3.10.8. Information Returns Processing

(1) Filers send paper information returns to the IRS to fulfill the requirement to file information returns. IRS converts processable returns selected for sample to an electronic data record. Receipt and Control Operation sorts and prepares these returns for the data capture systems to convert to electronic data records.

(1) Title 26 of the United States Code (USC) or more commonly known as the Internal Revenue Code, IRC 6721, and corresponding Treasury Regulations provides authority. The IRC is amended by act, public laws, treasury determinations, rules, and regulations such as the following:

• Information Reporting on Health Coverage by Insurers IRC 6055

• Information Reporting on Health Coverage by Employers IRC 6056

• Failure to File a Correct Information Return IRC 6721

• IRC 6693

• Protecting Americans from Tax Hikes Act

• Tax Cuts and Jobs Act of 2017

(2) Policy Statements for Submission Processing located in IRM 1.2.1.4, Policy Statements for Submission Processing Activities.

(1) The Director of Submission Processing approves and authorizes the policy presented in this IRM.

(2) The Operation manager secures, assigns, and provides training for the staff to perform the tasks throughout this instruction.

(3) The Planning and Analysis Staff provides feedback and support to local management to achieve and effectively monitor scheduled goals.

(4) The Department and Team manager assigns, monitors, and controls the workflow to accomplish accurate completion of the tasks in this IRM.

(5) The clerk accurately completes and prepares sorts of paper information submissions for release to paper intake for data capture.

(1) Program Reports: Use this list of official reports to show receipts, production and inventory for the program covered by this IRM below. Reports display daily and weekly status of the program to completion.

• PCC 2240, Daily Production Report - Program Sequence

• PCC 6040, SC WP&C Performance and Cost Report

• PCC 6240, SC WP&C Program Analysis Report

• PCB 0440, Daily Workload and Staff Hours Schedule

• PCB 0540, Weekly Workload and Staffing Schedule

(2) Program Effectiveness: Measure goals using standard managerial reports in documents processed per hour and actual to scheduled rates. Each function must meet or exceed schedule prior to the program completion date stated in IRM 3.30.123, Work Planning and Control Processing Timeliness: Cycles, Criteria, and Critical Dates. Local management conducts and monitors quality reviews taking corrective action to ensure quality products arrive to the next function.

(3) Annual Review: Review the processes included in this manual annually to ensure accuracy and promote consistent tax administration.

(1) Management uses unit production cards (UPCs) entered daily to measure and record activity in each function of this program. Use IRM 3.10.5, Campus Mail and Work Control, Batch/Block Tracking System (BBTS), to record receipts and production.

(2) Use any local reports to establish information for supporting daily program control. Local reports never replace the established official reports and production reporting.

(1) The following paragraphs define terms used in this IRM. See definitions for other terms in Exhibit 3.10.8-1, Term Definitions Information Returns.

(2) Affordable Care Act (ACA) Information Return Processing (IRP) — Form 1094 series and Form 1095 series "B" and "C" documents.

(3) Change of Payer — Any point in a block of returns when any part of the payer/filer entity changes.

(4) Copy A — The copy of the income information document submitted to the IRS for processing. Forms fall into four categories:

(5) General Purpose Programming (GPP) — Returns processed and sent to the modernized Information Return Intake system (IRI).

(6) Income Information Return Processing (IRP) — Returns transmitted by Form 1096, Annual Summary and Transmittal of U.S. Information Returns.

(7) Information Return Intake (IRI) — A modernized intake system establish to accept certain paper document electronic data records as of January 01, 2015.

(8) Parent Return — The return transmittal related to the detail information returns.

(9) Corrected standalone (CSA) — A Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, with both a corrected box and line 19 marked and no transmitting documents.

(10) Submission — A filing consisting of a transmittal document and supporting detail documents.

(11) Correspondence indicator — A two-digit number coded on the transmittal to generate letters to filers.

(12) Prior year return — A return reporting information pertaining to the calendar year minus more than one.

(13) Late filing indicator — A character placed in the first box under the title "For Official Use Only" on the transmittal to designate a late-filing.

(1) Resources to use in conjunction with the instructions found in this IRM below.

(2) Locate IRMs on Servicewide Electronic Research Program (SERP) at the following site: http://serp.enterprise.irs.gov/homepage.html. Use Receipt and Control Research Portals located at http://serp.enterprise.irs.gov/databases/portals/sp/imf/receipt-and-control/receipt-and-control.html and http://serp.enterprise.irs.gov/databases/portals/sp/bmf/receipt-and-control/receipt-and-control.html.

(3) The Taxpayer Bill of Rights (TBOR) lists rights that already existed in the tax code, putting them in simple language and grouping them into 10 fundamental rights. Employees are responsible for being familiar with and acting in accord with taxpayer rights. See IRC 7803(a)(3), Execution of Duties in Accord with Taxpayer Rights, and additional information on the Taxpayer Bill of Rights site located at the following location: https://www.irs.gov/taxpayer-bill-of-rights.

(4) IRM 21.5.1, Account Resolution, General Adjustments, for guidance on handling classified waste to prevent inadvertent and unlawful destruction of records.

(1) These instructions cover Receipt and Control processing of the following domestic information returns sorts:

• Form 1094-B, Transmittal of Health Coverage Information Returns and transmitted Form 1095-B, Health Coverage

  Caution: Processed as one unit of work - Never separate the submission for processing.

• Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, with a corrected box and line 19 both marked and no transmitting detail documents

• Form 1094-C, and transmitted Form 1095-C, Employer-Provided Health Insurance Offer and Coverage

  Caution: Processed as one unit of work - Never separate the submission for processing.

• Form 1096, Annual Summary and Transmittal of U.S. Information Returns

  Note: Current and delinquent processed to the Payer Master File (PMF)

• Form 1097-BTC, Bond Tax Credit

• Form 1098, Mortgage Interest Statement

• Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes

• Form 1098-E, Student Loan Interest Statement

• Form 1098-F, Fines, Penalties, and Other Amounts

• Form 1098-Q, Qualifying Longevity Annuity Contract Information

• Form 1098-T, Tuition Statement

• Form 1099-A, Acquisition or Abandonment of Secured Property

• Form 1099-B, Proceeds From Broker and Barter Exchange Transactions

• Form 1099-C, Cancellation of Debt

• Form 1099-CAP, Changes in Corporate Control and Capital Structure

• Form 1099-DIV, Dividends and Distributions

• Form 1099-G, Certain Government Payments

• Form 1099-INT, Interest Income

• Form 1099-K, Payment Card and Third Party Network Transactions

• Form 1099-LS, Reportable Life Insurance Sale

• Form 1099-LTC, Long-Term Care and Accelerated Death Benefits

• Form 1099-MISC, Miscellaneous Information

• Form 1099-NEC, Nonemployee Compensation

• Form 1099-OID, Original Issue Discount

• Form 1099-PATR, Taxable Distributions Received From Cooperatives

• Form 1099-Q, Payments From Qualified Education Programs (Under Section 529 and 530)

• Form 1099-QA, Distributions From ABLE Accounts

  Caution: Processed as one unit of work - Never separate the submission for processing.

• Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.

• Form 1099-S, Proceeds From Real Estate Transaction

• Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA

• Form 1099-SB, Seller’s Investment in Life Insurance Contract

• Form 3921, Exercise of an Incentive Stock Option Under Section 422(b)

• Form 3922, Transfer of Stock Acquired Through an Employee Stock Purchase Plan Under Section 423(c)

• Form 5498, IRA Contribution Information

• Form 5498-ESA, Coverdell ESA Contribution Information

• Form 5498-QA, ABLE Account Contribution Information

  Caution: Processed as one unit of work - Never separate the submission for processing.

• Form 5498-SA, HSA, Archer MSA, or Medicare Advantage MSA Information

• Form W-2G, Certain Gambling Winnings

(2) The following require exceptional processing. Process as one unit of work. DO NOT separate the submission (transmittals and the detail documents transmitted).

