Internal Revenue Manual Part 3. Submission Processing

Official source: Internal Revenue Manual (https://www.irs.gov/irm/part3/irm_03-024-180), retrieved 2026-10-03. U.S. Government work (17 U.S.C. § 105).

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(1) This transmits revised IRM 3.24.180, ISRP System - Allocated Tips.

(1) Editorial corrections and consistency changes made throughout including spelling, grammar, punctuation and formatting, removing italics, updating titles, correcting IRM links, Plain Language updates to improve readability, etc. and IRM 3.24.180.2 (2) updated and changed job title

James L. Fish Director, Submission Processing Customer Account Services Taxpayer Services

Purpose: Daily processing of processable paper filed Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips, on the Integrated Submission and Remittance Processing System (ISRP) are covered in this IRM. This processing will convert the taxpayer data reported to electronic data records for further validations to be applied to determine if the employers return is acceptable to fulfill the filing requirement.

Audience: The users of the IRM are Submission Processing General Clerks; Data Conversion Operation and their support staff which includes but is not limited to the following: clerks, leads and supervisors. These instructions apply to all campuses.

Policy Owner: The Director of Submission Processing

Program Owner: Return Processing Branch, Mail Management/Data Conversion Section (an organization within Submission Processing).

Primary Stakeholders: Affected by these procedures or have input to the procedures which may include a change in work flow, additional duties, change in established time frames, and similar issues are:

Accounts Management (AM)

Small Business/Self Employed (SB/SE)

Large Business and International (LB&I)

Chief Financial Officer (CFO)

Tax Payer Advocate (TAS)

Chief Counsel, Information Technology programmers

Statistics of Income (SOI)

Tax Exempt/Government Entities (TEGE)

Compliance Strategy and Policy and Operations Business Support

Office of Servicewide Penalties are affected by the completion of these data records to posting.

Program Goals: This information is used to provide instruction for accurate transcription of data into the ISRP system. The Integrated Submission and Remittance Processing (ISRP) is an application designed to capture, format, and forward information related to tax submissions and remittances in electronically readable formats to downstream IRS systems. Any remittances received with a tax document are forwarded and processed for deposit to the Remittance Processing function.

Employer's Annual Information Return of Tip Income and Allocated Tips are sent to the Service by filers to fulfill their requirement to make annual reports to the IRS on receipts from food or beverage operations and tips reported by employees and provide their taxpayer identification number (TIN). The returns must be converted to an electronic data record for use by the Service. Input of data present and validation of the data records during conversion of these paper returns to electronic data records is required.

for these procedures is found in Title 26 of the United States Code (USC) or more commonly known as the Internal Revenue Code (IRC). The IRC has been amended by acts, public laws, treasury determinations, rules, and regulations.

All policy statements for Submission Processing are contained in IRM 1.2.1.4, Servicewide Policies and Authorities, Policy Statements for Submission Processing Activities.

Code sections which provide the IRS with the authority to issue levies.

Congressional Acts which outline additional authorities and responsibilities like the Tax Act of 1986.

Policy Statements that provide authority for the work being done.

The Operations manager is responsible for securing, assigning and providing training for the staff needed to perform the task required throughout this instruction.

The Planning and Analysis Staff is responsible for providing feedback and support to local management to achieve and effectively monitor scheduled goals

The team manager/lead is responsible for and assigning, monitoring and controlling the work flow to accomplish timely completion of the tasks required throughout this IRM.

The employee is responsible for applying the instruction present to the assigned task on the ISRP system to accurately convert paper data to electronic data record for proper posting for use by the IRS.

Program Reports: Below are a list of reports to use to show receipts, production and inventory for the paper return to electronic data conversion process. These reports will be utilized to report and monitor daily and weekly status of the program to completeness.

PCC 2240, Daily Production Report - Program Sequence

PCC 6040, SC WP&C Performance and Cost Report

PCC 6240, SC WP&C Program Analysis Report

PCB 0440, Daily Workload and Staff hours Schedule

PCB 0540, Weekly Workload and Staffing Schedule

Program Effectiveness: Goals will be measured utilizing standard managerial reports by documents processed per hour and completion of each function compared to the established schedule for completion each week. Each functionality is expected to retain or exceed schedule prior to the program completion date stated in IRM 3.30.123, Work Planning and Control Processing Timeliness: Cycles, Criteria, and Critical Dates.

Annual Review: Review the processes included in this manual annually to ensure accuracy and promote consistent tax administration. This may be included under responsibilities for a manager.

Local reports may be utilized to establish additional information for maintaining daily program control. Local reports do not replace the established official reports and required production reports

The following is a list of the acronyms that are used in this IRM section, this IRM uses prompts for data entry and are defined in the charts.

