Section 154. Unemployment Tax Returns

(1) This transmits revised IRM 3.12.154, Error Resolution System - Federal Unemployment Tax.

(1) IRM 3.12.154.2.5.1(2) - Corrected the Taxpayer Advocate Service (TAS) Service Level Agreements link. (IPU 25U0023 issued 01-06-2025)

(2) IRM 3.12.154.2.12 - Updated with current information to align with other IRMs. (IPU 25U0176 issued 02-06-2025)

(3) IRM 3.12.154.2.10 (1) - Removed Note referring to Form 940(cg). 940(cg) is obsolete.

(4) IRM 3.12.154.2.13(1) - Removed the link and policy because this expired. (IPU 25U0176 issued 02-06-2025)

(5) IRM 3.12.154.2.19.1 (1) - Clarified Domestic Address.

(6) IRM 3.12.154.2.21(1) - Removed Form 10886, Reject Routing Slip, because it is no longer used. (IPU 25U0176 issued 02-06-2025)

(7) IRM 3.12.154.2.27 - Add Form 940 (sp) to Statute Chart.

(8) IRM 3.12.154.7.1 - Add new Field 01ARI Aggregate Return Indicator.

(9) IRM 3.12.154.7.6.2 (1) 2nd IF box - Update the dates in the i.e., to current year processing.

(10) IRM 3.12.154.7.12.3 - Added new Aggregate Return Indicator correction procedures.

(11) IRM 3.12.154.7.12.3.1 - Add Suspense Correction procedures.

(12) IRM 3.12.154.8.1 - Updated Form Revision to 2025.

(13) IRM 3.12.154.11 - Added new Section 60 Fields for Direct Deposit.

(14) IRM 3.12.154.11.2 - Field 60RTN - Routing Transit Number.

(15) IRM 3.12.154.11.2.1 - Invalid Conditions Field 60RTN.

(16) IRM 3.12.154.11.2.2 - Correction Procedures Field 60RTN.

(17) IRM 3.12.154.11.3 - Field 60TDA - Type of Depositor Account.

(18) IRM 3.12.154.11.3.1 - Invalid Conditions Field 60TDA.

(19) IRM 3.12.154.11.3.2 - Correction Procedures Field 60TDA.

(20) IRM 3.12.154.11.4 - Field 60DAN - Depositor Account Number.

(21) IRM 3.12.154.11.4.1 - Invalid Conditions Field 60DAN.

(22) IRM 3.12.154.11.4.2 - Correction Procedures Field 60DAN.

(23) IRM 3.12.154.12.1.2(2) and (3) - Added the 2020 tax year returns and prior information until we receive updated guidance. (IPU 25U0176 issued 02-06-2025)

(24) IRM 3.12.154.12.1.2(2) and (3) - Removed the 2020 tax year returns and prior information. (IPU 25U0023 issued 01-06-2025)

(25) IRM 3.12.154.12.38.2 (1) - Added Note "If Error Code 242 displays, send TPNC 08" IPU 25U0405 issued 03-27-2025.

(26) IRM 3.12.154.12.41.2.5 (3) - Last If/Then chart, added instructions "If the Taxpayer s paying maximum tax. IPU 25U0405 issued 03-27-2025"

(27) IRM 3.12.154.12.41.2.5 (3) Moved “If taxpayer is paying maximum tax” to 9th If/Then. IPU 25U3313 issued 05-21-2025.

(28) IRM 3.12.154.13(4) - Corrected Form 941 to Form 940 in the first If/Then box. (IPU 25U0201 issued 02-10-2025)

(29) IRM 3.12.154.13(4) 3) - IF/THEN chart updated on verifying the Received Date. IPU 25U0313 issued 03-06-2025

(30) Exhibit 3.12.154-15 - Update Credit Reduction States and Rates to include current tax year. (IPU 25U0023 issued 01-06-2025)

(31) Revised the Internal Revenue Manual (IRM), where necessary, for the following types of plain language changes and editorial changes.

Used simpler words

Removed unnecessary words

Changed consistency sections per BMF Consistency template

Corrected spelling and grammatical errors

Corrected references, citations, and links

Updated graphics and alternative text

Scott Wallace Director, Submission Processing Taxpayer Services

Purpose: The purpose of this Internal Revenue Manual (IRM) section is to give instructions for Input Correction, Error Resolution System (ERS) to correct errors made by taxpayers and those made during campus processing for the Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return series returns.

Audience: The audience for this IRM includes:

ERS Supervisory Tax Examining Assistant, Lead Tax Examining Technician, Tax Examining Technician.

Rejects Supervisory Tax Examining Technician, Lead Tax Examining Technician, Tax Examining Technician.

Policy Owner: The policy owner for this IRM is Director, Submission Processing.

Program Owner: Return Processing Branch, Business Master File (BMF) Section.

Primary Stakeholders: The primary stakeholders for this IRM are:

Accounts Management (AM)

Small Business/Self-Employed (SBSE)

Large Business and International (LB&I)

Chief Financial Officer (CFO)

Taxpayer Advocate (TAS)

Chief Counsel, Information Technology programmers

Statistics of Income (SOI)

Tax Exempt/Government Entities (TEGE)

Compliance, Modernized E-file (MeF), Submission Processing (SP)

Program Goals: Error Resolution to correct any errors that are found using the Error Resolution System (ERS).

The purpose of Error Resolution is to resolve validity errors, field errors, consistency errors, and math errors in returns and other documents for posting to the Master File. Records fall out in Error Resolution System (ERS) due to the Generalized Mainline Framework (GMF). The entries from transcription are transferred to ERS fields. The GMF programming causes a record to fall out to ERS if it fails to meet certain criteria, including:

Invalid characters in a field (e.g., numeric instead of alpha)

Invalid length of field (e.g., EIN with 8 digits instead of 9)

Invalid codes in field (valid Action Codes, Audit Codes, etc. are programmed in GMF)

Consistency errors - any valid field used in any computation where the result is inconsistent with (or contradictory to) any other valid field

Math errors - computer does math computation and it differs from the taxpayer’s amount, and invalid tax periods and eligibility for certain credits

Employees use the ERS system and the return to correct these conditions and, when necessary, use Integrated Data Retrieval System (IDRS) to research

Instructions in specific sections take precedence over general section instructions in case of a conflict.

This Internal Revenue Manual (IRM) is your main source of information for correcting the error record and the related return. Other related IRMs are:

IRM 3.12.38, Error Resolution- BMF (Business Master File) General Instructions, has procedures for correcting records on the screen. It also has information regarding document controls, inventories, and management reports.

IRM 3.11.154, Returns and Documents Analysis - Unemployment Tax Returns.

Listed below are Federal Unemployment Tax Return types processed at Kansas City Submission Processing Center (KCSPC) or Ogden Submission Processing Center (OSPC):

Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, was redesigned beginning with Tax Year 2006. The redesigned form includes Form 940 Schedule A, Multi-State Employer and Credit Reduction Information. These returns are processed at Kansas City Submission Processing Center (KCSPC) and the Ogden Submission Processing Center (OSPC).

Form 940 (PR), Employer's Annual Federal Unemployment (FUTA) Tax Return (Puerto Rican Version) in Spanish. Beginning with Tax Year 2006 and ending with Tax Year 2022, the form was redesigned and includes Form 940 Schedule A (PR), Multi-State Employer and Credit Reduction Information (Puerto Rican Version) in Spanish. These returns are processed as foreign tax returns at the Ogden Submission Processing Center (OSPC) only.

Form 940 (sp), Declaracion del Impuesto Federal Anual del Empleador del Impuesto Federal para el Desempleo (FUTA). This form is new for Tax Year 2023. These returns are processed at KCSPC and OSPC.

Form 940-EZ, Employer's Annual Federal Unemployment (FUTA) Tax Return (Revision 2005 and Prior) was made obsolete after Tax Year 2005 and must be converted to the current year revision of Form 940. These returns are processed at Kansas City Submission Processing Center (KCSPC) and the Ogden Submission Processing Center (OSPC).

The United States Code Title 26 Internal Revenue Code (IRC), Subtitle C-Unemployment Taxes, Chapter 23-Federal Unemployment Tax Act, Sections 3301 through 3311, established the Federal Unemployment Tax and required cooperation between the States, Internal Revenue Service, and the Department of Labor to decide an employer's contribution to the Unemployment System.

The Directors for Kansas City Submission Processing Center (KCSPC) and Ogden Submission Processing Center (OSPC), are responsible for monitoring operational performance for their Submission Processing Center.

The Operations Managers for KCSPC and OSPC are responsible for monitoring operational performance for their operation.

The Department Managers for KCSPC and OSPC are responsible for monitoring Team Units performance within their department.

The team manager/lead is responsible for performance monitoring and ensuring employees have the tools to perform their duties.

The team employees are responsible to follow the instructions contained in this IRM and maintain updated IRM procedures.

System control reports: The reports are stored on 4 ECC Z/OS Mainframes and are retrieved through Control-D Web Access Server. For general listing of the reports see IRM 3.12.38, Error Resolution, BMF General Instructions.

Program Effectiveness: The effectiveness is measured through Embedded Quality Submission Processing (EQSP) application used for quality review of the returns corrected in ERS. The application capture evaluative and non-evaluative data obtained from monitoring submission processing activities. Reports are generated for planning and training purposes.

Annual Review: is performed by Federal Managers Financial Integrity Act (FMFIA) to ensure accuracy and promote consistent tax administration.

Quality Review is conducted using the Embedded Quality Submission Processing (EQSP) application. A statistical valid sample size of corrected returns is pulled weekly for all tax examiners and reviewed to ensure IRM guidelines are followed.

The following table has a list of words which require interpretations:

Word

Definition

Example of using a word that is open to interpretation. (This column is for illustration purposes only)

Fair

Give accurate and professional service to all persons without regard to personal bias.

Treat the customer in a fair manner when working with FOIA requests.

Usually

Give the exceptions when something is not required or what would create the unusual circumstance.

Pay adjustments will be accomplished within a reasonable amount of time, usually within two (2) pay periods.

Timely

Give the time frame to consider what is or is not timely.

Process all IMF adjustments in a timely fashion.

Significant entry

Any entry other than zero or blank.

For example: If line 1 has a significant entry. Enter "A" in Field 01CCC.

For a list of ERS acronyms, abbreviations and definitions see Exhibit 3.12.154-17, Acronyms, Abbreviations and Definitions.

Other job aides, electronic tools, or websites needed to complete the work are listed below:

Servicewide Electronic Research Program (SERP)

Submission Processing Design Center (SPDC)

Integrated Data Retrieval System (IDRS)

This section has general information and procedures for Form 940 series returns.

The tax class, document codes, and Master File tax (MFT) codes for Unemployment Tax Returns are as follows:

Form Type

Form 940, Form 940 (PR), and Form 940 (sp)

Form 940 MeF and Form 940 Lockbox

Tax Class

8

8

Document Code

40

39

MFT

10

10

The due date for Form 940 and Form 940 (sp) is January 31 of the following Tax Year.

Since this is an annual return (covering a 12-month period) there are no short/fiscal period returns as compared to other Business Master File (BMF) returns.

The taxpayer may notate short period on the return, but if no reason is given, such as final, quarterly payment, seasonal, etc., we correspond to find out why the return was filed early.

The due date is extended by 10 days, if timely Federal Tax Deposits have been made in full by the due date.

There is no extension form for these returns.

The purpose of this initiative is to achieve consistency in the Business Master File (BMF) Error Resolution System (ERS) processing IRMs.

Ogden, Kansas City, and Return Processing Branch BMF Code and Edit and Error Resolution System (ERS) shown and developed topics for BMF Consistency.

A "♦" (diamond) in front and after the subsection title shows BMF Consistency subsection.

The text in normal print within a consistency subsection 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.

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

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

TAS uses Form 12412, Operations Assistance Request (OAR), to start the OAR process of referring a case to the Taxpayer Services (TS) Division, to affect the resolution of the taxpayer’s problem. For more information, refer to IRM 13.1.19, TAS Operations Assistance Request (OAR) Process.

Refer taxpayers to TAS when the contact meets TAS criteria or when Form 911, Request for Taxpayer Advocate Service Assistance (and Application for Taxpayer Assistance Order), is attached and steps can’t be taken to resolve the taxpayer's issue the same day. See IRM 21.1.3.18, Taxpayer Advocate Service (TAS) Guidelines.

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

The issue is resolved within 24 hours.

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

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

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

The National Taxpayer Advocate reached agreements with the Commissioners of the Taxpayer Services (TS) Division, Small Business and Self Employed (SB/SE) Division, Tax Exempt and Government Entities (TE/GE) Division, Criminal Investigation (CI), Independent Office of Appeals and Large Business and International Division (LB&I), that outline the procedures and responsibilities for the processing of Taxpayer Advocate Service (TAS) casework when either the statutory or delegated authority to complete case transactions rests outside of TAS. These agreements are known as Service Level Agreements (SLAs).

The SLAs are found at TAS Service Level Agreements.

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

SSPND with Action Code "360" to route the return to Planning & Analysis (P&A).

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

Give the entire case to the manager/lead.

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

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

If CI has stamped the return, do not send to CI.

For returns with refund claims ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, do the following:

If there is no sign Code and Edit (C&E) made a copy and sent to CI Referral, then see below.

Refund Claim

Ogden and Kansas City

≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

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

Attach Form 4227, Intra-SC Reject or Routing Slip, to the copy.

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

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

Continue processing the return.

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

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

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

Attach Form 4227, Intra-SC Reject or Routing Slip, to the copy.

Route the copy as shown in the table below.

Ogden

Kansas City

Mail Stop 9001, Criminal Investigation (CI)

Mail Stop S2 9000, Criminal Investigation (CI)

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

Continue processing the return.

If the return fits other criteria (e.g., Frivolous Argument), take proper action.

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

Businesses use frivolous argument for expressing dissatisfaction with the substance, form, or administration of the tax laws by trying to illegally avoid or reduce tax liabilities. See IRM 25.25.10, Frivolous Returns Program (FRP), and Exhibit 3.12.154-14, Potential Frivolous Argument for Examination Review, for a list of recognized frivolous argument made by businesses.

Review the return to decide whether it appears to be a frivolous return.

Frivolous Return Criteria

If

Then

The return meets any of the conditions shown as a frivolous return. See Exhibit 3.12.154-14, Potential Frivolous Argument for Examination Review.

If the return shows Action Code 331 and has a Form 4227 ,Intra-SC Reject or Routing Slip attached with the remarks, "Refer to Examination (Exam) Frivolous Return Program (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 Program (FRP) for review.

Examination has selected the return as frivolous, e.g., shown by an Action Code 331 "and a Form 4227, Intra-SC Reject or Routing Slip or other routing slip, with the remarks" , "Refer to Exam FRP for audit after processing" , but sends the return for processing,

Continue to process the return using the procedures in IRM 3.12.154, Error Resolution Unemployment Tax Returns. However, do not circle or void the Action Code "showing a frivolous return" .

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

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

Returns showing “None,” “Not Liable,” etc.

When the taxpayer fails to file a required return, IRC 6020(b) is the authority for the IRS to prepare the return. These returns are received in various formats.

At the centers option, IRC 6020(b)Form 940 returns are processed through ISRP or Service Center Recognition Image Processing System (SCRIPS).

These are identified by the notation: "PREPARED AND SIGNED UNDER AUTHORITY OF IRC 6020(b) OF THE INTERNAL REVENUE CODE" is found at the center bottom of Page 1 or Page 2 of the return. The right margin should also show "TC 599 cc 38" , or "TC 599 cc 39" should appear in the left upper margin.

Returns must have a received date. If missing, follow the normal procedures for editing the Received Date. See IRM 3.12.154.7.6, Field 01RCD Received Date.

Returns must be signed by Compliance Function. Accept the Revenue Officer (RO) signature anywhere on the return or, if Form 5604 is attached when the signature appears in the "Initiating Collection Employee" box.

All unsigned IRC 6020(b) returns received in Document Perfection must be brought to the attention of Centers Planning Analysis for proper handling.

For Planning Analysis analyst Only- If an IRC 6020(b) return is received unsigned, mail to the following address: Internal Revenue Service 2970 Market St. Mail Stop 5-E04.114 Philadelphia, PA 19104

Edit CCC "4"

CCC "R" should not be used with CCC "4" .

Edit CCC "D" if the Compliance Function representative notates: "DO NOT ASSESS FAILURE TO PAY PENALTY."

Do not correspond with the taxpayer for non-processable conditions. If the return is completely non-processable, route to the address in (c) above.

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 function.

No special calculations or notations are necessary on an IRC 6020(b) return that involves a credit reduction State. Do not calculate any credit reduction amounts. Do not enter the credit reduction wage amount.

After December 20, 2000, services rendered to a federally recognized Indian Tribal Government (or its instrumentalities) are exempt from Federal Unemployment Tax (FUTA), subject to the tribe's compliance with applicable State law. For more information, see Announcement 2001-16 and IRC 3309(d).

For submission processing purposes, Code & Edit and ERS employees will accept all FUTA tax returns notated or referenced with the following explanations for exemption to the FUTA tax. We will code and perfect these returns as "Non-Taxable and Final" .

Indian Tribal Government for Tax Years 200012 and later

Announcement 2001-16

The Community Renewal Tax Relief Act of 2000

H.R. 5662, incorporated in H.R. 4577, the Consolidated Appropriations Act, 2001

Public Law No. Pub 106-554, 114 Stat. 2763

Internal Revenue Code Section IRC 3309(d)

Similar explanation as described above

If the taxpayer is claiming a refund for Federal Tax Deposits, ensure that the return is perfected by editing/deleting all transcription lines, so the overpayment is refunded to the taxpayer.

The Internal Revenue Service (IRS) Restructuring and Reform Act of 1998 (RRA 98), Section 3705(a) gives identification requirements for all IRS employees working tax related matters.

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

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

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

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

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

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

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

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

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

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

Indicate the fax paragraph on the approved Correspondence Action Sheet to inform the taxpayer of the fax options.

Use the following resources to make sure you are speaking with the taxpayer or authorized representative prior to disclosing any tax information:

IRM 21.1.3.2.3, Required Taxpayer Authentication

IRM 21.1.3.2.4, Additional Taxpayer Authentication

Prior to leaving any messages on a taxpayer's answering machine, review:

IRM 10.5.1.6.7.2, Answering Machine or Voicemail.

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

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

Correspondence Imaging System (CIS) changed to Correspondence Imaging Inventory (CII).

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

Follow the instructions below for processing "CII" returns.

CII Return Correspondence Criteria

If

And

Then

The "CII" return has a Form 13596, Reprocessing Returns attached,

The return is incomplete (for example, missing signature, schedules, or forms),

Do not correspond.

Remove the return from the batch and SSPND with Action Code "640" to have the DLN voided.

Attach Form 4227, Intra SC Reject or Routing Slip, (or other proper routing slip) to the return and route to AM to secure missing information.

If the return comes back from AM with incomplete information , send the return to AM again to secure all the missing information. write "More information needed to process incomplete CII return," or similar language on Form 4227 Intra-SC Reject or Routing Slip (or other proper routing slip).

The "CII" return has a Form 13596, Reprocessing Returns, attached and the return is incomplete (e.g., missing signature, schedules, or forms),

If the return shows correspondence was sent (e.g., CCC 3 is edited on the return),

Do not route the return to AM. Continue processing the return.

The "CII" return does not have a Form 13596. Reprocessing Returns, is attached,

The return is incomplete (e.g., missing signature, schedules or forms),

Research for prior (Transaction Code (TC) 150 posted)

If TC 150 present and the information is the same, cancel the DLN and treat as classified waste.

Classified waste is documentation containing taxpayer entity or account information that is not part of the case and is not need for audit trail purpose. Refer to IRM 21.5.1, General Adjustments for guidance on handling classified waste to prevent inadvertent/unlawful destruction of records.

If TC 150 is not present, follow normal correspondence procedures.

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

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

The Business Master File (BMF) centers cycles are:

Centers Cycle: Thursday – Wednesday

Master File Processing: Friday – Thursday

Notice Review Saturday: Monday (8+ days)

Unpostables: New available Tuesday; Closing Tuesday

BMF transaction posting time frames are:

Transactions will be viewable using Corporate File On-Line (CFOL) command codes (CC) on Saturday following the weekly Master File processing run on Thursday.

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

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

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

01 = Friday

02 = Monday

03 = Tuesday

04 = Wednesday

05 = Thursday

BMF cycle posting dates on BMFOL will continue to show YYYYCC. The YYYY will show the year and the CC will show the posting cycle. BMF posting cycles in TXMOD will show a format of YYYYCCDD. The DD value is 08.

Some Submission Processing Centers have developed local use Desk Procedures.

Unit managers must have a signed approval on file from the responsible Branch Chief on all Submission Processing Centers Desk Procedures.

All existing local information and procedural issuances must be reviewed by the Operations Manager upon receipt of the new IRM revision to ensure conformance with Headquarters procedures.

Local desk procedures are only to be used:

To supplement existing Headquarters procedures.

To expand Submission Processing Centers Error Resolution procedures by incorporating material from other IRMs, Automatic Data Processing (ADP) handbooks, etc.

For local routing procedures.

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

Write all Taxpayer Notice Codes (TPNCs) 90 on the front of the return in the upper left corner (or use Form 12648, Error Correction 90 TPNC). For more information, see IRM 3.12.154.2.25, Taxpayer Notice Codes (TPNC).

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

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

Employer Identification Number (EIN) or Social Security Number (SSN)

Tax Period

Computer Condition Code (CCC)

Received Date

Correspondence Received Date (CRD)

Circle out incorrect Tax Periods, Received Dates, Employer Identification Numbers (EINs), and Social Security Numbers (SSNs).

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

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

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

Do not correspond for information on any return "SECURED BY EXAMINATION" . If non-processable, follow "No Reply" procedures.

Use Form 12522, 940 Correspondence Action Sheet - Letter 142-C for Form 940 Correspondence, or other locally approved Correspondence Action Sheet (CAS) to initiate correspondence.

Most correspondence is a computer-generated notice, a computer-generated letter, or a pre-printed letter.

All correspondence now reflects a response period within 30 days and the consequences for no reply.

When developing special notes or letters, following the guidelines below:

Whenever possible, use form letters to correspond with taxpayers. If a CNOTE or QUICKNOTE is used, clearly communicate the message in simple language and add the required information.

reason a response is required.

Specify the length of time the taxpayer has to respond.

Add a statement about the correction the IRS will take if the response is not received timely.

Add the following statement: "When you reply, please send us your telephone number and the most convenient time for us to call so we may contact you if we need more information" .

List for a purge date at least 10 days after the date provided to the taxpayer in the letter.

When taxpayers make errors that cause delays, advise the taxpayer that they made the error and explain the error that caused the delay.

Prior to 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 letter will mail to the taxpayer's representative (if one is on record).

Missing Signature - A signature is required on most returns:

Research IDRS prior to corresponding for a signature.

If a TC 150 is posted, and the data on the return is same as the data posted on the tax module, then SSPND 640 to Rejects to have the DLN deleted and ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

If a TC 150 is posted, and the data on the return is different than the data posted on the tax module, treat as an Amended Return, enter CCC G in field 01CCC and continue processing.

If a TC 150 is not posted follow normal correspondence procedures.

If a signature is not present in the Signature Section of Form 940, SSPND 225 and correspond. (If multiple issues SSPND 211).

See Exhibit 3.12.154-6, Correspondence Action Chart, for issues needing correspondence.

See Exhibit 3.12.154-7, No Reply/Undeliverable Chart, for no response to correspondence issues.

Do not correspond for a signature on "CII" returns with Form 13596 attached. Route reinput/reprocessable "CII" returns missing a signature to Accounts Management. See IRM 3.12.154.2.14, Correspondence Imaging Inventory (CII) Returns.

The determination of a domestic or foreign address is based only on the address of the taxpayer.

