4.19.5. Certification of State Federal Unemployment Tax Act (FUTA)Credits

(1) The FUTA program provides for cooperation between state and federal governments in the establishment and administration of unemployment insurance. Under this dual system, the employer is subject to a payroll tax levied by the federal and state government. The taxpayer is allowed a maximum credit of 5.4 percent against the Federal tax of 6.0 percent, provided that all payments were made to the state by the due date. Employers whose payments are received by the state after the due date are allowed 90 percent of the credit that would have been allowed had the payments been made on time. As a result of FUTA, IRS is responsible for receiving and processing the Form 940 and or/or Schedule H. All revenue that is associated with these tax returns is turned over to the Department of Labor (DOL). DOL is responsible for dispensing the revenue deposited in the FUTA Trust Fund. DOL is charged with monitoring the Unemployment Insurance Systems for each state and can withhold funds from a state if the state does not comply with Federal standards.

(1) The authority for the procedures of FUTA can be found under Title 26, Subtitle C, Chapter 23 of the Internal Revenue Code (Section 3301 through Section 3311).

(1) The Director, SB/SE, Exam Field and Campus Policy is responsible for the Federal Unemployment Tax Act (FUTA) program.

(2) Management officials are responsible for:

• Providing internal controls relating to the program, process and activity.

• Ensuring the instructions are communicated to and carried out by the proper officers and employees.

(1) This program is monitored through the FUTA Case Processing System (FCP) located on the Consolidated Annual Tax Reporting System (CATRS).

(1) Below is list of acronyms and their definitions:

(1) IRM 1.4.23, FUTA Manager and Coordinator Guide.

(2) IRM 4.19.23, FUTA Control.

(1) The Taxpayer Bill of Rights (TBOR) lists rights that already existed in the tax code, putting them in simple language and grouping them into 10 fundamental rights. Employees are responsible for being familiar with and acting in accord with taxpayer rights. See the link below for additional information about TBOR, Taxpayer Bill of Rights.

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

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

(4) Refer to Taxpayer Advocate when the contact meets the TAS criteria see IRM 13.1.7, Taxpayer Advocate (TAS) Case Criteria, or when Form 911, Request for Taxpayer Advocate Assistance (and application for Taxpayer Assistance Order), is attached and steps cannot be taken to resolve the taxpayer’s issue the same day. See IRM 13.1.7.4, Same Day Resolution by Operations. When making a TAS referral, use Form 911, and forward to TAS in accordance with your local procedures.

(1) The cases that are determined to have discrepancies are loaded onto the FUTA Case Processing (FCP) located on the CATRS platform.

(2) Download to the FCP system will be identified by FUTA Release Year. In October 2024 the download will be identified as FUTA Release 2022.

(3) The FCP System is a computer application housed on the CATRS platform. It allows inventory, correspondence, reporting and document preparation for the FUTA program.

(1) Whenever a System problem is identified during FUTA processing, the Campus who identified the problem will issue an IT GET IT ticket.

(2) Before issuing a ticket, contact a Headquarters Analyst for approval.

(3) To issue a “Get It Ticket”, the User will do the following

1. Access IRweb Homepage - Click on OS GetServices

2. Select New Tickets

3. Click on Request Help

4. Choose All IRS APPS

5. Click Submit to create a ticket

6. Complete the form, providing an explanation of the problem. Add the statement Forward this ticket to AD-COMP-RC-CD-CAWR/FUTA for FCP issues. and BU-WI-WIOS-MIT-IAT for IAT issues.

7. Click Submit.

8. A Get It ticket number will be issued.

(4) Whenever a “systemic” problem is identified, the Tax Examiner/Clerk will compile documentation (description of the problem and samples) and give the information to the Site Coordinator who will inform the Headquarters FUTA Analyst of the problem and forward the documentation.

(1) All changes made during the processing year will be posted on SERP.

(2) Both PAS (Program Analysis System) Analysts and FUTA unit personnel must be aware of all of the alerts that are applicable to the current FUTA Release Year.

(3) All employees must check SERP daily for a list of the most current and previous updates and alerts.

(1) Every employer (other than agricultural and household employers) who, during the current or preceding calendar year, paid wages of $1,500 or more in any calendar quarter, or had one or more employees for some part of a day in any 20 or more different weeks, must file Form 940. Publication 15 (Circular E) Employer's Tax Guide, and the Instructions for Form 940 are excellent sources of information about the requirements for filing this return. This information is also helpful for determining the credit allowable for state contributions, experience rate, and deposit requirements.

