part4-37
- 4.4.10.1
Introduction - 4.4.10.2
Processing and Maintenance of Form 4668 (Employment Tax Form Audit
Changes) - 4.4.10.3
Processing Employee Share of FICA - 4.4.10.4
Form 940, Federal Unemployment Tax Adjustments - 4.4.10.5
Schedule H - 4.4.10.6
Excise Tax Return Procedures
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This chapter contains procedures related to employment
and excise tax adjustments.
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When employment taxes are adjusted, Form 4668
is used to correct FICA wage records maintained by the Social Security Administration
(SSA) or to notify the Railroad Retirement Board (RRB) that Railroad Retirement
tax adjustments were closed for assessment (or overassessment). -
Form 4668 must not be forwarded to the SSA. For
employment tax examinations conducted after 1–86, employers are required
to report the wage adjustment to SSA via Forms W–2 (Wage and Tax Statement)
and Form W–2c (Statement of Corrected Income and Tax Amounts). Employers
must file Forms W–2/W–2c by the last day of February following
the quarter in which they agree to the employment tax deficiency i.e., examination
conducted in September 1986, Form W–2/W–2c is to be filed by the
last day of February, 1987. Except in instances where the examining officer
has secured Form W–2/W–2c after the examination, employers
will forward these forms to the area Case Processing Support function. Forms
W2/W–2c secured from employers will be reconciled by the examining officer
and ESP will be instructed to forward the forms to the Social Security Administration.
Employers who do not file these forms will be subject to penalties. -
A tickler file containing a copy of Form 4668
for each year examined is to be maintained awaiting receipt of Forms W–2/W–2c.
(for those cases in which Forms W–2/W–2c were not secured by the
examining officer). Examination will identify on Form 3198 those cases that
involve only conversion issues. The retained copy of Form 4668 involving conversion
issues must be identified as such (refer to (8) for SSA mailing address for
forms involving conversion issues). -
Employers will send Forms W–2 under cover
of Form W–3 (Transmittal of Income and Tax Statements) and Form W–2c
under cover of Form W–3c (Transmittal of Corrected Income and Tax Statements).
After receipt of these forms in the Case Processing Support function, the
amounts from the transmittal form(s) will be reconciled against the retained
copy of Form 4668. After reconciling these forms, the transmittal form(s)
along with Form(s) W–2/W–2c will be sent to the SSA under cover
of Form 3210. If there is any difficulty in reconciling the amounts from the
forms, the assistance of the examiner who conducted the examination may be
requested. Only those forms that do not agree with the dollar amount as shown
on Form 4668 will be returned to the employer. Maintain in the tickler file
a copy of the letter outlining the reason for returning Forms W–2/W–2c.
This Letter may help establish whether reasonable cause should be considered
if a penalty referral is made. Late filed forms (see criteria in Text 4.4.10.2.1)
with such error(s), will be sent to the Examination group as a penalty referral.
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If any barred periods are involved, this also
must be indicated. The left side portion of Form 4668 applicable to FICA wages,
will be photocopied and forwarded to the campus Receipt and Control Branch.
The copy must be legible for transcription and microfilming.
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If the adjustment is to RRTA, a copy of Form 4668
must be mailed to the RRB, addressed as follows:Director of Data Processing and Accounts
Railroad
Retirement Board
844 Rush Street
Chicago, Illinois 60611
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Reconcile Form W–3 by ensuring:
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The Social Security FICA Wages on Form W–3
equal Lines 1 and 2, columns b through e of Form 4668. -
The Social Security (FICA) Tips on Form W–3
equals Line 3, Columns b through of Form 4668.
-
-
Reconcile Form W–3c by ensuring:
-
Social Security Wages, column (c) of Form W–3c
equal Lines 1 and 2, columns b through e of Form 4668; -
Social Security Tips, column (c) of Form W–3c
equals Line 3, columns b through e of Form 4668.
-
-
If one employer forwards Form W–2/W–3
and Form W–2c/W–3c, the combined total of the amounts shown for
Social Security Wages/Tips on transmittals W–3 and W–3c must be
equal to the applicable line entries on Form 4668 as stated above.