A Domestic Address is a U.S. address with a:

Street Address

City

State

ZIP Code

These Unemployment Tax Returns are processed at KCSPC and OSPC.

An APO/DPO/FPO Address is a U.S. address with a:

APO (Army/Air Force Post Office)

DPO (Diplomatic Post Office)

FPO (Fleet Post Office)

Postal Service Center

Mobile Unit Designation

Name of Ship

State Code

ZIP Code

APO/DPO/FPO addresses are not foreign addresses.

These Unemployment Tax Returns are processed at KCSPC and OSPC.

The Postal Service has established address requirements for APO/DPO/FPO addresses. If an address appears in the old APO/DPO/FPO format, such as "APO New York, NY 091XX" , convert to the new state code based on the ZIP Code as follows: "APO AE 091XX" .

ZIP Code

State Code

340

AA

090-098

AE

962-966

AP

A U.S. Possession or Territory Address will have:

Street Address

City/U.S. Possession

ZIP Code

A U.S. Possession or Territory is considered a foreign address return.

These Unemployment Tax Returns are processed at the Ogden Submission Processing Centers only.

SSPND 650.

Attach Routing Slip with the notation "Forward to OSPC" .

Prepare Letter 86C, Referring Taxpayer Inquiry/Forms to Another Office, to inform the taxpayer the return was sent to Ogden.

OSPC ONLY -Returns with an address in a U.S. Possession or Territory are considered to be a foreign return for processing purposes and are entered in the same way as domestic addresses.

A two-character alpha code must be entered in Field 06ST for the possession or territory name.

U.S. Possession

Abbreviation

American Samoa

AS

Federated States of Micronesia

FM

Guam

GU

Marshall Islands

MH

Northern Mariana Islands

MP

Republic of Palau

PW

Puerto Rico

PR

U.S. Virgin Islands

VI

A ZIP Code must be present.

All returns with a foreign address must be shipped to OSPC.

SSPND 650.

Attach a routing slip with the notation "Forward to OSPC" .

Prepare Letter 86C, Referring Taxpayer Inquiry/Forms to Another Office, to inform the taxpayer the return was sent to Ogden.

A Foreign Address will contain:

Street Address or P.O. Box

City or town name

Other principal subdivision (i.e., province, State, country, etc.)

Postal code if present

Foreign country

A foreign (international) address is any address that is not in one of the 50 States or the District of Columbia.

Returns with an address in a U.S. Possession or Territory are considered to be foreign returns for processing purposes.

All ZIP CODES are standardized at Enterprise Computing Center at Martinsburg, WV (ECC-MTB) prior to the return posts to the Master File.

This program called "FINALIST" matches the taxpayer's street address and city address to the ZIP CODE on the return with the latest ZIP Code updates received from the U.S. Postal Service.

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

If the ZIP CODE is incorrect, but there is a match to the taxpayer's street and city address, then the program corrects and standardizes the ZIP CODE, and passes the record (return) on to the Master File for posting to the taxpayer's account.

If you have an incomplete or no ZIP CODE on the return, but has a street and city address, no research is necessary, do the following:

Exhibit 3.12.154-9, Entity State Code and Zip Code Chart, or Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries for the Major State ZIP Code that includes the last two digits of "01" .

If there is a match by the program, the ZIP CODE is standardized at Enterprise Computing Center - Martinsburg (ECC-MTB) for posting to the Master File.

If there is a no match by the program, ECC-MTB passes the return on to the Master File for posting, but an Error Listing is generated and sent to the Service Center for correction.

If you have an incomplete or no ZIP CODE, and the street or city address is incomplete or missing, then research is needed for the complete address. Follow local submission processing procedures for research.

The following words are used in the sections of this IRM:

Words

Definition

Action Code (AC) ERS

A three-digit numeric code showing the need for more information not available in the record or on the source document. Only one Action Code is assigned to a record at one time. See Exhibit 3.12.154-13, Action Code Chart.

Amended Return

A return the taxpayer files to change information on the original tax return.

Annualized

A method of computing tax on less than one full year (12 months) using the correct tax rates for that year.

In the FUTA program, you may see this statement on a final return.

Block

A group of 100 or less documents identified with the same block DLN (Document Locator Number) in order to control the documents.

Block-Out-Of-Balance (BOB)

A condition where the total returns or money listed does not equal the sum total of returns or amounts.

Check Digits

Two computer-generated alpha characters used with the Social Security Number (SSN) or Employee Identification Number (EIN) to identify a taxpayer's account (E, G, and M are invalid).

Computer Condition Code (CCC)

A one-digit number or letter assigned to a return to identify a specific condition or computation.

Consistency Error

A condition decided when the computer compares two or more Fields and these Fields do not meet the processing requirements.

Entity Index File (EIF)

A computer file that stores name data for each EIN on file. A check is made between the EIN and name entered.

Error Code

A three-digit numeric code identifying specific math or consistency error in an Error Record.

Error Records

Data records failing any of the math or validity checks on Generalized Mainline Framework or containing an invalid or incomplete Action Code.

Generalized Mainline Framework (GMF)

The system used to process and control all documents through the service center pipeline.

Name Search Facility (NSF)

A National file of name and address data used to Locate a Taxpayer Identification Number (TIN). NSF uses off-the-shelf software and a relational database to search for taxpayer names that match or are similar to the name requested by CC NAMEE.

The following forms are referred to in this section. The table below shows their form number, form title and use:

Form

Title

Use

Form 3244

Payment Posting Voucher

Shows account where payment is applied.

Form 3465

Adjustment Request

To request transfer of credits.

Form 12522

Correspondence Action Sheet

Starts correspondence to the taxpayer through the Typing Unit or IDRS. (or follow local procedures)

Form 4227

Intra-SC Reject or Routing Slip

Shows the reason for using the Action Code.

The COMMAND CODES (CC) used for correcting the Error Inventory and the Workable Suspense Inventories are described below.

Used to tell the system what function to do.

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

Correct the data entered with the CC and transmit.

The following is a list of some CCs:

Command Code

Definition

BMFOL

Reviews transactions posted to the Master File.

BRTVU

Used to see the transcribed data from a return that has posted to the Master File.

CRECT

Will be displayed with all error displays.

DLSEC

Deletes a section of a record.

ENMOD

Requests a display of entity information for a specific module.

ENREQ

Requests the BNCHG format.

ERINV

Used to research a DLN or TIN on ERS to see if the document is in the ERS inventory.

ERVOL

Used with a STATUS CODE to display the number of ERS records in the current Workable Inventory and Unworkable Inventory.

GTREC

Accesses the first error in a block in the Error Inventory or a specific record in the Workable Suspense Inventory. It can also re-display any uncorrected error.

GTRECQ

Retrieves and corrects a record selected for quality review.

GTRECW

Retrieves and corrects an Error Record that was erroneously worked. is used on the day that the record or block was worked.

GTSEC

Obtains the display of any section of a record in process.

INOLE

Research Entity Module.

MFREQ

Retrieves a tax module and its related entity date from Master File.

NAMEE

Used to give nationally centralized entity research via Name Search Facility (NSF).

NWDLN

Changes (renumbers) the DLN and MFT of the record and/or reject the record.

RJECT

Rejects a record from ERS.

SSPND

Used to enter an Action Code and place a record in suspense inventory.

TRDBV

A summary selection screen display of the returns, schedules and forms submitted by the specific taxpayer.

The ERS Action Code shows specific information is missing or that the record is to be rejected from processing. The Action Code will have sufficient detail to show if correspondence is to be sent to the taxpayer or the specific inhouse research or other examination is required. See Exhibit 3.12.154-13, Action Code Chart.

ACTION CODE 001 will be computer-generated when the BOB Resolution Function(Block Out of Balance) has added a missing document by only inputting the TIN and the Name Control for the missing document. See IRM 3.12.154.4.2(2), Priority I Errors Inventory Correction Procedures.

Document Perfection Tax Examiners (Code & Edit) will assign Action Codes to numbered returns when they decide the document is non-processable in its present form either by needing more information or some manual intervention is required. The Action Code will be entered on the lower left margin of the return.

Correspondence Action Sheets (Form 12522) may be attached by Code & Edit to initiate correspondence.

Action Codes and literal for each Action Code will generally be sufficient with no further explanation, except other research.

When a note of explanation concerning the missing information is attached to the return, an Action Code is assigned by Code & Edit.

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

If the Action Code assigned by Code & Edit is invalid, incomplete, or AC 001, the record will be assigned to the Error Inventory for correction or deletion of the Action Code.

Only one Action Code may be assigned at one time to a record. The priority of the Action Codes will be:

310

320

4XX

6XX

3XX

2XX

610

611

Use Action Code 211, 215, 225 or 226 prior to Action Code 341 to ensure return is complete prior to a manual refund is issued.

An ERS Tax Examiner may enter an Action Code on a record, delete or correct an invalid Action Code.

ERS Tax Examiner entering a valid Action Code with CC SSPND will be clearing the record from the screen and placing the record in either Workable Suspense or Unworkable Suspense.

A Reject Tax Examiner entering a valid Action Code with CC RJECT will be rejecting the record from ERS. Generally, Service Center Control File (SCCF) will be automatically updated for the rejected record.

A Reject 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 input.

See Exhibit 3.12.154-13, Action Code Chart, for a list of suspense periods.

The suspense period should be used for controlling suspense documents, NOT to decide which Action Code to use.

Records for the documents in the Error Resolution System (ERS) are controlled by Status Codes. The status is updated when the record is placed in a specific inventory.

Below is a list of the Status Codes and a brief explanation:

Status Code

Explanation

Status 100

Error awaiting correction. Records are in the Error Inventory.

Status 2XX

Records awaiting information to be received. Records are in the Unworkable Suspense Inventory.

Status 3XX

Suspense period expired - no response. Records are automatically transferred from Unworkable to Workable Suspense Inventory.

Status 4XX

Records awaiting correction - information received. Records are in the Workable Suspense Inventory.

Status 900

Record is on the Unselected Inventory.

The final two positions of the Status Code will consist of the first two positions of the Action Code. This will put similar work together on the Workable Suspense Inventory.

321 - Suspense period expired, no response to taxpayer correspondence.

This code is used when a math error is present involving the tax liability or balance due/overpayment. It is entered on the terminal screen following the literal "NC." See Exhibit 3.12.154-16, Taxpayer Notice Codes.

To eliminate a TPNC, do one of the following:

Delete 02TTW and 02TFT and XMIT, GTSEC 02 and reenter. (Deleting only one field may not eliminate the TPNC), or

Enter "G" in 01CCC and XMIT. When Error Code 010 falls out, delete CCC "G" .

The TPNC is entered after determining that no other corrections to the record are needed.

Each Math Error will have certain TPNCs that are valid to clear the Math Error.

The TPNC assigned must be valid for that error or the same as one previously assigned.

When a TPNC that is not valid is entered, the error will be re-displayed.

A previously assigned TPNC can only be used if it was 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 return can have a total of three TPNCs. If more than three TPNCs are to be assigned, use TPNC "90" instead and list the errors for Notice Review to type and send to the taxpayer.

TPNC "90" is actually a fill-in notice and should be used when no other TPNC fully explains the correction(s) made to the return.

The tax examiner will write a brief explanation of the error and attach it to the face of the return.

When a brief explanation is written, there must be a mandatory review prior to the record (return) is closed off the ERS system. Follow local procedures for review.

The return should be charged out and routed directly to Notice Review, and/or follow local procedures.

Notice Review will type the Math Error explanation on the notice prior to mailing to the taxpayer.

Is used with other TPNCs.

Listed below are procedures you may take once a TPNC is transmitted to the ERS record:

If errors remain after transmitting the TPNC, then create an error with a higher priority,

This will cause all "C" Clear Codes and any TPNC already assigned with a lower priority error to be deleted from the record.

TPNCs will be deleted from the header display,

Beginning with the higher Priority IV error created, all subsequent error TPNCs will be displayed for resolution, although they may have been displayed previously, and

A correction erases an Error Code which you previously cleared with a TPNC or "C" Clear Code. In this case, the "C" or TPNC on this error and all subsequent Error Codes will be displayed for resolution whether or not they were previously displayed.

The TPNCs for this error and subsequent Error Codes will be deleted from the header display.

Records which have been worked may be reworked using CC GTRECW. Refer to IRM 3.12.38.3.2.(4), General Correction Procedures, for further details.

All TPNCs are erased when a record is suspended with CC SSPND.

Unfinished records from the previous day will contain none of the TPNCs assigned to the records that were not completely worked.

OSPC Only - Form 940 (PR), Revision 2022 and prior, TPNCs are issued in the Spanish version.

Form 940 (sp) TPNCs are issued in the Spanish version.

For a listing of the TPNCs valid for specific forms, See Exhibit 3.12.154-16, Taxpayer Notice Codes.

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 or correction to the record as displayed.

The display will have a Clear Code Field labeled "CL" to show the possible need of a Clear Code.

The Clear Code Field is found to the right of CC CRECT on the screen display.

If

Then

Error Codes show the possible need for a Clear Code,

These are cleared by either correcting the condition or entering a "C" to show no correction is needed.

Corrections are required,

Assure that all corrective procedures have been input as shown under each individual Error Code prior to entering a "C" in the Clear Code Field.

The "C" Clear Code will prevent any other corrections to the record.

If a correction must be entered but you have already transmitted the "C" Clear Code, and the error is no longer displayed, then use CC GTRECW to make any corrections.

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 is resolved,

Clear Code "C" is used.

The presence of the "C" with a Priority I Error shows you have made the corrections to the Action Code and now wish to have any other errors on the record displayed.

Deleting an Action Code 1,

"000" is also used as a Clear Code.

It will only be used for invalid or erroneous Action Codes when you have decided 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 when a record is suspended with the CC SSPND.

It also erases Error Codes and Action Codes for the new day's Error Inventory and Workable Suspense Inventory.

Unfinished records from the previous day will contain none of the "C" Clear Codes assigned to a record that was not completely worked.

Error Codes (including the ones which may require a "C" Clear Code) are numbered in order of correction.

Sometimes an ERS Tax Examiner, correcting errors at the terminal, will create an Error Code with a higher priority than the one(s) cleared with a TPNC or "C" Clear Code.

Should this occur, programming will erase all "C" Clear Codes and TPNCs for Error Codes with a lower priority than the one created.

Beginning with the higher priority Error Code created, programming will continue displaying Error Codes for the record.

Displays using the corrected data are apt to be different from those previously displayed.

Sometimes an ERS Tax Examiner will make a correction erasing an Error Code which you previously cleared with a "C" and now the error condition no longer exists.

Should this occur, the "C" Clear Code for this error and all "C" and TPNCs for all subsequent errors in the record will be deleted.

If after deleting the "C" and TPNCs there are errors remaining on the record, they will continue to be displayed for resolution whether or not they were previously displayed.

Any Form 940 series return that has a current processing date equal to or more than two years and nine months or more after the original due date (without regard to any extension) or the received date, whichever is later, is a statute control document.

It will appear on the screen as Error Code 001, unless CCC "W" is present.

The "W" shows the record was cleared by the Statute Unit.

All "G" Coded returns become statute returns if the processing date is equal to or more than two years and nine months after the due date.

If the return has an attachment or stamp which shows previous clearance by the Statute Control Group within the last 90 days, the error must be cleared by entering "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 the last 90 days, take the following actions:

Treat the record as non-processable, suspend the record with AC 310 for statutory clearance.

If working the Error Inventory, return the document to the block.

If working the Workable Suspense Inventory, notate 2nd and 3rd copies of charge-out, if available, with AC 310 and the current date.

Handle the document as instructed for statutory clearance. Refer to IRM 3.0.273.11, Administrative Reference Guide, for further information.

The statute date for timely filed Form 940 series returns requesting an overpayment/refund due is shown in the table below.

All returns received after the postmarked date are disallowed by the Statute Unit (for overpayment or refund).

Original balance due returns must be cleared by the Statute Unit. Follow procedures outlined in (4) above.

Tax Return

Tax Year

Statute Barred Date

90 Days to Statute Bar Date

940 or 940 (sp)

2025

01-31-2029

11-02-2028

940 or 940 (sp)

2024

01-31-2028

11-02-2027

940 or 940 (sp)

2023

01-31-2027

11-02-2026

940 or 940PR

2022

01-31-2026

11-02-2025

940 or 940PR

2021

01-31-2025

11-02-2024

940 or 940PR

2020

01-31-2024

11-02-2023

940 or 940PR

2019

01-31-2023

11-02-2022

940 or 940PR

2018

01-31-2022

11-02-2021

940 or 940PR

2017

01-31-2021

11-02-2020

940 or 940PR

2016

01-31-2020

11-02-2019

940 or 940PR

2015

01-31-2019

11-02-2018

940 or 940PR

2014

01-31-2018

11-02-2017

940 or 940PR

2013

01-31-2017

11-02-2016

940 or 940PR

2012

01-31-2016

11-02-2015

940 or 940PR

2011

01-31-2015

11-02-2014

940 or 940PR

2010

01-31-2014

11-02-2013

940 or 940PR

2009

01-31-2013

11-02-2012

940 or 940PR

2008

01-31-2012

11-02-2011

940 or 940PR

2007

01-31-2011

11-02-2010

If a penalty other than a delinquency, late payment or Federal Tax Deposit (FTD) penalty is included on the return and the notation "3465 Prepared" does not appear on the return take the following actions:

Prepare a Form 3465 to request an assessment of the penalty.

If the return remittance includes an amount applicable to all or part of the penalty referred to above, write on the Form 3465 the part of the remittance is available for application to the assessment.

Enter CCC "X" to freeze the refund until the assessment for penalty posts to BMF.

Enter CCC "R" when an assessment of fraud penalty is shown. Notate on the return "Form 3465 Prepared" and route the Form 3465 to Accounts Management.

The following instructions apply to Electronically Filed returns:

Since all validity and consistency checks are performed up front during the transmission process, there should be minimal fall out to ERS.

If an Electronic record appears in your error inventory, please take the following steps:

If

Then

You are able to correct the error condition,

Make the correction following the procedures within this IRM.

You are unable to resolve the error condition for the Electronic record,

Take a screen print and give it to your manager.

The manager will contact the Planning and Analysis Staff Analyst responsible for Error Resolution who will contact and forward the documentation to the Unemployment Return (Electronic) Program Analyst at Headquarters.

A Knowledge, Incident/Problem, Service and Asset Management (KISAM) Alert may be required to notify Headquarters management and/or to correct current programming. The Planning and Analysis Staff Analyst should contact the Unemployment Return (Electronic) Program Analyst at Headquarters first, prior to issuing any KISAM Alert, to attempt to resolve the problem in a timely manner. Follow local procedures for issuing the KISAM Alert to Headquarters.

Form 940 originally input by electronic filing come out on ERS for correction.

The corrections are identical to corrections made for paper input documents.

Electronic Filed error corrections are made by referring to a computer printed facsimile document.

These facsimile documents have the Electronic Filed Error Codes printed in the top left corner of the return.

Electronic Filed DLNs contain Document CODE 39.

This section explains the procedure for issuing refunds when the 45-day interest free period is about to expire or when the amount of refund is $25,000 or more.

Document Perfection and ERS are responsible for identifying refunds and for initiating requests for manual refunds.

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

Action Code 341 should be input by Code & Edit to show that a manual refund is needed.

If these are not identified in Code & Edit, ERS examiners need to be aware of the following criteria:

If

Then

The processing date is more than 20 days after received date or return due date (whichever is later), and the 45-day interest free period is about to expire and the refund amount is≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

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

Input AC 341.

Attach Form 4227 (or other proper routing slip) route to ERS Rejects Correction for manual refund.

Give return to the manager.

The refund is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡,

Input AC 341.

Attach Form 4227 (or other proper routing slip) and route to ERS Rejects Correction for manual refund.

Give return to the manager.

Taxpayer Advocate Service (TAS) Initiated Manual Refunds - Any request for a manual refund that is hand walked by a Wage and Income Submission Processing (SP) liaison for a Taxpayer Advocate Service (TAS) employee as a manual refund, should be processed by a Lead Tax Examiner or designated tax examiner using the following procedures in the order listed:

CCC "O" should be edited on the return and entered in 01CCC.

Delete the CCC "Y" from Field 01CCC.

Continue to process the return according to Error Code processing.

Correspondence -If the manual refund requires correspondence for missing or incomplete information, then do the following:

Complete the proper correspondence request form and request all information that is missing or incomplete.

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

Suspend (SSPND) with correct suspense code and give the return back to the Wage and Income Submission Processing liaison.

The Wage and Income Submission Processing liaison will contact the TAS employee to obtain the required information needed to complete the processing of the manual refund.

Other Suspense Action Code - If the return requires other suspense Action Code, then do the following:

Initiate suspense (SSPND) Action Code according to the Error Code procedures.

Inform the Wage and Income Submission Processing liaison the reason of the suspense Action Code taken.

Give the return back to the Wage and Income Submission Processing liaison.

The Wage and Income Submission Processing liaison will contact the TAS employee, who in turn, will take the necessary steps to complete the processing of the manual refund.

Assigning TPNCs/Math Error - When a math error is identified, do the following:

Assign the TPNC in accordance with the Error Code procedures.

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

Suspend (SSPND) with correct Action Code (suspense should be done at the generated error code) and give the return to the TS SP liaison.

The Wage and Income Submission Processing liaison will contact the TAS employee, who, in turn, will take the necessary steps to complete the processing of the return.

When Balance Due/Overpayment Math Error Code generates - Do the following:

Make a screen print of the Error Code Screen Display. Highlight the Computer-generated Refund Amount and attach the print to the front of the return with the entity part of the return visible.

Enter the amount the taxpayer claimed as the amount they requested to be refunded back into Field 02B/R.

Once return processing is complete, give the return, Form 12412, Operations Assistance Request, and the ERS screen print to the TS SP liaison.

If Balance Due/Overpayment Math Error Code - Regenerates because the taxpayer made a math error when computing their refund, then do the following:

Make a screen print of the Error Code Screen Display and highlight the Computer-generated Refund Amount.

Attach the print to the front of the return with the entity part of the return visible.

Assign the correct TPNC.

Once return processing is complete, give the return, Form 12412, Operations Assistance Request, and the ERS screen print to the TS SP liaison.

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

Follow the specific instruction given by the TS SP liaison regarding correspondence issues and the assignment of the TPNCs.

Refer to Paragraphs 9 and 10 above.

The Form 940 was redesigned for Tax Years 2006 and later , Form 940 (PR) was redesigned for Tax Years 2006 through 2022.

The Form 940-EZ became obsolete. Thus, all Form 940-EZ returns must be converted to a current year Form 940 return format.

The Form 940-EZ is obsolete must be converted to a current year Form 940 return format. All converted forms are processed through ISRP.

Conversion of Form 940-EZ to Form 940.

The following table enumerates the Form 940-EZ line conversion to Form 940.

Line Item Description

Line Number on Form 940-EZ

Line Number on Form 940 , Rev 2013

Transcription Line

Title of Field

Field Designator

Amount of Contributions paid to State Unemployment Fund

A

N/A

No

N/A

N/A

Name of State where contributions are paid

B

1a

Yes

State Code

01SC1

Total payments to employees

1

3

No

N/A

N/A

Exempt payments

2

4

No

N/A

N/A

Payments of more than $7,000

3

5

No

N/A

N/A

Add lines 2 and 3

4

6

No

N/A

N/A

Total taxable wages

5

7

Yes

Total Taxable Wages

02TTW

FUTA Tax

6

12

Yes

Total Tax Taxpayer

02TFT

Total FUTA Tax Deposited

7

13

Yes

FTD Credit Claimed Amount

02FCC

Balance due

8

14

Yes

Balance Due/Overpayment Taxpayer

02B/R

Overpayment

9

15

Yes

Balance Due/Overpayment Taxpayer

02B/R

First Quarter Liability

First Box in Part II

16a

Yes

Total Tax Liability Amount

02Q1

Second Quarter Liability

Second Box in Part II

16b

Yes

Total Tax Liability Amount

02Q2

Third Quarter Liability

Third Box in Part II

16c

Yes

Total Tax Liability Amount

02Q3

Fourth Quarter Liability

Fourth Box in Part II

16d

Yes

Total Tax Liability Amount

02Q4

Form 940-EZ - All valid Codes should be transferred to Form 940 including 01SIC and 01RCD.

