3.17.41. Excise Reporting

(1) Currently, the Internal Revenue Code (IRC) provides for the following trust funds:

1. IRC Section 9501, Black Lung Disability Trust Fund

2. IRC Section 9502, Airport and Airway Trust Fund

3. IRC Section 9503, Highway Trust Fund

4. IRC Section 9504, Sports Fish Restoration and Boating Trust Fund

5. IRC Section 9506, Inland Waterways Trust Fund

6. IRC Section 9508, Leaking Underground Storage Tank Trust Fund

7. IRC Section 9509, Oil Spill Liability Trust Fund

8. IRC Section 9510, Vaccine Injury Compensation Trust Fund

9. IRC Section 9511, Patient-Centered Outcomes Research Trust Fund

(2) Taxpayers are required to file either a Form 720, Quarterly Federal Excise Tax Return, or Form 2290, Heavy Vehicle Use Tax Return (HVUT), to report the tax liability. The Form 720, Quarterly Federal Excise Tax Return, reports the excise tax quarterly by abstract number, which identifies the tax. The Form 2290, Heavy Vehicle Use Tax Return (HVUT), reports taxes for July 1 through June 30 or for the period following a vehicle's first use.

(3) Form 720, Quarterly Federal Excise Tax Return, tax deposits are generally made semi-monthly with Form 8109, Federal Tax Deposit Coupon Book, or electronically through the Electronic Federal Tax Payment System (EFTPS). Semi-monthly deposits are generally required in advance of the return.

(4) Under IRC Section 9601, Transfer of Amounts, excise taxes dedicated to the trust funds must be transferred by the Bureau of the Fiscal Service at least monthly, based on estimates by the Office of Tax Analysis, from the general fund to the trust fund. When the Bureau of the Fiscal Service receives the certification reporting the actual collections for the affected quarter, adjustments are made to true-up the amounts transferred.

(5) Custodial Reporting is responsible for determining the amount of trust fund collection credits and preparing both the collection, and the refunds and credits, certifications. The collection certification process is completed about five months after the end of the quarter or about four months after the return due date.

(6) The trust fund collection certifications and refunds and credits certifications are due to the Bureau of the Fiscal Service on the 1st of February, May and August. If the 1st is a non-work day, the due date is the next workday. Due to Government Accountability Office (GAO) requirements, the end of fiscal year certifications have different due dates and are dependent on agreed upon dates decided during the IRS and the GAO pre-audit meetings held each February.

(7) To prepare the refunds and credits certifications, the analyst uses information provided by the SPC and the Redesigned Revenue Accounting Control System (RRACS). To prepare the trust fund collection certifications, the analyst uses information provided by applications development, which is obtained from master file extracts of collections made during the previous quarter for all Form 720, Quarterly Federal Excise Tax Return, returns on the master files.

(1) The authorities for this IRM include:

1. IRC Section 4081, Imposition of Tax (gasoline, diesel fuel, and kerosene)

2. IRC Section 4261, Imposition of Tax (transportation of person by air)

3. IRC Section 4271, Imposition of Tax (transportation of property by air)

4. IRC Section 6427, Fuels Not Used for Taxable Purposes

5. IRC Section 9501, Black Lung Disability Trust Fund

6. IRC Section 9502, Airport and Airway Trust Fund

7. IRC Section 9503, Highway Trust Fund

8. IRC Section 9504, Sports Fish Restoration and Boating Trust Fund

9. IRC Section 9506, Inland Waterways Trust Fund

10. IRC Section 9508, Leaking Underground Storage Tank Trust Fund

11. IRC Section 9509, Oil Spill Liability Trust Fund

12. IRC Section 9510, Vaccine Injury Compensation Trust Fund

13. IRC Section 9511, Patient-Centered Outcomes Research Trust Fund

14. IRC Section 9601, Transfer of Amounts

(2) Treatment of Kerosene for Use in Aviation, Pub. L. No. 109-59 (2005), Section 11161

(3) Termination of Transfers from Highway Trust Fund for Certain Repayments and Credits, Pub. L. No. 111-147 (2010), Section 444

(1) This section provides responsibilities for:

1. CFO and deputy CFO

2. Associate CFO (ACFO) for Financial Management and deputy ACFO for Custodial Financial Management

3. Director, Custodial Accounting

4. Chief, Custodial Reporting

5. Management official/team lead, Custodial Reporting

6. Excise analysts, Custodial Reporting

7. SPC reports analysts, all SPCs

(1) Program Reports: Data sources include Control-D, AQETL, and the Integrated Data Retrieval Systems (IDRS).

(2) Program Effectiveness: The effectiveness of the activities performed by SPC reports analysts and the Custodial Reporting excise analysts’ quarterly certifications is measured by the preparation and issuance of error-free source documents and certifications.

(1) Access to IDRS is limited to campus reports analysts and their management.

(2) Access to AQETL is limited to the excise analysts at the Cincinnati campus and headquarters and access to the excise shared drive is limited to the headquarters excise analysts and manager.

(3) Required review checklist for completeness and accuracy must be performed by a Custodial Accounting management official/team lead. The checklist is specific to the reviewer and is signed upon completion.

(4) Required review checklist for completeness and accuracy must be performed by the director, Custodial Accounting. The checklist is specific to the director and is signed upon completion.

(1) In this IRM, the terms below have the following meanings:

1. Excise tax - A tax levied by the federal government to finance both general government activities and specific programs.

2. Redesigned Revenue Accounting Control System (RRACS) - The IRS automated system used to provide accounting control for all revenue accounting transactions.

3. Trust fund - One of two major categories of funds established to carry out purposes of a trust agreement or statute, whereby receipts are earmarked for spending on specific purposes.

(1) The following chart contains acronyms that are used throughout this IRM:

(1) Microsoft Excel is used for math verification of reports used by the SPC reports analysts.

(1) The NTRR is compiled in the SPC with the source data being derived manually systemically. This is a report of all refund checks sorted by tax class. Some of the tax classes have sub-divisions for more detailed reporting.

(2) A daily NTRR is generated through the Integrated Data Retrieval System (IDRS) indicating manual refunds processed through that system. In certain cases, more than one line number may apply to one Master File Tax Account Code (MFT).

1. Line number definitions for the NTRR may be used as a guide for entering line numbers through IDRS.

2. Line number definitions are in the NTRR Format Guideline in IRM 3.17.63.14.11, Net Tax Refund Report (RACS Report 023).

(1) Manually prepared refunds applicable to excise taxes paid for fuels originally reported on Form 720, Quarterly Federal Excise Tax Return, for excise taxes dedicated to the HTF and the AATF are reported as separate line items. See lines 71 through 79 and 99 on the NTRR.

(2) The refund claim is made by the ultimate purchaser. The claim is filed using Form 8849, Claim for Refund of Excise Taxes, Schedule 1, Nontaxable Use of Fuels. The claim must be at least $750. The $750 amount may be met by making a claim for fuel used during any quarter of the claimant's income tax year or aggregating amounts from any quarters of the claimant's income tax year for which no other claim has been made. If the dollar amount and/or the time for filing requirements are not met, an annual claim using Form 4136, Credit for Federal Tax Paid on Fuels, must be filed.

(3) The law normally forbids the payment of interest on quarterly fuel tax refunds claimed. See IRS Publication 378, Fuel Tax Credits.

(4) Most HTF and AATF refunds should not appear on the NTRR because the Form 8849, Claim for Refund of Excise Taxes, claims should be processed by excise adjustments for posting on the Master Files before refunding; therefore:

1. The amount of the original claim will be reported on the T-90 Report, Form 8849, Claim for Refund of Excise Taxes.

2. The net amount of the refund, after any offset, will be reported on the NTRR generated from the Enterprise Computing Centers (ECC) for both the Business Master File (BMF) and Individual Master File (IMF) as an income tax refund because it is included with the other credits combined with the income tax return refund.

(5) The IRS certifies the refunds for the trust funds quarterly to Treasury.

(6) Contact a CFO headquarters excise tax analyst if there are any questions or for additional information.

(1) The T-90 report includes data from Form 4136, Credit for Federal Tax Paid on Fuels, filed with income tax returns (Form 1040, U.S. Individual Income Tax Return; Form 1120, U.S. Corporation Income Tax Return; Form 720, Quarterly Federal Excise Tax Return, Quarterly Federal Excise Tax Return Schedule C; Form 1041, U.S. Income Tax Return for Estates and Trusts; Form 990-C, Farmer’s Cooperative Association Income Tax Return; and Form 990-T, Exempt Organization Business Income Tax Return) and Form 8849, Claim for Refund of Excise Taxes. This data is compiled in each SPC containing gas and other credits claimed with returns and Form 8849, Claim for Refund of Excise Taxes, claims plus audit and DP tax adjustments reflecting adjustments to T-90 data. The report also includes credits claimed on Form 720, Quarterly Federal Excise Tax Return, Quarterly Federal Excise Tax Return, Schedule C, and adjustments to Schedule C.

(2) The T-90 Report is compiled from both the BMF and IMF data processed through the Tape Edit Process (TEP).

(3) The T-90 GAS-01-04 reports are prepared by each SPC and sent to CFO headquarters quarterly. Weekly, the service centers should monitor the reports data to ensure the year-to-date (YTD) data is correct. Weekly reviews allow for any report problem to be researched promptly before the source data tapes are scratched.

(4) Treasury Reports Master File GAS-01-04 is scheduled and generated automatically as follows:

1. Weekly, to accumulate the data from the daily tapes during the week into report titled "Weekly and Quarter-To-Date" that accumulate the data from the prior weekly reports.

2. Quarterly, to create a new Treasury Reports Master File. The quarters normally end at the close of the cycle which contain the following dates. Each quarter contains data from good tape transactions processed during the reporting period. Ensure that this report is for "Quarter-To-Date" and "Year-To-Date".

(5) Treasury Reports Master File Control Printouts

1. Verify that YTD records in dollar are correctly totaled to date. Small variances may exist because report data is rounded to the nearest dollar.

2. Verify that the YTD line item counts are correct or reasonably accurate. Original returns and quarterly Form 8849, Claim for Refund of Excise Taxes, claims are counted, but amended returns are not.

3. Review listing of adjustment correction record formats, if any.

4. File the control printouts.

5. Re-file the adjustment correction record formats, if any.

(6) The report is due to CFO headquarters by close of business on the fifth workday after the close of the quarter being reported (see IRM 3.30.123, Processing Timeliness).

(1) The T-90 should be reviewed for reasonableness before it is sent to CFO headquarters. Any unusual increase or decrease in the counts and amounts reported for each quarter should be confirmed. The findings should be reported or noted on the quarterly report.

(2) Confirm and explain any negative amount shown on the reports. In most cases, these will be corrections to prior quarters’ data that were previously reported.

(3) Ensure that the current Weekly and Quarter-To-Date counts and amounts are correctly totaled for the Quarter and Year-To-Date (Cumulative, or Cum) - Total, on the report. Ensure that for the first calendar quarter, which is for the quarter ended March 31, that the Weekly and Quarter-To-Date amount equals the Quarter and Year-To-Date - Cum Total.

(4) Ensure that the Year-To-Date - Cum Total equals the sum of the calendar quarters reported to date. For example, the sum of the amounts for the March and June quarters will equal the Year-To-Date - Cum at June 30th.

(5) The specific credits allowed for T–90 Credits are presented in a table format. This table corresponds to the line items on the T–90 report. The table shows the credits allowed and the tax years for the allowable credits. See Exhibit 7, Credit Reference Numbers.

(6) The T-90 report is divided into seven segments. Pages one and two represent credits claimed with income tax returns on Form 4136, Credit for Federal Tax Paid on Fuels. Pages three and four represent credits claimed with Form 8849, Claim for Refund of Excise Taxes. Amended returns data is also included in pages three and four data. Page five is for credits claimed on Form 720, Quarterly Federal Excise Tax Return, Quarterly Federal Excise Tax Return, Schedule C, and page six is for adjustments to these credits. Page seven is a summary page.

(7) IRS certifies the fuel tax credits to Treasury's Bureau of the Fiscal Service quarterly. These credits are charged to the AATF, HTF and other trust funds; therefore, it is important that these credits are reported correctly on the T–90.

