The purpose of Document Perfection is 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) or the Service Center Recognition Image Processing System (SCRIPS). In addition, Document Perfection forwards any other documents or attachments not related to the processing of the returns to the function responsible for handling them.

It is not the purpose of Code and Edit to mathematically verify or to check the validity of the returns and other documents being processed unless otherwise specified in the applicable section. The computer and/or Error Correction Resolution (ERS) will perform these functions if the returns and other documents are coded and edited as prescribed in the applicable subsections of this section.

Authority for these procedures is found in the following sections of the Internal Revenue Code and their corresponding Treasury regulations:

All Policy Statements for Submission Processing are found in IRM 1.2.1, Servicewide Policies and Authorities, Servicewide Policy Statements.

The Campus Director is responsible for monitoring operational performance for their campus.

The Operations Manager is responsible for monitoring operational performance for their operation.

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 found in this IRM and maintain updated IRM procedures.

Program Reports: The Batch/Block Tracking System (BBTS) stores a vast amount of data which can be used in performance monitoring and production projections.

Program Effectiveness: The program goals are measured using the following methods:

Quality Review conducts a statistical valid sample size review of completed work to ensure IRM guidelines are followed.

For Terms, Definitions and Acronyms, See Exhibit 3.11.15-1, Terms/Definitions/Acronyms

The following is a list of related resources:

This IRM can’t address every possibility that occurs while perfecting returns or documents. Take taxpayer intent into consideration. Refer issues not addressed in this IRM to the subject matter expert (SME), lead or manager to determine the corrective action.

The following general information can be used when editing Form 1065 returns.

General instructions eliminate repetition of the same instructions for each return. If the general instructions and the specific instructions conflict, follow the specific instructions.

All money amounts must be edited in dollars only.

Do not edit brackets or parentheses around amounts clearly shown to be negative by the presence of a minus sign (−).

Reference is made throughout this IRM to "significant entries" . A significant entry is defined as any amount other than zero.

Instructions for editing Schedules K-1 are in IRM 3.0.101, General - Schedule K-1 Processing.

Received Date is edited in MMDDYY format.

The proper presentation of income and deduction items for subsequent input by Integrated and Remittance Processing System (ISRP) and computer processing is essential. Document Perfection is responsible for arranging the return in the following sequence order when transcription line entries are present:

If a current year (2023) return or a prior year return is filed on a tax form for other than the current tax year revision, convert the tax return to the current year format using the prior year conversion charts found in job aid (Number 2505-002).

The purpose of this initiative is to achieve consistency in the Business Master File (BMF) Code and Edit (C&E) processing IRMs.

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

A ♦ (diamond) before and after the subsection title shows BMF consistency subsections.

Text in normal print is the common processes for BMF returns. Text in BOLD print is form specific and applies to this IRM only.

Edit marks are edited on the return for transcription to the Automated Data Processing (ADP) System through the Integrated Submission and Remittance Processing (ISRP) system. Enter edit marks in brown, red, orange, purple, or green pencil or pen.

Only edit items on the return that are for transcription except where specific instructions require editing of a non-transcribed item. Leave lines blank if the entry would be a zero amount unless otherwise instructed.

Do not obliterate, alter, or erase the original entry on a return when deleting or correcting an entry. Always exercise care to ensure that the original entry remains legible. Perfected entries give a legible "edit trail" for anyone who may work with the return later.

Do not re-edit marks entered by other areas, such as Collections, Entity or Accounts Management, except to place the marks in the correct area or perfect for legibility.

Photocopied Returns - Re-edit or underline any valid, black edit marks. See IRM 3.11.15.3.1.2, Correspondence Imaging Inventory (CII) Returns, and IRM 3.11.15.5.5, Re-Entry Document Procedures.

For a description of specific edit marks, See the table below:

Action Codes are used to show whether correspondence, research or some other action is needed. The Action Code sets the suspense period for the return and places the return in the workable or unworkable suspense inventory.

When necessary, assign a three-digit Action Code.

Edit the Action Code in the bottom left margin of the return.

Assign Action Codes in the following priority:

Use the following table if more than one Action Code is needed:

Edit the following Action Codes when a return can’t be perfected:

Continue perfecting the return after editing the Action Codes.