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Forms W–2/W–3 and or Forms W–2c/W–3c
involving conversion issues (as identified on retained Form 4668) will be
forwarded under cover of Form 3210 annotated
“Conversion Issue
”
. This will ensure appropriate processing and crediting of the taxpayers
benefit data. -
Forms W-2/W-3 and or Forms W-2c/W-3c that DO NOT involve conversion
issues, will be annotated
“4668 Cases”
and sent under
cover of Form 3210.If you
use the U.S. Postal Service to send paper documents:If you
use a carrier other than the U.S.Postal Service to send paper documents:Social
Security Administration
Data Operations Center
P.O. Box 3333
Wilkes
Barre, PA 18767-3333Social
Security Administration
Data Operations Center
Attn: W-2c Process
1150
E. Mountain Drive
Wilkes Barre, PA 18702-7997If you
use the U.S. Postal Service to send magnetic media:If you
use a carrier other than the U.S. Postal Service to send magnetic media:Tape/Cartridge
Social
Security Administration
AWR Magnetic Media Processing
5-F-17, NB, Metro
West
PO Box 33009
Baltimore, MD 21290-3009Tape/Cartridge/Diskette
Social
Security Administration
AWR Magnetic Media Processing
5-F-17, NB, Metro
West
300 N. Greene Street
Baltimore, MD 21290-0300Diskette
Social Security
Administration
AWR Magnetic Media Processing
5-F-17, NB, Metro West
PO
Box 33014
Baltimore, MD 21290-3014 -
Do not include Form 4668 in the package being sent to SSA.
-
If an employer fails to file Form W–2/W–2c
by April 1 following the February in which the forms are due Case Processing
Support will make a penalty case referral (using the retained copy of Form
4668) to the Examination group which conducted the employment tax examination.
Form 4668 will be annotated
“Penalty Case Referral”
. The
group will consider assessing appropriate penalties for failure to file information
returns. Forms W–2/W–2c received in Case Processing Support after
the penalty referral is made, will just be forwarded to the Social Security
Administration (appropriately addressed).
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When processing an adjustment through Document
code 54, special action is necessary when adjusting a TC 180, Deposit Penalty
along with carryback transaction codes 294, 295, 298, or 299 (which are used
to post the tax adjustment and begin interest from the designated interest
computation date). Since the TC 180 adjustment requires input of a reason
code and the carryback transactions prohibit input of reason codes, the TC
180 must be input separately. One document should contain all transactions
other than the TC 180. The second document should contain only the TC 180
Deposit Penalty.
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When an income tax case is being processed that
contains adjustments for an EMPLOYEE share of FICA tax, process the FICA tax
adjustment as a partial assessment using Disposal Code 08 without an agreement
date entry, Disposal Code 08 is used since the 30 day interest free waiver
period is not applicable to FICA tax and interest is computed to the payment
date or 23C Date, whichever is earlier. Interest on these cases that contain
employee share of FICA tax adjustments are NOT INTEREST
FREE. -
As with all FICA tax adjustments, the examining
officer must secure taxpayer agreements with Form 2504, Agreement to Assessment
or Collection of Additional Tax and Acceptance of Overassessment. While a
different agreement form is secured, it is not necessary to process the employee
share of FICA tax as a NMF adjustment. Since FICA tax is not an income tax,
it is not subject to deficiency procedures and cannot be included on a statutory
notice of deficiency. When a statutory notice is to be issued, any adjustments
made to the employee share of FICA is to be processed as a partial assessment.
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In order to correctly process Form 940 cases,
examining officers must provide the closing function with the following information:-
Total tax adjustment and the state code the change
is made for; -
Wage adjustment and the state code the change is
made for; -
Total Corrected 940 wages; and,
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Credit reduction wages, credit reduction amount
and the state code(s) for the state(s) subject to credit reduction (if applicable).
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THIS INFORMATION IS NOT NECESSARY
ON NO CHANGE CASES.
-
For all increases or decreases in FUTA tax or
wages, in which Disposal Codes 03, 04, 08, 09 or 10 are used unique reference
codes must be entered with the tax adjustment. If the adjustment is for penalties
only, use Disposal Code 12 to bypass the reference code requirement.
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The reference code(s) reflect which state for
which the tax/wages are being adjustment. The three digit reference code for
the tax portion of the adjustment is comprised of a
“T”
FOLLOWED
by the two character state code (e.g., California is CA; New Jersey is NJ)
. The total of the tax (T) reference code amount must equal the TC 300/301
tax adjustment. If the
“T”
reference code amount does
not equal the tax amount or is not entered, a terminal reject will occur. -
If the adjustment is due to an increase or decrease
in wages, a wage reference code(s) is also required. The three digit reference
code for the wage adjustment is comprised of a
“W”
FOLLOWED
by the two character state code. If adjustments were made to more than one
state, the tax and or wage adjustment amount(s) attributed to each state will
be entered. -
Input of these reference codes are not applicable
for no change cases, cases closed TO Appeals, or second adjustment documents
processed through AIMS after input of a quick assessment.
