3.22.110. Processing Form 1042 Withholding Returns

(1) The purpose of Error Resolution is to resolve validity errors, field errors, consistency errors, and math errors on returns and other documents for posting to the Master File. Records fall out in Error Resolution System (ERS) due to the Generalized mainline Framework (GMF). The entries from transcription are transferred to the ERS fields. The GMF programming causes a record to fall out to ERS if it fails to meet certain criteria, including:

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

• Invalid length of field (e.g., 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

(2) Employees use ERS to correct these conditions and when necessary use Integrated Data Retrieval System (IDRS) to research.

(1) Authority for these procedures is found in the following sections of the Internal Revenue Code (IRC) and their corresponding Treasury regulations.

• IRC 6201(a)

• IRC 6213(b)

• IRC 6402(a)

• IRC 6511

• IRC 1441-1443

• IRC 1446

• IRC 1461-1464

• IRC 1471-1474

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

(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 for following 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 ERS reports. Daily, weekly, and periodic reports are available to management through Control-D Web Access to manage inventory and capture data for program planning and review. Refer to IRM 3.12.38, Error Resolution, BMF General Instructions, for a listing and description of ERS reports.

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

• Embedded Quality Submission Processing (EQSP) IRM 3.30.30, Embedded Quality for Submission Processing

• Computer Assisted Review of Error Resolution (CARE)

• Balanced Measures

• Managerial Reviews

(3) Annual Review: This IRM is updated and reviewed annually to ensure accuracy and promote consistent tax administration. Review and concurrence are performed by affected offices according to the clearance process established in IRM 1.11.9, Internal Management Documents, Clearing and Approving Internal Management Documents (IMD), prior to publishing.

(1) All tax examiners need manager approved access to the Error Resolution System.

(2) Tax returns in ERS are worked on a First in First Out (FIFO) basis as they are received from input systems through the General Mainline Framework (GMF).

(3) Quality Review is conducted following the Embedded Quality Submission Processing (EQSP) procedures found 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.

(4) Control clerks are responsible for the control of error documents. Inventory Control procedures are described in IRM 3.12.38, Error Resolution, BMF General Instructions.

(1) See Exhibit 3.22.110-2 for a glossary of terms and Exhibit 3.22.110-4 for abbreviations used in this IRM.

(1) ERS TEs use the following resources in conjunction with this IRM:

• IRM 3.12.38, BMF General Instructions

• Job Aid 2543-701; ERS Chapter Three Withholding (CTW) Form 1042

• Job Aid 2513-703; International Submission Processing IMF Foreign Address Job Aid

• Integrated Data Retrieval System (IDRS)

• Servicewide Electronic Research Program (SERP)

• Related IRS publications listed in Exhibit 3.22.110-3

• Instructions for Form 1042

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

(2) The SLAs are found at https://irsgov.sharepoint.com/sites/TAS/SitePages/SLA.aspx.

(1) Records are placed into the Error Inventory or the Workable Suspense Inventory for correction. Once the ERS TE accesses the record and it is displayed on the screen, it must be:

1. Corrected in full by correcting errors in editing or transcription and/or correcting math errors.

2. Placed in suspense for more information.

3. Rejected from pipeline processing.

(2) Each day the Error Inventory Report is furnished showing:

1. Blocks, by the block control number, and block Document Locator Number (DLN) in DLN order.

2. Each batch is on a separate page.

3. Blocks received from Block out of Balance (BOB) Correction is listed separately.

4. A copy of the report must be on the carts of documents and used as a charge-out to determine when a cart is completed.

5. The first line of the Error Inventory Report will show the number of working days the records on that page have been in the Error Inventory. This will enable work left from a previous day to have priority.

(1) Each day the Workable Suspense Inventory Report is furnished showing the records by program in DLN order for various status situations. Separate pages for each program, with totals, is provided.

(2) The first line of the report shows the number of working days the records have been in the Workable Suspense Inventory. This will allow priority to be given to the older work.

(1) All Form 1042, Error Screen Displays as follows:

• Each field is identified by an Alpha/Numeric Field Designator (AFD) displayed before the field.

• Fields are displayed with no breaker.

• Negative values are indicated by a minus (−) sign following the amount.

• Decimal points are displayed beginning in the left position.

• Leading zeros in amount fields are suppressed and the significant digits are displayed beginning in the left position.

• If more than one amount field of a record is to be shown, the corresponding place values are aligned beneath one another.

• Sufficient leading blanks are displayed preceding the shorter amounts. So, the place values of these amounts are directly in line with the place values of the longest amount.

• The cents digits are not displayed for "dollars only" fields. So, the place values will remain in line with the other fields of the section. Two asterisks (**) are displayed in the cents position of the "dollars only" field.

(2) Corrections are entered starting with the left-most position of the field. Blank-out unused positions.

• If fewer than the maximum number of positions is required, the program automatically moves to the right of the digits.

• It is not necessary to enter the decimal point. If the decimal point is entered, it is ignored.

• A minus sign (−) must be entered as the last numeric if the amount is negative.

(3) Do not enter more than the number of positions allowed for a particular field. If more data is entered, the overflow characters display on the screen but are dropped when the field is added to the record. This is especially important for the TIN, name and address.

(4) Corrections can be made to a displayed field by overlaying only the digits in error and not re-entering the entire field. It is not necessary to eliminate the decimal point when correcting in this manner.

(5) To add a missing section:

1. Transmit with Command Code GTSEC, followed by the desired Section Number.

2. When the empty section format is displayed, enter the missing data in the proper fields and transmit with Command Code CRECT.

(6) To see a field or section of the record other than shown in the display:

1. Enter Command Code GTSEC, followed by the desired Section Number.

2. If a correction is not made to the section, drop to the bottom of the screen, and transmit.

3. Any error display not showing all fields necessary for resolution must be reported to the National Office.

   Reminder: When transmitting corrections to a screen display, move the cursor below the last field containing data before transmitting.

(7) To delete a section of the record, enter Command Code DLSEC, followed by the desired Section Number.

(8) If, during the course of correcting a Priority II, III or IV Error, more information or research is necessary to resolve the error (or if the error is rejected), enter the correct Action Code with either Command Code SSPND or RJECT.

(1) The Command Codes needed for correcting the Error Inventory and the Workable Suspense Inventory are briefly described below. Any Command Code in the Employees Security Profile is available:

(1) Correspond for missing information when any part of the entity area cannot be found by using all applicable research (e.g., CCs NAMEB, NAMEE, INOLE, ENMOD, etc.).

(2) If the taxpayer has not entered data onto the correct lines of the return but instead puts "see attached," Rejects corresponds for the return to be properly completed unless instructed otherwise in this IRM.

(3) Rejects corresponds for clarification when the date entered on the return cannot be read accurately.

(4) If the signature is missing, Rejects will correspond. If you are corresponding for ONLY a missing signature, use Action Code "225" or "226" and continue to process the return.

(5) If the taxpayer does not provide a copy of Form 1042-S, Copy B or a Form 1099 to support the entry on Line 67a/67b, SSPND "21X" for Form 1042-S, Copy B.

(1) Information on the preparation of Manual Refund Forms (Form 5792, Request for IDRS Generated Refund, or Form 3753, Manual Refund Posting Voucher) and other relevant information can be found in IRMs:

1. IRM 3.12.38 (BMF General Instructions)

2. IRM 3.17.79 (Account Refund Transactions)

3. IRM 21.4.4 (Manual Refunds)

4. IRM 2.4.20 (Command Codes RFUND and REFAP)

5. IRM 3.12.14.7.11 (Refund Returns 45 Day Jeopardy and $100 Million or more Refunds)

(2) Document Perfection (Code and Edit - C&E) is responsible for identifying refunds and for initiating requests for manual refunds. C&E will edit to show a Manual Refund must be prepared because the refund is in interest jeopardy or the amount of the refund is $500,000.00 or more. If C&E did not identify these conditions, ERS must follow the instructions in the If/Then chart below:

(1) A return posted (or attempting to post) to the wrong account or module must be reprocessed to post to the proper account or 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 an actual return. Do not correspond for missing signatures on these documents.

(3) Each re-entry return must have Form 3893, Re-Entry Document Control, or Form 13596, Reprocessing Returns, attached. See below for the correct form to use.

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

• Form 13596 is used to reprocess documents to the correct account or module, that 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 re-input the return.

(1) Form 3893, Re-Entry Document Control, is used to re-input a return that has 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) If the return is not edited according to current processing instruction, circle out any action codes, CCCs and any other edit marks no longer applicable. Re-edit according to current processing instructions.

(4) If the return is edited according to current processing instruction, ensure the information from Form 3893, is edited to the return.

(5) Examine returns that have any color other than red editing in the tax data section. Determine if the corrections are the result of incorrect perfection or taxpayer error.

(6) A Received Date must be present on all Re-entry returns:

(7) When more information is still needed to make the return processable, prepare Letter 1791C, (or other approved Correspondence Action Sheet) or Form 4227, Intra-SC Reject or Routing Slip, for the proper action (e.g., correspondence, research, etc.).

(8) When perfection is not possible, enter Action Code 640 on the return and attach Form 4227, noting "perfection not possible" and return to initiator.

(1) Form 13596, Reprocessing Returns, is used to reprocess a return to the correct account or module that had previously posted to the wrong account or module.

(2) If the return is not edited according to current processing instruction, circle out any action codes, CCCs and edit marks no longer applicable. Re-edit according to current processing instructions.

(3) If the return is edited according to current processing instruction, ensure the information from Form 13596, is edited to the return.

