3.12.16. Corporate Income Tax Returns

(1) Error Resolution tax examiners resolve field errors, validity errors, section errors, math errors, consistency errors on Form 1120-FSC, U.S. Income Tax Return of a Foreign Sales Corporation, Form 1120-ND, Return for Nuclear Decommissioning Funds and Certain Related Persons, and Form 1120-SF, U.S. Income Tax Return for Settlement Funds (Under Section 468B), using paper error registers.

(2) Employees use the paper register (error register) and the return to correct these conditions and when necessary use Integrated Data Retrieval System (IDRS) to research.

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

• IRC 6201(a)

• IRC 6213(b)

(2) All Policy Statements for Submission Processing are in IRM 1.2.1, Servicewide Policies and Authorities, Servicewide Policy Statements.

(1) Submission Processing, Return Processing Branch (RPB), BMF Code and Edit (C&E) and Error Resolution System (ERS) Section follows the content in this IRM. The BMF ERS analyst make changes as needed and revise content once a year effective January 1st of each calendar year.

(2) The BMF Code and Edit and Error Resolution System Section manager makes sure the IRM is timely submitted to Publishing each year.

(3) The Campus Director monitors operational performance for the SP campus.

(4) The Operations Manager monitors operational performance for their operation.

(5) The Team Manager/Lead monitors performance and ensures the employees have the tools to perform their duties.

(6) The Team Employees follow the instructions in this IRM and keep updated on the IRM procedures.

(1) Program Goals: Enter corrections on the paper error registers for any errors falling out through Service Center Replacement System (SCRS) in Error Resolution.

(2) Program Reports: System control reports are on the Control-D WebAccess (CTDWA) and a general listing of the reports is in IRM 3.12.38, Error Resolution, BMF General Instructions.

(3) Program Effectiveness: The program goals are measured by using the following tools:

• Embedded Quality Submission Processing (EQSP)

• Balanced Measures

• Managerial Reviews

(4) Annual Review: The processes outlined in this IRM are reviewed annually during IRM Review and Clearance to ensure accuracy and promote consistent tax administration.

(1) Quality Review conducts a statistical valid sample size review of completed work to ensure IRM guidelines are followed.

(1) The following table defines terms that appear throughout this IRM section:Terms and Definition

(2) See Exhibit 3.12.16-5, Acronyms and Abbreviations, for a list of commonly used acronyms and abbreviations that appear throughout this IRM section.

(1) The following table lists related resources.Related Resources

(1) The text is organized to find correction procedures quickly and have all necessary procedures in one place. The text is organized as follows:

• General information on the overall concepts and procedures of the error resolution process.

• Math error and manual computation criteria and procedural instructions for correcting each section and each field on Form 1120-FSC, Form 1120-ND, and Form 1120-SF error register.

• Exhibits are displayed on the last pages of the Internal Revenue Manual (IRM) with transcription lines and other frequently used codes with explanations.

(2) This text gives sufficient information to correct most error conditions. It may be necessary to refer at times to the instructions in IRM 3.11.16, Corporate Income Tax Returns. If there is a discrepancy between the instructions in IRM 3.11.16 and those in IRM 3.12.16, contact your Headquarters Analyst and continue to follow the instructions in IRM 3.12.16. If there is a conflict between IRM 3.12.16 and another IRM or Job Aid, IRM 3.12.16 takes precedence until the conflict is resolved.

(1) Submit IRM deviations in writing following instructions from IRM 1.11.2.2.3, When Procedures Deviate from the IRM, and elevate through proper channels for executive approval.

(1) The Taxpayer Advocate Service is an independent organization within the Internal Revenue Service (IRS), led by the National Taxpayer Advocate, that helps taxpayers and protects taxpayer rights. TAS offers free help to taxpayers when a tax problem is causing a financial difficulty, when they’ve tried and been unable to resolve their issue with the IRS, or when they believe an IRS system, process, or procedure just isn't working as it should. TAS strives to ensure that every taxpayer is treated fairly and knows and understands their rights under the Taxpayer Bill of Rights. TAS has at least one taxpayer advocate office located in every state, the District of Columbia, and Puerto Rico.

(2) TAS uses Form 12412, Operations Assistance Request (OAR), to start the OAR process of referring a case to the Taxpayer Services (TS) Division, to affect the resolution of the taxpayer’s problem. For more information, refer to IRM 13.1.19, Taxpayer Advocate Service, Taxpayer Advocate Case Procedures, Advocating With Operations Assistance Requests (OARs).

(3) Refer taxpayers to TAS when the contact meets TAS criteria or when Form 911, Request for Taxpayer Advocate Service 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 21.1.3.18 , Taxpayer Advocate Service (TAS) Guidelines.

(4) The definition of "same day resolution" is within 24 hours. The following two situations meet the definition of "same day resolution":

• The issue can be resolved within 24 hours.

• The IRS takes steps within 24 hours to resolve the taxpayer’s issue.

(5) When making a TAS referral, use Form 911, and forward to TAS following your local procedures.

(6) For more information, see IRM 13.1.7, Taxpayer Advocate Service (TAS) Case Criteria and IRM 13.1.7.4 , Exceptions to Taxpayer Advocate Service Criteria, for information on cases that TAS will no longer accept.

(1) BMF ID Theft is increasing. If a case is found with attachments or correspondence showing the taxpayer is a victim of "ID Theft" (IDT):

1. Enter Action Code 3 on the error register and reject the record.

2. Attach Form 4227, Intra-SC Reject or Routing Slip, or other proper routing slip with the notation "ID THEFT."

3. Give the entire case to the manager/lead.

(2) The manager/lead will expedite the case to the Planning and Analysis (P&A) staff for referral to one of the Submission Processing (SP) BMF ID Theft liaisons. The taxpayer must show that they are a victim of "ID Theft"; do not send cases that are subject to Criminal Investigation (CI), Examination (Exam) or Fraud review.

(1) Businesses use frivolous arguments to express dissatisfaction with the substance, form or administration of the tax laws by trying to avoid or reduce tax liabilities illegally. See IRM 25.25.10, Frivolous Return Program, and Exhibit 3.12.16-6, Potential Frivolous Arguments for Examination Review, for a list of recognized frivolous arguments made by businesses.

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

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

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

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

(1) The Internal Revenue Service (IRS) Restructuring and Reform Act of 1998 (RRA98), Section 3705(a) provides identification requirements for all IRS employees working on tax-related matters.

(2) All IRS employees who communicate by telephone, face-to-face, or any other method of correspondence with taxpayers or their representatives on tax-related matters must give (at a minimum) the following information:

1. Telephone Contact - Their title (e.g., Mr., Mrs., Ms., Miss), last name, and badge identification (ID Card) number. Toll-free employees may also give their location for identification purposes. Treat faxes to taxpayers on tax-related matters as correspondence and include the required information.

2. Face-to-Face Contact - Their title (e.g., Mr., Mrs., Ms., Miss), give as appropriate during the conversation, their last name and badge identification (ID Card) number.

3. Correspondence (sent to the taxpayer and authorized representatives) - A telephone number that taxpayers can call for answers to questions. In addition, manually generated correspondence must have the employee's title (e.g., Mr., Mrs., Ms., Miss), last name, Integrated Data Retrieval System (IDRS) number, and letter system number, which are systemically generated by IDRS. Treat faxes to taxpayers on tax-related matters as correspondence and include the required information.

4. Correspondex letters - Specific employee name and telephone number if the employee initiating the correspondence is in the best position to respond to any questions the taxpayer may have or if the taxpayer is being asked to give more case-related information. If the taxpayer does not need to contact a specific employee, the correspondence needs only an IRS telephone number and standard signature.

(3) When a taxpayer requests to speak with a specific employee who previously worked their inquiry or request, or complains about the level of service previously given, make every attempt to resolve the taxpayer's inquiry. If unable to resolve the issue, refer the inquiry using established procedures to the manager.

(4) Secretaries, receptionists, or other people who answer the telephone in functional offices need to identify themselves. They should provide their badge identification (ID Card) number only if they are answering telephones which are routinely used to give tax or account information.

(5) It is not necessary to repeat the badge identification (ID Card) number on a subsequent contact, when the nature of an employee's work involves multiple contacts with the same taxpayer and the employee has given the taxpayer (either by telephone or in-person) their badge identification (ID Card) number on the first contact.

(1) Taxpayers may send tax return information via fax as part of return perfection even when submitting a signature. In circumstances where contact with the taxpayer was made and documented, faxed signatures are acceptable.

(2) Contact with the taxpayer may be by telephone or correspondence. Follow local procedures to decide which method of contact to use.

(3) Select the fax paragraph on the Form 3696, Correspondence Action Sheet, or other approved Correspondence Action Sheet to inform the taxpayer of the fax options.

(4) Use the following resources to ensure you are speaking with the taxpayer or authorized representative before disclosing any tax information:

• IRM 21.1.3.2.3, Required Taxpayer Authentication

• IRM 21.1.3.2.4, Additional Taxpayer Authentication

(5) Before leaving any messages on a taxpayer's answering machine, review the following:

• IRM 10.5.1.6.7.2, Answering Machine or Voicemail

• IRM 10.8.1, Information Technology (IT) Security, Policy and Guidance

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

(2) CII returns are shown with "CII Image - Do not correspond for Signature" stamped below the signature line or "CII" annotated on the front of the return.

(3) Follow the instructions below for processing CII returns. Correspondence Imaging Inventory (CII) Returns

(1) Document Perfection identifies refunds and initiates requests for manual refunds.

(2) Expeditious processing of refund returns is critical if the 45-day period is about to expire. Refund Returns

(1) Taxpayer Advocate Service (TAS) Manual Refunds - Any return hand walked by a Taxpayer Services (TS) SP liaison for Taxpayer Advocate Service (TAS) as a manual refund should be processed by a lead tax examiner or designated tax examiner using the following procedures:

1. CCC "O" should be edited on the return and entered in Field 01-F (CCC) after the manual refund has been issued.

2. Enter Reserve Code "1" (if applicable) in Field 03-E ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. The Reserve Code "1" is valid on correction only.

3. Delete CCC "Y". Continue processing the return.

(2) Correspondence - If the return requires correspondence for missing or incomplete information, then do the following:

1. Enter Action Code 3 on the error register and reject the record.

2. Prepare Form 3696, Correspondence Action Sheet, or other approved Correspondence Action Sheet and request all information that is missing or incomplete.

3. Input TC 599 with Closing Code (cc) 017 on IDRS using Command Code FRM49.

4. Edit an action trail "L118C Sent" (or similar language) in the lower left corner going vertically up the side of the return.

5. Inform the TS SP liaison of all information that is being requested.

6. Give the return back to the TS SP liaison.

7. The TS SP liaison will contact the Taxpayer Advocate to obtain the required information needed to complete the processing of the return.

(3) Other Suspense Action - If the return requires other suspense action, then do the following:

1. Initiate the suspense action according to procedures.

2. Inform the TS SP liaison the reason of the action taken.

3. Give the return back to the TS SP liaison.

4. The TS SP liaison will contact the Taxpayer Advocate, who in turn will take the necessary action to complete the processing of the return.