Form 940-EZ - Circle out any ACTION CODES.

Form 940-EZ - Staple the replacement Form 940 to the front of the original return.

Form 940-EZ - Follow local submission processing center procedures for renumbering.

Using CC SSPND 61X, suspend to Rejects.

Forms that have been converted will be processed via ISRP.

Conversions of prior year returns to Form 940 will be performed by Code & Edit.

In addition, some converting will be necessary as shown below when a credit reduction State is involved.

If

Then

The taxpayer completed Part I, Line 6, signifying a Credit Reduction State,

Part I, Line 6 should be edited to Form 940 Schedule A and entered into the correct Field in Section 03, 04, or 05. Part I, Line 7 should be entered on Form 940, Line 11 (current year revision).

If the taxpayer has not identified the Form 940 Schedule A Credit Reduction State and its associated FUTA Taxable Wage amount,

SSPND 211 using Letter 142C, Unemployment Return Incomplete for Processing: Form 940/940 EZ (or local letter as permitted by the center) correspond for a completed Form 940 (current year revision), and Form 940 Schedule A.

A signature and jurat is required on all returns except:

Returns prepared under Internal Revenue Code IRC 6020(b). These returns must be signed by a Compliance function representative. If not signed, route the return to Rejects to have the DLN extracted. Then, send the return to: Internal Revenue Service 2970 Market St. Mail Stop 5- EO4.114 Philadelphia, PA 19104

Returns prepared by Examination, for example "SFR" (Substitute For Return) or "Substitute Return"

Returns secured by Examination do require a signature and jurat.

Dummy returns prepared by the IRS.

Returns filed under IRC 501(d) (Religious or Apostolic Organization).

A blank return with a CP139 attached (i.e., notification that Form 941 or Form 940 may no longer be required because four consecutive Form 941 tax years were received with "NO LIABILITY" )

Correspondence is attached showing that the taxpayer is responding to an IRS letter.

Taxpayer shows he/she has filed another type of return.

It appears that the taxpayer is "IRATE" because he/she has received another blank return after filing a "FINAL" return in the previous year.

Tentative returns.

Other Federal Agencies.

Computer generated returns with computer generated signatures.

Electronically filed returns may be identified by the presence of printouts in lieu of an actual return.

Returns identified with "CII Image-Do not correspond for Signature" stamped below the signature line or "CII" ("Correspondence Imaging Inventory" ) annotated on the front of the return.

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.

A check mark or "X" for the purpose to designate where the taxpayer should sign the return is not considered a valid signature.

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 Forms 940, Form 940(PR), and Form 940 (sp), and may appear in either the Sign your name here or the Print your name here boxes.

This section gives general information regarding ERS Error Codes.

An error code is computer-generated to a record and assigned in numerical order.

Error codes are displayed on ERS by priority. The lower number error codes appear first.

Error codes require one of the following actions to be taken by the tax examiner:

Correct the invalid field/math condition,

Assign a TPNC in the correct field,

Suspend the document with the correct Action Code, or

Verify and clear the error with a "C" Code in the Clear Code Field.

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

Priority I are Action Code Errors. When an Action Code is assigned to a return, it displays as a Priority I error.

Priority II are Section Errors (ISRP and Terminus).

ISRP (transcription - error) - An error detected by ISRP displays as an ISRP Section Error,

Terminus - An alpha transcribed in a numeric field or vice versa and a section with variable length fields containing an erroneous size field displays as a terminus section error,

Priority III are Field Validity Errors. Any field failing to meet the requirements for that field displays as a Priority III error.

Priority IV are Math and Consistency Errors. When a record is assigned an Error Code because of a math error or an inconsistency between fields, it displays as a Priority IV error.

There may be records where the tax examiner finds that programming has not furnished a section that is needed to solve an error. If this happens, the tax examiner will enter the section using CC GTSEC and enter the missing data. It should be reported to Headquarters for correction of the display.

This section has Priority I Action Code Error information for Form 940, Form 940 (PR), and Form 940 (sp).

All records that are assigned an Action Code by Code & Edit will be displayed as a Priority I Error.

If the Action Code is valid and other than 001, it will be placed in the Suspense Inventory.

If the Action Code is invalid or 001, it will be placed in the Error Inventory.

The Error Screen Display will show the following:

The items listed will display in the header part of each Error Record. Previously assigned TPNCs will also be displayed in the header information.

Document Locator Number (DLN).

Taxpayer Identification Number and Name Control.

Processing Date.

ISRP/RRPS (literal printed if a document was processed through the Residual Remittance Processing System).

ERS Status Code.

Command Code.

Prior to making corrections do the following:

Make sure the DLN on the screen display matches the DLN of the document.

Make sure the taxpayer's entries are on the correct lines of the tax return.

Check and correct all coding and transcription errors in each section.

Make certain all sections and fields are transcribed.

If

Then

Suspense is required,

Use CC SSPND and the correct Action Code.

If no suspense is needed, enter "000" in the Clear Code Field and transmit.

The BOB Resolution function has added a document to a block by entering only the name control and TIN, Action Code 001 will be computer - generated,

Error Resolution must enter the remainder of the record.

Enter CC GTSEC for each record section that should contain data.

Add the required data. When all of the sections have been entered, clear the Action Code by entering "C" in the Clear Code Field.

Money Amounts - When you correct a screen display, be sure money amounts have been transcribed correctly in dollars and cents.

Check the displayed Action Code for validity. See Exhibit 3.12.154-13, Action Code Chart, for valid Action Codes.

Also check the return to verify that the Action Code assigned is correct and whether it was transcribed properly.

Remember to use CC GTSEC prior to clearing the data from the terminal on "AC 001" .

Decide if the record can now be resolved with the information available. If so, make the corrections to the record using CC DLSEC or CC GTSEC.

After all corrections are made and transmitted, enter a "C" in the Clear Code Field and transmit.

If there are other errors in the record, they will be displayed.

If the error is resolved, release the document to files.

The No Reply instructions are furnished on the No Reply Chart. See Exhibit 3.12.154-7, No-Reply / Undeliverable Chart.

If the error cannot be resolved without other information or clearance, re-suspend with the correct Action Code using CC SSPND.

Enter the new Action Code and date on both copies of the charge-out (Form 4251) (a new charge-out is not issued for the re-suspended record, if available.)

Give the return with attached charge-outs to the Suspended Documents File Unit.

A record may also require rejecting from ERS, either for re-input or voiding.

A record being re-input may be re-input with the same Document Locator Number (DLN) or a new DLN. Notate on charge-out,

A new charge-out will be issued for the Rejected Document.

Give the return to the Suspended Document Unit.

On the screen, use the correct CC RJECT or CC NWDLN and enter the correct Suspense Reject Action Code.

The following table has Priority I error instructions:

If

And

Then

Priority I Error, Action Code 21X, Correspondence

Status 321

For correspondence with No Reply, follow the No Reply instructions prior to clearing the Priority I Error. See Exhibit 3.12.154-7, No Reply / Undeliverable Chart.

Priority I Error, Action Code 21X, Correspondence

Status 421

Input the information received in the reply prior to clearing the Priority I Error.

Priority I Error, Action Code 310, Statute Control

Status 331 or 431

Document will be furnished to the tax examiner with instructions from Statute Control.

If the Statute Control Group shows clearance, use CC GTSEC for Section 01, verifying 01TXP (Tax Year) and entering "W" in 01CCC for Form 940 returns.

If document is to be voided:

Use CC RJECT 640 for non-remittance documents.

Use CC NWDLN 640 for remittance documents.

Refer to IRM 3.12.38, Error Resolution, BMF General Instructions for the DLN of the payment posting voucher (Form 3244) to post the remittance to the year and MFT of the voided Statute document.

Transmit and then clear the Priority I Error.

Priority I Error, Action Code 320, Entity Control.

Status 432

Document will be furnished to the tax examiner with instructions from Entity Control.

Follow instructions from Entity Control prior to clearing the Priority I Errors.

Enter the correct fields using CC GTSEC for Section 01 if the return was referred to Entity for the Name Control or EIN.

When Entity assigns an EIN, enter the assigned date in the Correspondence Received Date (CRD) field, (01CRD).

Priority I Error, Action Code 33X, Review/Routing to CI

Status 433

Document will be referred to CI prior to giving to tax examiners.

If instructed to void the record and refer the Form 940, Form 940 (PR), or Form 940 (sp) to CI, use CC RJECT or CC NWDLN, AC 640, following CI instructions.

CC NWDLN 640 is for the voided Form 940, Form 940 (PR), or 940 (sp) with a remittance.

The new DLN is the DLN of the payment posting voucher that posts the remittance to the year and MFT of the voided document sent to CI or URF if CI instructs that the money is to be applied to the Unidentified Remittance File.

If you continue processing Form 940, Form 940 (PR), or Form 940 (sp) follow CI instructions prior to clearing Priority I Error.

Priority I Error, Action Code 35X, IDRS Research

Status 435

AC 351 shows IDRS was not available when the record was on the Error inventory.

If after researching with CC NAMEB or CC NAMEE and the EIN is found - enter in 01EIN after using CC GTSEC for Section 01.

If after researching with CC NAMEB or CC NAMEE and the EIN is NOT found, re-suspend using CC SSPND with AC 320 for referral of a document to Entity for EIN.

Action Codes "352" , "354" or "355" , - if after researching you are unable to resolve, re-suspend to Entity with AC 320.

AC 353 will not be used on Form 940, Form 940 (PR) or, Form 940 (sp), unless correspondence is necessary and there is no address.

Priority I Error, Action Codes 420 through 460, Management Suspense

Status 442

Management may direct either that you work or re-suspend the record.

If re-suspending, use CC SSPND and the Action Code as directed.

When instructed to work the record, clear the Priority I Error with the "C" Clear Code, so if other errors exist in the record, they are displayed.

Priority I Error, Action Code 480, Early Filed Final Suspense

Status 448

See IRM 3.12.154.7.4.2, Field 01TXP Correction Procedures, and IRM 3.12.154.12.7.2, Correction Procedures (EC 007).

Priority I Error, Action Code 490, System Problem

Status 349

Instructions are needed from the Computer Branch through your supervisor for working. If instructions are not furnished for Status 349, you may be advised to re-suspend, using CC SSPND 490.

Priority I Error, Action Code 490, System Problem

Status 449

Once you clear AC 490, if no other error exists in the record, the record will go to good tape. It is imperative to await instructions from the Computer Branch.

Priority I Error, Action Code 51X, Missing Document

Status 451 or 351

The charge-out issued for a missing document may be used for the initial search.

It may also be used for subsequent searches by marking Second Request, Third Request, etc. on the charge-out returned from Files.

A special search is continued as shown in IRM 3.12.38, Error Resolution, BMF General Instructions until a document is found or record is rejected from ERS with AC 670.

If the missing document is a non-remittance document, use CC RJECT 670.

If the missing document is a remittance document, use CC NWDLN 670 and the DLN of Form 3244 for the payment or if unable to designate where remittance should be applied, use CC NWDLN 670 URF.

l. Priority I Error, Action Code 6XX, Rejects

Review the document to see if you agree with recommended rejection of return.

If so, delete with CC RJECT or CC NWDLN and the correct Action Code.

If you decide not to delete the record, clear the Priority I Error with the "C" Clear Code deleting the Action Code so that other errors that might exist can display.

Priority I Error, Action Code 700, Duplicate Block DLN

Clear the Priority I Error with the "C" Clear Code so that other errors in the record might display.

Priority I Error, Action Code 900, Unpostable Records

The literal for the AC 900 will have the Unpostable Code and the Unpostable Reason Code.

For AC 900 returns, decide if the record is resolved. If so, use CC GTSEC for the desired section(s) and make the correction(s).

After all corrections are made and transmitted, enter a "C" in the Clear Code Field. Once the AC 900 is cleared, all other errors on the record will be displayed for correction.

If no other errors exist, the record will clear the screen. The record has never posted to Master File.

Fields displayed will be as processed prior to being an Unpostable. The record may contain editing and transcription errors.

All Clear Codes and TPNCs assigned when previously processed will be deleted from the record and will need to be assigned again, if still applicable.

Errors which are identified as Priority II Errors are: ISRP, SCRIPS, and Terminus Errors.

These errors and the correction procedures are explained in this section.

An edit error is a section with an error detected by ISRP or SCRIPS.

Edit errors are coded as follows:

Code

Error

"1"

Split screen transmission.

Key Verifier attempted to change Check Digit.

Key Verifier changed 4 or more digits of TIN.

The Original Entry operator entered required section as missing.

"2"

Not used at this time.

"3"

Invalid section ending point.

"4"

Invalid field length.

Questionable Section - the same section was input more than once, or a section was entered out of sequence. The computer program will drop all duplicate sections and display the first one encountered.

Mainline Problem - two sections were input (04 and 05 input) to generate Section 02.

The computer cannot decide which input section to use.

When displayed, this type of error will display all input fields, except the Remittance in Section 01 of the section in error,

Transcribed data will be present, and

Computer-generated data will not be present.

Check the fields with the return and do the following:

If

Then

Check all fields of the section when this condition exists,

Verify that fields are entered as coded.

No correction is needed, or once the section is correct,

Go to the bottom of the screen and transmit.

The section needs to be deleted,

Enter CC DLSEC with the section number.

This error is caused by a section with variable length input fields containing an erroneous size field.

When displayed, this type of error will show all input fields of the terminus section.

Transcribed data will be present.

Computer-generated fields or Remittance Field for Section 01 will not be present.

Check all fields and make the necessary corrections.

If

Then

No correction is needed, or once the section is correct,

Go to the bottom of the screen and transmit.

The section needs to be deleted,

Enter CC DLSEC with the section number.

Any field that does not meet the requirement(s) for that field will be shown as a Priority III Error.

Some reasons for this type of error are as follows:

Non-alpha character in an alpha field.

Blank space in a numeric field.

Blank in the first position of an alpha field.

Non-numeric character in a numeric field.

A required field is blank.

On re-input–the field length exceeds the maximum allowable characters.

Form 940, Form 940 (PR), and Form 940 (sp) – Section 02, 03, 04, and 05 money fields, with the exception of the balance due field, have negative amounts.

All fields with a Priority III error will be displayed in the order encountered in the record.

The Action Code and TPNC will never be displayed as a Priority III error.

Follow the correction procedures below for an Overflow condition:

If

Then

The money amount on a return exceeds the maximum field length allowable. * "Overflow Field,"

Enter the maximum amount allowable on the original return.

Recompute the tax data and enter the corrected amount(s) on the screen display and the return.

DO NOT SEND A TPNC.

Annotate on the original return, "Dummy Return prepared due to an overflow document."

Prepare a "Dummy Return" by computing and entering the remaining overflow money amount(s) for all applicable T-lines. Enter the following information on the "Dummy Return" :

Entity data from the original return,

CCC "G"

In the signature area write "Signature on Original return" .

The DLN from the original return.

On the top of the return write "Prepared from Overflow Document."

Route completed "Dummy Return" to Receipt and Control on a routing slip to be numbered and processed.

No longer edited by Code & Edit.

01SC1

2

State Code

Part 1, Line 1a

01ABC

1

ABC Indicator

Not Applicable.

01CAF

1

Centralized Authorization File

Not Applicable

01SIC

1

Schedule Indicator Code (SIC)

In the right margin, next to the line that separates the entity information from Part 1

01MSB

1

Multi-State Filer Check Box Indicator

Part 1, Line 1b

01CRB

1

Credit Reduction Check Box Indicator

Part 1, Line 2

01ARI

1

Check Box Aggregate Return Indicator

Below Type of Return Box.

01SRI

1

Form 940 Schedule R Indicator

An indicator "R" on the right margin next to Line 6, "Subtotal" .

01CRD

8

Correspondence Received Date (CRD)

Far left of the address

01ARN

1

Applied Refund Indicator

Part 4, After Line 15

01CBI

1

Third-party Designee Indicator

Part 6

01CBP

5

Third-party Designee Personal Identification Number (PIN)

Part 6

01PSN

9

Paid Preparer's SSN or PTIN

Part 7, below the taxpayer signature line

01PEN

9

Firm's EIN

Part 7, below the taxpayer signature line

01PTN

10

Paid Preparer's Phone Number

Part 7, below the taxpayer signature line

Name Control:

This field is found in the Entity Section of the return and is underlined by Code & Edit.

Each of the four positions must have an alpha, numeric, hyphen, ampersand or blank.

The first position cannot be blank.

Check Digits

This field is found above the Entity Section of the return.

This is also a four-position field.

There must be blanks in the first two positions and a letter of the alphabet in the third and fourth positions.

The Name Control field is invalid if any of the following occurs:

The first position is not an alpha or numeric.

The "2nd" , "3rd" or "4th" position is not an alpha, numeric, hyphen, ampersand or blank.

There are any intervening blanks between characters.

Letters "E" , "G" or "M" are present in the check digits.

Check the field with the return and do the following:

If

Then

Data was transcribed incorrectly,

Enter the correct data. Check digits have priority over the Name Control.

Name control is not available,

Use CC ENMOD, CC NAMEB, CC NAMEE and/or CC INOLE to secure the name control.

Unable to secure name control,

Refer the document to Entity Control and suspend the record with "AC 320" . See Document 7071-A, Name Control Job Aid, for methods of determining name controls if the Name Control is obviously wrong. Otherwise, follow instructions above.

See IRM 3.12.154.10.1.2, Field 06CON, - Correction Procedures.

Description - The EIN is a number assigned by the IRS for identification of a business tax account.

This field is found in the Entity Section of the return.

The EIN is invalid if one of the following conditions is present:

It is not numeric.

It is less than nine characters.

The first two digits are: "00" , "07" , "08" , "09" , "17" , "18" , "19" , "28" , "29" , "49" , "78" , "79" , or "89" .

It is all "zeros" or all "nines" .

Check the field with the return and do the following:

If

Then

The EIN was transcribed incorrectly,

Enter the correct EIN.

The EIN was transcribed correctly,

Search for another valid EIN on the return or attachments and enter the correct number.

A correct number cannot be decided,

Research using CC NAMEB, CC NAMEE, or CC INOLE for the correct number.

If a valid EIN is found, enter the correct number.

If EIN is changed from the one the taxpayer used, send Letter 3875C, Missing or Incorrect EIN on Return - BMF/EPMF, as a non-response letter to the address on the return. Continue processing the return.

Do not send Letter 3875C when: • Three or less digits of the EIN are transposed, different or missing, or • The EIN is consecutive numbers (e.g., 12-3456789) or repeating numbers (e.g., 11-1111111), or • INOLES shows the account was "merged to" or "merged from" , or • The TIN on the return is the taxpayer’s SSN (check CC INOLEG).

More than one number is found or if unable to decide valid EIN,

Suspend with AC 320 for referral to Entity Control.

Entity assigns an EIN.

Enter the EIN in Field 01 EIN.

Enter the Entity Assigned Date in Field 01CRD if the date is after the return due date.

Description - This field is found in the Entity Section of the return and consists of the four digits for the Tax Year, for example, 2025.

This field is invalid if one of the following conditions is present:

It is not all numeric.

It is not in YYYY format.

It is all blank.

It is greater than the processing date.

Check the return and/or attachments for the correct Tax Year and do the following:

If

Then

The Tax Year cannot be decided,

Research BMFOLI to see which year has not yet posted. If unable to decide the tax year after researching BMFOLI, enter the current year being processed as the tax period.

The taxpayer is attempting to pay more than one year's tax on the return, and you are unable to decide the tax and wage amount for each year,

Correspond with the taxpayer and suspend with AC 211 for Form 940 or AC 215 for Form 940 (PR) and Form 940 (sp).

Early Filed (the taxpayer shows a Tax Year for a future year) - Final and complete return,

Enter CCC "F"

Enter AC 480 to suspend the return.

Early Filed - Final and incomplete return

Correspond for the missing data and suspend with AC 211 for Form 940 or AC 215 for International returns.

Input CCC "F" , if necessary, depending on the taxpayer's response.

When the correspondence is received, enter AC 480 to suspend the return until the upcoming January according to the taxpayer's response.

Early Filed - Non-Final return

This procedure includes early filed complete "CII" returns.

Suspend with AC 211 for Form 940 or AC 215 for International returns.

Correspond using Letter 142C (or, a local letter paragraph, as permitted by the center) for explanation for early filing.

If the return is prepared under IRC 6020(b) by a revenue officer, do not correspond with the taxpayer.

If No Reply, then re-suspend with AC 480. If this is an overpayment/refund return, enter CCC "X" to freeze the refund.

If the current date is November 1 through December 31, do not correspond using AC 211 for Form 940 or AC 215 for International returns. SSPND 480 as an Early Filed return.

Field 01 will take up to 10 Computer Condition Codes.

This field is found in the following locations on the tax form:

Form

Location

Form 940 (Revision 2006 and later)

Immediately to the right of the line that states: "You MUST fill out both pages of this form and SIGN it." See Exhibit 3.12.154-1, Form 940 (Revision 2025) and Form 940 Schedule A (Revision 2025).

Form 940 (sp)

Immediately to the right of the line that states: TIENE que completar ambas paginas del Formulario 940 y luego FIRMARLO.Exhibit 3.12.154-3.

Form 940 (PR) (Revision 2006 through 2022)

Immediately to the right of the line that states: "Usted DEBE llenar ambas paginas de esta planilla y luego FIRMARLA" . See Exhibit 3.12.154-2, Form 940 (PR)(Revision 2006 through 2022) and Form 940 Schedule A (PR) (Anexo (Formulario 940-PR)) (Revision 2006 through 2022).

Form 940 (Revision 2005 and prior)

Center of the bottom of Page 1.

Form 940 (PR) (Revision 2005 and prior)

Center of the bottom of Page 1.

Computer Condition Codes (CCC) are used to identify a special condition or computation for the computer. See the following table:

CCC

Definition

Validity/Consistency Checks

Remarks

"C"

Unexplained exemption

Not Applicable. This code will no longer be used.

"D"

Reasonable cause for failure to make timely payments,

Must have a received date (Error Code 028)

Cannot have a pre-computed penalty.

"E"

Credit Election

Cannot be "F" , "G" , or "S" Coded. (Field Error)

Computer-generated if 01ARN is blank and 02 B/R has an overpayment.

"F"

Final Return

Cannot be coded "G" , or "E"

"G"

Amended Return

No other CCC codes allowed except "W" and "3"

Must have received date. (Error Code 028)

All fields must be blank except 01NC, 01EIN, 01TXP, 01CCC, 01RCD, 01CRD (Error Code 010)

"J"

Reasonable cause for Waiver of FTD penalty. Also used when TP notates "State" , "City" , or "county" , in the entity area of the return.

Cannot have pre-computed FTD penalties (Error Code 038)

"O"

Module Freeze

Manual Refund

"R"

Reasonable cause for delinquency.

Must have received date. (Error Code 028)

Cannot be "4" Coded (Field Error)

Cannot be "7" coded. (Field Error)

Cannot have a pre-computed penalty.

"S"

Overpayment Refund

Cannot be "E" or "G" Coded (Field Error)

Computer-generated if 01ARN is "2" and 02 B/R has an overpayment.

"W"

Cleared by Statute Control

Must be present on Statute cases (Error Code 001)

"X"

Credit Freeze

"Z"

Scanned Paper Return in need of ERS correction

CCC Z is not currently valid.

