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Source of Returns |
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Determining Return Need |
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Activity Code |
Assets | Formula |
|---|---|---|
| 203 | No Balance Sheet | 1 |
| 209 | Under $250,000 | 2 |
| 213 | $250,000 under $1,000,000 | 3 |
| 215 | $1,000,000 under $5,000,000 | 4 |
| 217 | $5,000,000 under $10,000,000 | 5 |
| 1120 PHC—LA | Personal Holding Company—Low |
| Asset | |
| 1120 L | Life Insurance Company |
| 1120 PC | Property & Casualty Insurance |
| Company | |
| 1120 INAC—LA | Inactive—Low Asset |
| 1120H | Homeowners Association |
| 1120SF | Designated Settlement Fund |
| (IRC 468B) | |
| 1120REIT | Real Estate Investment Trust |
| 1120RIC | Regulated Investment Company |
| 1120ND | Nuclear Decommissioning Funds |
4.1.3.1.4 (05-19-1999)
S Corporation Returns
-
S
Corporation Returns having
assets under $10,000,000 are
computer scored under the DIF
System. The S Corporation System
includes:
Activity Code Assets 288 Under $200,000 289 $200,000 under $10,000,000 290 $10,000,000 and over (Automatic, if not DIF scored) - Certain S corporation returns are identified as Specials. These returns are delivered to Examination for screening without a return order and are identified by Audit Codes. These Audit Codes are listed in Exhibit 4.1.3–3.
4.1.3.2
(05-19-1999)
Inventory and Delivery Reports
- A
list of Inventory and Delivery
Reports that are available and the
exhibits where they can be found are
as follows shown in the following
figure:
Figure 4.1.3-1
Report Exhibit 1040–1, AO Individual Inventory and Delivery Report 4.1.3–4 1040–2, AO Individual Inventory and Delivery Analysis 4.1.3–5 1040–3, SC Individual Inventory and Delivery Report 4.1.3–6 1040–5, Individual Amended Returns Inventory and Delivery Report 4.1.3–7 1040–6, AO/SC Individual Inventory and Delivery Report (Correspondence Returns) 4.1.3–8 1120–1, AO Corporate DIF Inventory and Delivery Report 4.1.3–9 1120–2, AO Corporate Inventory and Delivery Analysis Report 4.1.3–10 1120–3, AO 1120S and 1120F Inventory and Delivery Report 4.1.3–11 1065–1, DO Partnership Inventory and Delivery Report 4.1.3–12 1065–2, DO Partnership Inventory and Delivery Analysis Report 4.1.3–13 1041, Fiduciary Inventory and Delivery Report 4.1.3–14 1066–1, AO Real Estate Mortgage Investment Concuit Inventory and Delivery Report 4.1.3.15 - The top section of the Inventory and Delivery Reports (1040–1, 1065–1, 1120–1, 1120–3) indicates the number of returns available for ordering. The bottom of the reports indicates the number of returns that have been delivered for screening by examination class and DIF score range for each file year. All returns identified on these reports have a DIF score which is above the National DIF cutoff score. These reports are cumulative for all returns received, processed and delivered to Examination during a file year. At certain times of the year, there will be available Inventory and Delivery Reports for two different file years. You should make sure you are utilizing the correct file year report.
4.1.3.3
(05-19-1999)
Guidelines for Ordering Returns
- The PSP Support Manager is responsible for submitting orders so that returns are received ratably during the fiscal year. Ratable is defined as a manner of ordering so that all returns with similar DIF scores, regardless of the filing date, have an equal chance of being delivered to Classification.
-
Current file year
individual DIF returns
(Activity Codes 530 through 539)
will be ordered so that deliveries
for total individual returns, when
measured as a percent of the total
Individual Examination Return Plan,
will not exceed the following:
- 65 percent before Cycle 52.
- 85 percent before Cycle 13.
- 108 percent Cycle 26.
-
There is an
exception to the
guidelines set in (2). Any orders in
excess of these guidelines must be
approved by the PSP Territory
Manager. Your order may be increased
if any of the following conditions
are met:
- The Area has a high dependence on DIF work for general program expectations;
- The Area has a substantial hiring authority; or
- The Area has low select rates which makes it impossible to accumulate sufficient training returns throughout the year while maintaining an appropriate tax auditor workload.
- Due to numerous fiscal year corporate and other BMF filings, high potential BMF returns are added to inventory throughout the entire file year. To ensure equal treatment of BMF taxpayers, BMF returns must be ordered in a ratable manner.
- Each Service/Customer Service Center will provide a schedule for ordering and classifying to the PSP Support Manager.
- All return orders will be submitted to the Service/Customer Service Center, ATTN: Chief, Classification Section in accordance with local procedures.
4.1.3.3.1 (05-19-1999)
Ordering Individual DIF
Returns
- Form 6356, Individual DIF Returns Order, will be used to order individual DIF returns. Instructions for completing Form 6356 are found on the back of the form. Returns may be ordered from any cycle for orders from regular DIF inventory and only from odd cycles for orders from DIF CORR inventory.