(4) Assigning Taxpayer Notice Codes (TPNCs)/Math Error - When a math error is identified, do the following:

1. Assign the applicable TPNC according to procedures.

2. After all TPNCs have been assigned, inform the TS SP liaison of the TPNCs issued.

3. Suspend according to procedures and then give the return to the TS SP liaison.

4. The TS SP liaison will contact the Taxpayer Advocate, who in turn will take the necessary action to complete the processing of the return.

(5) When Balance Due/Overpayment Math Error generates do the following:

1. Make a copy of the error register and highlight the Computer-Generated Refund Amount (underprint).

2. Attach the copy to the front of the return with the entity part of the return visible.

3. Enter the amount the taxpayer claimed as the amount they requested to be refunded back into Field 07-I.

(6) If Balance Due/Overpayment Math Error loops because the taxpayer made a math error when computing their refund, then do the following:

1. Make a copy of the error register and highlight the Computer-Generated Refund Amount (underprint).

2. Attach the copy to the front of the return with the entity part of the return visible.

3. Enter Action Code 1 and assign the correct TPNC.

4. The first time a document in error prints on an error register it is called a "raw" register.

5. Tax examiners will make several corrections to the paper register (error register), trying to correct as many errors as possible. The document and register are then sent back through the Integrated Submission and Remittance Processing (ISRP) system to be transcribed. If the correction resolves the error, the information is transmitted to the Enterprise Computing Center-Martinsburg (ECC-MTB).

6. If all the errors do not clear, the system will generate a subsequent register (known as a "loop" register) showing the errors that are remaining. The title line will tell you if the register is a raw register or a "loop" register and how many times (if any) the register has looped. The term "loop" means the register continues to reappear on the next correction cycle until every validity check has been satisfied.

(7) Once return processing is complete, give the return, copy of the error register and Form 12412, Operations Assistance Request (OAR), to the TS SP liaison.

(8) Rejects Suspense - Manual refunds that are hand walked by a TS SP liaison that have been suspended should be processed as follows:

1. Follow the specific instruction given by the TS SP liaison in regard to correspondence issues and the assignment of the TPNCs.

2. Refer to applicable paragraphs above.

(1) Some SP Campuses have developed local use "Desk Procedures". Such procedures are only to be used:

1. To supplement existing Headquarters procedures

2. To expand SP Campus Error Resolution procedures by incorporating material from other IRMs, Automated Data Processing (ADP) handbooks, etc.

3. For local routing procedures; and

4. Not limited to the examples above

(2) A signed approval must be on file from the responsible manager on all SP Campus Desk Procedures.

(3) Managers must periodically review all existing local information and procedural issuances.

1. Make sure conformance with Headquarters procedures,

2. Make necessary updates to the Desk Procedures, and

3. Secure necessary approvals.

(4) There are some BMF ERS Job Aids available at Servicewide Electronic Research Program (SERP): Servicewide Electronic Research Program (SERP)

• Integrated Data Retrieval System (IDRS) Command Codes Job Aid can be found at: Integrated Data Retrieval System (IDRS) Command Codes Job Aid

• TPNC 90 Math Error Codes Job Aid can be found on Servicewide Electronic Research Program (SERP) at TPNC 90 Math Error Codes Job Aid

• TPNC 90 Literals - Copy and Paste Job Aid (non-programmed TPNC 90 literals that Notice Review copies and pastes into notices) can be found on Servicewide Electronic Research Program (SERP) at TPNC 90 Literals - Copy and Paste Job Aid.

(5) Immediately notify the Headquarters Tax Analyst of any processing problems that cause a work stoppage.

(1) If the taxpayer writes a question or request for help on the return itself, make a photocopy of the question/request and the taxpayer's Employer Identification Number (EIN), name and address. Route this information to the correct function. Perfection of Attachments

(1) An "in-care-of" name can be identified by the words "in-care-of" or the symbols "c/o" or "%" (percent). Correct "in-care-of" names by researching Integrated Data Retrieval System (IDRS) using Command Code (CC) INOLES.

(2) Make sure the "in-care-of" name is above the street address. Procedures for "In-Care-Of"

1. Overlay CC ENMOD with CC ENREQ and transmit (Page Up key).

   Note: CC BNCHG will display.

2. Caution: If CC ENMOD is not present, displays "THE MODULE YOU HAVE REQUESTED IS FOUND AT THE FOLLOWING CAMPUS(S); XXX@ xx," or the ENMOD name control does not match the name control on the return, see the CC MFREQ instructions below.

3. Position the cursor at "CARE-OF-NAME" by tabbing over.

4. Enter the "c/o" name from the return making sure the % (percent) sign is in the first position followed by a space.

5. TAB to "REMARKS" and enter "PER DOC" and transmit (Page Up key). "REQUEST COMPLETED" will display.

6. Delete % from Field 01-B (Name Control) and enter the correct name control in Field 01-B (Name Control).

(3) CC MFREQ Instructions
Enter: MFREQC00-1234567
00 000000 XXXX

1. Enter the name control on CC INOLES in place of the 4 Xs.

2. After "REQUEST COMPLETED" displays, overlay CC MFREQ with CC ENMOD and transmit (Page Up key) to return to the "c/o" name change function.

   Note: Addresses on extensions should NEVER be changed.

(1) Criminal Investigation (CI) investigates potential criminal violations of the Internal Revenue Code (IRC) and related financial crimes. Criminal violations of the IRC include willful attempts to evade or defeat the income tax. Criminal tax violations also include the willful failure to collect or pay over tax and false claims for refunds based on bogus return information.

(2) If CI has stamped the return, do not send for further CI action.

(3) For returns with refund claims ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, do the following:

(4) Because of the repetitive nature of the ERS/Rejects function, ERS/Rejects Tax Examining Technicians often recognize income tax return data that is outside of the norm for data found on similar returns for each income tax return type. If ERS/Rejects finds return characteristics not meeting Audit Code or Exam referral criteria it deems suspicious, CI is available to review the referral.

(5) If a suspicious return is found, and there is no sign Code and Edit (C&E) made a copy and sent to CI Referral, then, do the following:

1. Make a copy of the first two pages of the return along with any page of the return that appears suspicious.

2. Attach Form 4227, Intra-SC Reject or Routing Slip, or other proper routing slip to the copy.

3. Route the copy to Ogden, Mail Stop 9001, Criminal Investigation (CI).

4. Edit an action trail "Copy to CI", or "CI Referral", or similar language in the lower left corner going vertically up the side of the return.

5. Continue processing the return.

(6) If the return fits other criteria (for example, Frivolous Argument), take proper action.

(1) The primary goal in identifying tax returns for examination is to promote the highest degree of voluntary compliance. Examination gives support and helps Submission Processing (SP) with any questionable return found during processing. Exam has many programs and tolerance criteria already found in several IRM sections. SP can refer any questionable return to Exam, unless prohibited by instructions currently found in several IRMs.

(1) IAT gives tools to the IRS employees that simplify research, reduce keystrokes and increase the accuracy of regular work processes. When used with IRS systems, it eliminates repetitive typing and helps in making precise decisions. IAT tools improve efficiency, productivity and quality by performing some functions automatically. Through more complex programming, they are designed to reduce fallout to other areas.

(2) Managers will ensure employees understand the use of IAT and will verify that employees have access to all the tools needed for their duties. They will ensure that all employees receive training on the use of IAT.

(3) See the IAT website at Integrated Automation Technologies (IAT) for a complete list of available tools and User Guides. A few of the tools available are:

• Address Change

• Auto MFREQ

• CC Prints

• Credit Transfer

• Manual Refund

• Route It Out

(1) The Customer Account Data Engine (CADE) 2 Program Office in Headquarters is charged with the primary goal of implementing a single, modernized programming solution that gives daily processing of taxpayer accounts.

(2) The CADE 2 solution is comprised of several components, to modernize the IRS to a daily processing environment with several Transition States.

(3) The Business Master File (BMF) campus cycles are:

1. Campus Cycle: Thursday - Wednesday

2. Master File Processing: Friday - Thursday

3. Notice Review: Saturday - Monday (8+ days)

4. Unpostables: New available Tuesday; Closing Tuesday

(4) BMF transaction posting times are:

1. Transactions will be viewable using Corporate Files Online (CFOL) command codes on Saturday following the weekly Master Files processing run on Thursday.

2. Transactions will be viewable as posted transactions using Integrated Data Retrieval System (IDRS) command codes on Monday, following the weekly Master File processing run on Thursday.

Note: Implementation of CADE 2 accelerated weekly IDRS analysis. Previously, transactions such as this would have been pending on IDRS and not shown in the CFOL command code displays.

(5) Transaction posting dates show a format of YYYYCCDD. YYYY is the year. CC is the posting cycle. Individual Master File (IMF) transactions values for DD are:

• 01 = Friday

• 02 = Monday

• 03 = Tuesday

• 04 = Wednesday

• 05 = Thursday

(1) Below are letters by Headquarters for Submission Processing Campus use in corresponding for items in this IRM. It is expected that tax examiners or their supervisors (or delegates) will have access to and be familiar with the Submission Processing Campus Correspondex for selection of correct letters.

1. Letter 86C, Referring Taxpayer Inquiry/Forms to Another Office - Letter referring taxpayer inquiry and forms to another office.

2. Letter 118C, Corporate Return Incomplete for Processing: Form 1120, Form 1120 Series, Form 1120-S - Letter requesting missing schedules or documents.

3. Letter 319C, Return Covers Other Than 12-Month Accounting Period - Letter advising taxpayer that the IRS cannot process return because it shows an improper tax period, or a period of more than 12 months, or a period less than 12 months without an explanation.

4. Letter 1382C, Penalty Removal Request Incomplete - Letter requesting taxpayer to resubmit request for penalty relief after receiving notice of penalty assessment.

5. Letter 3463C, Missing Information Request to Process Business Returns - Letter requesting missing information to process business returns.

6. Letter 3833C, Tax Return Adjustment Explained (BMF) - Letter explaining adjustment made on business returns.

7. Letter 3875C, Missing or Incorrect EIN on Return - BMF/EPMF - Letter requesting missing or incorrect EIN on business returns.

(2) When corresponding, edit an action trail "118C Sent" (or similar language) in the lower left corner going vertically up the side of the return.

(1) For any return received within the specified accounting period which cannot be processed by the Program Completion Date (PCD) as shown in IRM 3.30.123, Processing Timeliness: Cycles, Criteria, and Critical Dates, a Transaction Code (TC) 599 with Closing Code (cc) 018 must be input on Integrated Data Retrieval System (IDRS) using Command Code FRM49. See IRM 3.30.123.2.4, Acceptable Inventory and Aged Criteria for Submission Processing Databases, for more information. This includes block deletes, nullified unpostables and rejects suspense/correction. Input of TC 599 with cc 018 does not need to be completed until three weeks before delinquency checks. However, checks can begin as soon as three weeks after the return's PCD.

(2) Paper registers must have the fact of filing (TC 599) input manually to prevent erroneous notices. Automatic generation of a TC 599 is done only by the Error Resolution System (ERS).

(3) Whenever a return or payment must be withdrawn from the workflow, immediate consideration must be given to the possibility that erroneous balance due or return delinquency notices may be issued. This includes block deletes, nullified unpostables, and rejects suspense/correction.

(4) If notices would be sent erroneously, Integrated Data Retrieval System (IDRS) action must be input to the correct account by the first person identifying any of the following conditions:

1. If the return is more than ten weeks past the due date, input TC 599 with Closing Code (cc) 018 on IDRS using Command Code FRM49.