(8) When there is a program change to add new CRNs, the program change has to be run after the quarterly and YTD reports. When this happens, there is a reformatting of the report which requires the YTD data to restart from the date of the program change. This means that the following can happen:

1. There can be multiple program changes that require the YTD figure to restart.

2. The total YTD amount requires adding each of the YTD figures.

3. The regular balancing must be done to confirm the weekly reports are all included in the quarter-to-date runs.

(1) This section lists the areas that provide information related to credits and refunds reported on the T–90 reports for the IMF and the BMF. The general functional areas are:

1. IMF and BMF

2. IDRS

3. Audit Information Management System (AIMS)

4. Computer services (IMF and BMF)

(2) Credits claimed that are passed on to the T–90 originate from:

1. Original income tax returns with Form 4136, Credit for Federal Taxes Paid on Fuel

2. Amended income tax returns

3. Form 8849, Claim for Refund of Excise Taxes

(3) The T–90 related credits may be claimed on the following forms:

1. Form 4136, Credit for Federal Tax Paid on Fuels, which is updated for each calendar tax year

2. Form 6478, Biofuel Producer Credit

3. Form 720, Quarterly Federal Excise Tax Return, Schedule C

(4) List of Returns and Master Files involved are:

1. IMF - Form 1040, U.S. Individual Income Tax Return series

2. BMF - Form 1120, U.S. Corporation Income Tax Return series; Form 1041, U.S. Income Tax Return for Estates and Trusts; Form 990–T, Exempt Organization Business Income Tax Return; and 1120–FSC, U.S. Income Tax Return of a Foreign Sales Corporation

3. BMF - Form 1120-F, U.S. Income Tax Return of a Foreign Corporation and Form 1120-L, U.S. Life Insurance Company Income Tax Return

4. BMF - Form 1065, U.S. Return of Partnership Income

(1) This report consists of seven pages for credit amounts plus statistics:

(2) Line Items Counts are from the line items listed on the T–90 that equate to the line items on the Form 4136, Credit for Federal Taxes Paid on Fuels. Be aware that Form 4136, Credit for Federal Taxes Paid on Fuels, may have two or more line items present.

(3) Dollar Claim Ranges are listed on the left side under Line Numbers 1 through 23.

(4) Total Counts—Line Items are on line number 24 for the totals for each data column.

(5) Counts are stratified into two sections with four columns each. The two sections are:

1. Numbered (1) through (4) under title for "This Week" or "This Quarter" reports

2. Numbered (5) through (8) under title for "Current Quarter" or "Year-To-Date" reports

(6) Each section's four columns represent the counts for six reports of credit data:

1. BMF returns

2. BMF Form 8849, Claim for Refund of Excise Taxes, claims

3. IMF returns

4. IMF Form 8849, Claim for Refund of Excise Taxes, claims

5. Adjustments for Form 720, Quarterly Federal Excise Tax Return, Quarterly Federal Excise Tax Return, Schedule C, claims

(7) Line Items to be researched will be found on the Form 4136, Credit for Federal Tax Paid on Fuels, Stratification Report, in the:

1. Equal or same dollar range

2. Higher dollar range

(8) Page 6 is a Claims Dollar Stratification Report - Form 4136 (totals from Form 4136, Credit for Federal Tax Paid on Fuels):

1. Form 4136, Credit for Federal Tax Paid on Fuels, count totals are summarized on the T–90 as a memo count.

2. Form 4136, Credit for Federal Tax Paid on Fuels, dollar amount represents the Form 4136, Credit for Federal Tax Paid on Fuels, gross amount of credit (the combined amounts of all line items present).

3. This report should be used to determine number of claims to be confirmed based on minimum dollar limits.

(9) Page 7 is a Recap of Counts and Average Items and claims on Form 4136, Credit for Federal Tax Paid on Fuels, and Form 8849, Claim for Refund of Excise Taxes.

(10) Line numbers 25 through 30 identify the:

1. T–90 data counts and dollars being recapped

2. Source

3. Purpose or objective of recap

(11) Line 27 Average Line Item Amount:

1. If lower than minimum limits set for review, then no large items are required to confirm.

2. If higher than limits set for review, then one or more items to confirm.

(12) Line 29 Average Form 4136 Amount:

1. Use the same review concepts as for line 27.

2. Line 29 average should always equal or exceed line 27 average.

3. Line 29 average indicates average dollar range of Form 4136.

(13) Line 30 is the difference between lines 27 and 29.

1. The line 29, Form 4136, average should equal or exceed the line 27 average.

2. An equal or low average means most Forms 4136 have only one line item present.

3. A high average means most Forms 4136 have multiple line items present.

4. The line 29 average indicates how closely the individual line items on T–90 match the Form 4136 gross/combined total. The lower the average, the easier it is to match individual T–90 line items being reviewed to the Form 4136, Credit for Federal Tax Paid on Fuels, amounts for research on the Daily DLN Listing.

(14) P–R–F GAS–01–40: This Week and Quarter-To-Date (QTD)

(15) P–R–F GAS–01–42: This Quarter and YTD

(16) P–R–F GAS–01–44: Gas Adjustment List - shows valid adjustments list for this pass.

(17) P–R–F GAS–01–46: Gas Adjustment Error List - shows invalid adjustments for this pass.

(1) Consists of seven sections with one or more pages per section.

(1) The Daily Extract Reports GMF–15–48 to 15–53 have eight columns of data in each section.

(1) These runs provide control totals to be used for balancing to the totals on the T–90 reports.

(2) The "Today's Totals" line from the daily extract reports should be recorded and accumulated on a manually prepared control work sheet.

(3) The control work sheet will serve as a log of the inputs and totals to be accumulated for control purposes. Two sets of worksheets will be required:

1. Weekly and Current Quarter Cum.

2. Calendar Year Cum. This proves that the four quarterly totals equal the YTD totals. Be sure to include all YTD totals.

(1) The proposed control work sheet column format, for example, would be:

1. Cycle "YYYYCC" or Date of Run "MMDDYYYY" in the first column.

2. The money amount columns across the page should be in the same sequence as on the reports. For example IMF Form 4136, Credit for Federal Tax Paid on Fuels.

3. Combined Total. Obtained by adding up the amounts of columns 1 through 3 in "(b)" above.

4. Quarter-To-Date Cum Total. Obtained by adding the sums of the latest week to the balance forward for the quarter.

(2) There are six sections to match up to Pages 1 through 6 of GAS–01–04:

1. BMF Returns

2. IMF Returns

3. BMF 8849 Claims

4. IMF 8849 Claims

5. Form 720, Quarterly Federal Excise Tax Return, Schedule C, claims

6. Form 720, Quarterly Federal Excise Tax Return, Schedule C, adjustments

(3) Control Work Sheets are required weekly and quarterly.

1. Weekly - accumulating the daily run totals for dollar amounts and counts.

2. Quarterly - accumulating the weekly totals for dollar amounts and counts.

3. The weekly and quarterly work sheets may be combined into one sheet by recording the quarter balance forward amounts at the beginning of each weekly cycle.

4. Each control work sheet should have the identifying dates recorded on the upper right side for week, quarter, and calendar year ending MMDDYYYY.

5. The quarterly control work sheet totals must equal the totals on the T–90 reports for the weekly and quarter-to-date reports.

6. The current quarter-to-date column totals will equal the quarterly amount in the quarter column on the quarter and year-to-date reports.

(4) Establish a control work sheet for the calendar year by:

1. Creating a calendar year control work sheet accumulating the quarterly totals. Use the same format as for the weekly and quarterly control work sheets.

2. Recording quarterly dollar amount totals.

3. Recording quarterly count totals.

4. Computing cumulative totals for amounts and counts.

5. Ensuring that the calendar year cumulative totals equal the totals on the T–90 reports for the quarter and YTD reports.

(1) The accumulated sum of the daily extract report totals for the week, usually five processing days, will equal the respective sums printed under the week column on the "Weekly and Quarter-To-Date" T–90 report. The "Quarter-To-Date" column respective totals will equal the sum of the week's totals accumulated into the current calendar quarter totals.

(2) The T–90 reports are calendar year cum reports. There are two sets. First, the "Weekly and Quarter-To-Date" kept by the SPC, and second, the "Quarter-To-Date and YTD" which is sent to CFO headquarters at the end of each quarter. The totals of these reports must be reconciled to the Control Work Sheet totals. At the end of each calendar quarter, the accumulated sum(s) of the quarter-to-date "QTD" columns must equal the "YTD" columns totals.

(1) The proof totals should equal the GAS–01–04 report's totals except for rounding adjustments.

(1) Documents that report credits should be sampled regularly to ensure valid processing and extraction of the credits. Each of the sections must be scanned to look for unusually large credits or reversals that should be confirmed. Please use the following as minimum guides:

(2) Select at least the following number of documents each month to ensure the minimum amount of review is being done (Consult with the T–90 analyst for any assistance needed to arrive at a reasonable level of review for your SPC):

(3) The credit amount is confirmed by requisitioning the return or Form 8849, Claim for Refund of Excise Taxes, to determine if an appropriate supporting form is attached, or if the claimant input information correctly. If not, then a correction must be made to back the credit out of the report or correct it on the report.

(4) Confirming credits on a selective or random sampling basis is necessary to ensure the integrity of the credits allowed and to confirm that there are no processing or systemic problems.

(5) If there are several large dollar amount credits present, select only one or two documents for each MFT and document code.

1. If the credits inspected are valid, assume the remainder of the group for that cycle are valid.

2. If the credit documents inspected are in error, then confirm additional documents from that same MFT group.

3. If all the documents inspected are invalid, advise CFO headquarters and continue research to determine the cause. Prepare a ticket if it is a programming or systemic error.

(6) Always review requisition documents to confirm credits for:

1. Initial processing of a new return

2. Implementation of a major tax law change

3. Implementation of programming corrections

4. Programming changes for each new calendar year

5. New line item changes on the T–90 report

(7) The Form 720, Quarterly Federal Excise Tax Return, Quarterly Federal Excise Tax Return, Schedule C items are verified in Cincinnati Excise Compliance for large returns.

(1) Maintain a work sheet to accumulate the adjustments required for the quarter. Record the MMDDYYYY for the quarter.

(2) Record each correction adjustment separately. This will:

1. Provide means to reconcile adjustments requested to control totals.

2. Provide proof of individual adjustments.

3. Provide a historical record.

4. Ensure accuracy of the average dollar amount per report line item and dollar stratification report.

(3) Correction adjustments should only be combined by line items if the number is excessive due to systemic problems.

1. Do not combine line item counts unless they exceed 20 per line item. This way, the Dollar Stratification Report will not be distorted due to corrections.

2. Advise CFO headquarters.

3. Note on the report the line items and amounts corrected.

(4) Make sure all correction adjustments are input before the end of each calendar quarter and the end of each year. This will prevent the need to footnote reports for:

1. Carryover items corrected for prior quarter

2. Uncorrected errors pending

3. Questionable and unresolved items pending

(5) Correction information must include:

1. Alpha Line IDs (A through O)

2. Net count change, plus or minus

3. Net money amount change, plus or minus

(6) Compute separately for each of the T–90 pages:

1. BMF returns

2. IMF returns

3. BMF 8849 claims

4. IMF 8849 claims

5. Form 720, Quarterly Federal Excise Tax Return, Schedule C, credits

6. Form 720, Quarterly Federal Excise Tax Return, Schedule C, adjustments

(1) The amounts are entered by line item and are converted to CRNs on the T–90 reports. After 2008, they are entered by CRN, like the Form 8849, Claim for Refund of Excise Taxes and Form 720, Quarterly Federal Excise Tax Return, Schedule C.

(2) The averages are computed for both the current period (Week or Quarter-To- Date), and cum period (Quarter or Year-To-Date).

(3) These average amounts and counts should be used as a guide to determine if there are large dollar amount claims that should be confirmed.

(4) Be aware that a single Form 4136, Credit for Federal Tax Paid on Fuels, may have more than one line item credit present.