1. Form 1099-QA, Distributions From ABLE Accounts

2. Form 5498-QA, ABLE Account Contribution Information

3. Form 1096, Annual Summary and Transmittal of U.S. Information Returns transmitting the returns directly above

(3) The instructions for processing Form W-2, Wage and Tax Statement, Form W-2 C, Corrected Wage and Tax Statement, Form W-3, Transmittal of Wage and Tax Statements, and Form W-3 C, Transmittal of Corrected Wage and Tax Statements, consist solely of procedures for routing and disposal of these forms.

(4) Don’t process Form 1098-MA, Mortgage Assistance Payments, in Information Return Processing (IRP) Sort Unit or information return processing. Ship these forms to Stop 6723 Austin Submission Processing Center (AUSPC) for retention.

(5) Don’t process Form 8966, FATCA Report, in IRP Sort Unit. Return these forms to Stop 6052, Austin Submission Processing Center (AUSPC), Receipt and Control batching function for proper routing.

(6) Use instructions in IRM 3.10.72, Campus Mail and Work Control, Receiving, Extracting, and Sorting, and IRM 3.10.73, Campus Mail and Work Control, Batching and Numbering, as a source of general guidelines not found in this IRM.

(7) See IRM 3.10.72.15, Information Return Processing Sort (Austin, Kansas City, and Ogden Only), for sorts received from the extraction area.

(1) Use the following program codes for Integrated Submission and Remittance Processing (ISRP):

(2) Use the following program codes for Service Center Recognition/Imaging Processing System (SCRIPS):

(1) Route correspondence meeting Taxpayer Advocate Service (TAS) criteria listed in IRM 13.1.7.3, TAS Case Criteria, to the local TAS office.

(2) Route correspondence concerning anything other than information returns to Accounts Management.

(3) Disregard notations on the face of the return and continue processing if on a processable return.

(4) Route correspondence concerning 50 or more recipient accounts in error to the payer coordinator in the Underreporter Branch in Ogden. See Exhibit 3.10.8-3, Mail Stops and Addresses for Disposition of Information Return Program, for complete mailing address.

(5) Route correspondence concerning a CP 2000, Request for Verification of Unreported Income, Payments, or Credits, notice per the following instructions. Go to Servicewide Electronic Research Program (SERP) located at http://serp.enterprise.irs.gov/homepage.html under the Who/Where tab. Choose Automated Under Reporter (AUR) Addresses (Open Cases) to find the address.

(6) Forward correspondence concerning a Letter 2030, Request Verification for Unreported Income, Deductions, Payments and/or Credits on BMF Income Tax Returns Matched to Payer Information Documents, routed to IRP Sort unit in error from Extraction to Business Underreporter (BUR) using the following instruction. Go to Servicewide Electronic Research Program (SERP) located at http://serp.enterprise.irs.gov/homepage.html and under the Who/Where tab choose BUR Program to find the address. Include the provided stop number on the transmittal.

(7) Route documents received with correspondence concerning a Letter 3939-A, Delinquent Information Returns - Government Entities Compliance Unit, or with Form 14232, Response Form for Letter 3939-A, routed to IRP Sort unit in error from Extraction to Government Entities Compliance Unit (GECU) in Ogden at M/S 7700.

(8) Forward correspondence concerning current year Form W-2 and Form W-3 to Social Security Administration (SSA). Forward "correspondence" concerning prior year Form W-2 and Form W-3 to the Combined Annual Wage Reporting (CAWR) function. See Exhibit 3.10.8-3, Mail Stops and Addresses for Disposition of Informational Return Program, for the mailing addresses.

(9) Route "letters or notices" from the CAWR Reconciliation Function from the taxpayer, as well as any forms or information submitted to the CAWR Function. "Don’t remove any of the information or forms" (Form 94x, Schedule H, Form 1096, Form W-2G, Form W-2, or Form W-3) submitted with the CAWR letter or notice received from the taxpayer. Use the complete street address and mail stops found in Exhibit 3.10.8-3, Mail Stops and Addresses for Disposition of Information Return Program, when routing information to CAWR.

(1) Date stamp all prior year Form 1096 upon receipt.

(2) Process through ISRP prior year Form 1096.

1. Route prior year Form 1096 to SCRIPS for imaging after ISRP processing is complete.

2. Forward prior year Form 1096 with criteria in Exhibit 3.10.8-3, Mail Stops and Addresses for Disposition of Information Return Program, to the IRP Penalty unit in Philadelphia.

3. Destroy prior year processed Form 1096 imaged by SCRIPS not forwarded to IRP Penalty unit.

(3) Process prior year Form 1096 marked "≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡" as ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ returns.

(4) Process prior year Form 1099-R, and Form W-2G, as follows:

1. Forward prior year Form W-2G and Form 1099-R and the transmitting Form 1096with correspondence to the CAWR Reconciliation function with the original Form 1096 prior to processing.

2. Destroy all prior year Form W-2G and Form 1099-R without correspondence after editing the original Form 1096 for processing.

(5) Process Form 3921 and Form 3922 as current year returns.

(6) Consider tax years prior to 2019 for Form 1094 series and Form 1095 series unprocessable. Don’t correspond with the filer on returns prior to tax year 2019.

(7) Date stamped on receipt prior year Form 1094 series transmitting Form 1095 series beginning with tax year 2019.

(1) Date stamp all current year Form 1096, received after due date grace period listed in Exhibit 3.10.8-8 upon receipt. Date stamp all current year and processable prior year Form 1094 series, received after due date grace period upon receipt. Follow guidelines found in IRM 3.10.72, Campus Mail and Work Control, Receiving, Extracting, and Sorting, for date stamping late-filed returns.

1. Date stamp current year transmittals, in the blank area above the wording "For Official Use Only." The date stamp must not cover the fill-in boxes.

2. In the first box under the wording "For Official Use Only," code an "X" with a #2 pencil.

Note: Don’t use red ink to edit Form 1096.

3. When a taxpayer replies within the 45-day timeframe to the Letter 1865-C, Information Return (Paper) Incomplete or Rejected for Processing/Instructions Enclosed: Form 1095, 1098, 1099, etc., use the date stamp, if present, on the original return to ensure the correct received date is captured. Don’t date stamp a return when the original is unprocessable, but timely filed.

   Example: If a reply is received after the no reply case is forwarded for penalty assessment, process the new complete submission with the actual received date of the response.

(2) Don’t date stamp transmittals incorrectly sent to state taxing agencies or the Social Security Administration (SSA) where the envelopes show the returns mailed timely.

(3) If a payer sent in a letter explaining late returns, date stamp the transmittal and forward to the IRP Unit for processing through SCRIPS or ISRP.

(4) Date stamp late filed Form W-3, transmitting Form W-2. Date stamp the first Form W-2, if a Form W-3 isn’t present in the submission. See IRM 3.10.8.3.2, Prior Year Forms.

(1) Don’t separate Form W-2, Form W-2 C, Form W-3, and Form W-3 C route as follows:

1. Send any current tax year copy received to the SSA address listed below.

2. Send all future tax year returns to the SSA address listed below.

3. Route prior year returns received "with correspondence or Combined Annual Wage Reporting (CAWR) related correspondence" to the CAWR Reconciliation Function per the Campus Program Locator Guide. Find the guide on Servicewide Electronic Research Program (SERP) under the Who/Where tab under the heading Campus Program Locator Guide located at http://serp.enterprise.irs.gov/content/who-where/cplg/cplg.html. Use routing information located under the heading Small Business/Self-Employed (SB/SE) AUR CAWR.

(2) SSA Address - Send copy A of Form W-2, Form W-2 C, and Form W-3 from payers to:

Social Security Administration
Wilkes-Barre Data Operations Center
Wilkes-Barre, PA 18769

(3) Copies A of Form W-2 GU, Guam Wage and Tax Statement and Form W-2 VI, U.S. Virgin Islands Wage and Tax Statement, transmitted by Form W-3 SS, Transmittal of Wage and Tax Statements. Send to:

Social Security Administration
Wilkes-Barre Data Operations Center
Wilkes-Barre, PA 18769

(4) Copies A of Form W-2 AS, American Samoa Wage and Tax Statement, transmitted by Form W-3 SS, Transmittal of Wage and Tax Statements. Send to:

American Samoan Tax Office
Government of American Samoa
Pago Pago, AS 96799

(5) Ensure the payer submission remains intact (Form W-3 with related Form W-2 (copy A)), whether the submission is sent to SSA or the CAWR Reconciliation Function (as outlined in IRM 3.10.8.3). Don’t staple Form W-3 to related Form W-2. Put the payer submission back into the original envelope/container it came in.