(2) Agricultural employers are liable if:

1. Cash wages of $20,000 or more were paid to agricultural workers in any calendar quarter in the current or preceding calendar year or

2. Ten or more agricultural workers were employed for some part of a day during any 20 or more different weeks in the current or preceding calendar year.

   Note: Non-Resident Aliens performing farm work under H-2A visas are counted only to determine if tests (a) and (b) above are met. However, remuneration paid to non-resident farm workers who are admitted to perform farm work under H-2A visas is not subject to FUTA tax. Remuneration paid to non-resident farm workers, except those with H-2A visas, is subject to FUTA taxes.

(3) Household employers must pay FUTA taxes ONLY if they pay cash wages to all household employees totaling $1,000 or more in any calendar quarter in the current or prior calendar year. Household employees are those who perform household work in a private home, local college club, or a local chapter of a college fraternity or sorority. Generally individuals, estates, and trusts that owe FUTA tax for domestic service in a private home, must file Schedule H with their Form 1040 or Form 1041. For more information, see IRM 4.19.5.4.8.1, Schedule H — Household Employment Tax, Publication 926, Household Employer’s Tax Guide, and IRM 4.23.10.10.5, Household Employment Taxes.

(1) Form 940 is an annual return filed by employers to report Federal Unemployment Tax. This return covers the period January 1 through December 31 and is due to be filed on or before January 31 following the close of the calendar year. However, if timely deposits have been made in full payment of such tax, Form 940 may be filed on or before February 10. This is an employer tax and cannot be collected or deducted from employee wages.

1. Part 1 of Form 940– Identifies if an employer is a single state, multi-state and/or credit reduction state filer. Determines if Schedule A needs to be filed as well.

2. Part 2 of Form 940– Shows the FUTA tax before adjustments.

3. Part 3 of Form 940– Shows adjustments to be made to the FUTA tax. Exempt Wages- Refer to Publication 15 (Circular E) Employer's Tax Guide, Special Rules for Various Types of Services and Payments.

4. Part 4 of Form 940 - Shows the FUTA tax and balance due or overpayment per the taxpayer's calculations. This information is provided by the taxpayer and is not to be used as a State Certification.

5. Part 5 of Form 940- Shows the FUTA tax liability by quarter for some employers.

(2) The IRS also uses Schedule A (Form 940), Multi-State Employer and Credit Reduction Information. The employer must file Schedule A (Form 940) if the employer paid wages to employees in more than one state or if they paid wages in any state that is subject to credit reduction.

(1) Individuals who are household employers are generally required to report unemployment taxes on Schedule H, to be filed with their individual income tax returns (Form 1040 due April 15), or U.S. Fiduciary Income Tax return (Form 1041 due April 15).

(2) Cases should be resolved using the Schedule H adjustment procedures. See IRM 4.19.5.4.8.1, Schedule H — Household Employment Tax and Publication 926, Household Employer's Tax Guide for more information.

(1) If the correspondence is from a Power of Attorney (POA) or other third party, adhere to the procedures in IRM 21.3.7, Taxpayer Contacts, Processing Third Party Authorizations onto the Centralized Authorization File.

(2) Taxpayers may list multiple years or a series of inclusive periods on their Form 2848. For fiscal years, the Form 2848 should show the ending year and month, using the YYYY format. For annual returns , the form may show the applicable years using a specific YYYY format.

(1) See Exhibit 4.19.5-2 for Tolerance Chart and more information.

(2) Some cases in the FUTA download require review prior to letter issuance. Update the FUTA FCP System to reflect the current wage, tax (TC 150 plus TC 290/298 or minus TC 291.), and entity information as shown on IDRS

(3) The Statute Awareness Program was created to minimize barred assessments and erroneous abatements. The download will contain cases which have two statute situations that must be addressed. Cases where the statute date expires within 120 days will be worked on a priority basis. Refer to IRM 25.6, Statute of Limitations. The two types of statutes addressed in the FUTA processing are:

• The Assessment Statute Expiration Date (ASED). In general, the ASED is 3 years from the filing of the return, unless the return is filed before the due date (determined without regard to any extension of time to file), in which case the ASED is 3 years from the due date. Determine the Assessment Statute Expiration Date (ASED) for cases on the statute listing where the date is initially blank or 00/00/0000 on the FCP System and input the ASED on the detail screen on the FCP System. Cases that are within 60 to 90 days of the ASED, you will need to provide the designated individuals with the assessment information for direct IDRS input and monitor to ensure posting of the adjustment. Cases that are within 59 days or less of the ASED, you will prepare Form 2859 and submit it to the coordinator who will forward it to RACS. You will also need to ensure that the confirmation and DLN of the adjustment is received.

