part3-29

3.11.106 
Estate and Gift Tax Returns

All Official Use Only content has been replaced with ≡.

3.11.106.1 
(01-01-2009)
General Information

  1. Information of a general nature was removed from IRM 3.11.106. IRM 3.0.273 , Administrative Reference Guide, contains procedures
    previously found in this IRM.

  2. The new General IRM will serve as a supplement to Chapter 3 Handbooks. Criteria for items contained in the General IRM are:

    1. Not specific to one form (general in nature). Information used primarily during initial training.

    2. Once learned, easily retained.

    3. Seldom requiring updating.

  3. The purpose of the General IRM is to ensure consistency and accuracy of the basic information.

3.11.106.1.1 
(01-01-2009)
Purpose

  1. This sub-section contains instructions for coding and editing Estate and Gift Tax (Forms 706 and 709 series) returns.

3.11.106.1.2 
(01-01-2009)
Scope

  1. This section contains instructions for coding and editing Estate and Gift Tax Returns (Forms 706, 706-NA, 706-A, 706-D, 709,
    706-GS(D), 706-GS(D–1), 706-GS(T) and 706-QDT). Tax examiners will code and edit returns. It is not the intent of these instructions
    for tax examiners to audit the returns.

  2. General instructions eliminate repetition of the same instructions for each return. If the general instructions and the specific
    instructions conflict, follow the specific instructions.

3.11.106.1.3 
(01-01-2009)
♦BMF Consistency♦

  1. The purpose of the BMF Consistency initiative is to achieve consistency in the BMF Code and Edit processing Internal Revenue
    Manuals (IRMs).

  2. Topics for BMF Consistency have been identified and developed as a coordinated effort between Cincinnati, Ogden, and W&I (BMF
    Policy and Procedures Branch).

  3. BMF Consistency sections are identified by a “♦”
    (diamond) before and after the section title.

  4. The text in normal print within a consistency section signifies the common processes to be used for all BMF returns. The text
    in bold print is form-specific and applies to this IRM only.

3.11.106.1.4 
(01-01-2009)
Section 3705(a), IRS Employee Contacts

  1. This sub-section provides guidelines and key points for IRS employees to follow when communicating with taxpayers and/or their
    representatives on tax-related matters.

3.11.106.1.4.1 
(01-01-2009)
Background

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

  2. IRS employees are required to give their name and unique identification number during taxpayer telephone, face, and written
    contact. In addition, a telephone number is required on all taxpayer correspondence.

  3. This will provide taxpayers with enough information to identify an IRS employee who has previously assisted with tax related
    matters.

3.11.106.1.4.2 
(01-01-2009)
Key Points

  1. All IRS employees, in the field, national, and regional offices, who communicate, by telephone, correspondence, or face to
    face, with taxpayers, or their personal representatives, on tax-related matters, are required to provide (at a minimum) the
    following information:

    1. Telephone Contact: Their title (e.g., Mr., Mrs., Ms., Miss), their last name, and their badge identification (ID Card) number.

    2. Face to Face: This information should be their title (e.g., Mr., Mrs., Ms., Miss), last name, and ID (badge) number provided as appropriate
      during their conversation.

    3. Correspondence: All correspondence must include a telephone number where the taxpayers question can be answered. In addition, manually–generated
      and handwritten correspondence must include their title (e.g., Mr., Mrs., Ms., Miss), their last name, and their IDRS, letter
      system, or ID Card (badge) number.

  2. The IDRS number and numbers for some other letter systems are automatically generated. If it is not generated, or a handwritten
    note is prepared, the ID Card (badge) number must be used.

  3. Toll-Free employees may also provide their location for identification purposes. Facsimiles to taxpayers on tax-related matters
    are considered manually-generated correspondence and must include the required information.

  4. Correspondence, whether sent directly to the taxpayer or to the taxpayers personal representative, must contain the required
    information.

  5. When a taxpayer asks to speak with a specific employee who previously handled their inquiry or request, or complains about
    the level of service previously provided, every attempt should be made to resolve the taxpayers inquiry. If the issue cannot
    be resolved, the employee should refer the inquiry, using established procedures, to his or her manager.

  6. If, during a taxpayer contact, it appears there may be a hardship situation, or the taxpayer asks to be referred to the Taxpayer
    Advocate Service (TAS), or the contact meets TAS criteria, and you cant resolve the taxpayers issue the same day, then refer
    the taxpayer to the Local Taxpayer Advocate (See IRM Part 13, Taxpayer Advocate Service). However, if you are able to resolve
    and close the TAS issue on the same day as the taxpayer contact, do not refer the inquiry to TAS. The definition of “same
    day”
    is within 24 hours. There will be times you can completely resolve the issue within 24 hours. There will also be times
    that although you cannot completely resolve the issue within 24 hours, if you have taken steps within 24 hours to resolve
    the taxpayer’s issue, these cases also meet the definition of “same day”
    . Do not refer these cases to TAS unless the taxpayer asks to be transferred to TAS. Refer to the Same-Day Resolution subsection
    13.1.7.4 in IRM 13.1.7, Taxpayer Advocate Service Case Processing. When referring cases to TAS, use Form 911, Request for
    Taxpayer Advocate Service Assistance and (Application for Taxpayer Assistance order), or Form e-911. http://publish.no.irs.gov/FORMS/PUBLIC/PDF/16965F07.PDF

  7. Correspondex letters will require a specific employee name and telephone number only if the employee initiating the correspondence
    is in the best position to respond to any questions that the taxpayer may have about the correspondence, or the employee is
    asking the taxpayer to provide additional case-related information.

  8. Otherwise, if the taxpayer does not need to contact a specific employee, the correspondence needs only an IRS telephone number
    and standard signature.

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

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

3.11.106.1.4.3 
(01-01-2009)
♦Taxpayer Advocate Service (TAS) Service Level Agreements (SLA)♦

  1. The National Taxpayer Advocate and the Commissioner, W&I Division have reached an agreement outlining the procedures and responsibilities
    for processing Tax Advocate Service (TAS) casework when either the statutory or delegated authority to complete a case transaction
    rests with the W&I Division.

  2. In preparation for a case being referred to an W&I Division function, the TAS employee is responsible for:

    1. Preparing Form 12412, Operations Assistance Request (OAR).

    2. Securing all necessary supporting documentation.

    3. Forwarding Form 12412, Operations Assistance Request (OAR), and documentation on Form 3210, Document Transmittal, to the
      W&I Division Liaison.

  3. W&I Division is responsible for:

    1. Assigning a liaison in each office or Campus where a Taxpayer Advocate is located.

    2. Acknowledging receipt of the case via Form 3210, Document Transmittal, within one (1) workday for economic hardships or within
      three (3) days for cases involving systemic hardship (delay or procedural/systemic failure).

    3. Responding to TAS within three (3) workdays in writing, via facsimile or hand delivery of resolution.

    4. Providing TAS with the name and telephone number of the W&I employee assigned the case.

    5. Determining a reasonable timeframe for case resolution.

    6. Upon resolution of the case, the W&I employee will complete Section VI of Form 12412 and return it to the TAS employee within
      three (3) working days from the date all actions have been completed and transactions posted.

  4. For further information, refer to IRM 13.1.19.2, TAS Service Level Agreements (SLA).

3.11.106.1.5 
(01-01-2009)
National Disaster/Emergency Relief Operating Procedures

  1. See IRM 25.16, Disaster Assistance and Emergency Relief, for specific conditions that qualify a taxpayer for relief.

    If Then
    A taxable return qualifies and is received within the timeframe prescribed.

    Note:

    No penalty or interest is assessed on non-taxable returns, therefore, no action needs to be taken.

    		 1. Prepare Form 4227, Intra-SC Reject or Routing Slip, to alert Cincinnati Compliance Services, Estate and Gift Tax Campus
    Operation that CCC “R”
    determination is requested.
    2. Route copy of Page 1 and letter requesting CCC “R”
    to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation to determine use of CCC “R”
    to suppress failure to file penalty.
    A qualifying return is “R”
    coded.     		Change the received date and edit to reflect timely filing.
    Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, is annotated at the top of Page 1 of the return
    “Section 2201″
    or has any indications the return is the result of legislation impacting victims of terrorist attacks (April 19, 1995 —
    Oklahoma City bombing; September 11, 2001—World Trade Center bombing; or references to deaths resulting from anthrax that
    occurred on or after September 11, 2001, and before January 1, 2002)     		1. Edit CCC “B”
    .
    2. A special tax rate schedule will apply to victims of terrorist attacks. ERS/Rejects will verify the appropriate tax computation.
    3. All other credits against the estate tax (including unified credit) apply to these returns.

