part3-39

The returns covered in this IRM are:

Employees are reminded to consider any ethical issues while following these instructions.

The Error Inventory Report is generated at the beginning of each day to show the blocks by the block control number and block
document locator number (DLN) in numerical order. Each batch will be on separate pages. Blocks received from Block Out of
Balance (BOB) Correction will be listed separately.

A copy of the Error Inventory Report can be placed on the carts of documents and used as a charge-out. This will help to determine
when a cart is completed.

The first line of the Error Inventory Report will show the number of working days the records on that page have been in the
Error Inventory. This will enable work left from a previous day to have priority.

Each day the Workable Suspense Inventory Report will be furnished showing the records by Program in DLN order for various
statuses. Separate pages with totals for each program will be provided.

The report will show the number of working days the records have been in the Workable Suspense Inventory. This is on the first
line of the report and will allow priority to be given to the older work.

Edit the applicable code(s) in the designated area(s) on each of the following returns:

Any changes to the Name Control, Employer Identification Number, or Address (including the City, State or ZIP Code) on all
employment returns are edited above the printed location.

All returns must be in an acceptable current format, (i.e. for SCRIPS or ISRP processing, as a Rev 2005 and subsequent).

All lines with amount entries should be edited in dollars and cents.

ERS tax examiners will leave a working trail on BMF returns for the following:

To indicate a correction, change or deletion of an entry, Code and Edit examiners edit different characters for returns being
processed through SCRIPS than ISRP.

Error Resolution examiners must be able to comprehend any edited changes shown on a return. The tables below show the current
acceptable edit marks on employment returns, and their meaning.

When a Code and Edit examiner initiates correspondence, they are required to show Action Code 211 (or the applicable code)
in the lower left hand corner of the return. If Letter 21c is used, (Form 13195) they are also required to notate the paragraph,
and if appropriate, the fill in number(s) followed by the inserted fill-in information. For example: “211–P(19)$100.00 (20)$50.00″

For Form 941 returns, documents processed through SCRIPS will be received in ERS “unstapled”
and sorted into “Perfect”
(documents without attachments) and “Imperfect”
(documents with attachments and/or envelopes) batches.

ERS will identify errors according to type and priority. The record heading will show the type of error.

This IRM will furnish the procedures to be used for resolving the displayed errors. However, there may be records where the
tax examiner finds that programming has not furnished a section that is needed to resolve an error. This should be reported
to the Headquarters for correction .

The tax examiner will enter the section using CC GTSEC, and enter the missing data.

There are instances when a tax examiner may correct a higher numbered priority error causing a lower numbered priority error
to display.

The ERS Action Code indicates that specific information is missing, suspended or that the record is to be rejected from processing.

The code will have sufficient detail to indicate if:

Action Code 001 will be computer generated when the BOB Resolution function has added a missing document by only inputting
the TIN and the Name Control for the missing document. Follow corrective procedures in IRM 3.12.13.5.1 for Priority l Errors.

Code and Edit tax examiners assign Action Codes to numbered returns if they determine the document is unprocessable. Unprocessable
documents require additional information or manual intervention for correction.

An Action Code is entered in the lower left margin of the return.

The presence of a valid Action Code other than AC 001 will place the record in the applicable Suspense Inventory, “Workable”
or “Unworkable”
.

If an Action Code assigned by Code and Edit is invalid, incomplete, or “001″
, the record will be assigned to the Error Inventory for correction or deletion of the code.

Only one Action Code may be assigned at a time to a record. The priority of the Action Codes will be 310, 320, 4xx, 6xx, 3xx,
2xx.

An ERS tax examiner may enter an Action Code on a record, delete or correct an invalid code, or may overlay the present Action
Code with another to re-suspend or reject the record from ERS. This is done by entering a valid Action Code with CC SSPND,
RJECT or NWDLN. The Action Codes are shown in the table in (13) below. IRM 3.12.38, General Instructions, also explains these
codes.

An ERS tax examiner entering a valid Action Code with the CC SSPND will be clearing the record from the screen and placing
the record in the Workable Suspense or Unworkable Suspense inventory.

A tax examiner entering a valid Action Code with the CC RJECT will be rejecting the record from ERS. Generally, SCCF will
be automatically updated for the rejected records.

A tax examiner entering an Action Code with the CC NWDLN will be rejecting the record from ERS and establishing the new DLN
under which the record is to be reinput.

Below is a list of Action Codes showing the suspense period. The suspense period should be used for controlling suspense documents,
not to determine which Action Code to use.

An Error Code is computer generated to a record and assigned in numerical order.

Error Codes display by priority with the lowest number error codes first.

An Error Code requires that one of the following actions be taken:

The Command Codes (CC) needed for correcting the Error Inventory and the Workable Suspense Inventory are briefly described
below. They are fully explained in IRM 3.12.38,General Instructions, including procedural input instructions within the IRMs
Exhibits.

Any CC permitted by the Employees Security File will be available.

CCs are used to tell the system what function to perform.

CCs must be entered in a valid format, otherwise an error message will display.

Correct the data entered with the command code and transmit.