  Note: When screening 6020(b) cases, see the 6020(b) if/then chart below in (4).

• The Refund Statute Expiration Date (RSED). A claim for credit or refund must be filed within 3 years from the time the return was filed or two years from the time the tax was paid, whichever is later. If the claim is filed within the 3 year period, the amount to be credited or refunded is limited to the tax paid during the 3 years immediately preceding the filing of the claim plus the period of any extension of time to file (the 3 year look back rule). If the claim for refund is filed within the two year period, the amount is limited to the portion of tax paid during the 2 years immediately preceding the filing of the claim (the 2 year look back rule). The claim can be for payment of tax, penalties or interest.

Note: Cases on which the ASED/RSED expires within 120 days will be worked on a priority basis.

(4) Untimely claims for credit or refund will be formally disallowed (fully or partially). However, in some situations , a claim will be timely but a refund or credit of the overpayment will not be allowable due to when the credit was deemed available. In those situations, this credit will be moved to the Excess Collection Files (XSF) and cannot be used to offset liabilities for other periods.

(5) IRS prepared returns IRC Section 6020(b) — Employers are not entitled to a credit for state information if the IRS prepared their unemployment tax returns under the provisions of IRC Section 6020(b). The following identify an IRC Section 6020(b) case on the Master File transcript.

• "SUB" to the left of the TC 150.

• RCC-4 is present. (The 4 may be preceded by a single alpha character.)

• The DLN of TC 150 will be in Blocking Series 98 or 99.

• TC 599 with closing code(s) 38, 88, or 63 will be on the account.

(6) 4011-C Screening Refund Statute Expiration Date (RSED)— Check IDRS for the RSED date on TXMOD for the tax period in question.

• If the RSED has expired, do not generate the Letter 4011-C. Close the case on the FCP System using closing status code "STEX" and input in the Remarks field "RSED Expired."

• If the RSED expires within 90 days, notify the taxpayer via a Letter 380-C and request that (s)he respond prior to the RSED. When abating Statute cases follow procedures shown in IRM 4.19.5.4.6(3), Screening, Statute Verification above.

• If the RSED is not going to expire within 90 days, issue the Letter 4011-C.

(7) Duplicate DLN/EIN: Research the Schedule H EIN/Social Security Number (SSN) Match. Research must be performed to consolidate the information on these records. A DUP tab has now been added to FCP and these cases will now be accessed using the “Master “ Case ID Number/EIN. The DUP tab will list all the “child “ dup cases that are associated with the “Master” case and will be researched and updated accordingly.. The true dups will close all of the child dups automatically and will change the status from open dup to just open for the master case. The master case will continue to be updated and closed through the normal process. The updates for the child cases that are not true dups should be worked and closed in the DUP tab. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡

(8) Zero Certification Cases—Are records that were not certified by the states because there was no match on the EIN, state wages were not reported, or payments were not made to the state. The Manager/Coordinator will mail the zero certs to each state. When these certs are mailed back from the states the Manager/Coordinator will assign designated te’s to work them following these procedures:

1. Update the FCP system with the new certification information to recalculate the tax.

2. Input the appropriate adjustment on IDRS.

3. If correspondence is necessary, send the appropriate letter.

(9) California Unity of Enterprise and North Carolina Unity of Enterprise—The States of California and North Carolina has a unique situation when matching our FUTA Identification Tape with employer account records. They have a system of assigning ONE state number to all businesses owned by that individual. This is called "Unity of Enterprise". The IRS assigns EINs to business entity types (sole proprietor, corporation, etc.) and not individuals. Each entity type has its own Federal Employer Identification Number (FEIN). Use the following procedures when processing Unity of Enterprise cases.

Note: If all contributions to the state are late or no contributions were paid, each FEIN will be recalculated and assessed based on Federal wages. Each FEIN gets credit for reporting state wages and will have a letter issued if potential tax increase is above tolerance.

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2. See AP (Audit Potential) procedures below to determine if the FCP System records require an "AP." indicator

3. If correspondence is necessary, send a 4010-C letter to the last established EIN or the entity with the highest wages.