2. Any subsequent payment transaction (Document (Doc) Code 017, 018, 019) requires input of Command Code STAUP for six cycles.

   Note: STAUP is an IDRS Command Code used to delay issuance of service center notices.

3. Annotate the document with "TC 599 cc 018" or "STAUP 6" (or similar language) in the upper left margin of the return.

   Note: If the document has already been annotated, no further action is required.

(5) A Transaction Code (TC) 599 is not necessary when:

1. An Error Resolutions System (ERS) Action Code is entered. A fact of filing (TC 599) is automatically generated on IDRS to prevent delinquency notice issuance; therefore, a TC 599 is not necessary.

2. Returns processed through Integrated Submission and Remittance Processing (ISRP). The payments have already posted on IDRS as a TC 610 (payment received with return) and this satisfies the BMF delinquency check.

   Note: Integrated Submission and Remittance Processing (ISRP) replaced the previous Distributed Input System (DIS) and Residual Remittance Processing System (RRPS).

3. Returns processed through a Collections Function will show a TC 59X in the middle of the left margin of the return.

(1) It is important to leave a legible "Working Trail" (or "Action Trail") using blue ink for those who may work with the return later.

(2) Write all Taxpayer Notice Codes (TPNCs) 90 on the front of the return in the upper left corner (or use Form 12648, Error Correction 90 TPNC). See IRM 3.12.16.3.4.1, Taxpayer Notice Codes (TPNCs), and IRM 3.12.16.4.17, Field 01-M, Taxpayer Notice Code (TPNC), for more information.

(3) If corresponding with a non-suspense letter, "X" and write the corrected money amounts to the left of each original point(s) of error. Write money amounts in dollars only or dollars and cents, as applicable. Arrowing is allowed for money amounts when there are no intervening entries between the arrow and the line to which the money is to be entered.

(4) Leave a working trail on the return when changes are made to the following items:

• Employer Identification Number (EIN)

• Tax Period

• Received Date

• Computer Condition Code (CCC)

• Correspondence Received Date (CRD)

(5) When working Reject re-inputs, circle out any previous Action Codes shown on the front of the return, if no longer applicable.

(6) When working Rejects, write "Voided" with the date above the DLN in red, when voiding a return.

(1) If one of the following returns are mailed between August 28, 2020, and October 31, 2025, and accept a digital signature.

• Form 1120-FSC

• Form 1120-ND

• Form 1120-SF

(1) There are several types of errors which cause a record to print on the error register.

• Field errors

• Section errors

• Math errors

• Consistency errors

(2) Field errors are shown on the error register by an asterisk printed to the left of the Alpha Field Designator (AFD) in error. This occurs when a field does not have required data or when the contents of the field does not meet the requirements for that field (failed a validity check). See Figure 3.12.16-1, Field Error.

(3) Missing section errors are identified by a (*) single asterisk printed to the left of the section number. A missing section error occurs when a section is missing that the computer identifies as necessary for the correct processing of the return. See Figure 3.12.16-2, Section Error.

1. If the required data or section was not transcribed, enter the data with Action Code 6. If the data cannot be found by checking the return or researching, show the return is unprocessable by entering Action Code 3.

2. Do not try to correct a missing section error by trying to delete the section with Action Code 4. There is no section present (it is missing) and the computer will cause the register to "loop."

(4) Extraneous errors are a type of section error identified by a single pound sign (#) printed to the left of the section number. An extraneous section is one the computer identifies as not necessary for the complete processing of the return (unnecessary or invalid section). To correct an extraneous section error, do the following:

1. Examine the return and attachments and determine if the section is needed.

2. Delete any unnecessary sections with Action Code 4; or,

3. Enter another section with Action Code 5; or,

4. Correct the section with Action Code 6.

(5) Terminus section errors are a type of section error identified by two asterisks (**) printed to the left of the section number. A terminus section is a section that does not fit the prescribed requirements for the given section. See Figure 3.12.16-3, Terminus Error. Several things cause Terminus section errors:

1. Erroneous size of a field or the entire section

2. Non-numeric character in a numeric field

3. Improper formatting of the section

(6) To correct a terminus section error, do the following:

1. Check that all necessary sections are present. If not, enter the missing sections with Action Code 5 or correct the terminus sections with Action Code 6.

2. Re-enter any field in the terminus section with Action Code 6 if the data is correct as it appears in the section.

3. Delete the section with Action Code 4 if the terminus section is blank and no data is required.

(7) Integrated Submission and Remittance Processing (ISRP) section errors are a type of section error identified by a pound sign (#) and an error number printed to the left of the section number. An ISRP section error occurs after ISRP enters the data on the return into the system, the computer performs an automatic check, called a System Edit Run. If an error is detected, the computer prints a pound sign (#) and an error number to the left of the section number, identifying the type of error detected. An explanation of each error number follows.

1. #0 - Normal.

2. #1 - Split screen transmission - The Key Verifier tried to change the check digits, the Key Verifier changed four or more digits of the Taxpayer Identification Number (TIN), or the Original Entry operator (ISRP operator) entered a required section as "missing."

3. #2 - A mixed condition exists, caused by back to back returns with the same data.

4. #3 - Invalid section ending point.

5. #4 - Invalid field length.

6. #5 - A section was entered twice or entered out of sequence by ISRP.

(8) All fields of an ISRP section error must be examined when this condition exists. For example, if Section 01 of a return is coded, then examine the tax data base section for error to ensure the return data is for the taxpayer whose name control is in Section 01.

(9) Even though one or more sections of a record are coded, the validity and consistency checks necessary for the record are made for all sections.

1. If the record is correct as it appears on the error register, then use Action Code 7 to send the record to Good Tape.

(10) Corrective action for fields in error must be taken as instructed in the applicable chapter of IRM 3.12.16.

(11) Math Errors are shown by the presence of an underprint amount on the error register under the transcribed amount. A math error occurs when the taxpayer gives incorrect information or there is an editing or transcription causing a computed field to be out of balance. See Figure 3.12.16-5, Math Error.

1. To correct a math error, compare all entries leading to the underprinted field with the return and correct all transcription errors, editing errors, coding and transfer errors on both the return and the error register.

2. Total Tax Field is computer verified and underprinted only after Total Income and Total Deductions are within tolerance. Therefore, Total Tax may appear valid when either Total Income or Total Deductions are not within tolerance.

3. After making all possible corrections to the error register and examining the return for manual computation requirements, assign the applicable Taxpayer Notice Code (TPNC).

   Note: The term "loop" means the register continues to reappear on the next correction cycle until every validity check has been satisfied.

4. TPNCs can only be assigned after every validity check has been satisfied. See IRM 3.12.16.3.4.1, Taxpayer Notice Codes (TPNCs).

(12) Consistency errors (Relationship errors) involve more than one field on the error register. The error can happen if the input information does not match or is inconsistent with other fields on the error register. An asterisk prints before the involved fields and should be worked together with all involved fields.

1. To correct a consistency error, check all fields marked with an asterisk for coding errors and transcription errors by comparing the data on the register with the related entry on the return.

2. Enter Action Code 6 on the error register to the left of the corresponding section number and correct the field on the error register to agree with the return.

(1) Action Codes are entered on the error register to alert the computer to the type of correction being tried. The table below lists the Action Codes and describes when each Action Code can be used. Action Codes

(1) When a Computer Condition Code (CCC) is not present, and is required, it must be entered in the dotted part of the income section, Page 1 (Lines 1-11).

(2) A maximum of ten codes can be entered, as required.

(1) A math error will occur when the taxpayer gives incorrect information (or there is a coding error or transcription error) in any of the following fields:

• Tax Period (Field 01-D)

• Penalty and Interest Code (Field 03-D)

(2) Take the following action during the preliminary review process: Math Error Preliminary Review

(3) Prepare Letter 3833C, Tax Return Adjustment Explained (BMF), (or other correct letter) to notify the taxpayer of errors or adjustments to the return when a TPNC will not be sent.

(4) Prepare Letter 3833C (or other correct letter) when:

1. An adjustment is made to income and deductions which affects the total taxable income ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ when the total taxable income is a loss.

2. An adjustment to the Net Operating Loss Deduction (NOLD) changed ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

3. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ in Foreign Tax Credit, Work Opportunity Credit, Employer Stock Ownership Credit, Research Credit, Possessions Tax Credit, Credit for Alcohol Used as Fuel, Production Tax Credit, General Business Credit or Prior Year Minimum Tax Credit.

(1) Reject an error record with Action Code 3 when it is international related and one of the following conditions is present:

• Has a foreign address

• Claims Possessions Tax Credit (197601 and later)

• Claims Credit for Income Tax Withheld (or paid) at source (Form 1042-S credit) (OSPC only)

• Requests extension for Form 1120-FSC or

• For Form 1120-FSC

(2) Reject an error record with Action Code 3 when one of the following situations are present:

• The return covers multiple tax periods or reports multiple types of tax.

• The return is mis-blocked.

• The return requires correspondence with the taxpayer for missing or clarifying information.

• The return shows Tax Exempt Status pending.

• The return is a potential Statute case not cleared by Statute Control Group.

• The return shows "Pro Forma" or "Pro Forma 1120", "Pro Forma Form 1120 for New York State", or similar statement. The "Pro Forma" return should not be processed.

1. If a "Pro Forma" return is attached to a Form 1120 series return, do not detach. Move the "Pro Forma" return to the back of the document.

2. If a "Pro Forma" return is received and not attached to a Form 1120 series return, then delete the DLN and return the "Pro Forma" return to the taxpayer using correct letter, e.g., Letter 3064C, IDRS Special Letter. Include the following (or similar language) in the open paragraph: "The form appears to have been sent to us in error. Please keep it for your tax records."

(3) When a record is rejected, it will be necessary to prepare one or more of the following:

1. Form 4227, Intra-SC Reject or Routing Slip, or other proper routing slip. Notate the reason for rejecting the document. See Figure 3.12.16-6, Form 4227, Intra-SC Reject or Routing Slip.

2. Form 3696, Correspondence Action Sheet, (or other approved Correspondence Action Sheet), used to correspond with the taxpayer.

3. Form 6882, IDRS/Master File Information Request.

(4) Input Transaction Code (TC) 599 with Closing Code (cc) 017 on IDRS using Command Code FRM49 to prevent delinquency notice from generating. Input TC 599 with cc 018 on IDRS using Command Code FRM49 if the form is being processed after the program completion date (PCD) and TC 599 with cc 017 has not already been input. See IRM 3.12.16.2.19, Suppression of Erroneous Balance Due and Return Delinquency Notices - Reject/Suspense Correction, for more information.

1. If the EIN, Name Control, Master File Tax (MFT) or Tax Period is missing, do not input TC 599 with cc 017.

2. If the document was secured by Compliance, do not input TC 599 with cc 017.

(1) In a mixed section with both single and double alpha fields, the single alphas must have a space between the AFD and the money amount.

• For single Alpha Field Designator (AFD) fields in an a single/double field section, the correction would be entered as: 608A (1 with a circle around it) 557600, where 6 is the Action Code, 08 is the section number, A is the AFD, 1 with a circle around it is the space, and 557600 is the money amount.

• For double AFD fields in a single/double field section, the correction would be entered as: 608AB557600, where 6 is the Action Code, 08 is the section number, AB is the AFD, and 557600 is the money amount.