(4) Examine returns that have any color other than red editing in the tax data section. If the corrections are the result of:

(5) A Received Date must be present on all reprocessed returns:

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

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

2. Secured tax returns are notated with "TC 59X" or "ICS" (Integrated Collection System) or notated with "Process as Original" with an attached Form 13133, Expedite Processing Request. The "Delinquent Return" box on Form 13133 should be checked.

(2) When Form 13133 is attached to a return, ensure all applicable boxes checked (i.e., CCC codes) are edited to the return and entered.

(1) These returns are identified by the notations: "TC 59X" or "ICS."

1. Do Not enter CCC "G" on these returns.

2. Correspond for conditions that cannot be processed (e.g., missing signatures, missing schedules, etc.). Use Letter 1791C, and return a copy of the letter back to the withholding agent.

3. Enter CCC "W" if the Received Date is more than two years and nine months after the Return Due Date. Do Not send the return to Statute Control. SSPND with Action Code "310."

4. If the return is incomplete or no reply is received to the correspondence, and the return is not a statute imminent return, then prepare Form 4227, Intra-SC Reject or Routing Slip, and send to Rejects, and SSPND with Action Code "640."

(2) Upon receipt, Rejects deletes the DLN and route the document to collections on Form 3210, Document Transmittal.

(1) A return is normally delinquent if it is not received on or before the return due date.

(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

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

(3) Consider a return timely:

1. If it appears the Post Office might have sent it to another government agency in error (i.e., SSA)

2. If the original envelope bears a timely postmark or a timely date stamp by that agency

3. However, if the return was erroneously addressed to another agency, it is date stamped with the current date when the IRS receives it

(4) Consider a return timely if it is received or mailed on the next workday when the last day for filing falls on a Saturday, Sunday, or legal holiday.

(5) If a return is delivered to the IRS after the date prescribed for filing, consider:

• The postmark date stamped on the envelope as the date of delivery

• The document as timely if the postmark date falls on or before the prescribed date for filing the return

(6) If the return is truly delinquent, check the return and attachments for an explanation of late filing, unless a pre-computed delinquency penalty is shown. If reasonable cause for late filing is found, enter the correct CCC "J" or "R."

(1) When the taxpayer does not file a required return, IRC 6020(b) is the authority for the IRS to prepare the return.

(2) These returns are identified by the notation: "Prepared and signed under the authority of IRC regulation 6020(b) of the Internal Revenue Code" which is located in the center bottom of Page 1 of the return.

1. IRC 6020(b) returns must have a Received Date. If no Received Date is present per the Compliance Function, edit the Received Date using IRM 3.22.110.21.6(5), Field 01RCD - Received Date

2. IRC 6020(b) returns must be signed by Compliance Function representative. If not signed, route to Compliance using Form 4227, Intra-SC Reject or Routing Slip.

Note: Starting July 1, 2013, the revenue officer’s (RO) electronic or typed signature is accepted as a valid signature on the return.

3. Enter CCC "4"

   Note: CCC "R" must not be used with CCC "4."

4. Do Not correspond with the taxpayer for unprocessable conditions on 6020(b) returns. If the return is completely unprocessable, enter CCC "3" and continue processing.

5. Enter CCC "W" if the Received Date is more than two years and nine months after the Return Due Date. Do Not send the return to Statute Control.

(1) These returns are identified by the notation: "SFR" or "substitute for return" on Page 1.

1. "SFR" returns must have an IRS Received Date. If no IRS Received Date is present, edit/enter the Received Date using IRM 3.22.110.21.6(5), Field 01RCD - Received Date

2. Do Not correspond with the taxpayer for unprocessable conditions. If the return is completely unprocessable, use No Reply procedures and enter CCC "3" and continue processing. Enter CCC "X" if the return shows an overpayment.

3. If Form 13133, Expedite Processing Cycle, is attached, enter the CCCs that are checked on the form.

   Note: CCC "R" must not be used with a CCC "4."

4. Enter CCC "W" if the Received Date is more than two years and nine months after the Return Due Date. Do Not send the return to Statute Control.

(1) These returns are identified by the notation: "Process as Original" on Page 1 of the return and a Form 13133, Expedite Processing Request, attached with the "Delinquent Return" box checked.

1. Use approved Correspondence Action Sheet (CAS) to correspond for conditions that cannot be processed (e.g., missing signatures, missing schedules, etc.).

2. Enter the CCCs that are checked on Form 13133

3. Enter CCC "W" if the IRS Received Date is more than two years nine months after the Return Due Date. Do Not send to Statute Control function.

(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 25.25.10, Frivolous Return Program, and Exhibit 3.22.110-10, Potential Frivolous Arguments for Examination Review, for a list of recognized frivolous arguments made by businesses.

(2) Review the return to decide whether it appears to be a frivolous return.Frivolous Return Criteria

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

• Returns that have only zeros, blanks, or no entries.

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

(1) A period of limitation is a time established by law to review, analyze, and resolve taxpayer and/or IRS related issues.

(2) The Internal Revenue Code (IRC) states the IRS will assess, refund credit, and collect taxes within specific time limits. These limits are known as Statute of Limitations. When they expire, we can no longer assess more tax, allow a claim for refund by the taxpayer, nor take collection action. There are different periods of limitations for Assessment, Refund, and Collection Statutes. The expiration of these periods is tracked separately.

(3) The different periods of limitations expiration dates tracked are:

• Assessment Statute Expiration Date (ASED): The statute of limitations associated with Form 1042 is generally three years from the date the return is filed. If a withholding agent files Form 1042 before April 15 of the following calendar year, the Form 1042 is considered filed on April 15 for the purposes of the statute of limitations. If a return is not filed, the IRS may assess the tax at anytime.
  IRC 6501(a)
  IRC 6501(b)(2)
  IRM 6501(c)(3)

• Refund Statute Expiration Date (RSED): Within 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever of such periods expires the later, or if no return was filed by the taxpayer, within 2 years from the time the tax was paid.
  IRC 6511(a)
  IRC 6211(b)2(A)

• Collection Statute Expiration Date (CSED) is 10 years from the 23C date or 10 years from the date of the TC 29X or 30X adjustment. IRC 6502(a).

(4) Several conditions may change the general Assessment Statute Expiration Date (ASED). They include:

• IRC 6501 (c) (1) - False Return

• IRC 6501 (c) (4) - Extensions by Agreement

• IRC 6501 (d) - Is request for Prompt Assessments, which shortens the Assessment Period

• IRC 6501 (e) - Substantial (in excess of 25 percent) Omission of Income provides for a 6-year period of limitations.

• IRC 6503 (a) - Issuance of Statutory Notice of Deficiency (90-day Letter, which suspends the running of the period of limitations.)

• IRC 6901 (c) - Fiduciaries and Transferees

• IRC 6503 (h) - Bankruptcy

• IRC 6229 (a) through (h) - Partnership Items (Effective for tax years beginning before December 31, 2017)

• IRC 6501 (b) (3) - Substitute for Return by Authority of IRC 6020(b)

  Caution: IRC 6020(b) is not a tax return that triggers the period of limitations on assessment under IRC 6501(a). If the taxpayer subsequently files a return reporting more liability, that return constitutes an original tax return allowing for the assessment of any additional amount not already assessed under the Substitute for Return program and triggering the running of the period of limitations on assessment for the tax year.

• IRC 6051(b) and Treas. Reg. 301.6501(b)-1(b) - A Form 1042 is considered timely filed on or before March 15th of the calendar year following the year the payment of income was made and the tax was required to be withheld. However, the statute of limitations on assessment of tax for timely filed Forms 1042 does not begin until April 15th as a return timely filed on or before March 15th is deemed to have been filed on April 15th.

(5) Statute Control must clear Form 1042 before coding and editing. If not, SSPND 310, and Rejects sends the return to Statute Control with the required BMFOLT research attached for clearance.

(6) Enter CCC "W" and continue processing the return if:

1. TC 59X or Section 6020(b) is notated on the face of the return, or

2. Exam prepared a return with no money amounts.

Note: A "cleared by statute" stamp is not required on these returns.

(7) If the statute has already expired or will expire within 60 days of the current processing date, hand-carry to the Statute Control function.

(8) Enter CCC "W" on statute returns cleared by Statute Control. "Cleared by statute" is stamped on the left-hand side of the Form 1042 return.

(1) Description:

• All records with an invalid Action Code assigned by C&E are placed in the Error Inventory and is displayed as a Priority I Error.

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

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

(3) Correction Procedures – Process Priority I errors as follows:

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

(1) Most edit, missing section and terminus errors are eliminated by the Integrated Submission and Remittance Processing (ISRP) system. 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, key verifier changed 4 or more digits of TIN, or the original entry operator indicated a required section is missing.

• Code 2 – CATCH-ALL ISRP ERROR: Any error attributed to ISRP not described below, such as invalid characters in a field, or a combination of errors listed below.

• Code 3 – Invalid Section ending point.

• Code 4 – Invalid field length.

• Code 5 – Questionable section - the ISRP operator input the same section more than once. The computer program drops all duplicate sections and display on the error screen the first one encountered.

Note: When displayed, this type of error displays all input fields, except for the Remittance in Section 01 of the section in error. Transcribed data will be present. Computer generated data will not be present.

(3) Correction Procedures:

• Check all fields of the section when this condition exists verifying fields are entered as coded.

• If no correction is needed, or once the section is correct, transmit from the bottom of the screen.

• If the section needs to be deleted, enter DLSEC with the section number.

(4) Terminus Error: This error is caused by a section with variable length input fields containing an erroneous size field.