(1) Each credit/claim will be included for each of the four T–90 reports. There are two reports:

1. By line item

2. By Form 4136

(2) The counts shown on these two reports are shown by dollar ranges and they should be used to ensure that large amount claims are considered for confirmation.

(3) Individual Form 4136, Credit for Federal Tax Paid on Fuels, credits/claims may be determined by reviewing the daily Document Locator Number (DLN) listings.

(4) These two reports may be useful to various IRS examination, adjustment and other functions interested in detecting fraudulent claims. These reports can provide statistics for screening, reviewing and auditing claims.

(1) Data from the four T–90 reports are recapped to provide a summary of claims processing.

(2) Total dollar amounts should equal the total amounts from the four T–90 reports.

(3) Advise CFO headquarters of any material change in counts or average amounts. Otherwise, the analysis will be performed by those functions concerned with claims processing, reviewing, and auditing.

(4) Ensure the three statistical reports, pages 5, 6 and 7, are also sent along with the T–90 reports to CFO headquarters quarterly.

(1) Invalid claims are those that were coded or processed as Form 4136, Credit for Federal Tax Paid on Fuels, claims in error.

1. IRS error, no Form 4136 present

2. IRS error, input gallons as money amount

3. IRS error, input TIN as money amount

4. IRS error, amount input with extra digits

5. IRS error, amount figure inverted

6. IRS error, wrong CRN used

(2) Invalid claims disposition - correct.

(3) Potentially fraudulent claims are those that may be totally invalid. Here are some indicators:

1. Filer often uses a post office box as an address.

2. Filer recently obtained a TIN.

3. Filer has no prior business returns on file.

4. Filer may have filed multiple claims for the same amount, but under different TINs/names.

5. Filer may have filed multiple claims using similar names.

6. Filer may have filed multiple claims using the same local address.

7. Filer is an individual, but files a corporation claim.

8. Type of fuel claimed may not match up to business use indicated.

9. Filer may not have a business schedule "C" present on the master file income tax for the prior or current period.

(4) Perform the following steps if a potentially fraudulent claim is identified:

1. Retain a copy and turn claim over to the Adjustment or Examination Division.

2. Advise CFO headquarters by telephone of count and amount.

3. Do not reverse these items because at this point the claim is only suspected to be invalid. If there is any resolution by IRS, the reversal will be reflected in future reports. If the amounts are material, CFO headquarters will advise Treasury.

(5) Any credits with CRN 318 should be requisitioned and confirmed.

(1) Whenever it has been determined that an adjustment is necessary to the Reports Cum File because of a programming error, send a memorandum to the CFO Custodial Reporting office giving the following information:

1. Name of Report and Program Run File Number (P–R–F)

2. Service Center, type of tax and amount of adjustment

3. Line item identification

4. Reason for adjustment

(2) Correction adjustments for revenue receipts for both the BMF and the IMF reports are made to the Automated Non Master File (ANMF) report generated in Kansas City.

(1) Errors discovered after the review of the T–90 reports, DLN listings and random confirmations must be corrected on subsequent T–90 reports.

(2) T–90 errors fall into two categories. The category type depends on if:

1. The error affects only the T–90 Report.

2. It also affects the taxpayer's Master File (MF) Account.

(3) The category types of error impact conditions are:

1. Errors that do not impact the net credit on the taxpayer’s MF account. These errors must be corrected using the RPA/SA's demand terminal. This would correct the T–90 report only, and not the taxpayer's account.

2. Credit amount correct on Form 4136, but on the wrong T–90 line.

3. Errors affecting both the net credit on the taxpayer's MF Account and the T–90 report. This error must be corrected on the taxpayer's MF account because the claim was either completely erroneous, overstated, or understated. Do not manually correct the T–90, as the adjustment transaction will correct the T–90.

(4) If errors impact the taxpayer's MF account, then the following steps should occur:

1. When originated in Integrated Submission and Remittance Program (ISRP), ask the Adjustments Branch to correct.

2. When originated in an area other than ISRP, return it to the originator with an explanation requesting correction.

(5) If the error is over $100,000, please advise CFO headquarters of the pending correction.

(1) T–90 errors or questionable items are normally either:

1. Noticed on the daily DLN listing

2. Indicated on the T–90 weekly and quarter-to-date reports

(2) Determine the source type of error (the types are on pages one to six):

1. BMF returns

2. IMF returns

3. BMF Claims Form 8849, Claim for Refund of Excise Taxes

4. IMF Claims Form 8849, Claim for Refund of Excise Taxes

5. Form 720, Quarterly Federal Excise Tax Return, Schedule C, claims

6. Form 720, Quarterly Federal Excise Tax Return, Schedule C, adjustments

(3) Determine on which CRN the item to be corrected was first reported.

1. Look at daily/weekly reports to determine where that amount first appeared.

2. If the amount is very large, it is easy to find. If the amount is small, it may be difficult to isolate and find the error. You may have to use your best judgement to determine which line should be corrected.

(4) List the corrective actions on the T–90 correction work sheet:

1. Reverse out 100% of the original error.

2. Re-enter the correct amount, if the original amount is required to correct the report.

3. Reverse out and re-input each error and correction separately. Compute the corrections separately for both each type and each line item.

4. Corrections must be input separately in order to accurately compute the average claim by line item and dollar stratification for each Form 4136, Credit for Federal Tax Paid on Fuels, amount.

(5) Proposed format of T–90 correction work sheet:

1. Header across top, left to right "Return, 8849 Claim. BMF, IMF, line item, count + or −, money Amount, Count if Form 4136."

2. Enter a check mark under either the return or Form 8849 Claim.

3. Enter a check mark under either BMF or IMF.

4. Enter the line alpha letter under line item.

5. Enter under count + or −, either +1 or −1.

6. Enter the money amount (without a decimal).

7. Enter count of +1 or −1, if a F–4136 error.

(6) Present this T-90 correction work sheet to the technician to enter on the demand terminal.

1. The technician will input the date on a special IT terminal.

2. Each time the T–90 is run, a "Gas Adjustment List", generates both the P-R-F GAS-01–43 invalid adjustments, and P-R-F GAS-01–44 valid adjustments.

3. If corrections were input, re-submit any invalid corrections until they are valid.

(7) Record corrections +/− on the T–90 controls. The new T–90 YTD should match the revised control totals (YTD plus/minus corrections).

(8) Maintain a historical record of all corrections.

1. Make a photocopy of the document indicating the credit or error.

2. Place in the T–90 correction file for the calendar year.

(1) The computer-generated operating reports are available through Control-D for printing and review.

(1) The excise taxes reported on Form 720, Quarterly Federal Excise Tax Return, are divided into monitoring groups.

(2) Each excise tax reported is identified by an IRS number (abstract), excise tax description, trust fund (if applicable) and other information.

(1) The Cincinnati RA should allocate sufficient time to and prioritize accomplishing the monitoring tasks promptly after the AQETL is updated with new data.

(2) The Cincinnati RA should be able to estimate the amount of initial time needed to monitor the number of accounts requiring review based on the:

1. AQETL number of accounts extracted.

2. Million-dollar BMF records reports volume.

3. The notes on the AQETL from the CFO headquarters analysts indicating research is required and errors should be corrected.

(3) The Cincinnati RA may determine the status of the Form 720, Quarterly Federal Excise Tax Return, account monitoring based on the volume of accounts listed on the "Million-Dollar" reports.

(4) The primary purpose of the communication with CFO headquarters via AQETL is to:

1. Ensure that no corrections are overlooked.

2. Ensure that CFO headquarters has not missed any material adjustments or corrections.

3. Request return for posting confirmation, line 4 adjustments, or information listed on the return by the taxpayer.

(5) The secondary purpose is for Cincinnati RAs to determine:

1. The current workload and the amount of additional research and correction activity to be done for any period.

2. The number of outstanding corrections from prior reports.

(6) The reports analysts can ensure responsive and timely monitoring by:

1. Prompt review of the AQETL, to determine number of potential errors this period.

2. Prompt requisition of returns and documents for inspection.

3. Prompt IDRS input of corrections for posting errors allowed to be corrected by the analysts.

4. Systematic transfer of returns with errors required to be corrected by Excise Adjustments.

(7) Prompt and reasonable time frame monitoring guidelines enable:

1. Correcting prior quarter reports errors by the end of the succeeding quarter.

2. Correcting routine errors discovered on the Weekly Million-Dollar BMF Reports Listing within four cycles after receiving the report, but no later than eight cycles.

(8) Factors increasing monitoring needs include:

1. Reporting and input posting errors due to type of taxpayer.

2. IRS input errors.

3. Implementation of new taxes and new taxpayers. There always are more errors in the first few quarters until taxpayers learn to report taxes on the correct abstract lines.

(9) Monitoring timeliness response is normally considered met if:

1. IDRS input posting corrections, determined without the need to secure the returns to confirm, are made within three to four cycles of the receipt of the AQETL.

2. Requisitioned returns and documents needed are requisitioned within one to two cycles of receipt of the report.

3. Prompt action taken on new or first-time extractions. This occurs because an account may not be extracted until the current month, yet the error may have occurred several cycles earlier.

(10) Reports Analysts reporting to the CFO headquarters:

1. By telephone confirmation of unusually large adjustments input or errors discovered/confirmed in the last couple cycles of the reporting quarter. The reason is that the current AQETL due may not contain those postings until the next monthly report.

2. To keep the CFO headquarters informed of processing delays, material adjustments and settlement of large excise tax law cases and systemic problems that would materially affect processing and reporting via notes on AQETL or telephone confirmations.

(11) Top 100 Form 720, Quarterly Federal Excise Tax Return Filers Tax Period 20XXXX:

1. This list is used to monitor the timely posting of the Top 720 filers.

2. The data is extracted using TXPD 20XX09 each fiscal year.

3. There are approximately 200 filers on the list.

4. The list is sent out about one month after the end of the tax period.

5. The excel worksheet contains TIN, TXPD, name control, trust fund, amount posted, cycle return posted and comments (return posted, return received, if there is a problem in posting, etc.).

(1) TREAS–92, Summary of Excise Tax Liabilities Report, includes data from:

1. Original Form 720, Quarterly Federal Excise Tax Return returns, TC 150

2. Amended returns processed as TC 290

3. DP adjustments, TC 290 and 291

4. Audit adjustments, TC 300 and 301

5. Account transfer-in, TC 370

(2) TREAS–92 is fiscal year to date report ending each 9-30-YYYY.

(3) TREAS–92 generates monthly for: transactions 180–40–11, and ECC posted 180–50–11. The automated report is 180–52–11.

(4) Excise tax detail data is listed by abstract number and dollar amount (no cents). Abstract numbers and amounts are listed in groups for the trust funds and the general account.

(1) TREAS–92, Summary of Excise Tax Liabilities, is reviewed quarterly by CFO headquarters.

1. The SPC RA is not required to manually compute the variances and develop adjustments to arrive at the amount properly due each quarter.

2. The SPC RA may be requested by CFO headquarters to assist in determining cause of unusual dollar variances. The most logical reasons are errors and late postings.

3. The SPC RA should inform CFO headquarters when very unusual situations adversely affect the processing and reporting of the data.

4. The SPC RA, on a quarterly basis, will compare the dollar amount of variance between the current quarter and the prior quarter this year and one year prior.

5. The SPC RA will annually compare current fiscal year (FY) totals with the prior FY totals.

(2) The most effective review methods are:

1. Analysis of net change by exception

2. Normal growth trend

3. Expected no change

4. Expected decrease

5. Seasonal or cyclical patterns

6. Unusual negative figures

(3) Look for large CRNs related to abstracts for:

1. Prior FY corrections posting in this FY.

2. Refunds of prior period taxes repealed retroactively.

3. Partial refund of prior period taxes that are all claimed in the current quarter or FY.

4. Large audit adjustments applicable to prior period expired or repealed taxes.

5. IRS input errors occur, such as an abnormally large dollar line 4 CRN.

6. Prior FY number 80 unidentified that was corrected in the current FY.

(4) Negative figures are more likely to appear on the TREAS–92 report in the first months of the new FY before there are enough normal positive postings to absorb any negative postings.