(6) Ship documents per IRM 3.13.62, Campus Document Services, Media Transport and Control, or IRM 10.5.1, Privacy and Information Protection - Privacy Policy, following Personally Identifiable Information (PII) guidelines located at http://publish.no.irs.gov/mailtran/pii.html, titled Postal and Transport Policy. Prepare Form 3210, Document Transmittal, and ship documents on a weekly basis.

(7) Separate late-filed Form W-3 and Form W-2 from timely filed. Annotate on the Form 3210, Document Transmittal "Delinquent Returns."

(8) Forward Form W-3 and Form W-2 received for subsequent tax years to SSA at the following address:

Social Security Administration
Wilkes-Barre Data Operations Center
Wilkes-Barre, PA 18769

(1) Send to SCRIPS only current year forms transmitted by current year Form 1096, listed in Exhibit 3.10.8-6, Number of Returns Per Page Allowed on Service Center Recognition/Imaging Processing System (SCRIPS) Income Returns. Exhibit 3.10.8-6 lists the maximum number of returns allowed on one page for SCRIPS processing.

(2) Send to SCRIPS current year processed (2022) or first three prior year (2021, 2020, and 2019) Form 1095 series transmitted by corresponding year Form 1094 series. Below is the maximum number of pages per form type for the series.

(3) Form 1094-C with a corrected box marked and line 19 marked transmitting no documents.

(4) Don’t release to SCRIPS the following forms types processed exclusively on ISRP:

• Form 1096

  Note: Don’t forwarded to SCRIPS prior year, transmitting ISRP processed return types or submitted without transmitting documents.

• Form 1098-C,

• Form 1098-F,

• Form 1098-Q,

• Form 1099-CAP,

• Form 1099-LS,

• Form 1099-LTC,

• Form 1099-SA,

• Form 1099-SB,

• Form 1099-QA,

• Form 5498-ESA,

• Form 5498-QA,

• Form 5498-SA,

• Form 3921,

• Form 3922,

• Form W-2G, and prior year returns including

• Any forms exceeding the maximum page count in the instruction present in Exhibit 3.10.8-6, Number of Returns Per Page Allowed on Service Center Recognition/Imaging Processing System (SCRIPS) Income Returns, referred to in IRM 3.10.8.4.1 (1) above if the entries remain readable.

(1) Send to SCRIPS only current year Form 1096 and the SCRIPS processable returns they transmit listed in IRM 3.10.8.4 (7), Detailed Sorting.

(2) Transmittals processed through SCRIPS must remain with the returns they transmit.

(3) Each type of return within each submission requires a Form 1096. If each type of return doesn’t have it’s own Form 1096 do the following:

1. Preferred action is to copy the taxpayer provided Form 1096 and use the copy for the other form type.

2. Only if a copy machine isn’t available create another Form 1096. Use the original Form 1096 as a source for information. Annotate Prepared by IRS on the signature line of any Form 1096 created by the IRS and assign the correspondence indicator "99".

(4) Sort returns by the categories of transportable and non-transportable. Sort the submissions by transmittal form type not transmitted form type for release to SCRIPS. See Exhibit 3.10.8-4, Sorts for Service Center Recognition/Imaging Processing System (SCRIPS), for a listing of each SCRIPS sort.

(5) Do the following for transportable returns not severely torn, cut, or separated.

1. Burst and strip continuous roll/printed returns.

2. Carefully remove staples, never staple documents together.

3. Tape a cut/torn document, to make it transportable.

(6) A non-transportable return is one severely torn, cut, separated, inappropriate size, or for any other reason cannot go through the scanner.

(7) Photocopy non-transportable Form 1096 to make it transportable (scannable) even if transmitting ISRP processed only returns. The scanner images all ISRP Form 1096 after ISRP processing for retention.

(1) When only one return is received for a payer, place the return in a group of single payer returns. Do this only for current year information returns.

(2) When more than one return is received for a payer place the returns in a group of multiple payer returns. Do this only for current year information returns.

(3) Sort current year returns by type of return. Ensure the first return for each payer has the correct payer name and TIN.

(1) Process for CAWR Reconciliation Form 1096, transmitting prior year Form W-2G and Form 1099-R.

(2) If the entire payer's submission is for a subsequent tax year, hold the entire submission for the correct processing year in Receipt and Controls' inventory.

(3) See IRM 3.10.8.3.3 (1) for processing Form 1096 and Form W-2G filed after March 16.

(4) Sort Form 1096 and Form W-2G as follows:

1. If the Date Won (box 2) on a current Form W-2G reflects a prior tax year's winnings, pull those documents. Annotate on the back of the related Form 1096 the number of Form W-2G documents pulled from the payer's submission. Forward the pulled Form W-2G to the CAWR Reconciliation Function. Notate prior year to Reconciliation as an explanation for the documents pulled from the payer's submission. See CAWR addresses and stop numbers in Exhibit 3.10.8-3, Mail Stops and Addresses for Disposition of Information Return Program.

2. If the Date Won (box 2) on a current Form W-2G reflects subsequent tax year(s) winnings, pull those documents. Annotate on the back of the related Form 1096, the number of Form W-2G pulled from the payer's submission. Hold those pulled Form W-2G for the correct processing year (creating a "Dummy" Form 1096 in the correct processing year). Forward the Form 1096 and remaining Form W-2G for SCRIPS processing.

(1) Cross check the detail information returns in the submission against the parent transmittal return (Form 1096 and Form 1094-C) to determine if all necessary information is present and matches the parent return (transmittal).

(2) For payer/filer taxpayer identification number (TIN):

1. Only one payer TIN is allowed

2. If more than one TIN is present, see IRM 3.10.8.5.1 (8) below.

(3) For payer name:

1. Only one payer name is allowed

2. If more than one name is present, see IRM 3.10.8.5.1 (8) below.

(4) If all necessary information isn’t on the return, determine from the parent return, other returns from the same payer or any attached correspondence, if the necessary information is available. Edit the necessary information on the return and forward for processing.

(5) If Form 1094 series is received without attached Form 1095 series documents, consider the form unprocessable.

(6) If only the payer TIN is missing and isn’t found by cross checking other documents, follow research procedures to obtain a TIN.

1. For Form 1096 if the payer TIN is found, edit it to the transmittal, and the first detail document transmitted by the transmittal.

2. If the payer TIN isn’t found for a Form 1096 leave blank and continue normal processing.

3. If the payer TIN isn’t found for a Form 1094 series within the actual submission (supporting Form 1095 series returns) consider the submission unprocessable. Don’t research IDRS to obtain the TIN. See IRM 3.10.8.5.3, Unprocessable Information Returns, for further information.

(7) If the payer name is missing, and not found by checking supporting detail documents:

1. Follow research procedures to obtain a name for Form 1096.

2. Edit the payer name found to the transmittal document and the first detail document transmitted.

3. Correspond using the address present if research does not secure a payer name. Dispose of the information returns and transmittal without an address or name.

   Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

4. Consider the submission unprocessable if transmitted by Form 1094-C. See IRM 3.10.8.5.3, Unprocessable Information Returns, for further information.

5. Correspond using the address if transmitted by Form 1094-B without a filer name. Dispose of the information returns and transmittal without an address or name.

(8) If multiple payer names and/or payer TINs appear on Form 1094-C or Form 1096, check attachments to determine the payer name and/or TIN to use. If the correct payer name and/or TIN isn’t determined from the attachments, follow research procedures to determine the correct name for the TIN for Form 1096 only. Underline the first payer name and TIN listed on the first return for the payer and its parent transmittal.