• When displayed, this type of error shows all input fields of the terminus section. Transcribed data will be present. Computer generated fields or Remittance Field for Section 01 will not be present.

• All fields present for the section must be examined and the necessary correction(s) made to all the fields.

(5) Correction Procedures:

• Command Code CRECT is displayed. If the section needs to be deleted, use DLSEC to delete the section.

• If no corrections are needed, transmit from the bottom of the screen.

(1) Definition – Any field that does not meet the requirement(s) for that field is shown as a Priority III error. Consistency and or relationships with other fields will not be a factor.

(2) Some reasons for this type of error are:

• Non-numeric character in a numeric field.

• Non-alphabetical character in an alpha field.

• Blank space in a numeric field.

• Blank in the first position of an alpha field if followed by significant data.

(3) Display – Every field displayed is in error (see Exception below).

• All fields with a Priority III error is 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 see if each displayed field is 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.

5. Transmit.

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

(2) Display – These errors are displayed with the Error Code assigned to them for the specific error in ascending numerical order. The screen display shows the error code assigned and the fields needed to make the necessary correction.

1. The blank field "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.

2. All errors must be resolved by either eliminating the error or entering a Clear Code.

(3) Correction Procedures:

• Correct all coding and transcription errors.

• If the data in the field is correct, enter a "C" in the Clear Code field.

(1) Field RMIT is a 11-position non-correctable field that may or may not be present.

(2) Valid characters are numeric (0 thru 9) and blank.

(3) The computer generates the amount of remittance in Field RMIT into Field 07B/D (balance due) if Field 07B/D is blank.

(4) Invalid Condition: Field RMIT is invalid when:

• There is an amount present and Total Net Tax Liability (Field 0764E) is blank.

(5) Correction Procedures:

1. Perfect Field 0764E from the return, if possible.

2. Add or correct Sections 03-06, as proper.

3. If there is no tax to enter in Field 0764E, but the reason for the remittance is notated on the return (such as penalty or interest), enter a "1" into Field 0764E.

4. If there is no tax due and no explanation of the remittance is found, SSPND 351 for research and/or correspondence. Notate the Form 4227, No tax but entry on Field RMIT.

5. Compare the form to the field and if the remittance amount in Field RMIT is incorrect, SSPND 630 the return to be re-input. Notate the Form 4227, Remittance in error.

   Note: Never try to correct Field RMIT.

(6) Rejects Correction Procedures:

1. Rejects researches IDRS. For instance, research using BMFOLI to determine if the remittance should be applied to a different tax year or to a different return.

2. If research does not provide an answer, SSPND 21X with literal:
   Does the remittance sent with your ____ Form 1042 belong to this EIN, and if so, to which tax return and tax period should it be applied?

Note: Insert the tax year of the Form 1042 for which you are corresponding into the literal.

3. If the taxpayer replies the money belongs somewhere else, enter Field 01CRD and CCC "X" into Field 01CCC. Prepare Form 3465, and send to the Philadelphia Accounts Management Campus (PAMC) International Business Master File (BMF) unit to transfer remittance to correct account; Unless Ogden Rejects Unit is willing to process the Credit Transfer.

   Reminder: Circle out the remittance in RED on the Form 1042 and re-input the return as a non-remittance return.

4. If the taxpayer replies the money is not their transfer the money to Unidentified Remittance. Refer to IRM 3.12.38.5.19.3 Transfer to Unidentified for instructions.

5. If there is NO REPLY to the correspondence, enter CCCs "3" and "X" into Field 01CCC and enter a "1" into Field 0764E.

   Note: When there is an entry in Field RMIT, there will be an entry in Field 0764E, but the tax and remittance amounts do not have to be the same.

6. If the Form 1042 must be re-input to change the amount in Field RMIT, ERS will SSPND 630 the return and Rejects re-inputs the return on Form 3893.

(1) Field 01NC is a 4-position field that must be present.

(2) Valid characters are alpha (A thru Z), numeric (0 thru 9), ampersand (&), hyphen/dash (-) or blank.

(3) The person or organization required to withhold tax is the Withholding Agent.

(4) The Withholding Agent can be either domestic (U.S.) or foreign.

(5) The Withholding Agent can be any of the following:

• An individual

• A trust

• An estate

• A partnership

• A corporation

• A government agency

• An association

• A foundation

(6) Invalid Conditions:

1. The first space in the Field 01NC cannot be blank if the name control is present.

2. Field 01NC is invalid if any character other than those mentioned in (2) above is present.

(7) Correction Procedures:

1. Change a slash "/" or period "." in the name control to a hyphen/dash "-".

Name Control on Return	Change to
Re/Max	RE-M
98.6	98-6

2. If the name control was transcribed incorrectly, enter the correct name control.

3. If the name control is invalid or missing, research using Document 7071-A Name Control Job Aid - For Use Outside of the Entry Area

4. If found, enter the correct name control in Field 01NC.

5. If unable to determine the name control, SSPND 320 to Rejects.

(8) Rejects Correction Procedures:

1. Rejects will re-research the name and EIN.

(1) Field 01EIN is a 9-position field that must be present.

(2) A Social Security Number (SSN) is never permitted in this field.

(3) Only numeric characters (0 thru 9) are valid.

(4) Invalid Conditions:

• Field 01EIN has all zeros or all nines.

• The field is blank.

• The field is less than 9 digits.

• Any character other than a number is present.

• The first two digits are: 00, 07, 08, 09, 17, 18, 19, 28, 29, 49, 69, 70, 78, 79, or 89.

(5) Correction Procedures:

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

2. Review Form 1042 and all attachments for a valid EIN. Enter EIN if found.

3. Research using INOLE, ENMOD, NAMEB, and NAMEE. Enter EIN on the screen and return if found.

4. If less than 3 digits of the EIN are transposed, different, or missing, do not send 3875C Letter.

Note: See Exhibit 3.22.110-2 for the EIN range applicable to QI taxpayers.

(6) SSPND 320 to Entity if:

• No valid EIN is found.

• More than one EIN appears on research. Notate on the Form 4227, Multiple EINs.

• There is more than one EIN on the return and INOLE shows both EINs show the same name. Notate on the Form 4227, MULTIPLE EINs.

• The EIN on a pre-printed label was changed by the taxpayer. Notate on the Form 4227, "EIN changed on pre-print label."

Note: It is imperative NAMEE and NAMEB are researched for a valid EIN.

(7) Rejects Procedures -

1. Re-research return using NAMEE before sending the return to Entity.

2. If a valid EIN is found, follow the procedures noted above.

3. If no valid EIN is found, or more than one EIN is found, leave Form 4227 attached with the error condition noted.

   Note: No other correction can be made to the ERS Screen when sending a document to another area. Do not enter any Action Code until the return comes back with the new EIN on it. Enter the new EIN into Field 01EIN.

4. Rejects never corresponds for an EIN. If the return cannot be perfected through research, it must go directly to Entity.

(1) Field 01TXP is a 6-position field that must be present.

(2) Only numeric characters in YYYYMM format are valid.

(3) Invalid Conditions:

1. Field 01TXP has any non-numeric character.

2. The field is blank or has less than 6 numbers.

3. The year is later than current year processing.

4. The tax period is earlier than 198512.

5. If the month-ending in the tax period is other than 12.

   Reminder: All Form 1042 are calendar year only and must end in 12. The field does not underprint, as do most other returns.

(4) Correction Procedures:

1. Correct misplaced entries, coding and transcription errors.

2. If the tax period is prior to 198512, SSPND 620. Attach Form 4227, and notate "Renumber to NMF" (Non-Master File).

3. If the return shows a fiscal year, then:
   1) Change the year to the current calendar year.
   2) SSPND 21X. Form 1042 may only be a calendar year return. If attachments to the return show money for both years, request a separate return for each year. Use 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.

4. If the tax period is later than the Received Date (early filer), then:
   1) Verify the tax period is edited and transcribed correctly.
   2) If the tax period is within the first 8 months of the year and is not a Final return, correspond using Letter 319C, requesting an explanation with paragraphs B and D for an introduction and use either P, T, Y or 3 based on the situation on the return and then close with b, e, and g.
   3) If the tax period is in the last six months of the year, SSPND 480 the return to be input after the year is over.

(5) Rejects Correction Procedures:

1. If the tax period is prior to 198512, send to NMF using IRM 3.12.38.5.15, Non Master File Items.

2. Reply Procedures: If the taxpayer replies it is a Final return, enter CCC "F". Process according to IRM 3.22.110.21.4.1, Processing Early-Filed Form 1042.

   Note: Do not enter a Correspondence Received Date as the CRD will not be valid the following January when the return is processed.

3. No Reply Procedures:

If	Then
The return is a fiscal year return with money amounts in both years,	Enter CCC "3". Enter CCC "X" if the return shows an overpayment. Follow early-filer procedures, if necessary.
If the return has a remittance amount that does not appear to belong to the return (such as if the balance due is zero and there is a remittance amount of $500.00),	1) Send the remittance amount to the Accounting Department Unidentified Remittance group on a Form 3465, (see instructions in IRM 3.12.38). 2) Enter CCC "3". 3) Continue processing the return as a non-remittance. 4) Enter CCC "X" if the return shows an overpayment.

Reminder: If entering CCC "F" (Final return) or CCC "3" (no reply), edit either code in red onto the document.

(1) Field 01CCC is a 10-position field that may or may not be present.

(2) Valid characters are: A, D, E, F, G, J, O, R, S, T, U, W, X, 3, 4, 7, and blank.

(3) The CCC is transcribed from the CC line in the "For IRS Use Only box" in the upper-right-hand corner of the return.