(5) Look for normal increases in the dollar amounts reported for those taxes when the:

1. Economy for that business is improving.

2. Tax rate increased.

3. New items are included in the tax base.

4. New tax is imposed.

5. IRS is having a compliance drive.

(6) Look for no change or a minor change up/down when the:

1. Economy is normal or slowing down.

2. Industry experiences seasonal fluctuation.

(7) Look for decrease in the dollar amounts reported when the:

1. Economy is slowing down, there are industry layoffs, and the industry is in a recession.

2. Tax rate has decreased.

3. Other events occur, such as strikes and acts of nature.

4. New IRS rules and regulations are issued.

5. Tax law case sets new precedent allowing credits.

6. Tax law change allows tax exemption or partial credit.

7. Tax is repealed retroactively.

8. Prior quarter or FY corrections are input.

9. Large accounts go unpostable. This also happens when a taxpayer files two returns, the first is for Floor Stock Tax, and the second is for the normal taxes due at a later date.

(8) Look for large increases or decreases when:

1. Major processing problems or delays exist.

2. Large account is coded incorrectly.

3. Large correction is input incorrectly.

4. Data is input as No. 80 Unidentified.

5. Audit corrects an account that had already been corrected.

6. Reversals/corrections input are applicable to a prior FY.

7. Audit adjustments to reclassify a tax for several tax periods (TXPDs) are all in the same month, quarter and FY.

8. Prior FY No. 80 Unidentified debits or credits are being corrected this FY.

9. Unusual Adjustments from current TXPD F–720, line 4 credits, that apply to prior TXPDs.

10. Erroneous inputs and DIS overstatement errors occur.

(1) The SPC RA monitoring schedule should evolve around the receipt of the monitoring reports received weekly and monthly.

(2) Weekly, review the AQETL which lists current and prior TXPD postings.

1. Determine overall number of corrections, and number of returns and documents needed to confirm or correct postings.

2. Requisition the returns needed to confirm or correct postings.

3. Confirm proper posting of corrections input or requested through adjustments.

(3) Weekly, review the Weekly Posted Million-Dollar BMF Records Report using Control-D.

1. This prompt review will allow lead time for the SPC RA to make some corrections before the end of the month, quarter and FY end.

2. This prompt review will also allow the SPC RA to requisition returns before the returns are requested by others or sent to the Federal Records Center.

3. The Million-Dollar Report lists all Form 720, Quarterly Federal Excise Tax Return, tax liability transactions for abstract amounts of $5,000 or more beginning April 1993.

(4) Perform a visual study of the report to determine:

1. Valid abstract number for each filer.

2. Logical abstract number based on key words in the taxpayer's (TP) name or common knowledge indications of what taxes that TP would be reporting.

3. Reasonableness of the dollar amounts being reported based on the filer or abstract number.

(5) Monthly, review the Million-Dollar BMF Records Report to ensure all errors are accounted for. The weekly listings are reviewed using Control-D.

(6) Quarterly, review the Form 720 IRS Numbers Count Report to determine if the counts are reasonable and there are no material exceptions.

(1) Monitor the Form 720 IRS Numbers Count Report. SPC RAs should record counts in an Excel spreadsheet.

(2) Monitor the Posted Million-Dollar reports received weekly and monthly via Control-D.

(3) Maintain a file of returns reviewed. Copies are made from returns obtained from:

1. Files section when requisitioned.

2. Processing areas.

3. Code and Edit, courtesy copies for returns over one million dollars.

(4) Use other systems as follows:

1. Comments on AQETL.

2. Notes on the monthly million-dollar BMF report.

3. Case folder with history sheet.

4. Closed case listing maintained by SPC RAs.

(1) The AQETL report extracts Form 720, Quarterly Federal Excise Tax Return, postings.

1. The data is reported in EIN account sequence.

2. The accounts are reported in tax period (TXPD) sequence.

3. Tax liability transactions (TC) are listed in posting cycle (YYYYCC) sequence with abstract numbers and dollar amounts for each TC.

(2) The criteria for extraction are based on:

1. Initial base of the taxpayer account in the four prior CY TXPDs.

2. IRS abstract numbers.

(3) Dollar amounts by abstract number is key for extraction:

1. Determined by combining both plus (+) and minus (−) dollar amounts present for each TXPD.

2. Amounts are combined for TCs present, which are: TCs 150, 290, 291, 300, 301, and 370.

(4) The extraction criteria are determined by the CFO headquarters analysts.

(1) The AQETL is extracted at ECC Martinsburg from the BMF Form 720, Quarterly Federal Excise Tax Return, and adjustment data.

(2) The AQETL is downloaded weekly.

(3) The AQETL lists all TCs 150, 29X, 30X and 370 posted by TXPD and cycle.

1. Review each one listed to determine if return posted or if adjustments requested posted. Confirm if postings are reasonable and correct.

2. Determine if abstracts, CRNs and amounts posted are consistent and in normal ratio with prior quarters.

3. Determine if each abstract number reported appears logical for that firm based on its name or business type.

(4) Follow up on adjustment requests (TC29X) that did not post in the quarter just ended. Adjustments of $5,000 or more for each abstract will appear on the monthly Million-Dollar BMF Reports Records Listing. Those under $5,000 can be confirmed on IDRS or the AQETL.

(5) Review the first two or three quarters' filings of new companies on the AQETL to ensure the abstracts reported are consistent and logical for that TP. If questionable, obtain returns to determine the issue. If necessary, contact TP to resolve the problem.

(6) Follow up all postings to abstract No. 80 "unapplied or unidentified amounts" to ensure that the amount is transferred to the correct abstract, usually by TC 29X. These must be transferred to the correct abstract, so they appear on the proper certification.

(7) Refer to separate review instructions for "TC 370 Account Transfer-in Review."

(1) Monthly monitoring of the Highway Use Tax (HUT) reported on Form 2290 ensures data is reasonably consistent with prior year periods.

1. If data variance is material, advise the CFO headquarters Highway Trust Fund analyst by telephone. De-cum the data monthly and compare the data to the same month and quarter of the prior year.

2. HUT Form 2290 data is reported on P–R–F 180–40 AND/OR 50–11, titled "US REPORT INTERNAL REVENUE RECEIPTS.". This data represents net collections after adjustments. It is available on Control-D Web.

3. HUT is required for each truck put into service. The annual return covers the period July 1 through June 30. Whenever a truck is put in service on the highways after July 1, the tax is due at the beginning of the next month and is prorated for the remainder of the twelve-month annual period.

(1) It is normal for AATF abstracts: 13, 14, 26, 27, 28, 69 and 77 to be reported by airline passenger, airline freight and airport service businesses.

(2) It is normal for a full-service airline to report any combination of 26, 27 and 28. Domestic airline passenger service firms would be 26, airlines with international departures would be 27, and airline freight would be 28.

(3) It would be normal for firms providing airplane and airport services to report tax on fuels used in noncommercial aviation as follows: Aviation gasoline fuels as 14, and aviation fuel (other than gasoline) as 69. Normally 14 is smaller than 69 when both are present together for air service filers. If a firm is not an air service filer, then any combination of 14 and 69 with 62, or 14 and 62 is usually an error. To confirm the error, compare to prior TXPDs, confirm the NAIC, obtain and inspect the Form 720, Quarterly Federal Excise Tax Return, for that TXPD, and if necessary, check with the taxpayer.

(4) An air freight firm will normally only report 28, not 26 or 27.

(5) A common error is abstract 26 being reported or posted as 22.

(6) If Form 720, Quarterly Federal Excise Tax Return, filer is an airline, correct without securing the return. If any doubt, secure the return to confirm.

(7) Another common error is for 26 and 27 to be reported as 27 and 28. Secure the return to confirm and correct.

(1) HTF Abstracts are: 33, 35, 60, 62, 104, 112, 117, 118, 120,121, 122, 123, 124.

(2) Abstracts for tires are 108, 109 and 113. Some large auto or truck manufacturers report both tires, abstracts 108, 109 or 113 and retail tax, abstract 33.

(3) Usually 60 and 62 are present together for oil companies.

(4) Normally 62 is larger than 60 when reported together.

(5) Abstract 35, kerosene, was effective starting in 1998. The rate of the tax for kerosene is the same as Diesel fuel Abstract 60.

(6) Alternative fuel sources have been developed over the years which has caused abstracts to be removed, added and reorganized to track different types of fuels. The current abstracts are 79, 112, 118 and 120-124.

(1) Number 40 is only valid for producer or importer of automobiles sold that do not meet certain fuel economy ratings per Form 6197.

(2) If valid abstract 40, the tax is all dollars, there are no cents in the tax rate.

(3) Normally manufacturers (includes producer or importer) of motor vehicles report abstract 40 Fuel Economy (Gas Guzzler). Although this is not part of HTF, many groups are interested in the amounts reported.

(1) Earmarked funds abstracts 44 and 106 are normally reported in some combination by sporting goods companies.

(2) It is most unusual for the earmarked abstracts to be reported with any others, such as: BLDF, HTF, AATF, and IWTF.

(3) In the Revenue Reconciliation Act of 1997, Bows and Arrow were separated. Bows remain as Abstract 44. Abstract 102, Arrows—Component Parts, was effective September 30, 1997 to March 31, 2005. Abstract 106, Arrow Shafts, was effective April 1, 2005.

(1) Abstract 64 is reported by users (barge lines) of Inland Waterways.

(2) Normally only abstract 64 is present unless abstract 125 is also required.

(3) The NAIC Code is usually 483000.

(1) Most abstract 51 (Alcohol sold as, but not used as fuel) posts should be abstract 62 and should not be on a Form 720, Quarterly Federal Excise Tax Return.

(2) Secure the Form 720, Quarterly Federal Excise Tax Return, to confirm and correct.

(3) Abstract 51 is a penalty type tax incurred when alcohol claimed as a credit on Form 6478 by the taxpayer is not used to make gasohol.

(1) Abstract 31 is a penalty type tax incurred when brokers sell obligations (bonds) not in registered form.

(2) Most abstract 31 posts should be on another abstract. It could be for the line 29 above or line 30 below. It could also be for a new abstract and the taxpayer listed under “Other Excise Taxes” in error, such as abstract 140.

(3) Secure the Form 720, Quarterly Federal Excise Tax Return, as needed to confirm and correct abstract 31 to the appropriate abstract based on normal research.

(1) The most common error is the posting of abstract 22, telephone tax, as abstract 26, Transportation of Persons by Air.

(2) If the Form 720, Quarterly Federal Excise Tax Return, filer is a telephone company, correct without securing the return. If any doubt, secure the return to confirm.

(3) Application of communications tax to prepaid telephone cards is reported under abstract 22 (telephone tax). The face amount of such card shall be treated as the amount paid for such communications services, that amount shall be treated as paid when the card is transferred by any telecommunications carrier to any person who is not such a carrier. Effective date - applies to amounts paid in calendar months beginning more than 60 days after the date (November 1, 1997) of the enactment of this Act. The enactment date was August 8, 1997.

(4) The tax for long distance telephone charges has been revoked. In 2007, for Tax Year 2006, individuals or corporations could take a deduction for tax paid on long distance phone calls against their Forms 1040, U.S. Individual Income Tax Return, or business type returns.

(1) Abstract 97 is reported by drug manufacturers, producers or importers. There may be increases or decreases as types of vaccines are added or removed from taxable vaccines.

(1) Leaking Underground Storage Tank (LUST) taxes are imposed on sellers and users of fuels.

(1) Abstract 30 is for reporting taxes attributable to premiums paid or credited to an insurer or reinsurer. Includes premiums on casualty insurance, indemnity bonds, life insurance, annuity contracts and reinsurance.

(2) General foreign insurer type filers are:

1. Insurers and reinsurers.

2. Businesses purchasing insurance for their employees that are usually reported once a year on TXPDs YY12 or YY03.

(3) The most common error is abstract 30 input as abstract 31, obligations not in registered form. This is usually caused by a taxpayer recording tax on the wrong line when the Form 720, Quarterly Federal Excise Tax Return, is revised. Correct from abstract 31 to abstract 30 if confirmed to be valid abstract 30. Valid abstract 30 filers can be determined from sources on AQETL by:

1. Name line may provide proof.

2. NAIC Code - Insurance.

3. Prior TXPD postings present for abstract 30.

(4) Refunds in past years have been allowed based on treaties with the United Kingdom, France and Bermuda.