(9) To ensure processing of only valid Form 1098 do the following:

1. Compare the "Filer's" name on the Form 1096 to the "Recipient's/Lender's" on the Form 1098.

2. Compare the "Filer's" TIN on the Form 1096 to the "Recipient's/Lender's" on the Form 1098.

(10) Do the following to ensure the information return submissions is processable:

1. Compare the "Filer's" (payer) name on the transmittal, to the payee (responsible individual) listed on the transmitted information return. If they match remove the submission from processing and alert the manager.

2. Compare the "Filer's" (payer) TIN on the transmittal to the payee (responsible individual) listed on the information return transmitted. If they match remove the submission from processing and alert the manager.

(11) The information processed on the transmittal is as follows:

(1) Ensure returns follow a valid, processable format, by reviewing each payer's return for necessary information. If any conditions cited below apply to the returns and you don’t find the information on the returns or from the transmittal, consider the returns temporarily unprocessable. The following conditions require correspondence:

• You can’t determine the type of return.

• Titles of the forms differ from the official IRS form of the same number.

• You can’t determine the kind of amount.

• Illegible data entered throughout the submission.

• You can’t determine the amount of money in an amount field (e.g., the decimal point incorrectly placed).

• The return doesn’t look like the official form (divergent format) and would impede processing.

  Example: Documents resembling a postcard, exceed three documents per page, or doesn’t resemble the official form.

• You can’t determine the tax year of the information present.

  Example: Current tax year Form 1096 transmitting prior year information returns require correspondence if the tax year for the information isn’t clear.

• Tax year on the return equals a year prior to the form’s existence.

• Entries printed in such a manner on the returns that you can’t separate them for processing (e.g., a computer listing, multiple information return data on one form, font too small to decipher).

• Form 1095 series received without a Form 1094 series transmittal from a filer or employer. Filers and employers send a group of Form 1095 series returns not individual returns.

  Reminder: A single responsible individual or employee sending in the 1095 series return they received from their employer or health care provider isn’t from a filer or employer. Don’t send Letter 1865-C, Information Return (Paper) Incomplete or Rejected for Processing/Instructions Enclosed: Form 1095, 1098, 1099, etc., when a single Form 1095 series return is received.

• Real estate transactions reported on a form or document other than the official Form 1099-S, Proceeds From Real Estate Transaction, or the name of the filer is inconsistent throughout the submission, and/or the filer on Form 1096 does not match the filer on Form 1099-S.

• Form 1095-C where Part III check box is marked at least one name of a covered individual in Part III.

  Note: If there is no response and less than 50 percent of the details have this error send the submission forward for processing. If 50 percent or more have this error destroy the submission and don’t forward for processing.

(2) Pull from processing if the following criteria is present in a submission:Signs of Fraud

(1) Keep a separate count of the number of Letter 1865-C, Information Return (Paper) Incomplete or Rejected for Processing/Instructions Enclosed: Form 1095, 1098, 1099, etc., issued and the total number of information returns, by program, considered temporarily unprocessable.

(2) Identify unprocessable information returns within 10 days of receipt.

(3) Issue the Letter 1865-C with the correct paragraph to filers of unprocessable information returns to request a processable submission. Check the Power of Attorney (POA)/Taxpayer Information Authorization (TIA) file using command code (CC) CFINQ before corresponding. Enclose with each letter:

• A copy of the letter

• Photocopies of the returns only if describing the issue alone appears not adequate or clear

(4) Insert the exact number of unprocessable returns including the transmittal on each Letter 1865-C sent.

(5) Do whatever you must to reduce the need to send photocopies of the unprocessable returns. If the existing language in the Letter 1865-C or fill-in language can completely explain the unprocessable condition do not send photocopies of the unprocessable returns. See suggested phrases in Exhibit 3.10.8-7, Correspondence Fill-In Paragraph Options.

(6) Maintain the original suspense file until the payer resubmits correctly or for 45-calendar days, whichever comes first.

(7) Do not keep in suspense each original unprocessable return in the Form 1095 series due to space limitations. Record as classified waste records not retained.

1. Maintain only the Form 1094 series return present or one of the unprocessable Form 1095 series returns if no transmittal is present.

2. Notate on the individual return kept in suspense the total number of unprocessable returns recorded as classified waste.

(8) Dispose of the original unprocessable returns and process the new processable ones. Also, purge the letter from the suspense file for disposal.

(9) If you can’t determine the name and address for a filer of unprocessable real estate transactions destroy the entire submission.

(10) If no reply is received, route the entire case file and the retention copy of the correspondence to the IRP Penalty Unit for manual penalty determination. See Exhibit 3.10.8-3, Mail Stops and Addresses for Disposition of Information Return Program, for disposition address in Philadelphia and mail stop number.

(11) If an issued letter is returned as undeliverable, do the following:

1. If a yellow sticker contains a new address, forward the submission to the new address listed and resuspend the case.

2. If no yellow sticker with an address change present, then research using IDRS CC ENMOD to determine a more current address. If a new address is found, reissue the letter, update the file, and resuspend the case.

3. If no yellow sticker with an address change present and you do not find a more current address through IDRS research, dispose of the letter and the suspended submission.

(12) If the re-submission has both unprocessable and processable information returns, separate the unprocessable returns from the processable returns.

1. Route the processable returns for Income IRP processing. Adjust the number in box 3, Total number of forms, for processing Form 1096. See IRM 3.10.8.9.7, Editing Other Items.

2. Destroy unprocessable Form 1099-R, Form 5498-ESA, and Form 5498-SA.

(1) Use only correspondence indicator "99" until further notice.

(2) Check the Power of Attorney (POA)/Tax Information Authorization (TIA) file before corresponding if an in care of name is present on Form 1096 using CC CFINQ.

(3) Write the indicator in the two right most boxes under the title "For Official Use Only" on Form 1096. Using a #2 pencil, write the indicator legibly and within the boundaries of the boxes.

(4) Write correspondence indicator "99" on every Form 1096 created by IRS. Code "99" denotes IRS prepared.

(1) SCRIPS creates a report identifying payers with federal income tax withheld (FTWH) only listed on the return. If information returns report only federal income tax withheld then considered them unprocessable.

(2) Issue Letter 1865-C, Information Return (Paper) Incomplete or Rejected for Processing/Instructions Enclosed: Form 1095, 1098, 1099, etc., to payer(s) identified on the FTWH report. Use as the unprocessable criteria, federal income tax withheld is the only money amount reported on the information return(s).

(3) Each page of the report reflects one payer's filing of information returns reporting only federal income tax withheld. Photocopy and consolidate all pages reporting one payer's returns. Use the photocopy as an enclosure to the Letter 1865-C.

(4) When you receive the re-submission check the upper right corner of the suspended copy of the FTWH report for a delinquent indicator and received date. Look after an asterisk to the right of name line "1" in the format "MMDDYY" where "1" is the delinquent indicator and "MMDDYY" is the received date. Code the Form 1096 with this delinquent indicator and received date.

(5) If the filer resubmits incorrectly or does not respond, follow procedures below:

1. Form 1099-G and Form 1099-R destroy the FTWH report, the photocopied Form 1096, and the information returns (if resubmitted).

2. For all other form types, forward the retention FTWH Report, the photocopied Form 1096 and the information returns (if resubmitted, or if not resubmitted) to the IRP Civil Penalty Unit in Philadelphia for manual penalty consideration. See Exhibit 3.10.8-3, Mail Stops and Addresses for Disposition of Information Return Program, for the address and mail stop.

(1) Submissions severely cut, torn, or mutilated cannot physically pass through the scanner. Follow this exception process for SCRIPS processing to reduces documents sent through ISRP.

1. Secure blank forms of the same form type and quantity to replace the non-transportable forms.

2. Reference the corresponding non-transportable forms for key-entry of the information.

3. Consider photocopies as processable documents.

(2) Create blocks of 99 information returns.

1. Count each page of documents as the number of documents on the official IRS form. See Exhibit 3.10.8-6, Number of Returns Per Page Allowed on Service Center Recognition/Imaging Processing System (SCRIPS) Income Returns, for the number to use.