(4) The table provides a brief description of the valid codes. Specific instructions for each Computer Condition Code follow.

(5) Computer Condition Code priority:

1. If C&E has edited an Action Code in the bottom left margin of the tax return, ensure all other required CCCs, such as "F" or "4," are entered before making any other correction.

2. If CCC "G" is present, the only other CCCs that can be present in Field 01CCC at the same time are "W" and "3".

3. CCC "7" and "R" can be used together.

4. CCC "7" and "D" can be used together.

(6) Invalid Conditions:

1. Any code is present with CCC "G" except "W" or "3".

2. CCC "E" and "F" are used together.

3. CCC "D" and "R" are used together.

(7) Correction Procedures:

1. If a previously reinput return is received in ERS, ensure all CCCs are entered in Field 01CCC before making any other correction.

2. If CCC "G" is present, then: Delete any other CCC in Field 01CCC (except "W" and "3" if needed). If there is any question the return is amended, research BMFOLT for a TC 150. If present, delete the CCC "G" and enter any necessary data.

   Note: If the majority of the lines in the ROFTL (Lines 1-60) have an entry, SSPND 351 for Rejects to input the missing data.

3. If there is an overpayment amount on Line 70a/70b, there must be a CCC "E" or "S" in Field 01CCC. CCC "X" may also be necessary.

If	Then
The credit box on Line 71 is checked,	Enter CCC "E".
The refund box on Line 71 is checked,	Enter CCC "S".
Both boxes on Line 71 are checked,	SSPND 351 to Rejects for research.
Neither box on Line 71 is checked, and you are corresponding for another reason	SSPND 21X and use literal: Please explain whether you want your overpayment applied as a Credit or as a Refund.
Neither box on Line 71 is checked, and there is no other need for correspondence,	Enter CCC "E". (Do not correspond for ONLY this condition.)
The amount is correctly changed from negative to positive,	Delete CCC "E" and CCC "S" (if present).

4. If CCC "E" and CCC "F" are both present, determine which is correct. If the return is a Final return and there is an overpayment, change CCC "E" to CCC "S".

5. If CCC "D" and CCC "R" are both present, determine which is correct and delete the incorrect CCC.

6. Look under the specific individual instructions for each code for other possible corrections.

(8) Rejects Correction Procedures:

1. If a return from C&E with an ERS Action Code 650 is received, ensure all CCCs are entered in Field 01CCC before making any other correction.

2. If CCC "X" is required because of a NO REPLY condition and there is an overpayment, CCC "E" or CCC "S" must still be present in Field 01CCC along with CCC "X" and CCC "3".

3. If a return is received from the Statute Unit with instructions to process the return, ensure all necessary CCCs are entered.

4. If an erroneous short-year or fiscal-year return was sent to be cleared by Statutes, delete CCC "W" (if present).

5. If correcting the tax period to a non-Statute tax period, do not enter CCC "W" because the corrected tax period no longer makes it Statute criteria.

(1) Field 01RCD is an 8-position field that must be present.

(2) The valid characters are numeric (0 thru 9) only and must be in YYYYMMDD format.

(3) The Received Date is transcribed from the RD line in the "For IRS Use Only" box in the upper right-hand corner of the return. The date may also be stamped on the front of the return.

(4) Invalid Conditions:

1. The entry is missing or less than 8 numbers in the correct format.

2. The date is earlier than the last day of the tax year (early-filer).

3. The day of the month exceeds the number of days for that month, e.g., 20230931 (where September has only 30 days).

4. The date is later than the current processing date.

(5) Correction Procedures:

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

2. If there is more than one Received Date present, enter the earliest Received Date.

Exception: Do not use a Received Date in Field 01RCD that is prior to the end of the tax period.

3. Use the following priority when a Received Date is needed, but it is not stamped on the return, or a valid handwritten Received Date is not present.

Determine the Received Date

Earliest legible postmark (e.g., U.S. Postal Service (USPS) Foreign or Private Delivery Service (PDS)). Note: Receipt and Control function will attach the USPS tracking page if the postmark date is missing from a piece of certified mail. Use the "Acceptance" and "Date and Time" as the postmark date. Note: If an envelope is not attached, use the postmark date stamped on the face of the return. Service center Automated Mail Processing System (SCAMPS) digital date. Revenue officer's or other IRS official's signature date. Signature date, if within the current year (unless other information shows signature date is invalid). Julian Date of the Document Locator Number (DLN) minus 10 days.

4. If the year in the Received Date is either prior or future but other data on the return (tax year, postmark date or signature date) indicate the year should be the current year, enter the current year.

5. Correct the day of the month :

Month	Maximum Number of Days
01, 03, 05, 07, 08, 10, or 12	31
04, 06, 09, or 11	30
02	28 (29 in a leap year)

6. If the date is earlier than the last day of the tax year (e.g., the Received Date is 20231027 a 202312 return), ERS examines the return to be certain the tax year and Received Date are correct. ERS will SSPND 480 and notate "early filer" on Form 4227.

(6) Rejects Correction Procedures: Re-examine any return suspended as an Early-filer to verify it is an early filed return.

(1) Field 01CRD is an 8-position field that may or may not be present.

(2) The valid characters are numeric, 0 thru 9 (in YYYYMMDD format) or blank.

(3) The date is found on the CR line in the "For IRS Use Only" block in the upper right-hand corner of the Form 1042.

(4) Invalid Conditions:

1. The date is not later than the due date of the return.

2. It is the same as or earlier than the Received Date in Field 01RCD.

3. CCC "3" (No Reply) is present in Field 01CCC.

(5) Correction Procedures:

1. Correct misplaced entries, coding and transcription errors on Field 01CRD.

Note: The Correspondence Received Date (CRD) may be present on the return if:
1) C&E corresponded and entered the date OR,
2) Entity assigned an EIN and entered the EIN-assignment date on the return.

Note: The Entity date may not be entered on the CR line. The Entity Assignment Date is indicated, in the left-hand margin on the front of the return, by a capital E and date assigned in purple.

2. If CCC "3" and the CRD are both present, determine which is correct and delete the other.

Note: Do not enter a date in Field 01CRD if the taxpayer is not at fault and the correspondence was an IRS error.

(6) Rejects Correction Procedures:

1. The date is entered when a reply is received in response to IRS correspondence.

2. Enter the date onto the return on the CR line in the For IRS Use Only block in the upper right-hand corner of the return.

3. This reply may be a letter, telephone call or fax.

4. If the correspondence was sent in error (that is, the taxpayer is not at fault), do not enter a CRD.

5. Years ago, a No-Reply was indicated by entering eight 9s into this field, if ever seen on an old re-input return, delete and enter CCC "3".

(1) Field 01PIC is a 1-position field that may or may not be present.

(2) The valid characters are 1 and blank.

(3) The code is transcribed from the "I" line in the "For IRS Use Only" block in the upper right-hand corner of the return.

(4) The 1 is entered when:

1. The taxpayer entered an amount for delinquency (FF) penalty and/or interest onto the return (usually near the balance due or refund line) AND

2. The Received Date (stamped or edited) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(5) Invalid Conditions:

1. The entry is other than 1 or blank.

2. The Received Date is not within the ≡ ≡ ≡ ≡ ≡ ≡ ≡.

(6) Correction Procedures:

1. Correct misplaced entries, coding and transcription errors on Field 01PIC and Field 01RCD.

2. If the P/I code is entered and the transcribed Received Date is within the ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ delete the code.

3. If you correct Field 01RCD, see if the corrected Received Date affects the P/I code and correct the code.

(7) Rejects Correction Procedures: If the P/I code "1" should be entered, enter the code on the return and in Field 01PIC.

(1) Field 01SIC is a 1-position field that may or may not be present.

(2) The valid characters are 1, 2 or blank.

(3) The SIC code is transcribed from the SIC line in the "For IRS Use Only" block in the upper right-hand corner of the return.

(4) SIC code 1 is entered only when the Record of Federal Tax Liability (ROFTL) (Lines 1-60) is completely blank because it is unnecessary (no tax).

(5) SIC code 2 is entered if any of these conditions exist:

• CCC "J" is edited due to a notation of 3121 Agreement or VCP on the return. See IRM 3.22.110.21.5.6, CCC "J".

• TY17 only: CCC "J" is edited for an amount present on Line 62b(1), Field 07SSD.

• TY10 and prior: The taxpayer did not notate "3121 Agreement on top of" Form 1042 but included a reasonable cause statement. Follow the step list instructions in IRM 3.22.110.18.3, Delinquent Returns.

• TY10 and prior: The 90 Percent Rule checkbox is checked (the checkbox is located below the entity part of Form 1042) and any monthly Tax Liability (Lines 5, 10, 15, etc.) exceeds ≡ ≡ ≡ ≡ and the weekly tax liability for that month is also present.

• TY10 and prior: The taxpayer noted "3121 Agreement" on Form 1042 and any monthly tax liability (Lines 5, 10, 15, etc.) is ≡ ≡ ≡ ≡ ≡ or more.

• TY10 and prior: Both TY10 and prior conditions exist at the same time.

(6) Invalid Conditions:

1. Any character other than a 1, 2 or blank appears in Field 01SIC.

2. Although it does not appear invalid, SIC Code 1 must not appear in Field 01SIC if there are any entries at all in the ROFTL (Lines 1-60), Sections 03-06

(7) Correction Procedures:

1. Correct misplaced entries, coding and transcription errors.

2. If there are no entries on Lines 1-60 and Line 64e is zero or blank, enter 1 in Field 01SIC.

3. If there are any correct entries on Lines 1 thru 60, and a 1 is present in Field 01SIC, delete the entry.

Note: Determine if SIC code 2 must be entered in its place.