(1) IRC 444, election to retain a fiscal year, is a deposit for estimated taxes due for Form 1065, U.S. Return of Partnership Income and Form 1120-S, U.S. Income Tax Return for an S Corporation.

(1) OSLTF was effective 1–1–90, TXPD 9003 through 1994 and it was reactivated in 2006. Taxes are on petroleum, both domestic and imported oil.

(2) Oil Spill, abstract 18, domestic.

(3) Oil Spill, abstract 21, imported.

(1) Ozone-Depleting Chemicals (ODC) is on the manufacturer, producer or importer. See Exhibit 1.

(2) ODC abstracts are 19 and 98.

(3) Floor Stock taxes are abstract 19 and 98. Abstract 20 is tax on any ODC held for sale or use by anyone other than the manufacturer, producer or importer thereof. Due each 1–1–YYYY, if tax rate has increased on ODC held in inventory at 1–1–YYYY.

(4) Annual floor stock due if:

1. Tax rate has increased on ODC items held in inventory at 12–31–YYYY.

2. New ODC items are included as taxable.

(5) ODC items are reported on Form 6627, Part IV.

(1) Cruise Ship Passenger Tax was effective 1–1–90, TXPD 9003. The tax is for passengers on a commercial ship that has stateroom accommodations for at least 17 passengers and if the trip is for at least one night.

(2) Tax is also imposed on passengers on ships engaged in gambling beyond the three-mile limit. Tax applies only once, at the time the passenger embarks or disembarks in the U.S. Tax is due when trip is fully paid to operator or operator's agent.

(3) Common errors are:

1. Abstract 29 input instead of abstract 31 for Other Excise Tax, obligations aren’t in registered form. In most cases the filer's name indicates it should be abstract 29. This type of error is probably caused because abstract 29 is just above abstract 31 on some Form 720, Quarterly Federal Excise Tax Return, versions.

2. Abstract 27, Use of Air Travel Facilities, is input instead of abstract 29. This type of error is either ISRP input error or taxpayer mistake.

3. Abstract 2X input instead of abstract 29. In most cases the filer's name or NAIC Code will indicate which abstract it should be. If not, requisition return to confirm correct abstract number.

4. In most cases these should be first time Form 720, Quarterly Federal Excise Tax Return, filers. Therefore, if there are no TXPD prior, then this would indicate the tax is probably for abstract 29.

(1) The Affordable Care Act of 2010 established a new Internal Revenue Code section, 5000B that imposes a tax on indoor tanning services sold after June 30, 2010. The Act became law on March 23, 2010. This act created a new excise tax to be imposed on indoor tanning services.

(2) The tax rate is 10% on the amount received for indoor tanning services.

(3) The inception of this excise tax introduced a large volume of new and unfamiliar filers to the Form 720, Quarterly Federal Excise Tax Return. Some of the most common errors have been:

1. Abstract 31, Other Excise Taxes, instead of abstract 140.

2. Abstract 80, Unidentified, instead of abstract 140.

3. Abstract 106, Arrows-Shafts, which is right above abstract 140 on Form 720, Quarterly Federal Excise Tax Return.

(4) Research the AQETL and history, the filer’s name, and the NAIC code. If necessary, requisition the Form 720, Quarterly Federal Excise Tax Return, to confirm abstract 140.

(1) The Health Care and Education Reconciliation Act of 2010 in conjunction with the Patient Protection and Affordable Care Act, Pub. L. No. 111-148, 124 Stat. 119, established a new Internal Revenue Code section 4191 that imposes a tax on certain medical devices. The new excise tax applies to sales of taxable medical devices after December 31, 2012.

(2) The tax rate is 2.3% of the sale price of taxable medical device as defined in section 201(h) of the Federal Food, Drug, and Cosmetic Act (FFDCA), that is intended for humans.

(3) In addition to the tax listed for abstract 136, the taxable medical device sales are also required to be listed on the Form 720, Quarterly Federal Excise Tax Return, and are captured during processing. Item Reference Number 812 is used to adjust this figure. The 812 is an adjustable information field.

(4) A common error is tax processed under abstract 80, Unidentified.

(5) Research the AQETL and history, the filer’s name, and NAIC code, and if necessary requisition the Form 720, Quarterly Federal Excise Tax Return, to confirm abstract 136. When adjusting abstract 136, remember to adjust item reference number 812 appropriately.

(6) The Protecting Americans from Tax Hikes Act of 2015 (PATH Act, P.L. 114-113) includes a two-year moratorium on the medical device excise tax imposed by IRC 4191. P.L. 115-120 extended the moratorium for an additional two years. Thus, the medical device excise tax does not apply to the sale of a taxable medical device by the manufacturer, producer or importer of the device during the period beginning on January 1, 2016 and ending on December 31, 2019.

(1) The Patient Protection and Affordable Care Act (ACA) established the Patient-Centered Outcomes Research Institute (PCORI). The ACA created IRC 9511 to establish a Patient-Centered Outcomes Research Trust Fund (PCORTF). The legislation also created IRCs 4375, 4376, and 4377 that impose fees on issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans to help fund the Patient-Centered Outcomes Research Institute.

(2) The fee is filed annually on Form 720, Quarterly Federal Excise Tax Return, and is processed in the second quarter. The fees for a plan year ending during a calendar year is due by July 31 of the following calendar year.

(3) The fee is $1 per life for plan years ending between October 1, 2012 and September 30, 2013. The fee is $2 per life for plan years ending between October 1, 2013, and September 30, 2014. For subsequent years, the fee is the dollar amount for the previous year plus the percentage increase in the projected per capita amount of the National Health Expenditures released by the Department of Health and Human Services before the beginning of the fiscal year.

(4) For 201306, the Form 720, Quarterly Federal Excise Tax Return, was filed for fees on plan years ending between October 1, 2012 and December 31, 2012. The fee was $1 per life.

(5) For 201406, the Form 720, Quarterly Federal Excise Tax Return, was filed for fees on plan years ending between January 1, 2013 and December 31, 2013. The fee was $1 per life for plan year’s ending January 1, 2013 through September 30, 2013 and $2 per life for plan year’s ending October 1, 2013 through December 31, 2013.

(6) The PCORI tax has two subsections that are captured, the Specified Health Insurance Policies (SHIP) and Applicable Self-Insured Health Plans (ASIHP). The SHIP and ASIHP have an amount and the number of lives that are captured and must be considered for each adjustment. The Data Reference Numbers are 906 for SHIP lives and 907 for ASHIP lives. The Item Reference Numbers are 813 for SHIP amount and 814 for ASIHP amount.

(7) The inception of this excise tax introduced a large volume of new and unfamiliar filers to the Form 720, Quarterly Federal Excise Tax Return. Coupled with the unique and complex nature of the PCORI tax, this generated confusion on the filing requirements and postings.

(8) A common error is the PCORI tax posting to the incorrect tax period.

(1) The North American Industry Classification System (NAICS) may be used to indicate if a taxpayer has correctly identified by abstract number the excise taxes reported for each TXPD. The NAICS Code is a six-digit number.

(2) The code comes from the taxpayer's Form 1120, U.S. Corporation Income Tax Return, or Form 1065, U.S. Return of Partnership Income. Please note that there may be multiple excise taxes reported. (See the Instructions for Form 1120, U.S. Corporation Income Tax Return, for a list of the codes.)

(1) This listing is available using Control-D.

(2) This is both a weekly and monthly report and includes the cycles (YYYYCC) for that week or month. Note that the cycle cutoff may not always match the AQETL.

(3) The following steps should be taken when each report is received:

1. Review the Form 720, Quarterly Federal Excise Tax Return, returns or adjustments or reversals/corrections (MFT 03). Look under column titled "IRS NO." for 2/3-digit abstract number. Confirm that the tax period is correct and that the abstract number and amount appear correct/reasonable. If not, perform appropriate research.

2. Record any errors or necessary adjustments on your current quarter adjustment list. Also note them on the F–720 taxpayer account file on AQETL.

(4) The listing is generated to include all MFT 03 abstract postings for $5,000 or more.

(5) IRC 59A Environmental Taxes reported for MFTs 02 (Form 1120, U.S. Corporation Income Tax Return), 33 (Form 990-C, Farmer's Cooperative Association Income Tax Return) and 34 (Form 990–T, Exempt Organization Business Income Tax Return) are listed at the end of the report.

(1) Use IDRS to complete the following:

1. Determine if TXPD module is on IDRS.

2. Confirm TC 290 posting for abstract corrections.

3. Obtain the IDRS Reject Sequence Number if the Form 720, Quarterly Federal Excise Tax Return, for a certain TXPD is shown as rejected on IDRS. This number will help locate the return in the Error Correction Section. When the return is located, copy it and obtain the amounts by abstract number that are reported on the return. Also, confirm the re-input cycle of the perfected return. This is important if the return was not re-input prior to the end of the current processing quarter being reported for certification.

(2) Use the BMF Reject Register to:

1. Obtain total the Form 720, Quarterly Federal Excise Tax Return, amount.

2. Confirm re-input cycle (YYCC).

(3) SCCF (Service Center Control File) ANMF Data - confirm data reported correctly on ANMF Revenue Receipts Reports.

(4) On-line Service Center Control File (SCCF) Transcripts

1. Access any DLN on the SCCF using IDRS Command Code SCFTR to determine the status of any return transaction.

2. The SCCF is updated daily. If DLN is open on the SCCF, a complete transcript is displayed.

(5) Return location or processing in the SPC

1. Check adjustments, rejects or unpostables.

2. Check taxpayer relations/correspondence.

3. Check technical Form 720, Quarterly Federal Excise Tax Return, examiner of large returns.

4. Check field audit excise group.

(6) Number of Forms 720, Quarterly Federal Excise Tax Return, posted each quarter

1. CFO headquarters receives a quarterly report, using Control-D, that counts the number of Form 720, Quarterly Federal Excise Tax Return, (TC 150) posts during the last processing quarter. It also counts the number of posts (TC 150, 290 and 300) for each IRS number posted during the quarter.

2. The report count totals are for U.S. totals. The counts indicate exactly what was posted during the last quarter. The counts help confirm validity of postings, number of new filers for newly established excise taxes, decrease for expired excise taxes, and changes in volume trends due to tax law changes, economic conditions, etc.

3. The SPC receives a quarterly report listing the number of IRS number posts at ECC. See Form 720, Quarterly Federal Excise Tax Return, IRS Numbers Report Review , in IRM 3.17.41.7.39.

(7) IRS Tax News and other news items that affect reporting

1. Taxpayer goes out of business, merger or bankruptcy.

2. Taxpayer affected by prolonged strike or disaster.

3. New tax, or tax law change or repeal.

(1) A Form 720, Quarterly Federal Excise Tax Return, confirmation request may be in an email or in the form of questions on specific accounts on the AQETL. This request states the Form 720, Quarterly Federal Excise Tax Return, TXPDs that may have posting errors, have not posted timely, or have questionable posts.

(2) The reports analyst must review this request to ensure that no posts requiring correction or confirmation are overlooked.

(3) The purpose of this request is to:

1. Confirm the CFO headquarters review of the Form 720, Quarterly Federal Excise Tax Return, posts reported on the AQETL.

2. Request correction of obvious abstract post errors.

3. Obtain detail abstract data from returns not input or perfected.

4. Obtain the deposits of returns not found.

5. Ensure that the SPC RAs are advised promptly of observations made by the CFO headquarters program analyst.

(4) The report analyst must review any request and take proper action such as:

1. Correct the abstract posting known to be in error.

2. Secure the return to confirm if the post is correct as posted or if in error, to correct the abstract posting.

3. Contact the taxpayer to confirm exactly what excise tax is being reported.

4. Determine the cause of erroneous posts caused by improper input.

(5) The reports analyst must:

1. Record the results of actions taken for each TXPD listed.

2. Relate changes made via responses on the AQETL or by email or phone call to CFO headquarters.

(6) Retain a history sheet for your records to:

1. Follow up on posting of transactions in the next reporting period.

2. Confirm if an account or TXPD has been previously corrected or confirmed.

(1) The reports listed in this section are used to certify amounts for the trust funds. The reports are for: Revenue Receipts (Collections), Net Tax Liabilities (returns and adjustments processed), Credits and Refunds (applicable to the Highway Trust Fund and the Airport and Airway Trust Fund related credits), and monitoring. The monitoring reports are Form 720, Quarterly Federal Excise Tax Return, transactions and tax module extractions.