Acronyms

Definition

ABC

Alphanumeric Block Control

BMF

Business Master File

CCC

Computer Condition Code

DLN

Document Locator Number

EIN

Employer Identification Number

EOP

Entry Operator

IRM

Internal Revenue Manual

ISRP

Integrated Submission and Remittance Processing System

KV

Key Verification

OE

Original Entry

PTIN

Preparer Taxpayer Identification Numbers

RPS

Remittance Processing System

The following table lists the IRM primary sources of guidance on the processing of paper filed Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips.

IRM

Title

Guidance on

IRM 3.10.5

Campus Mail and Work Control - Batch/Block Tracking System (BBTS)

utilizing BBTS to drop unit production cards for daily incoming receipts and production

IRM 3.10.72

Campus Mail and Work Control - Receiving, Extracting, and Sorting

receiving, extracting, sorting, and routing mail within the Submission Processing campuses

IRM 3.10.73

Campus Mail and Work Control - Batching and Numbering

batching and numbering with a document locator number (DLN) of documents

IRM 3.11.180

Returns and Documents Analysis, Allocated Tips

document perfection to code and edit (perfect) returns and other documents for input to the Master File (MF) through the Integrated Submission and Remittance Processing System (ISRP)

IRM 3.24.38

BMF General Instructions

workstation functions, workstation keyboard, windows environment and general instruction for entering data for tax returns and related data through ISRP

Document 7071-A, Name Control Job Aid - For Use Outside of the Entity Area

The IRS adopted the Taxpayer Bill of Rights in June 2014. Employees are responsible for being familiar with and acting in accord with taxpayer rights. See IRC 7803(a)(3), and the following site for additional information about the Taxpayer Bill of Rights.

This section provides instructions for entering and verifying data from control documents and source documents that will produce employers annual information return of tip income and allocated tips using the ISRP system. It also provides instructions for entering and verifying corrections to the error register.

General Clerks will also need to refer to IRM 3.24.38, ISRP System - BMF General Instructions, for general procedures.

IRM deviations must be submitted in writing following instructions from IRM 1.11.2.2, Internal Management Documents System - Internal Revenue Manual (IRM) Process, IRM Standards and elevated through appropriate channels for executive approval.

Control data will be transcribed from Form 1332, Block and Selection Record.

Data will be transcribed from Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips. Data will be transcribed from the error register in the case of error correction input. Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips and the error register will only be transcribed at the Cincinnati Submission Processing Campus.

The following table illustrates the forms, program numbers and format codes:

FORMS

PROGRAM NUMBERS

FORMAT CODES

8027

80310

170

8027 Error Register

80319

175

Form 8027

Original Entry—Sections 01, 02, and 03 are always required.

Key Verification—Sections 01, 02, and 03 are always required.

Error Register

Original Entry—Section 01 is always required.

Key Verification—Section 01 is always required.

All money amount fields should be entered as whole dollars WITHOUT rounding. Ignore any amount to the right of the vertical line on the form.

$5,927.85 is entered as 5927 (with no rounding).

Always use standard street and state abbreviations in accordance with 3.24.38.3.4.14.8, Street Address and 3.24.38.3.4.14.11, State.

Condition Code "U" is used when Line 8, Total Number of Directly Tipped Employees at this Establishment During 20XX, is zero or blank. The letter "U" is coded to the right of Line 8.

Condition Code "4" is used when there is no entry for Lines 7a–c, the Allocation Basis and Line 7 is greater than zero. The number "4" will be coded to the right of Lines 7a, b or c.

Action Code "2" is used to drop the record residing on the error register from further processing.

Action Code "6" is used to change a field of the record residing on the error register.

Action Code "7" is used to force a record residing on the error register to the valid file. This is used when all fields have been transcribed correctly even though one or more fields have failed validity or consistency checks.

The following exhibits represent specific data entry procedures.

Element Number

Data Element Name

Prompt

Field Term

Instructions

(1)

Service Center (SC) Block Control

ABC

The screen displays the Alphanumeric Block Control (ABC) that was entered in the Entry Operator (EOP) Dialog Window. It cannot be changed.

(2)

SC Code

FLC/DO

SC Code "00" should always be generated. No entry is required.

(3)

Format Code

FCODE

Enter "170" .

(4)

Filling Fields

Press 6 times.

(5)

Source Code

SOURCE

Enter "4" if the control document is Form 3893.

Element Number

Data Element Name

Prompt

Field Term

Instructions

(1)

Section Number

SECT:

Section "01" will always be generated. No entry is required.

(2)

Serial Number

SER#

Enter the last two digits of the 13 digit DLN from the upper portion of the form. If the serial number has been generated by the system, verify that it matches the document being entered.

(3)

Block Document Locator Number (DLN)

DLN

Enter the 11 digit Block DLN and press for the first record in the block.

Verify that the DLN is correct before going to the next document.