2. Distinguish a single form from a single page. A single page has as many as three forms.

3. If an information return is cut from a page of two or three forms count the return as specified below:

If	Then
The single form is the only return in the submission, or it’s the last return remaining in the submission.	Count the return as two or three using Exhibit 3.10.8-6.
The single form is one of only two returns in a submission, or the remaining two in the submission.	Count the two returns as three for maximum page count as three returns and two for maximum amount page count as two returns.
The submission is made up of many single forms.	Count each return as one.

4. Don’t count the Form 1096 as an information return.

5. Don’t mix form types.

6. Blocks contain 99 information returns or less.

(3) For each block, create a duplicate of the actual block using blank forms.

1. Represent three information returns, or a count of three, with a single page of blank forms or as a maximum of two returns per page in using Exhibit 3.10.8-6, Number of Returns Per Page Allowed on Service Center Recognition/Imaging Processing System (SCRIPS) Income Returns.

2. Use blank forms corresponding to the form type.

3. Do not cut or separate the forms on the blank page.

(4) Do not split a filer’s submission unless necessary.

1. If you must split a payer's submission keep the blocks in sequence.

2. A submission of different form types requires a split.

(5) Maintain the actual block with the duplicate block in one folder.

(6) Group no more than 30 blocks in a batch.

(7) Less than 30 blocks in a batch is allowed.

(8) It isn’t recommended to assign batch and block numbers to SCRIPS releases.

(1) Each block of information returns transmitted by Form 1096 has an Account Type Code of "P".

(2) Assign Form 1096 different Account Type Codes than other information returns. Use Account Type Codes "B" and "C" for Form 1096. See Exhibit 3.10.8-9, Account Type Codes. Place codes on the Form 1332, Block and Selection Record.

1. "B" - The payer furnished the Form 1096. Use this code even if the Receipt and Control Function had to perfect the entity.

2. "C" - The payer did not furnish the Form 1096 and/or a Form 1096 is created by the Receipt and Control function because the "Payer provided transmittal" unreadable, or unusable.

(1) Trust name must appear on the first name line. Arrow the trust name to the first name line for trust entities.

(2) Include estate names in the first name line. Arrow the estate name to the first name line for estate entities.

(3) Form 5498 may list the issuing organization as the custodian for the taxpayer. Circle-out the issuing organization if this is the case.

(4) Partnership first name line may include a list of partners or the business/trade name. If it isn’t possible to list all the partners, list the maximum number of names and edit the phrase "ET AL PTR."

(1) Attach payer identifiers to the first return of each batch and to each subsequent return reflecting a change in payer. Edit the payer area of each information return attached to a payer identifier in the following manner (treat single return payer batches as if a payer identifier is attached to each return).

1. If a payer TIN isn’t present on information returns transmitted by Form 1096 research. If still unable to locate after researching Corporate Files On-line (CFOL) command codes, contact the payer to determine the correct TIN. Edit "9-" when you can’t determine the payer from other returns. ISRP converts this to 999999999.

   Exception: Don’t research a mismatched or missing payer TIN or name on Form 1096 transmitting Form 1099-QA or Form 5498-QA it is unprocessable. Correspond with the payer requesting a replacement submission with the payer TIN.

2. Destroy the returns if the payer name and a full address isn’t present or found on other returns.

   Exception: Form 1099-R and Form W-2G where IRP Sort Unit has edited the payer as "Unknown."

(2) Circle-out foreign payer addresses present on payee documents with "NO TIN" or "No-TIN" located in the payer TIN area.

(3) Form 1096 and related payee forms must require the same payer name and TIN. If different or blank, use the information from the payee form.

(1) If the payee taxpayer identification number (TIN) isn’t in the proper box, draw an arrow from the TIN to the box provided for the payee's identification number.

(2) If the payee TIN is missing, don’t code the field or research. Continue processing as normal.

(1) Street address:

1. If both a street address and a Post Office Box appear, circle-out the street address.

2. Arrow to address area an apartment number or other location designations (e.g., building, room, N.W., etc.) present but not in address area.

3. If the street address isn’t present on the document, edit the single character "Z" as the street address.

(2) For Army Post Office (APO), Diplomatic Post Office (DPO) and Fleet Post Office (FPO), arrow APO, FPO or DPO and the literal "AA, AE, or AP" to the beginning of the "city or town, state or province, country, ZIPor foreign postal code" line in the city field.

(3) If missing the city (for other than APO, DPO or FPO), enter "ZZZ" as the city.

(4) If you can determine a missing state from city or ZIP Code, edit state abbreviation to "city or town, state or province, country, ZIP or foreign postal code" line.

(5) If a ZIP Code is present, edit a state. If you can’t determine the missing state from the city or ZIP Code, edit city only.

(6) If a ZIP Code is present and:

1. It’s less than five numbers, enter the ZIP Code for the state as shown in Exhibit 3.10.8-11, Zone Improvement Plan (ZIP) Code, State and State Abbreviation Exceptions, or Exhibit 3.10.8-12, Military Army Post Office (APO), Diplomatic Post Office (DPO) and Fleet Post Office (FPO) State Codes and ZIP Codes.

2. It’s six, seven, eight, or more than nine numbers, circle the extraneous numbers.

   Example: If the ZIP Code is 0012321, then circle the two preceding zeros.

(7) If the exact ZIP Code for a state isn’t known, or you notice an invalid ZIP Code, use the ZIP Code for the state (or "AA, AE, or AP") as shown in Exhibit 3.10.8-10, State Code/Zone Improvement Plan (ZIP) Code Perfection Chart (State Order).

(8) If the ZIP Code is missing and the state is present, edit the five-digit ZIP Code for the state shown in, Exhibit 3.10.8-10, State Code/Zone Improvement Plan (ZIP) Code Perfection Chart (State Order).

(9) Special edit of foreign payee addresses:

1. Code the street address (if present) for entry in the Name Line 2 field.

2. Allow a maximum of 40 characters for the remainder of the total address including city or town, state or province, country, and ZIP or foreign postal code. The postal code is separated from the foreign city by a space. Edit the foreign country in the city field. Use abbreviations to limit this entry to 15 positions.

3. Code a dollar sign "$" in the first position of the state-field to identify the address as foreign.

(1) Ensure the amount field boxes (lines) match with the official IRS return issued. Ensure the money amounts of each box (line) appear clear (i.e., whether it’s dollars and cents, or whole dollars if the decimal is missing or misplaced).

1. Edit the amount box (line) numbers if inconsistent with the preprinted amount box (line) numbers. If unable to do so consider the returns unprocessable and correspond with the payer.

2. If the payer re-titles payment amount fields or otherwise indicates a difference from the pre-printed return, use taxpayer intent as a basis for re-titling the return and re-numbering payment amount fields on the return.

   Example: Change to the correct return Form 1099-MISC with payments identified as other than what would normally appear on a MISC return (e.g., Dividends, Wages, etc.), BUT NOT A RE-TITLED RETURN.

3. If the payer crossed out the pre-printed type of return and entered another type of return, edit the payment amount fields consistent with the payer's correction (i.e., circle-out the pre-printed payment amount field number and enter the number from the official form identifying the type of income).

   Example: The payer sends in a Form 1099-MISC crosses out MISC and enters DIV, places an amount in box 1 and identifies it as dividends; edit the return in the following manner: underline Form 1099-DIV circle-out the "1," if present, and enter a "1a" above it.

4. If the payer enters more than one amount in a box, circle the amounts and place the total of the amounts above the circled-out amounts. Cross out the net amount if there is both a gross and net amount.

(2) Edit payment amount fields consistent with the official returns listed in instructions for each type of return below.

(3) A processable Form 1096 has two amount fields.

1. Money amount from box 4, "Federal income tax withheld," equal to or greater than zero.

2. Money amount from box 5, "Total amount reported with this Form 1096," equal to or greater than zero.

(4) Form 1099-B (boxes 1d, 8, 9, 10, and 11 only) allows positive or negative money amounts.

1. Form 1099-DIV only if box 9, Non-cash, contains a negative and positive amount and the net total of the amounts is positive, edit the net total amount as the box 9 amount. If the net total equals a negative amount, edit it to zero.