CCC Z is used by the scanning vendors to cause returns that need correction to fall out in ERS. See IRM 3.12.154.13, Scanned Paper Returns for correction procedures.

Do not delete CCC "Z" before resolving the error condition.

"3"

No Reply Received - Suppress Credit Interest

Must not contain Correspondence Received Date (Error Code 073)

Used to suppress credit interest when No Reply is received to correspondence

"4"

Return prepared by the IRS under IRC 6020(b).

Cannot be "R" Coded (Field Error)

Will have notation about IRC 6020(b) and the signature of revenue agent or officer.

"5"

Successor Employer

Box "b" should be checked to signify that the taxpayer is entitled to special credits as a Successor Employer.

"7"

Reasonable cause statement denied

Cannot be both "D" coded and "R" coded (Field Error)

Must have a received date (Error Code 028)

Code used when a taxpayer gives unacceptable reason(s) for failing to file or pay tax timely.

"9"

No Payments to Employees

Box "c" will be checked to signify that no payments were made to employees.

This field is in error if any one of the following is present:

The entry is other than "C" , "D" , "E" , "F" , "G" , "J" , "O" , "P" , "R" , "S" , "W" , "X" , "3" , "4" , "5" , "7" , or "9" .

CCC "Z" is invalid and is used with scanned paper returns to cause fallout for ERS correction. See IRM 3.12.154.13, Scanned Paper Returns for correction procedures. Do not delete CCC "Z" until the underlying error condition is addressed.

CCC "G" is present, and any other CCC except "W" and/or "3" is present.

CCCs "E" and "F" are used together.

CCCs "E" and "S" are used together.

CCC "7" is present, and CCCs "D" and "R" are present.

CCC "4" is present, and CCC "R" is present.

Check the return for the CCC and do the following:

If

Then

The CCC was transcribed incorrectly,

Enter the correct CCC.

Other CCCs are present with "G" , "W" , or "3" .

If the CCC "G" is needed, delete the other CCC.

If the CCC "G" CCC is not needed, delete it and leave the other CCC.

Review all sections and input data where necessary. Research BMFOLT for TC 150. If TC 150 is present, CCC "G" must be present. If there is no TC 150, review all sections and input data where necessary. Delete CCC "G" .

CCCs "E" and "S" are present,

Verify box on Line 10 Field 01ARN.

If applied to the next return box is checked, then enter CCC "E" .

If the refund box is checked, then enter CCC "S" .

If no box is checked, and an overpayment is shown on the return, enter CCC "E"

CCCs "E" and "F" are present,

Decide if the return is a Final.

If it is a final return, delete "E" .

If there is no indication of a final return, delete the "F" .

CCCs "D" and "R" are present with CCC "7" ,

Decide which is correct and delete the incorrect CCC.

Both CCC "4" and "R" are present,

If the return was prepared under IRC 6020(b), delete the "R" .

If the return was not prepared under IRC 6020(b), delete the "4" .

CCC "9" is present, and Line 3 or Line 7 (e.g., Line 7a if Revision 2011) has an amount greater than zero,

Delete the "9" .

The Received Date field is date stamped by Receipt and Control or perfected by Code & Edit on the center of return.

The Received Date is required on all Form 940 Series returns, or

If all positions in the field are blank, it would not cause an invalid condition.

The Received Date field is invalid if any of the following occur:

Not in YYYYMMDD format.

Prior to 19620101 - Form 940.

Later than the current processing date.

Not all numeric (if present).

Not within the valid month, day range as shown below:

Month

Day

01

01-31

02

01-28 (29 leap year)

03

01-31

04

01-30

05

01-31

06

01-30

07

01-31

08

01-31

09

01-30

10

01-31

11

01-30

12

01-31

Received Date - Compare the screen entry to the entry on the return and do the following:

If

Then

The field was transcribed incorrectly,

Correct the screen entry.

It appears the incorrect year was used (i.e., 20250115 instead of 20260115) and other information (Julian date, postmark date, and/or signature date) shows the received date should be a current year,

Change the received date year to the current year.

Multiple dates are on the return,

Use the earliest date.

When you enter a received date, if the return was filed at a Service Center other than the one at which it is supposed to be filed, enter the earliest received date regardless of where it was filed. OSPC Only: If a foreign-address return was filed with an IRS office in the foreign country instead of OSPC, enter the foreign-country received date (this includes U.S. Possessions).

The return was held in suspense,

Circle all but the earliest date.

The Received Date is not present on the return, or the date is illegible/invalid,

Enter the Received Date using the following priorities:

Earliest legible postmark date of the U.S. Post Office or a Private Delivery Service or a foreign postmark date.

If an envelope is not attached, use the postmark date stamped on the face of the return.

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

Revenue officer's signature date.

Signature date, if within the current year

Julian date minus 10 days.

Current date minus 10 days.

The Received Date should never precede the beginning of the Tax Year (Error Code 007).

This field is no longer edited by Code & Edit.

The "P" / "I" Code was used to alert the computer to do a computation for penalty and/or interest if the return is received ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

Penalty Interest Code- Entry was invalid if it is other than "1" or blank.

Penalty Interest Code- Compare the screen entries with the return and do the following:

If

Then

There was a transcription error,

Change the field to the correct entry.

Pre-computed delinquency penalty and/or interest is shown in the Penalty and Interest box or area, and the return is received ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡,

Enter Code "1" .

Description - The State Code Field for a single State filer is found in Part 1, Line 1a. for Form 940, Form 940 (PR) (Revision 2006 through 2022 ) and Form 940 (sp).

The State codes are composed of two alpha characters.

There are 53 valid codes, as shown below. See Exhibit 3.12.154-9, Entity State Code and Zip Code Chart.

The State Code Field is invalid if one of the following occurs:

The State Code in the State Code field is not a valid abbreviation for one of the 50 U. S. States, District of Columbia, Puerto Rico, or the U.S. Virgin Islands. See Exhibit 3.12.154-8, State Codes.

The State Code is a foreign country.

State Code Field -Compare the screen entry with the entry on the return and do the following:

If

And

Then

The field was transcribed incorrectly,

Correct the screen display from the return.

Box 1a (01SC1) entry is an invalid State code,

Enter the valid State code from the return.

If the return is non-taxable, enter "ZZ" in field 01SC1 only for a credit reduction State.

Field 01SC1 is blank or the State Code in Box 1a (01SC1) is a foreign country other than a U.S. Possession,

AA, AE, or AP, address is present on the entity of the return, See IRM 3.12.154.2.19.2, APO/DPO/FPO Address.

Enter the State from the entity address on page 1 of the return.

Field 01SC1 is blank or the State Code in Box 1a (01SC1) is a foreign country other than a U.S. Possession,

No AA, AE, or AP address is present on the entity of the return,

Delete the entry in Fields 01SC1, 01MSB and 01CRB, if present for the single invalid credit reduction State.

Also, delete the invalid credit reduction State code and associated amount from Section 03, 04, or 05, as applicable, if multi States are involved.

A valid State Code cannot be decided from the return or attachments,

Use "CC SSPND" with" AC 650" and transship to the Ogden Submission Processing Campus (OSPC). OSPC Only: Delete entry of foreign country and/or U.S. possessions (Exceptions: Puerto Rico and Virgin Islands).

The address on the return is a foreign address from "AS" (American Samoa), "FM" (Federated States of Micronesia), "GU" (Guam), "MH" (Marshall Is.), "MP" (Northern Mariana Is.), or "PW" (Palau), but not US Virgin Island (VI) or Puerto Rico (PR),

Delete the State Code from Field 01SC1 if present.

The State Code in Box 1a (01SC1) is blank,

Box 1b. (01MSB) is not checked

Enter the State code from the entity section of the return.

Form 2848, Power of Attorney and Declaration of Representative. and Form 8821, Tax Information Authorization (TIA), are forwarded to the Central Authorization File Unit (CAF) by Code & Edit function.

Editing of Central Authorization File Codes by Code & Edit is no longer necessary. When the CAF Code was being edited, the field 01CAF had a value of 1, 2, 3, 4, or 7 depending on how much authority the CAF representative had received from their client.

If a Form 2848 or Form 8821 is still attached to the return, detach and route to the CAF function.

If a "General Power of Attorney" or a "Durable Power of Attorney" or "Tax Information Authorization" is submitted on any document other than Form 2848 or Form 8821, leave it attached to the return. Do not detach. Do not route to the Central Authorization File function.

This field is invalid if the entry is other than "1" , or is not blank.

Compare the return to the screen entry with the entry on the return.

If

Then

There is a transcription error,

Enter the correct data.

A valid code is not present on the return,

Delete the entry.

The Schedule Indicator Code (SIC) is used to notify the computer that the Record of Quarterly Federal Tax Liability (ROFTL) is incomplete or unnecessary. SIC 1 would be edited when:

Total FUTA Tax is ≡ ≡ ≡ or less.

The ROFTL Total is ≡ ≡ ≡ or less.

The ROFTL Total is ≡ ≡ ≡ ≡ or more.

There is a negative amount in the ROFTL.

The ROFTL is blank.

There is a total in the ROFTL, but there are no Quarterly Liability Amounts present.

The Total FUTA tax is more than ≡ ≡ ≡ ≡ ≡ and the Total in the ROFTL is more than ≡ ≡ ≡ ≡ ≡, but there is a difference of more than ≡ ≡ ≡ ≡ between the two amounts.

The Schedule Indicator Code (SIC) is found in the following locations:

Form

Location

Form 940 (Revision 2006 and later)

In the margin, to the right of the line that separates the entity information from Part 1. See Exhibit 3.12.154-1, Form 940 (Revision 2025) and Form 940 Schedule A (Revision 2025).

Form 940 (sp)

In the margin, to the right of the line that separates the entity information from Part 1. Exhibit 3.12.154-3

Form 940 (PR) (Revisions 2006 through 2022)

In the margin, to the right of the line that separates the entity information from Part 1. See Exhibit 3.12.154-2, Form 940 (PR) (Revision 2022 and Form 940 Schedule A (PR) (Anexo A (Formulario 940 (PR)) (Revision 2022).

Form 940 (2005 and prior revisions)

In the margin, to the right the line that separates the entity information from the ABCD Questions.

Form 940 (PR) (2005 and prior revisions)

In the margin, to the right of line that separates the entity information from the ABC Questions.

This field is invalid if it is other than "1" or "blank" .

Check the field with the return and take the following actions:

If

Then

There is a transcription error,

Enter the correct data.

A valid code is not present on the return,

Delete the entry.

This box is found in Part 1, Line 1b. If this box is checked, the taxpayer is showing wages were paid in more than one State. Form 940 Schedule A must be completed when Box 1b is checked. Valid entries for 01MSB are "1" and blank.

This field is invalid if the entry is other than "1" or is not blank.

Compare the screen entry with the entry on the return and do the following:

If

Then

The field 01MSB is other than "1" , or is not blank,

If Box 1b is checked on the return, correct field 01MSB to "1" .

If the box is not checked, blank the field.

Box 2 must be checked if the taxpayer paid wages in a State that is subject to credit reduction. Valid entries are "1" or blank.

This field is invalid if the entry is other than "1" or is not blank.

Compare the screen entry with the entry on the return and do the following:

If

Then

The field 01CRB is other than "1" or, is not blank,

If Box 2 is checked on the return, correct field 01CRB to "1" . If the box is not checked, blank the field.

This field is invalid if the entry is other than blank, "1" ," 2" , or" 3"

If

Then

Section 3504 Agent is checked,

Certified Professional Employer Organization (CEPO) is checked,

Other Third Party is checked,

Enter "1" in Filed 01ARI

Enter "2" in Filed 01ARI

Enter "3" in Field 01ARI

Do not correspond if Other Third Party is checked, Schedule R is not required.

Multiple Boxes or No Box is Checked and Schedule R is attached,

Edit from the Check Box of the Schedule R.

Multiple Boxes or No Box is Checked and Schedule R is attached with Multiple or No Boxes Checked,

There is no indication Code and Edit initiated correspondence. Correspond for clarification

Any Box or Multiple Boxes are checked and Schedule R is NOT attached

There is no indication Code and Edit initiated correspondence. Correspond for clarification

Reply, No Reply, or Insufficient Reply - Use the following table to correct returns that have been suspended for Aggregate Return Filer check box:

IF

THEN

A complete Schedule R is received

Enter the correct ARI in Field 01ARI

The taxpayer replies that the Aggregate Return Filer was checked in error,

Remove any entries in Field 01ARI and delete CCC "8" if present.

A Schedule R is received and no Type of Filer is checked,

Enter CCC "8"

No reply is received

Enter CCC 3 and "8"

This field is used to show Form 940 Schedule R, Allocation Schedule for Aggregate Form 940 Filers, was attached to the Form 940 when filed.

The Form 940 Schedule R and its continuation sheet are created to identify the clients by EIN and report aggregate filers total taxable FUTA wages, adjustments, credit reductions and deposits. Agents will be required to attach Form 940 Schedule R and any continuation sheets to Form 940 calendar year 2011.

Valid entries are "R" (active) or blank (inactive).

When the Form 940 is filed with a Form 940 Schedule R attached, Code & Edit will edit an "R" to the right margin next to Line 6, "Subtotal."

This field is invalid if any character other than "R" is present.

If a character other than "R" is present then delete the entry.

The Correspondence Received Date field is used as a second date in computing interest on overpayments.

If all the positions in the field are blank, it does not cause an invalid condition.

This field is invalid if:

It is not numeric.

Not in YYYYMMDD format.

Not in the valid month, day range.

The same as, or prior to the due date of the return.

Compare the screen entry with the entry on the return and do the following:

Enter the Correspondence Received Date in the following priority:

Correspondence Received Date Stamp

Postmark Date on envelope

Current Date

Fax Replies.

Enter the Correspondence Received Date in the following priority for Fax Replies:

Correspondence Received Date Stamp

Date the reply was faxed

Date entered on fax cover sheet by the taxpayer

Current Date

If

Then

Transcribed incorrectly

Enter the correct CRD from the correspondence.

The date is illegible,

Check the attached correspondence, which bears a received date stamp for the correct date.

More than one CRD is stamped or written,

Use the earliest date as the CRD.

There is No Reply,

Enter CCC "3" , unless equal to or prior to the due date. Leave field 01CRD box blank.

Description -This field is used to show the taxpayer has requested that an overpayment of $1.00 or more be either credit elect (CCC E generated) or refund (CCC S generated).

If the Applied Refund Indicator"2" is present, then the system will generate CCC "S"

If the Applied Refund Indicator is blank, the system will generate CCC "E" (if CCC is "F" is not present). If CCC "F" is present, CCC "S" will generate.

This field is invalid if it is not blank or "2" .

Check the field with the return and do the following:

If

Then

There is a transcription error,

Enter the correct data.

An incorrect code is present,

Correct the entry.

The "Refund" box is checked,

Enter "2" .

The "Applied to Next Return" box is checked,

01ARN should be blank- Unless CCC "F" is present, then enter "2" .

Both boxes are checked,

01ARN should be blank- Unless CCC "F" is present, then enter "2" .

Any box is not checked,

01ARN should be blank - Unless CCC "F" is present, then enter "2" .

Description - Valid character for this field is "1" or blank.

This field has one (1) position.

The Third-party Designee information is present, and no check box indicator is marked by the taxpayer.

An invalid character may have been entered. For example, &, #, –, or ( ).

If the taxpayer checked the "YES" Box in the Third-party Designee area on the bottom part of the return, then enter "1" in the field and transmit.

If the "YES" Check box is not marked by the taxpayer, clear all entries on the screen and transmit.

Do not correspond.

Description - the valid characters for this field are numeric.

The field length is five (5) positions.

This number is not issued by the IRS. This number is self-selected by the taxpayer.

Verify the entry for any invalid characters.

An invalid character such as &, #, –, or ( ). may have been entered.

Verify the entry.

Correct any invalid characters.

If there are no invalid characters in the Third-party Designee PIN, then blank the field and transmit.

Do not correspond.

This field has the Preparer's Tax Identification Number (PTIN) issued by the IRS.

For Tax Year 2009 and prior the field was used for the preparer's Social Security Number (SSN) issued by the Social Security Administration

This entry is Blank or 9 digits.

The Paid Preparer's SSN must be a 9-digit number.

The PTIN is a valid entry in the Preparer's Social Security Number area at the bottom of Form 940, Form 940 (PR), and Form 940 (sp).

The PTIN is a 9-character number beginning with the letter P followed by eight numbers. For example: PXXXXXXXX.

This field is invalid if any of the following conditions are present:

Field 01PSN is other than nine numeric digits or a "P" followed by eight numbers.

The field has all zeros.

The field has all nines.

Compare the screen entry with the return and do the following:

If

Then

A valid PTIN is present,

Enter the PTIN in Field 01PSN.

A valid SSN is present,

Enter the SSN in Field 01PSN.

A valid PTIN and SSN are both present,

Enter the PTIN in Field 01PSN.

A valid PTIN or SSN cannot be found,

Delete 01PSN.

This field has the preparer's firm Employer Identification Number (EIN). The Firm's EIN:

Is Blank or 9 digits.

If an entry is present, it must contain 9 digits.

If an entry is present, it cannot be all zeros or all nines.

This field is invalid if one of the following occurs:

Field 01PEN is other than nine numbers. Alpha characters cannot be present.

Field 01 has all zeros.

Field 01 has all nines.

Compare the screen entry with the entry on the return, and do the following:

If

Then

A Valid EIN is present on the return or attachments,

Enter the EIN in Field 01PEN.

If a valid EIN cannot be found,

Delete Field 01PEN.

The Paid Preparer's Telephone Number is found on Page 2 of Form 940, Form 940 (PR), and Form 940 (sp) in Part 7. This field is not valid for any tax years prior to 2008.

This field is invalid if it is less than 10 characters.

If the Paid Preparer's Phone Number is invalid or incomplete, delete the phone number.

On Revision 2011, Line 7a

02TTW>

15

Total Taxable Wages (computer-generated)

Lien 7

On Revision 2011, Line 7a.

Revision 2011 only: 02W08

15

Revision 2011 only: FUTA Wages paid before 7/1/2011 (transcribed amount in the box before the .008 amount on Line 7b)

Revision 2011 only: Line 7b

Revision 2011 only: 02W7c

15

FUTA Taxes paid before 7/1/2011 (the transcribed amount in the box after the .008 amount on Line 7c)

Revision 2011 only: Line 7c

Revision 2011 only: 02W7c>

15

FUTA Taxes paid before 7/1/2011 (the Computer-generated under-print amount for the box after the .008 amount on Line 7c.)

Revision 2011 only: Line 7c (computer-generated)

Revision 2011 only: 02W06

15

FUTA Wages paid after 6/30/2011 (the transcribed amount in the box before the .006 amount on Line 7d.)

Revision 2011 only: Line 7d

02W60> or, 02W62>

15

Total Taxable Wages x .060 or, Total Taxable Wages x .062

This field is computer-generated. It is the total of 02TTW (Total Taxable Wages) times .060. (See Note below) The computer displays the result if corrections may be needed for Line 8, revision 2013 by generating Error Code 242.

For taxable FUTA wages earned prior to July 1, 2011, the computer uses 02TTW times .062 for Error Code 242.

Revision 2011 only: 02W7e

15

FUTA Taxes paid after 6/30/2011 x .006 (the transcribed amount in the box after the .006 )

Revision 2011 only: Line 7e

Revision 2011 only: 02W7e>

15

FUTA Taxes paid after 6/30/2011 x .006 (the computer-generated under-print amount for the box after the .006 amount on Line 7e.)

Revision 2011 only: Line 7e (Computer amount)

02TBA

15

FUTA Tax before adjustments (transcribed amount on Line 8)

Line 8

02TBA>

15

FUTA Tax Before Adjustments (computer-generated)

Line 8 (Computer amount)

02ADJ

12

Adjustment Amount

Line 9

02W54>

15

Total Taxable Wages x .054

This field is computer-generated. It is the total of 02TTW (Total Taxable Wages) times .054. The computer calculated result displays if corrections may be needed for Line 9 (Error Code 242).

02EXL

12

Some Excluded Wages or Late Payments

Line 10

02TCR

10

Total Credit Reduction Amount

Line 11

02TFT

15

Total Tax Taxpayer

Line 12

02FCC

15

FTD Credit Claimed Amount

Line 13

02B/R

15

Balance Due/Overpayment Taxpayer

Line 14 or Line 15

02FD

10

FTD Penalty Taxpayer Line FTD

To the right of the "Type of Return" Box

02Q1

14

Total Tax Liability Amount

Line 16a

02Q2

14

Total Tax Liability Amount

Line 16b

02Q3

14

Total Tax Liability Amount

Line 16c

02Q4

14

Total Tax Liability Amount

Line 16d

All money fields are in dollars and cents.

The following table shows the field, the field length, the title of field and the location on the return:

Field Designator

Field Length

Title of Field

Location on Form 940-EZ

Location on Current Year Form 940 Format

02TTW

15

Total Taxable 940-EZ Wages

Part I, Line 5

Line 7

02TFT

14

Total Tax Taxpayer

Part 1, Line 6

Line 12

02FCC

14

FTD Credit Claimed Amount

Part 1, Line 7

Line 13

02B/R

14

Balance Due/Overpayment Taxpayer

Part 1, Line 8 or 9

Line 14 or 15

02FD

10

FTD Penalty Taxpayer

Line FD, Penalty

Line FD Penalty

02Q1

14

Total Tax Liability Amount

Part II, First Quarter 1 Column

Line 16a

02Q2

14

Total Tax Liability Amount

Part II, Second Quarter 2 Column

Line 16b

02Q3

14

Total Tax Liability Amount

Part II, Third Quarter 3 Column

Line 16c

02Q4

14

Total Tax Liability Amount

Part II, Fourth Quarter 4 Column

Line 16d

The Total Tentative Credit will no longer be applicable.

Description - This field is found on Line 7 (Line 7a 2001 Revision or Line 5 2005 and Prior) on Form 940, Form 940 (PR) and Form 940 (sp). It must be entered as dollars and cents and positive amounts only.

If taxable wages are present, the taxpayer's total tax cannot be zero.

This field is invalid if it is not all numeric.

Compare the screen entry with the entry on the return.

If

Then

The field was transcribed incorrectly,

Correct the screen display.

The amount of wages can be on Line 3 or Line 6 (Rev. 2006 and later), or Line 1 or Line 4 (Rev. 2005 and prior). This can be due to erroneous placement. It may be necessary to perfect Line 7 by subtracting the amount on Line 6 from Line 3 (Rev. 2006 and later), or perfecting Line 5 by subtracting the amounts on Lines 2 through 4 from Line 1 (Rev. 2005 and prior).

This field is found on Line 7 (Line 7a 2011 Revision or Line 5 2005 and Prior) on Form 940, Form 940 (PR), and Form 940 (sp). Computer-generated under-print amount.

There are no invalid conditions or correction procedures for this field.

This field is found in Line 7b on Form 940 and Form 940 (PR) for Tax Year 2011 revisions (transcribed amount in the box in front of the .008 amount).

It must be entered as dollars and cents and positive amounts only.

This field is invalid if it is not all numeric.

Compare the screen entry with the entry on the return.

If

Then

The field was transcribed incorrectly,

Correct the screen display.

This field is found in Part 2, Line 7c (transcribed amount in the box after the .008 amount).

This field is invalid if it is not all dollars and cents.

Compare the screen entry with the entry on the return.

If

Then

The field was transcribed incorrectly,

Correct the screen display. If present as a negative amount, convert to a positive amount.

This field is found in Line 7c (computer-generated amount for the box after the .008 amount).

There are no invalid conditions or correction procedures for this field.

This field is found in Line 7d on Form 940 and Form 940 (PR) for Tax Year 2011 revisions (transcribed amount in the box in front of the .006 amount).

This field is invalid if it is not all numeric. It must be entered as dollars and cents and positive amounts only.