3.11.106.1.6 
(01-01-2009)
Forms List

  1. The following table contains instructions for forms used with Estate and Gift Tax Returns:

    Note:

    Attachment must contain name, address, SSN and received date. Enter, if missing.

    FORMS TITLE DETACH ACTION TAKEN
    56 Notice Concerning Fiduciary Relationship Yes Prepare Form 4227, Intra-SC Reject or Routing Slip, and Letter of Appointment or pertinent information to Entity.
    637 Application for Registration (For Certain Excise Tax Activities) Yes Route to Stop 5701G, ATTN: Gene Neal
    706 United States Estate (and Generation-Skipping Transfer) Tax Return Yes If original return, or copy with original signature, process as directed ( See IRM 3.11.106.10, Processing Form 706.)
    706–A United States Additional Estate Tax Return Yes If original return, or copy with original signature, process as directed ( See IRM 3.11.106.12, Processing Form 706-A.)
    706–CE Certificate of Payment of Foreign Death Tax No If filed separately, send to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.
    706–D United States Additional Estate Tax Return Under Code Section 2057 Yes If original return, or copy with original signature, process as directed ( See IRM 3.11.106.13, Processing Form 706-D.)
    706-GS(D) Generation-Skipping Transfer Tax Return For Distribution Yes If original return, or copy with original signature, process as directed ( See IRM 3.11.106.17, Processing Form 706-GS(D).)
    706-GS(D–1) Notification of Distribution From a Generation-Skipping Trust Yes If original return, or copy with original signature, process as directed ( See IRM 3.11.106.18, Processing Form 706-GS(D-1).) (Forward all separate D-1s to Files.)
    706-GS(T) Generation-Skipping Transfer Tax Return For Terminations Yes If original return, or copy with original signature, process as directed ( See IRM 3.11.106.19, Processing Form 706-GS(T).)
    706-NA United States Estate (and Generation-Skipping Transfer) Tax Return Yes If original return, or copy with original signature, process as directed ( See IRM 3.11.106.11, Processing Form 706-NA.)
    706-QDT U.S. Estate Tax Return for Qualified Domestic Trusts   ( See IRM 3.11.106.20, Processing Form 706-QDT.)
    706 Sch. S Increased Estate Tax on Excess Retirement Accumulations No  
    709 United States Gift (and Generation-Skipping Transfer) Tax Return Yes If original return, or copy with original signature, process as directed ( See IRM 3.11.106.15, Processing Form 709.)
    709–A United States Short Form Gift Tax Return Yes If original return, or copy with original signature, process as directed ( See IRM 3.11.106.16 ,Processing Form 709-A). If copy, leave attached as supporting document.
    712 Life Insurance Statement No Leave attached as supporting document.
    843 Claim for Refund and Request for Abatement Yes Send Form 843 to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation on Form 4227, Intra-SC Reject or Routing
    Slip, (Forms 706 and 709 series returns).
    1310 Statement of Person Claiming Refund Due a Deceased Taxpayer Yes Prepare Form 4227, Intra-SC Reject or Routing Slip, and route to Adjustments.
    1332 Block and Selection Record No  
    2350 Application for Extension of Time To File U.S. Income Tax Return No  
    2848 Power of Attorney and Declaration of Representative Yes 1. Edit taxpayer name and SSN on Form 2848, if missing.
    2. Edit received date on Form 2848.
    3. Domestic address – Route to Memphis CAF. Foreign (International) address – Route to Philadelphia CAF
    4. Edit action trail on tax return. See IRM 3.11.106.3,Tax Information Authorization (TIA) – Form 706 Only.
    3198 Special Handling Notice for Examination Case Processing No  
    3233 Report of Gift Tax Examination No  
    3465 Adjustment Request No  
    3696 Correspondence Action Sheet No  
    3696A IDRS Correspondence Action Sheet No  
    3753 Manual Refund Posting Voucher No See IRM 3.11.106.5.6, CCC “O”
    -Module Freeze.
    3893 Re-entry Document Control No Stays on the front of return
    4349 Computation of Estate Tax Due With Return and Annual Installment Yes See IRM 3.11.106.10.8.2, IRC Section 6166.
    4422 Application for Certificate Discharging Property Subject to Estate Tax Lien No 1. If attached to Form 706, prepare Form 4227, Intra-SC Reject or Routing Slip; attach copies of Form 4422 and Pages 1, 2, and 3 of Form 706; and route
    to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.
    2. If attached to Form 709, prepare Form 4227; attach copies of Form 4422 and Pages 1 and 2 of Form 709; and route to Cincinnati Compliance Services,
    Estate and Gift Tax Campus Operation.
    4768 Application for Extension of Time To File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes Yes
    (Balance Due Return with Original Form 4768 only)     		Send to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.
    4810 Request for Prompt Assessment Under Internal Revenue Code Section 6501(d) Yes (Form 709 series returns only) Send original Form 4810 and copy of Page 1, Form 709, on Form 4227, Intra-SC Reject or Routing Slip, to Cincinnati Compliance
    Services, Estate and Gift Tax Campus Operation.
    4868 Application for Automatic Extension of Time To File U.S. Individual Income Tax Return No  
    5347 Examination Multiple Request Master File Yes Route on Form 4227, Intra-SC Reject or Routing Slip, to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.
    5495 Request for Discharge from Personal Liability Under Internal Revenue Code Section 6905 Yes Route on Form 4227 to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.
    5792 Request for IDRS Generated Refund (IGR) No See IRM 3.11.106.5.6, CCC “O”
    -Module Freeze.)
    6459 Return Preparers Checksheet (IRC 6694 and IRC 6695) No  
    6800 Request for Missing Information Or Papers to Complete Your Tax Return No  
    7004 Application for Automatic 6-Month Extension of Time to File Certain Business Income Tax, Information, and Other Returns No  
    6882 IDRS/Master File Information Request Yes Route on Form 4227, Intra-SC Reject or Routing Slip, to Customer Service.
    8821 Tax Information Authorization (TIA) Yes 1. Edit taxpayer name and SSN on Form 8821, if missing.
    2. Edit received date on Form 8821.
    3. Domestic address – Route to Memphis CAF. Foreign (International) address – Route to Philadelphia CAF.
    4. Edit action trail on tax return.
    8886 Reportable Transaction Disclosure Statement No  
    8892 Application for Automatic Extension of Time To File Form 709 and/or Payment of Gift/Generation-Skipping Transfer Tax No  
    9465 Installment Agreement Request Yes Route to Collection, using Form 4227, Intra-SC Reject or Routing Slip.
    13133 Expedite Processing Cycle No Used to flag special returns for processing on an expedite basis (replaces 6469, Expedite Processing Request). See IRM 3.11.106.2.5.3, Examination Prepared. See IRM 3.11.106.2.5.4, Examination Secured.
    Sch. R–1 Generation— Skipping Transfer Tax (Direct Skips From a Trust Payment Voucher Yes (If Schedule R-1 has money amounts other than zero on Page 1, Lines 1 through 6.) Rebatch as Program 75700 to Accounting. NMF.
    Forms 1065 (Original) U.S. Return of Partnership Income Yes Process as directed per instructions in IRM 3.11.15.
    Copies of Forms 1065 U.S. Return of Partnership Income No Leave attached to Forms 706 and 709 series returns.
    Forms 1120 (Original) U.S. Corporation Income Tax Return Yes Process as directed per instructions in IRM 3.11.16.
    Copies of Forms 1120 U.S. Corporation Income Tax Return No Leave attached to Forms 706 and 709 series returns.
    Forms 1120S (Original) U.S. Income Tax Return for an S Corporation Yes Process as directed per code and edit instructions contained in 3.11.16.
    Copies of Forms 1120S (copies) U.S. Income Tax Return for an S Corporation No Leave attached to Forms 706 and 709 series returns.
    Other Business Returns (Originals) (Various return types and titles) Yes (if the return has an original signature) Process as directed per code and edit instructions used for processing of that form type..
    Copies of Other Business Returns (various return types and titles) No Leave attached to Forms 706 and 709 series returns.

3.11.106.2 
(01-01-2009)
Document Control Instructions

  1. The following instructions pertain to Document Control.

3.11.106.2.1 
(01-01-2009)
Blocking

  1. Sort Estate tax returns (Form 706 and 706-NA) into blocks of 15 or less.

  2. Sort Gift tax returns (Forms 709), and Forms 706-GS(D) and 706-GS(T) into blocks of 50 or less. See IRM 3.10.72, Campus Mail
    and Work Control – Extracting, Sorting, and Numbering.

  3. Separate accounting controls are established for each block created.

3.11.106.2.1.1 
(01-01-2009)
Numbered Returns

  1. Numbered returns will be received in Document Perfection after blocking, numbering, and listing in Deposit Activity.

  2. Any returns requiring subsequent action for perfection cannot be withdrawn from the block in Document Perfection. They can
    be coded for later withdrawal.