4. TY10 and prior: If C&E has corresponded for missing amounts in the ROFTL, look at the reply and determine if SIC 2 must be entered.

(8) Rejects Correction Procedures:

(1) Field 01QIN is a 1-position field that may or may not be present.

(2) The valid character is "1" or "2."

• "1" shows a valid Qualified Intermediary (QI), Withholding Partnership (WP), or Withholding Trust (WT) EIN is present (referred collectively throughout the rest of the IRM as QI).

• "2" shows a valid QI/WP/WT EIN is not present (NQI).

(3) The QI checkbox was removed from Form 1042 in TY14 and is no longer a transcribed field. The computer automatically determines if the EIN is in the QI or NQI range and sets the indicator as correct.

(1) Description: The designee checkbox indicator is transcribed from the bottom of Form 1042. The checkbox is used to indicate whether the filer has elected to allow a third-party designee to answer questions about the return as it is processed. Data may or may not be present in Field 01CBI.

(2) Valid Condition: Valid entries are "1" and blank.

(3) Invalid Condition: Field 01CBI generates as an error when the Designee Checkbox Indicator is other than "1" or blank.

(4) Correction Procedures:

1. Correct misplaced entries, coding and transcription errors.

2. Enter a "1" in Field 01CBI on the screen if the "Yes" box is checked.

3. Delete Field 01CBI if "No" box or both boxes are checked.

4. If invalid, delete the entry in Field 01CBI.

(1) Description: The paid preparer telephone number is transcribed from the bottom Form 1042, below the paid preparer EIN. Data may or may not be present in Field 01CBT.

(2) Valid Condition: Field 01CBT must be alpha or numeric or a combination of alpha and numeric characters, not to exceed 10 characters or blank.

(3) Invalid Condition: Field 01CBT generates as an error when the Paid Preparer Telephone Number is other than 10 alpha/numeric.

(4) Correction Procedures:

1. Correct misplaced entries, coding and transcription errors.

2. If a telephone number is invalid, delete the entry in Field 01CBT.

(1) Field 01PSN is a 9-position field that may be present. It is located below Line 71 to the right of Preparer's Signature.

(2) Valid conditions:

• Entry is blank

• "P" for the first character followed by eight numeric characters

(3) Invalid conditions:

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

• Contains all zeros,

• Contains all nines, or

• Contains all numeric characters.

(4) Correct Field 01PSN as follows:

(1) Field 01PEN is a 9-position field that may be present.

(2) Valid conditions:

• Entry is blank

• All numeric

(3) Invalid conditions:

• Field 01PEN is other than nine numeric digits,

• Contains all zeros,

• Contains all nines, or

• The first two digits are invalid for Field 01EIN. See IRM 3.22.110.21.3, Field 01EIN.

(4) Correct Field 01PEN as follows:

(1) This field has the Chapter Three Status Code.

(2) This is a two-position numeric field and valid entries are 00-99.

(3) It is entered by the taxpayer from their Form 1042-S, Box 12b.

(4) Blank is not valid.

(5) Correction Procedures:

1. The only valid entry on G Coded returns is "00."

2. The only valid entry on a zero return is "00."

3. If blank, and taxpayer has an entry on the return, enter the status code from the return unless it is a zero return then enter "00."

(1) This field has the Chapter Four Status Code.

(2) This is a two-position numeric field and valid entries are 00-99.

(3) It is entered by the taxpayer from their Form 1042-S Box 12c.

(4) Blank is not valid.

(5) Correction Procedures:

1. The only valid entry on G Coded returns is "00."

2. The only valid entry on a zero return is "00."

3. If blank, and taxpayer has an entry on the return, enter the status code from the return unless it is a zero return then enter "00."

(1) Field TPNC is a 6-position field.

(2) The valid characters are 01, 02, 26, 90 or blank.

(3) This field is never entered or corrected by ERS or Rejects.

(4) This field is where the TPNCs appear after the return has posted.

(5) The list of available Taxpayer Notice Codes is as follows:

(6) Do not use any other TPNC when sending TPNC 90. If TPNC 01 or 02 is also needed, add the wording from that TPNC to the wording for the error requiring the TPNC 90.

(7) Do not send a TPNC if:

1. Field 0764E and Field 0764> (total tax liability) underprint ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ AND

2. The balance due/refund Field 07B/D underprints ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

3. Correct Field 07B/D using the taxpayer's original amounts.

(8) Correction/Rejects Correction Procedures:

1. Never correct, add or delete anything in this field.

2. Do not send a TPNC if there is no underprint in the balance due/refund field (07B/D). If there are underprints in the tax fields (0763A and 0763C) but not in Field 07B/D, look carefully for transcription errors. A taxpayer notice code on the Form 1042 will not be released by the computer if there is no underprint in field 07B/D.

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

(1) Field 01CBP is a 9-position field that may or may not have an entry.

(2) This field is located at the right side of the Third-Party Designee Line (under Line 71).

(3) The designee is instructed to pick any five numbers and insert them into the blocks as a means of identification when IRS calls the designee.

(4) The valid characters are numeric (0 thru 9) and blank.

(5) This number cannot be researched using CFOL.

(6) Correction Procedures:

1. If the designee enters any invalid or illegible characters, blank the field.

2. Correct any transcription errors, if possible. If in doubt about what a digit may be, do not guess; blank the field

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

(2) Field 02CON is a 35-position field that may or may not be present.

(3) Valid characters are alpha (A thru Z), numeric (0 thru 9), ampersand (), dash/hyphen (-), percent (%), slash (/) or blank.

(4) Invalid Conditions:

1. The first position of the field is blank unless the entire field is blank.

2. The first position is a percent (%) and second position is not blank.

3. An entry other than the valid characters is present.

4. There are two consecutive blanks between significant characters.

(5) Correction Procedures:

1. Delete any invalid characters.

2. If the entry exceeds 35 characters, abbreviate where possible.

3. If it is not possible to determine the in-care-of name, delete the field.

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

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

• Field 02FAD must not be present on "G" coded short length records.

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

(3) Invalid Conditions: Field 02FAD generates 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 inputs a pound sign (#) as the 35th character if there are more than 35 characters present for this field on the return. If the foreign address is longer than 35 characters, continue the address in Field 02ADD.

(4) Correction Procedures:

1. Correct all coding and transcription errors.

If	Then
Field 02FAD is present,	GTSEC 02 Ensure Field 02CTY has a foreign country code and Field 02ST has 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 has a province name or abbreviation. See IRM 3.22.110.22.4 (5) for Province/Country Codes - Canada.
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 proper position in Field 02FAD. See Exhibit 3.22.110-6, ♦Province, Foreign State, and Territory Abbreviations♦
A foreign address is not present on the return,	SSPND with Action Code 610. Renumber return with domestic DLN.

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/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
Form 8822, Change of Address, or Form 8822-B, Change of Address or Responsible Party - Business, is attached,	All the following applies: Mailing address information is the same, No location address is on Form 8822 or Form 8822-B, Line 7, No entry on Form 8822-B, Lines 8 or 9,	Take no action and continue processing.
Form 8822, Change of Address, or Form 8822-B, Change of Address or Responsible Party - Business, is attached,	Any of the following applies: Mailing address information is different, Location address is on Form 8822 or Form 8822-B, Line 7, An entry is on Form 8822-B, Lines 8 or 9,	Enter address shown on Form 8822 or Form 8822-B in Field 02FAD. Notate "Form 8822 or Form 8822-B detached" on tax return. Detach Form 8822 or Form 8822-B and route to Entity Control using Form 4227, Intra-SC Reject or Routing Slip, or follow local procedures. Notate on Form 4227, "Change of address per Form 8822 or FORM 8822-B."

Note: The lead TE must batch all Forms 8822 or Forms 8822-B daily and hand carry to Entity Control for expedite processing.

(1) Field 02ADD is a 35-position field that may or may not be present.

(2) Valid characters are alpha (A thru Z), numeric (0 thru 9), dash/hyphen (-), slash (/) and blank.

(3) Invalid Conditions:

1. An entry other than the valid characters is present.

   Note: A pound sign (#) is transcribed at the end of 35 spaces if the entry has more than 35 characters.

2. The first position of the field is blank unless the entire field is blank.

(4) Correction Procedures:

1. Delete any invalid character.

2. If the entry exceeds 35 characters, abbreviate where possible.

3. If unable to correct, delete Section 02.

   Note: This is common for foreign addresses.

4. If the first position is blank, delete the blank.

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

(2) Valid characters are alpha (a-z) and blank.

(3) Invalid Conditions: Field 02CTY generates as a field error when:

• The first position is blank,

• Any character other than blank or alpha is present,

• Any character follows two consecutive blanks,

• The Major City Code (MCC) does not match any of the valid codes in the Major City Code Table, and/or

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

(4) Correction Procedures:

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

Note: For a listing of Major City Codes (MCC) (listed by state) and valid Foreign Country Codes (FCC) see Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries.