Valid Action Codes are listed below:

IMPORTANT (regarding "Black Liquor" Claims on Form 1065 returns): This special processing only applies to Tax Years 200901 through 201011. DO NOT edit Action Code 343 (Other Accounting) on any Form 1065 for Tax Period 201012 or later.

For more information and applicable Action Codes, see IRM 3.12.38.3.4, Error Resolution System (ERS) Action Codes, and the exhibit in IRM 3.12.38-1, Action Codes.

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 correspondence with taxpayers or their personal representatives on tax-related matters must give (at a minimum) the following information:

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.

Submit IRM deviations in writing following instructions from IRM 1.11.2.2.4, 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. Its job is to protect taxpayers’ rights by striving to ensure that every taxpayer is treated fairly and knows and understands their rights under the Taxpayer Bill of Rights (TBOR). TAS offers free help to taxpayers, including when taxpayers face financial difficulties due to an IRS problem, when they are unable to resolve tax problems they haven’t been able to resolve on their own, or when they need assistance to address an IRS system, process, or procedure that is not functioning as it should. 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 Wage and Investment (W&I) Division, to affect the resolution of the taxpayer’s problem. For more information, refer to IRM 13.1.19, Taxpayer Advocate Service, Taxpayer Advocate Case Procedures, Advocating With Operations Assistance Requests (OARs).

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.

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

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

See IRM 13.1.7, Taxpayer Advocate Service (TAS) Case Criteria, for more information.

For returns completed in other than U.S. currency, process as filed. However, if corresponding for missing/incomplete item(s), include instructions in the letter to resubmit in U.S. currency.

Correspondence is all written communications from a taxpayer or their representative, excluding tax returns, whether solicited or unsolicited. This includes:

The key to identifying taxpayer correspondence is to ask the following questions:

Ogden Submission Processing Center (OSPC) will process all Foreign Address returns.

A Foreign Address is any address other than the 50 states and the District of Columbia.

An Army Post Office (APO), Diplomatic Post Office (DPO) or Fleet Post Office (FPO) is not considered a foreign address. The Postal Service established new address requirements for the 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, if the old address appears as "APO New York, NY 091XX" , convert to read as "APO AE 091XX" .

Route returns with a foreign address to OSPC for processing. Prepare Letter 86C to inform the partnership that the return has been sent. See Figure 3.11.15-2 below.

U.S. Possessions/Territories - The following U.S. Possessions/Territories are considered Foreign Addresses and must be sent to OSPC for processing:

A ZIP Code must be present for U.S. Possessions/Territories. Edit the correct ZIP Code if one is not given. See Exhibit 3.11.15-6, U.S. Possessions/Territories ZIP Codes.

Figure 3.11.15-2

This illustrates two graphics (2a and 2b) showing returns with Foreign Addresses.Figure 2a - is entitled Foreign address - Route to OSPC shows the top portion of a Form 1065 with the following editing: There is an arrow pointing to the Foreign Address 60324 Frankfurt Germany86C prepared is edited in the left side margin of the form.There is a box in the bottom left margin of the forms with the notation Edit Action Trail - 86C preparedFigure 2b - is entitled American Possession/Territory - Route to OSPC shows the top portion of a Form 1065 with the following editing: There is an arrow pointing to the Foreign Address Charlotte Amalie, St. Thomas, V.I. 0080286C prepared is edited in the left side margin of the form.There is a box in the bottom left margin of the forms with the notation Edit Action Trail - 86C prepared

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Businesses use frivolous arguments 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 Return Program, and Exhibit 3.11.15-4, Potential Frivolous Arguments for Examination Review, for a list of recognized frivolous arguments made by businesses.

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

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

Criminal Investigation (CI) investigates potential criminal violations of the Internal Revenue Code (IRC) and related financial crimes. Criminal violations of the IRC include willful attempts to evade or defeat the income tax. Criminal tax violations also include 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 for further CI action.

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

Because of the repetitive nature of the C&E function, C&E 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 C&E 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, do the following:

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 found in several IRM sections. SP can refer any questionable return to Exam, unless prohibited by instructions currently found in several IRMs.