(2) Revenue receipts for excise taxes are reported by abstract number and amount monthly on the following reports:

1. Report of Excise Tax Collections

2. U.S. Internal Revenue Receipt (NMF SCF–13–41) and ANMF extract

3. Summary Excise Tax Liabilities Treas–92 (BMF)

4. Report of US Internal Revenue Receipts - Form 2290 Collections (Highway Use Tax No. 138)

(3) Gas/oil and other credits claimed on Form 4136, Credit for Federal Tax Paid on Fuels, attached to income tax returns for Form 1040, U.S. Individual Income Tax Return; Form 1120, U.S. Corporation Income Tax Return; Form 1041, U.S. Income Tax Return for Estates and Trusts; 990–C, Farmer’s Cooperative Association Income Tax Return; and Form 990-T, Exempt Organization Business Income Tax Return, claims for refund are reported from each SPC quarterly on P–R–F GAS–01–04.

1. Gasoline, Diesel and Special Fuels and Other Credits Claimed (T-90) for IMF and BMF.

2. Includes Form 720, Quarterly Federal Excise Tax Return, and adjustments.

(4) Refunds for all tax classes including the trust fund excise taxes are reported for each service center by manually combining the refund data generated from ECC, IDRS and manual refunds on the NTRR.

(5) Analysis and monitoring reports are generated from ECC with selected data by EIN, abstract, tax period, MFT and amount on the Million-Dollar BMF Reports Records Listing (weekly and monthly), P/R/F 180–46–11 and 180–48–11.

(1) The AQETL has been configured with new security requirements. These include password complexity requirements, as well as user login restrictions.

(2) When a new user is hired, an Online 5081 (OL5081) request must be prepared to request permission to use the system.

1. The OL5081 must be approved by CFO headquarters before the user is allowed to use the system.

2. When the OL5081 is approved, CFO headquarters assigns a range of EINs for the analyst to review.

3. When an analyst is leaving for an extended length of time, the supervisor must notify CFO headquarters, which will delete the EIN range and reassign them to another analyst.

4. The AQETL system will automatically lock the user’s account if they do not login for 45 days. At that time, CFO headquarters analysts will verify with the reports analyst's manager that the person is still assigned AQETL duties. If they are not, or if they have left the IRS, they will be deleted.

5. The manager will prepare an OL5081 for any user leaving the IRS or being reassigned to a different area to delete the user from the system. In some cases, an OL5081 is automatically generated.

(1) The AQETL lists all Form 720, Quarterly Federal Excise Tax Return, abstract number postings by transaction code within TXPDs for each taxpayer account. The AQETL is programmed to allow review by abstract number or by Taxpayer Identification Number (TIN). The system lists the taxpayer data on the screen in TXPD sequence, transaction code, cycle posted and dollar amount under heading for each abstract present.

(2) Errors are program generated when:

1. A new abstract is present for the first time or was not present in the preceding TXPD. This may indicate an error, or it could be a floor stock tax due periodically.

2. A first-time filer. Match taxpayer name and/or NAICS code with tax reported.

3. A material dollar amount changes for an abstract, meaning a large increase or decrease from the prior TXPD. The change percentage is currently set at 50% to ensure that CFO headquarters is able to review every account with a significant change. This could indicate a dollar amount coded to a wrong abstract, an input error or a trend change.

4. An abstract 80 is unidentified for zero amounts. In this case, ignore the error.

(1) Accounts reporting material dollar amounts for any of the trust funds should be monitored for the Abstract Number Groups shown below for the applicable trust fund:

1. AATF - 26, 27 and 28 Airlines

2. AATF - 13, 14, 69 Non/aviation fuel

3. BLDTF - 36, 37, 38 and 39 Coal mining operations

4. HTF - 33 Truck Manufacturing

5. HTF - 60, 62, 79, 117 and 35. Diesel, and Gasoline Compressed Natural Gas

6. HTF - 79, 104, 108, 109, 112, 113, 117, 118 and 120-124

7. IWTF - 64, inland waterways fuel use and 125, inland waterways kerosene

8. No. 40 - Motor Vehicle Manufacturing

9. No. 51 - Alcohol sold as, but not used as, fuel

10. SFRBTF - boating safety numbers 41, 42, 110, and sports fishing equipment, 114

11. Earmarked Funds Nos. 44 and 106 Recreational items

12. LUSTTF - Gas and Diesel Fuels; 105, 107, 111, 119 LUST on new exempt fuels 2006.

13. OSLTF- 18, 21 Began 199003 Petroleum, reinstated 2006.

14. VICTF- No. 97 Began 198803 Vaccines.

15. ODCT- 19, 20, 98 Began 199003 Chemicals.

16. PCORTF - 133

(2) Non-trust fund taxes that require routine monitoring include:

1. No. 22 Telephone Services

2. No. 30 Foreign Insurers

3. No. 40 Gas Guzzler/Fuel Economy Form 6197

4. No. 29 Cruise Ship Passenger Tax

(1) When you have the original return, prepare the correction using Blocking Series 00, attach the correction information to the original return and return the original return to files.

(2) Examples of source documents:

1. TXMOD

2. Phone log

3. Prior quarter history

4. Correspondence

(3) For corrections, use Blocking Series 15. Input an explanation in the remarks section of the reason for the adjustment. Send any documents to files.

(4) When no correction is necessary: Keep these files for the current and prior FY until GAO has completed that FY audit. After the above period you can shred. Do not hold onto original returns. They must be sent back to files as soon as possible.

(5) If a folder is already set up it will be kept at Cincinnati Campus Centralized Excise Operations.

(1) The weekly and monthly Million-Dollar BMF Reports Records listing are reviewed on Control-D.

(2) Disposal guidelines for manually prepared individual Form 720, Quarterly Federal Excise Tax Return, taxpayer monitoring records are as follows:

1. Dispose of records one year or older at 12–31–YYYY.

2. Otherwise retain records for as long as the reports analyst deems it proper using Records Distribution Guidelines.

(1) Credits for nontaxable use of various products may be taken on the Form 720, Quarterly Federal Excise Tax Return, Schedule C as CRN.

(2) Negative TC 150 posts will appear on the following reports:

1. Million-Dollar BMF Reports Records for Form 720, Quarterly Federal Excise Tax Return, MFT 03 abstracts.

2. Automated Quarterly Excise Tax Listing for Form 720, Quarterly Federal Excise Tax Return, accounts.

3. IDRS or ECC Transcripts for Form 720, Quarterly Federal Excise Tax Return, accounts.

(3) The taxpayer claims a credit by:

1. Filing a Form 8849, Claim for Refund of Excise Taxes. The purpose is to claim a refund due to an overstatement or erroneous reporting of a tax on a prior quarterly Form 720, Quarterly Federal Excise Tax Return, filed. This Form 8849, Claim for Refund of Excise Taxes, is processed as a TC 29X.

2. Filing an amended Form 720, Quarterly Federal Excise Tax Return, that reduces the amount of a specific tax previously reported. This amended return is processed as a TC 29X.

3. Claiming a credit on the Line 4 section, entitled "Claims" of the Form 720, Quarterly Federal Excise Tax Return. The details for the claims taken are on Schedule C and are transcribed and are listed on the AQETL.

4. Filing a Form 4136, Credit for Federal Tax Paid on Fuels, with an individual or corporate tax return.

(4) Some of the reasons for the over-reporting of taxes for prior quarters are:

1. New legislation that changes prior tax rates and effective dates of the original tax laws. The effect of the change sometimes is retroactive to a specific date, or to the effective date of the original public law being amended by typical tax law changes.

2. Repeal of a tax.

3. Reduction in the rate of the tax on all items subject to that tax rate.

4. Reduction in some of the articles subject to that tax rate.

5. Exemption for some of the articles subject to the tax.

6. Exemption of certain industry uses or purposes from the tax.

7. Tax imposed is shifted from one type of taxpayer to another.

8. Temporary reduction in the rate of the tax, usually for one year.

9. The tax law expires, or it is not reinstated as expected.

10. Taxpayer's customer confirms tax exempt status and is therefore entitled to a refund of taxes previously paid. For example, schools and local governments are entitled to the refund.

11. Tax treaty with another country that allows credits or refunds of taxes already paid for prior periods. For example, the United Kingdom Tax Treaty allows abstract 30 credits or refunds that are retroactive to 1–1–75.

(5) Some of the reasons attributable to the taxpayer are:

1. Decreasing tax rates not followed by the taxpayer but discovered later.

2. Using an outdated Form 720, Quarterly Federal Excise Tax Return. Therefore, taxes that may have expired, been repealed, or were reduced are over reported.

3. Taxpayer’s misunderstanding or misinterpretation of IRS regulations.

4. Erroneous reporting in a prior FY with the posting reclassification or abatement of the tax posting in a subsequent FY.

(6) Some of the reasons attributable to the IRS are:

1. Invalid abstract entered for corrections or adjustments via TC 29X or 30X.

2. Erroneous correction or adjustment made that is the opposite sign of what was intended.

3. Incorrect abstract number or amount input to correct or adjust the tax period.

(1) The Form 720, Quarterly Federal Excise Tax Return, IRS Numbers, report is printed or loaded on Control-D. The purpose of this report is to provide the SPC RA with a count of the related trust funds and other excise taxes reported each quarter on the Form 720, Quarterly Federal Excise Tax Return.

1. The count report is generated monthly. There are three cumulative monthly reports for each quarter. The reports are extracted one month later in order to capture late return counts. For example, the December quarter will be run on YYYY04, March YYYY17/18 and so on. Review and monitor the reports monthly. Do a cursory review of the first monthly report, as this represents only one-third of a quarter. Do a closer review of the second monthly, as this represents two-thirds of a quarter. Perform a thorough review of the third monthly report. Post to the monitoring work sheets. Save the third monthly, which is the full quarter copy. Prior reports may then be destroyed.

2. Each quarter, these counts will provide a measuring tool to indicate the reasonableness of the data being reported and posted at the master file.

3. These counts will also indicate trends and reporting patterns for all Forms 720, Quarterly Federal Excise Tax Return, excise taxes.

4. These counts should disclose both taxpayer filing and pipeline processing problems, such as timeliness and erroneous postings.

(2) The report is generated from the BMF Form 720, Quarterly Federal Excise Tax Return, master file at ECC. It includes abstract postings from Form 720, Quarterly Federal Excise Tax Return, transaction codes (TC) 150, 290, 300 and 370. It does not count abstract postings from TC 291, other 29X or 301, or other 30X TCs. There is one count made for each abstract present with a positive value. Abstracts present with a negative (reversal) or zero value are not counted. The report consists of counts for both valid and invalid abstract numbers as follows:

1. The report lists in numerical order the valid abstracts followed with a brief description of the excise tax. The valid abstracts are those currently assigned to a specific tax and currently programmed.

2. The report lists the valid and invalid or unprogrammed abstracts.

(3) The report is non-cumulative and counts only those TCs posting during the processing quarter. There is no program timeliness check for the Form 720, Quarterly Federal Excise Tax Return, TXPD currently due. The counts for the abstract numbers represent abstract postings of each of the excise taxes from:

1. Quarterly Forms 720, Quarterly Federal Excise Tax Return, (TC 150) due during the current processing quarter.

2. Unpostable prior quarter Forms 720, Quarterly Federal Excise Tax Return, (TC 150) perfected this processing quarter.

3. Delinquent filed prior quarter Forms 720, Quarterly Federal Excise Tax Return, (TC 150) due during the preceding processing quarter.

4. Early filed Forms 720, Quarterly Federal Excise Tax Return, (TC 150) not yet due for the next tax liability and processing quarter.