Compare the screen entry with the entry on the return.

If

Then

The field was transcribed incorrectly,

Correct the screen display.

This field is found in Line 7e (transcribed amount in the box after the .006 amount).

This field is invalid if it is not all numeric. It must be a positive amount only. If present as a negative amount, convert to a positive amount.

Compare the screen entry with the entry on the return.

If

Then

The field was transcribed incorrectly,

Correct the screen display.

This field is found in Line 7e (computer-generated amount for the box after the .006 amount).

There are no invalid conditions or correction procedures for this field.

This field is found in Line 8 on Form 940, Form 940 (PR) for Tax Year 2006 through 2022 and Form 940 (sp).

This field is invalid if it is not all numeric. It must be a positive amount only. If present as a negative amount, convert to a positive amount.

This field is invalid if it is not all numeric. It must be a positive amount only. If present as a negative amount, convert to a positive amount.

Compare the screen entry with the entry on the return.

If

Then

The field was transcribed incorrectly,

Correct the screen display. The amount on Line 8 should equal the amount of Line 7c plus Line 7e.

This field is found in Line 8 on Form 940 , Form 940 (PR) for Tax Year 2006 through 2022 and Form 940 (sp).

It is not a transcribed field. It is a computer-generated field. There are no invalid conditions or correction procedures for this field.

This field is found on Line 9 of Form 940, Form 940 (PR), Revision 2006 through 2022 and Form 940 (sp). The taxpayer enters an amount on this line if all of the taxable FUTA wages they paid were excluded from State unemployment tax.

This field may or may not contain an entry. This field is "blank" or "zero" or may show a "dash" , showing that Line 9 does not apply to the taxpayer.

If present, this field must be entered as dollars and cents. It must be a positive amount only. If present as a negative amount, convert to a positive amount.

This field is invalid if it is not all numeric.

Compare the screen entry with the entry on the return.

If

And

Then

If Line 9 (02ADJ) entry is blank,

The State Code in Box 1a (01SC1) is blank,

SSPND 211 and correspond for Line 9 amount.

If Line 9 (02ADJ) entry is present

The taxpayer calculated the field incorrectly,

Correct the screen display. The amount on Line 9 should equal the amount of Line 7 multiplied by .054.

This field is found on Line 10 of Form 940, Form 940 (PR) (Revision 2006 through 2022) and Form 940 (sp). The taxpayer will complete this line if some of the FUTA wages that they paid were excluded from State unemployment tax, or if they paid any State unemployment tax late.

This field may or may not have an entry.

This field must be entered as dollars and cents, or is "blank" or "zero" on taxable returns. If present, it must be a positive amount only. If present as a negative amount, convert to a positive amount.

This field is invalid if any of the following occur:

If it is not all numeric.

If there is an entry on Line 9 (02ADJ) and Line 10 (02EXL).

Compare the screen entry with the entry on the return and do the following.

If

Then

The field was entered incorrectly,

Correct the screen display.

If there is an entry on Line 9 and also on Line 10,

Delete the Line 10 entry. The taxpayer cannot have an entry on Line 9 and Line 10.

A Credit Reduction State or territory is named by the Department of Labor when it is unable to repay loans from the Federal Unemployment Fund. Employers doing business in that State or territory are required to pay more tax on their Form 940. This is done by a reduction of the allowable credit.

If credit reduction does not apply for a particular year, the applicable lines relating to credit reduction will be grayed out on the form.

This field is found in the following locations:

Form

Location

Form 940, Form 940 (PR) (2006 through 2022) and Form 940 (sp).

Line 11

In tax years where there are no credit reduction States, the correct revision for that year has line 11 shaded.

Form 940 (2005 Revision)

Line 7

Form 940 (PR) (2005 Revision)

Not Applicable

This field is not valid for tax years 2006 through 2008.

It must be entered as dollars and cents and positive amounts only. If present as a negative amount, convert to a positive amount.

The information obtained from this area is utilized by The Bureau of Public Debt and The Department of Labor.

This field is invalid if any of the following occur:

If it is not all numeric.

If it entered for Tax Year 2006, 2007 or 2008.

If there is an entry on Line 9 (02ADJ) and Line 11 (02TCR).

Compare the screen entry with the entry on the return and do the following:

If

Then

The return is for tax year 2006, 2007 or 2008,

There should be no entry.

Delete the amount in 02TCR.

The taxpayer pays wages in only one State that is not a Credit Reduction State,

Correct the return, deleting the Credit Reduction information.

Line 9 (02ADJ) and Line 11 (02TCR) both have an entry (Revisions 2006 and later),

Delete the entry on Line 11 (02TCR).

The taxpayer pays wages in only one State that is subject to Credit Reduction, but did not attach or did not complete Form 940 Schedule A (Revision 2011),

Enter the single state code into field 01SC1, if not present.

Enter "1" in field 01CRB, if not present.

If the associated FUTA Taxable Wages was shown by the taxpayer, then enter the amount into Section 03 next to the Credit Reduction State code.

If the associated FUTA Taxable Wage has not been shown by the taxpayer:

If the amount on line 11 is equal to the sum of line 7 amount multiplied by the Credit Reduction Rate percentage, then enter the line 7 amount into the correct field for Section 03.

If the amount on line 11 is not equal to the sum of line 7 amount multiplied by the Credit Reduction Rate percentage, then SSPND 211 and correspond for Form 940 Schedule A using Letter 142C.

The taxpayer is a multi-State filer and one of the States checked in Form 940 Schedule A is subject to credit reduction, but Form 940 Schedule A was not completed,

SSPND 211 and correspond with the taxpayer for the Credit Reduction Wages.

The taxpayer is a multi-State filer but does not check the box which corresponds to the Credit Reduction State on Form 940 Schedule A,

Check the boxes on Lines 1b and 2

Description - This field is found in the following locations:

Form

Location

Form 940

Line 12 (FUTA Tax After Adjustments)

Form 940 (sp)

Line 12

Form 940 (PR) (Revisions 2006 through 2022).

Line 12

Form 940 (2005 and prior revisions)

Line 7

Form 940 (PR) (2005 and prior revisions)

Line 7

This field must be entered as dollars and cents and cannot be "blank" or "zero" on taxable returns. It must be a positive amount only.

This field is invalid if it is not all numeric.

Compare the screen entry with the entry on the return.

If

Then

The field was entered incorrectly,

Correct the screen display.

It must be entered as dollars and cents.

All money amounts must be positive only.

This field is found in the following locations:

Form

Location

Form 940

Line 13

Form 940 (PR) (Revisions 2006 through 2022)

Line 13

Form 940 (2005 and prior revisions)

Line 8

Form 940 (PR) (2005 and prior revisions)

Line 2 or Line 8 (Code & Edit will convert Part II, Line 2 or Part III, Line 8 to Line 13)

This field is in error if it is not all numeric.

Compare the screen entry with the entry on the return.

If

Then

The field was transcribed incorrectly,

Correct the screen display.

This field must be entered as dollars and cents and is a positive or negative amount.

Code & Edit will perfect balance due/overpayment.

This field is found in the following locations:

Form

Location

Form 940

Line 14 or 15. See Exhibit 3.12.154-1, Form 940 (Revision 2025) and Form 940 Schedule A (Revision 2025).

Form 940 (sp)

Line 14 or 15

Form 940 (PR) (Revisions 2006 through 2022)

Line 14 or 15. See Exhibit 3.12.154-2, Form 940 (PR) (Revision 2022) and Form 940 Schedule A (PR) (Anexo A (Formulario 940(PR)) (Revision 2022).

Form 940 (2005 and prior revisions)

Part II, Line 9 or 10.

Form 940 (PR) (2005 and prior revisions)

Part II, Line 3 or 4 (converted to Line 14 or 15), or Part III, Line 9 or 10 (converted to Line 14 or 15).

This field is in error if it is not all numeric.

Compare the screen entry with the entry on the return.

If

Then

The field was transcribed incorrectly,

Correct the screen display.

A negative amount is shown,

A "-" must be entered.

This field must be entered as dollars and cents in positive amounts only.

This field is found in the following location:

Form

Location

Form 940

In the right margin near the "Type of Return" Box. See Exhibit 3.12.154-1, Form 940 (Revision 2025) and Form 940 Schedule A (Revision 2025).

Form 940 (sp)

In the right margin near the Type of ReturnExhibit 3.12.154-3

Form 940 (PR) (Revisions 2006 through 2022)

In the right margin near the "Type of Return" Box. See Exhibit 3.12.154-2, Form 940 (PR) (Revision 2022) and Form 940 Schedule A (PR) (Anexo A (Formulario 940 (PR)) (Revision 2022).

Form 940 (2005 and prior revisions)

In the right margin next to the "Penalty and Interest" box.

Form 940 (PR) (2005 and prior revisions)

In the right margin next to the "Penalty and Interest" Box.

This field is invalid if it is not all numeric.

Compare the screen entry with the entry on the return.

If

Then

The field was transcribed incorrectly,

Correct the screen display.

These fields must be entered in dollars and cents and positive amounts only.

These fields is found in the following locations:

Form

Location

Form 940

Lines 16a through 16d

Form 940 (sp)

Lines 16a through 16d

Form 940 (PR) (Revisions 2006 through 2022)

Lines 16a through 16d

Form 940 (2005 and prior revisions)

In the ROFTL in Part III

Form 940 (PR) (2005 and prior revisions)

In the ROFTL in Part IV

Form 940-EZ

On Form 940, Lines 16a through 16d

These fields are invalid if they are not all numeric and positive entries.

Compare the screen entries with the entries on the return.

If

Then

The field was transcribed incorrectly,

Correct the screen display.

Any negative amounts are entered in Fields 02Q1 through 02Q4.

GTSEC 01

Enter "1" in Field 01SIC, and blank Fields 02Q1 through 02Q4.

The fields for Sections 03, 04 and 05 are transcribed from Schedule A (Form 940, Form 940 (PR) (Revisions 2006 through 2022), and Form 940(sp). The fields are 17 positions and consist of the combined data as follows:

The 2 alpha characters in the Postal Abbreviation column for the box checked, and

Up to 15 dollars and cents (including the period in front of cents) entry in the FUTA Taxable Wages column.

See Exhibit 3.12.154-1, Form 940 (Revision 2025) and Form 940 Schedule A (Revision 2025), and Exhibit 3.12.154-2, Form 940 (PR) (Revision 2022) and Form 940 Schedule A(PR)) (Anexo A (Formulario 940 (PR)) (Revision 2022). Exhibit 3.12.154-3 .

Field designators, title of field, field lengths, and location on Schedule A are outlined in the following table:

Field Designator

Title of Field

Location

Section 03 03S01 - 03S26

State Code & Credit Wages 1 through State Code & Credit Wages 26

State Code in Postal Abbreviation Column and amount in the FUTA Taxable Wages Column in dollars and cents

Section 04 04S27 - 04S52

State Code & Credit Wages 27 through State Code & Credit Wages 52

State Code in Postal Abbreviation Column and amount in the FUTA Taxable Wages Column

Section 05 05S53

State Code & Credit Wages 53

State Code in Postal Abbreviation Column and amount in the FUTA Taxable Wages Column in dollars and cents

The fields for Section 03, 04, and 05 will be invalid when:

The first 2 positions in not a valid State Code or is duplicated in any section.

The 15 positions after the first 2 positions are not number (except for the period).

The amount for FUTA Taxable Wages is greater than $99,999,999,999.99.

Sections 03, 04, and 05 may be displayed depending on the number of State boxes marked on Form 940 Schedule A as follows:

The first 26 U.S. States or Territories marked on Form 940 Schedule A display in Section 03.

If there are more than 26 States or territories marked on Form 940 Schedule A, then the 27th through 52nd State or territories will display in Section 04.

The 53rd State or territory will display in Section 05.

Within each Section any State's codes marked and the related State information (left of the marked State code) is entered or corrected in random order. If a State is duplicated in any of the Sections, it will generate a field error.

Any codes other than those listed are invalid and will generate a field error. Blank any invalid State codes in Section 03, 04, or 05 on the display screen. For a list of the valid State codes (abbreviations) and Credit Reduction States:

See Exhibit 3.12.154-8, State Codes

See Exhibit 3.12.154-15, Credit Reduction States & Rates (TY 2025 - 2004)

The Credit Reduction Wage amounts should be shown by the taxpayer on the return, attachment, or in reply to correspondence.

The Credit Reduction Wage amounts must be in dollars and cents and be positive amounts.

Correction procedures for 6020(b) returns. If Form 940 Schedule A is missing and line 1a of Form 940 has a State Code, then GTSEC 03 and enter the State Code and .01 into Field 03S01. When error code 214 generates, enter 1 in Field 01CRB and .01 in 02TCR.

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

Correct all coding and transcription errors.

If

Then

Field 06FAD is present,

GTSEC 06.

Ensure Field 06CTY has a foreign country code and Field 05ST has a "." (period/space). See Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries.

Use the country code based on the province in field 06CTY if the foreign address is from Canada and the address has a province name or abbreviation. See Exhibit 3.12.154-12, Province, Foreign State and territory.

A province abbreviation is not present for Australia, Brazil, Canada, Cuba, Italy, Mexico or The Netherlands but a province name is present,

Enter the province abbreviation in the proper position in Form 940. See Exhibit 3.12.154-12, Province, Foreign State and Territory Abbreviations.

A foreign address is not present on the return,

SSPND with Action Code "610" .

Renumber return to domestic DLN.

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

If

And

Then

Form 8822, Change of Address, or Form 8822-B, Change of Address-Business, is attached,

Mailing address information is the same and no location address is on Line 7, Form 8822 or Form 8822-B,

Do not correct the mailing address and continue processing.

Form 8822, Change of Address, or Form 8822-B, Change of Address-Business, is attached,

Mailing address information is different and/or a location address is on Line 7, Form 8822 or Form 8822-B,

Enter the address on Form 8822 or Form 8822-B in Field 06FAD.

Notate "Form 8822 detached" or "Form 8822–B detached" on tax return.

Detach Form 8822 or Form 8822-B and route to Entity Control using Form 4227, or follow local procedures.

Notate on Form 4227, "Change of Address Per Form 8822-B (or 8822)"

The lead tax examiner must batch all Form 8822 or Form 8822-B daily and hand carry to Entity Control for expedite processing.

Description - This field is found in the Entity Section of the return.

This section is for address information.

Valid characters are alpha, numeric, blank, dash or slash.

It will be present when a change of address was entered.

This section will not be present if Field 01CCC has CCC "G."

This field will be invalid if the following occurs:

The street address is present, and the first position is blank.

Any character is other than alpha, numeric, blank, dash, or slash.

Any character follows two consecutive blanks.

ISRP is instructed to input a pound sign (#) as the 35th character if there are more than 35 characters present for this field on the return.

Check the screen entry with the entry on the return. Correct coding and transcription errors.

If

Then

The field was transcribed incorrectly,

Correct the screen display.

The first position is blank,

All positions must be blank.

Field 06ADD is present,

Fields 06CTY, and 06ST and 06ZIP must be present.

Street address is in error and a valid Major City Code is present,

Correct by entering the entire name of the city in Field 06CTY and the State Code in Field 06ST. See Exhibit 3.12.154-9, Entity State Code and Zip Code Chart.

A good address is not found,

Delete address and revert to INOLE.

If Form 8822 (Change of Address) or Form 8822-B (Change of Address- Business) is attached to the return, compare the Name Control, EIN, Address, City, State and ZIP Code information on the Form 8822 or Form 8822-B to the return.

If

Then

The information is the same,

Do not change the address and continue processing.

The information is different,

Enter address shown on Form 8822 or Form 8822-B in Field 06ADD.

Notate "Form 8822 detached" or "Form 8822-B detached" on tax return.

Detach Form 8822 or Form 8822-B and route to Entity Control using routing slip or follow local procedures.

Notate on routing slip, "Change of Address Per (Form 8822 or) Form 8822-B"

The lead tax examiner is required to batch all Form 8822 or Form 8822-B daily and hand carry to Entity Control for expedited processing.

Description - This field is found in the Entity Section of the return.

Valid characters are alpha and blank.

Certain cities within each State are designated "Major Cities" and assigned a special code of two alpha characters.

This code represents the City and State.

It is transcribed on the Error Record with no intervening blanks and no other characters in the City-State Field either in front of or after the code.

This field is invalid if any of the following conditions are present:

The first position is blank.

Any character is other than blank or alpha.

Any character follows two consecutive blanks.

The Major City Code does not match any of the valid codes in the Major City Code Table.

Foreign country code is not present, incorrect or has "XX" .

Compare the screen entry with the entry on the return. If Form 8822, Change of Address, or Form 8822-B, Change of Address-Business, is attached, to the return:

Compare the Name Control, EIN, Address, City, State and ZIP Code information on the Form 8822 or Form 8822-B to the return.

a. If the information is the same, then correct field 06CTY. Leave the Form 8822 or Form 8822-B attached. b. If the information is different, then enter the correct information from the Form 8822 or Form 8822-B. Detach the Form 8822 or Form 8822-B and route to Entity Control. Notate on the left-hand margin, "Form 8822 (or, Form 8822-B) to Entity" .

Correct the Major City Code as follows.

If

Then

A Major City Code is used,

Field 06CTY must be present

Field 06CTY has an error,

Check to see if the Major City Code is correct.

Field 06CTY is not valid and a Major City Code cannot be decided,

Input the entire city name.

A major City Code is not used and Field 06CTY is present,

Field 06ST (State) must be present.

A foreign address is shown on the return,

Enter correct foreign country code in Field 06CTY from Document 7475, "State, and Address abbreviations, Major City Codes (MCCs), ZIP Codes and Countries" .

Field 06CTY has an incorrect country code or "XX" ,

Enter the correct foreign country code in 06CTY from Document 7475, "State, and Address abbreviations, Major City Codes (MCCs), ZIP Codes and Countries" .

Description - This field is found in the Entity Section of the return.

Valid characters are alpha and blank.

The following defines entity addresses:

See IRM 3.12.154.2.19.1, Domestic Addresses.

See IRM 3.12.154.2.19.2, APO/DPO/FPO Addresses.

See IRM 3.12.154.2.19.3, U.S. Possession or Territory Address.

See IRM 3.12.154.2.19.4, Foreign Addresses (OSPC ONLY).

This field is invalid if it is not contained in the State Code Table. See Exhibit 3.12.154-9, Entity State Code and Zip Code Chart, for a detailed listing.

Check the entry on the screen with the entry on the return.

If

Then

The field was transcribed incorrectly,

Correct the screen display.

Form 8822, (Change of Address) or Form 8822-B (Change of Address-Business) is attached, to the return,

Compare the Name Control, EIN, Address, City, State and ZIP Code information on the Form 8822 or Form 8822-B to the return.

If the information is the same, then correct the State code abbreviation. Leave the Form 8822 or Form 8822-B attached.

If the information is different, then enter the correct information from the Form 8822 or Form 8822-B. Detach the Form 8822 or Form 8822-B and route to Entity Control. Notate on the left-hand margin, "Form 8822 (or, Form 8822-B) to Entity"

Unable to perfect,

DLSEC 06

Description - This field is found in the Entity Section of the return.

Valid characters are numeric and blank.

This field is invalid if any of the following conditions are present:

Any character is other than numeric or blank.

An entry is other than five or nine positions.

The entry is not within the range of 00401 and 99999.

The entry does not match the Major City Code or State Code.

Lockbox ONLY: ZIP Code is 00000.

Check the entry on the screen with the entry on the return.

If

Then

The field was transcribed incorrectly, or a valid ZIP Code is found on the return or attachments,

Correct the screen display and enter the ZIP Code in field 06ZIP.

Only the first 5 digits are required.

Only the first three-digits of the ZIP code is decided,

Enter "01" for the fourth and fifth digits.

A valid ZIP code is not available from the return or attachments,

Research INOLE or use Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries to determine the first 3 digits of a valid ZIP Code for the Major City. See Exhibit 3.12.154-9, Entity State Code and Zip Code Chart.

The Major City is not listed, or the first three digits cannot be found,

Enter the ZIP Code in Field 06ZIP of the State shown in the address. See Exhibit 3.12.154-9, Entity State Code and Zip Code Chart.

Lockbox ONLY: Line 06ZIP is 00000

Check the return and attachments for a valid ZIP Code.

Enter in field 06ZIP.

If a valid ZIP Code is not found, follow the instructions in the table above for missing ZIP Code.

ALSO check field 06ADD and field 06CTY to verify if the street address or the City line is incomplete or blank.

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

If

Then

The information is the same,

Leave document attached and continue processing.

The information is different,

Enter the correct information from Form 8822.

Detach Form 8822.

Route to Entity Control on Form 4227 or follow local procedures.

Notate on Form 4227, "Change of Address per Form 8822" .

These errors will be displayed with the error code assigned to them for the specific error in ascending numerical order.

The screen display will show the error code assigned and the fields needed to make the necessary correction.

The blank field "NC" will be displayed for the entry of a TPNC for all Math Error displays, if needed.

Multiple TPNCs may be entered if you have multiple Notice Code Fields.

The blank field "CL" will be displayed for the entry of a clear code on records where the possibility exists that a change or correction may not be needed.

The "C" Clear Code does not permit any other corrections to the record after it is transmitted to clear the screen.

If an unworkable situation exists, suspend or reject the return with the correct Action Code.

Error Code 001 will display as:

Field Designator

Field Name

Field Length

01TXP

Tax Year

4

01CCC

Computer Condition Code

10

01RCD

Received Date

8

Error Code 001 will generate when any of the following conditions is present:

Computer Condition Code "G" is Not Present- The processing date is equal to or more than two years and ten months after the Return Due Date or Received Date (whichever is later), and CCC "W" is not present.

Computer Condition Code "G" is Present- The processing date is equal to or more than two years and ten months after the Return Due Date and CCC "W" is not present.

On any return, the processing date is less than two years after the Return Due Date and CCC "W" ispresent.

Correct all misplaced entries, coding and transcription errors.

Do not send the returns in the following table to Statute Control for clearance. Instead, do the following:

If

Then

Return is prepared by Compliance (e.g., IRC 6020(b)),

Return is secured by Examination/Collections, secured by TE/GE,

Return has a Transaction Code (TC) 59X,

Return has "ICS" (Integrated Collection System) notated on the face of the return,

Return is a Substitute for Return prepared by Examination ("SFR" in the margin) with Form 13133, Expedite Processing Cycle, attached,

Return has a stamp showing a previous clearance by Statute Control within the last 90 days,

Return is a 2022 or prior year original. Due to the COVID-19 pandemic and subsequent Submission Processing (SP) and Accounts Management (AM) site closures, SP and AM developed procedures to bypass AM statute clearance and be processed. In addition, any 2022 or prior year returns previously cleared by AM statute will not be returned by SP to AM to be cleared again if the 90-calendar day statute stamp has expired.

Enter "W" in Field 01CCC and on the return and continue processing.

Compare the displayed fields with the return and attachments. If incorrect, overlay the screen with the correct information.

If

Then

Field 01RCD is blank,

Enter the Received Date in Field 01RCD. Use the earliest date if multiple Received Dates are present. See IRM 3.12.154.7.6, Field 01RCD Received Date.

CCC "W" entered incorrectly,

Delete CCC "W" from Field 01CCC.

The return has a stamp that shows a previous clearance by Statute Control within the last 90 days,

Enter CCC "W" in Field 01CCC and on the return.

Do not send the return to Statute Control.

The return is not stamped by Statute Control within the last ninety days,

SSPND with Action Code "310" .

Prepare Form 4227, to route to Statute Control.

Return is a 2022 or prior year original. Due to the COVID-19 pandemic and subsequent Submission Processing (SP) and Accounts Management (AM) site closures, SP and AM developed procedures to bypass AM statute clearance and be processed. In addition, any 2022 or prior year returns previously cleared by AM statute will not be returned by SP to AM to be cleared again if the 90-calendar day statute stamp has expired.

