Note:

When retyping a notice, use the appropriate FTD penalty code to ensure the taxpayer receives the correct explanation. OLNR displays a date of 01/01/0001 as a placeholder date for an account without an originally assessed FTD penalty. This field does not need to be addressed when retyping a notice for reasons other than FTD.

The FTD penalty will be reviewed whenever an adjustment to tax is made on the notice module.

If the tax is being increased and there is an unreversed TC 180 or TC 186 on the account, the TC 290 tax adjustment will post without addressing the FTD penalty. Manually recompute the penalty and adjust any increase/decrease with TC 180/181.

If the total tax is being decreased and there is an unreversed TC 180 on the account, the TC 291 will unpost if the FTD penalty is not addressed.

A partial tax decrease will post without the FTD penalty being addressed. The penalty may also need to be decreased (TC 181) to avoid an erroneous notice. See, IRM 20.1.4.21.3(13), Amended or Supplemental Return (Tax Decrease or Non-Interest-Free Tax Increase).

If the TC 291 abates the entire tax, then the TC 186 will abate in full.

The penalty may be abated if reasonable cause applies. Reasonable cause is determined separately for each payment.

A CP 207 or a CP 207L proposed averaged FTD penalty notice may be issued on Forms 940,941, 943, 944, 945, CT-1 and 1042 when the Record Of Federal Tax Liability (ROFTL) or liability schedule is incomplete, illegible, or the liability does not equal the net taxes.

For tax periods beginning January 1, 2001, and later Code and Edit must enter Schedule Indicator Code (SIC) 1 in some instances. See the table below.

Schedule Indicator Codes

Net Tax is less than ≡ ≡ ≡ ≡ ≡ ≡ ≡

Net Tax is ≡ ≡ ≡ ≡ ≡ ≡ or more and the ROFTL is blank without an attached liability schedule

Net Tax is ≡ ≡ ≡ ≡ ≡ or more and there is a difference of ≡ ≡ ≡ ≡ or more between Net Taxes and Total Liability

Negative amount of ≡ ≡ ≡ ≡ ≡ ≡ or more is on ROFTL or Liability Schedule