2. If/Then:

(5) Special Considerations -

1. APO/FPO/DPO Address Format:

APO/FPO/DPO addresses use the following format

Line Name	EXAMPLE:	Applicable Field
Payee Name	PVT. Willard J. Doe	02ADD
Mailing Address	Company F. PSC Box 100 167 Infantry REGT
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

2. Canadian Province/Country Codes:

Canadian Province	Province Abbreviation	Postal Code Beginning Note: If the Canadian Postal Code begins with one of the following, use the corresponding Country Code abbreviation in the right most column.	Country Code Field 02CTY
Alberta	AB	T	XA
British Columbia	BC	V	XB
Manitoba	MB	R	XM
New Brunswick	NB	E	XN
Newfoundland and Labrador	NL	A	XL
Northwest Territories	NT	X	XT
Nova Scotia	NS	B	XS
Nunavut	NU	X	XV
Ontario	ON	K, L, M, N, or P	XO
Prince Edward Island	PE	C	XP
Quebec	QC	G, H, or I	XQ
Saskatchewan	SK	S	XW
Yukon	YT	Y	XY

(1) Field 02ST is a 2-position field that may or may not be present.

(2) If Section 02 is present, this field must have an entry unless there is a MCC in Field 02ST.

(3) Valid characters are alpha (A thru Z), period (.) and blank.

(4) For domestic addresses, the entry must be one of the state codes shown in the list below.

(5) U.S. Possessions are indicated on the following list, as are their respective state codes. These are entered in the same way as in a domestic address.

(6) For foreign addresses, there is a period "." in the first position of the field (the second position must be blank). If not send case to Rejects for correction to DLN.

(7) The list of valid state codes (including U.S. Possessions) is as follows:

(8) Invalid Conditions:

1. There is a non-alpha (except for period) character present.

2. The entry is not on the list of valid codes.

3. The field is blank (unless there is a MCC in Field 02CTY).

4. The period is in the second position (with foreign address).

5. There is an entry in Field 02ST and a period in Field 02CTY.

6. The DLN begins with "60" and Field 02ST is other than a period (.) or blank.

(9) Correction/Rejects Correction Procedures:

1. Verify the state code is transcribed correctly.

2. Correct any invalid entry.

3. If the state is missing from the line on the return, search attachments. Research the state from the ZIP Code if present.

4. If the state and ZIP Code are both missing and it is impossible to determine them, delete Section 02.

5. If the DLN begins with "60" and Field 02ST has a valid state code, SSPND 610 to Rejects to be renumbered.

(1) Field 02ZIP is a 12-position field which may or may not be present.

(2) Valid characters are numeric (0 thru 9) and blank.

(3) There must be a minimum of five (5) numbers present.

(4) If there is a state code in Field 02ST there must be a ZIP Code present in Field 02ZIP.

(5) If there is a MCC in Field 02CTY, there must be a ZIP Code present in Field 02ZIP

(6) This field must be blank if there is a period in Field 02ADD.

(7) The ZIP Codes of U.S. Possessions are considered U.S. ZIP Codes and are entered in this field.

(8) Invalid Conditions:

1. The field is blank and there is a state code in Field 02ST or a MCC in Field 02CTY.

2. There is a non-numeric entry in the field.

3. There are less than five digits in the field.

4. There is an entry in the field but there is a period in Field 02ST.

Note: A foreign (Non-U.S. Possession) ZIP/Postal Code is never entered in this field. The state code and ZIP Code for U.S. possessions follow the same format as for domestic addresses.

5. There is a valid ZIP Code in the field but the first position of the field is blank.

6. There is a discrepancy between the digits of the ZIP Code and the state code. (Each state has a certain range of applicable ZIP Codes).

7. The ZIP Code is not on the list of valid ZIP Codes of the U.S. Post Office.

(9) Correction/Rejects Correction Procedures:

1. Correct misplaced entries, coding and transcription errors.

2. Perfect any non-numeric characters.

3. Delete any ZIP/Postal Code belonging to a foreign country, except U.S. Possessions. (Foreign ZIP Codes are sometimes referred to as Postal Codes).

4. Research any missing or incomplete ZIP Code using the ZIP Code Directory. Also, look on any attachments, especially an envelope.

5. If the first position of the field is blank, but there is a valid code in the field, re-enter the entire field.

6. If the ZIP Code is invalid, ensure the state code in Field 02ST is correct, per IRM 3.22.110.22.5, Field 02ST.

   Example: Alaska is AK, not AS or AA. These are valid state codes, but they would not match the applicable ZIP Code.

(1) If there are two entries on one line, add them together and enter in the correct field.

(2) If there are negative amounts in Lines 1-60:

(3) If only monthly totals are entered,

(4) If only Line 59 has an entry:

(5) If Lines 1 thru 59 are blank and:

(1) When ERS corresponded for Lines 1-60:

(2) When ERS corresponded because only monthly totals are entered:

(3) If ERS corresponded because multiple entries in the ROFTL (Lines 1-60) are income, not tax:

(1) Field 0761A is a 6-position field which may or may not be present.

(2) Only numeric characters (0 thru 9) are valid.

(3) Field 0761A is Line 61a on Form 1042.

(4) Invalid Conditions:

• A non-numeric character in the field.

• The field is blank (if Field 0761B is also blank)

(5) Correction Procedures:

1. Correct misplaced entries, coding and transcription errors.

2. If there are no entries on Line 61, do not correspond for the number of Form 1042-S.

Note: If the return is all zeros and/or Line 64e is blank or the taxpayer notates "No Taxable Income," do not correspond for Line 61a and 61b, Enter 000001 in Field 0761A. Fields 0761A and 0761B are 6 position fields.

(1) Field 0761B is a 6-position field which may or may not be present.

(2) Only numeric characters (0 thru 9) are valid.

(3) Field 0761B is Line 61b on Form 1042.

(4) Invalid Conditions:

1. A non-numeric character in the field.

2. The field is blank (if Field 0761A is also blank).

(5) Correction Procedures:

1. Correct misplaced entries, coding and transcription errors.

2. If there are no entries on Line 61, do not correspond for the number of Form 1042-S.

Note: If the return is all zeros and/or Line 64e is blank or the taxpayer notates "No Taxable Income," do not correspond for Line 61a and 61b, Enter 000001 in Field 0761A. Fields 0761A and 0761B are 6 position fields.

(1) Field 0762A is a 15-position field that may or may not be present.

(2) The field is found on Line 62a.

(3) The valid characters are numeric (0 thru 9) and blank.

(4) The amount must be positive and in Dollars and Cents.

(5) Invalid Conditions:

1. A negative amount in the field.

2. Non-numeric character in the field.

(6) Correction Procedures:

1. Correct misplaced entries, coding and transcription errors.

2. Delete negative entries.

(1) Field 0762SSD is a 15-position field that may or may not be present.

(2) This field will generally contain an amount (other than 0) if the withholding agent’s chapter 3 status code is "Qualified Securities Lender" (QSL) or "Qualified Derivatives Dealer (QDD)."

(3) The field is found on Line 62b(1).

(4) If an amount is present in this field, CCC "J" will be present in Field 01CCC and a 2 in Field 01SIC.

(5) The valid characters are numeric (0 thru 9) and blank.

(6) The amount must be positive and in dollars and cents.

(7) Invalid Conditions:

1. A negative amount in the field.

2. Non-numeric character in the field.

(8) Correction Procedures:

1. Correct misplaced entries, coding and transcription errors.

2. Delete negative entries.

3. If an amount is present in Field 0762SSD, ensure CCC "J" and SIC 2 are present.

(1) Field 0762SSP is a 15-position field that may or may not be present.

(2) The field is found on Line 62b(2).

(3) The valid characters are numeric (0 thru 9) and blank.

(4) The amount must be positive and in dollars and cents.

(5) Invalid Conditions:

1. A negative amount in the field.

2. Non-numeric character in the field.

(6) Correction Procedures:

1. Correct misplaced entries, coding and transcription errors.

2. Delete negative entries.

(1) Field 0762C is a 15-position field that may or may not be present.

(2) The field is found on Line 62c.

(3) The valid characters are numeric (0 thru 9) and blank.

(4) The amount must be positive and in dollars and cents.

(5) Invalid Conditions:

1. A negative entry in the field.

2. A non-numeric character in the field.

(6) Correction Procedures:

1. Correct misplaced entries, coding and transcription errors.

2. Delete negative entries.

(1) Field 0762D is a 15-position field that may or may not be present. This field must be filled out unless withholding agent’s status code is a QI, WP, or WT.

(2) The field is found on Line 62d.

(3) The valid characters are numeric (0 thru 9) and blank.

(4) The amount must be positive and in Dollars and Cents.

(5) The word income refers to all types of income: wages, interest, capital gains, dividends, etc., from which tax may or may not have been withheld.

(6) This field must have an entry if there is a difference in gross income reported (Line 62c).

(7) There can be an amount of income in Field 0762D without a tax being present on Line 64e (for example, the tax is zero because of applicable treaty provisions).

(8) Invalid Conditions:

1. A non-numeric character in the field.

2. A negative entry in the field.

(9) Correction Procedures:

1. Correct misplaced entries, coding and transcription errors.

2. Delete negative entries.

(1) Field 0763A is a 15-position field that may or may not be present.

(2) The field is found on Line 63a

(3) The valid characters are numeric (0 thru 9) and blank.

(4) The amount must be positive and in Dollars and Cents.

(5) Invalid Conditions:

1. A non-numeric character in the field.

2. A negative number in the field.

(6) Correction Procedures:

1. Correct misplaced entries, coding and transcription errors.

2. Delete negative entries.

(1) Field 07POD is a 15-position field that may or may not be present.

(2) The field is found on Line 63b(1)

(3) The valid characters are numeric (0 thru 9) and blank.

(4) The amount must be positive and in Dollars and Cents.

(5) Invalid Conditions:

1. A non-numeric character in the field.

2. A negative number in the field.

(6) Correction Procedures:

1. Correct misplaced entries, coding and transcription errors.

2. Delete negative entries.

(1) Field 07SD is a 15-position field that may or may not be present.