3.11.106.2.1.2 
(01-01-2009)
Unnumbered Returns

  1. Unnumbered returns that are blocked should be withdrawn from the batch and appropriate action taken to perfect the returns.

3.11.106.2.1.3 
(01-01-2009)
Document Control

  1. A Document Locator Number (DLN) is assigned to each document processed in the ADP System and is used to locate the document.

  2. Examine the documents to ensure that all documents in a block are the same type and are in DLN order. ( See Figure 3.11.106-1.)

    Figure 3.11.106-1

    This image is too large to be displayed in the current screen.

    Please click the link to view the image.

    Figure 3.11.106-1 – Document Locator Number

  3. The type of document is defined as a specific tax class and document code explained in Document 6209, IRS Processing Codes
    and Information.

3.11.106.2.1.4 
(01-01-2009)
Numbered Return

  1. The following information pertains to numbered returns:

    If Then
    The document is a different type than the numbered block in which it is found Use either CCC “U”
    or Action Code 610, whichever is applicable.
    The numbered return is in an unnumbered batch of documents 1. Give it to your manager for inclusion in the correct batch.

    Note:

    A re-input document may have two different DLNs stamped on it because of reblocking. When this occurs, determine the correct
    DLN from the Form 3893, Re-Entry Document Control, and line through the old DLN on the return.

    The first eleven digits of the DLN on the documents in a block do not agree with the DLN stamped on Form 1332, Block and
    Selection Record, and on the face of the Block Jacket     		1. Bring any difference to the attention of your manager.
    2. Check only the DLN of the first document in the block.
    3. Circle the number on the Form 1332 which represents the number of documents in the block.

3.11.106.2.1.5 
(01-01-2009)
Block Control Document

  1. A block of documents must be controlled by a Block Control Document.

  2. The Block Control Documents are as follows:

    • Form 1332, Block and Selection Record, for no-remittance documents.

      Note:

      Generally, no-remittance returns will be processed through Code and Edit unnumbered. There should be no occasion for a block
      of no-remittance returns to be examined under Form 1332 control.

    • Form 3893, Re-Entry Document Control, for re-entry of document(s) under original DLN.

    If Then
    A block does not have a control document Send back to the originating unit, routed through Accounting.
    More than one document is being re-entered from the “same”
    original block     		1. Attach Form 3893, Re-Entry Document Control, to the first document in the re-entry block.
    2. If more than one document is in the block, enter the number of documents in the document count box of Form 3893.
    3. Leave Form 3893 attached to the front of the return.

3.11.106.2.2 
(01-01-2009)
Attachments to Documents

  1. The following information pertains to attachments to documents.

3.11.106.2.2.1 
(01-01-2009)
Examination of Attachments

  1. The following information pertains to examination of documents:

    Note:

    Attachment must contain name, address, Social Security Number (SSN) and received date. Enter, if missing.

    If Then
    There are attachments 1. Examine all attachments to the returns being processed and take proper action.
    2. Remove attachments only if specific instructions require it.
    3. See IRM 3.11.106.1.6, Forms List.

3.11.106.2.2.2 
(01-01-2009)
Unrelated Attachments

  1. The following information pertains to unrelated attachments:

    Note:

    Attachment must contain name, address, SSN and received date. Enter, if missing.

    If Then
    There is a request for adjustment of another document Remove the attachment requesting adjustment and forward via Form 4227, Intra-SC Reject or Routing Slip, to the Adjustments
    function for subsequent action.
    Other unrelated documents (i.e., requests for tax forms, or letters requiring a reply) 1. Remove from the return being processed and route via Form 4227, for necessary action.
    2. Include on Form 4227 action required, name, address, SSN of the taxpayer, and received date.

3.11.106.2.2.2.1 
(01-01-2009)
Taxpayer Requests

  1. The following information pertains to Taxpayer requests:

    If Then
    The taxpayer writes a question or request for assistance on the return itself Photocopy the question/request and the taxpayers TIN, name, and address. Forward this information to the appropriate area.
    Data from any removed attachment is necessary to process the return Copy the removed attachment and attach the copy to the return being processed.
    Taxpayer has requested part of the refund be applied to another account See IRM 3.11.106.5.10, CCC “X”
    – Return Settlement Frozen.

3.11.106.2.2.3 
(01-01-2009)
Related Attachments and Required Action

  1. The following information pertains to related attachments:

    If Then
    Remittance is attached Take to your manager. See IRM 3.8.46.1, Deposit Activity – Discovered Remittance.
    An attachment indicates the taxpayer has included tax liability for more than one type of tax on a numbered or unnumbered
    return     		1. Adjustment action is needed, therefore, prepare Form 3465, Adjustment Request; photocopy Page 1 of return, and route to
    Adjustments on Form 4227, Intra-SC Reject or Routing Slip. Leave action trail on left side of return.
    2. Edit CCC “X”
    on return. ( See IRM 3.11.106.5.10, CCC “X”
    – Return Settlement Frozen.)
    3. Continue processing return.
    An attachment indicates the taxpayer has included more than one tax period on a numbered return (Form 709 series only) 1. Edit Action Code 351.
    2. Attach Form 4227 notating “Multiple Tax Periods”
    .
    An attachment indicates the taxpayer has included more than one tax period on an unnumbered return (Form 709 series only) 1. Send back to taxpayer on Form 6800, Request for Missing Information Or Papers to Complete Your Tax Return.
    2. If Form 6800 cannot be used, correspond using Form 3696, Correspondence Action Sheet.
    An attachment to a tax return indicates that this is the final return for which the taxpayer will be liable Enter CCC “F”
    code on Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, only. The Date of Death must be in
    the same year as the gift was given.
    An attachment to a return establishes reasonable cause for delinquent filing See IRM 3.11.106.5.7, CCC “R”
    – Reasonable Cause for Delinquency.
    Attachment to a return establishes reasonable cause for failure to pay 1. See IRM 3.11.106.5.2, CCC “D”
    – Reasonable Cause for Failure to Pay Taxes Timely.
    2. Attach the envelope to the back of the return. It may be needed to determine the Received Date.

3.11.106.2.3 
(01-01-2009)
Unprocessable Conditions—Forms 706 and 706-NA

  1. The following table pertains to unprocessable conditions for Form 706 and 706-NA, United States Estate (and Generation-Skipping
    Transfer) Tax Returns:

    If Then
    Name, address, and/or SSN is illegible, incomplete or contradictory so that it is not acceptable for computer processing 1. Research IDRS.
    2. If no data found, use Form 4227, Intra-SC Reject or Routing Slip, to route to Entity.
    3. If return is numbered, edit Action Code 230.
    Taxpayer indicates on documents or attachments that the documents represent liability for more than one tax period or more
    than one type of tax     		1. Use Action Code 211 for correspondence.
    2. See IRM 3.11.106.2.2.3, Related Attachments and Required Action.
    Tax data entries on documents are incomplete, illegible, or contradictory so that tax liability cannot be determined Edit Action Code 211 for correspondence.
    Entity cannot be perfected on amended returns with remittance 1. Research IDRS.
    2. If no data found, use Form 4227, Intra-SC Reject or Routing Slip, to route to Entity.
    3. If return is numbered, edit Action Code 320.
    Numbered returns ( Form 706-NA, United States Estate (and Generation-Skipping Transfer) Tax Return (Estate of non-resident
    not a citizen of the United States)) of taxpayers who file Form 706-NA instead of Form 706 (U.S. citizens by reason of birth,
    who established residence in a possession of the U.S. and died after September 2, 1958)     		Edit Action Code 610.
    Early filed Forms 709 Edit Action Code 480 and attach Form 4227.

3.11.106.2.3.1 
(01-01-2009)
Unprocessable Conditions-More Than One Tax Period

  1. The following table pertains to unprocessable conditions for more than one tax period:

    Note:

    Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, are one-time filers.