2. For all other form types if a positive and negative amount appear in one box, use the positive amount.

(1) If a field on any form requires a positive money amount only, and it appears to contain a negative money amount, circle the amount.

(2) Circle-out the amount if a field on any form requires a money amount and has only cents.

(3) If two money amounts in one box

1. Add the money amounts.

2. Circle-out the two money amounts present.

3. Enter the total of the two money amounts in the box.

(4) Edit the amounts field specified below for each form.

(5) Form 1097-BTC, Bond Tax Credit: Edit boxes 1, 5a through 5l.

• Box 1, Total

• Box 5a, January

• Box 5b, February

• Box 5c, March

• Box 5d, April

• Box 5e, May

• Box 5f, June

• Box 5g, July

• Box 5h, August

• Box 5i, September

• Box 5j, October

• Box 5k, November

• Box 5l, December

(6) Form 1098, Mortgage Interest Statement: Edit boxes 1, 2, 3, 4, 5, 6, and 11.

• Box 1, Mortgage interest received from payer(s)/borrower(s)

• Box 2, Outstanding mortgage principal

• Box 3, Mortgage origination date

• Box 4, Refund of overpaid interest

• Box 5, Mortgage insurance premiums

• Box 6, Points paid on purchase of principal residence

• Box 11, Mortgage acquisition date

(7) Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes: Edit boxes 1, 4c, and 6b.

• Box 1, Date of contribution, YY must equal the current tax year processed. Follow taxpayer intent. If you can’t determine the taxpayer’s intent to equal the current tax year processed correspond.

• Box 4b, Date of sale, YY must equal the current tax year processed. Circle-out any date with the current processing year if box 1 contains the current year processed. Follow taxpayer intent. If you can’t determine the taxpayer’s intent to equal the current tax year processed correspond.

• Box 4c, Gross proceeds from sale

• Box 6b, Value of good provided

(8) Form 1098-E, Student Loan Interest Statement: Edit box 1.

• Box 1, Student loan interest received by lender

(9) Form 1098-F, Fines, Penalties, and Other Amounts: Edit boxes 1, 2, 3, 4 and 5.

• Box 1, Total amount required to be paid

• Box 2, Amount to be paid for...

• Box 3, Restitution/remediation amount

• Box 4, Compliance amount

• Box 5, Date of order/agreement

(10) Form 1098-T, Tuition Statement: Edit boxes 1, 4, 5, 6, and 10.

• Box 1, Payments received for...

• Box 4, Adjustments made for...

• Box 5, Scholarships or grants

• Box 6, Adjustments to scholarships or grants...

• Box 10, Ins. contract reimb./refund

(11) Form 1098-Q, Qualifying Longevity Annuity Contract Information: Edit boxes 1, 3, 4, and 5a through 5l.

• Box 1a, Annuity amount on start date

• Box 3, Total premiums

• Box 4, FMV of QLAC

• Box 5a, January

• Box 5b, February

• Box 5c, March

• Box 5d, April

• Box 5e, May

• Box 5f, June

• Box 5g, July

• Box 5h, August

• Box 5i, September

• Box 5j, October

• Box 5k, November

• Box 5l, December

(12) Form 1099-A, Acquisition or Abandonment of Secured Property: Edit boxes 2 and 4.

• Box 2, Balance of principal outstanding

• Box 4, Fair market value of property

(13) Form 1099-B, Proceeds From Broker and Barter Exchange Transactions: Edit boxes 1b, 1c, 1d, 1e, 1f, 1g, 4, 8, 9, 10, 11, and 13.

• Box 1b, Date acquired — Numeric in "MMDDYY" format. Edit the date to "MMDDYY" format by circling the payer’s entry and entering the correct date format. "YY" must equal "TY" currently processed. Follow taxpayer intent. When you determine taxpayer’s intent does not equal "TY" currently processed follow previous instruction for prior year or future year returns.

• Box 1c, Date sold or disposed
  — Numeric in "MMDDYY" format. Edit the date to "MMDDYY" format by circling the payer’s entry and entering in the correct date format.

  Note: Blank is allowed for this field.

• Box 1d, Proceeds (bracket negative amounts)

• Box 1e, Cost or other basis

• Box 1f, Accrued market discount

• Box 1g, Wash sale loss disallowed

• Box 4, Federal income tax withheld

• Box 8, Profit or (loss) realized in yyty (current tax year processed) on closed contracts (bracket negative amounts)

• Box 9, Unrealized profit or (loss) on open contracts - 12/31/yyty-1 (bracket negative amounts)

• Box 10, Unrealized profit or (loss) on open contracts - 12/31/yyty (bracket negative amounts)

• Box 11, Aggregate profit or (loss) on contracts (bracket negative amounts)

• Box 13, Bartering

(14) Form 1099-C, Cancellation of Debt: Edit boxes 1, 2, 3, and 7.

• Box 1, Date of identifiable event
  Numeric in "MMDDYY" format. Edit the date to "MMDDYY" format by circling the payer's entry and entering in the correct date format. YY must equal tax year currently processed. Follow taxpayer intent. If you determine the taxpayer’s intent does not equal the current year processed follow previous instruction for prior or future year returns.

• Box 2, Amount of debt discharged

• Box 3, Interest if included in box 2

• Box 7, Fair market value of property

(15) Form 1099-CAP, Changes in Corporate Control and Capital Structure: Edit boxes 1, and 2.

• Box 1, Date of sale or exchange
  — Numeric in "MMDDYY" format. Edit the date to "MMDDYY" format by circling the payer’s entry and entering the correct date format. "YY" must equal "TY" currently being processed. Follow taxpayer intent. When you determine taxpayer’s intent does not equal "TY" currently processed follow previous instruction for prior year or future year returns.

• Box 2, Aggregate amount rec'd*

(16) Form 1099-DIV, Dividends and Distributions: Edit boxes 1a, 1b, 2a, 2b, 2c, 2d, 2e, 2f, 3, 4, 5, 6, 7, 9, 10, 12, 13 and 16.

• Box 1a, Total ordinary dividends

• Box 1b, Qualified dividends

• Box 2a, Total capital gain distr.

• Box 2b, Unrecap. Sec. 1250 gain

• Box 2c Section 1202 gain

• Box 2d, Collectible (28%) gain

• Box 2e, Section 897 ordinary dividends

• Box 2f, Section 897 capital gain

• Box 3, Nondividend distributions

• Box 4, Federal income tax withheld

• Box 5, Section 199A dividends

• Box 6, Investment expenses

• Box 7, Foreign tax paid

• Box 9, Cash liquidation distributions

• Box 10, Noncash liquidation distributions

• Box 12, Exempt-interest dividends

• Box 13, Specified private activity bond interest dividends

• Box 16, State tax withheld

(17) Form 1099-G, Certain Government Payments: Edit boxes 1, 2, 3, 4, 5, 6, 7, 9 and 11.

• Box 1, Unemployment compensation

• Box 2, State or local income tax refunds, credits, or offsets
  — Numeric entry. The "X" belongs in box 8. If an "X" appears after the numerics in box 2 circle it out and move the "X" to box 8. Circle-out any other non-numeric characters, edit to an "X" in box 8.

• Box 3, Box 2 amount is for tax year
  — If an amount is in box 2 and box 3 is blank, edit current year minus one (current year processed).

• Box 4, Federal income tax withheld

• Box 5, RTAA payments
  — Positive money amounts of $600 or more. If the amount is under $600, circle-out the amount.

• Box 6, Taxable grants

• Box 7, Agriculture payments

• Box 9, Market gain

• Box 11, State income tax withheld

(18) Form 1099-INT, Interest Income: Edit boxes 1, 2, 3, 4, 5, 6, 8, 9, 10, 11,12,13 and 17.

• Box 1, Interest income. Edit in box 3, any amounts located in box 1 identified as savings bond interest, but not entered in box 3, as box 3. Circle-out the amount located in box 1.

  Note: Interest paid on Series E Savings bonds is reported in box 3. Returns come in year-round because regulations allow reporting when interest is paid.