For all other records in the block, do not enter the Block DLN.

(4)

Tax Year

TAXPR

Enter the tax period in YY format only if edited.

(5)

Special Return Indicator

SPI

Enter the edited "F" , "N" from the immediate left of the "Final Return" box.

(6)

Received Date

DATE

Enter the date as stamped or edited on the face of the return.

(7)

Amended Document Code

AMEND

Enter "G" if the "Amended Return" box is checked.

(8)

Establishment Name

EST NAME

★★★★★★

Enter the establishment name from the "Name of Establishment" line.

If "Same" is shown or edited, enter the name from the "Employer's Name" line.

(9)

Employer Identification Number (EIN)

EIN

Enter the EIN from the "Employer Identification Number" box.

(10)

Kind of Establishment

KIND

Enter the number coded in the "Type of Establishment" box.

(11)

Establishment Street Address

ADDR

Enter the establishment street address.

(12)

Establishment City

CITY

Enter the establishment city.

DO NOT USE MAJOR CITY CODES.

(13)

Establishment State

ST

Enter the establishment state.

(14)

Establishment ZIP Code

ZIP

Enter the establishment zip code.

Element Number

Data Element Name

Prompt

Field Term

Instructions

(1)

Section Number

SECT:

Press if already present on the screen, otherwise enter "02" .

(2)

Employer Name

EMP NAME

Enter the employer name as found on the" Employer's Name" line.

If "Same" is shown or edited on, the" Employer's Name" line. enter an asterisk (*) and press .

(3)

Establishment Number

EST#

Enter the establishment number to the right of the employer name.

(4)

Employer Street Address

ADDR

Enter the employer street address.

If an asterisk (*) was entered for Element Number 2, press for elements 4 through 7.

(5)

Employer City

CITY

Enter the employer city.

DO NOT use major city codes.

(6)

Employer State

ST

Enter the employer state.

(7)

Employer ZIP Code

ZIP

Enter the employer zip code.

(8)

Total Charged Tips

LN1 $

★★★★★★

Enter the amount from line 1.

(9)

Total Charged Receipts

LN2 $

Enter the amount from line 2.

Element Number

Data Element Name

Prompt

Field Term

Instructions

(1)

Section Number

SECT:

Press if already present on the screen, otherwise enter "03" .

(2)

Total Service Charges

LN3 $

Enter the amount from Line 3.

(3)

Total Indirect Tips

LN4A $

Enter the amount from Line 4a.

(4)

Total Direct Tips

LN4B $

Enter the amount from Line 4b.

(5)

Total Tips

LN4C $

Enter the amount from Line 4c.

(6)

Gross Receipts

LN5 $

Enter the amount from Line 5.

(7)

Allocation Rate

RATE

Enter the rate from the center portion of Line 6. (a) If the number is less than 8 percent, enter all four digits of the field (7.5 percent would be entered as 0750). (b) If the number is equal to 8 percent (0800), do not enter the number, press .

(8)

Gross Receipts Times Allocation Rate

LN6 $

Enter the amount or the character from Line 6.

(9)

Allocation of Tips

LN7 $

Enter the amount from Line 7.

(10)

Allocation Method

7A/B/C

Enter the edited number (1, 2, 3 or 4) near the check boxes for lines 7a, b, and c.

(11)

Number of Directly Tipped Employees

LN8

Enter the number or the edited letter "U" from line 8. If line is blank, enter "U" .

Element Number

Data Element Name

Prompt

Field Term

Instructions

(1)

SC Block Control

ABC

Enter the three characters from the upper left corner of the Form 1332 attached to the group of documents.

(2)

Service Center Code

FLC/DO

Service Center Code "00" should always be generated. No entry is required.

(3)

Format Code

FCODE

Enter "175" .

Element Number.

Data Element Name

Prompt

Field Term

Instructions

(1)

Section Number

SECT:

Section "01" will always be generated. No entry is required.

(2)

Serial Number

SER#

Enter the last two digits of the 13 digit DLN from the upper portion of the form. If the serial number has been generated by the system, verify that it matches the document being entered.

(3)

Error Sequence Number

SEQ#

Enter the 10 digit Error Sequence Number.

(4)

Action Code

ACT CD

★★★★★★

Enter Action Code. If "2" or "7" was entered, press to proceed to the next error record.

(5)

Element Number

EL#

Enter the element number coded to the left of the field to be corrected.

(6)

Correction 1

CORR1

Enter the corrected data for this element.

(7)

Element Number

EL#

Enter the element number coded to the left of the field to be corrected.

(8)

Correction 2

CORR2

Enter the corrected data for this element.

(9)

Element Number

EL#

Enter the element number coded to the left of the field to be corrected.

(10)

Correction 3

CORR3

Enter the corrected data for this element.

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