    If Then
    A remittance return and information for preparation of dummy return(s) is available Edit Action Code 351 and send to the Rejects Function to prepare a dummy return.
    Information is not available Edit Action Code 351 and correspond for information.
    An unnumbered return 1. Send back to taxpayer on Form 6800, Request for Missing Information Or Papers to Complete Your Tax Return.
    2. Prepare dummy return if taxpayer does not correct tax data and it can be determined for each year. Continue processing.
    Non-remittance document is unprocessable because of an illegible name or erroneous SSN Send the document to Entity Control.
    Remittance document is unprocessable because the name is illegible or the SSN is missing CCC “U”
    or use Action Code 320 or 351 on Form 706 and 706-NA, United States Estate (and Generation-Skipping Transfer) Tax Returns,
    and Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, on the return for subsequent entity correction
    by Entity Control and/or Transcript Research System (TRS) Unit. Use the most expeditious means to resolve the problem (routing
    sequence to be determined by the Director).
    No reply to a request for additional information on an unprocessable, incomplete or invalid return Edit “3″
    in the Computer Condition Code area. This suppresses credit interest.
    The taxpayers TIN and/or name cannot be determined from attachments or after research per local Service procedures, and the
    return cannot be sent back to the taxpayer for lack of name, and/or address     		The return is considered as an unprocessable return. The following instructions should be followed:
    1. Numbered—Edit the appropriate Computer Condition Code or Action Code.
    2. Prepare a Form 4227, Intra-SC Reject or Routing Slip, indicating to the Rejects Unit to void the DLN and destroy the return
    in accordance with IRM 1.15.29, Records Management-Records Control Schedule for Service Center Operations.
    3. Unnumbered—Pull from the batch and give to your manager for disposition in accordance with IRM 1.15.29.

3.11.106.2.3.2 
(01-01-2009)
Unprocessable Conditions-Estate Tax Returns

  1. Estate Tax Returns need the following information:

    • Decedents Name

    • Social Security Number

    • Executors Address

    • Signature of executor or one co-executor

  2. If any of the above items are missing or cannot be perfected, give the return to your manager to give to the Estate Tax Attorney.
    Exception: Correspond for signature of executor or one co-executor.

    Note:

    DO NOT correspond for death certificates.

3.11.106.2.3.3 
(01-01-2009)
Unprocessable Conditions-Gift Tax Returns

  1. Gift Tax Returns need the following information:

    • Donors Name

    • Social Security Number

    • Address

    • Signature of donor

    • Spouses Name, if applicable

    • Spouses SSN, if applicable

  2. If any of the above items are missing or cannot be perfected, correspond using Form 6800, Request for Missing Information
    Or Papers to Complete Your Tax Return, if unnumbered. Otherwise, follow numbered procedures.

  3. The following table pertains to unprocessable conditions for an incomplete Form 709, United States Gift (and Generation-Skipping
    Transfer) Tax Return:

    If And Then
    Incomplete return (e.g., only page 1 and/or 2 is present) Return is unnumbered, refund, or zero-balance and information for preparation of dummy page(s) is available 1. Prepare dummy page(s).
    2. If information is not available, correspond using Form 6800. ( See IRM 3.11.106.6.1, Correspondence.)
    Return is numbered or unnumbered, balance due and information for preparation of dummy return is available 1. Prepare dummy page(s).
    2. If information is not available, complete Form 3696, Correspondence Action Sheet, and edit Action Code 211 on Form 709.
    ( See IRM 3.11.106.6.1.)

  4. The Internal Revenue Code required quarterly gift tax returns for tax periods 197012 to 198012. If Form 709, United States
    Gift (and Generation-Skipping Transfer) Tax Returns, for these periods are received, send the returns to Cincinnati Compliance
    Services, Estate and Gift Tax Campus Operation on Form 4227, Intra-SC Reject or Routing Slip.

3.11.106.2.3.4 
(01-01-2009)
Unprocessable Conditions-FRIVOLOUS RETURNS AND CLAIMS

  1. A frivolous argument is used for the purpose of expressing dissatisfaction with the substance form or administration of the
    tax laws by attempting to illegally avoid or reduce tax liabilities.

  2. Review the return to determine whether it appears to be a frivolous return.

    If Then
    The return meets any of the conditions in the table below.

    Caution:

    If the return shows Action Code 331 and has a Form 4227, Intra-SC Reject or Routing Slip, attached with the remarks: “Refer
    to Exam FRP for audit after processing”
    , continue to next procedure.

    		Remove return from the batch and place the return in the locally designated basket for Examination, Frivolous Return Processing
    (FRP) for review.

    Note:

    IRM 4.10.12, Frivolous Return Program, requires Examination to expedite the return and make a determination whether it qualifies
    as a frivolous return within two (2) business days. If a determination is not made within the allowed timeframe, the Examination
    examiner will edit Action Code 331 in the lower left margin of Form 706, United States Estate Tax Return, or Form 709, United
    States Gift (and Generation-Skipping Transfer) Tax Returns preceded with the letters “AC”
    .

    Examination has selected the return as frivolous, e.g., indicated by an Action Code 331 and a Form 4227, Intra-SC Reject
    or Routing Slip, with the remarks: “Refer to Exam FRP for audit after processing”
    , but sends the return for processing     		Continue processing the return using procedures in IRM 3.11.106. However, do not circle or void the Action Code indicating
    a frivolous return.

    Note:

    Returns having only zeros, no entries, are blank, or indicate “None”
    , “Not Liable”
    , etc. with no evidence of frivolous arguments are not to be considered as frivolous returns.

  3. Recognized frivolous arguments made by businesses include, but are not limited to, the examples in IRM 4.10.12, Frivolous
    Return Program, shown below:

    Reason Description
    Alleged Churches/First Amendment Income from non-religious sources and may claim a vow of poverty.
    Altered Form Altering any or all line items with the intent of facilitating non-compliance with the tax laws.
    Altered Jurat/UCC 1-207 Return contains income and deductions but the jurat has been altered or stricken. May include reference to UCC 1-207 or a
    statement that the return was not signed under penalties of perjury.
    Amended Returns/Form 843 Claim Amended return or a Form 843 filed to obtain a total refund of all taxes paid in prior years, based on a tax avoidance argument.
    Challenges to Authority/Due Process Questions various administrative authorities such as delegation orders, summons authority, privacy act, etc., argues that
    they must be afforded a hearing or a trial before taxes can be assessed or before property can be seized.
    Challenged to Authority/Title 26 or “law”
    in other documents     		Argues that Title 26 of the United States Code is not law because it was never enacted as named.
    Disclaimer Submits a disclaimer stating, “disclaims the liability for the tax due”
    , making the liability on the return zero.
    Fifth Amendment Assertion of the Fifth Amendment right against self-incrimination as a basis for not providing any financial information.
    IRS is a Private Organization/Collects Tribute, Not Taxes Argues that the IRS is an entity named the Internal Revenue and Tax Service, Inc., which was incorporated in Delaware in 1933,
    it is a collection agency for the Federal Reserve Bank, or is part of the United Nations and is clandestinely leading the
    taxpaying public into a “new world order”
    .
    Obscene, Vulgar, Harassing Submits documents or other materials indicating that non-filing is due to dissatisfaction with tax policies or taxation in
    general. Often, this argument is expressed with obscene, vulgar, or crude language and characters in an extremely demeaning
    manner.
    Protest Against Government Action/Inaction Argues that refusal to file or pay is justified because they disagree with government policies or spending plans.
    Sixteenth Amendment Argues the Sixteenth Amendment was not properly ratified and therefore the federal government does not have the legal authority
    to collect an income tax without apportionment.
    Taxes are Voluntary/Law Does Not Require Submits a return, amended return, or correspondence that argues income taxes are voluntary.
    U.S. v. Long Submits a return with zero money amounts much the same as the “Zero Return”
    category and “U.S. v. Long”
    is referenced. (See note in Zero Returns below.)
    Unsigned Returns The individual completes a return but fails to sign. A statement indicating disagreement with the tax system is attached or
    added to the return.
    Valuation Income is not taxable because of the declining fair market value of the dollar, because the dollar is not backed by gold/silver,
    because the value of services is offset by the value of the labor (barter income), etc.
    Zero Returns Submits a return with zero money amounts. A statement is attached claiming there is no section of the Internal Revenue Code
    that established an income tax liability. The statement may also contain arguments regarding the definition of income.

    Note:

    Returns having only zeros, no entries, are blank, or indicate “None”
    , “Not Liable”
    , etc., with no evidence of frivolous arguments are not to be considered as frivolous returns.

    Other All others. This category includes non-filer accounts resulting from initial compliance check such as cross-reference TINs.

    Note:

    Frivolous arguments citing “Collection Due Process”
    (CDP) should be reviewed by Collections for possible referral to Appeals. Refer to IRM 5.19.8, Collection Liability Collection
    Appeal Rights, for additional information.

3.11.106.2.3.5 
(01-01-2009)
Unprocessable Conditions-No Entry Return

  1. A “Tentative”
    estate or gift tax return on the appropriate form showing only the taxpayers name, address, and estimated amount of tax
    due is not considered a complete return since it does not contain a signature, information about the decedents gross estate
    ( Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return) or the total gifts of donor ( Form 709, United
    States Gift (and Generation-Skipping Transfer) Tax Return), and allowable deductions, credits and prepayments.