Computer Condition Codes (CCC) are used to identify a special condition or computation for the computer. Computer Condition
Codes post to the BMF Master File.

These codes are entered on Forms 941, 941-PR, 941-SS, 943, 943-PR, 944, 944-PR, 944-SS, 944-(SP), 945 and CT–1 .

The chart below shows the applicable Computer Condition Codes, their definitions and the related checks.

When a math error involves a tax liability or balance/overpayment field, a Taxpayer Notice Code (TPNC) is used.

The ERS examiner enters a 2-digit code on their terminal screen after the literal “NC”
. This code generates an assigned explanation of the taxpayers error or the ERS correction on the math error notice.

After determining that no other corrections to the record are needed, the TPNC is entered. The presence of a TPNC indicates
to the computer that no other corrections will be made to the screen display. Therefore, all corrections must be entered and transmitted for each error condition prior to TPNC assignment.

Whenever a TPNC is assigned, a written history showing the changes made must be entered on the return at the point of change.

Each Math Error will have certain TPNCs that are valid to clear the Math Error. The TPNCs entered in the “NC”
field must be valid for that error or the same as one previously assigned. If a code that is not valid is assigned, the
Error Code will redisplay. A previously assigned notice code can only be used if it has been validated for that Error Code.

Each Math Error display will require a correction to a field or the entry of a TPNC. The transmission of a TPNC must not be
accompanied by any other correction. A TPNC assigned to a Math Error will be displayed with subsequent displays for the record.
The field is used for display purposes only and is not correctable.

A return can have a total of three TPNCs. Exhibit 3.12.13-19 is a list of the TPNCs used for each employment return and the related statement which will appear on the generated math
error notice. If more than three codes need to be assigned, use TPNC 90 and list the errors for Notice Review to type and
send to the taxpayer.

TPNC 90 is actually a “fill-in”
and should be used if more than three codes are to be assigned, or when no other TPNC fully explains the correction(s)
made. The tax examiner will write a brief explanation of the error and attach it to the face of the return. The return should
be charged out and routed directly to Notice Review. Notice Review will type the Math Error explanation on the notice before
mailing to the taxpayer.

To delete a TPNC, blank the Total Tax-Taxpayer field and then re-enter.

Once a code is transmitted to the record, it may be changed in the following manner:

The letter “C”
is used as a “Clear Code”
for the Error Codes (consistency errors) where the error condition is such that the resolution does not require a change
to the record as displayed.

The ERS screen display will include a clear field, labeled “CL”
to indicate the possible need of a Clear Code. The Clear Field will always be located to the right of CRECT on the screen
display.

Error Codes indicating the possible need of a Clear Code are cleared by either correcting the condition or entering a “C”
to indicate no correction is needed. If corrections are required, they must be entered and transmitted prior to entry
of the Clear Code “C”
. Assure that all corrective procedures have been input as shown under each individual Error Code before entering a “C”
in the Clear Code Field.

Clear Code “C”
is also used for clearing the Action Code from the screen after corrections for the Action Code have been completed, or
as with Action Codes 410 and 700, the Action Code must be cleared initially so other errors in the record can be resolved.
The presence of the “C”
with a Priority I Error indicates you have made the corrections to the Action Code and now wish to have any other errors
on the record displayed.

The “000″
is also used as a Clear Code when deleting an Action Code. It will only be used for invalid or erroneous Action Codes
and when you have determined there is no reason to suspend the record. The “000″
cannot be used in Suspense Correction.

Programming erases all “C”
Clear Codes for Error Codes:

Error Codes (including the ones which may require a “C”
Clear Code) are numbered and displayed consecutively for correcting. There may be instances when you will create an Error
Code with a higher priority than the one(s) you have cleared with a TPNC or “C”
Clear Code. When this occurs:

There may be instances when you will make a correction erasing an Error Code which you previously cleared with a “C”
and now the error condition no longer exists. When this occurs:

The “C”
Clear Code will prevent any other corrections to the record to accompany the “C”
Clear Code. If a correction must be entered, but you have already transmitted the “C”
Clear Code, and the error is no longer displayed, use CC GTRECW to make any corrections.

Forms 941 and 944 may be filed electronically by ELF or On-Line.

When a Form 941 or 944 is filed electronically, it is corrected in ERS using the same procedures as a transcribed (paper)
document. Each of these returns when filed electronically have the following characteristics:

Code and Edit is responsible for identifying refunds and initiating requests for manual refunds. If a request for a manual
refund is not identified within Code and Edit, but identified in ERS, process as follows:

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

Any Form 941, 941-PR, 941-SS, 943, 943-PR, 944, 944-PR, 944-SS, 944-(SP) or 945 with a current processing date equal to or
more than two years and nine months after April 15 of the year following the year of the tax period(without regard to extensions) or the received date, whichever is later, is a Statute Control document.

Any Form CT–1 with a current processing date equal to or more than two years and nine months
after March 1st of the year following the year of the tax period
or the original received date , whichever is later, (without regard to any extension) is a Statute Control document.

All “G”
coded Form 941 returns become statute returns if the processing date is equal to or more than two years and nine months
after April 15 of the year following the year of the tax period.