When Statute Control returns the cleared document, enter "W" in Field 01CCC and on the return. Continue processing.

If Statute Control requests a voided record, SSPND with Action Code "640" .

Error Code 002 will display as follows:

Field Designator

Field Name

Field Length

CL

Clear Code

1

01NC

Name Control/Check digit

4

Name Control Under-print

4

01EIN

Employer Identification Number

9

01TXP

Tax Year

4

06CON

"In Care of" Name

35

06FAD

Foreign Address

35

06ADD

Street Address

35

06CTY

City

22

06ST

State

2

06ZIP

ZIP CODE

12

Error Code 002 will generate when the name control mismatched against the National Account Profile (NAP) or Entity Index File (EIF).

Prior to taking any research steps to resolve Error Code 002, drop the cursor to the bottom of the screen and transmit. This ensures any prior changes to the Name Control have posted to the NAP. If Error Code 002 reappears, continue with the remainder of the correction procedures.

When corrections are made to Field 01NC or Field 01EIN, the computer will validate the entries with the NAP and reset the On-Line Entity (OLE) indicators correctly upon transmitting the ERS screen.

Correct all misplaced entries, coding and transcription errors.

Compare the displayed fields with the return and attachments. If incorrect, overlay the screen with the correct information.

Refer to all of the following research instructions in this error code prior to correcting entries and/or taking the proper suspense Action Code.

If Field 01NC and the Name on the return or attachments are the same but differ from the under-print in Field 01NC, research INOLES for the correct Name:

If

Then

The Name on the return or attachment matches the Name Control on INOLES,

Bring up the under-print.

The Name Control on INOLES is different from the Name on the return or attachment,

Research NAMEB and/or NAMEE for a new EIN.

If a new EIN is found, verify the Name Control using Command Code (CC) INOLES:

If

Then

The Name Control on INOLES agrees with the Name on the return or attachment,

Ensure the entity information matches the return.

Overlay Field 01 EIN with the new EIN from NAMEB or NAMEE. When the EIN is changed from the one the taxpayer used, send Letter 3875C, Missing or Incorrect EIN on Return, as a non-suspense letter to the address on the return.

Do not send Letter 3875C when: • Three or less digits of the EIN are transposed, different or missing, or • The EIN is consecutive numbers (e.g., 12-3456789) or repeating numbers (e.g., 11-1111111), or • INOLES shows the account was "merged to" or "merged from" , or • The TIN on the return is the taxpayer’s SSN (check CC INOLEG).

Multiple EINs are found,

SSPND with Action Code "320" to Entity Control.

Prepare Form 4227, with the notation "MULTIPLE EINS" .

INOLES shows a "Merge To" (MT) EIN,

Research the "MT" EIN on INOLES.

The "MT" EIN matches the entity on the return or attachments,

Enter the "MT" EIN in Field 01EIN.

Do not send Letter 3875C on MT EIN cases.

The "MT" EIN does not match the entity on the return or attachments,

SSPND with Action Code "320" to Entity Control.

If the Name on the return or attachment does not agree with the Name Control on INOLES, research ENMOD for a new name:

If

Then

The Name Control on ENMOD agrees with the Name on the return or attachment,

Enter "C" in the Clear Code field.

The Name Control on ENMOD or INOLES does not agree with the Name on the return or attachment,

SSPND with Action Code "320" to route the return to Entity.

Attach Form 4227, with the notation "NO RECORD" .

If the Name change has not been made, research IDRS using Command Code ENMOD for a pending TC 013:

If

Then

A pending TC 013 is present,

Enter "C" in the Clear Code field.

A pending TC 013 is not present,

SSPND with Action Code "320" to route to Entity Control.

Attach Form 4227, with the notation "REQUEST NAME CHANGE (TC 013)" .

If Entity has assigned an EIN to the return, find the Entity Assignment Date:

If

Then

The Entity Assignment Date is past the Return Due Date and the IRS Received Date,

GTSEC 01.

Enter the Entity Assignment Date in Field 01CRD.

The Entity Assignment Date is not past the Return Due Date and the IRS Received Date,

Continue Processing.

Research IDRS using CC BMFOL to decide if payments posted incorrectly:

If

Then

The payment posted to the wrong EIN,

Prepare Form 3465, Adjustment Request, to have the payment transferred to the correct module.

Notate on Form 3465 to "MOVE PAYMENT TO CORRECT MODULE UPON COMPLETION AND RELEASE FREEZE"

Write "Form 3465 PREPARED" on return, to the left of the Entity section.

GTSEC 01, enter CCC "X" in Field 01CCC.

The payment posted correctly,

Enter correct EIN in Field 01EIN and on the return.

Enter "C" .

Payment can’t be found,

Enter "C" in the Clear Code field.

Error Code 003 will display as follows:

Field Designator

Field Name

Length

01NC

Name Control

4

01EIN

Employer Identification Number

9

Error Code 003 will generate when any of the following conditions are present:

A check digit is present but is not valid for the EIN.

The letters "E" , "G" or "M" (in check digit only) are present in Field 01NC.

Correct all misplaced entries, coding and transcription errors.

Compare the displayed fields with the return and attachments. If incorrect, overlay the screen with the correct information:

If

Then

The check digit in Field 01NC does not match the return or is not legible,

Enter the Name Control from the return in Field 01NC.

The EIN on the return is not legible,

Research IDRS using CC NAMEB or NAMEE for correct EIN.

Compare the EIN from NAMEB/NAMEE to the EIN on the return:

If

Then

The EIN on Form 940 ,Form 940 (PR), or Form 940 (sp) matches the EIN on NAMEB or NAMEE,

Enter Name Control from NAMEB or NAMEE in Field 01NC.

Research shows a different EIN,

Verify the EIN and name on INOLES.

Name Control on INOLES matches the name on the return or attachment,

Overlay Field 01EIN with the EIN from INOLES.

Send Letter 3875C, Missing or Incorrect EIN on Return - BMF/EPMF, as a non-suspense letter to the address on the return.

Do not send Letter 3875C when: • Three or less digits of the EIN are transposed, different or missing, or • The EIN is consecutive numbers (e.g., 12-3456789) or repeating numbers (e.g., 11-1111111), or • INOLES shows the account was "merged to" or "merged from" , or • The TIN on the return is the taxpayer’s SSN (check CC INOLEG).

Unable to find an EIN or more than one EIN is found,

SSPND with Action Code "320" to Entity Control.

Prepare Form 4227 with the notation "NO RECORD OF EIN" .

Research IDRS using CC BMFOL to decide if payments posted incorrectly:

If

Then

The payment posted to the wrong EIN,

Prepare Form 3465, Adjustment Request, to have the payment transferred to the correct module.

Notate on Form 3465, "MOVE PAYMENT TO CORRECT MODULE UPON COMPLETION AND RELEASE FREEZE" .

Write "Form 3465 PREPARED" on the return, to the left of the Entity section.

Enter CCC "X" in Field 01CCC.

The payment posted to the correct EIN,

Enter the correct EIN in Field 01EIN and on the return

Payment can’t be found,

Enter C in the Clear Code field.

Error Code 004 will display as follows:

Field Designator

Field Name

Field Length

CL

Clear Code

1

01NC

Name Control/Check Digit

4

Name Control Under-print

4

01EIN

EIN

9

Error Code 004 will generate when any of the following conditions are present.

The EIN is not present on the Master File (MF).

The Entity Index File (EIF) and the National Account Profile (NAP) were not accessed or were not operational, causing a blank under-print in Field 01NC.

An under-print of "XXXX" shows that there is no account on the Master File, while a blank under-print shows that the NAP has not been accessed or was not operational.

Prior to taking any research steps to resolve Error Code 004, drop the cursor to the bottom of the screen and transmit. This ensures any prior changes to the Name Control/EIN have posted to the NAP. If Error Code 004 reappears, continue with the remainder of the correction procedures.

When corrections are made to Field 01NC or Field 01EIN, the computer will validate the entries with the NAP and reset the OLE indicators correctly upon transmitting the ERS screen.

Correct all misplaced entries, coding and transcription errors.

Compare the displayed fields with the return and attachments. If incorrect, overlay the screen with the correct information.

Refer to all of the following research instructions in this error code prior to correcting and/or assigning the proper suspense Action Code.

If Field 01NC and the Name Control on the return or attachments are the same but differ from the under-print in Field 01NC, research IDRS using Command Code (CC) INOLES to find the correct Name Control:

If

Then

The Name on the return or attachment matches the Name Control on INOLES,

Bring up under-print.

The Name Control on INOLES is different from the Name on the return or attachment,

Research NAMEB and/ or NAMEE for a new EIN.

If a new EIN is found, verify the Name Control using IDRS Command Code (CC) INOLES:

If

Then

The Name Control on INOLES agrees with the Name on the return or attachment,

Ensure the entity information matches the return.

Overlay Field 01EIN with the new EIN from NAMEB or NAMEE. When the EIN is changed from the one the taxpayer used, send Letter 3875C, Missing or Incorrect EIN on Return - BMF/EPMF, as a non-suspense letter to the address on the return.

Do not send Letter 3875C when: • Three or less digits of the EIN are transposed, different or missing, or • The EIN is consecutive numbers (e.g., 12-3456789) or repeating numbers (e.g., 11-1111111), or • INOLES shows the account was "merged to" or "merged from" , or • The TIN on the return is the taxpayer’s SSN (check CC INOLEG).

Multiple EINs are found,

SSPND with Action Code "320" to Entity Control.

Prepare Routing Slip with the notation "MULTIPLE EINS" .

INOLES shows a "Merge To" (MT) EIN,

Research the "MT" EIN on INOLES.

The "MT" EIN matches the entity on the return or attachments,

Enter the "MT" EIN in Field 01EIN.

The "MT" EIN does not match the entity on the return or attachments,

SSPND with Action Code "320" to Entity Control.

If the Name on the return or attachment does not agree with the Name Control on INOLES, or there is an indication of a name change on Form 940, research using Command Code ENMOD for a new name:

If

Then

The Name Control on ENMOD agrees with the Name Control on the return or attachment,

Enter a "C" in the Clear Code field.

The Name Control on ENMOD or INOLES does not agree with the Name Control on the return or attachment,

SSPND with Action Code "320" to route the return to Entity.

Attach Form 4227 with the notation "NO RECORD" .

If the Name change has not been made, research IDRS using Command Code ENMOD for a pending TC 013:

If

Then

A pending TC 013 is present,

Enter "C" in the Clear Code field.

A pending TC 013 is not present,

SSPND with Action Code "320" to route to Entity Control.

Attach Form 4227 with the notation "REQUEST NAME CHANGE" .

If Entity has assigned an EIN to the return, find the Entity Assignment Date:

If

Then

The Entity Assignment Date is past the Return Due Date and the IRS Received Date,

GTSEC 01.

Enter the Entity Assignment Date in Field 01CRD if later than the due date of the return and CCC "3" is not present.

The Entity Assignment Date is not past the Return Due Date and the IRS Received Date,

Continue processing.

Research IDRS using CC BMFOL to decide if payments posted incorrectly:

If

Then

The payment posted to the wrong EIN,

Prepare Form 3465, Adjustment Request, to have the payment transferred to the correct module.

Notate on Form 3465"MOVE PAYMENT TO CORRECT MODULE UPON COMPLETION AND RELEASE FREEZE."

Write "Form 3465 PREPARED" on return, to the left of the Entity section.

GTSEC 01, enter CCC "X" in Field 01CCC.

The payment posted correctly,

Enter correct EIN in Field 01 EIN and on the return.

Enter "C" in the Clear Code field.

Payment can’t be found,

Enter "C" in the Clear Code field.

"Error Code 005 will display as follows: "

Field Designator

Field Name

Field Length

CL

Clear Code

1

01TXP

Tax Year

4

01RCD

Received Date

8

Error Code 005 will generate when the year-month of the processing date is later than the tax period plus 6 months and the IRS received date is not present.

Compare the displayed fields with the return and correct all misplaced entries, coding and transcription errors.

If displayed fields are correct and the return is timely filed, enter a "C" in the Clear Code field.

A Received Date must be in Field 01RCD.

Use the earliest received date in Field 01RCD if there are multiple received dates on the return.

Do not use a received date in Field 01RCD that is prior to the beginning of the tax period.

Obtain the Received Date using the following priority when one is illegible or missing:

Earliest legible Postmark Date (e.g., U.S. Postal Service (USPS), Foreign or Private Delivery (PDS)).

Use the postmark date stamped on the face of the return if the envelope is was not attached.

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

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

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

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

Current date minus 10 days.

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

Do not use the EEFax Date as the IRS Received Date.

Error Code 006 will display as follows:

Field Designator

Field Name

Field Length

RMIT>

Remittance Amount

15

01RCD

Received Date

8

Invalid - Remittance is received with return but a Received Date is not present.

Compare the displayed field with the return and do the following:

If

Then

Incorrect data,

Overlay the screen with the correct information.

The received date is needed, but is not stamped on the return or a valid handwritten received date is not present,

Enter the Received Date using the following priority:

Earliest legible postmark date of the U.S. Post Office or a Private Delivery Service or a foreign postmark date.

If an envelope is not attached, use the postmark date stamped on the face of the return.

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

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

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

DLN Julian date minus 10 days.

Current date minus 10 days.

OSPC Only: If a foreign address return was sent to an IRS office in the foreign country instead of to Ogden, enter the foreign stamped received date (this includes U.S. Possessions).

Error Code 007 will display as follows:

Field Designator

Field Name

Field Length

01TXP

Tax Year

4

01RCD

Received Date

8

Error Code 007 will generate when the received date is earlier than the first day of the Tax Period/Year by two months or more.

Correct all misplaced entries, coding and transcription errors.

Compare the displayed fields with the return and attachments. If incorrect, overlay the screen with the correct information.

If

And

Then

The Received Date is invalid, and it appears that the incorrect year was used (i.e., 20250115 instead of 20260115) and other information (Julian date, postmark date, SCAMPS, or signature date) shows that the received date should be a current year,

Change the received date year to the current year and enter in Field 01RCD.

The return is an early filed "Final" return.

Enter "F" in Field 01CCC.

SSPND with Action Code "480" .

The return is not an early filed Final return,

The Tax Period ending date is passed,

Change the Received Date to one day after the tax period ending date.

See IRM 3.12.154.2.17 Working Trail for more information.

The return is not an early filed "Final" return,

The Tax Period ending is less than four months after the Received Date,

SSPND with Action Code" 480" .

Prepare Form 4227, with the notation "Early Filed" .

The return is not an early filed "Final" return,

The Tax Period ending is more than four months after the Received Date,

Initiate correspondence for clarification of the Tax Period.

SSPND with Action Code "211" .

Refer to taxpayer's response and do the following:

If

Then

The taxpayer replies that the return is a "Final" ,

Change the Tax Period to agree with the month prior to the Received Date and enter in Field 01TXP.

Enter "F" in Field 01CCC.

The taxpayer replies that the return is not a final return,

SSPND with Action Code "480" until the end of the tax period given by the taxpayer.

The taxpayer replies that the return is for For payment only, Return filed in error, or Quarterly Return.

SSPND with Action Code 640 to have Rejects delete the DLN and ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

The taxpayer doesn’t reply or the reply is not adequate,

Enter "3" in Field 01CCC.

SSPND Action Code "480" until the end of the tax period shown on the return.

Error Code 010 will display as follows:

Field Designator

Field Name

Field Length

01CCC

Computer Condition Code

10

01PIC

Penalty and Interest Code

1

01SC1

State Code

2

01ABC

ABC Indicator

1

The ABC Indicator will no longer be captured. This field should have no entry.

01MSB

Multiple State Indicator Box

1

01CRB

Credit Reduction Indicator Box

1

01SRI

Form 940 Schedule R indicator

1

01CAF

CAF Indicator

1

The CAF Code will no longer be captured. This field should have no entry.

01SIC

Schedule Indicator Code

1

01ARN

Applied Refund Indicator

1

Section 02

Present

Section 03

Present

Section 04

Present

Section 05

Present

Section 06

Present

Error Code 010 will generate when Computer Condition Code "G" is present, and fields other than 01NC, 01EIN, 01TXP, 01RCD, 01CCC, and 01CRD have entries.

Correct all misplaced entries, coding and transcription errors.

Compare the displayed fields with the return. If incorrect, overlay the screen with the correct information.

If CCC "G" was input correctly.

If

Then

Return shows amended, revised, supplemental, corrected or superseding,

Research BMFOL, SUMRY, and TXMOD to decide if information is the same as a posted return.

All information is not the same,

Process the return with CCC "G" .

DLSEC to delete all sections except Section 01.

Delete the invalid entries that are present in Section 01. GTSEC 01, if necessary.

All information is the same,

SSPND with Action Code "640" and route to Rejects.

A return is not posted for the tax period and the return is an amended return,

Continue processing as an amended return.

A return is not posted for the tax period and the return is not amended ("G" coded in error),

Enter all necessary data in Sections 02 through 06.

Ensure the Section 01 fields are correct.

Delete the "G" code in Field 01CCC.

When deleting CCC "G" and the sections required are shown as being present, no further verification of section entries is needed.

Error Code 011 will display as follows:

Field Designator

Field Name

Field Length

RMIT>

Remittance Amount

15

01CCC

Computer Condition Code

10

01RCD

Received Date

8

Section 02

Not Present

An invalid condition occurs if a remittance amount is present, and there is no money field present in Section 02 and CCC "G" is not present.

Compare the entries on the return with those on the screen and do the following:

If

Then

The record is to be "G" Coded,

Section 02 is not necessary. Enter CCC "G" in Field 01CCC.

Verify the received date is present and enter it in Field 01RCD.

Data is present on the return for Section 02 fields,

Use CC GTSEC to bring up Section 02 and enter the correct data on the screen.

There is no money amount in the RMIT> field, and an RRPS/ISRP indicator is present,

CC GTSEC 02.

Enter $.01 in Field 02TFT.

Continue processing.

The data present is insufficient to decide the correct application of the remittance amount,

Suspend the record with SSPND 355.

The Rejects unit will research using IDRS to secure the data and transfer the credit to the correct tax class or module.

Rejects/ Suspense:

If

Then

Data is not found, or you are unable to decide where to apply the excess remittance,

Leave field 01ARN blank. Any excess remittance will be applied to the next tax year.

Error Code 014 will display as follows:

Field Designator

Field Name

Field Length

06CON

"In care of" name

35

06FAD

Foreign Address

35

06ADD

Address

35

06CTY

City

22

06ST

State

2

06ZIP

ZIP CODE

12

Error Code 014 will generate if all fields are not present as follows:

A Major City Code is not used, the street address is present, and Field 06CTY or Field 06ST is not present.

A Major City Code is used and Field 06ADD is not present.

A Major City Code is used and Field 06ST is present.

Correct all misplaced entries, coding and transcription errors. If data is missing because address is foreign, SSPND 650 (except OSPC) to transship to OSPC.

Compare the displayed fields with the return and attachments. If incorrect, overlay the screen with the correct information.

Research any of the following for valid address information:

Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries

Command Codes INOLES, NAMEB/NAMEE, ENMOD

See Exhibit 3.12.154-9, Entity State Code and Zip Code Chart.

See Exhibit 3.12.154-11, Foreign Country Codes.

If

Then

A Major City Code is present, and no street address is available,

Enter the City Name in Field 06CTY (spelled out, not in Major City Code format).

Enter the State Code in Field 06ST.

The Major City Code is correct, and the State is present,

Delete Field 06ST.

OSPC Only - Invalid U.S. Possession or foreign country,

CC DLSEC 06. See Exhibit 3.12.154-11, Foreign Country Codes.

The ZIP Code or Address can’t be corrected from the information on the return, attachments or from research,

CC DLSEC 06.

Invalid ZIP CODE,

See Exhibit 3.12.154-9, Entity State Code and Zip Code Chart, for valid ZIP codes.

Error Code 015 will display as follows:

Field Designator

Field Name

Field Length

06FAD

Foreign Address

35

06ADD

Street Address

35

06CTY

City

22

06ST

State

2

06ZIP

ZIP Code

12

Error Code 015 will generate when any of the following conditions are present:

Field 06ST has an entry other than "." (period/space) when field 06FAD is present.

Field 06ZIP has an entry when field 06FAD is present.

Correct all misplaced entries, coding and transcription errors.

Compare displayed fields with the return. If incorrect, overlay the screen with the correct information:

If

Then

A foreign address is present in field 06FAD,

KCSPC Only - Route returns with a foreign country, or U.S. Possession/Territory address to OSPC.

Field 06ST must have .(Period/space).

Delete any entry in field 06ZIP

A foreign address is not present in Field 06FAD,

Check return for foreign address.

A foreign address is present on the return,

Enter the foreign address in field 06FAD.

If more space is required, continue entering the address in Field 06ADD.

Field 06CTY must have the correct foreign country code. See Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries.

Use the country code based on the province in field 06FAD if the foreign address is from Canada and the address has a province name or abbreviation. See Exhibit 3.12.154-12, Province, Foreign State and territory Abbreviations.

Field 06ST must have . (period/space).

Delete any entry in Field 06ZIP.

A foreign address is not present on the return,

Verify the address on the return is not a foreign address.

SSPND with Action Code "610" .

Renumber return with domestic DLN.

Error Code 016 will display as follows:

Field Designator

Field Name

Field Length

06CON

"In Care of" name

35

06FAD

Foreign Address

35

06CTY

City

22

06ST

State

2

06ZIP

ZIP Code

12

Error Code 016 generates when the ZIP Code is inconsistent with the Major City Code or State Code.

Correct all misplaced entries, coding and transcription errors.

Compare the displayed fields with the return and attachments. If incorrect, overlay the screen with the correct information.

Research any of the following for valid ZIP Code information:

Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries

Command Codes INOLES, NAMEB/NAMEE, ENMOD

See Exhibit 3.12.154-9, Entity State Code and Zip Code Chart.

Enter the 3 digits followed by "01" of the first ZIP code listed for the applicable State in Document 7475 (e.g., 99501 for Alaska).

If

And

Then

Unable to find a valid ZIP Code from the return or attachments,

A valid Zip Code is found through IDRS research,

Enter the valid ZIP Code found through research in Field 06ZIP.

Only the first three digits of the ZIP Code is decided,

Enter "01" in the "4th" and "5th" position.

A Zip Code can’t be decided,

Enter the 3 digits followed by "01" of the first Zip Code listed for the applicable State found in Document 7475. (e.g., 99501 for Alaska).

The address is in a major city,

A Major City Code is decided,

Enter Major City Code in Field 06CTY.

The address is in a major city,

A Major City Code can’t be decided,

Enter the name of the city in Field 06CTY.

Enter the State Code in Field 06ST.

The address is not in a major city,

Enter the correct State abbreviation in Field 06ST.

Enter the ZIP Code in Field 06ZIP.

APO/DPO/FPO Addresses - An Army Post Office (APO), Diplomatic Post Office (DPO), or Fleet Post Office (FPO) is not a foreign address. The U.S. Postal Service set up new address requirements for APO/DPO/FPO addresses. If an address appears in the old APO/DPO/FPO format, convert to the new State code abbreviation based on the ZIP Code. For example, APO New York, NY 091XX would be, converted to “APO AE 091XX”. Refer to the APO/DPO/FPO conversion chart below:

ZIP Code

State Code

340

AA

090 - 098

AE

962 - 966

AP

Error Code 028 will display as:

Field Designator

Field Name

Field Length

01CCC

Computer Condition Codes

10

01RCD

Received Date

8

Computer Condition Code "R," "7" , "D" , or "G" is present, and the Received Date is NOT present.

Compare the displayed fields with the return.

If incorrect, overlay the screen with the correct information. See the table below:

If

Then

"R" , "D" or "7" is present,

Enter the Received Date in Field 01RCD.