5. Adjustment TCs 290 and 300 input and posted during this processing quarter.

6. Unpostable TCs 290 and 300 input in prior quarters but perfected during this processing quarter.

7. TCs 370, Account Transfer-in beginning 4–1–90.

(4) The report count extractions are based on the TC posting cycle YYYYCC. The cycles included in each report are printed in the header of the report. The report's inclusive cycles may not always match with the SC quarterly posting cycles.

(5) The SPC RA should maintain a postings spreadsheet and update it quarterly. This postings spreadsheet should be set up as follows:

1. Descriptive headers across the top. The first column should list the IRS numbers in numerical sequence. There are currently over 40 valid IRS numbers reported on the report.

2. The second column's contents are optional. It could contain a brief description of the tax if desired. However, it is not necessary since the description is on the quarterly computer report.

3. The subsequent columns should be used to record the counts for each processing quarter. The header or title should contain both the liability tax period YYYYMM and the MM–DD–YYYY of the processing quarter just ended.

(6) Compare the counts for each quarter with the counts for the prior quarter for consistency and reasonableness. Also compare each quarter with the same quarter one year ago in order to make seasonal comparisons. Look for possible trends or patterns in the counts being reported and posted.

(7) Possible explanations for variations or changes in the counts reported are:

1. Erroneous abstracting by the taxpayer or incorrect abstracting by the IRS in the current quarter, with the corrections input and posting in a subsequent quarter.

2. Repeal or expiration of an excise tax.

3. Implementation of a new excise tax.

4. Tax law change that reduced or increased the types of taxpayers liable for a specific tax.

5. ADP dead cycles at the end of year processing.

6. ECC report cycles do not match the SC's cutoff cycles.

7. Seasonal patterns. For example, sporting equipment for Earmarked Funds, abstracts 41, 42, 44 and 102.

(8) Reconcile or logically associate the count for each abstract with the dollar amount reported on the TREAS–92 report for each quarter. Verify when there are counts present for an abstract and dollars. The reverse is also true. The only exception will be the complete reversal of dollars from a prior quarter. However, the original abstract posts will not be reversed on the report. Allow for late posting returns, returns that cannot be posted, and any correction or adjustment TCs input.

(9) Document abstract quarterly count trends. Monitor the counts closely to determine the causes of the increase or decrease for each quarter. Monitor those abstracts that tend to have seasonal patterns. Most of the abstracts dedicated to specific trust funds may follow the same trend or seasonal pattern. Trend changes may be the result of:

1. Changes in tax laws affecting different types of taxpayers.

2. New taxpayers in a growing economy.

3. Decreasing taxpayers in a recessional economy.

4. Deregulation of an industry such as the airlines.

5. Business mergers or acquisitions.

6. Taxpayer going out of that type of business.

(10) Monitor very closely the first few quarters for reporting a new excise tax, including:

1. New types of taxpayers who did not file Forms 720.

2. Confusion as to which taxpayer is liable for the tax.

(11) Invalid IRS number posts should be posted to a separate recap sheet. Maintain it in a format similar to the invalid posts spreadsheets. That is, record the two-digit invalid abstract number in the left column and the counts in the next columns headed up for each processing quarter ended MM–DD–YYYY.

(12) Consult CFO headquarters for additional information.

(13) Save these quarterly reports and the manually posted spreadsheets for future reference.

(14) Make footnotes on the computer reports or spreadsheets to explain discrepancies or variances in the counts.

1. Make separate footnotes for each IRS Number for each processing quarter.

2. Record the MM–DD–YYYY of the notation. This date is helpful in the event future information is obtained that reverses or reconfirms the original findings.

(15) Flag any report and the posting spreadsheet for follow-up confirmation of potential changes expected on the next quarter's report. For example:

1. If the current quarter's count for certain IRS numbers are below normal without an obvious explanation, then expect the next quarter's count to be unusually high for those same abstracts.

2. If the current quarter's count is very low and the next quarter's count is very high, then add the counts together for the two quarters to obtain an average. Record on the report the average counts for both quarters and write "Averaged" beside the revised count.

(1) The reports analyst must be authorized to use IDRS to properly monitor, research, order returns, confirm transaction (TC) postings for TC 150, 29X, and 30X, and to make certain abstract corrections related to the Form 720, Quarterly Federal Excise Tax Return, TXPDs.

(2) The reports analyst must have access to an IDRS terminal.

(3) The reports analyst must be aware of the IRS security policies and procedures, including UNAX and Rules of Behavior.

(4) The reports analyst or someone designated in the accounting function must be authorized to use at least the following IDRS command codes:

1. ACTON, SUMRY, and TXMOD to research and confirm postings.

2. ESTAB to requisition returns.

3. MFTRA, MFTRD, and ACTRA to research and get print outs.

4. UPCAS to obtain Form 720, Quarterly Federal Excise Tax Return, EINs to locate Forms 720, Quarterly Federal Excise Tax Return, that are in the Unpostables Unit at the end of each quarter.

5. ADJ54 and REQ54 to make abstract posting corrections on the Form 720, Quarterly Federal Excise Tax Return, TXPDs.

6. SCFTR to research the SCCF to determine the status of the Form 720, Quarterly Federal Excise Tax Return, transactions.

7. ENMOD to research name and filing requirements.

8. BMFOL (R) and (T) to research BMF accounts.

9. MFREQ to bring account down from BMFOL when there is no TXMOD current.

10. RECON to show posted data when BMFOL is used.

11. Electronic Return Database Command Codes when F720 Returns are filed electronically.

(5) There may be other useful command codes but those listed above should be authorized in the reports analysts’ IDRS profile.

(6) Use IDRS to:

1. Respond promptly to telephone or written requests for information from CFO headquarters.

2. Requisition Form 720, Quarterly Federal Excise Tax Returns or other related documents.

3. Confirm status of accounts that have not posted timely.

4. Obtain the total deposits for TXPDs due that have not posted timely.

5. Confirm posting cycle statuses, such as pending. This information is needed when a TC is input in the final cycle(s) of each processing quarter and at each fiscal year end.

6. Confirm taxpayer's filing requirements for Form 720, Quarterly Federal Excise Tax Return.

7. Confirm when a new Form 720, Quarterly Federal Excise Tax Return, filer was first liable or was first reporting Form 720, Quarterly Federal Excise Tax Return, excise taxes.

8. Confirm duplicate accounts for the same taxpayer.

9. Confirm taxpayer name change.

10. Confirm if a taxpayer changed from one EIN and entity to another if cross referenced EINs are present.

11. Confirm final Form 720, Quarterly Federal Excise Tax Return, filing requirement status.

(7) IDRS will also be used to make or confirm adjustments to:

1. Input correction transactions TC 290 to reclassify IRS Number (abstract) postings that were determined to be input in error.

2. Confirm if an account has already been corrected by another party before inputting a correcting transaction.

3. Confirm if a reclassification transaction to change abstract number 80 (Unidentified posting) to the proper abstract number has already been made by the adjustments or taxpayer service branches.

4. Reverse erroneous or duplicate adjustment transactions.

(1) The IRS is required, either by public law, memoranda of understanding or direct requests from Treasury, to certify the taxes reported for the trust funds listed below. There are two general classifications and methods of preparing certifications for Treasury.

1. Collections by formal letter.

2. Refunds and credits claimed by formal letter.

(2) Collections are reported in formal certification letters each quarter for the following trust funds:

1. Airport and Airway Trust Fund (AATF)

2. Sport Fishing Boat Restoration Fund (SFBRTF)

3. Black Lung Disability Trust Fund (BLDF)

4. Highway Trust Fund (HTF - Highway) for Form 720, Quarterly Federal Excise Tax Return, and Form 2290 net collection

5. Highway Trust Fund - Mass Transit Account (HTF - Mass)

6. Inland Waterways Trust Fund (IWTF)

7. Leaking Underground Storage Tank TF (LUST TF)

8. Vaccine Injury Compensation Trust Fund (VICTF)

9. Oil Spill Liability Trust Fund (OSLTF)

10. Patient-Centered Outcomes Research (PCORTF)

(3) Refunds and credits are certified by formal certification letter each quarter for AATF only.

(4) Net tax liabilities are reported by Treasury General Account Transfers quarterly for the Earmarked Funds, also known as Recreational Excise Taxes.

(5) The ECC and SPC source reports and tax forms for reporting collections and net tax liabilities are:

1. Report of Excise Tax Collections

2. BMF US Internal Revenue Receipts (Form 2290)

3. AQETL (Form 720, Quarterly Federal Excise Tax Return) for verifying IRS numbers

4. SCF–13–41 Automated Non-Master File Revenue Receipts, (ANMF) (Form 720, Quarterly Federal Excise Tax Return and Form 2290)

(6) The SPC source reports and the claim forms for claiming the refunds and credits are:

1. T–90

2. NTRR

(7) The figures for the trust fund certification detail amounts for collections are published in the:

1. Quarterly Excise Tax News Releases in the SOI Bulletin, Publication 1136

2. IRS Data Book, Internal Revenue Collections By Sources

(1) The purpose of this section is to describe the structure of the Form 720, Quarterly Federal Excise Tax Return, Business Master File (BMF) account. An account is composed of one or more tax modules. Each tax module represents a tax liability quarter period. A quarterly tax period (TXPD) return is posted as a tax module on the BMF as Master File Tax code (MFT) 03 for Form 720, Quarterly Federal Excise Tax Return. Each TXPD tax module is composed of one original return, a TC 150, or a TC 370, Account Transfer-in. In addition, a TXPD may have ADP adjustments, a TC 29X, or a TC30X, audit adjustments.

(2) Form 720, Quarterly Federal Excise Tax Return, account transactions:

1. An account is established by a taxpayer who has a TIN/EIN and files a Form 720, Quarterly Federal Excise Tax Return, for the first time.

2. Each quarterly TXPD is posted as a tax module on the taxpayer's account. Each TXPD is coded as YYYYMM. "YYYY" are the year digits, 2019 for 2019 returns, and "MM" is the ending month for the quarter due, 03 for March, 06 for June, 09 for September, and 12 for December. Original returns are posted as Transaction Code (TC) 150.

3. Account transfer-ins are posted as TC 370 with Doc Code 51. TC 370 may also establish a tax module if one is not already established by a TC 150.

4. Adjustment transactions, TC 29X and 30X cannot post unless there has been a tax module for that applicable TXPD established by a TC 150 or 370 for that TXPD being adjusted.

5. Only one original return (TC 150) may post to a TXPD tax module. The second or duplicate return TC 150 will go unposted and is returned to the SC to be nullified. If it is determined to be a valid item, it is re-input as an adjustment TC 290.

(3) Form 720, Quarterly Federal Excise Tax Return, account:

1. Only one account per taxpayer TIN/EIN.

2. Taxpayer may have two accounts, each with different EINs. The account name may also be different.

3. Contains the taxpayer's entity information and location code.

(4) Form 720, Quarterly Federal Excise Tax Return, tax module:

1. Tax Module represents one liability tax period (TXPD) identified as YYYYMM for year and ending month of tax liability quarter due.

2. Must be one or more TXPDs to establish an account.

3. Only one TXPD per liability quarter.

4. Maximum of four TXPDs per calendar year.

(5) Form 720, Quarterly Federal Excise Tax Return, valid transaction codes (TC):

1. TC 150, Original return

2. TC 370, Account transfer-in

3. TC 29X, Adjustment

4. TC 30X, Audit adjustment

(6) Form 720, Quarterly Federal Excise Tax Return, original returns, TC 150:

1. Required to establish an account or tax module.

2. Only one TC 150 allowed per tax module.

(7) Deposits, TC 610, 650 and 670 (subsequent payment).

(1) Form 720, Quarterly Federal Excise Tax Return, filing and processing period:

1. Taxpayers are required to file Form 720, Quarterly Federal Excise Tax Return, returns quarterly.

2. The quarterly return is due by the end of the first month following the end of the tax liability quarter.

3. Some taxpayers make biweekly Federal Tax Deposits (FTD) during the tax liability quarter, unless exempted from FTDs based on the tax law.