4. If an adjustment is necessary, input it on the last established EIN or the entity with the highest wages

(10) Audit Potential (AP) Cases— These are cases where the state wage base is the same as the federal wage base, and the state taxable wages are more than the federal taxable wages (≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡). These cases are identified by a check mark in the AP field shown on the Money screen of the FCP System.

1. Use CFOL (Corporate Files On Line) command codes whenever possible to obtain information before requesting a document/return from Files. Do NOT request original return if sufficient information is available through CFOL. If it is determined that the original return is needed, request the return using command code ESTAB via IDRS.

2. If there is a valid exemption on Form 940, line 4, compare this amount with the discrepancy between the federal and state wage amounts. If the amount on line 4 is greater than or equal to the discrepancy, update the AP indicator by unchecking the AP Indicator box shown on the Money screen. The FCP System will calculate using the Federal Tax Wage.

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4. If there is no valid exemption on Form 940, line 4, or if this amount is less than the discrepancy between the federal and state wage figures, uncheck the "AP" field, and issue the appropriate letter (4010-C or 4011-C).

(11) Potential Adjustment Registers (PARs) — PARs require case review prior to letter issuance. These are cases/records that could not pass Enterprise Computing Center at Martinsburg (ECC-MTB) calculation programs due to the rate indicator provided by the state or a freeze code posted to the Master File. The service center FCP System cannot automatically determine the tax or credit due on these cases.

1. Update FCP to reflect the current wage, tax (TC 150 + TC 29X), and entity information as shown on IDRS. If a discrepancy still exists, follow normal screening procedures.

Note: When an account has a TC 300 or TC 308 on the module of the tax year you're working, close the case with no assessment.

2. If all wage and tax information has been transferred or merged to a new EIN, update the FCP System "Corrected or Cross Reference Info" field on the Detail Screen by inputting the new EIN followed by a "C".

(12) Bankruptcy (TC 520) /Defunct (TC 530) Cases- The following procedures are to be used during the screening process.

(13) Exempt Wages reported cases: If line 10 on the Form 940 matches the amount of the proposed refund on FCP and it’s within the tolerance close the case under cc REIM.

(1) The priority for working Compliance cases are:

• Criminal Investigation

• Examination

(1) Information for General Processing will be the same throughout the FUTA Certification Case Processing program. See below when working both replies and recons.

(1) See Exhibit 4.19.5-2 for Tolerance Chart and more information.

(2) Policy Statement P-21-3 is in place to improve the quality and timely handling of taxpayer correspondence. When working replies sent in by the taxpayer (in response to the IRS letters sent) remember that care must be taken to attempt to conform to Policy Statement P-21-3 guidelines. Policy Statement P-21-3 requires an interim letter (for example; Letter 5825-C to be issued if unable to close the taxpayer's response within 30 days.) See Policy Statement P-21-3 .

(3) When work is being shipped and/or transferred from one campus to another, the losing campus will issue a Letter 86-C .

(4) When an account has a TC 300/308 on the module of the tax year you're working, close the case with no assessment.

(5) Faxed Signatures- A faxed consent to assess additional tax (ex: Letter 4010-C is acceptable if contact was made and the case history documents the date of contact.)

(6) Barred Statute follow the procedures below:

1. Research to determine the actual missed assessment amount.

2. Prepare a Barred Statute Report for missed assessment amounts above tolerance.

3. Send 105-C for claims that are completely disallowed.

4. Send 106-C for claims that are partially disallowed. (Example: A claim is submitted for full abatement of a module. The RSED for prepaid credits has expired, but a subsequent assessment was made 6 months ago. Only the TC 290 may be abated.)

5. Send 916-C if the taxpayer asks for reconsideration of a previously denied claim without providing any new information.

(7) Cross Reference EIN(s) provided by the taxpayer:

1. Research IDRS for tax and wage information.

2. Request state certification for EIN(s).

3. Input to the FCP System the combined federal and state tax and wage information from all EINS for the FCP System.

4. Update the FCP Systems "Corrected or Cross Reference Info" field on the Detail Screen by inputting the cross reference EIN(s) followed by an "X".

5. When the X-Reference resolves the case, input TC 290 .00 and issue Letter 3786-C.

6. When the X-Reference does not resolve the case, assess and send Letter 380-C using an open paragraph stating the X-Reference EIN provided did not resolve the issue.