  2. An estate or gift tax return containing only the taxpayers name and referring to various constitutional provisions which
    are said to excuse filing a return should be treated as a “no entry return”
    , invalid, and unprocessable.

  3. A bare statement of gross/net estate (Form 706) or total gifts (Form 709) constitutes an invalid and unprocessable return.

  4. An estate or gift tax return which is blank, except for the heading and the signature, is considered as a “no entry return”
    , invalid and unprocessable.

  5. If a return is not sent back to the taxpayer for unprocessable items, the statute begins when IRS receives the return. If
    the return is sent back to the taxpayer via Form 6800, Request for Missing Information Or Papers to Complete Your Tax Return,
    the statute begins when the reply is received.

    If Then
    An unprocessable estate or gift tax return is received in the mail and indicates tentative, undetermined, etc. (numbered or
    unnumbered)     		1. Enter zeros on all transcription lines, Page 1, except Line 9 ( Form 706, United States Estate (and Generation-Skipping
    Transfer) Tax Return), and enter the Unified Credit amount for Date of Death (DOD) on Lines 9 and 11.
    2. For estate and gift tax returns, process as incomplete using the best available information.

    Note:

    The statute begins with the earliest received date.

3.11.106.2.4 
(01-01-2009)
♦Re-Entry Documents♦

  1. A return posted to the wrong account or module or attempting to post must be reprocessed to post to the proper account or
    module.

  2. Each re-entry return must have a Form 3893, Re-Entry Document Control, or Form 13596, Reprocessing Returns, attached. This
    will indicate to the examiner that special handling is required.

    • Form 3893 is used to re-input documents.

    • Form 13596 is used to reprocess documents.

  3. Always leave a Form 3893 or Form 13596 on the front of the return. It must remain as a permanent part of the return.

    Exception:

    If the return is more than 2 years and 6 months from return due date, do not use Form 3893 or Form 13596 reprocessing procedures.
    Route the return to the Statute Control Unit following statute procedures.

  4. Examine Form 3893 or Form 13596 to determine the action needed to make the return processable.

    If Then
    Form 3893 or Form 13596 is missing 1. Edit Action Code 630 on Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, series and Form
    709, United States Gift (and Generation-Skipping Transfer) Tax Returns.
    2. Route to Receipt and Control, using Form 4227, Intra-SC Reject or Routing Slip.
    Form 3893 or Form 13596 is attached Determine if the return was edited according to current processing instructions.

3.11.106.2.4.1 
(01-01-2009)
♦Form 3893 – Re-Entry Document Control♦

  1. Form 3893, Re-Entry Document Control, is used to re-input a return that has not been posted to an account or module.

  2. If more than one return is in the batch and only the top Form 3893 has an entry in Box 1 (Alpha/Numeric block control number),
    edit all returns using current processing procedures and keep all returns clipped together.

  3. If the return was not edited according to current processing procedures, circle out any action codes, Computer Condition Codes
    and any other edit marks that are no longer applicable. Re-edit according to current processing procedures.

    Note:

    Do not send letter 1382C if a request for reasonable cause is attached.

  4. If the return was edited according to current processing procedures, ensure that the information from Form 3893 is edited
    on the return.

    Form 3893 Action Taken
    Box 14 (Remarks) Ensure that the information is edited to the return.
    Box 15 (Process as) 1. Circle out the green rocker and edit marks that may indicate a receipt of remittance.
    2. Do not change any tax due amounts.

  5. Examine returns that have any color other than red editing in the tax data section to determine if the corrections are the
    result of improper perfection or taxpayer error.

    If Then
    Improper perfection Edit the same correction in red to the appropriate area.
    Taxpayer error Leave the entries as shown on the document.

  6. A received date must be present on all Re-Entry returns:

    If Then
    Received date is not present Edit a received date to the middle of the return.
    Multiple received dates are present Circle out all but the earliest date.

  7. When additional information is still needed to make the return processable, prepare Form 13195 or Form 4227 for the appropriate
    action (e.g., correspondence, research, etc.).

  8. When perfection is not possible, edit Action Code 630 on the return and attach Form 4227 noting, “Perfection Not Possible”
    and return to initiator.

3.11.106.2.4.2 
(01-01-2009)
♦Form 13596 – Reprocessing Returns♦

  1. Form 13596, Reprocessing Returns, is used to reprocess a return to the correct account or module that had previously posted
    to the wrong account or module.

  2. If the return was not edited according to current processing procedures, circle out any action codes, Computer Condition Codes
    (including CCC “G”
    ) and any other edit marks that are no longer applicable. Re-edit according to current processing procedures.

    Note:

    Do not edit CCC “G”
    on an amended return.

  3. If the return was edited according to current processing procedures, ensure that the information from Form 13596 is edited
    on the return.

    Form 13596 Action Taken
    TIN correction Edit correct TIN on return.
    Tax period correction Edit correct tax period ended on return.
    Reasonable cause Edit appropriate computer condition code.

    1. Edit CCC “R”
      if the “FTF”
      box is checked.

    2. Edit CCC “D”
      if the “FTP”
      box is checked.

  4. Examine returns that have any color other than red edited in the tax data section to determine if the corrections are the
    result of improper perfection or taxpayer error.

    If Then
    Improper perfection Edit the same correction in red to the appropriate area.
    Taxpayer error Leave the entries as shown on the document.

  5. A received date must be present on all reprocessed returns.

    If Then
    Received date is not present Edit a received date to the middle of the return.
    Multiple received dates are present Circle out all but the earliest date.

  6. Circle out the green rocker and edit marks that may indicate a receipt of remittance.

3.11.106.2.5 
(01-01-2009)
♦Secured/Prepared Returns♦

  1. Compliance functions secure returns from the taxpayer and also prepare returns if the taxpayer does not provide them.

    1. Returns notated “6020(b)”
      are prepared by Collections.

    2. Returns notated “TC 59X”
      or “ICS”
      (Integrated Collections System) are secured by Collections.

    3. Returns notated “SFR”
      (Substitute for Return) are prepared by Examination.

    4. Returns notated “Process as Original”
      with an attached Form 13133, Expedite Processing Cycle, are secured by Examination. The “Delinquent Return”
      box on Form 13133 should be checked.

3.11.106.2.5.1 
(01-01-2009)
♦IRC 6020(b) – Prepared by Collection♦

  1. When the taxpayer fails to file a required return, Section 6020(b) of the Internal Revenue Code is the authority for the IRS
    to prepare the return.

  2. These returns are identified by the notation “PREPARED AND SIGNED UNDER THE AUTHORITY OF SECTION 6020(b) OF THE INTERNAL REVENUE
    CODE”
    which is located in the center bottom of Page 1 of the return.

    1. Returns must have a Received Date. If no Received Date is present per the Compliance Function, follow the normal procedures
      for editing the Received Date.

    2. Returns must be signed by Compliance Function representative. If not signed, route to Compliance using Form 4227, Intra-SC
      Reject or Routing Slip.

    3. Edit CCC “D”
      if the Compliance Function representative notates “DO NOT ASSESS FAILURE TO PAY PENALTY”
      .

    4. Do not send the return back or correspond with the taxpayer for unprocessable conditions.

    5. Edit CCC “W”
      if the Received Date is more than 2 years 9 months after the return due date. Do not send the return to Statute Control.

3.11.106.2.5.2 
(01-01-2009)
♦Collection Secured♦

  1. These returns are identified by the notations “TC 59X”
    or “ICS”
    .

    1. Do not edit CCC “G”
      on these returns.

    2. Correspond for conditions that cannot be processed (e.g. missing signatures, missing schedules, etc.).

    3. Edit CCC “W”
      if the Received Date is more than 2 years 9 months after the return due date. Do not send the return to Statute Control.

3.11.106.2.5.3 
(01-01-2009)
♦Examination Prepared♦

  1. These returns are identified by the notation “SFR”
    or “SUBSTITUTE RETURN”
    on Page 1.

    1. Return must have a Received Date. If no Received Date is present, follow the normal procedures for editing the Received Date.

    2. Do not send back or correspond with the taxpayer for unprocessable conditions. If the return is completely unprocessable, use No
      Reply procedures.

    3. If Form 13133, Expedite Processing Cycle, is attached, edit the computer condition codes that are checked on the form.

    4. Edit CCC “W”
      if the Received Date is more than 2 years 9 months after the return due date. Do not send the return to Statute Control.

3.11.106.2.5.4 
(01-01-2009)
♦Examination Secured♦

  1. These returns are identified by the notation “Process as Original”
    on Page 1 of the return and a Form 13133, Expedite Processing Cycle, attached with the “Delinquent Return”
    box checked.