"R" , "D" or "7" is not on the return,

Delete the "R," "D" or "7" from Field 01CCC.

The return is not a "G" coded return and nothing shows the return is other than the first return filed,

CC GTSEC 02 and enter the data in the fields for Section 02 and transmit.

Error Code 010 generates,

Enter the correct data into the fields displayed and delete Field 01CCC.

The "G" code is correct,

Enter the Received Date in Field 01RCD.

The received date is missing or illegible,

Enter the Received Date using the following priorities:

Earliest legible postmark date of the U.S. Post Office or a Private Delivery Service or a foreign postmark date.

If an envelope is not attached, use the postmark date stamped on the face of the return.

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

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

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

DLN Julian date minus 10 days.

Current date minus 10 days.

OSPC Only: If a foreign address return was sent to an IRS office in the foreign country instead of to Ogden, enter the foreign stamped received date (this includes U.S. Possessions).

Error Code 030 will display as:

Field Designator

Field Name

Field Length

01TXP

Tax Year

4

01CCC

Computer Condition Codes

10

01RCD

Received Date

8

01PIC

Penalty and Interest Code

1

The Penalty and Interest Code of "1" is present and the Received Date is one of the following:

On or prior to the due date of the return.

≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

Not present.

Compare the display fields with the return and do the following:

If

Then

Incorrect data,

Overlay the screen with the correct information.

The code is correct. The taxpayer is paying penalty or interest and the Received Date on the return is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

Enter the correct Received Date.

The Received Date is correct ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

Delete "1" from Field 01PIC.

The correct Received Date is equal to or earlier than the due date,

Delete "1" from Field 01PIC.

The Penalty and Interest Code is present, and the received date is missing or illegible,

Enter the Received Date using the following priorities:

Earliest legible postmark date of the U.S. Post Office or a Private Delivery Service or a foreign postmark date.

If an envelope is not attached, use the postmark date stamped on the face of the return.

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

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

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

DLN Julian date minus 10 days.

Current date minus 10 days.

No indication of pre-computed penalty and/or interest,

Delete Code "1" from Field 01PIC.

CCC "R," if present, will override the Penalty and Interest Code "1" .

Error Code 034 will display as:

Field Designator

Field Name

Field Length

01TXP

Tax Year

4

01RCD

Received Date

8

01CRD

Correspondence Received Date

8

The Correspondence Received Date, Field 01CRD, is earlier or the same as either:

The Received Date, Field 01RCD.

The Return Due Date.

The CRD is later than the processing date.

An entry in Field 01CRD does not require an entry in Field 01RCD.

Compare the displayed fields with the return and do the following:

The Received Date will either be stamped or edited on the return.

Timely filed Form 940 Series Returns are not date stamped by Receipt and Control. per IRM 3.10.72., Campus Mail and Work Control - Receiving, Extracting, and Sorting.

A Correspondence Receive Date (CRD) will be decided from the date the reply was received in the service center. Refer to the return for the CRD. It is edited in the Entity section of the return. This is verified by checking the stamped Received Date on the correspondence attached to the return. See IRM 3.12.154.7.14.2, Field 01CRD - Correction Procedures, for received date priority order for replies received by mail or fax.

If

Then

Incorrect data,

Overlay the screen with the correct information.

CRD is present and earlier than the Return Due Date, or later than the processing date,

Delete the CRD from Field 01CRD.

Error Code 038 will display as:

Field Designator

Field Name

Field Length

01CCC

Computer Condition Codes

10

02FD

FTD Penalty Taxpayer

10

CCC "J" is present and FTD Penalty is present in Field 02FD.

Review the return for the State, City, and County:

If

Then

"State" , "City" , or "County" is noted on return,

Delete the penalty from Field 02FD.

None of the above is present,

Delete the "J" from Field 01CCC.

Error Code 073 will display as:

Field Designator

Field Name

Field Length

01CCC

Computer Condition Code

10

01CRD

Correspondence Received Date

8

This error condition will generate if Field 01CCC is "3" and there is a date in Field 01CRD.

Review the return and attachments for IRS correspondence:

If

Then

A reply to IRS correspondence was received from the taxpayer and is attached,

Circle the CCC "3" edited on the return.

Delete CCC "3" from Field 01CCC.

NO REPLY is attached

Circle the Correspondence Received Date entered on the return.

Delete entry in field 01CRD. See Exhibit 3.12.154-7, No Reply / Undeliverable Chart.

Error Code 200 will display as follows:

Field Designators

Field Name

Length

S03NP

Section 03 Not Present

03S01 - 03S26

State Code & Credit Wages 1 through State Code & Credit Wages 26

17

S04NP

Section 04 Not Present

04S27 - 04S52

State Code & Credit Wages 27 through State Code & Credit Wages 52

17

S05NP

Section 04 Not Present

05S53

State Code & Credit Wages 53

17

Section 04 is present, and Section 03 is not present.

Section 05 is present, and Section 04 is not present.

The format of each field is "2" alphas (State Code) and 13 numeric (Credit Reduction wage amount), if applicable:

If

Then

Compare the screen display with the entries on the return or edit sheet and if incorrect,

Enter the data in the correct section(s) and use "CC DLSEC" to delete the incorrect section(s). For example: GTSEC 03. Enter in Field 03S01 "NY7000.00" .

Error Code 201 will display as follows:

Field Designator

Field Name

Field Length

01TXP

Tax Year

4

01SC1

State Code

2

"ZZ" is present in "State Code Field" for Non-Credit Reduction Year. Credit Reduction applies, in recent years, to tax years 2004, 2005, and 2009 through 2025. See Exhibit 3.12.154-15, Credit Reduction State and rates (TY 2025 - 2004).

"ZZ" will appear as a field error if present in Sections 03 - 05.

Compare screen display to the return for coding and transcription errors and make the proper corrections as follows:

If

Then

Tax Year is correct.

Delete "ZZ" and enter the correct State Code.

Tax Year is changed.

Transmit and let computer decide if "ZZ" is correct.

Error re-displays,

Go back and delete "ZZ" and enter correct State Code.

Error Code 202 will display as follows:

Field Designator

Field Name

Field Length

01TXP

Tax Year

4

01SC1

State Code

2

02TTW

Total Taxable FUTA Wages

15

"ZZ" is present in State Code Field and Total Taxable Wages for Form 940 is greater than "0" .

" ZZ" is entered into 01SC1 if there is no tax in 02TFT and the only State code available is for a Credit Reduction State for that year.

Compare screen display to the return for coding and transcription errors and make the proper corrections:

If

Then

After verifying the amount entered as Total Taxable Wages on Form 940 is correct and determining that the State Code entered is not a Credit Reduction State,

Delete "ZZ" and enter the correct State Code. See Exhibit 3.12.154-15, Credit Reduction State and rates (TY 2025 - 2004).

Credit Reduction is present,

Delete State Code ZZ and use CC GTSEC 03 and enter State Code and applicable Credit Reduction wages from Form 940 Schedule A (Revision 2025).

Error Code 203 will display as follows:

Field Designator

Field Name

Field Length

01SC1

State Code

2

01MSB

Multi-State Box

1

01CRB

Credit Reduction Box

1

S03DP

Section 03 Data Present

S04DP

Section 04 Data Present

S05DP

Section 05 Present

Error Code 203 will generate when the State Code is present in Field 01SC1 and either Section 04 Form 940 Schedule A is present, or Section 05 Form 940 Schedule A is present.

Compare the screen display to the return for coding or transcription errors and make the proper corrections:

If

Then

The entity State is correct in field 01SC1, and the same State code is in Section(s) 03, 04 and/or 05, is present,

Consider the return a single State filer.

Leave the valid State Code in field 01SC1.

If the entity State in field 01SC1 is a valid Credit Reduction State for the return tax year filed, enter 1 in Field 01CRB if not present. See Exhibit 3.12.154-15, Credit Reduction States and Rates (TY 2025 - 2004) prior to entering 1 in Field 01CRB.

Delete the entry in Field 01MSB is present.

DLSEC Section 03, 04 and 05 if present.

There is a State Code in field 01SC1, but there are multiple States in Section 03, 04 and/or 05.

Review the return and any attachments and determine if the taxpayer is a single state filer, or a multi-state filer.

If there is an indication, the taxpayer is a single state filer:

Ensure the state code in field 01SC1 is the same state as the entity. Make correction to the display screen as needed.

If the entity state in field 01SC1 is a valid Credit Reduction state for the return tax year filed, enter 1 in Field 01CRB if not present. See Exhibit 3.12.154-15, Credit Reduction States and Rates (TY 2025 - 2004), prior to entering 1 in Field 01CRB.

Delete the entry in Field 01SC1 and 01MSB if present.

DLSEC Section(s) 03, 04 and/or 05 if present.

If there is an indication the taxpayer is a multi-state filer:

Enter "1" in 01MSB.

If any state is a Credit Reduction State, enter "1 " in the 01CRB. See Exhibit 3.12.154-15, Credit Reduction States and Rates (TY 2025 - 2004).

Error Code 208 will display as follows:

Field Designator

Field Name

Field Length

01CCC

Computer Condition Code

10

01TXP

Tax Year

4

01SC1

State Code

2

01MSB

Multi-State Check Box

1

01CRB

Credit Reduction Check Box

1

S03NP

Section 03 Not Present

S04NP

Section 04 Not Present

S05NP

Section 05 Not Present

The State Code Field 01SC1 is blank and no State Code is present in Section 03, 04 or 05 and 02TTW and 02TFT are greater than zero.

Compare the screen display to the return for coding and transcription errors and make the proper corrections. See the table below:

If

And

Then

The return is an amended return,

CCC "G" is not present,

Enter CCC "G" in Field 01CCC. The State Code entries are not needed.

The return or attachments does not identify the return as a single State filer,

Box 1b is not marked and no indication on Form 940 Schedule A, of multi states or Form 940 Schedule A not attached,

If the entity address on the return has a State Code, enter the valid State Code from the entity address in Field 01SC1.

If the entity address on the return does not have a State Code, SSPND 211 and correspond using Letter 142C.

The return or attachments shows the return as a single State filer,

The state is not subject to Credit Reduction,

Enter the two-character State Code in Field 01SC1. See Exhibit 3.12.154-8 for valid state codes.

Delete any entry in Field 01CRB.

The return or attachments shows the return as a single State filer,

That state is subject to credit reduction,

Enter the two-character State Code in Field 01SC1.

Enter a "1" in Field 01CRB, if not present.

Line 2 box is marked by the taxpayer or by a Code & Edit tax examiner. If edited by Code & Edit ensure the entry was edited correctly prior to entering 1 in Field 01CRB.

If the amount on line 11 is equal to the sum of Line 7 amount multiplied by the Credit Reduction Rate percentage, then enter the Line 7 amount into the correct Field for Section 03.

If the amount on line 11 is not equal to the sum of Line 7 amount multiplied by the Credit Reduction Rate percentage, then SSPND 211 and correspond for Form 940 Schedule A using Letter 142C.

Field 01SC1 is blank or the State Code in Box 1a (01SC1) is a foreign country other than a U.S. Possession,

AA, AE, or AP, address is present on the entity of the return, See IRM 3.12.154.2.19.2, APO/DPO/ FPO Addresses.

Enter the valid state code from the entity address on page 1 of the return and in Field 01SC1.

If no valid state code is present, SSPND 211 and correspond using Letter 142C.

Box 1b (Field 01MSB) is checked,

Form 940 Schedule A is missing or has not been completed, or no attachment is attached identifying the multiple state Codes and their associated FUTA Taxable Wages,

SSPND 211 and correspond using Letter 142C.

Multiple State Codes are present,

At least one state is subject to Credit Reduction and the associated FUTA Taxable Wage is shown by the taxpayer,

Enter the two-character State Code(s) and the associated FUTA Taxable Wage amounts (if applicable) in Section(s) 03, 04 and 05.

Enter "1" in 01MSB, if not present.

Enter "1" in 01CRB, if not present.

If an entry is in 01SC1, verify that it is present in Sections 03, 04, or 05, as applicable and delete any entry in 01SC1.

Multiple State Codes are present,

None are subject to credit reduction,

CC "GTSEC" Section(s) 03, 04 and 05. Enter the two-character State Codes.

Enter any State Code in Field 01SC1 to Section(s) 03, 04 and 05, as applicable.

Delete any State Code in Field 01SC1.

Enter "1" in 01MSB, if not present.

The return is non-taxable,

The State Code is for a Credit Reduction state for that year,

Enter "ZZ" in the 01SC1.

Delete any entries present in Sections 03, 04 or 05.

Foreign Address and/or U.S. Possession in Field 01SC1, or Section 03 through 05,

SSPND 650. Prepare a Routing Slip and notate to transship to OSPC.

OSPC ONLY: There is a foreign country other than a U.S. Possession, US Virgin Islands or Puerto Rico,

The valid state code cannot be decided,

SSPND 215 and correspond using Letter 142C.

OSPC ONLY: Field 01SC1 is blank,

No state or country is listed on Form 940 (PR)

Enter "PR" into Field 01SC1.

If correspondence was not received or not provided do the following:

If

Then

The entity State Code is a valid Credit Reduction State for the tax year of the return,

Enter the entity state code in Field 01SC1, if not present.

Enter "1" in 01CRB, if not present.

Enter the Line 7 amount into the correct Field for Section 03.

The entity State Code is not a valid Credit Reduction State for the tax year of the return,

Enter the Entity State in Field 01SC

Remove the Entry in Field 01MSB

If the entity on the return has a foreign country other than a U.S. Possession, U.S. Virgin Island or Puerto Rico,

Delete the entry in Fields 01SC, 01MSB, and 01CRB if present.

Also delete the invalid Credit reduction State Code and associated amount from Section 03, 04, and 05 as applicable.

If no state was provided, Research Command Code BMFOLI, BMFOLR, TRDBV, and IRPTR for a previous year’s tax return,

If previous year tax return have been found:

Find the tax year return where the EIN has an established date.

Find the first return filled after the established date.

If the return filed state code in the entity matches IRPTR (Form W-2, Form 1099, etc.) information then, enter the state code on Form 940 and in the fields display.

If the state code cannot be decided after research BMFOL, TRDBV, and or IRPTR,

If a telephone number is given for a signer (Payroll Technician) or Paid Preparer on the tax return in question. ERS Rejects should call the representative at the number listed requesting the missing state code. See IRM 3.12.154.2.12, IRS Employee Contact Rev. Proc. RRA98-Section 3705(a),

If the state code is given, enter it on the return and on the ERS screen display.

If no state code is provided:

SSPND the return with Action Code 460.

Notate on Form 4220 “EC 208 State Code not provided TC”.

Notify your center ERS P&A Analyst for elevation of the issue to headquarters.

Error Code 209 will display as follows:

Field Designator

Field Name

Field Length

01SC1

State Code

2

01MSB

Multi-State Indicator

1

01CRB

Credit Reduction Check Box

1

03S01 - 03S26

State Code & Credit Wages 1 through State Code & Credit Wages 26

17

S04NP

Section 04 Not Present

04S27 - 04S52

State Code & Credit Wages 26 through State Code & Credit Wages 52

17

05S53

State Code & Credit Wages 53

17

There is a valid State Code in 01SC1 (Box 1a) and also an entry in 01MSB (Box 1b).

Field 01SC1 or 01MSB is not present and 02TTW and 02TFT are greater than zero.

Compare the screen display to the return for coding and transcription errors and make the proper corrections. See the table below:

If

And

Then

There is a valid state code shown in field 01SC1,

There is an entry in 01MSB,

Examine the return and attachments for the single or multi-state filer status:

If the taxpayer is a single state filer, and no credit reduction state is shown:

Delete the entry in 01MSB.

Delete the state shown in Sections 03, 04 or 05.

If the taxpayer is a multi-state filer:

Delete the entry in 01SC1.

Enter the state code into the correct field in Section 03, 04, or 05.

Be sure that the state code shown in 01SC1 is checked on Form 940 Schedule A. If it is not checked, mark the correct box on Form 940 Schedule A (Revision 2011).

A single state is shown anywhere on the return or attachments by the taxpayer,

That state is subject to credit reduction,

Enter the state code in 01SC1, if not present.

Enter 1 in 01CRB, if not present.

If the associated FUTA Taxable Wages was shown by the taxpayer, then enter the amount into Section 03 next to the Credit Reduction State code.

If the associated FUTA Taxable Wages has not been shown by the taxpayer:

If the amount on line 11 is equal to the sum of Line 7 amount multiplied by the Credit Reduction Rate percentage, then enter the Line 7 amount into the correct Field for Section 03.

If the amount on line 11 is not equal to the sum of Line 7 amount multiplied by the Credit Reduction Rate percentage, then SSPND 211 and correspond for Form 940 Schedule A using Letter 142C.

A single state is shown anywhere on the return or attachments by the taxpayer,

The state is not subject to the credit reduction,

Input the state code in 01SC1.

Form 940 Schedule A is not attached,

01SC1 has a valid state code that is not subject to credit reduction,

Delete the entry in 01MSB.

The State Code in Box 1a (01SC1) is a foreign country other than a U.S. Possession,

AA, AE, or AP, address is present on the entity of the return, See IRM 3.12.154.2.19.2, APO/DPO/FPO Addresses.

Enter the state from the entity address on page 1 of the return and in Field 01SC1.

If no valid state code is present, SSPND 211 and correspond using Letter 142C.

OSPC ONLY: There is a foreign country other than a US Possession, US Virgin Islands or Puerto Rico in the entity area,

A valid state code cannot be decided,

SSPND 215 and correspond using Letter 142C.

OSPC ONLY: Field 01SC1 is blank,

No state or country is listed on Form 940 (PR),

Enter "PR" into Field 01SC1.

Delete entry in 01MSB if present.

The State Code in Box 1a (01SC1) is blank,

Box 1b. (01MSB) is not checked

Enter the state code form the entity address on page 1 of the return in Field 01SC1 if Box 1a and 1b are blank.

Error Code 210 will display as follows:

Field Designator

Field Name

Field Length

01SC1

State Code

2

01MSB

Multi-State Indicator

1

01CRB

Credit Reduction Check Box

1

S03NP

Section 03 Not Present

03S01 - 03S26

State Code & Credit Wages 1 through State Code & Credit Wages 26

17

S04NP

Section 04 Not Present

04S27 - 04S52

State Code & Credit Wages 27 through State Code & Credit Wages 52

17

Error Code 210 will generate when:

Field 01MSB has an entry, and Section(s) 03, 04, or 05 only has one state code or no state codes are present.

Field 01MSB is blank, and Section(s) 03, 04, and 05 has more than 1 state code or Section(s) 03, 04, or 05 only has one state code or no state codes are present and Field 01CRB has an entry.

Compare the screen display to the return for coding and transcription errors and make the proper corrections.

Decide if the return is single or multi-state filer and the follow the procedures below:

Single state filer - Schedule A or similar statement is attached with only one state present.

Multi-state filer - Schedule A or similar statement is attached with more than one state present.

If

And

Then

Type of Return box c. is marked, or or taxpayer shows no payments to employees,

Lines 1 through 15 are all blank or zero,

Enter 9 in Field 01CCC.

Type of Return box d. is marked, or or taxpayer shows return is a final or Business closed or stopped paying wages,

Enter F in Field 01CCC.

The return is shown as a single state filer,

The state is not a credit reduction state,

Delete the entry in 01MSB if present.

Enter the single state code into field 01SC1.

Delete the state code(s) and/or FUTA Taxable Wage amount(s) in Section(s) 03, 04, and 05 on the display screen.

If Form 940 Schedule A is attached to the return, draw a slash (/) across the Form 940 Schedule A. This will show on the Form 940 Schedule A it was deleted.

The return is shown as a single state filer,

The state is a credit reduction state,

Enter the state code in 01SC1, if not present.

Enter "1" in 01CRB, if not present.

If the associated FUTA Taxable Wages was shown by the taxpayer, then enter the amount into Section 03 next to the Credit Reduction State code.

If the associated FUTA Taxable Wages has not been shown by the taxpayer:

If the amount on line 11 is equal to the sum of Line 7 amount multiplied by the Credit Reduction Rate percentage, then enter the Line 7 amount into the correct Field for Section 03.

If the amount on line 11 is not equal to the sum of Line 7 amount multiplied by the Credit Reduction Rate percentage, then SSPND 211 and correspond for Form 940 Schedule A using Letter 142C

There is an entry in 01MSB,

There is only one state shown in Section(s) 03, 04, or 05,

Examine the return and attachments for the taxpayer's true filing status, e.g., single state filer, or Multi-State filer.

If the taxpayer is a single state filer:

Delete the entry in 01MSB.

Enter the single state code into field 01SC1.

See Exhibit 3.12.154-15, Credit Reduction States and rates (TY 2025 - 2004

If the state is a Credit Reduction state for the return tax year, Do not change the entry and continue processing.

If the state is not a Credit Reduction state for the tax year, delete the state code(s) and/or FUTA Taxable Wage amount(s) in Section(s) 03, 04, and 05 on the display.

If Form 940 Schedule A is attached to the return, draw a slash (/) across the Form 940 Schedule A. This will show on the Form 940 Schedule A that it was deleted.

There is no entry in field 01MSB,

There is more than one (1) state shown in Section(s) 03 04, or 05,

Enter a "1" in field 01MSB (Box 1b).

If a state is present that is a valid credit reduction state and 01CRB is blank, enter a "1" in Field 01CRB.

OSPC ONLY: The state code is for a foreign country other than a U.S. Possession,

AA, AE, or AP, address is present in the entity of the return, See IRM 3.12.154.2.19.2, APO/DPO/FPO Addresses.

Enter the state from the entity address from page 1 of the return in 01SC1.

OSPC ONLY: The state code is for a foreign country other than a U.S. Possession,

No AA, AE, or AP, address is present in the entity of the return,

SSPND 211 and correspond for a valid state code using Letter 142C.

OSPC ONLY: Field 01SC1 is blank,

No state or country is listed,

Enter "PR" into Field 01SC1.

Delete entry in 01MSB if present.

Error Code 211 will display as follows:

Field Designator

Field Name

Field Length

01SC1

State Code

2

01MSB

Multi-State Indicator

1

01CRB

Credit Reduction Check Box

1

S03NP

Section 03 Not Present

03S01 - 03S26

State Code & Credit Wages 1 through State Code & Credit Wages 26

17

04S27 - 04S52

State Code & Credit Wages 27 through State Code & Credit Wages 52

17

05S53

State Code & Credit Wages 53

17

This field will be invalid if the Credit Reduction box is checked for a year that is subject to credit reduction, but Section 03, 04, or 05 of Form 940 Schedule A is not present. Note: Error Code 211 will not generate if a state is present in field 01SC.

Compare the screen display to the return for coding and transcription errors and make the proper corrections. See the table below:

See Exhibit 3.12.154-15 for Credit Reduction States and Rates.

If

And

Then

Credit Reduction applies,

A "1" must be entered in 01CRB if not present.

There is an entry in 01CRB,

No entries are present in Sections 03, 04 or 05,

Examine the return and attachments:

If the taxpayer has shown multiple Credit Reduction State and the associated FUTA Taxable Wage:

Enter the Credit Reduction State Codes and the associated FUTA Taxable Wage amount into Section 03, 04, or 05.

If the taxpayer has not shown the Credit Reduction State and its associated FUTA Taxable Wage, SSPND 211 and correspond for Form 940 Schedule A.

There is an entry in 01CRB,

There is an entry in 01SC1 and there are no entries in Sections 03, 04, or 05,

Verify that the state shown in 01SC1 is subject to credit reduction.

If the state is subject to credit reduction, edit the associated FUTA Taxable Wages to the correct state line on Form 940 Schedule A.

If the state shown in 01SC1 is not subject to credit reduction, or the return is non-taxable, delete the entry in 01CRB.

The return is non-taxable and the State Code available is subject to Credit Reduction, enter "ZZ" in Field 01SC1.