(8) Follow the table below for required actions necessary to process taxpayer replies. See IRM 4.19.5.4.7.4, Special Adjustment to Blocking Series for the appropriate blocking series.

(9) Follow the table below for required actions necessary to process taxpayer replies. See IRM 4.19.5.4.7.4, Special Adjustment to Blocking Series for the appropriate blocking series

(10) Assistance for responses by the state agency are listed in the table below:

(1) The FCP will automatically generate an open status code "DADJ".

(2) The No Replies are worked systemically using the IAT GII tool. The TEs will the work the cases with indicators that prevent the tool from making the adjustment.

(3) When an account has a TC 300/308 on the module of the tax year your working, do not assess, input a 290 for .00 and close the case using CC NRPY.

(1) The Clerical Function will perform research for a new/better address when correspondence is returned undeliverable. Below are the steps the Clerical team has already taken:

(2) Research IDRS for a new/better address within 14 days from the received date. When ENMOD shows an SSN that is responsible for the entity, use CC INOLES for the SSN and re-send the notice to that address. If ENMOD shows a Mr. and Mrs. listed, address the notice to only the taxpayer that owns the SSN found on ENMOD for disclosure purposes.

(1) Many of the processing procedures Reconsiderations for can be found in the reply section of this IRM. See the references below to find the proper procedures.

(2) Reconsiderations occur when taxpayer correspondence is received after the initial case is closed on the FCP System. See Exhibit 4.19.5-2 for Tolerance Chart and more information.

(3) FCP will now open reconsiderations into status "LTRP" when the date is entered through the clerical "Replies/Undeliverables Recd" screen. All status "LTRP" cases will be manually closed on FCP using CC "LTWR" when the reconsideration is worked. Any updates, letters, or changes to money amounts must be made to FCP prior to closing the case on FCP.

(4) CATRS only keeps three years of active data. At the end of three years, CATRS archives all cases that had case activity performed on them (it does NOT store cases we didn’t select to work).  The first year cases that were archived was the 2014 program year and it will store 10 years of data. Archived case information can be accessed using the Archive Query option on the Case Query Screen. The information that can be viewed on an archived case is listed below.

• Entity

• Cross References

• Federal Tax and Wages

• State Certification Information

• Previous Adjustments

• Correspondence Sent

• Remarks

• Case History

(5) The taxpayer may send an amended return or state recertification to try to resolve the case. Review the information and make any necessary corrections on IDRS. See IRM 4.19.5.4.5, Screening , IRM 21.3.3.4.17.1, Preparing Outgoing Manually Generated Correspondence , IRM 21.3.3.3.4, Quality and Timely Responses - Exception statement, and IRM 21.3.3.4.1, Case Control and Inventory Management to determine if additional correspondence is required.

(6) Refer to IRM 4.19.5.4.7, General Case Processing Procedures, for additional information relating to specific case type procedures.

(7) Reconsideration indicates the employer is a multi-state filer . Follow procedures outlined in IRM 4.19.5.4.8.9, Multi-State Cases.

(8) Taxpayer's Reconsiderations indicates the incorrect State was transcribed. Follow procedures as shown for processing Reply cases. See IRM 4.19.5.4.8.3, Incorrect State . Input a TC 291 for the original tax assessment with the appropriate Reference Codes to correct the state.

(9) When Processing Statute cases, be sure to consider the following:

• The postmark date of the original claim will be used to determine if the claim is timely. For example, a claim filed on a delinquent original tax return that is postmarked three years after the Return Due Date is deemed to be filed on the postmark date. Therefore, the look back rule that limits the amount of a credit or refund to the tax paid during the three years immediately preceding the filing of the claim would not prevent the crediting or refunding of the advanced payments described below.

• For purposes of the look back rules and determining when an advanced payment of tax is considered paid: Any payment of FUTA tax made within a calendar year or before the Return Due Date for the calendar year (determined without regard to any extension of time for filing), shall be considered made on the Return Due Date. Income tax withheld at the source during any calendar year is deemed to have been paid by an employee on the 15th day of the fourth month following the close of the taxable year: i.e., the Return Due Date. Estimated taxes are deemed paid on the Return Due Date (determined without regard to any extension of time for filing).

• If the last day of the three year filing period is a Saturday, Sunday, or legal holiday and the claim is timely filed on the next succeeding day which is not a Saturday, Sunday, or legal holiday, the claim is deemed to have been filed on the last day of the filing period for purposes of applying the look back rules.