• Any section with just single AFDs would be corrected as: 610B12345, which is the normal correction procedures.

(1) Due to the Form 1120, U.S. Corporation Income Tax Return, redesign, the Form 3892, Corporation Edit Sheet, will no longer be used in Code and Edit. The applicable fields will be edited in the margin to the left of Deductions section of the return.

(1) Section 01 must always be present.

(2) It cannot be deleted or added. Action Codes 4 and 5 will never be used.

(3) The error indicators that apply are the asterisk, underprint, ISRP Errors, and Terminus Errors.

(4) Fields 01-A (Remittance), 01-B (Name Control), and 01-C (EIN) are fixed fields and all positions must be accounted for. The remaining fields are variable in length.

(5) The record can be accepted (Action Code 0), rejected (Action Code 3) or changed (Action Code 6). See IRM 3.12.16.3.2, Action Codes, for more information.

(6) Only Section 01 will print on a "G" coded return.

1. Manual math verification is not required.

2. All other records must be math verified and cleared with Action Code 0 or Action Code 1.

(7) Form 1120-FSC, Form 1120-ND and Form 1120-SF require manual computations except "G" coded returns. See IRM 3.12.16.18, Manual Computations, for procedures.

(1) The table below shows Section 01: Alpha Field Designator (AFD), Field Title, Field Length and Location on the Return. Section 01

(1) Field 01-A (Remittance) can never be changed with Action Code 6. If the remittance was transcribed incorrectly take the following action:

1. Reject the record with Action Code 3.

2. Prepare Form 4227 Intra-SC Reject or Routing Slip, or other proper routing slip notating "Remittance in Error" or "Unidentified Remittance" and route to Rejects.

(2) This field will be blank for non-remittance returns, overpaid returns and remittance returns processed through Integrated Submission and Remittance Processing (ISRP).

(3) Field 01-A (Remittance) will asterisk if present on a non-"G" coded return when Total Tax Computed is zero or blank, or if Total Tax Taxpayer is zero or blank. Take the following action:

(4) On the "loop", Field 01-A (Remittance) will not asterisk on Form 1120-FSC, Form 1120-ND and Form 1120-SF.

(1) This is a four-position field and is used for either the check digits (two letter code preprinted on the label which is assigned to the taxpayer) or the name control (the first four significant characters of the corporation except when the first word is "the" and is followed by more than one word). For information on determining the Name Control, refer to Document 7071-A, Name Control Job Aid - For Use Outside of the Entity Area.

(2) This field must have one to four characters. The valid characters are:

1. Numeric

2. Alpha

3. Ampersand

4. Hyphen

   Note: Change a slash (/) or period (.) in the name control to a hyphen (-).

(3) The name control field may have one to three blanks.

1. The name control must have an alpha or numeric in the first position.

2. The remaining positions must be numeric, alpha, ampersand, hyphen or blank.

3. No character may follow a blank.

4. If the correction has less than 4 characters, enter the significant characters and circle the number of remaining positions.

5. The check digit must have blanks in the first two positions and a letter other than "E", "G" or "M" in the last two positions.

6. When the check digit is present, the computer verifies it with Field 01-C (EIN). Always enter the name control to correct invalid check digits.

(4) Take the following action: Field 01-B Criteria

(5) All returns and documents input through ISRP must have the name control and tax period validated on the EIF (Entity Index File).

(6) Field 01-B (Name Control) or Field 01-D (Tax Period) will underprint if the transcribed field and the EIF name control or tax period don't match.

(7) Compare the entries in Field 01-B (Name Control) and Field 01-C (EIN) with the return, to determine the corrective action. EIN and Name Control

(8) From the research, determine the correct EIN and name control for the return on the error register. Take the following action: Correction Procedures

(1) The EIN is in the box shown on the return or on the preprinted label.

(2) This field must:

• Contain nine numbers

• Not begin with 00, 07, 08, 09, 17, 18, 19, 28, 29, 49, 78, 79 or 89

• Not be all zeroes or all nines

(3) Correct all misplaced entries, coding errors and transcription errors. Correction Procedures

(4) If the Employer Identification Number (EIN) is changed from the one the taxpayer used, send Letter 3875C, Missing or Incorrect EIN on Return - BMF/EPMF, or Letter 3463C, Missing Information Request to Process Business Returns, as a non-suspense letter to the address on the return. Continue processing the return.

(5) Suspense Correction:

1. If there is an indication that Entity Control has assigned an EIN to the return, enter the Entity Assignment Date (found in the lower left corner of Page 1 of the return) in Field 01-G (Correspondence Received Date (CRD)), if it is later than the received date and return due date.

2. If the EIN is changed from the taxpayer's entry and Entity has not already issued Letter 3875C, CP 576, We Assigned an EIN, (or other correct EIN letter or notice), send Letter 3875C as a non-suspense letter to the address on the return.

   Exception: Letter 3463C, Missing Information Request to Process Business Returns, was updated to include the paragraphs from the Letter 3875C. Letter 3463C may be used when there is more than one correspondence issue (e.g., Incorrect EIN and missing signature).

   Note: Do not send Letter 3875C when:
   1. Three or less digits of the EIN are transposed, different or missing, or
   2. The EIN is consecutive numbers (e.g., 12-3456789) or repeating numbers (e.g., 11-1111111), or
   3. Command Code (CC) INOLES shows the account has been "merged to" or "merged from", or
   4. The TIN on the return is the taxpayer's SSN (check CC INOLEG).

(1) Field 01-D (Tax Period) is entered in YYYYMM format.

(2) The following procedures address invalid tax periods for EARLY FILERS.

1. The tax period is computer-generated as a current calendar year return when ISRP inputs a blank.

2. The tax period cannot be after the current year and month.

3. If the tax period is equal to the year and month of the process date, the tax period will asterisk.

4. For tax periods that are later than or equal to the current month and year:

Correction Procedures

If	Then
a. Later by a year or more,	Change to a current fiscal or calendar year.
b. Later by not more than one month, or the taxpayer shows "no income",	Reject the record and attach Form 4227, Intra-SC Reject or Routing Slip, or other proper routing slip notating "Release end of appropriate month."
c. Later by more than one month with no explanation such as "Final" or "no income",	Correspond for confirmation of tax period ending.
d. Later by more than one month and taxpayer shows "Final" on the return,	Reduce the tax period to the month before the current processing month. See Figure 3.12.16-8, Tax Period Correction.

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

(2) A statute control document is filed for a barred period. A barred period is a taxable period on which statutory limitations are placed for allowing refunds, credits, or for assessing additional taxes.

(3) A claim for refund must be filed not later than three years from the date the original return was filed or two years from the date the tax was paid, whichever period ends the later. An additional tax assessment must be made within three years from the date the original return was filed.

(4) Process non-"G" coded returns as follows:

1. Identify a return for statute control action if the current processing date is two years and nine months, or more, after the original due date or the received date, whichever is later, and has not cleared the Statute Control Group. Reject and route the return using Form 4227, Intra-SC Reject or Routing Slip, or other proper routing slip.

2. Field 01-D (Tax Period) will asterisk for Statute check if the processing date is two years and nine months, or more, after the original due date or the received date, whichever is later and CCC "W" is not present.

(5) Process "G" coded returns as follows:

1. Identify a return for statute control action if the current processing date is two years and nine months, or more, after the original due date or the received date, whichever is later, and has not cleared the Statute Control Group. Reject and route the return using Form 4227 or other proper routing slip.

2. Field 01-D (Tax Period) will asterisk if the processing date is two years and nine months, or more, after the original due date or the received date, whichever is later, and CCC "W" is not present.

(6) On both non-"G" and "G" coded returns both Field 01-D (Tax Period) and Field 01-F (CCC) will asterisk if the processing date is less than two years after the Return Due Date and a CCC "W" is present.

1. Correct the Tax Period or Computer Condition Code, whichever is incorrect.

(7) Statute control returns must be routed to the Statute Control Group daily, or more often, if needed.

• Compliance IRC 6020(b) returns.

• Returns secured by Examination/Collections.

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

• Returns that are substitute returns prepared by Examination (e.g., Substitute For Return (SFR)) in top margin of the return.

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

• Return is a 2020 or prior year original. Due to the COVID-19 pandemic and subsequent Submission Processing (SP) and Accounts Management (AM) site closures, SP and AM developed procedures to bypass AM statute clearance and be processed. In addition, any 2020 or prior year returns previously cleared by AM statute will not be returned by SP to AM to be cleared again if the 90-calendar day statute stamp has expired.

(8) If there is an indication that the return has already been cleared through the Statute Control Group within the last 90 days, then enter CCC "W." Code and Edit will enter CCC "W" if the return has been cleared by Statute Control.

(9) If no indication, reject the record, attach Form 4227 or other proper routing slip to return and route to Statute Control Group.

(10) If a rejected document will not reach the Statute Control Group in time for clearance, then photocopy Page 1 of the return, stamp the photocopy "Photocopy-Do not process" and forward it to the Statute Control Group.

(1) Compare the EIN on the return with Field 01-C (EIN) and apply the following correction procedures when the tax period underprints. See Exhibit 3.12.16-14, Tax Period Underprint Flowchart, and Exhibit 3.12.16-15, Tax Period Underprint Flowchart for "Reply" and "No Reply", for more information.Correction Procedures

(2) If the tax period on the return is for a short period, "Final", "Change in Accounting Period", or "Initial" proceed as follows: Correction Procedures

(3) If the return covers a full 12 months and the Fiscal Year Month (FYM) in Field 01-D (Tax Period) does not agree with the underprint, research using IDRS.

1. Research using Command Code (CC) BMFOL, CC INOLE or CC ENMOD for the entity and the MFT of the return.

2. Review the transactions posted for the tax periods on the BMF.

(4) Initiate correspondence with the taxpayer, requesting a clarification of the accounting period, if the posted TC 150 are for several tax periods (no pattern), or posted TC 150 are all for the same FYM but disagree with the tax period of the return. Telephone contact may be used.

1. The table below provides procedures for processing correspondence.

If	Then
a. The taxpayer replies and identifies the correct tax period and it agrees with the return tax period,	Enter Action Code 3 on the error register. Attach Form 4227 or other proper routing slip and route to Rejects for input of TC 016 (or follow local procedures). Rejects will input TC 016 to change the FYM on the BMF to agree with the return. Release the return from the error register one (1) cycle after the TC 016 is input. Enter a "2" in Field 01-L (Entity Underprint Code). Move the extension, payments, and credits, etc., to the correct tax period, or prepare Form 3465, Adjustment Request, for routing to Accounts Management, request that the extension, payments, and credits, etc., be moved to the correct tax period. Enter a CCC "X" in Field 01-F (CCC) and write a note on the bottom of Form 3465 to remove "X" once credits have been moved. Input a TC 590 with Closing Code (cc) 020 to the module that was created erroneously.
b. The taxpayer replies and identifies that the tax period on the return is incorrect and gives the correct period that does not agree with the underprint,	Change Field 01-D (Tax Period) and follow procedures directly above.
c. No reply and the last tax period with a TC 150 is 12 months or more before the return tax period,	Enter Action Code 3 on the error register. Attach Form 4227 or other proper routing slip and route to Rejects for input of TC 016 (or follow local procedures). Rejects will input TC 016 on IDRS CC ENMOD using CC BNCHG. Input TC 474 on CC REQ77 (using one (1) cycle delay) for the year and month before the beginning month of the tax period on the return being processed. Hold for one week. Correct the return and the error register one (1) cycle after the input of TC 474. When pending (PN) TC 016 generates on CC ENMOD, enter a "2" in Field 01-L (Entity Underprint Code) for "Initial" returns.
d. No reply to correspondence and the last tax period with a TC 150 is less than 12 months before the return tax period,	Enter CCC "Y" in Field 01-F (CCC). Enter a "2" in Field 01-L (Entity Underprint Code).