Remove returns marked as "Protective Claims" , "Protective Claim for Refund" , or similar statement from the batch and route to Accounts Management (AM). Notate "Protective Claim" in the remarks box of Form 4227, Intra-SC Reject or Routing Slip.

BMF (ID) Theft is increasing. If a case is found with attachments or correspondence showing the taxpayer is a victim of "ID Theft" , give the entire case to the manager/lead.

The manager/lead will expedite the case to the Planning and Analysis (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.

Any return with a Received Date that is two years and nine months or more after the Return Due Date is a potential statute control return.

Route Statute returns to the Statute Control Unit daily or more often if needed.

If any of the conditions listed below are present, don’t route to Statute Control Unit for clearance. Instead, edit CCC "W" , and continue processing.

If a return has any of the following computer paragraphs (CPs) or letters are attached, do not route to Statute Control Unit for clearance. Edit CCC "W" if the return needs processing. See Exhibit 3.11.15-2, Routing Guide for Attachments, for more information.

If a return has a Form 12412, Operations Assistance Request (OAR), from TAS and is a potential statute control return but is not stamped "Cleared by Statute" , give the return to the lead. The lead contacts the TAS employee listed on the OAR for rejection of the return and sends it back to TAS for clearance by the Statute Control Unit.

Statute returns are unprocessable until cleared by Statute Control.

Edit CCC "W" if the Statute Control Unit stamps or shows clearance on the front of the return. (Figure 3.11.15-4).

Statute may stamp a return as "No Statute Issue" , "Statute N/A" , or similar statement indicating there is no statute issue. Follow the chart below to determine if CCC "W" is needed:

For partnership years beginning on or after January 1, 2018, IRC 6235 provides a general limitation period on making adjustments to partnership-related items that ends three years after the latest of (1) the date on which the partnership return was filed, (2) the return due date, or (3) the date on which the partnership filed an administrative adjustment request under section 6227. For partnership years beginning before January 1, 2018, IRC 6229 provides a minimum three year period of limitations to assess tax attributable to partnership items from partnerships covered under the Tax Equity Fiscal Responsibility Act (TEFRA).

Figure 3.11.15-3

This represents the top half of Form 1065, page 1. The filer has lined through the current tax year and entered 2013. The tax year 1312 is edited in the top margin between the form title and the pre-printed tax year. The Name Control HERO is underlined.Form 4227, Intra-SC Reject or Routing Slip is completed as follows: An X is in the Statute Control checkbox.An X is in the BMF checkbox.Other (explain) box has an X and Possible Statute is written in the field under the Other (explain).

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Figure 3.11.15-4

This represents the top half of a Form 1065 showing the prior return was sent back from Statute Control. The return is stamped Statute Cleared 06/06/24 vertically in the left margin next to the entity section of Form 1065. Computer Condition Code W is edited in the dotted portion next to Lines 1a and 1b.

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Section 965 (Repatriation Provision), Treatment of deferred foreign income upon transition to participation exemption systems of taxation for U.S. Shareholders of Specified Foreign Corporations per Tax Cuts & Jobs Act (Tax Reform), Public Law 115-97 (H.R. 1), Provision Section 14103, 131 STAT. 2195 (2017).

Identify a Section 965 return when any of the following are present and the partnerships Tax Period is 201712 through 202012:

When a return has been identified as a Section 965 return, edit as follows:

This subsection pertains to tax periods 202201 through 202212.

Under the Inflation Reduction Act (IRA) of 2022 and CHIPS and Science Act of 2022, the taxpayer can elect to:

Identify an "Elective or Deemed Payment Election" when the taxpayer writes "IRA22DPE" on an attachment or on Form 1065, Line 28.

When a return is identified with an "Elective or Deemed Payment Election" do the following:

Identify a "Credit Transfer" when the taxpayer writes "IRA22TRE" on an attachment or at the top of the return. When found, do the following:

Compliance functions (Collections and Examination) secure returns from the taxpayer and also prepare returns if the taxpayer does not provide them.

Compliance notates:

Reprocess a return posted to the wrong account or module and post it to the correct account module.

Some re-entry returns may have originally been filed electronically (E-File) or via Modernized E-file (MeF). These returns may be identified by the presence of Mod E-file printouts in lieu of an actual return.

Each re-entry return must have a Form 3893, Re-Entry Document Control, or Form 13596, Reprocessing Returns attached.