(2) The field is found on Line 63b(2)

(3) The valid characters are numeric (0 thru 9) and blank.

(4) The amount must be positive and in Dollars and Cents.

(5) Invalid Conditions:

1. A non-numeric character in the field.

2. A negative number in the field.

(6) Correction Procedures:

1. Correct misplaced entries, coding and transcription errors.

2. Delete negative entries.

(1) Field 076AO is a 15-position field that may or may not be present.

(2) The field is found on Line 63c(1).

(3) The valid characters are numeric (0 thru 9) and blank.

(4) The amount must be negative and in Dollars and Cents.

(5) Invalid Conditions:

1. A non-numeric character in the field.

(6) Correction Procedures:

1. Correct misplaced entries, coding and transcription errors.

(1) Field 076AU is a 15-position field that may or may not be present.

(2) The field is found on Line 63c(2).

(3) The valid characters are numeric (0 thru 9) and blank.

(4) Invalid Conditions:

1. A non-numeric character in the field.

2. A negative entry in the field.

(5) Correction Procedures:

1. Correct misplaced entries, coding and transcription errors.

2. Delete negative entries.

(1) Field 0763D is a 15-position field that may or may not be present.

(2) The field is found on Line 63d.

(3) The valid characters are numeric (0 thru 9) and blank.

(4) The amount must be positive and in Dollars and Cents.

(5) Invalid Conditions:

1. A non-numeric character in the field.

2. A negative number in the field.

(6) Correction Procedures:

1. Correct misplaced entries, coding and transcription errors.

2. Delete negative entries.

3. If it appears Field 0763D is being used as subtotal line, delete entry. (i.e., 0763A=0763D=0763E)

(1) Field 0763E is a 15-position field that may or may not be present.

(2) This amount is found on Line 63e.

(3) Valid characters are numeric (0 thru 9).

(4) The amount must be positive and in dollars and cents.

(5) Invalid Conditions:

1. There is a non-numeric character in the field.

2. Fields 0763A, 07POD, 07SD, 076AO, 076AU, and 0763D are all blank.

   Note: If Field 0763E is invalid, then 0763A thru 0763D will also be invalid, whether these fields have entries or not.

(6) Correction/Rejects Correction Procedures:

1. Correct misplaced entries, coding and transcription errors.

2. If there is no amount on Line 63e, make no entry on the line or in Field 0763E.

(1) Field 0764A is a 15-position field that may or may not be present.

(2) The valid characters are numeric (0 thru 9) and blank.

(3) The field is entered in dollars and cents and can be positive or negative.

(4) Invalid Conditions: Non-numeric character in the field.

(5) Correction Procedures:

1. Correct misplaced entries, coding and transcription errors.

2. TY15 and prior: There must be a statement substantiating any negative adjustment amount. If statement is not attached, SSPND 21X with literal:
   Please provide the required substantiating statement showing the computation of the negative adjustment.

(6) Rejects Correction Procedures:

1. TY15 and prior: SSPND 21X with literal:
   Please provide the required substantiating statement showing the computation of the negative adjustment.

2. If the REPLY is sufficient, allow the adjustment (and enter Field 01CRD, if required).

3. If there is NO REPLY, X the amount and blank the field. Enter CCC "3". Enter CCC "X" if the return shows an overpayment. Send TPNC 90 #302 with literal:
   The amount of your adjustment of under withheld tax on corporate distributions on Form 1042 was denied because you did not reply to our request for the required statement substantiating the adjustment.

   Note: If C&E corresponded for a statement for a positive adjustment amount (tax increase), do not delete the adjustment if there is no reply.

(1) Field 0764B is a 15-position field that may or may not be present.

(2) The field is located on Line 64b.

(3) The valid characters are numeric (0 thru 9) and blank.

(4) The amount must be positive only and in dollars and cents.

(5) Invalid Conditions:

1. A non-numeric character in the field.

2. A negative amount in the field.

(6) Correction Procedures:

1. Correct misplaced entries, coding and transcription errors.

2. Delete negative entries.

3. If Field 0764B is blank and Fields 0764A, 0764C, and 0764D are blank and an amount is present in Field 0764E, enter the Field 0764E amount into Field 0764B.

(1) Field 0764C is a 15-position field that may or may not be present.

(2) The field is located on Line 64c.

(3) The valid characters are numeric (0 thru 9) and blank.

(4) The amount must be positive only and in dollars and cents.

(5) Invalid Conditions:

1. A non-numeric character in the field

2. A negative amount in the field.

(6) Correction Procedures:

1. Correct misplaced entries, coding and transcription errors.

2. Delete negative entries.

(1) Field 0764D is a 15-position field that may or may not be present.

(2) This amount is found on Line 64d.

(3) Valid characters are numeric 0 thru 9.

(4) The amount must be positive and in dollars and cents.

(5) The 2 percent excise tax paid on specified federal procurement payments reported on line 64d is already included in the ROFTL.

(6) Invalid Conditions:

1. There is a non-numeric character in the field.

2. Field 0764D is a negative amount.

3. An entry is present in Field 0764D, but Field 0764E is blank.

4. Employment Code F is not present in the ENMOD.

(7) Error/Rejects Correction Procedures:

1. Correct misplaced entries, coding and transcription errors.

2. Compare the entry on the return to Field 0764D. If different, input the correct amount.

3. If an amount is present in Field 0764D and ENMOD Employment Code is NOT F, delete the entry.

4. If the amount in Field 0764D (Line 64d) is negative, delete the entry in Field 0764D.

5. TY14 and subsequent - SSPND 21X for Sections 03-06 and Fields 0762D and 0763E when an amount is present in Field 0764D (Line 64D), but there is no entry in Fields 0762D, 0763E, and/or Field 0764E and the ROFTL (Sections 03-06) is blank.

(8) No-Reply Procedures:

1. Enter CCC "3"

2. Divide the amount in Field 0764D by two percent (.02) and enter the result in Field 0762D.

3. Enter the amount from Field 0764D in Fields 0763E, 06L31, and 0764E.

4. Do not enter 000001 in Field 0761A.

5. Send TPNC 90 #305 with literal:
   You did not correctly complete Form 1042 to report the two percent excise tax on federal procurement payments to a foreign person or foreign entity.

(1) Field 0764E is a 15-position field that may or may not be present.

(2) The field is located on Line 64e

(3) The valid characters are numeric (0 thru 9) and blank.

(4) The amount must be positive only and in dollars and cents.

(5) The amount is determined by computing Fields 0764A, 0764B, 0764C and 0764D.

(6) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(7) Invalid Conditions:

1. There is a non-numeric character in the field.

2. Field 0764E is invalid if Field 0762D (income) is either blank or has an amount that is less than Field 07TQA, even if Field 0764E is entered correctly.

3. Field 0764E invalid AND underprint zeros if the entry is greater than zero but sections 03-06 are all missing from the error screens.

(8) Special Error Conditions:

1. Field 0764E can never have a negative amount. The computer will not accept a negative (-). (If the amount in Field 0764A (adjustments) exceeds field 07TQA, see (10)b2 below).

2. If there is a positive amount on Lines 1-60, there must be an amount in Field 0764E, unless a negative amount in Field 0764A reduces Field 0764E to zero.

3. If the total of entries on Lines 1-60 (sections 03-06) differs from the total tax ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ then Field 0764E will underprint, but will not be invalid.

4. If Field 0764E underprints but Field 0764A does not, there is probably a transcription error in Field 0764A. (If Field 0764A is negative, the field must be negative.)

(9) Correction Procedures:

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

2. If Field 0764E is invalid, verify that Field 0762D (income) is entered correctly. If not, see IRM 3.22.110.24.7, Field 0762D.

3. Field 0764E must be present if there is an entry in Field 07TQA unless reduced by a negative amount on Line 64a and will underprint if blank or not entered correctly.

4. The field will underprint if the computer's computation (combining all allowable amounts on Lines 1-60 and Line 64a) differs from the taxpayer's amount ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(10) Correction Procedure for Line 64e Underprint:

1. Correct misplaced entries, coding and transcription errors.

2. If the taxpayer has computed Line 64e to a negative amount:
   1) And it is caused by a negative amount on Lines 1-60, assign TPNC 90 #301.
   2) If caused by a negative amount on Line 64a being larger than Field 07TQA, then reduce the adjustment amount on Line 64a so that it is equal to the amount in Field 07TQA (even if zero). Assign TPNC 90 #303, with literal:
   The negative adjustment amount for your adjustment of under-withheld tax on corporate distribution on Form 1042 cannot be larger than the total tax liability reported. We have reduced the amount accordingly.

3. Assign TPNC 02.

(1) Field 0765A is a 15-position field that may or may not be present.

(2) The amount must be positive and in dollars and cents.

(3) The valid characters are numeric (0 thru 9) and blank.

(4) The amount on this line can be substantiated by researching BMFOLT for the applicable credit transaction codes and amounts. (e.g., TC 650, 660, 670, etc.)

(5) This entry reflects the amounts paid during the tax year by the taxpayer by Electronic Filing.

(6) Invalid Conditions: There is a non-numeric character in the field.

(7) Correction Procedures:

1. Correct misplaced entries, coding and transcription errors.

2. Do not change the taxpayer's amount unless instructed.

   Note: If the taxpayer enters the same amount on Lines 65b, 66, 67a and 67b, SSPND 351 so Rejects can research whether Line 65a, 65b, 67a or 67b applies.