(5) For more information on Command Codes, see Integrated Data Retrieval System (IDRS) Command Code Job Aid at: Integrated Data Retrieval System (IDRS) Command Code Job Aid.

(1) The received date must be printed in YYYYMMDD format, and it must be all numeric. If no received date is stamped on the return, Code and Edit may edit it in the dotted part of the Deductions Section.

(2) Input the correct received date if Field 01-E (Received Date) asterisks.

(3) It must be equal to or earlier than the processing date. The year-month combination must be equal to or later than the tax period year-month. Otherwise, Field 01-E (Received Date) will asterisk.

(4) If the received date is earlier than the tax period:

1. If Field 01-D (Tax Period) and Field 01-E (Received Date) are transcribed correctly and the tax period is not after the error register date, enter the received date as the first day after the tax period.

2. If tax period is after the error register date, see IRM 3.12.16.4.6, Field 01-D, Tax Period Ending.

(5) Correct all misplaced entries, coding errors and transcription errors. Compare the date with the date stamped or edited on the face of the return and take the following action:Received Date

(6) Determine the received date using the following priority when one is needed but is not stamped on the return or a valid handwritten received date is not present.

1. Earliest legible postmark date (U.S. Postal Service, foreign or Private Delivery Service) on the envelope. Rules for using the U.S. Postal Service (USPS) postmark, foreign postmark or Private Delivery Service postmark date are as follows:

Received Date

If	Then
a. An envelope is not attached,	Use the postmark date stamped on the face of the return. Note: When there are multiple returns in one envelope, the envelope is attached to one return and the postmark date is stamped on the other returns.
b. The postmark is missing, and the envelope is certified,	Look for an "USPS.com Track Confirm" record that has been attached to the return (should be before the envelope). Use the Acceptance date on the record to determine timeliness and follow normal procedures. See Exhibit 3.12.16-16, USPS.com Track Confirm. If the "USPS.com Track Confirm" record is not attached, no action is required.
c. An envelope has both a USPS and private-metered postmark,	Use the USPS postmark.
d. An envelope has a foreign and private-metered postmark,	Use the foreign postmark.
e. An envelope has two private-metered postmarks,	Use the latest private postmark.
f. An envelope has only one private-metered postmark,	Use the private-metered postmark.

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

3. Revenue officer's or other IRS official's signature date.

4. Signature Date, if within the current year (unless other information shows signature date is invalid).

5. Julian Date of the Document Locator Number (DLN) minus 10 days.

6. Current date minus 10 days.

(7) If a return is faxed to another area of the IRS and then sent to Submission for processing, do not enter the Enterprise Electronic Fax (EEFax) Date as an IRS Received Date. Enter a received date according to normal procedures.

(1) See IRM 3.12.16.3.3, Computer Condition Codes, for a list of valid Computer Condition Codes (CCCs) and their descriptions.

(2) Field 01-F (CCC) can have up to 10 positions.

(3) The table below shows the forms and valid codes on the raw register.

(4) CCC "L" is valid on Form 1120-FSC. It must be entered when a taxpayer writes "Section 6114 Election", "IRC 6114 Election" (or similar language) on the return or attaches Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b), to the return.

(5) CCC "O" (alpha O, not zero) is entered if a quick refund has been issued or if a manual refund has been issued. Also, a Reserve Code "1" must be entered when a manual refund ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ has been issued.

(6) CCC "W" - Field 01-F (CCC) will asterisk if CCC "W" is present and the processing date is less than two years after the return due date. Field 01-D (Tax Period) will also asterisk. See IRM 3.12.16.4.6, Field 01-D, Tax Period Ending, for correction procedures.

(7) CCC "Y" is used to update the tax period on the Master File.

(8) If CCC "Y" is present without Action Code 0 or Action Code 1, Field 01-F (CCC) will continue to asterisk. See IRM 3.12.16.18, Manual Computations, for corrective action.

(9) CCC "3" will be entered for "No Reply" cases and used as an indicator for Master File to suppress credit interest.

(10) CCC "8" - Enter CCC "8" when:

• Form 2220, Underpayment of Estimated Tax by Corporations, is attached and Part II, Box 6 of Box 7 is checked.

• Form 2220 is attached and any column on Form 2220, Schedule A, Line 38 has significant entries (other than zero).

• Enter Reserve Code "4" when a large corporation is shown on Form 2220, Part II, Line 8. See IRM 3.12.16.6.6, Field 03-E, Reserve Code, Reserve Code "4" for more information.

(11) Take the following action to correct Field 01-F (CCC): Correction Procedures

(1) Field 01-G (CRD) is entered in YYYYMMDD format and has eight positions.

(2) Field 01-G (CRD) cannot be later than or the same as the current processing date or earlier than Field 01-E (Received Date). See IRM 3.12.16.4.9, Field 01-E, Received Date, for more information.

(3) Correct all misplaced entries, coding errors and transcription errors.Correction Procedures

(1) The Preparer Checkbox is next to the taxpayer signature area. The Preparer Checkbox is used to show whether the taxpayer has elected to allow the Preparer to answer questions about the taxpayer's return as it is processed.

(2) The Preparer Indicator is on Page 1, lower right margin, next to the Discuss with Preparer Checkbox, Form 1120-FSC, Form 1120-ND and Form 1120-SF.

(3) ISRP operators will enter a "1" if the Preparer Checkbox, "Yes" box is checked.

(4) Correction Procedures:

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

Correction Procedures

If	Then
a. The "Yes" box is checked	Enter "1" in Field 01-H (Preparer Checkbox Indicator).
b. The "No" box is checked; Neither box is checked; or Both boxes are checked	Delete Field 01-H (Preparer Checkbox Indicator) and Field 01-I (Preparer Phone Number) and continue processing.

(1) The Preparer Phone Number is at the bottom of Page 1 below the Firm's Employer Identification Number (EIN).

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

(3) Invalid Condition - This field is invalid if other than alpha, numeric and blank.

(4) Correction Procedures:

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

2. If invalid, delete Field 01-I (Preparer Phone Number) and continue processing.

(1) The Preparer Tax Identification Number (PTIN) is at the bottom of Page 1. Data may or may not be present in Field 01-J (PTIN).

(2) Valid Condition - Field 01-J (PTIN) can be blank or numeric. If numeric, it cannot be all zeros and it cannot be all nines.

(3) Invalid Condition - Field 01-J (PTIN) is invalid if any of the following conditions are present:

• All zeros, or

• All nines, or

• Less than nine positions.

(4) Correction Procedures:

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

2. If unable to determine a valid entry, delete Field 01-J (PTIN).

(1) The Firm‘s EIN is at the bottom of Page 1 below the PTIN box.

(2) Valid Condition - Field 01-K (Firm's EIN) can be blank or numeric. If numeric, it cannot be all zeros or all nines.

(3) Invalid Condition - Field 01-K (Firm's EIN) is invalid if any of the following conditions are present:

• All zeros, or

• All nines, or

• Less than nine characters.

(4) Correction Procedures:

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

2. If unable to determine a valid entry, delete Field 01-K (Firm's EIN).

(1) The Entity Underprint Code will force the computer to bypass the underprint and accept the transcribed entry for Field 01-B (Name Control) and Field 01-D (Tax Period).

(2) The underprint in Field 01-B (Name Control), and Field 01-D (Tax Period), will not clear until either an Entity Underprint Code is entered in Field 01-L or the field is corrected to agree with the underprint.

(3) When CCC "F" is entered to correct a tax period underprint, the Entity Underprint Code is not necessary to clear the tax period underprint.

(4) The computer will not recheck the Entity Index File after initial input. Enter code as follows:

1. Code "1" - Name Control underprinting only and transcribed name control is correct; or name control and tax period both are underprinting but only transcribed name control is correct.

2. Code "2" - Tax period underprinting only and transcribed tax period is correct; or name control and tax period both are underprinting but only transcribed tax period is correct.

3. Code "3" - Tax period and name control underprinting and transcribed tax period and name control are both correct.

(1) The valid Taxpayer Notice Codes for Form 1120-FSC, Form 1120-ND and Form 1120-SF are 05, 10, 41, 88, 89 and 90. See IRM 3.12.16.3.4.1, Taxpayer Notice Codes (TPNCs), for the TPNC and the explanation.

(2) In January 2014, the Taxpayer Notice Code (TPNC) 90 Math Error (ME) Code literals/language were programmed into the OnLine Notice Review (OLNR) Retype Application for Notice Review (NR). This addition will eliminate the need for the NR tax examiner to manually type the notice literal and reduce potential copying and typing incorrect paragraphs and messages in the notices. For a full listing of the programmed TPNC 90 Math Error Codes, see TPNC 90 Math Error Code Job Aid on Servicewide Electronic Research Program (SERP) at TPNC 90 Math Error Code Job Aid .

(3) Notice Review can copy and paste non-programmed TPNC 90 literals in the notice. For an updated listing of the non-programmed TPNC 90 literals, see TPNC 90 Literals - Copy and Paste Job Aid on Servicewide Electronic Research Program (SERP) at TPNC 90 Literals - Copy and Paste Job Aid.

(4) TPNC 90 is an error explanation "fill-in" that is used if the standard TPNCs do not adequately describe an error condition or correction(s) made or when more than three or more notice codes are necessary. Ten blank lines (70 characters per line) are available to give pertinent information to the taxpayer.

(5) Write the TPNC 90 on the front of the return in the upper left corner or use Form 12648, Error Correction 90 TPNC.

(6) When sending a TPNC 90, do the following:

1. Write on the return "TPNC 90 - ###" (or similar language) or use Form 12648, Error Correction 90 TPNC, for OnLine Notice Review.

   Note: TPNC 90 Math Error Code Job Aid shows literals with two digits and TPNC 90 Literals - Copy and Paste Job Aid shows literals with three digits.

2. Notate "TPNC 90" (or similar language) and the date on Form 1332, Block and Selection Record, or Form 2275, Records Request, Charge and Recharge.

3. Place the return in the TPNC 90 designated area (basket/tub).

(7) If there is not an applicable TPNC 90, then do the following:

1. Attach the applicable TPNC 90 slip of paper to the front of the return, after completing applicable fields, or use Form 12648, Error Correction 90 TPNC, with the TPNC or narrative to be sent.

2. Notate "TPNC 90" (or similar language) and the date on Form 1332, Block and Selection Record, or Form 2275, Records Request, Charge and Recharge.

3. Place the return in the TPNC 90 designated area (basket/tub).

(8) Re-enter TPNC 90 with Action Code 1 if it was transcribed incorrectly.

(9) Make sure that the return needing a TPNC 90 leaves Error Resolution System (ERS) with the correct TPNC 90 language for the applicable form. For questions, please contact your Lead or Manager.