Always leave the Form 3893 or Form 13596 on the front of the return. It must remain as a permanent part of the document.

Examine Form 3893 or Form 13596 to determine the action needed to make the return processable.

If Schedule K-1’s are attached to a Reprocessable/Re-Entry return, process the K-1’s like any other return using the instructions in IRM 3.0.101, Schedule K-1 Processing.

A return is considered Amended based on the following:

Examine the return for attachments:

Follow the instructions in the chart below when there is an indication of an amended return:

The following data must be edited on all amended returns:

Detach Schedules K-1 for current year (TY2023), two preceding years (TY2022 and TY2021) and future Schedules K-1. Process according to IRM 3.0.101, General - Schedule K-1 Processing.

This subsection gives instructions for editing Short Record returns. Short Record returns include:

Short record returns must be edited correctly to prevent erroneous assessment of any penalties.

Process as a Short Record unless any of the following conditions apply:

The Paid Preparer Checkbox is found next to the taxpayer signature area. It shows whether the partnership has elected to allow the Paid Preparer to answer questions about the return as it is processed.

No action is required on amended or Short Record returns.

Take the following actions when an entry is present in the Paid Preparer Checkbox:

Figure 3.11.15-10

This figure represents three images, of the Signature and Paid Preparer Use Only area found at the bottom of Form 1065, page 1. The paid preparer checkbox has the following statement: May the IRS discuss this return with the preparer shown below (See instructions).The first graphic (a) illustrates the partnership marked the No box in the paid preparer checkbox. The telephone number is circled in red.The second graphic (b) illustrates the partnership checked neither of the boxes in the paid preparer checkbox. The telephone number is circled in red.The third graphic (c) illustrates the partnership marked the Yes and No boxes in the paid preparer checkbox. The telephone number is circled in red.

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The Paid Preparer section is found below the taxpayer signature area at the bottom of Form 1065.

All returns must have a Tax Period Ending.

Edit the Tax Period Ending to the right of the form title in YYMM format.

Tax Periods reported under the 52/53-week are treated as:

If the resulting tax year is more than 12 months, correspond to obtain the correct Tax Period.

On a Final return, if the Tax Period's month and/or year is later than the Received Date's month and year (future return), edit the Tax Period to be one month before the Received Date. See Figure 3.11.15-13

Figure 3.11.15-12

This represents two images, both showing the top half of Form 1065, page 1.Figure a has the caption Short period, Final, prior year return filed on a current year form. The tax year 2111 is edited in the top margin between the form title and the pre-printed tax yearThe Tax Period beginning date is edited as 010121 to the left of the form title.The Name Control, Card is underlined.CCC F is edited to the center of the dotted portion on Line 2. Cost of goods sold.Figure b has the caption Prior year fiscal return filed on a current year form.The tax year 2206 is edited in the top margin between the form title and the pre-printed tax yearThere is a line under the Name Control Finc in the Name of partnership line in the entity section of the return

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Figure 3.11.15-13

This represents the top half of Form 1065, page 1. The tax year 2403 is edited in the top margin between the form title and the pre-printed tax year.The Tax Period beginning date is edited as 010124 to the left of the form title. The Name Control Duck is underlined on the Name of partnership line in the entity section of the return.The Final return checkbox is marked with no indication of when the business terminated.CCC F is edited to the center of the dotted portion on Line 2. Cost of goods sold.There is a Received Date of 04/17/2024 stamped on the return.

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Edit the Tax Period Beginning (when present) to the left of the Form 1065 title area in MMDDYY format on an Initial, Final, or Short Period return as follows: See Figure 3.11.15-14 below.

Figure 3.11.15-14

This figure represents two graphics of the top half of Form 1065, page 1.Graphic a titled Final has: Tax Period beginning January 1, 2023 and ending June 7, 2023 shown by the taxpayer. Final written across the top of the form.Tax Period ending date is edited as 2306 to the right of the form title.Tax Period beginning date is edited as 010123 to the left of the form title.Graphic b titled Short Period has: Tax Period beginning July 19, 2023 and ending December 31, 2023 shown by the taxpayer.The Initial Return box on Line G is checked.The Tax Period beginning date is edited as 071923 to the left of the form title.The Initial Return Code 2 is edited to the left of Line G.

