Encoding Errors

Encoding is used to convert and print the amount of the payment shown on the remittance in a Magnetic Ink Character Recognition (MICR) font on the lower right side of the front of the check. An encoding error occurs when the operator misreads the numeric amount indicated on the remittance.

If, for example, a check is written for $1,561.00 but encoded for $582.36 and is returned by the bank, take the following action:

Using CC BDADD, add the debit voucher for $582.36 to the DCF.

Using CC BDAPL, apply $582.36 to the taxpayer's account. These two actions clear the debit and reduce the credit on the taxpayer's module.

Prepare Form 3244, Payment Posting Voucher, for the correct amount, $1,561.00, using the transaction date of the original payment.

Send check and Form 3244 to Clearing and Deposit for processing.

If a correction is not received from the bank for all the erroneously encoded items within the block contact the bank, working through them to resolve the discrepancy.

IRM 3.17.10.23.17.10.2, Dishonored Check File for processing documentation needed. (i.e., copy of check, bank statements from taxpayer). As per local procedure, encoding errors may be routed to Accounting through Accounts Management after retrieving required documentation from the taxpayer. See IRM 21.5.7, Payment Tracers.

Processing deposit discrepancy encoding errors is much like processing single encoding errors; however, correct amount of these multiple encoding errors is often assigned to an adjoining remittance in the block or the same error (i.e., moving decimal point one or more spaces) has been made in a number of remittances in the block.