Timely filed returns for tax year 2006 or earlier must be treated as statute returns in year 2009.

If the return has an attachment or stamp indicating previous clearance by the Statute Control Unit, the error must be cleared
within 90 days of the processing date by entering CCC “W”
in field 01CCC.

If the return does not have an attachment or stamp which shows that the Statute Control Group has cleared it within 90 days
of the processing date, take the following action:

The due dates for quarterly Form 941, 941-PR, 941-SS returns and annual Forms 943, 943-PR, 944, 944-PR, 944-SS, 944-(SP),
945 and CT–1 returns are as follows:

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. Recognized frivolous arguments made by both individuals
and businesses include, but are not limited to, the examples shown in Exhibit 3.12.13–26.

Processing Procedures- Review the return to determine whether it appears to be a frivolous return.

If a penalty other than a delinquency, late payment or FTD penalty is indicated on a return, (e.g., fraud, Form W–2), and
the notation, “3465 Prepared”
does not appear on the return:

The following internal forms are referred to in this section. The chart below shows the form number, form title, and use.

If the taxpayer writes a question or requests assistance on the return itself, make a photocopy of the question/request and
the taxpayers EIN, name and address. Route this information to the appropriate function.
See Exhibit 3.12.13-21 for Routing Guide.

If unrelated, unanswered taxpayer correspondence is attached to any return, whether it is an ERS document or not and no action
has been taken, detach and route to the appropriate area.

If unanswered taxpayer correspondence relating to the Form 94X is attached, make a photocopy of the attachment and forward
it to Accounts Management (Adjustments). Be sure that any attachment or photocopy of an attachment, except Schedule B, that
is routed contains NAME, ADDRESS, EIN and RECEIVED DATE. Enter the required information, if missing.

Correspondence records with Action Code 21X will be automatically suspended for a predetermined number of days or until the
taxpayer replies, whichever is earlier

Most correspondence is a computer based notice, or a computer generated letter, or a pre-printed letter. The notices and letters
have been revised to include recommendations made by the Taxpayer Correspondence Study. All correspondence now reflects a
response period within 30 days and the consequences for no reply.

As an ERS tax examiner initiating correspondence, you may:

Whenever possible, pattern letters should be used to correspond with taxpayers. If a CNOTE or QUICK NOTE is used, be sure
it clearly communicates the message in simple language and contains the required information.

All correspondence to taxpayers requesting information should indicate that a response is required. Specify the length of
time the taxpayer has to respond and include a statement on the action the IRS will take if the response is not received timely.
Include the statement, “When you reply, please send your telephone number and the most convenient time to us to call so we may contact you if we
need additional information.”
Provide for a purge date at least 10 days after the date provided in the letter to the taxpayer.

When taxpayer errors are discovered in processing which have caused or will cause processing delays and no other notification
is to be sent to the taxpayer, advise the taxpayer of the reasons for the delay.

Acknowledgment letters no longer will be sent. If the call for action has not been completed in 30 days, an interim reply
will be made telling the taxpayer when we expect to complete the required action.

Before initiating manual correspondence on an account dealing with anything other than a recently filed return, check the
Centralized Authorization File (CAF) to ensure that the information will be mailed to the taxpayer’s representative if one
is on file.

A signature and jurat is required on all returns except:

Since tax examiners are not expected to be handwriting experts, Regulations allow us to presume that the signature on a return,
statement or other document is the true signature of the person who actually signed the document.

Accept a signature declaration (i.e. a signature with a jurat obtained through correspondence) if attached to the return.

A signature of an individual, officer, partner, duly authorized agent, etc. affixed by rubber stamp, mechanical device, or
computer generated software to a return is acceptable on Form(s) 941, 941 PR, 941-SS, 943, 943 PR, 944, 944-PR, 944-SS, 945,
or CT-1.

Tax returns can be received via fax as part of return perfection even if a taxpayer signature is required. In circumstances
where contact with the taxpayer has been made and documented, fax signatures are acceptable.

Contact with the taxpayer may be by telephone or correspondence. Follow local procedures to determine which method of contact
will be used.

Code & Edit examiners will indicate the fax paragraph on the Form 3696, Correspondence Action Sheet, or Form 13195, “Form
941, 943, 944, 945 Correspondence Sheet”
, to advise taxpayers of the option to fax their response.

This section provides procedures for correcting field errors (Priority III) for Forms 941, 941-PR, and 941-SS.

Forms 941, 941-PR, and 941-SS contain Sections 01, 02, 03, 04, 05, 06 and 07 under ERS. Within the introduction for each ERS
Section is a table showing the fields within that section by the field designator, the maximum field length, the title of
the field and the location of the field on the Forms 941, 941-PR, or 941-SS, (if applicable). Also, there are exhibits at the back of IRM 3.12.13 showing the location of each field on Forms 941, 941-PR, and 941-SS.

Each of the fields 05A01 through 05A31 represents a day within January. The entry within the field is the tax liability for
that day.

If a dollar amount exceeds the maximum length allowable within a Form 941/941-PR/941-SS field, see IRM 3.12.13.5.3 for processing
procedures.

The following sections provide information concerning Form 941, 941-PR and 941-SS, Section 01.