The credit reduction information cannot be decided,

SSPND 211 and correspond with the taxpayer.

The Taxpayer does not reply or in reply to correspondence, the multi-state filer does not give the amount of wages for one or more credit reduction states listed on Form 940 Schedule A,

Assign all wages to the first state and enter a penny (.01) in Section 03/04/05 for the remaining Credit Reduction states without wages

If all of the credit reduction states on Form 940 Schedule A do not show a wage amount, and the return is a taxable return, then enter the taxable wages from line 7 (line 7a, Revision 2011) to the state with the higher rate, and a penny ($.01) for the remaining credit reduction states.

Error Code 212 will display as follows:

Field Designator

Field Name

Field Length

01SC1

State Code

2

01MSB

Multi-State Indicator

1

01CRB

Credit Reduction Check Box

1

S03NP

Section 03 Not present

03S01 - 03S26

State Code & Credit Wages 1 through State Code & Credit Wages 26

17

04S27 - 04S52

State Code & Credit Wages 27 through State Code & Credit Wages 52

17

05S53

State Code & Credit Wages 53

17

Section 03, 04 or 05 has a blank field followed by a field with an entry.

Compare the screen and return, do the following:

If

Then

Transcription errors,

Review the return and attachments.

Make the proper corrections, as needed, on the ERS display screen based on the return, Form 940 Schedule A or attachment.

FUTA Taxable wages for Schedule A has not been shown by the taxpayer,

Suspend 211 to correspond for Credit Reduction state wage amounts.

If more than one state is shown in Section 03, 04 or 05 of Form 940 Schedule A,

If any state is missing in Section 03, 04, or 05, enter the missing state on the display.

If a "1" is not present in 01MSB:

Enter "1"

If more than one state is shown on Form 940 Schedule A, and 01SC1 has an entry, blank the state in field 01SC1.

If an entry is in 01SC1:

Verify that the state code shown in 01SC1 is shown in Sections 03, 04, or 05 Form 940 Schedule A.

If there is only one state on Form 940 Schedule A, blank 01MSB if there is an entry.

Error Code 214 will display as follows:

Field Designator

Field Name

Field Length

01TXP

Tax Period

4

01SC1

State Code

2

01MSB

Multi-State Indicator

1

01CRB

Credit Reduction Indicator

1

02TCR

Total Credit Reduction Amount

10

Section 03

Present

Section 04

Present

Section 05

Present

Field 02TCR Total Credit Reduction Amount (Line 11) is present and field 01CRB Credit Reduction Check Box (Line 2) is not present.

Field 01MSB Multiple State Check Box (Line 1b) is present and State Code Credit Reduction Wages are present in Section 03, 04, or 05 (Form 940 Schedule A), and field 02TCR Credit Reduction Total Amount (Line 11) is not present.

Year in Tax Period is 1974, 1976 - 1987, 1991 - 1992, 2004, 2005, or 2009 - 2025 and Field 01CRB Credit Reduction Check Box (Line 2) is present and Field 01SC1 One State Code is not present and Section 03, 04, or 05 (Form 940 Schedule A) is not present.

Field 01MSB Multiple State Code Check Box (Line 1b) is present and the State Code for the Credit Reduction Wages in Section 03, 04, or 05 (Form 940 Schedule A) is a valid Credit Reduction State for the Tax year of the return and field 01CRB Credit Reduction Check Box (Line 2) is not present.

Field 01MSB Multiple State Code Check Box (Line 1b) is present and the State Code for the Credit Reduction Wages in Section 03, 04, or 05 (Form 940 Schedule A) is not a valid Credit Reduction State for the Tax year of the return and field 01CRB Credit Reduction Check Box (Line 2) is present.

Field 01MSB Multiple State Code Check Box (Line 1b) is not present and Field 01SC1 One State Code is a valid Credit Reduction State for the tax year of the return, and Field 01CRB Credit Reduction Check Box (Line 2) is not present.

Field 01MSB Multiple State Code Check Box (Line 1b) is not present and Field 01SC1 One State Code is not a valid Credit Reduction State for the tax year of the return, and Field 01CRB Credit Reduction Check Box (Line 2) is present.

Year in Tax Period is 1974, 1976 - 1987, 1991 - 1992, 2004, 2005, 2009 - 2025 and Field 01CRB Credit Reduction Check Box (Line 2) is present and Section 03, 04, and 05 (Form 940 Schedule A) are not present.

Compare the screen display to the return and correct coding and transcription errors.

Review the return and attachments and follow the procedures in the table below:

If

And

Then

Field 01MSB (Line 1b) and Section(s) 03, 04, and/or 05 have entries,

Field 02TCR (Line 11) is blank or zero,

If the return is a "Section IRC 6020(b)" , and Form 940 Schedule A has a Credit Reduction state with FUTA Taxable wages greater than .01:

SSPND with Action Code 640.

Attach Form 4227 with notation "UN Proc. See Line 2 and Sch. A CR State."

Route the non-processable IRC 6020(b) return to: Internal Revenue Service 2970 Market St. Mail Stop 5-E04.114 Philadelphia, PA 19104

If Form 940 Schedule A is attached, correct any transcription or math errors as needed.

If the taxpayer checked a state box, and the state is a credit reduction state for the filing year, ensure the state wage column (on Form 940 Schedule A) for the Credit Reduction state is not blank.

Zero ("0" ) is an acceptable entry.

If blank, review attachments for any indication of the FUTA Taxable Wage amount for Credit Reduction State.

If all Credit Reduction States on Form 940 Schedule A reflect the FUTA Taxable Wages as zero e.g., not blank, and field 02TCR is blank or zero, then enter one penny ($.01) into the FUTA Taxable Wage for all Credit Reduction States in Section 03, 04, or 05.

If field 01CRB (Box 2) is blank, enter a "1" field 01CRB.

If the FUTA Taxable Wages on Form 940 Schedule A is blank and the taxpayer has not shown the FUTA taxable Wages, correspond for the missing Form 940 Schedule A FUTA Taxable Wages.

Field 01MSB (Line 1b) and Section(s) 03, 04, and/or 05 have entries,

Field 02TCR (Line 11) is greater than zero,

If the return is an IRC 6020(b), and Form 940 Schedule A has a Credit Reduction state with FUTA Taxable wages greater than .01:

SSPND with Action Code 640.

Attach Form 4227 with notation "UN Proc. See Line 2 and Sch. A CR State."

Route the non-processable IRC 6020(b) return to: Internal Revenue Service 2970 Market St. Mail Stop 5-E04.114 Philadelphia, PA 19104

If an invalid Credit reduction State on Schedule A has a credit reduction amount, then do the following:

Delete the credit reduction amount for the invalid credit reduction state for the tax year of the return in Section 03, 04, and 05.

Delete the entry in Field 01CRB.

If the computer amount for Field 02TCR differs from Line 11, assign TPNC 08 if EC 208 generates.

Field 01MSB (Line 1b) and Section(s) 03, 04, and/or 05 have entries,

Line 2 Box (Field 01CRB) is not marked by the taxpayer or Code & Edit,

If Form 940 Schedule A is attached, correct any transcription and math errors as needed.

Review field 02TCR (Line 11) to ensure the correct amount from Form 940 Schedule A was transcribed from the return.

If field 01CRB (Box 2) is blank, enter a "1" in Box 2.

If Form 940 Schedule A is not attached,

Line 2 Box (Field 01CRB) is or is not marked by the taxpayer or Code & Edit,

If the return is an IRC 6020(b):

SSPND with Action Code 640.

Attach Form 4227 with notation "UN Proc. See Line 2 and Sch. A."

Route the non-processable an IRC 6020(b) return to: Internal Revenue Service 2970 Market St. Mail Stop 5-E04.114 Philadelphia, PA 19104

If the return is a single state filer:

If Line 8 amount is the max tax amount (Line 7 X .054),

If an amount is present on Line 9 that is equal to Line 8, multiply line 7 amount by .006 and enter the result in field 02TBA and input a 1 in field 01CRB, and input the credit reduction state code with no wages in Sect 03.

If an amount is present on line 9 and is not equal to line 8, multiply line 7 amount by .006 and enter the result in field 02TBA. Multiply line 7 by .054 and input the result in field 02ADJ, input 1 in field 01CRB, and input the credit reduction state code with no wages in Sect 03.

If Line 8 amount is not the max tax amount (Line 7 X .054),

If an amount is present on Line 9 (Field 02ADJ) that equals line 7 X .054 (max tax), input a 1 in field 01CRB, and input the credit reduction state code with no wages in Sect 03.

If an amount is not present on line 9 and line 10 is blank, enter the amount from line 7 as the FUTA Taxable Wage for the Credit Reduction State in Section 03, 04, or 05.

If b)1) or b)2) above do not apply, correspond for Credit Reduction State Taxable FUTA Wages.

If the return is not a single state filer, correspond for Credit Reduction State and Credit Reduction Taxable FUTA Wages.

Form 940 Schedule A is blank or zero, or field 02TCR is blank or zero,

Line 2 Box (Field 01CRB) is marked by the taxpayer or Code & Edit,

If the return is an IRC 6020(b):

SSPND with Action Code 640.

Attach Form 4227 with notation "UN Proc. See Line 2 and Sch. A."

Route the non-processable an IRC 6020(b) return to: Internal Revenue Service 2970 Market St. Mail Stop 5-E04.114 Philadelphia, PA 19104

If a state box is checked for which the return filing year is a Credit Reduction state and the state wage for a Credit Reduction state is zero or if blank and the Credit Reduction total amount on page 1 of Schedule A is 0 (zero not blank), then enter one penny ($.01) as the state wage amount.

If a state box is not checked and the taxpayer entered zero (0) for state wage for a Credit Reduction state, then enter one penny ($.01) as the state wage amount.

Field 02TCR (Line 11) has an amount greater than zero,

Line 2 Box (Field 01CRB) is not marked by the taxpayer or Code & Edit,

If the return is an IRC 6020(b):

SSPND with Action Code 640.

Attach Form 4227 with notation "UN Proc. See Line 2 and 11."

Route the non-processable an IRC 6020(b) return to: Internal Revenue Service 2970 Market St. Mail Stop 5-E04.114 Philadelphia, PA 19104

If the return and attachments shows the taxpayer is a single state filer (Box 1a marked), or a Multi-State filer (Box 1b marked).

Taxpayer is single state filer: See Exhibit 3.12.154-15, Credit Reduction States and Rates (TY 2025 - 2004), for the valid state:

Taxpayer's state is a valid CR state for tax year of return- Enter a "1" in field 01CRB.

Review Sections 03, 04, and 05 for math errors. Be sure the same state shown in 01SC1 is checked in Section(s) 03, 04, and 05, and the total CR amount on Form 940 Schedule A is shown in field 02TCR.

If the state is not a CR state for tax year of return delete any entry in field 01CRB, field 02TCR, and/or Sections 03, 04, and/or 05. Correct any "ripple errors" , as needed. If Error Code 242 generates, use TPNC 08.

Taxpayer is a Multi-State filer:

Enter a "1" in field 01CRB.

Check Sections 03, 04, and/or 05 for multiple states, FUTA wage amounts for each state, and any math errors within those sections.

Check to ensure the total CR amount from Sections 03, 04 and/or 05 is shown in field 02TCR. Make any corrections, as needed.

If FUTA Taxable wage amounts are not shown in Sections 03, 04, and/or 05 for each state, correspond for the correct amounts.

Field 01SC1 (Box 1a) has an entry, and the return tax year is a Credit Reduction year,

Line 2 Box (Field 01CRB) is not marked by the taxpayer or Code & Edit,

If Form 940 Schedule A is or is not attached and the taxpayer has shown on the return or attachments the Credit Reduction State and its associated FUTA Taxable Wages:

Credit Reduction State is shown by an entry on line 1a, entity state code, or notated on an attachment. FUTA Taxable Wages is shown on Line 7 provided when multiplied by the credit reduction percentage the result is equal to Line 11 or if line 11 is blank is used in the calculation by the taxpayer for Line 12 and/or Line 14/15.

Enter the Credit Reduction State and its associated FUTA Taxable Wage into the correct Fields for Section 03, 04, and 05 and enter 1 in 01CRB.

If the taxpayer shows 0.00 for FUTA Taxable Wages, then enter 1 ($.01) as the FUTA Taxable Wage amount.

If the taxpayer has not shown on the return or attachments the Credit Reduction State and its associated FUTA Taxable Wages, SSPND 211 and correspond for Form 940 Schedule A.

Field 01SC1 is blank,

Line 2 Box (Field 01CRB) is marked by the taxpayer or Code & Edit,

If the return is an "IRC 6020(b)" :

SSPND with Action Code 640.

Attach Form 4227 with notation "UN Proc. See Line 1 and 2."

Route the non-processable an IRC 6020(b) return to: Internal Revenue Service 2970 Market St. Mail Stop 5-E04.114 Philadelphia, PA 19104

If Form 940 Schedule A is or is not attached and the taxpayer has shown on the return or attachments the Credit Reduction State and its associated FUTA Taxable Wages:

Enter the Credit Reduction State and its associated FUTA Taxable Wage into the correct Fields for Section 03, 05, and 05 and enter 1 in 01CRB.

If the taxpayer shows 0.00 for FUTA Taxable Wages, then enter 1 ($.01) as the FUTA Taxable Wage amount.

If the taxpayer has not shown on the return or attachments the Credit Reduction State and its associated FUTA Taxable Wages, SSPND 211 and correspond for Form 940 Schedule A.

The return is shown as a single state filer

The state is not a Credit Reduction State for Tax Year of the return,

Delete the entry in 01MSB if present.

Enter the single state code into field 01SC1.

Delete the state code(s) and/or FUTA Taxable Wage amount(s) in Section(s) 03, 04, and 05 on the display screen.

If Form 940 Schedule A is attached to the return, draw a slash (/) across the Form 940 Schedule A. This shows the Form 940 Schedule A is deleted.

Delete the entry in Field 01CRB.

Delete the entry in Field 02TCR.

Reply and No Reply:

If

Then

The taxpayer sends a reply and gives all information requested,

Enter the information into the correct Section and fields. Continue to process return.

The taxpayer does not give all of the information requested reply, or no reply.

Process the return as a single state filer:

If the entity state is not a Credit Reduction state for the return tax year:

Review field 02TCR and/or 01CRB for a taxpayer entry.

If on the display screen 01CRB, 01MSB or 02TCR has an entry, blank the field.

If 01SC is blank, enter the state code from box 1a.

If the entity state is a Credit Reduction state for the return tax year:

Be sure the state code appears in field 01SC1 and field 02TCR has a "1" .

If Form 940 Schedule A was attached, be sure Field 03, 04, or 05 has the correct state code.

If state code is incorrect, blank the incorrect state. Then, enter the correct state code, to correct, or if Section 03, 04, or 05 were blank.

Transmit to update the screen.

Error Code 216 will display as follows:

Field Designator

Field Name

Field Length

01CCC

Computer Condition Codes

10

01TXP

Tax Year

4

01SC1

State Code

2

01MSB

Multi-State Indicator

1

01CRB

Credit Reduction Indicator

1

The State Code field (01SC1) has a state that is subject to Credit Reduction.

Credit Reduction applies to recent tax years 2009 - 2025.

In a credit reduction year, field 01SC1 (Line 1a) and field 01CRB (Line 2) contain entries, or field 01MSB (Line 1b) and 01CRB (Line 2) contain entries, and the State (or States) in field 01SC1 or Form 940 Schedule A (Section 03, 04 or 05) are not subject to Credit Reduction.

Compare the screen display to the return and correct coding and transcription errors.

Make the proper corrections. See the table below:

See Exhibit 3.12.154-15 for Credit Reduction States and Rates.

If

And

Then

The return is nontaxable and the only State Code available is a Credit Reduction State for that year,

Enter "ZZ" in field 01SC1.

The State Code in Field 01SC1 is for a valid Credit Reduction State for that Tax Year,

Use CC GTSEC to display Section 03:

If the amount on line 11 is equal to the sum of Line 7 amount multiplied by the Credit Reduction Rate percentage, then enter the Line 7 amount into the correct Field for Section 03.

If the amount on line 11 is not equal to the sum of Line 7 amount multiplied by the Credit Reduction Rate percentage, then SSPND 211 and correspond for Form 940 Schedule A using Letter 142C.

Enter "1" in 01CRB if not present.

Form 940-EZ has a State Code that is a Credit Reduction state,

Convert to Form 940.

IRM 3.12.154.2.31.1, Form 940-EZ Conversion

See IRM 3.12.154.2.31.2, Form 940 (Revision 2005 and Prior) Conversion to Current Year

The return is an amended return and CCC "G" is not present,

Enter "G" in field 01CCC.

In a credit reduction year, field 01SC1 (Line 1a) and field 01CRB (Line 2) contain entries, or Sections 03, 04, or 05 (of Form 940 Schedule A),

01CRB (Line 2) contain entries, and the State (or states) in field 01SC1 or Section 03, 04 or 05 are not valid credit reduction states.

Delete any entries present in 01CRB.

Error Code 220 will display as follows:

Field Designator

Field Name

Field Length

01TXP

Tax Year

4

01SC1

State Code

2

01MSB

Multi-State Indicator

1

01CRB

Credit Reduction Indicator

1

03S01 - 03S26

State Code & Credit Wages 1 through State Code & Credit Wages 26

17

04S27 - 04S52

State Code & Credit Wages 27 through State Code & Credit Wages 52

17

05S53

State Code & Credit Wages 53

17

Credit Reduction wages are present, and no State Code is present.

A Credit Reduction wage amount is present for a state that is not subject to Credit Reduction.

For a list of valid Credit Reduction States and Rates See Exhibit 3.12.154-15, Credit Reduction States and Rates (TY 2025 - 2004).

Compare the screen display to the return for editing and transcription errors:

If

Then

Editing and Transcription errors exist,

Make the proper corrections.

The taxpayer has shown a Credit Reduction wage amount and has not paid wages to a state subject to Credit Reduction,

Delete the erroneous entry in Section(s) 03, 04 and 05, as applicable. Do not delete the section unless there is only one entry.

If only one state is present, enter it into 01SC1. Delete the entry in 01MSB if present.

Delete the entry in 01CRB, if it is present.

Send TPNC 08 if Error Code 242 displays.

Error Code 222 will display as follows:

Field Designator

Field Name

Field Length

01TXP

Tax Year

4

02TCR

Total Credit Reduction Amount

10

The Total Credit Reduction Amount is present, and the Tax Year is not 2009 - 2025.

Compare the screen display to the return for editing and transcription errors:

If

Then

Editing and Transcription errors exist,

Make the proper corrections.

The Tax Year is not (an earlier CR year), or 2009 - 2025,

Delete Field 02TCR.

Delete the entry in 01CRB, if present.

Send TPNC 08 if Error Code 242 displays.

Error code 225 should only generate for Tax Year 2011 returns. For any other year, the return will bypass this error condition.

Field Designator

Field Name

Field Length

01TXP

Tax Year

4

02TTW

Total Taxable Wages

15

02TTW>

Total Taxable Wages (computer)

15

02W08

FUTA Wages paid before 7/1/2011

15

02W06

FUTA Wages paid after 06/30/2011

15

Error Code 225 generates when the Tax Period is equal to 201112 and difference between Total Taxable Wages computer (02TTW>) amount and Total Taxable Wages amount (Line 7a) is greater than ≡ ≡ ≡ ≡ ≡ ≡.

For Tax Year 2011, Total Taxable Wages- Computer amount is the total of Form 940, lines 7b and 7d (fields 02W08 and 02W06, respectively)

Compare the screen display to the entries on the return and make the proper corrections.

All procedures for Error Code 225 should be followed in the order listed to properly resolve the error condition.

If the return is an IRC 6020(b) return and Lines 7b, 7c, 7d, and 7e are all zero or blank or if Lines 7b and 7d do not equal Line 7a, do the following:

SSPND with Action Code 640.

Attach Form 4227 with a notation "UN Proc. See Lines 7b, 7c, 7d, and 7e" .

Route the non-processable IRC 6020(b) return to:

Internal Revenue Service

2970 Market St.

Mail Stop 5-E04.114

Philadelphia, PA 19104

Line 7a is the taxpayer amount for Total Taxable FUTA Wages and is the sum of lines 4 and 6 amounts.

Manually compute line 7a as follows:

Manually compute line 6 and enter the result on line 6 if different than taxpayer entry.

Manually compute line 7a and enter the result on line 7a if it's different than taxpayer entry.

Field 02TTW> is the Total Taxable FUTA Wages Computer amount for line 7a. This computer-generated amount is the sum of lines 7b and 7d amounts.

If Field 02TTW> differs from line 7a, do the following:

If

And

Then

Line 7b is zero, blank, or none,

Line 7c is greater than zero, blank or none,

Divide line 7c entry by .008 and enter the result on line 7b and in Field 02W08.

Line 7b is zero, blank, or none,

Line 7c is zero, blank or none,

If no amount is present on lines 9, 10, and 11:

Divide the sum of lines 16a and 16b by .008.

Enter the result on line 7b and in Field 02W08.

If an amount is present on lines 9, 10, or 11, SSPND 211 and correspond for line 7b amount. Use Letter 142C.

Line 7d is zero, blank, or none,

Line 7e is greater than zero, blank or none,

Divide line 7c entry by .006 and enter the result on line 7d and in Field 02W06.

Line 7d is zero, blank, or none,

Line 7e is zero, blank or none,

If no amounts are present on lines 9, 10, and 11:

Divide the sum of lines 16c and 16d by .006.

Enter the result on line 7d and in Field 02W06.

If an amount is present on lines 9, 10, or 11, SSPND 211 and correspond for line 7d amount. Use Letter 142C.

An amount is present on lines 7b and 7d, or If either of these lines were entered according to above instructions,

The sum of lines 7b and line 7d is less than Line 7a,

SSPND 211 and correspond regarding the discrepancy of the amounts for lines 7a, 7b and 7d. Use Letter 142C.

An amount is present on lines 7b and 7d, or If either of these lines were entered according to above instructions,

The sum of lines 7b and 7d is greater than line 7a,

Correspond with the taxpayer using Letter 142C. (Suggested paragraph L).

If the return was prepared on a Form 940 revision form other than a 2011 revision:

If

Then

Line 8 greater than zero,

Multiple line 7 by .008:

If the result is equal to line 8 amount, enter the result in Field 02W08.

If the result is not equal to line 8 amount, Multiple line 7 by .006:

If the result is equal to line 8, enter the result on line 7d and in Field 02W06.

If the result is not equal to line 8, SSPND 211 and correspond with the taxpayer using Letter 142C with the open paragraph.

Reply, No Reply, or insufficient Reply - Use the following table to correct returns that have been suspended for correspondence or reject for other review:

If

And

Then

Line 7b amount is received,

Enter the amount on line 7b and in Field 0208W.

Line 7d amount is received,

Enter the amount on line 7d and in Field 0206W.

Line 7b amount is not received,

No amounts are present on lines 7d and 7e or no amount entered in Field 0206W

Enter the line 7a amount on line 7b and in Field 0208W.

Line 7d amount is not received,

No amounts are present on lines 7b and 7c or no amount entered in Field 0208W

Enter the line 7a amount on line 7b and in Field 0208W.

Sum of lines 7b and 7d is less than line 7a,

Response was received,

Adjust the entry for line 7a, 7b, and 7c according to taxpayer’s response,

Sum of lines 7b and 7d is less than line 7a,

Response was not received,

Adjust line 7a and Field 02TTW to equal the amount in Field 02TWW>.

Sum of lines 7b and 7d greater than line 7a, is received,

Response was received,

Adjust the entry for line 7a, 7b, and 7c according to taxpayer’s response,

Sum of lines 7b and 7d greater than line 7a, is received,

Response was not received,

Adjust line 7a and Field 02TTW to equal the amount in Field 02TWW>.