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Identify an "Initial" Short Period Return by any of the following:

Edit the Tax Period Beginning in MMDDYY format per IRM 3.11.15.8.2.

Edit initial Return Code 2 to the left of Line G. (See IRM 3.11.15.13). (See Figure 3.11.15-14).

Identify a "Final" Short Period return by any of the following:

Edit the Tax Period Beginning in MMDDYY format on a "Final" Form 1065 Return per IRM 3.11.15.8.2.

A "Final" Short Period return ends on the date the partnership went out of business. Use the numeric designation of the calendar month in which it ended. If the partnership does not show the month the business ended, edit the Tax Period ending as one month before the return Received Date.

Edit CCC "F" to the center of the dotted portion on Line 2. Cost of goods sold (Form 1065).

If the partnership files both a Final and Initial Short Period return using one EIN, which together cover no more than one 12 month or 52-53 week period and both returns are received together for editing, do the following:

If the Tax Period on the return is for a Short Period other than an "Initial" return (Form 1065, page 1, Line G, Box (1)) or a "Final" return (Form 1065, page 1, Line G, Box (2)), review Form 1065 for an indication that the partnership is changing their accounting period.

An Early Filed Return is defined as a return whose Received Date is before its Tax Period Ending Date.

Never send back an Early-Filed return to the partnership. Correspond for any missing information before suspending the return:

If the Form 1065 shows bankruptcy (e.g., shows "RECEIVER" , "TRUSTEE" , or "DEBTOR IN POSSESSION" ) in the entity area or on an attachment, route to Entity Control. Follow local procedures using Form 13934, Entity Document/C&E Merge Transmittal.

Completely edit the return except the name control prior to routing to Entity Control.

The EIN is a nine digit number (XX-XXXXXXX) assigned to identify the partnership.

The EIN is found in the upper right of Form 1065 (Employer Identification Number, Box D).

Determine the EIN as follows:

The Name Control consists of four characters or less:

See job aid Document 7071-A, Name Control Job Aid - For Use Outside the Entity Area, to determine the Name Control.

Name Controls for EINs assigned by the MODI-EIN program are different. If the EIN prefix begins with 20, 26, 27, 45, 46, 47, 81, 82,83, 84, 85, 86, 87, 88, or 92, then the Name Control will be the first four characters of the first name in the Primary Name Line.

If Line G, box (3), "Name Change" , is checked, route the return to Entity Control following local procedures using Form 13934, Entity Document/C&E Merge Transmittal.

Edit the Name Control as follows:

An "in-care-of" name can be identified by the words "in care of" or the symbols "c/o" or "%" (percent).

Ensure the "in-care-of" name is found in the proper location.

Determine a change in the in-care-of name by any of the following:

Perfect the address when the mailing address (Street or P.O. Box) is not easily identified.

A business may have two addresses. One is the mailing address and the other is the location address or physical location of the business.

Perfect the address as follows:

The U.S. Postal Service established new address requirements for Army Post Office (APO)/Diplomatic Post Office (DPO)/Fleet Post Office (FPO) addresses. If the old address appears, convert to the new State Code abbreviation based on the ZIP Code (e.g., APO New York, NY 091XX would be converted to APO AE 091XX). Consider APO/DPO/FPO addresses as domestic addresses. Refer to APO/DPO/FPO conversion chart below:

Figure 3.11.15-15

This is the top half of the Form 1065, a return for Oriole Broadcasting, Ein 00-4624624, showing an address of 4321 N Pelican Dr. Oklahoma City, OK. 73125 that has been circled out.Next to the circled out 4321 N. Pelican Dr, the street address 2113 Heron Ave has been written.Next to the circled out Oklahoma City, OK. 73125, the city of Seattle, State of WA and ZIP code 98109 has been written.In a box below the Form 1065, shows correspondence from the taxpayer regarding the change of address:The first line of the letter: To Whom it May ConcernThe second line: Please note the following address change for Oriole Broadcasting,The third line: is a continuation of the second line providing the EIN 00-4624624The Fourth and Fifth line is the old address of 4321 N Pelican Dr. Oklahoma City, OK 73125The sixth and seventh line is the new address of 2113 Heron Ave. Seattle, WA. 98109The eight line is the salutation of Sincerely,The ninth and tenth line is the name Mark Oriole and position as General Partner

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

Consider returns with Army Post Office (APO)/Diplomatic Post Office (DPO)/Fleet Post Office (FPO) addresses as domestic addresses. See IRM 3.11.15.9.5, Entity Perfection - Domestic Addresses.