    1. Do not edit CCC “G”
      on these returns.

    2. Correspond for conditions that cannot be processed (e.g., missing signatures, missing schedules, etc.).

    3. On the attached Form 13133, review the “Hold Credits on Module-Generates TC 570″
      box to determine if the return should be edited with CCC “X”
      .

    4. Edit CCC “W”
      if the received date is more than 2 years 9 months after the return due date. Do not send to Statute Control function.

3.11.106.2.6 
(01-01-2009)
Precomputed Penalties Other Than Delinquency or Failure to Pay

  1. The following information pertains to penalties other than delinquency to pay:

    Type of Penalty What to Do
    Penalty other than delinquency or failure to pay is present (e.g., fraud, negligence, etc.) 1. Prepare Form 3465, Adjustment Request, requesting assessment of penalty.
    2. If return remittance includes penalty amount, request on Form 3465 that this portion of remittance be applied to assessment.
    3. Note on return “3465 prepared”
    and route Form 3465 to Adjustment function. ( See Figure 3.11.106-2.)
    Penalties and interest are imposed by Service Enforcement Officers and reasonable cause is given and accepted per documents
    attached     		Enter necessary Computer Condition Code in condition code area of return (as determined by Examination).

    Figure 3.11.106-2

    This image is too large to be displayed in the current screen.

    Please click the link to view the image.

    Figure 3.11.106-2 – Form 3465, Adjustment Request, for Assessment of Penalty

3.11.106.2.7 
(01-01-2009)
Obsolete Forms

  1. The following information pertains to obsolete returns:

    If Then
    Taxpayer uses an obsolete form as a current year return or files on an improper form, but computer program has been changed
    to accommodate current revision of form (e.g., Form 709, United States Gift (and Generation-Skipping Transfer) Tax Returns,
    for tax periods prior to 7701), and line entries differ from the current year form     		1. Renumber form to current year revision, if possible.
    2. Copy data to be input to the BMF on current year return.
    3. Staple current year return with necessary code and edit markings to the face of taxpayers prior year return.
    4. Use entity data on taxpayers return, if possible, by cutting off or folding entity portion of the dummy return before
    stapling to taxpayers return.
    5. NEVER destroy, mutilate, obliterate, or throw away any part or portion of return submitted by taxpayer.

3.11.106.2.8 
(01-01-2009)
♦Refund Returns/45-Day Jeopardy/Million Dollar Refunds♦

  1. Document Perfection will identify refund returns and initiate requests for manual refunds in the following instances.

    Note:

    Expeditious processing of refund returns is critical if the 45-day period is about to expire.

    If Then
    A refund return is batched in a non-refund batch 1. Completely edit the return.
    2. Pull the return from the non-refund batch and merge into a refund batch using local procedures.

    Note:

    Follow the instructions below when the processing date is more than 20 days after the received date or the return due date
    or the refund is $1,000,000 or more.

    The processing date is more than 20 days after received date or the return due date (whichever is later) and the 45-day interest
    free period is in jeopardy ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    Note:

    Refund in this instruction means only the amount requested to be refunded to the taxpayer, not overpayments transferred to
    other periods.

    		Unnumbered Returns:
    1. Edit Action Code 341.
    2. Attach Form 4227, Intra-SC Reject or Routing Slip, and give the return to your manager for expedite processing.
    Numbered Returns:
    1. Edit Action Code 341 and leave in the batch.
    The refund is $1,000,000 or more Unnumbered Returns:
    1. Do not leave the return in the block.
    2. Edit Action Code 341 ( Form 706 and 706-NA, United States Estate (and Generation-Skipping Transfer) Tax Returns, and Form
    709, United States Gift (and Generation-Skipping Transfer) Tax Returns). Edit CCC “U”
    for all other 706/709 series returns.
    3. Attach Form 4227 and give the return to your manager for expedite processing.
    Numbered Returns:
    1. Edit Action Code 341 for Forms 706, 706-NA, and 709 and leave in the batch. Edit CCC “U”
    for all other 706/709 series returns and leave in the batch.
    The W&I Submission Processing Liaison for Taxpayer Advocate Services (TAS) issues walks a return through Code & Edit In addition to normal editing:
    1. Edit CCC “O”
    to freeze the refund.
    2. Edit CCC “Y”
    to send the return to ERS.

3.11.106.2.9 
(01-01-2009)
Penalty and Interest Code

  1. The following information pertains to penalty and interest.

  2. Edit Code “1″
    when the return reflects a precomputed delinquency penalty and/or interest and the return is received ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ . If only interest is shown, enter CCC “R”
    and P&I Code “1.”
    If only penalty is shown, enter P&I Code “1.”

    If Then
    The return has precomputed penalty or interest, but no Received Date Determine Received Date and edit it. See IRM 3.11.106.8, Received Date.
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Enter P&I Code “1″
    .
    A Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return; Form 706-GS(D), Generation-Skipping Transfer
    Tax Return For Distributions; Form 706-GS(T), Generation-Skipping Transfer Tax Return For Terminations; and Form 706-NA,
    United .States Estate (and Generation-Skipping Transfer) Tax Return (Estate of nonresident not a citizen of the United States)     		Edit the P&I Code in the upper right margin. ( See Figure 3.11.106-3.)
    Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return Enter the P&I Code between Lines 2 and 3 of the Tax Computation Section.
    A precomputed penalty, other than delinquency or failure to pay (i.e., Section 6660 penalty) is shown on the return Prepare Form 3465, Adjustment Request.

    Note:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Figure 3.11.106-3

    This image is too large to be displayed in the current screen.

    Please click the link to view the image.

    Figure 3.11.106-3 – Penalty and Interest Code

3.11.106.3 
(01-01-2009)
Tax Information Authorization (TIA) – Form 706 Only

  1. A valid Form 2848,Power of Attorney, attached to Form 706,United States Estate (and Generation-Skipping Transfer) Tax Return,
    takes precedence over a TIA. If detaching and routing a Form 2848, do not edit a TIA.

    Note:

    A valid Form 2848 must contain: a received date, taxpayers name and SSN, signature and date.

  2. The following information pertains to TIA for Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return,
    only:

    If Then
    A TIA declaration on Page 2 of Form 706 is signed by someone other than the Executor 1. Edit “TIA”
    on Form 706 in the bottom margin and also in the top margin, left side, of Page 1.
    2. If Page 2 of Form 706 states, “See attached for TIA Information”
    , flag attachment page.
    3. Place return behind the batch when finished.

    Note:

    Clerks will copy TIAs and attachment pages.
    4. Route TIAs (domestic address) to Memphis CAF function and TIAs (foreign (international) address) to Philadelphia CAF function.

3.11.106.4 
(01-01-2009)
Error Resolution System Coding (ERS) (Forms 706, 706-NA, and 709 Only)

  1. The following sections contain information pertaining to ERS coding.

3.11.106.4.1 
(01-01-2009)
Background

  1. The Error Resolution System (ERS) replaced the input perfection procedures for manual corrections to paper Error Register.

  2. ERS displays data on terminal display screens with corrections made and integrity verified in a real time environment.

  3. The Document Perfection tax examiner will have the first opportunity to identify a record having a problem which requires
    correspondence, research or other action in order to make the return processable.

3.11.106.4.2 
(01-01-2009)
♦Action Codes (General)♦

  1. Action Codes are used to indicate whether correspondence, research, or some other action is needed. The Action Code will set
    the suspense period to be assigned to the return and place the return in the workable or unworkable suspense inventory.

  2. When necessary, a three-digit Action Code will be assigned by the tax examiner.

  3. Action codes are valid on Form 706 and 706-NA, United States Estate (and Generation-Skipping Transfer) Tax Returns, and
    Form 709, United States Gift (and Generation-Skipping Transfer) Tax Returns. Any other returns are processed through a manual
    correction system. Use Computer Condition Code “U”
    on these returns when action such as correspondence is needed.

  4. Edit Action Codes in the bottom left margin of the return for Form 706. ( See Figure 3.11.106-4.)

    Figure 3.11.106-4

    This image is too large to be displayed in the current screen.

    Please click the link to view the image.

    Figure 3.11.106-4 – Action Code and Form 3696, Correspondence Action Sheet

  5. Edit Action Codes for Forms 706-NA in the bottom center margin of the return.

  6. Assign Action Codes in the following priority order:

    • Action Code 310 (Statute Control)

    • Action Code 320 (Entity Control)

    • Action Code 4XX

    • Action Code 6XX

    • Action Code 3XX

    • Action Code 2XX (Correspondence)

    Exception:

    Use Action Code 211 before Action Code 341 to ensure the return is complete before a manual refund is issued.

  7. Only one Action Code can be assigned to a return at one time. If more than one Action Code is needed, edit the second Action
    Code on Form 4227.