(10) If Field 01-M (TPNC) is invalid (*), do not change Field 01-M. This will happen if Field 07-Z (Manually Corrected Total Tax) was not entered previously. Never change Field 01-M.

(11) When necessary to send a TPNC, the correct tax must be entered in Field 07-Z (Manually Corrected Total Tax) first, then allow it to "loop" to send the TPNC. On "loop", the amount in Field 07-Z (Manually Corrected Total Tax) will underprint Field 07-A (Total Tax) for the notice.

(1) The Tax Period Beginning (Field 01-N) displays in YYYYMMDD format and must have eight numerics.

(2) The Tax Period Beginning is edited on Page 1, above or to the left of the form title area (close to that area) if Computer Condition Code (CCC) "F" or CCC "Y" is present. If the Tax Period Beginning is not present (not a short period or final return), programming will generate the Tax Period Beginning to be the first day of the 11th month preceding the tax period ending month. For example: Tax period ending month is 202311, so the Tax Period Beginning would be 12/01/2022 (20221201).

(3) Correct all misplaced entries, coding errors and transcription errors.

(4) Invalid Condition - Field 01-N (Tax Period Beginning) is invalid if any of the following conditions are present:

1. Tax Period Beginning is not present with a CCC "Y" or CCC "F", or

2. Tax Period Beginning is after the Tax Period Ending, or

3. Tax Period Beginning is earlier than 12 months before Tax Period Ending

(5) Correction Procedures:

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

2. Compare the Tax Period Beginning on the return with Field 01-N (Tax Period Beginning) and take the following action:

Correction Procedures

If	And	Then
a. The return is a final or short period,	Tax Period Beginning is present on return,	Enter Tax Period Beginning in YYYYMMDD format.
b. The return is a final or a short period,	The day is not present in the Tax Period Beginning,	Enter "01" for the day.
c. The return is a final or a short period,	Tax Period Beginning is missing or not valid,	Determine a Tax Period Beginning based on the previous tax period ending.
d. The return is not a final or a short period,		Remove CCC "Y" and "F", as applicable.

(1) Field 02-A ("In-Care-Of" Name) is in the Entity Section of the return.

(2) Valid Condition - Field 02-A ("In-Care-Of" Name) has 35 positions and the valid characters are numeric, alpha, ampersand, hyphen (-), slash (/) or percent (%).

(3) Invalid Condition - Field 02-A ("In-Care-Of" Name) is invalid if any of the following conditions are present:

• The first position is % (percent) and the second position is not blank, or

• The first position is blank, or

• The first position of the "in-care-of" name is not alpha or numeric, or

• There are two consecutive blanks between significant characters.

(4) Correction Procedures:

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

(1) Field 02-B (Foreign Address) is in the Entity Address Section of the return.

1. The computer will check for a presence in this field if Field 02-E (State Code) has a period/space (. ).

2. Field 02-B (Foreign Address) should not be present on "G" coded short period returns.

(2) Valid Condition - Field 02-B (Foreign Address) has 35 characters, and the valid characters are alpha, numeric and special characters.

(3) Invalid Condition - Field 02-B (Foreign Address) will generate as an error when the Field 02-E (State Code) has a period/space (. ) and any of the following conditions are present:

• The first position is blank.

• There are two consecutive blanks followed by valid characters.

• There are more than 35 characters present in the field.

  Note: ISRP operators will input a pound sign (#) as the 35th character if there are more than 35 characters present for this field on the return.

(4) Correction Procedures:

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

Correction Procedures

If	Then
a. A foreign address is present in Field 02-B (Foreign Address),	Check the error register against the return to verify the address is truly a foreign address.
b. It is confirmed the address on the return is a foreign address,	A valid Foreign Country Code must be present in Field 02-D (City). If missing, correct Field 02-D with an Action Code 6. Exception: Use the country code based on the province in Field 02-D (City) if the foreign address is from Canada and the address has a province name or abbreviation. See Exhibit 3.12.16-8, Province and Country Code - Canada. Delete Field 02-F (ZIP Code), if present, with Action Code 6.
c. A province abbreviation is not present for Australia, Brazil, Canada, Cuba, Italy, Mexico or The Netherlands but a province name is present,	Enter the province abbreviation in Field 02-B (Foreign Address). See Exhibit 3.12.16-9, Province, Foreign State and Territory Abbreviations.
d. It is confirmed the address on the return is a domestic address,	Reject with Action Code 3. Attach Form 4227 or other proper routing slip stating to renumber the return with a domestic DLN. Reminder: *The period/space (. ) in Field 02-E (State) must be deleted if this is NOT a foreign address.
e. A foreign address is NOT present in Field 02-B (Foreign Address),	Check the error register against the return to verify whether the address was a domestic address. Caution: Do not use Field 02-B (Foreign Address) for domestic street addresses. The period/space (. ) in Field 02-E (State) will alert the computer to search for a foreign address in Field 02-B and the Foreign Country Code in Field 02-D (City).
f. The address on the return is a domestic address,	Draw a line through the period/space (. ) entry in Field 02-E (State) and enter the correct State Code, with Action Code 6. Enter the correct information in Field 02-C (Street), Field 02-D (City), and Field 02-F (ZIP Code), with Action Code 6.
g. The address on the return is truly a foreign address,	Enter the foreign street address in Field 02-B, with Action Code 6. Reminder: ISRP operators are instructed to use the Street Address line (Field 02-C) as a second address line, if needed. Also enter the valid Foreign Country Code in Field 02-D (City), with Action Code 6.
h. The Foreign Country Code is missing or incorrect,	Compare the information on the error register to the information on the return. Enter the Foreign Country Code in Field 02-D (City), if missing, with Action Code 6. To correct, draw a line through the entry in Field 02-D and write the correct information above the lined-out entry, with Action Code 6.
i. A foreign address is present in Field 02-B (Foreign Address) and a ZIP code is present in Field 02-F (ZIP Code),	Verify the information on the error register against the return. If the return truly has a foreign address, line through the entry in Field 02-F (ZIP Code) on the error register. Enter the Foreign Country Code in Field 02-D (City), with Action Code 6.

Note: See Exhibit 3.12.16-7, Foreign Country Codes, for a list of the valid Foreign Country Codes or Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries.

(5) This field will asterisk (*) if other than specified above.

(6) If Form 8822, Change of Address, or Form 8822-B, Change of Address or Responsible Party - Business, is attached to the return, compare the name and address information on the Form 8822 (or Form 8822-B) to the return.

(1) Field 02-C (Street Address) is in the Entity Section of the return.

(2) Valid Condition - Field 02-C (Street Address) has 35 characters, and the valid characters are alpha, numeric, blank, hyphen (-), and slash (/).

(3) Invalid Condition - Field 02-C (Street Address) will error when any of these conditions are present:

• The first position is blank.

• Any characters are not alpha, numeric, blank, hyphen (-) or slash (/).

• There are two consecutive blanks followed by valid characters.

(4) Correct all coding errors and transcription errors.

(5) If Field 02-D (City) has a Major City Code (MCC), a street address must be present.

(6) If a Major City Code (MCC) is used and no address is present, enter the city in "city format", not in MCC format.

(7) Check returns and attachments if the address is not present. Address Criteria

(8) This field will asterisk if other than specified above. Correct this field.

(9) If Form 8822, Change of Address, or Form 8822-B, Change of Address or Responsible Party - Business, is attached to the return, compare the name and address information on the Form 8822 (or Form 8822-B) to the return.

(1) Valid characters are alpha and blank (22 positions).

(2) First position cannot be blank.

(3) Second and third positions cannot both be blank.

(4) There cannot be two consecutive blanks within significant data.

(5) When a Major City Code (MCC) has been used:

1. Field 02-E (State Code) must not be present.

2. Field 02-C (Street Address) must be present.

3. Field 02-F (ZIP Code) must be compatible with Major City Code.

(6) If a valid MCC cannot be used, then the entire City must be input with Action Code 6. When the entire city name is used, Field 02-E (State) must be present.

(7) This field will asterisk if the MCC does not agree with the first three digits of the ZIP Code. Field 02-F (ZIP Code) will also asterisk.

(8) The ZIP Code will need ZIP Code look-up if the Major City has multiple ZIP Codes. Correct Field 02-F (ZIP Code).

(9) See Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries. See Exhibit 3.12.16-10, U.S. Possessions ZIP Codes, for use with address corrections.

(10) IMPORTANT: If there is a foreign address, the country must be present in this field. Do not abbreviate the name of the country. See Exhibit 3.12.16-7, Foreign Country Codes, for a list of the valid foreign country codes or Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries.

(1) If present, this field must have a State Code of two alpha characters (two positions).

(2) This field will asterisk for the following conditions:

1. The State is not valid. Enter the correct State Code in Field 02-E.

   Note: See Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries.

2. The State is present and a Major City Code is present in Field 02-D. If the Major City Code is correct, then delete Field 02-E (State).

3. If the Major City Code is incorrect or determinable, then enter the complete city name in Field 02-D.

(3) The State Code does not agree with the first three digits of the ZIP Code. Field 02-F (ZIP Code) will also asterisk:

1. If the State Code is incorrect, then correct Field 02-E.

2. If the State Code is correct, check the return and attachments for the ZIP Code. If no data found, see Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries.

(4) OSPC will delete Section 02 if a Non-U.S. Possession Foreign Address.

(5) IMPORTANT: Field 02-E must have a period/space (. ) if the address is foreign.

(1) Field 02-F is the entity ZIP information (12 positions).

(2) Correction Procedures:

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

(3) If a valid ZIP Code is unavailable from the return or attachments, see Exhibit 3.12.16-10, U.S. Possessions ZIP Codes, for a valid ZIP Code. See Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries.

(4) All ZIP Codes are standardized at Martinsburg Computing Center (MCC) before the return posts to the Master File. A program called "Finalist" matches the taxpayers Street Address and City Address to the ZIP Code on the return with the latest ZIP Code updates received from the U.S. Postal Service (USPS).

1. If the ZIP Code is correct, the program standardizes the ZIP Code to a 12-digit ZIP Code and passes the record (return) on to the Master File for posting to the taxpayer's account.

2. If the ZIP Code is incorrect, but there is a match to the taxpayer's Street and City address, the program corrects and standardizes the ZIP Code, and passes the record (return) on to the Master File for posting to the taxpayer's account.

(5) If the ZIP Code is incomplete (partial) on the return, but it has a Street and City address, no research is necessary, take the following action:

1. Enter the Major State Code that includes the last two digits of "01". See Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries.

2. If there is a match by the program, the ZIP Code is standardized at MCC for posting to the Master File.

3. If there is no match by the program, MCC passes the return on to the Master File for posting, but an Error Listing is generated and sent to the campus for correction.

(6) If the ZIP Code is incomplete on the return and the Street or City address is incomplete or missing, then research is needed for the complete address.

• Follow local procedures for research.

(7) If only the first three digits of the ZIP Code can be determined, enter "01" for the fourth and fifth digits.

(8) If the first three digits of the ZIP Code cannot be determined, see Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries.

(9) The U.S. Postal Service (USPS) created new address requirements for Army Post Office (APO), Diplomatic Post Office (DPO), and Fleet Post Office (FPO) addresses. If the old address appears (e.g., APO New York, NY 091XX), convert to the new state code abbreviation based on the ZIP Code (e.g., the previous example would be converted to APO AE 091XX). APO/DPO/FPO addresses are considered domestic addresses. Refer to conversion table below: APO/DPO/FPO Criteria

(10) IMPORTANT: Field 02-F must be blank if the address is foreign.