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Form 4668, Form 4667 and Form 2504 are used to
make adjustments to Schedule H.
-
If the EIN per the original Schedule H is incorrect
or there was no Schedule H filed:-
Use IREF 993 to add or correct the primary taxpayer’s
9 digit EIN. -
Use IREF 994 to add or correct the secondary taxpayer’s
9 digit EIN.
-
-
Form 4668 is used to reflect adjustments to Social
Security and Medicare Taxes. Following are the line numbers from the Form
4667 that will be used to complete the entries in Item 12 and 15 on the MFT
30 Form 5344. Line numbers that are not listed should be ignored in the preparation
of the Form 5344. -
Line 1 = Social Security and Medicare wage adjustments.
Item 15 on Form 5344.-
Use IREF 004 for SS wage adjustment for Primary
taxpayer -
Use IREF 904 for SS wage adjustment for Secondary
taxpayer -
Use IREF 073 for Medicare wage adjustment for Primary
taxpayer -
Use IREF 973 for Medicare wage adjustment for Secondary
taxpayer -
The above reference numbers can be + or – but not zero. If decreased below
the amount posted at Master File, the transaction will unpost (UPC 189).
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-
Line 09 = Reflects income tax withholding adjustment.
Item 15 on Form 5344.-
DO NOT USE REFERENCE NUMBER 184
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Use IREF 003 for Primary taxpayer
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Use IREF 903 for Secondary taxpayer
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The above reference numbers can be + or – but not zero. If decreased below
the amount posted at Master File, the transaction will unpost (UPC 189).
-
-
Line 10 = Reflects Total Social Security and Medicare
tax adjustment. Item 15 on Form 5344.-
Use IREF 007 for Primary taxpayer
-
Use IREF 907 for Secondary taxpayer
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The above reference numbers can be + or – but not zero. If decreased below
the amount posted at Master File, the transaction will unpost (UPC 189).
-
-
Line 13 = Delinquent tax or increase (decrease) in tax. Item 12 on the
Form 5344. The interest free provisions for adjustments on BMF employment
taxes are in effect for errors discovered on IMF, Schedule H. Adjustments
will be made interest free if reported by the due date of the return for the
period in which the error was discovered. TC 308 should be used to adjust
employment taxes when an error is discovered on Schedule H.
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Form 4667 is used to reflect adjustments to FUTA.
Following are the line numbers from the Form 4667 that will be used to complete
the entries in Item 12 and 15 on the MFT 30 Form 5344. Line numbers that are
not listed should be ignored in the preparation of the Form 5344. -
Line 2 = Increase or decrease in taxable wages. See (4)c and d below.
-
Line 8 = Reflects increase/decrease in tax. Item
12 on the Form 5344. The interest free provisions for adjustments on BMF employment
taxes are in effect for errors discovered on IMF, Schedule H. Adjustments
will be made interest free if reported by the due date of the return for the
period in which the error was discovered. TC 308 should be used to adjust
employment taxes when an error is discovered on Schedule H. -
Line 10 = Reflects State (* = State Code) Item
15 on the Form 5344. If FUTA state code is input, disposal code cannot be
01 or 02.-
Use IREF TXX* for tax adjustment for Primary taxpayer.
Amount to enter is from Line 8. This will generate an IREF 995 at Master File. -
Use IREF ZXX* for tax adjustment for Secondary taxpayer.
Amount to enter is from Line 8. This will generate an IREF 997 at Master File. -
Use IREF WXX* for wage adjustment for Primary taxpayer.
Amount to enter is from Line 2. This will generate an IREF 996 at Master File. -
Use IREF YXX* for wage adjustment for Secondary
taxpayer. Amount to enter is from Line 2. This will generate an IREF 998 at
Master File. -
The above reference numbers can be + or – but not zero. If decreased below
the amount posted at Master File, the transaction will unpost (UPC 189).
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Following are procedures for excise tax returns.
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The ExFON computer application is designed to
allow the DCO to enter inspection and penalty information into a laptop computer.
The information is transmitted telephonically to a host computer in Cincinnati
Service Center. The DCO manager accesses the host computer from a desktop
system to approve recommended penalties. Once the penalty is approved, Cincinnati
Campus Assessments Unit will print the assessment forms and make the needed
assessments. -
The dyed fuel penalties (section 6715 and 4083(c)
(3) are assessed as civil penalties through the Master File Civil Penalty
Module via MFT codes 55 (IMF and 13 (BMF) with reference numbers 655, 656,
and 657. No AIMS controls are established on Master File or Non-Master File.
Case Processing Support function will not be involved in the process.
