e., A to Z) numeric (0 to 9), or any combination of both. The PIN number is self-selected by the taxpayer or designee. It is not assigned by IRS.

(1) The Preparer's EIN or PTIN is located to the right of the Preparer's Signature at the bottom of Form 1042.

(2) No action is required on amended returns.

(3) A valid PTIN begins with the alpha "P" followed by an eight-digit number (e.g., PXXXXXXXX). Circle the SSN/PTIN if it is invalid or any repeating 9 digits.

(4) Valid characters are numeric (0 thru 9) and alpha "P" only.

(5) Circle the entry if:

• it does not begin with a "P",

• it is an SSN,

• it has all zeros, nines, or any repeating 9 digits, or

• it has invalid characters.

(1) The FIRM's EIN (Paid Preparer's EIN - 2009 and prior revisions) must be a nine-digit numeric number. The FIRM's EIN is entered in NN-NNNNNNN format. The FIRM's EIN cannot be all zeros or all nines.

(2) No action is required on amended returns.

(3) Circle the FIRM's EIN (Paid Preparer's EIN - 2009 and prior revisions) if all zeros, all nines, or any repeating 9 digits.

(1) The Paid Preparer's Phone Number is located below the Paid Preparer's EIN at the bottom right corner of Form 1042.

(2) If the return is for a tax period prior to 2001, circle the telephone number.