Route returns with a foreign address to Ogden Submission Processing (OSPC) for processing. Prepare Letter 86C, Referring Taxpayer Inquiry/Forms to Another Office, to inform the partnership IRS sent the return to Ogden.

Consider returns with addresses in the following U.S. Possessions/Territories as foreign for processing purposes. Edit the same way as domestic addresses.

All other foreign addresses are edited the same as a domestic address with the following exceptions:

Edit CCC "A" when the "Date Business Started" , Box E is blank.

Edit CCC "B" when any of the following conditions are met:

Edit Audit Code "8" if Schedule M-3 is attached to Form 1065 or Form 1065-B. See IRM 3.11.15.19.1, Audit Codes.

Do not edit CCC "D" if the taxpayer requests abatement for "Failing to Pay Timely" when the return is submitted. Send Letter 1382C, Penalty Removal Request Incomplete, to inform the taxpayer of the proper procedure to follow to request penalty abatement when a penalty is assessed.

IMPORTANT: Edit CCC "D" if an internal use form (i.e., Form 13133, Expedite Processing Cycle) or routing slip is attached and shows "DO NOT ASSESS FAILURE TO PAY PENALTY" .

Edit CCC F when the "Final Return Box" is checked or there is another indication the partnership is not liable for future returns. Notations may include (but are not limited to):

See IRM 3.11.15.5.6, Amended Returns.

Edit CCC "I" (i) when Form 6781 (Gains and Losses From Section 1256 Contracts and Straddles) is attached. See Figure 3.11.15-23 below.

Figure 3.11.15-23

This figure represents the top half of Form 1065, page 1 and the top of Form 6781, Gains and Losses From Section 1256 Contracts and Straddles. There is a line under the Name Control JOSE on the Name of partnership line.CCC I (as in Idaho) is edited on the dotted portion to the centert of Line 2. Cost of goods sold..

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CCC "J" is used to show a Section 965 return. See IRM 3.11.15.5.2, Section 965 Returns, for more information.

Edit CCC "J" when any of the following are present:

Also edit Action Code 460 when any of the above criteria is met. See IRM 3.11.15.2.4, Action Codes.

Edit CCC "L" when taxpayer attaches Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b), to the return.

Edit CCC "M" when both of the following conditions are present:

No editing required.

Do not edit CCC "R" when a reason is given by the partnership for a delay in filing a return. Issue Letter 1382C, Penalty Removal Request Incomplete and continue editing the return.

Edit CCC "R" on the partnership return when any of the following conditions are present:

Edit CCC "S" when Form 8883, Asset Allocation Statement under Section 338, is attached.

Edit CCC "T" when Form 8271, Investor Reporting of Tax Shelter Registration Number, is attached.

Edit CCC "T" when Form 8886, Reportable Transaction Disclosure Statement, is attached.

Edit CCC "W" when Statute Control cleared the return. (See IRM 3.11.15.5.1, Statute Returns)

Edit CCC "X" on partnership returns filed by Publicly Traded Partnerships that include a tax computation of 3.5% in the margin to the right of Line 22 (Form 1065) or an attachment. (See IRM 3.11.15.22.16, and IRM 3.11.15.74, Publicly Traded Partnerships.)

Edit CCC "X" on partnership returns if Form 8697, Interest Computation Under the Look-Back Method for Completing Long-Term Contracts or Form 8866, Interest Computation Under the Look-Back Method for Property Depreciated Under the Income Forecast Method is attached and a $ amount (interest due) is written by the taxpayer in the bottom margin of Form 1065. See Exhibit 3.11.15-2, Routing Guide for Attachments, for instructions regarding Form 8697 and Form 8866.

This subsection is reserved.

Edit CCC "1" if Form 8824, Like-Kind Exchange, is attached.