(8) Rejects Correction Procedures:

1. Change this amount if directed by Unpostables (the amount may not equal the amount on BMFOLT).

   Note: If the difference is substantial, it may be necessary to SSPND 21X for clarification (such as prior to issuing a manual refund), depending upon service center procedure.

2. If the same amounts are on Lines 65a and 67a and 67b, look at the EIN (to see if it is within the valid QI range ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and check BMFOLT to determine on which line the credit belongs. See the instructions under IRM 3.22.110.24.23, Field 0767A, and IRM 3.22.110.24.24, Field 0767B.

(9) If Field 0765A is blank, add monthly total lines from the ROFTL area to come up with the correct figure.

(1) Field 0765B is a 15-position field that may or may not be present.

(2) The amount must be positive and in dollars and cents.

(3) The valid characters are numeric (0 thru 9) and blank.

(4) This entry reflects the amounts paid during the subsequent tax year via Electronic Filing.

(5) Invalid Conditions: There is a non-numeric character in the field.

(6) Correction Procedures:

1. Correct misplaced entries, coding and transcription errors.

2. Do not change the taxpayer's amount unless instructed to do so.

   Note: If the same amounts are on Lines 65b, 66, 67a, and 67b, SSPND 351 so Rejects can research whether Line 65a, 65b, 67a, or 67b applies.

(1) Field 0766 is a 15-position field that may or may not be present.

(2) If is found on Line 66 of the Form 1042.

(3) The amounts must be positive only and in dollars and cents.

(4) The valid characters are numeric (0 thru 9) and blank.

(5) The entry reflects the amount of (overpayment) credit elect from the previous year. It can be seen on the current year BMFOLT usually as a TC 716 or on the previous year BMFOLT as a TC 836 (this amount may be smaller than the taxpayer's amount due to the imposition of penalties and interest).

(6) Invalid Conditions: There is a non-numeric character in the field.

(7) Correction Procedures:

1. Correct misplaced entries, coding and transcription errors.

2. Do not change this amount unless instructed to do so.

(8) Rejects Correction Procedures:

1. Change this amount if directed to do so by Unpostables or if another condition warrants a change, such as the issuance of a manual refund.

2. Before changing the amount or corresponding with the taxpayer (if the difference is substantial), research the previous year's BMFOLT if the amount was reduced by the computer because of penalties and/or interest being assessed, or if any of the amount was refunded or applied to a different module.

(1) Field 0767A is a 15-position field which may or may not be present.

(2) It is found on Form 1042, Line 67a.

(3) The valid characters are numeric (0 thru 9) and blank.

(4) The entry must be positive and in dollars and cents.

(5) This field can only contain data if the taxpayer is an intermediary (QI or NQI). Field 01QIN must be a "1" or a "2."

(6) All withholding agents must substantiate entries on Lines 67a and Line 67b by attaching a copy of Form 1042-S Copy B (C, D, and/or E) or they may attach a Form 1099. Review Form 1042 for supporting Form 1042-S or 1099. Do not detach Form 1042-S Copy B (C, D, and/or E) or other supporting documentation.

1. The recipient’s name on the Form 1042-S must be the same as the filer name on the Form 1042 and the Recipient Chapter 3 Status Code (Box 13f) must be 09, 11, 12, 13, 14 or 35 or

2. The Intermediary or flow-through entity’s name (Box 15d) must be the same as the filer name on the Form 1042 and the Recipient Chapter 3 Status Code must be other than 09, 11, 12, 13, 14 or 35.

3. If neither a) or b) above apply, delete the amount claimed on Line 67a or 67b unless (7) or (8) applies.

Caution: If Form 1042-S is attached and the taxpayer is a QI BUT the supporting Form 1042-S documentation for the entry on lines 67a/67b is not a different withholding agent (e.g., it is the same withholding agent/recipient), then SSPND 21X for the correct Form 1042-S document that does not list the taxpayer as both the withholding agent and recipient.

4. If a Form 1099 is attached, the recipient’s name on the Form 1099 must be the same as the filer name on the Form 1042. If not, delete the amount claimed on Line 67a or Line 67b unless (7) or (8) apply.

5. The sum of the tax withheld reported on all the attached Forms 1042-S (Box 10, total withholding credit), Forms 1099 (federal tax withheld box), and any amount reported in a statement or U.S. Competent Authority letter, (if 7 or 8 applies) must equal to ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ the total amount reported on Line 67a and Line 67b. If not, then SSPND 21X for the missing Form 1042-S or 1099 to support the amount of the credit claimed.

(7) If the Form 1042-S is missing and a credit is claimed on Line 67b paid from a withholding agent that has not issued a Form 1042-S, the filer may attach a statement to Form 1042 to support the amount on Line 67b with all the following info:

• The withholding agent's name, address, and EIN (if known).

• The amount of U.S. source substitute dividends received from the withholding agent.

• The amount of credit forward included in connection with these substitute dividends.

(8) If the taxpayer attached a letter signed by a "U.S. Competent Authority" instead of Form 1042–S Copy B, accept the withholding amounts claimed.

(9) Invalid Conditions:

1. There is a non-numeric character in the field.

2. Form 1042 Lines 67a/67b are valid for TY 2001 and subsequent. (Line 66 for TY13 and prior and Lines 67a/67b for TY14 and subsequent.)

(10) Correction Procedures:

1. Correct misplaced entries, coding and transcription errors. Also, verify the taxpayer did not use Lines 67a/b as total lines for Lines 65 and 66. If so, move entry to Field 0768 and Line 68.

2. Do not change this amount unless instructed to do so.

3. When there is an amount on Lines 67a/67b, search the return for attached copies of Form 1042-S (Copy B).

4. Check withholding agent chapter 3 status code for status of the withholding agent.

5. If Form 1042-S Copy B or other documentation are not present to substantiate ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ 67a/67b,

And	Then
The withholding amount claimed in this field is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡	Do not correspond. Allow the credit.
The withholding amount claimed in this field is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡,	SSPND 21X for the missing Form 1042-S.
The filer included a supporting statement, per (7),	If all info is present, allow the credit. If any info is missing, SSPND 21X for the missing Form 1042-S.
The filer included a letter signed by a Competent Authority, per (8),	Allow the credit.
TY14 and prior: The withholding agent designates itself as a QI, but the EIN is NOT within the valid QI range (Field 01QIN is 2),	Do not correspond. Delete the entries in Fields 0767A and 0767B. Send TPNC 90 #298 with literal: The credit or refund on Form 1042 was denied because the Employer Identification Number on your Form 1042 does not identify you as a Qualified Intermediary entitled to claim an overpayment attributable to withholding by others.

(11) Rejects Correction Procedures:

1. When a REPLY is received, attach the copies of Form 1042-S, and enter the CRD (if required).

2. If the REPLY says Form 1042-S were attached to the return, research IRPTR to locate the withholding document. If found, substantiate the credit by attaching a print of the collaborating information to the tax return. Do not enter a CRD as the Form 1042-S were removed by IRS and the error is not the taxpayer's. If not found, then disallow the credit and send TPNC 90 #299, with literal:
   You did not provide substantiation (i.e., Forms 1042-S) to support your Form 1042 entry for the amounts withheld by other withholding agents.

3. If there is NO REPLY, delete the credit, enter CCC "3" and send TPNC 90 #299. Enter CCC "X" if the return shows an overpayment.

4. TY 2000 and prior:

If	Then
The taxpayer uses a current revision of Form 1042 for a tax year prior to 2001, and there is an entry on Line 67a/67b,	Research BMFOLT to see if the credit must be on a different line on the return.
The amount does not appear on BMFOLT,	SSPND 21X with literal: Please explain the entry on Line 67A/B on Form 1042 and provide official substantiation of the credit.
The REPLY is acceptable,	Process the return. Also enter the CRD (if required). Note: If the reply shows the amount is a QI credit see IRM 3.22.110.21.10, Field 01QIN.
There is NO REPLY or the reply is insufficient,	1) Delete the credit. 2) Enter CCC "3". 3) Send TPNC 90, #300, with literal: There was either no reply to our request for substantiation to support your entry for the amount withheld by other withholding agents, or the reply was insufficient, so the credit was not allowed. 4) Enter CCC "X" if the return shows an overpayment.

(1) Field 0767B is a 15-position field that may or may not be present.

(2) The field is located on Line 67b.

(3) The valid characters are numeric (0 thru 9) and blank.

(4) The entry must be positive and in dollars and cents.

(5) See IRM 3.22.110.24.23, Field 0767A, for invalid conditions and correction procedures.

(1) Field 0768 is a 15-position field that may or may not be present.

(2) The field is located on Line 68.

(3) The valid characters are numeric (0 thru 9) and blank.

(4) The entry must be positive and in dollars and cents.

(5) Invalid Conditions:

1. There is a non-numeric character in the field.

2. The field will underprint if blank or incorrect and there is at least one entry on Lines 65-67b

(6) Correction Procedures:

1. Correct misplaced entries, coding and transcription errors.

2. If the field underprints, ensure Fields 0765, 0766, 0767A and 0767B are entered correctly before perfecting Field 0768.

3. Before correcting Field 0768, if there is an entry on Line 67a/b, review IRM 3.22.110.24.23, Field 0767A, and IRM 3.22.110.24.24, Field 0767B.

4. If there is an entry on Line 68 but lines 65-67b are blank, SSPND 351 for Rejects to research BMFOLT.

5. If the amount on Line 68 is negative (i.e., the amount is added to the balance due or subtracted from the refund) and no explanation can be found on the return, SSPND 21X. Use literal:
   Please provide an explanation why your Form 1042 Line 68 is negative.

(7) Rejects Correction Procedures: