4.19.23. FUTA Control

(1) Purpose: This manual contains information on Business Master File (BMF) accounts with discrepancy issues related to the Federal Unemployment Tax Act (FUTA), to provide clerical procedures regarding unemployment taxes.

(2) Audience: The primary users of this IRM are the FUTA clerical staff in the Small Business Self Employed site.

(3) Policy Owner: Director, Exam Field and Campus Policy.

(4) Program Owner: Small Business/Self Employed (SB/SE) BMF Document Matching.

(5) Primary Stakeholder: Small Business/Self Employed (SB/SE)

(6) Program Goals: Program goals for this type of work can be found in IRM 1.4.23, FUTA Manager and Coordinator Guide.

(1) A statute of limitation is a time period established by law to review, analyze and resolve taxpayer and/or IRS related issues. The Internal Revenue Code (IRC) requires the Internal Revenue Service (IRS) to assess, refund, credit, and collect taxes within specific time limits. These limits are known as the Statutes of Limitations. When they expire, the IRS can no longer assess additional tax, allow a claim for refund by the taxpayer, or take collection action. The determination of Statute expiration differs for Assessment, Refund, and Collection.

(2) Failure to protect an assessment statute can result in disciplinary action against the responsible employee. The responsible area/employee is identified as the area/employee who had the case, when the case was within 90 days of the ASED and either took no action to protect the statute or allowed the statute to expire (barred statute).

(3) In the FUTA Clerical team, a Statute imminent case is identified by the Assessment Statute Expiration Date (ASED) which is three years from the due date of the return, or three years after the return was actually filed, whichever is later.

(4) The Integrated Automation Technology (IAT) SBSE DM (Document Matching) Batcher Tool will assist you in identifying a statute tax year case. The tool will not batch the case but will print out an error listing with the comment ASED EXPIRING in the additional issues section.

(5) To manually batch these cases, use the following procedures:

1. Input CX,TYRECONXXXX,A,TPLR.

2. Control the case to the 10 digit IDRS number of the designated management official with the correct IRS received date.

(1) FUTA receipts will be responses to:

1. Letter 4010-C, FUTA Certification-Proposed Tax Increase to FUTA Tax.

2. Letter 4011-C, FUTA Certification-Proposed Tax Decrease to FUTA Tax.

   Note: You may also receive the Spanish versions of either Letter 4010-SP, FUTA Certification-Proposed Tax Increase to FUTA Tax Spanish Version or Letter 4011-SP, FUTA Certification-Proposed Tax Decrease to FUTA Tax Spanish Version.

3. Adjustment notices.

4. Notices of intent to levy.

5. Letter 380-C, State Certification Tax Adjustment Explained Form 940/ Schedule H or Letter 380-SP, State Certification Tax Adjustment Explained Form 940/ Schedule H Letter 4011-SP, Spanish Version.

6. Letter 3786-C, FUTA Certification No Change to Tax Liability or Letter 3786-SP, FUTA Certification No Change to Tax Liability Spanish Version.

7. Balance due notices.

(2) Further research may be needed to identify and process these cases.

(3) Correspondence may be received by mail, fax and/or referrals.

(4) FUTA cases can be defined as Reply, Recon , Prior Recon , or Undeliverable.

1. A Reply is any case without a date on FCP.

2. A Recon is any case with a closing date on FCP.

3. A Prior Recon is any case no longer on FCP.

4. An Undeliverable is mail returned as not delivered to the taxpayer.

(5) Form 3870 Recon and TAS cases will also be received as receipts, both are now controlled on FCP and IDRS. Further instruction for processing Form 3870 Recon and TAS cases are detailed below see IRM 4.19.23.3.2.4.1 and IRM 4.19.23.9.

(1) At times, states will send loose State Certifications (Form 940C) for cases not yet in the FCP database. These certifications are to be treated as loose certifications only. Research FCP to ensure a previous state cert 940C has not been received. To research on FCP:

1. Click on EDIT.

2. Select Clerk then Loose Certs Form 940C from the drop down menu.

3. Enter the TIN number in XX-XXXXXXX format in the EIN field then Enter If FCP found your 940C cert it will display in the field, verify the tax period and company name.

4. If you cannot locate the 940C by the EIN, enter the Tax period and enter to search for the Loose 940C.

5. If you still cannot locate the 940C cert under the TIN or tax year, enter the Company Name, and enter, to search for the 940C information.

6. If certification is not found then file the 940C’s as loose certifications.

(2) Inputting a New Form 940-C follow the steps below:

1. Click on Edit then select Clerk then Loose Certs Form 940C.

2. Select New to enter the new 940C information.

3. The Manage Loose Certs screen will come up: Enter the EIN, Tax Year, Company Name, contact name, contact Phone and any remarks.

4. Click the Save button and a message will display the 940C was added and saved. The new cert will display on the top of the loose cert field with an assigned number under the ID field. Enter this number on the 940C you just added.

5. If you have more loose certs to input you repeat the steps above, when you have completed all your certs select the Close button.

6. File the Form 940-C in the FUTA staging area using the assigned number.

(1) This section is to be used for all FUTA letters returned undeliverable. Undeliverable mail received from the mail room can be identified one of two ways:

1. Unopened original FUTA correspondence.

2. Opened original FUTA correspondence with the envelope affixed to the back.

(2) All undeliverable mail is to be reviewed within 7 calendar days of the IRS received date. This action will prevent the FCP System from closing the case as a "No Reply" before a new letter can be issued with the new address.

(3) Check the envelope for a yellow Post Office (P.O.) forwarding sticker.

(4) When there is no P.O. sticker research IDRS CC’s ENMOD, INOLES, and NAMEE for a new/better address by using the IAT Research Address tool.

(5) If CC ENMOD shows an SSN that is responsible for the entity, use CC INOLES for the SSN to research for a new/better address. If CC ENMOD shows a Mr. and Mrs. listed, address the envelope only to the taxpayer that owns the SSN found on ENMOD for disclosure purposes.

(6) Undeliverable batches will be numbered as follows:

(7) Retrieve cases previously sorted (no more than 25 cases) of the same program and IRS received date then assign the next available batch number from the appropriate log book.

(8) Follow procedures below to update IDRS control:

1. Access CC TXMOD.

2. Access CC ACTON.

3. Ensure the previous "M" control is closed.

4. Create a new "A" Status control labeled UNDL and reassign it to the number designated for the program you are working.

Example: CX,21UNDL0001,A,UNDL
*(Assignee employee number),MMDDYYYY(IRS receive date)

(9) Create a cover sheet listing each EIN/TIN of the batch, IRS Received Date, and Batch Number. See Exhibit 4.19.23-1 for a sample cover sheet and place the cover sheet on top of the batch.

(10) File completed batch in FUTA inventory undeliverable staging area in batch number order or give directly to a tax examiner.

(1) Clerical function is responsible for all outgoing mail. This mail may consist of internal mail, misdirected mail, or external mail.

(2) Internal mail is routed to other areas using a Form 3210, Document Transmittal. The receiving area will acknowledge the receipt of the cases by sending a signed copy of the Form 3210 back to the originating area. These forms must be maintained in a log in the FUTA unit.

(3) At times misdirected mail may be received, and not related to the FUTA program. This mail from other areas must be rejected back to the referring site.

(4) When the tax examiners complete their daily work it is filed in brown folders. Follow local procedures for routing these folders to the Files Function.

(1) Discovered remittance is a response and/or correspondence with an original form of payment attached such as a personal check, money order or cashier’s check. Also, a loose check(s) discovered in an envelope or attached to a blank piece of paper.

(2) If any of the items listed in (1) are discovered, both the Form 3244, Payment Posting Voucher and Form 4287, Record of Discovered Remittance must be completed.