4. Some taxpayers are required to make deposits via the Electronic Federal Tax Payment System (EFTPS).

(2) Form 720, Quarterly Federal Excise Tax Return, liability tax period (TXPD):

1. Each Form 720, Quarterly Federal Excise Tax Return, represents the taxpayer's tax liability for the three months making up the quarter for which the return is due, which is known as the liability tax period. For example, the tax liability for January 1 through March 31, 20YY, is posted as TXPD 20YY03. The return would be filed and processed in the processing quarter ended June 30, 20YY.

2. The four quarterly TXPDs due for 20YY would be: March 20YY03, June 20YY06, September 20YY09, and December 20YY12.

3. The March 20YY03 return would be filed and processed during the June processing quarter ended June 30, 20YY, and so on for the other TXPDs.

4. The processing quarter is normally the quarter immediately following each liability TXPD due.

(3) Form 720, Quarterly Federal Excise Tax Return, timely filing due dates:

1. The Form 720, Quarterly Federal Excise Tax Return is due the last day of the month after the end of the TXPD quarter. TXPD 20YY03 due for quarter ended March 31 would be due April 30.

(4) Form 720, Quarterly Federal Excise Tax Return, return filing and adjustment/claim filing instructions:

1. Instructions are on Form 720, Quarterly Federal Excise Tax Return.

2. Detailed instructions are in Publication 510, Excise Taxes.

3. Amended returns, Form 720, Quarterly Federal Excise Tax Return, may be filed to correct prior returns filed. Amended returns are processed as TC 290 or TC 291.

4. Form 8849, Claim for Refund of Excise Taxes, are filed if an over payment is made and no taxes are owed for succeeding quarters. Claims are input as TC 291.

(5) Processing quarter:

1. Represents the quarter or quarters in which the return or adjustment transaction is filed, perfected and posted at the Master File.

2. Normally it is the quarter during which the return is due.

(6) Federal Tax Deposit (FTD) or Electronic Federal Tax Payment System (EFTPS) requirements:

1. Normally required every two weeks, or 15 days if over $2,000 due.

2. Some excise taxes are exempt. For example, filers of Inland Waterways Use Tax, IRS No. 64, are exempt. Tax for No. 64 is normally paid when the return is filed.

(7) TXPDs in each Fiscal Year Ending (FYE) 9–30–YYYY reports:

1. IRS’s fiscal year begins on October 1 and ends the following September 30. The TXPDs filed and processed during FYE 9–30–2019 are TXPDs 201809, 201812, 201903, and 201906.

2. The TREAS–92 Summary of Excise Tax Liabilities is a fiscal year cumulative report. It includes postings for the above TXPDs plus prior TXPDs.

3. The AQETL contains individual posts and includes totals for each tax period by abstract.

4. The Million-Dollar BMF Records report is a non-cumulative and generated each week and month, including posts for that week and month only.

(1) This section lists the general posting rules applicable to Form 720, Quarterly Federal Excise Tax Return, accounts. The information presented is to be used as background information to have a better insight and understanding for reviewing Form 720, Quarterly Federal Excise Tax Return, transaction posts on the AQETL. This information will aid in the recognition of posting errors or questionable items that should be confirmed and then corrected if necessary. Information presented includes in part:

1. General rules and requirements for posting various transactions.

2. Special examples to aid in understanding the different types of taxpayer accounts and the excise taxes reported.

(2) Delinquent return posts:

1. Post on the account when filed and processed.

2. Post the delinquent TXPD in the proper TXPD sequence.

3. The posting cycle (YYYYCC) and the DLN Julian date (JJJ) indicate that the return was not received and or processed timely.

(3) Duplicate returns, TC 150:

1. Duplicate returns post to the taxpayer's account with an "A" freeze, and Notice 36 pulls the duplicate return to be worked in the Ogden SPC.

2. Duplicate TC 150 transaction will go unpostable and be returned to the SC to be perfected or nullified.

3. Duplicate return posts occur if taxpayer filed two separate returns inadvertently.

(4) Duplicate transactions codes, TC 29X, 30X, and 370:

1. These duplicate transactions post to the tax module TXPD if there is a TC 150 present.

2. These TCs may generate a refund or balance due condition.

(5) Return perfection:

1. Invalid transactions are sent to Error Resolution for perfection.

2. If the transaction is invalid, it will be rejected.

3. Transactions may un-post at the Masterfile and have to be corrected or re-input.

(6) Erroneous return posts:

1. Original TC 150 posts cannot be deleted from the account.

2. Erroneous TC 150 amounts and abstracts must be reversed with TC 291 and re-input correctly, if a valid item.

(7) Erroneous adjustment posts, TC 29X and 30X:

1. Posting cannot be deleted.

2. Original posting must either be reversed in full and re-input or adjusted for the net difference to correct the transaction.

(8) Final returns posts, TC 150:

1. Filer indicates on the return that it is a "Final return."

2. Be aware that some TXPDs indicate "FINAL" in error.

(9) Missing/unposted TXPDs:

1. TXPDs are posted in sequence on the BMF.

2. AQETL shows the TXPDs in sequence.

3. The total tax liability due can usually be determined by adding the sum of any deposits made for that TXPD. If no deposits are present, then it indicates that there may not be any tax liability for that TXPD.

(10) Reasons for missing/unposted return TXPDs, TC 150:

1. No return filed by taxpayer.

2. Return not received by IRS.

3. Return received by IRS was misplaced.

4. Return has not been processed for input to ISRP.

5. Return in Error Correction.

6. Return sent to Unpostables.

7. Return perfected for posting at ECC in the next posting cycle (YYYYCC).

(11) Adjustment transactions, TC 29X:

1. Assessments, TC 290.

2. Reversals or abatements, TC 291.

3. Movement from one abstract to another.

(12) Audit adjustments, TC 30X:

1. Assessments, TC 300

2. Reversals or abatements, TC 301

(1) Form 720, Quarterly Federal Excise Tax Return, filers may claim credits for excise taxes paid for various reasons.

1. Each credit listed on Form 720, Quarterly Federal Excise Tax Return, Schedule C, has claim requirements. Some require supporting documentation to be submitted while others allow them to maintain it in their records.

2. Form 720, Quarterly Federal Excise Tax Return, Schedule C, lists CRNs that are normally allowed credits.

3. The Schedule C is transcribed so the IRS can determine the true tax liability and the tax credits.

4. Schedule C credits are reviewed by revenue agents to ensure the claim requirements are met.

5. Any overpayment shown on Line 11 can be applied to the next return or refunded.

(2) A credit claimed is related to the IRS number for which the tax was originally paid and reported, and not necessarily the tax due for which the credit is being used in lieu of a payment, by applying the credit as a payment/offset against tax due by the claimant filer.

1. Visualize the filer's business activity to better understand how and why a credit is logically allowed.

2. Some abstracts, in the normal course of business activity, will have CRNs allowed as adjustments to taxes paid. Some of the most common abstracts are No. 26, 33, and 62.

(3) Airline service type filer (ABS. 26–28, and 69):

1. An airline service type filer that is liable for only one type of tax may occasionally have a credit for another type of tax. An airline filer is only liable for the ticket tax, No. 26, and/or departure tax, No. 27, and the air freight tax No. 28, but is not liable for aviation fuel, No. 69. This filer would be allowed to buy aviation fuel tax free at his or her home base.

2. In contrast, a filer who is liable for the aviation fuel, No. 69 tax, is not liable for the Nos. 26, 27 and 28.

3. Therefore, a filer liable for Nos. 26–28, who had to buy aviation fuel No. 69 while away from his or her home base, is allowed to claim the CRN for tax paid as a credit on their F–720.

(4) Ozone Depleting Chemicals (ODC) (Abs 19):

1. ODC users may claim credit for portion of ODC in product exported.

2. ODC filers normally allowed ODC export credits are auto manufacturers.

(1) Maximum number of abstracts allowed per return or transaction:

1. The limit is 24.

2. Certain filers reporting both petroleum and chemical related taxes may report taxes affecting multiple trust funds. For example, oil, fuel and chemical abstracts as well as floorstocks and LUST.

3. The normal number of abstracts and CRNs increase when there are line four credits present.

(2) IRS number sequence posting on the tax module:

1. IRS numbers appear in the sequence they were input on ISRP.

2. IRS number (No.) sequence is usually the same as on the return for TC 150.

3. Adjustment transaction abstracts are normally in a logical sequence based on the input adjustment request record or sorted by IDRS into ascending sequence.

4. When zero is written on the return, it is transcribed for each abstract with a zero.

(1) Zero tax liability returns:

1. Filer did not have a tax liability for that quarter but filed a return to avoid the account going into TDI status.

2. When a taxpayer marks zero, it is understood that they are stating that their liability is zero for that abstract.

3. Posts to normal IRS No. due if marked with a zero.

4. IRS No. 80, unidentified is coded for input if filer did not mark/check a number on the return.

(1) IRC 59A, Environmental Taxes, are reported on Schedule J of Form 1120, U.S. Corporation Income Tax Return, MFT 02; Form 990–C, Farmer’s Cooperative Association Income Tax Return; MFT 33 and Form 990–T, Exempt Organization Business Income Tax Return, MFT 34.

(1) ANMF data is reported on NMF Report of U.S. Internal Revenue Receipts, SCF-13–41.

(2) Confirm all MFT 03 amounts for $5,000 or more to ensure the abstracts are correct.

(3) If abstracting is incorrect, have data corrected for the next monthly cumulative report.

(4) If the error is uncorrected at the end of a quarter or fiscal year, call CFO headquarters and report the dollar amounts and the abstract numbers being corrected.

(5) Special emphasis should be placed on those excise taxes dedicated to the trust funds.

(1) Review all TCs 370 listed on the AQETL.

(2) Do not make any corrections unless:

1. Doc Code is 51.

2. Blocking Series is 100–199. These represent manual assessments and should be included in T–92.

(3) All other TC 370 accounts have already been included in the T–92 Report.

(1) Abstract 99, effective 1–1–92, for use by AIMS when its system will not accept the original abstract because of programming restrictions. Reasons original abstracts may not be accepted for input are:

1. Expired tax.

2. Repealed tax.

3. Unprogrammed or other systemic reasons.

(2) Abstracts input by AIMS will be primarily on TCs 300 and 301; however, they could also be on TC 150 and 370.

(3) AIMS abstract 99 TCs should be related primarily to TXPDs 199112 and prior.

(4) AIMS TCs may have District Office number in DLN, instead of SC identity number.

(5) Any abstract 99 present on a TC with a SC identity number in DLN may be an input error:

1. Code and Edit.

2. ISRP.

3. IDRS input by Adjustments or other areas.

(6) Abstract 99 posts should be reviewed and considered for correction in the same manner as abstract 80 unidentified postings.

(7) To determine reclassification of abstract 99 posts:

1. Compare to original return and all prior adjustments.

2. Use process of elimination of abstracts if the amount does not obviously match up to a prior posting.

(8) If abstract 99 correction is unclear:

1. Requisition audit document; however, it may be too difficult and time-consuming to get the source document.

2. Contact revenue agent and ask if agent's records/memory indicates the tax being adjusted.

3. Contact CFO headquarters if unable to resolve and a decision will be made.

4. Leave as is, especially if a non-trust fund tax or the change might cause more data distortion.

(9) If the amount is under $50,000, and the issue is unclear, forgo research efforts. CFO headquarters will advise if any actions are required.

(10) IDRS was reprogrammed to allow corrections using ADJ54 for all abstracts.

(1) Special expedite procedures are to be used to assure returns of $1 million or more post in the current quarter and included in the correct certification.

(2) Make a case on all returns of $1 million or more.

(3) Million-dollar returns are identified by:

1. Top 100 listing provided by IRS CFO headquarters.

2. Code and Edit function forwards copies to SPC RA.

3. Weekly Million-Dollar Report.

4. AM Transcripts (internal generated notice of deposits without a return posted).

(1) Pull Black Lung Trust Fund (Abstracts 36, 37, 38 and 39) returns that total $100,000 or more off the Weekly Million-Dollar Report on Control-D.

(2) Then follow the Million-Dollar Procedures in section 3.17.41.8.52.

(1) See IRM 3.17.63, Redesigned Revenue Accounting Control System, for a list of RRACS generated reports.

(2) Reports are obtained using Control-D web for viewing and printing.