  Note: Payments of penalties and interest are treated as tax payments. While the IRC limits the overall amount available for credit or refund, it does not establish a specific order in which the payments constituting that amount must be depleted when a credit or refund is made. IRS is generally not permitted to use an ordering method simply to limit the amount of a credit or refund available under the look back rule of IRC 6511(b)(2).

  Note: If the taxpayer made a partial payment for one or more taxable periods, Rev. Proc. 2002–26, 2001–C.B. 746 provides the ordering rules for the application of the payment.

• Expired credits cannot be used to offset liabilities on other modules.

• If a timely filed claim is processed after the normal RSED, input the adjustment with Override Code "S". Use the IRS Received Date of the reply as the RFSCDT.

(10) Accounts in Collection Status - Any Reconsiderations that is received on an account with an active Collection status code (22, 24 or 26) on IDRS must be coordinated with the responsible function(s) prior to the FUTA issue being worked. For example:

• When you receive a reply for a case in Status 22 notify the ACS staff that you have a reply so they can update their comments on the ACS system and suspend collection action using the appropriate referral form. The tax examiners should document their attempts and outcome on the appropriate referral form. Work the FUTA issue and close the case.

• For all cases in Status 22, 24 or 26 input TC 470 CC 90 to remove the case from collection status while it is in inventory

• If there are any other Collection issues that need to be addressed, such as a remaining balance due, Installment Agreement request, etc., those functions must work that portion of the Reconsiderations.

• A TC 29X will ensure any case with a balance due remaining on the module is put back into collection status. If a TC 29X is not being input a TC 472 with no closing code must be input.

(11) When an account has a TC 300/308 on the module of the tax year your working, abate any FUTA tax assessment and issue a 380-C closing letter explaining all actions taken.

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

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

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

• TIN

• Form Number/MFT

• Tax Period

• Transaction/Received Date (IRS received date)

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

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

• Prepared By

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

• Stop Number

• Unit

• Telephone Number

• Today’s Date - In MM/DD/YYYY format

• Type of Doc. - (for example, check or money order)

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

• Received Date - In MM/DD/YYYY format

• Name (entire name)

• TIN

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

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

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

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

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

1. Notify your manager immediately.

2. Email completed Form 3244 and 4287 to your Manager and Coordinator/Assistant Coordinator.

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

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

5. Make an appointment to bring the Discovered Remittance into the Operation and deliver it to the Technical Manager/Lead Tax Examiner within 2 business days.

6. Technical Manager/Lead Tax Examiner will accept the Discovered Remittance and print Form 3244 and Form 4287.

7. Technical Manager/Lead Tax Examiner will deliver the Discovered Remittance to the Clerical Manager/Lead Clerk.

(7) IRS CHECKS - Returned IRS refund checks are handled differently than regular Discovered Remittance. If an IRS refund check is found, take it to the manager/Lead Tax Examiner to be forwarded to the Refund Inquiry Unit.

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

(1) The Federal Unemployment Tax Act (FUTA) provides for cooperation between the federal and state governments in the establishment and administration of unemployment insurance programs. The purpose of the FUTA Certification program is to verify that the payment information reported on Form 940 or Schedule H agrees with the information reported to us by the various State unemployment agencies.

(2) Employers are subject to a payroll tax levied by the federal and state governments. The taxpayer may be allowed a maximum credit of 5.4 percent against the FUTA tax of 6.0 percent, for payments made to the state. Employers whose payments are received by the state after the due date of the federal return are allowed 90 percent of the credit that would have been allowed had the payments been made on time. In addition, an employer's credit will be reduced if the employer paid wages that are subject to the unemployment tax laws of a credit reduction state.

(3) The FUTA unit issues three types of correspondence.

• Letter 4010-C - Proposed Increase to Tax

• Letter 4011-C - Proposed Decrease to Tax

• Letter 380-C - State Certification Tax Adjustment Explained

(4) When the taxpayer states that they received one of these letters, inform the taxpayer that they should immediately respond to the FUTA unit at the address on the letter via mail or fax. If this information is not available, determine the campus working the case and refer to the fax numbers found at the CAWR/FUTA web site: CAWR/ FUTA website.

(5) A FUTA assessment can be identified by researching Command Code TXMOD for a TC 290 on any of the following modules:

• MFT 10 with a blocking series 50 if there was state wage data on file or blocking series 51 if there is no state wage data.