(1) The table below shows Section 03: Alpha Field Designator (AFD), Field Title, Field Length and Location on the Return.

(1) This field is Reserved.

(1) The six-digit Principal Business Activity (PBA) (which is based on the North American Industry Classification System (NAICS)) is computer-generated for Form 1120-ND (525920) and Form 1120-SF (999000).

(2) The NAICS Code (Field 03-B) is entered on Form 1120-FSC, U.S. Income Tax Return of a Foreign Sales Corporation, Page 1, left corner, near Form 1120-FSC.

(3) Field 03-B (NAICS Code) will asterisk if blank, all zeroes or if Field 03-B (NAICS Code) does not have six numeric digits within the range 000001 through 999999 on Form 1120-FSC only, on other than an Amended (CCC "G") return. See Figure 3.12.16-9, Blank Field 03-B (NAICS Code).

(4) Only one NAICS Code can be used on the return. Enter the NAICS Code as follows:NAICS Code Procedures

(5) Field 03-B (NAICS Code) must always be present on Form 1120-FSC.

1. A Missing Section will generate if this field and Section 03 are not present.

2. Enter the correct code with Action Code 6, if missing.

(1) Code and Edit will no longer edit the Missing Schedule Code (MSC) in the left margin near Line 5 (Form 1120-ND) and near Line 2 (Form 1120-FSC). Code and Edit will correspond for the missing form and/or schedule if the entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(2) Check for coding errors, transcription errors, and correct Field 03-C (Missing Schedule Code) correctly.

(3) If the required form(s) and schedule(s) are not present and there is no indication Code and Edit corresponded for the missing form(s) and schedule(s):

1. Delete the entry in Field 03-C (Missing Schedule Code).

2. Reject the record with Action Code 3 for correspondence.

3. Prepare Form 3696 or other approved Correspondence Action Sheet and request all information that is missing or incomplete.

4. Input TC 599 with Closing Code (cc) 017 on IDRS using Command Code FRM49.

5. Edit an action trail "L118C Sent" (or similar language) in the lower left corner going vertically up the side of the return.

6. Circle out the Missing Schedule Code on the return, if present.

(4) If no reply to our correspondence:

1. Disallow the credit. See IRM 3.12.16.17, General "No Reply" Procedures, for more information.

2. Delete the credit from the error register and the return.

3. Enter CCC "3" in Field 01-F (CCC).

4. Enter CCC "X" to freeze the refund if an overpayment is shown.

5. Enter Action Code 1 and TPNC 90 (e.g., 90-202) with the following language: We adjusted your tax and/or credits because we did not receive a reply to our request for more information.

6. For an updated listing of the non-programmed TPNC 90 literals, see TPNC 90 Literals - Copy and Paste Job Aid on Servicewide Electronic Research Program (SERP) at TPNC 90 Literals - Copy and Paste Job Aid.

7. See IRM 3.12.16.4.17, Field 01-M, Taxpayer Notice Code (TPNC), for more information.

(1) Penalty and Interest Code is edited in the left margin near Deductions (Form 1120-ND, near Line 5; Form 1120-SF, near Line 9) when the return shows an amount for Penalty and Interest, and the return is received ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ of the original due date. Code and Edit will edit "4 - 1".

(2) CCC "R" must be present in Field 01-F (CCC) if interest only is shown.

(3) Field 03-D must be blank or "1".

• If "1" is present, Field 01-E (Received Date), must be ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. Otherwise, both fields will asterisk.

(4) Check the return for all coding errors and transcription errors.

• Correct Field 01-E (Received Date), Field 01-F (Computer Condition Code), Field 03-D (Penalty and Interest Code) and return.

(1) Reserve Code is edited in the left margin near Deductions (Form 1120-ND, near Line 5; Form 1120-SF, near Line 9). Code and Edit will edit "5 -" followed by the correct Reserve Code.

(2) Code and Edit may enter a "9" to force the record to the error register and will attach an explanation to the return.

1. Since the "9" is invalid, it must be deleted from Field 03-E (Reserve Code) when the problem is resolved.

(3) If Field 03-E is asterisked, correct the field.

(4) Enter Reserve Code "1" when ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ refund has been issued. The "1" is valid on correction only.

(5) Enter Reserve Code "4" if Form 2220, Underpayment of Estimated Tax by Corporations, is attached and the taxpayer has checked the box on Form 2220, Part II, Line 8, "Large Corporation". See IRM 3.12.16.3.3.1, Computer Condition Code Table, CCC "8", for additional information.

(6) Priority of Reserve Codes are as follows:

1. "1"

2. "4"

3. "9" - will be deleted by Error Correction after proper action is taken.

(1) Field 03-F (Tax Preference Code) applies only to Form 1120-FSC and is valid for tax periods ending November 30, 2018, (201811) and prior.

(2) For tax periods ending December 31, 2018, (201812) and later, Field 03-F (Tax Preference Code) must be blank. If a "1" is present in Field 03-F (Tax Preference Code), remove it.

(3) For tax periods ending November 30, 2018, (201811) and prior, the valid entries are blank and "1".

1. The Tax Preference Code is edited to the bottom center margin of Form 1120-FSC, Page 1.

2. Check for misplaced entries, coding errors and transcription errors, and correct.

3. Tax Preference Code "1" is required when:

• Form 4626, Alternative Minimum Tax, or substitute is attached.

• An amount is present (for tax periods ending 201811 and prior) for Alternative Minimum Tax computation on Form 1120-FSC, Schedule J, Line 3 (Prior year line number: 2017 - 2006: Line 3).

(1) Field 03-H (Audit Code) is edited in the left margin near Deductions (Form 1120-ND, near Line 5; Form 1120-SF, near Line 9). Code and Edit will edit "2 -" followed by the correct Audit Code(s).

(2) This field may be blank or have digits 1 through 6. Only three codes can be entered. The following table lists the valid Audit Codes: Audit Codes

(3) The Audit Codes and conditions are in the following table: Audit Codes

(4) If Field 03-H (Audit Code) is asterisked, check for coding errors and transcription errors. Correct Field 03-H (Audit Code).

(1) Field 03-I (Installment Sale Indicator) is edited in the left margin near Line 2 (Payments) of Form 1120-FSC. Code and Edit will edit "6 -" followed by the correct Installment Sale Indicator.

(2) This field must be 1, 2, 3 or blank. The codes are based on the response to Question "3" on Form 6252, Installment Sale Income.

(3) Valid codes for Installment Sale Indicator are: Installment Sale Indicator

(4) The following table gives instructions for resolving Field 03-I (Installment Sale Indicator). Correction Procedures

(1) Field 03-K (Principal Shareholder Name) is transcribed from Form 1120-FSC, Page 1, Line 1a. The field must have one to four characters. The valid characters are:

1. Numeric

2. Alpha

3. Ampersand

4. Hyphen

Note: Change a slash (/) or period (.) in the name control to a hyphen (-).

(2) The name field must have one to four characters and may have from one to three blanks.

1. The name must have an alpha or numeric in the first position.

2. The remaining positions must be numeric, alpha, ampersand, hyphen or blank.

3. No character may follow a blank.

(3) Take the following action: Correction Procedures

(1) Field 03-L (Principal Shareholder EIN) is transcribed from Form 1120-FSC, Page 1, Line 1b.

(2) Field 03-L (Principal Shareholder EIN) must have an EIN.

(3) If Field 03-L (Principal Shareholder EIN) is an EIN, it cannot begin with 00, 07, 08, 09, 17, 18, 19, 28, 29, 49, 78, 79 or 89.

(4) Take the following action to correct the field: Correction Procedures

(1) Field 03-M (Subsidiary Filer Code) is edited and transcribed from Form 1120-FSC, Page 1, Line 2 box checked.

(2) Field 03-M (Subsidiary Filer Code) is a transcribed field which must have a blank or 1 through 3.

1. Code "1" - "Yes" box checked.

2. Code "2" - "No" box checked.

3. Code "3" - Both box 1 and 2 are checked.

(3) If this field asterisks, check for coding errors and transcription errors.

(4) Field 03-M (Subsidiary Filer Code) will asterisk if the Parent Name Control or Parent EIN is not present on the return, when code "1" or "3" is entered in this field. A correct entry in Field 03-N (Parent Name Control) and Field 03-O (Parent EIN) will eliminate the asterisk.

(1) Field 03-N (Parent Name Control) is transcribed from Form 1120-FSC, Page 1, Line 2a.

(2) Field 03-N (Parent Name Control) must have one to four characters. The valid characters are:

1. Numeric

2. Alpha

3. Ampersand

4. Hyphen

Note: Change a slash (/) or period (.) in the name control to a hyphen (-).

(3) The name field must have one to four characters and may have from one to three blanks.

1. The name must have an alpha or numeric in the first position.

2. The remaining positions must be numeric, alpha, ampersand, hyphen or blank.

3. No character may follow a blank.

(4) If name control is invalid or blank, check for coding errors and transcription errors and correct.

(5) Field 03-N (Parent Name Control) will asterisk if Field 03-M (Subsidiary Filer Code) is coded "1" or "3" and Field 03-N (Parent Name Control) is blank. Take the following action: Correction Procedures

(1) Field 03-O (Parent EIN) is transcribed from Form 1120-FSC, Page 1, Line 2b.

(2) Take the following action for Form 1120-FSC only: Correction Procedures

(3) The table below lists pertinent information for Field 03-O (Parent EIN). Parent EIN

(4) Field 03-O (Parent EIN) will asterisk if the EIN is the same as the EIN for the return. They cannot be the same.

(5) Examine the return and attachments for a valid EIN, if this field is invalid. Take the following action: Correction Procedures

(1) Field 03-P (Type of Election Code) is transcribed and edited from Form 1120-FSC, Page 1, Box B.

(2) Valid codes are 1, 2 or blank.

1. Code "1" must be present if the "FSC" box is checked.

2. Code "2" must be present if the "Small FSC" box is checked.

3. If neither box is checked (Box B is blank), then no code is applicable.

4. Correct field.

(3) Field 03-P (Type of Election Code) will asterisk if present on any return other than Form 1120-FSC. Delete this field if present on any other form.

(1) This field is Reserved.

(2) This will prevent the error register from being renumbered/reformatted and will eliminate new programming.

(1) The Foreign Country Code is a code transcribed from Form 1120-FSC, Page 1, left of Line 1a.

(2) This field must be blank or a two-character alpha. See Exhibit 3.12.16-7, Foreign Country Codes, for a list of valid foreign county codes or Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries.

(1) Field 03-W (Parent Total Assets) must be present if Field 03-N (Parent Name Control) was edited and transcribed.

1. It is transcribed in dollars only.

2. Delete Field 03-W (Parent Total Assets) if it is negative.

3. The field must be blank or all numeric.

(2) Delete this field when an asterisk is present on Form 1120-SF.

(3) Enter the amount from Page 1, Line 1d into Field 03-W (Parent Total Assets), when the amount on Page 1, Line 1d is greater than the amount present on Page 1, Line 2d.

(4) Copy any significant amount on Page 1, Line 1d to Page 1, Line 2d, when the amount on Page 1, Line 2d is blank and the Common Parent's Name and EIN are blank.