• Box 2, Early withdrawal penalty

• Box 3, Interest on U.S. Savings Bonds and Treas. obligations

• Box 4, Federal income tax withheld

• Box 5, Investment expenses

• Box 6, Foreign tax paid

• Box 8, Tax-exempt interest

• Box 9, Specified private activity bond interest

• Box 10, Market discount

• Box 11, Bond premium

• Box 12, Bond premium on Treasury obligations

• Box 13, Bond premium on tax-exempt bond

• Box 17. State tax withheld

(19) Form 1099-K, Payment Card and Third Party Network Transactions: Edit boxes 1a, 1b, 4, and 5a through 5l.

• Box 1a, Gross amount of payment card/third party network transactions

• Box 1b, Card Not Present transactions

• Box 4, Federal income tax withheld

• Box 5a, January

• Box 5b, February

• Box 5c, March

• Box 5d, April

• Box 5e, May

• Box 5f, June

• Box 5g, July

• Box 5h, August

• Box 5i, September

• Box 5j, October

• Box 5k, November

• Box 5l, December

(20) Form 1099-LS, Reportable Life Insurance Sale: Edit box 1 and 2.

• Box 1, Amount paid to payment recipient

• Box 2, Date of sale
  Numeric in "MMDDYY" format. Edit the date to "MMDDYY" format by circling the payer’s entry and entering the correct date format.

(21) Form 1099-LTC, Long-Term Care and Accelerated Death Benefits: Edit boxes 1, 2, and 5.

• Box 1, Gross long-term care benefits paid

• Box 2, Accelerated death benefits paid

• Box 5, Date certified

  Note: The year must equal to yyty or yyty minus one.

(22) Form 1099-MISC, Miscellaneous Information: Edit boxes 1 through 12, and boxes 14, 15 , 16 and 18.

• Box 1, Rents

• Box 2, Royalties

• Box 3, Other income

• Box 4, Federal income tax withheld

• Box 5, Fishing boat proceeds

• Box 6, Medical and health care payments

• Box 7, Direct sales indicator

  Note: Send for processing forms with an entry only on box 7.

• Box 8, Substitute payments...

• Box 9, Crop insurance proceeds

• Box 10, Gross proceeds paid to an attorney

• Box 11, Fish purchased for resale

• Box 12, Section 409A deferrals

• Box 14 Excess golden parachute payments

• Box 15, Nonqualified deferred compensation

• Box 16, State tax withheld

• Box 18, State income

(23) Form 1099-NEC, Nonemployee Compensation: Edit boxes 1, 4, 5 and 7.

• Box 1, Nonemployee compensation

• Box 4, Federal income tax withheld

• Box 5, State tax withheld

• Box 7 State income

(24) Form 1099-OID, Original Issue Discount: Edit boxes 1, 2, 3, 4, 5, 6, 8, 9, 10, 11 and 14.

• Box 1, Original issue discount for yyty

• Box 2, Other periodic interest

• Box 3, Early withdrawal penalty

• Box 4, Federal income tax withheld

• Box 5, Market discount

• Box 6, Acquisition premium

• Box 8, Original issue discount on U.S. Treasury obligations

• Box 9, Investment expenses

• Box 10, Bond premium

• Box 11, Tax-exempt OID

• Box 14, State tax withheld

(25) Form 1099-PATR, Taxable Distributions Received From Cooperatives: Edit boxes 1 through 12.

• Box 1, Patronage dividends

• Box 2, Nonpatronage distributions

• Box 3, Per-unit retain allocations

• Box 4, Federal income tax withheld

• Box 5, Redeemed nonqualified notices

• Box 6, Section 199A(g) deduction

• Box 7, Qual. payments (Section 199A(b)(7))

• Box 8, Section 199A(a) qual. items

• Box 9, Section 199A(a) SSTB items

• Box 10, Investment credit

• Box 11, Work opportunity credit

• Box 12, Other credits and deductions

(26) Form 1099-Q, Payments From Qualified Education Programs (Under Section 529 and 530): Edit boxes 1 through 3.

• Box 1, Gross distribution

• Box 2, Earnings

• Box 3, Basis

(27) Form 1099-QA, Distributions From ABLE Accounts: Edit boxes 1, 2, and 3.

• Box 1, Gross distribution

• Box 2, Earnings

• Box 3, Basis

(28) Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.: Edit boxes 1, 2a, 3, 4, 6 , 8, 9b, 10, 14, 16, 17, and 19 for dollar amounts, the code(s) in box 7 including the IRA/SEP/SIMPLE check box, and the date in box 13.

• Box 1, Gross distribution

• Box 2a, Taxable amount

• Box 3, Capital gain

• Box 4, Federal income tax withheld

• Box 6, Net unrealized appreciation on employer's securities

• Box 7, Distribution codes and IRA/SEP/SIMPLE indicator
  —See IRM 3.10.8.8.7 for allowable entries and entry combinations.

• Box 8, Other

• Box 9b, Total employee contributions

• Box 10, Amount allocable to IRR within 5 years

• Box 13, Date of payment

• Box 14, State tax withheld

• Box 16, State distribution

• Box 17, Local tax withheld

• Box 19, Local distribution

(29) Form 1099-S, Proceeds From Real Estate Transaction: Edit boxes 1, 2, and 6.

• Box 1, Date of closing, this date is numeric and in "MMDDYY" format.

  Caution: "YY" must equal the tax year currently processed. Follow taxpayer intent. When you determine taxpayer’s intent does not equal "TY" follow previous instruction for prior year or future year returns.

• Box 2, Gross proceeds

• Box 6, Buyer’s part of real estate tax

(30) Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA: Edit boxes 1, 2, and 4.

• Box 1, Gross distribution

• Box 2, Earnings on excess cont.

• Box 4, FMV on date of death

(31) Form 1099-SB, Seller's Investment in Life Insurance Contract: Edit boxes 1 and 2.

• Box 1, Investment in contract

• Box 2, Surrender amount

(32) Form 5498, IRA Contribution Information: Edit boxes 1, 2, 3, 4, 5, 6, 8, 9, 10, 12b, 13a, 14a, and 15a.

• Box 1, IRA contributions...

• Box 2, Rollover contributions

• Box 3, Roth IRA conversion amount

• Box 4, Recharacterized contributions

• Box 5, FMV of account

• Box 6, Life insurance cost included in box 1

• Box 8, SEP contributions

• Box 9, SIMPLE contributions

• Box 10, Roth IRA contributions

• Box 12b, RMD amount

• Box 13a, Postponed/late contrib.

• Box 14a, Repayments

• Box 15a, FMV of certain specified assets

(33) Form 5498-ESA, Coverdell ESA Contribution Information: Edit boxes 1 and 2.

• Box 1, Coverdell ESA contributions

• Box 2, Rollover contributions

(34) Form 5498-QA, ABLE Account Contribution Information: Edit boxes 1 through 4.

• Box 1, ABLE contributions

• Box 2, ABLE to ABLE Rollovers

• Box 3, Cumulative contributions

• Box 4, Fair market value

(35) Form 5498-SA, HSA, Archer MSA, or Medicare Advantage MSA Information: Edit boxes 1 through 5.

• Box 1, Employee or self-employed person’s Archer MSA contributions made in yyty and yypy for yyty

• Box 2, Total contributions made in "yyty"

• Box 3, Total HSA or Archer HSA contributions made in yypy for yyty

• Box 4, Rollover contributions

• Box 5, Fair market value of HSA, Archer MSA, or MA MSA

(36) Form W-2G, Certain Gambling Winnings: Edit boxes 1, 2, 4, and 7.

• Box 1, Reportable winnings
  — if the payer enters multiple amounts in a box, circle and place the total of the amounts above the circled-out amount

• Box 2, Date won always numeric and in "MMDDYY" format.

  Caution: "YY" must equal the tax year currently processed. Follow taxpayer intent. When you determine the intent does not equal the tax year processed follow previous instruction for prior year or future year returns.