  8. If more than one Action Code of the same priority is required (e.g., 342 and 355), edit the Action Code with the shortest
    suspense period and attach Form 4227 to indicate the second unprocessable condition.

  9. Edit the following Action Code when a return cannot be perfected from the information present:

    Action Code Description
    211 (First Correspondence) 1. Return is so illegible, incomplete, or contradictory that it is not acceptable for computer processing.
    2. The taxpayer notates on the return or attachment that they are reporting tax for more than one Tax Period or for more than
    one type of tax.
    225 (Missing Signature Correspondence) Unsigned return (only issue for correspondence).
    226 (Missing Signature International Correspondence) Unsigned foreign (international) return (only issue for correspondence).
    610 (Renumbered Non Remittance) or
     611 (Renumbered with Remittance)     		A return is mis-blocked (e.g., Form 706-NA found in a 706 batch of work, or Form 706 is found in a batch of Forms 709, etc.).
    480 (Early Filed-Suspense) The return is an early filed current return. See IRM 3.11.106.8.7.1, Tax Period-Early Filed Returns.

  10. Continue perfecting the return after editing the Action Codes.

3.11.106.4.2.1 
(01-01-2009)
Numbered Return

  1. The following information pertains to numbered returns:

    If Then
    A numbered return cannot be perfected 1. Edit Action Code 211.
    2. This code applies only to numbered returns ( Form 706 and 706-NA, United States Estate (and Generation-Skipping Transfer)
    Tax Returns, and Form 709, United States Gift (and Generation-Skipping Transfer) Tax Returns) and will cause a record to
    print on the SC New Suspense List.
    However, continue to perfect the document to the extent possible as though it did not contain an Action Code.

3.11.106.4.3 
(01-01-2009)
Action Codes (AC)—Forms 706, 706-NA, and 709

  1. Some of the conditions in which Form 706 and 706-NA, United States Estate (and Generation-Skipping Transfer) Tax Returns,
    and Form 709, United States Gift (and Generation-Skipping Transfer) Tax Returns, would be assigned an Action Code (AC) are
    described in the following: See IRM 3.11.106.4.3.1, AC 610/611, and See IRM 3.11.106.4.3.2, AC 620.

3.11.106.4.3.1 
(01-01-2009)
AC 610/611

  1. The document has been misblocked (the DLN is not the proper one to be assigned to the document), but it is an ADP document.

    • AC 610—Non-Remittance

    • AC 611—Remittance

3.11.106.4.3.2 
(01-01-2009)
AC 620

  1. The document is for a tax period prior to the beginning of ADP Processing for that type of document. Also, if the document
    is of a type not prescribed to be input to the ADP System.

3.11.106.4.4 
(01-01-2009)
Additional Action Codes

  1. The Action Codes used throughout the handbook are the codes to be edited for those specific situations. The following is a
    list of codes that are valid for Document Perfection use and may be used for other situations that may arise during processing.
    The codes, their meanings, suspense periods, and function are as follows:

    Action Code
    and Description    		 Workday
    Suspense
    Period    		 Function
    211 First Taxpayer Correspondence 40 RA, EC, S
    212 Second Taxpayer Correspondence 25 RA, EC, S
    213 Correspondence to Other than Taxpayer 40 RA, EC
    215 Assistant Commissioner (International Correspondence) 45 RA, EC, S
    225 Taxpayer Correspondence (Signature Only) 40 CE, EC, S
    226 International (AC) (Signature Only) 45 CE, EC, S
    In-House Research
    310 Statute Control—Not cleared 10 RA, EC, S
    320 Entity Control—Filing Requirement, etc. 10 RA, EC, S
    Routing—Criminal Investigation Division
    331 Protest Review 3 RA, EC
    332 QRDT Review 3 RA, EC
    333 Prompt Audit 10 RA, EC
    334 Joint Committee 10 RA, EC, S
    335 Protest Case 10 RA, EC, S
    336 QRDT Case 10 RA, EC, S
    337 Other CID 10 RA, EC, S
    Routing—Accounting
    341 Manual Refund 10 RA, EC, S
    342 Credit Verification 10 RA, EC, S
    343 Other Accounting 10 RA, EC, S
    351 TIN Research 0 EC, S
    KIF/MFTRA Research
    352 Name Research 3 RA, EC, S
    353 Address research 3 RA, EC, S
    354 Filing Requirements Research 3 RA, EC, S
    355 Other INOLE/BMFOL or MFTRA Research 3 RA, EC, S
    360 Other Submission Processing Center Routing/In House 10 RA, EC, S
    370 Examination 10 RA, EC, S
    383 1040EZ Audit Code 0 RA
    Management Suspense
    420 Management Suspense—A 5 RA, EC, S
    430 Management Suspense—B 10 RA, EC, S
    440 Management Suspense—C 15 RA, EC, S
    450 Management Suspense—D 20 RA, EC, S
    460 Management Suspense—E 25 RA, EC, S
    480 Early Filed Suspense 150 RA, EC, A
    Missing Document
    510 Missing Document 0 RA
    511 Missing Document
    1st Suspense     		25 EC, S
    512 Missing Document
    2nd Suspense     		20 S
    513 Missing Document 20 S
    515 Missing Document
    Short Term     		5 EC, S
    550 Mag. Tape Attachment 3 RA
    551 Mag. Tape Inconsistent Data 3 RA
    Rejects
    610 Renumber 0 RA, EC
    611 Remittance Renumber 0 S
    620 NMF/Non- ADP 0 RA, EC, S
    630 Re-input 0 EC
    650 Assistant Commissioner (International) (AC/IN) 0 RA, EC
    660 Data Control Delete
    (TEP Delete)     		0 GEN
    670 Deleted Missing Document 0 GEN
    Duplicate DLN (Computer Generated Codes)
    700 Duplicate Block 0 DLN
    711 Duplicate Document
    DLN from RA     		NA GEN
    712 Duplicate Document
    DLN from RA     		NA GEN
    713 Duplicate Document
    DLN from Unpostables     		NA GEN
    714 Duplicate Document
    DLN from Unworkable Suspense     		NA GEN
    715 Duplicate Document DLN from Workable Suspense NA GEN
    Unpostable Records (Computer Generated Codes)
    900 Unpostable Record 0 GEN

3.11.106.5 
(01-01-2009)
♦Computer Condition Codes—CCCs♦

  1. Computer Condition Codes (CCCs) are used to identify a special condition or computation to post to the Masterfile.

  2. Computer Condition Code(s) will be edited in the upper left corner of the return for all Estate and Gift Tax (Forms 706 and
    709 series) returns.

  3. The following common Computer Condition Codes (CCCs) will be used on all documents input to the Business Master File (BMF):

    Code Explanation
    B Victims of Terrorism Relief
    D Reasonable Cause For Failure to Pay Taxes Timely
    F Final Return
    G Amended, superseding, duplicate, tentative, revised, substitute, or taxpayer checks the “amended return”
    box
    L Treaty based positions. IRC 6114 written on Forms 706, 706-NA, and 709
    O Forms 3753 and 5792, Module Freeze – indicates a manual refund was issued
    R Reasonable cause for delinquency
    U Unprocessable document
    W Indicates the return has been cleared by Statute Control
    X Credit freeze
    Y Combat zone return, early filed return, Form 709 returns under Revenue Ruling 71-132, and Form 709 returns filed by non-residents
    who are not citizens
    3 No reply to correspondence
    7 Reasonable Cause Statement Denied

  4. Since all Computer Condition Codes are not valid for each (and every) 706/709 series return, consult the following sections,
    as appropriate, before editing a code for the specific (type of) return being processed. Tax examiners code various documents
    for input to the BMF.

3.11.106.5.1 
(01-01-2009)
CCC “B”
—Victims of Terrorism Relief

  1. Edit this code to identify Form 706, United States Estate (and Generation-Skipping Transfer) Tax Returns, containing references
    or indications the return was for the estate of a victim killed in a terrorism attack.

  2. If a Form 706 return is annotated at the top of Page 1 of the return “Section 2201″
    or has any indications the return is the result of legislation impacting victims of terrorist attacks (April 19, 1995
    — Oklahoma City bombing; September 11, 2001 — World Trade Center bombing; or references to deaths resulting from anthrax that
    occurred on or after September 11, 2001, and before January 1, 2002):

    1. Edit Computer Condition Code “B”
      .

    2. A special tax rate schedule will apply to victims of terrorist attacks. ERS/Rejects will verify the appropriate tax computation.

    3. Apply all other credits against the estate tax (including unified credit) to these returns.

3.11.106.5.2 
(01-01-2009)
♦CCC “D”
—Reasonable Cause For Failure to Pay Taxes Timely♦

  1. We will no longer code CCC “D”
    if the taxpayer requests abatement for Failing to Timely Pay Taxes when the return is submitted.