(1) Field 03-X (Type of Liabilities) is a five-digit field transcribed from Page 2, Additional Information, Line 5a on Form 1120-SF only.

(2) The field must be 1 through 5 or blank. All five codes do not have to be present.

(3) A blank cannot be in the first position if a valid code is present.

(4) The valid codes for Field 03-X (Type of Liabilities) are: Type of Liabilities (Form 1120-SF)

(1) This field is Reserved.

(2) This will prevent the error register from being renumbered/reformatted and will eliminate new programming.

(1) The table below shows Section 04: Alpha Field Designator (AFD), Field Title, Field Length, Dollars and Cents ($ / ¢), and the Location on the Return. Section 04

(1) Field 04-A (Total Assets - End) is transcribed from the following forms.

(2) Code and Edit will edit the amount in dollars.

(3) The field must be all numeric or blank.

(4) Field 04-A (Total Assets - End) will asterisk when Fields 04-F through 04-I are present on Form 1120-SF.

(5) Delete the invalid fields for Form 1120-ND or Form 1120-SF.

(6) Check for mis-blocking if the return is not a Form 1120-ND or Form 1120-SF.

1. Reject with Action Code 3.

2. Prepare Form 4227, Intra-SC Reject or Routing Slip, or other proper routing slip indicating reason for reject (e.g., return is mis-blocked, renumber as Form 1120-FSC).

(1) Fields 04-B through 04-E are valid on Form 1120-SF only.

(2) The table below shows Field, Field Title and Location on the Form 1120-SF.Fields 04-B through 04-E (Form 1120-SF)

(3) These fields must be all numeric or blank.

(4) Field 04-C (Modified Gross Income) may be positive or negative.

(1) The table below shows Form and Location on the Return for Field 04-F (Taxable Income).Field 04-F, Taxable Income

(2) This field must be all numeric or blank.

(3) Field 04-F (Taxable Income) may be positive or negative.

(1) The table below shows Field, Field Title and Location on the Form 1120-FSC. Field 04-H and Field 04-I, Depreciation

(2) Fields 04-H (Depreciation (Administrative Pricing Rules)) and 04-I (Depreciation (Non-Administrative Pricing Rules)) must be edited in dollars and cents.

(3) These fields must be all numeric or blank.

(4) They must be a positive amount only.

(1) The table below shows the Tax Periods and Tax Rates for the Form 1120-SF.Tax Periods and Tax Rates for Form 1120-SF

(1) Section 07 has information fields that are variable in length and are money amounts.

(2) If a field is asterisked, check to determine if that field is valid for that return and document code.

(3) The table below shows Section 07: Alpha Field Designator (AFD), Field Title, Field Length, Dollars and Cents ($ / ¢), and the Location on the Return.

(1) Field 07-A (Total Tax) has a ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(2) The form(s) and the transcription line(s) are shown in the table below:Field 07-A, Total Tax

(3) Take the following action: Correction Procedures

(4) The return is a Form 1120-SF and the total tax does not equal 37% (201812 and later) of the Modified Gross Income (Field 04-C), Field 07-A (Total Tax) will underprint. See IRM 3.12.16.7.6, Tax Rates for Form 1120-SF, for more information. Take the following action: Correction Procedures

(5) Take the following action for Form 1120-SF: Correction Procedures

(6) Taxpayers who file an approved Form 1128, Application to Adopt, Change, or Retain a Tax Year, must annualize. If the taxpayer does not annualize, enter the correct annualized tax in Field 07-Z (Manually Corrected Total Tax). On "loop", enter Action Code 1 and TPNC 05 to inform the taxpayer of the error.

(7) Taxpayers annualizing their tax due to a short period "Initial" or "Final" return is not permitted. Assess tax at the regular rate based on their taxable income.

(1) The form(s) and the transcription line(s) are shown in the table below: Field 07-B, Estimated Tax Credit

(2) Field 07-B (Estimated Tax Credit) is the total of:

• Form 1120-FSC, Line 2d equals = Line 2a plus 2b minus 2c.

• Form 1120-ND, Line 14d equals = Line 14a plus 14b minus 14c.

• Form 1120-SF, Line 16d equals = Line 16a plus 16b minus 16c.

(3) Reject to Accounting: If prepaid credits are claimed on Form 1120-FSC (Lines 2a, 2b, 2e), Form 1120-ND (Lines 14a, 14b, 14e), or Form 1120-SF (Lines 16a, 16b, 16e) and the return is one of the following conditions:

1. A short period return,

2. A "Final", or

3. A "Change of Accounting Period".

(4) Prepare Form 4227, Intra-SC Reject or Routing Slip, or other proper routing slip with a notation "Short Period with ES Credits".

(5) Input TC 599 with Closing Code (cc) 017 on IDRS using Command Code FRM49 as defined below.

1. Input for the short period if a copy of attached Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns, shows short period.

2. Input for a full period (ending 12 months after beginning of the short period) if no Form 7004 is attached or use the underprinted Fiscal Year Month (FYM) in Field 01-D (Tax Period).

(1) The form(s) and the transcription line(s) are shown in the table below: Field 07-C, Form 7004 Credit

(1) This field is Reserved.

(2) This will prevent the error register from being renumbered/reformatted and will eliminate new programming.

(1) This field is Reserved.

(2) This will prevent the error register from being renumbered/reformatted and will eliminate new programming.

(1) The form and the transcription line are shown in the table below: Field 07-F, U.S. Income Tax Paid or Withheld at Source (Form 1042-S Credit)

(2) Correct all misplaced entries, coding errors and transcription errors.

(3) OSPC must take the following action to correct Field 07-F:

(4) OSPC must refer any questionable verification of the withholding documents to Examination (Exam).

(1) The FIRPTA credit is on Form 1120-FSC, Page 1, to the right of Line 2g.

(2) Correct all misplaced entries, coding errors and transcription errors.

(3) If FIRPTA credit is claimed on Form 1120-FSC, OSPC must take the following action to correct Field 07-G (FIRPTA):

1. Look for an approval from the OSPC Document Perfection, Foreign Team on the total amount of credit claimed on Form 13698, International Credit(s) Verification Slip.

2. The credit must be claimed on Form 8288-A, Statement of Withholding on Certain Dispositions by Foreign Persons, or a statement from the payor/withholding agent which shows the amount of tax withheld, the withholding rate (including 0% (percent), if exempt), and the country involved.

(4) Follow the instructions in the table below for FIRPTA credit. Field 07-G, Foreign Investment in Real Property Tax Act (FIRPTA) Procedures

(5) OSPC must refer any questionable verification of the withholding documentation to Examination (Exam).

(1) The form(s) and the transcription line(s) are shown in the table below: Field 07-H, Estimated Tax Penalty

(2) Field 07-H (Estimated Tax Penalty) is edited from Form 2220, Underpayment of Estimated Tax by Corporations, Line 38 (Form 2220 prior year line number: 2005 through 2007: Line 34) and must always be included in the Balance Due/Overpayment total.

(3) Enter Reserve Code "4" when a large corporation is shown on Form 2220, Part II, Line 8. See IRM 3.12.16.6.6, Field 03-E, Reserve Code.

(1) The form(s) and the transcription line(s) are shown in the table below: Field 07-I, Balance Due/Overpayment

(2) Field 07-I (Balance Due/Overpayment) will underprint if it is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(3) Correct all misplaced entries, coding errors and transcription errors.

(4) The table below shows the form and gives the computation for Field 07-I (Balance Due/Overpayment). Field 07-I, Balance Due/Overpayment Procedures

(5) Field 07-I (Balance Due/Overpayment) will underprint when a refundable credit is present, but not claimed on a refundable credit line. Follow local procedures to allow the credit.

(6) Delete all penalties and interest that are included in Field 07-I (Balance Due/Overpayment), except for the amount from Field 07-H (Estimated Tax Penalty).

(7) Occasionally, the taxpayer will enter tax only on the total income tax line or only on the tax due line.

1. If this happens, deduct any penalties and interest from the total income tax line ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

2. Enter the correct tax in Field 07-A (Total Income Tax) or Field 07-I (Balance Due/Overpayment), whichever is correct.

(8) Field 07-I (Balance Due/Overpayment) may underprint if Field 07-I is out of tolerance. If the out of tolerance was caused by an adjustment to the Credit for Federal Telephone Excise Tax Paid, and Field 07-S (Credit for Federal Telephone Excise Tax Paid, Verified Amount) has a significant entry, then:

1. Enter Action Code 1 and TPNC 88 if the credit was partially denied (Field 07-S amount is less than Field 07-R) See IRM 3.12.16.8.14, Field 07-R, Credit for Federal Telephone Excise Tax Paid.

2. Enter Action Code 1 and TPNC 89 if the credit was fully denied (Field 07-S entry is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ See IRM 3.12.16.8.14, Field 07-R, Credit for Federal Telephone Excise Tax Paid.

(9) When no other errors are discovered, take the following action:

1. Change Field 07-I (Balance Due/Overpayment) to the underprinted amount.

2. Enter the revised figure on the return.

(1) The form(s) and the transcription line(s) are shown in the table below: Field 07-J, Credit to Next Years Estimated Tax

(2) CCC "F" is incompatible with an amount in Field 07-J (Credit to Next Years Estimated Tax) and both will asterisk.

1. Determine which is correct.

2. Delete the other.

(1) This field is Reserved.

(2) This will prevent the error register from being renumbered/reformatted and will eliminate new programming.

(1) This field is Reserved.

(2) This will prevent the error register from being renumbered/reformatted and will eliminate new programming.

(1) The statutory period for claiming a Telephone Excise Tax Refund (TETR), Form 8913, Credit for Federal Telephone Excise Tax Paid, has expired. Field 07-R and Field 07-S are no longer applicable and were used for Telephone Excise Tax Refund (TETR) claims filed in tax periods 200612 - 200711. When programming resources are available, these fields will be removed or re-purposed.

(2) An Invalid Condition will asterisk when any of the following conditions are present:

• Tax Period is before 200612 or after 200711.

• There are entries in Field 20-A (Tax Refund) and Field 20-B (Interest on Tax Refund) and there is no entry in Field 07-R (Credit for Telephone Excise Tax Paid).

• Field 20-B (Interest on Tax Refund) is greater than Field 07-R (Credit for Telephone Excise Tax Paid) and the total claimed ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

• The transcribed amount for telephone excise tax refund amount (return amount) differs from the computer amount ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(3) Correction Procedures:

1. Code and Edit will no longer edit the Telephone Excise Tax Refund (TETR) amount. This will allow all TETR claims filed on original returns to fall out to ERS.

2. Change all TETR fields to zero (0) and remove the Computer Condition Code "U", if applicable.

3. Detach Form 8913 and make a copy of the signature page from the return. Staple the copy of the signature page to the back of the original Form 8913 and route to Accounts Management.

4. Enter Action Code 1 and TPNC 90 (e.g., 90-201) with the following language: Due to processing constraints, your Credit for Federal Telephone Excise Tax Paid could not be processed with your tax return. Your claim for this credit has been forwarded to another area to be processed.

5. For an updated listing of the non-programmed TPNC 90 literals, see TPNC 90 Literals - Copy and Paste Job Aid on Servicewide Electronic Research Program (SERP) at TPNC 90 Literals - Copy and Paste Job Aid.