Edit CCC "2" if Form 8938, Statement of Specified Foreign Financial Assets, is attached. See IRM 3.11.15.24.16, Form 8938 - Statement of Specified Foreign Financial Assets (Question 20).

Edit CCC "3" when the partnership return is unprocessable, and there is a sign that correspondence was sent and no reply received.

Edit CCC "4" when the IRS Compliance Function prepared a return and the revenue officer entered "IRC 6020(b)" .

Edit CCC "5" when the partnership return is identified as a "Common Trust" . (See IRM 3.11.15.5.7.2, Common Trusts.)

Edit CCC "6" when the return has more than 100 partners and any of the following conditions are present:

CCC "6" cannot be used with any other Computer Condition Code except"F" , "R" , "W" , "4" , "5" , "8" , and "9" .

Edit CCC "8" when a partnership return is identified as a Section 761(a), Return and/or Election and has been selected or accepted by Exam. (See IRM 3.11.15.5.7.1, IRC 761(a) Returns.)

Edit CCC "9" when the address on the partnership return is foreign.

No more than 15 audit codes may be used at one time.

Edit Audit Codes in the left margin next to Line 9 of Form 1065.

Edit as "1 -" followed by the correct code(s).

Edit Audit Code "1" if any of the following forms or conditions are present:

Edit Audit Code "2" if any of the following forms and/or conditions are present:

Edit Audit Code"3" if the following condition is present:

Edit Audit Code "4" if the following condition is present:

Edit Audit Code "5" if any of the following forms and/or conditions are present:

Edit Audit Code "6" if Form 3115, Application for Change in Accounting Method, is attached.

Edit Audit Code "7" if any of the following forms and/or conditions are present:

Edit Audit Code "8" if Schedule M-3, Net Income (Loss) Reconciliation for Certain Partnerships, is attached.

Edit Audit Code "9" if Form 1065 or Form 1065-B, page 5, Schedule M-2, Line 6b (Property Distribution) has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

Edit Audit Code "C" if Form 8283, Noncash Charitable Contributions, is attached and any of the following conditions are present:

≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

If present, edit Code "2 - 1" in the left margin next to Line 9 of Form 1065.

Form 6252, Installment Sale Income, is used to report the sale of property on the installment plan.

Codes are based solely on the partnership response to Question 3 on Form 6252. See Figure 3.11.15-27 below.

Edit the Installment Sale Indicator in the left margin next to Line 9 of Form 1065.

Edit as "3 -" followed by the correct Installment Sale Indicator Code.

Valid codes for Installment Sale Indicator are as follows:

Figure 3.11.15-27

This figure is an example of the middle section of Form 1065 and the top Sections of two Forms 6252, Installment Sale Income. There is a pop-up box with two arrows marked with the caption, Codes are based on the partnership response to Question 3 on Form 6252. One Form 6252 has an arrow pointing to the Yes box that is marked and the second Form 6252 has an arrow pointing to the No box. A third arrow is pointing to “3-1”. Form 1065 has a line under the Name Control HERO on the Name of partnership line and 3 -1 is edited in the margin to the left of Line 9 (Salaries and wages).

Please click here for the text description of the image.

Edit a "4 - 1" in the left margin next to Line 9 of Form 1065 for the Nonrecourse Loan Code in the following instances:

In all other instances, leave blank.

Figure 3.11.15-28

This figure shows a folded section of Schedule K-1 and folded middle section of Form 1065. There is a pop-up box on Schedule K-1 with the following text A Nonrecourse Entry Can Appear on Schedule K-1 of Form 1065 or on Schedule L, Line 18, Columns (b) or (d) or on an attachment with an arrow pointing to Line K Partner's share of liabilities at year end: Nonrecourse on Schedule K-1There is a line under the Name Control HERO on the Name of partnership line of Form 10654 -1 edited in the margin to the left of Line 9 (Salaries and wages)

Please click here for the text description of the image.

Edit a Code "6 - 3" in the left margin next to Line 9 of Form 1065 if the Tax Period is 8312 and later, Form 3468, Investment Credit, is attached, and there is an entry present ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ on the credit side of any of the following lines:

A Return Processing Code (RPC) is an alpha or numeric character used to identify a specific condition for the computer.

RPCs are edited on page 1, in the right margin next to Line 1c of Form 1065.