• MFT 05 with a blocking series 17. This adjustment would be for a Schedule H attached to the Form 1041.

• MFT 30 with a blocking series 05. This adjustment would be for a Schedule H attached to a Form 1040.

(6) Follow procedures below when working FUTA certification issues

(7) If the taxpayer states they previously sent information in response to the correspondence from IRS. Do not prepare a referral (Form 4442 or Letter 4442-C) to the FUTA Unit. Determine when the taxpayer submitted the information and follow the steps below:

(8) Advise the taxpayer, failure to respond to the FUTA Unit or provide the requested information within the time period indicated in the letter they received can result in additional tax and penalty assessment.

(9) The taxpayer must respond immediately to the address shown on the notice/letter with a clear and complete explanation of the reason for the discrepancy and the appropriate correcting documents. You may provide the fax number of the FUTA unit if the taxpayer wants to fax his reply. Never provide the voice number of the FUTA unit to the taxpayer or transfer the call to the FUTA unit.

(10) The letters issued to the taxpayer of Schedule H FUTA cases, may only contain the EIN associated with the SSN on the Schedule H. Verify the EIN and SSN belong to the same taxpayer.

(1) Function Codes:

• 700 — FUTA Telephone Replies (used with Program Code 172X0 and 175X0 only).

• 710 — Point of Count when each case is closed or transferred.

• 790 — Clerical activities (no point of count).

(2) Program Codes: The Small Business Self Employed campuses will record their progress using the following FUTA program codes. The "X" in the Program Codes 170X0 through 175X0 will reflect the current Release year being worked (i.e., 17010 - 17410). Program code 175X0 can reflect the current and prior Release years (i.e., 17590 or 17580, 17570) depending on the Release year of the case.

• 170X0 - FUTA Screening

• 172X0 - FUTA Replies Received

• 173X0 - FUTA Undeliverables

• 174X0 - FUTA No Replies

• 175X0 - FUTA Reconsiderations (previously called Late Replies)

(1) Document 7368, Basic Guide for Processing Statute Cases, is available to all campuses and area offices. If you do not have one, please see your manager. This document is also available electronically.

(2) Statute Searches: All Tax Examiners are responsible to expedite statute imminent cases. Each tax examiner must perform a statute search on their inventories (paper and electronic) beginning 90 days prior to the statute expiration date as stated below. In addition, all new receipts to their inventory must be reviewed for statute criteria.

(3) Each search must be documented using Form 11122 which will be maintained by management. See the CAWR/FUTA Home page at CAWR/FUTA Web Page for Form 11122, Employee's Statute Certification, and additional statute guidelines and Document 7368, Basic Guide for Processing Statute Cases, for Statute Processing.

(1) The FUTA program processing start up for CSC is scheduled for October and the PCD is the last day of September, each year unless otherwise directed by Small Business/Self Employed (SBSE) Headquarters.

(2) This requirement will be considered met if 95 percent of the workable download volume of cases are closed by the August 31 PCD. The remaining 5 percent of the inventory must be completed by September 30. This includes working the No Reply listings on a weekly basis and making any necessary tax adjustments.

(3) The table below provides the schedule for current and subsequent FUTA Certification program case processing.

(1) Management will provide a copy of the CCA 4243 listing to the appropriate tax examiner by either printing or sending an electronic copy to them through secured E-mail for the TE to review.

(2) Each TE is responsible to ensure the control assigned to them on IDRS is physically in their possession and can be retrieved at any time. In addition, the tax examiner who the case is controlled to, must ensure appropriate and timely actions are taken as necessary.

(3) In order to complete this each week the TE must do the following

• Find the earliest IRS Received Date on the actual piece of correspondence and ensure it matches with the received date entered on IDRS, and FCP.

• Work Unpostable conditions.

• MFT code is correct.

• Review to ensure the activity code is correct.

• Review to ensure the category code is correct.

• Ensure all appropriate interim letters have been sent.

• Are STAUPS needed? If so have they been input? If not, input them.

• Ensure you are working your cases in FIFO (First in, First out) order

• Review ASED for statute imminent cases and process accordingly.

• Review to ensure the case is in the correct status (A-Assigned, M-Monitored, S-Suspense, etc.).

(4) When doing quarterly certification, each Tax Examiner must complete a Physical Inventory Certification Form (see Exhibit 4.19.5-1) and submit it to their manager.