(3) Two copies of Form 3244, Payment Posting Voucher must be completed for each discovered remittance and contain entries in the following fields:

• TIN (SSN/EIN)

• Form number/MFT

• Tax period

• Transaction/Received date (IRS received date)

• Taxpayer name, address and Zip code

• Transaction Data, enter remittance amount next to code 640 (Advanced Payment of Deficiency)

• Remarks (the team manager’s phone number and Mail Stop)

• Prepared by

(4) Two copies of Form 4287, Record of Discovered Remittance must be completed to log all discovered remittances. The following fields must have entries:

• Stop number

• Unit

• Telephone Number

• Today’s Date-in MM/DD/YYYY format

• Type of document- (for example, Form 940, Form 1040 Schedule H)

• Tax Period-(entire period XXXXXX)

• Type of remit

• Amount of remit-(total money amount including comma and decimal point)

• Received Date-in MM/DD/YYYY format

• Name (Taxpayer’s entire name)

• TIN-(SSN/EIN)

• Discoverer-Name of person who discovered the remittance and their supervisor’s name

(5) If remittance is found attached to a case while working in the office, take the following steps:

1. Attach one copy (original) to the remittance and give it to the Manager/Lead Tax Examiner who will give it to the Clerical Manager/Lead Clerk to place in a locked box (lock box).

2. Attach the second copy of the Form 3244 to the response.

(6) If the remittance is found attached to a case while teleworking, immediately take the following steps:

1. Notify your manager immediately.

2. Email completed Forms 3244 and 4287 to your Manager and Coordinator/Technical Advisor.

3. Place the remittance in a sealed envelope and store in a secure place (locked desk or cabinet).

4. Document remittance details (i.e; leave a case note or history item).

5. Make an appointment to bring Discovered Remittance into the operation and deliver to the technical Manager/Lead tax examiner within 2 business days.

6. Technical Manager/Lead Tax examiner will accept the discovered remittance, print Form 4287 and Form 3244.

7. Manager/Lead tax Examiner will deliver the discovered remittance to the Clerical Manager/Lead Clerk.

(7) IRS CHECKS- Returned IRS refund checks are handled differently than regular discovered remittance. If an IRS refund check is found, take it to the team Manager/Lead Tax Examiner to be routed to the Refund Inquiry Unit.

(8) VOIDED CHECKS-If the response has a ”VOIDED” personal check attached, remove the check from the response and attach it to the Installment Agreement (IA) request. Route the “VOIDED” check with the Installment Agreement to Collections.

(1) At times taxpayers or internal IRS areas may call to inquire about a FUTA issue. The clerical team will be responsible for retrieving and recording the information left on voice mail.

(2) On a telephone message slip record the following information:

1. Date and time of call

2. Name of individual calling and company name

3. Phone number and extension

4. Best time to reach caller

5. EIN and tax period

6. A brief explanation of issue

7. The name of the clerk retrieving the message

(3) When the case has an open "A" control on IDRS place the message slip in the tax examiner's designated mail box.

(4) When the case is not controlled give the message slip to your lead for further research.

(1) The Taxpayer Bill of Rights (TBOR) lists rights that already existed in the tax code, putting them in simple language and grouping them into 10 fundamental rights. Employees are responsible for being familiar with and acting in accord with taxpayer rights. See IRC 7803(a)(3), Execution of Duties in Accord with Taxpayer Rights. For additional information about TBOR, see Taxpayer Bill of Rights .

(2) The Taxpayer Bill of Rights (TBOR), adopted by IRS in June 2014, outlines the ten fundamental rights of taxpayers. Pub 1, Your Rights as a Taxpayer, was updated to include the modified language from the Taxpayer Bill of Rights.

(3) Under the Right to Quality Service, taxpayers have the right to expect a fair and just tax system which provides taxpayers with the opportunity to have their facts and circumstances considered when it might affect their underlying liabilities, ability to pay or ability to provide information timely. Taxpayers have the right to receive assistance from the Taxpayer Advocate Service (TAS) if they are experiencing financial difficulty or if the IRS has not resolved their tax issues properly and timely through normal channels.

(4) Refer to Taxpayer Advocate when the contact meets the TAS criteria see IRM 13.1.7.3, Taxpayer Advocate (TAS) Case Criteria, or when Form 911, Request for Taxpayer Advocate Assistance (and application for Taxpayer Assistance Order), is attached and steps cannot be taken to resolve the taxpayer’s issue the same day. See IRM 13.1.7.5, Same Day Resolution by Operations. When making a TAS referral, use Form 911, and forward to TAS in accordance with your local procedures.

(1) Below is an example of the Batch Cover Sheet used by the IAT SBSE DM Batcher tool. The header will show the IRS Received date, Batch number and the Case Type.