    Note:

    In the case of a disaster, specific instructions for the use of this code will be provided at that time.

  2. For Forms 706 and 709 series returns, the Cincinnati Compliance Services, Estate and Gift Tax Campus Operation will make a
    determination regarding reasonable cause and assess any penalty(ies), etc., against the account, if applicable. They have
    determined the return(s) should be processed through the pipeline (without delay) while they are making their determination
    of reasonable cause and assessments of applicable penalties.

  3. The following instructions apply for handling of Forms 706 and 709 series returns:

    1. Make a photocopy of Pages 1 and 2 of the return.

    2. Detach the taxpayers statement from the return.

    3. Attach the photocopy of the return and the taxpayers statement to Form 4227, Intra-SC Reject or Routing Slip, and route
      to the Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.

    4. Continue normal processing of the (original) return.

  4. If a Cincinnati Compliance Services, Estate and Gift Tax Campus Operation representative visits Code and Edit for an on-site
    review for determination(s) of reasonable cause, proceed as follows:

    1. Edit the appropriate Computer Condition Code on the return per Exams instructions.

    2. Continue normal processing of the return.

3.11.106.5.3 
(01-01-2009)
♦CCC “F”
—Final Return♦

  1. Edit Computer Condition Code (CCC) “F”
    when the taxpayer:

    1. States “final”
      on the return or attachments.

    2. Gives a positive indication that they are not liable for filing future returns. Notations such as (but not limited to):

    • Final

    • Deceased

    • Out-of-Business

    • Liquidation

    • Exempt under IRC 501(c)(3)

    • Dissolved

  2. CCC “F”
    on Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, indicates this is the last return of a
    donor who died.

3.11.106.5.4 
(01-01-2009)
♦CCC “G”
—Amended Return♦

  1. See IRM 3.11.106.5.4.1, Amended Returns.

3.11.106.5.4.1 
(01-01-2009)
♦Amended Returns ♦

  1. An amended return may be identified by checking the “Amended”
    box and/or by such words as “Supplemental”
    , “Duplicate”
    , “Additional”
    , or any other positive indication that the taxpayer has filed previously. Filing a “Copy”
    of a return is not sufficient reason to label a return “Amended”
    unless accompanied by a positive statement from the taxpayer.

    Note:

    Forms 706 and 709 series returns do not contain “amended boxes”
    . However, the return(s) might include some written indication(s) by the taxpayer (or their representatives) that a change
    from (or since) the original return was submitted.

  2. Examine the return for attachments. Do not separate any related attachments from the return that the taxpayer has submitted
    to explain the reason for the amended return. This information will be used by Accounts Management. Detach any unrelated documents
    and route them to the appropriate function, using Form 4227, Intra-SC Reject or Routing Slip.

    Note:

    For Forms 706 and 709 series returns, do not detach any attachments.

  3. There is an indication the return is amended and:

    If Then
    TC 59X or ICS was entered on the return by Compliance Services Do not edit CCC “G”
    . Process the return as an original.
    The return is stamped Delinquent Original Cleared for Processing by Statute
    Form 13596, Reprocessing Returns, is attached 1. Do not edit CCC “G”
    .
    2. See IRM 3.11.106.2.4.2, Form 13596, Reprocessing Returns.
    None of the above are present Edit CCC “G”
    . No other codes may be used with CCC “G”
    except CCC “U”
    , “W”
    , “3″
    and/or ERS Action Codes.

  4. Forms 706/709 series returns: Receipt and Control will sort non-remittance amended Forms 706/709 series tax returns and forward
    returns with a domestic or foreign (international) address to Cincinnati Compliance Services, Estate and Gift Tax Campus Operations.
    The following instructions pertain to Forms 706, 706-GS(D), 706-GS(T), 706-QDT, 709.

    If And Then
    Return (without remittance) is marked “Amended”
    , “Revised”
    , “Adjusted”
    , “Subsequent”
    , “Substitute”
    , “Corrected”
    , etc.     		Domestic or foreign (international) address (Block 3a, Form 706, or Block 5, Form 709) 1. Consider the return as amended.
    2. Route to Cincinnati Compliance Services, Estate and Gift Tax Campus Operations.
    Return (with remittance) is marked “Amended”
    , “Revised”
    , “Adjusted”
    , “Subsequent”
    , “Substitute”
    , “Corrected”
    , etc.     		Unnumbered return with domestic or foreign (international) address 1. Consider the return as amended.
    2. Route to Cincinnati Compliance Services, Estate and Gift Tax Campus Operations.
    3. Hand carry return and remittance to supervisor.
    Numbered return with domestic or foreign (international) address 1. Route to Cincinnati Compliance Services, Estate and Gift Tax Operations.
    2. Use Action Code 370 (Examination).
    3. Leave the return in the batch.

  5. See IRM 3.11.106.11.7,for processing amended Forms 706-NA.

  6. The following data must be edited on all amended returns:

    • Name Control (unless Check Digits are present)

    • Social Security Number (SSN)

    • Date of Death (or, Tax Period)

    • Computer Condition Code “G”

    • Received Date

    • Signature

3.11.106.5.5 
(01-01-2009)
♦CCC “L”
—Treaty Based Positions♦

  1. Edit CCC “L”
    when the taxpayer has written “IRC 6114″
    on the top of the return (treaty overrules or modifies tax law).

    Note:

    This applies only to Form 706 and 706-NA, United States Estate (and Generation-Skipping Transfer) Tax Returns, and Form 709, United States
    Gift (and Generation-Skipping Transfer) Tax Returns.

3.11.106.5.6 
(01-01-2009)
♦CCC “O”
—Module Freeze♦

  1. CCC “O”
    is edited when a Pre-Settlement Manual Refund will be made and a Form 3753, Manual Refund Posting Voucher; Form 5792,
    Request for IDRS Generated Refund (IGR); or Form 12857, Refund Transfer Posting Voucher, is attached. Verify that the Name
    Control, SSN, and Tax Period on the return is the same as the data on the form.

  2. When issuing CCC “O”
    :

    1. Research to determine if TC 840 (Manual Refund Transaction) has posted.

    2. If TC 840 has posted, enter CCC “O”
      and process as usual.

    3. If TC 840 has
      not
       posted, enter Action Code 341 to issue a manual refund.

    If Then
    A completed Form 3753, Manual Refund Posting Voucher; Form 5792, Request for IDRS Generated Refund (IGR); or Form 128577,
    Refund Transfer Posting Voucher, is attached to the return. (These indicate that a pre-settlement manual refund was made.)     		Edit CCC “O”
    .
    (The freeze is released by posting Transaction Code “840″
    .)

3.11.106.5.7 
(01-01-2009)
♦CCC “R”
—Reasonable Cause for Delinquency♦

  1. We will no longer code CCC “R”
    if the taxpayer requests abatement for Failing to Timely File when the return is submitted.

    Note:

    In the case of a disaster, specific instructions for the use of this code will be provided at that time.

  2. See IRM 3.11.106.10.3.2 if a Form 706, United States Estate (and Generation-Skipping Transfer ) Tax Return, is received with an original Form 709,
    United States Gift (and Generation-Skipping Transfer) Tax Return, with an approved extension of time to file.

  3. For Forms 706 and 709 series returns, the Cincinnati Compliance Services, Estate and Gift Tax Campus Operation will make a
    determination regarding reasonable cause and assess any penalty(ies), etc., against the account, if applicable. They have
    determined the return(s) should be processed through the pipeline (without delay) while they are making their determination
    of reasonable cause and assessments of applicable penalties.

  4. The following instructions apply for handling of Forms 706 and 709 series returns:

    1. Make a photocopy of Pages 1 and 2 of the return.

    2. Detach the taxpayers statement from the return.

    3. Attach the photocopy of the return and the taxpayers statement to Form 4227, Intra-SC Reject or Routing Slip, and route
      to the Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.

    4. Continue normal processing of the (original) return.

    Note:

    All “R”
    coded returns must have a received date. If one is not present, enter the date in the middle of the return.

  5. If a Cincinnati Compliance Services, Estate and Gift Tax Campus Operation representative visits Code and Edit for an on-site
    review for determination(s) of reasonable cause, proceed as follows:

    1. Edit the appropriate Computer Condition Code on the return per Exams (Cincinnati Compliance Services, Estate and Gift Tax
      Campus Operation) instructions.

    2. Continue normal processing of the return.


Next

Law Offices of Darrin T. Mish, PA

100 S. Edison Ave. Suite A, PO Box 3414, Tampa, FL 33606 (813) 229-7100
Made with Semiologic Pro • Colorblock-blue skin by Techie Coach