• Box 4, Federal income tax withheld

• Box 7, Winnings from identical wagers
  — if the Form W-2G, Certain Gambling Winnings, has an amount titled "Net Winnings," circle-out the amount.

(37) Form 3921, Exercise of an Incentive Stock Option Under Section 422(b): Edit boxes 1 through 5.

• Box 1, Date option granted

• Box 2, Date option exercised

• Box 3, Exercise price per share
  — circle-out the amounts below one dollar

• Box 4, Fair market value per share on exercise date
  — circle-out the amounts below one dollar

• Box 5, No. of shares transferred
  — this requires a whole number. If only a fraction is present circle-out don’t round up, if a whole number and a fraction is present circle-out the fraction.

(38) Form 3922, Transfer of Stock Acquired Through an Employee Stock Purchase Plan Under Section 423(c): Edit boxes 1 through 8.

• Box 1, Date option granted

• Box 2, Date option exercised

• Box 3, Fair market value per share on grant date
  — if the amount present is below one dollar, circle the amount

• Box 4, Fair market value per share on exercise date
  — if the amount present is below one dollar, circle the amount

• Box 5, Exercise price paid per share
  — if the amount present is below one dollar, circle the amount

• Box 6, No. of shares transferred
  — the number present is a whole number. If only a fraction is present circle-out and don’t round up. If a whole number and a fraction is present circle-out the fraction

• Box 7, Date legal title transferred
  — the number present is a whole number. If only a fraction is present circle-out don’t round up, if a whole number and a fraction is present circle-out the fraction

• Box 8, Exercise price per share determined as if the option was exercised on the date shown in box 1.
  — if the amount present is below one dollar, circle the amount.

(1) Form 1099-R may reflect a type of distribution indicator or distribution code, category of distribution, in box 7.

(2) Check for valid indicators in box 7: 1 through 9, A, B, C, D, E, F, G, H, J, K, L, M, N, P, Q, R, S, T, U, W, or blank. See valid combinations below.

(3) Allow up to two entries in box 7. If more than two entries edit the first valid combination present for input.

(1) The payee account number should appear in the account number (optional) box. If you can identify the account number and it isn’t in the account number box edit the number to the account number box.

(2) The number is any combination of alpha and/or numeric characters but is limited to 20 positions. If the number is more than 20 positions in length, edit 20 positions, usually the 20 left most positions. If an account number is in SSN format use it. Omit any special characters and leading zeros.

(3) Edit the 20 left-most positions. Whenever the account numbers in a group of returns start with the same prefix digits, edit the 20 digits following the prefix digits.

(4) If more than one account number is present, try to determine the number belonging to the payee. If unable to do so, use the first account number on the return.

(1) Send to ISRP all prior year Form 1096 and code them as current year. Also code the two numeric digits in the bottom right-hand corner of the Form 1096 indicating the tax year filed.

(2) If more than one type of return is transmitted by the payer, create a Form 1096 for each type of return transmitted.

(1) If the payer taxpayer identification number (TIN) isn’t in the proper box, draw an arrow from the TIN to the proper box provided for the payer identification number.

(2) Edit "9-" when a TIN isn’t found on the returns transmitted or by research.

(3) Use the payer TIN edited by Receipt and Control since Form 1096 uses the payer name and TIN assigned to the supporting detail documents.

(4) Edit a numeric "1" (when payer TIN is an EIN) or "2" (when payer TIN is an SSN) to identify the type of entity of the payer. Edit this numeric in front of the numeric return code in the box identifying the type of returns transmitted. See IRM 3.10.8.9.4, Editing Type of Return Transmitted.

(5) This editing is used for posting to the Payer Master File. Edit per the overall payer entity appearance.

(6) If a Form 1096 has both an EIN and an SSN choose the EIN, unless specific notation from IDRS research indicates to use the SSN.

(1) Edit the payer's address per the normal payee address editing rules. See IRM 3.10.8.8.4, Payee Address.

(2) The requirement for mailable addresses for No TIN record does not apply. See IRM 3.10.8.8.2 (2), Payer Name, Taxpayer Identification Number (TIN) on Payee Returns.

(1) For Form 1096 the following apply:

1. Only one type of return transmitted in the submission; if more than one type of return present, create another Form 1096 so one Form 1096, exists for each type of supporting detail document transmitted.

2. Ensure ISRP can clearly identify the type of return transmitted.

3. The type of entity (or TIN type) from IRM 3.10.8.9.2, Editing Payer Taxpayer Identification Number (TIN) and Type of Entity On Form 1096, Annual Summary and Transmittal of U.S. Information Returns, appears immediately before the numeric return code.

(1) Ensure return codes for information returns pre-printed on the Form 1096 and marked equal the document codes transmitted.

(2) Form 1096 transmits only one type of return.

(3) Use the type of return transmitted if two or more return code boxes contain marks. See Exhibit 3.10.8-2, Income Information Return Codes.

(1) The simplification of the Form 1099 (series) reduced the number of different returns and created the need to identify the types of payments reported by a payer. Because of this, you must edit the amount box numbers in alpha order for those Form 1096 transmitting the following form types:

• Form 1099-DIV,

• Form 1099-G,

• Form 1099-K,

• Form 1099-LTC,

• Form 1099-MISC,

• Form 1099-NEC,

• Form 1099-QA,

• Form 1099-SA,

• Form 5498-QA,

• Form 5498-SA,

(2) For Form 1096 transmitting the form types above, you must edit the allowable payment codes as indicated below, for each form type. Edit the payment code(s) in the space next to the word instructions on Form 1096. See the table below for the payment codes for each of the form types. If the return transmits only "Amended" or "Corrected" documents with all zero money amounts, edit a payment code of "Z".

(3) Form 1096 transmitting information returns received from the IRP Penalty Unit, edit an "A" as the payment code.

(4) Edit an "A" as the payment code on Form 1096 transmitting Form 1099-DIV, Form 1099-G, Form 1099-MISC, or, Form 1099-NEC with no money amounts (or all zero amounts) if:

• Not transmitting amended documents,

• Or is no longer associated with the documents they transmit.

(1) Review each Form 1096 for the number of returns transmitted present in box 3.

1. Determine if the count present in box 3 appears reasonable.

   Example: The payer enters 100 payee documents but attached only 3 sheets then count the documents, edit the total on the transmittal and circle-out the incorrect entry.

2. If the count isn’t present, count the payee documents, and edit the total in the correct box.

3. Edit the number of original returns transmitted by the Form 1096 followed by a slash (/) (e.g., 50/).

4. Edit the number of "Corrected"/"Amended" returns transmitted by the Form 1096 as a slash (/), followed by the number (e.g., /50).

(2) If the taxpayer did not to put an amount in box 4 (Federal income tax withheld) and/or box 5 (Total amount reported with this Form 1096) transmitting Form W-2G do the following:

1. Add the amount from box 4 (Federal income tax withheld) of the Form W-2G documents attached and edit the amount in box 4 of Form 1096.

2. Add the amount from box 1, (Gross winnings) of the Form W-2G attached and edit the amount in box 5 of Form 1096.

(3) Determine the number of returns subject to penalty on ISRP processed Form 1096 within a submission using the criteria listed below. Do not count voided information returns.

(4) Edit the number of information returns subject to penalty in the bottom left-hand corner of the Form 1096 using the criteria above. This count is less than or equal to the total number of documents reported in box 3 of Form 1096.

1. Edit the number of original returns subject to penalty by the Form 1096 followed by a slash (/).

   Example: Enter 50/ on the bottom left hand corner when 50 original Form 1099-NEC documents with $600 or more in box 1.

2. Edit the number of "Corrected" or "Amended" returns transmitted by the Form 1096 as a slash (/), followed by the number (e.g., /50).

   Example: Enter /20 on the bottom left hand corner when 20 corrected Form 1099-LS documents with $1 or more in box 1.

(1) Return transmittals together with the supporting detail documents to the numbering function for numbering after editing.

(2) Numbering forwards prior and current year Form 1096 and current year information returns to ISRP for transcription per IRM 3.24.8, ISRP System, Information Return Processing. Properly coded the Form 1096 then destroy the prior year detail information returns transmitted.