-
Areas are expected to order
returns for the entire area.
However, you have the capability
for ordering or excluding
returns for a specific
post-of-duty. You should keep
these orders to a minimum since
it deviates from working the
highest DIF returns first. These
types of orders are:
- POD Exclusion Order—Where there is an excess workload at one or more posts-of-duty, the POD(s) may be excluded from any order cycle. A maximum of 17 PODs my be excluded each cycle. You should be aware that if you place an area-wide order subsequent to a POD exclusion order, returns previously excluded may fall out.
- POD Supplement Order—Where there is a workload shortage at a specific POD, a supplemental order may be submitted.
- Inventory and Delivery Report 1040–1 (Exhibit 4.1.3–4) shows the number of DIF returns available for ordering and the number of returns delivered for screening by examination class and DIF score range for each file year. This report also provides the number of Minimum Tax and Alternative Minimum Tax returns (combined under TXPREFRET). This is a cumulative report which is generated every even cycle for each file year.
- Inventory and Delivery Analysis Report 1040–2 (Exhibit 4.1.3–5) provides statistical data on individual returns processed and on returns delivered, including specials. This report is generated every cycle for the first 40 cycles and every even cycle thereafter.
- Individual returns cannot be ordered from the current file year until cycle 18. For orders prior to cycle 26,Override Code "1" will be entered in Column 80 of Form 6356 to override the computer block.
- Previous file year individual returns cannot be ordered after cycle 26 of the current file year. Override Code "9" will be entered in Column 80 of Form 6356 to override the computer block. Approval is needed from the Territory PSP Manager to utilize this override code.
- Alternative Minimum Tax returns may be ordered using Form 6356 with Indicator Code "W" entered on the order form.
- Areas may use the DIF CORR Inventory to secure returns for training purposes either on an area or POD basis. Form 6356 is used and must clearly indicate that the order is for training returns. Inventory and Delivery Report 1040–6 (Exhibit 4.1.3–8) reflects DIF CORR inventory by score range and deliveries to the service/customer service center or area. Orders must be made in odd cycles.
-
The
Amended
Returns inventory
contains Category B (paid)
claims as defined in the LEM.
Form 8199, Amended Returns
Order, is used to place orders.
Table 1040–5 (Exhibit 4.1.3–7)
is the Inventory and Delivery
Report for Amended Returns.
These claims are ordered by the
year in which the claims were
filed, not
by the tax year of the returns
for which the claim applies. The
highest dollar claims will be
delivered first. The following
categories of amended returns
may be ordered:
- Adjustments to Income
- Filing Status and Exemptions
- Tax Computations
- Credits
- Itemized Deductions
- Schedule C or F
- Schedule D and Form 4797
- Schedule E
- Other Taxes
- Multiples—any combination of the above categories.
- Other—reasons not covered in above categories.
4.1.3.3.2 (05-19-1999)
Ordering Corporation Returns
- Form 6897, Corporation Returns Order, will be used to order corporation returns. This form is separated into two sections, Corporation DIF Returns Order and Miscellaneous Corporation Returns Order. Instructions for completing Form 6897 are found on the back of the form. Returns may be ordered from odd numbered cycles only.
-
Areas are expected to order
returns for the entire area.
However, you have the capability
for ordering or excluding
returns for a specific
post-of-duty. You should keep
these orders to a minimum since
it deviates from working the
highest DIF returns first. These
types of orders are:
- POD Exclusion Order—Where there is an excess workload at one or more posts-of-duty, the POD(s) may be excluded from any order cycle. A maximum of 7 PODs may be excluded each cycle.
- POD Supplemental Order—Where there is a workload shortage at a specific POD, a supplemental order may be submitted.
- Corporate DIF Inventory and Delivery Report 1120–1 (Exhibit 4.1.3–9) shows the number of DIF returns available to order for screening and the number of DIF returns which have been delivered by DIF score range.
- Corporate DIF Inventory and Delivery Analysis Report 1120–2 (Exhibit 4.1.3–10) provides data on corporations processed and on returns in inventory or delivered, including specials and automatics. BMF returns will not be ordered from the current file year inventory until after processing cycle 26 of the current file year.
- 1120S DIF and 1120F Inventory and Delivery Report 1120–3 (Exhibit 4.1.3–11) provides data on corporate returns processed and on returns in inventory or delivered, including specials and automatics.
-
Indicator Codes
are entered on Form 6897 to
designate the type of returns
ordered as shown in the
following figure:
Figure 4.1.3-2
Indicator Explanation 0 The highest scored returns in inventory will be delivered. Valid for all types of DIF scored returns. 1 Reserved. 2 Taxable Inventory Returns. Valid for only the following returns:
a. 1120L
b. 1120PC
c. 1120 PHC (low asset)3 Non Taxable Income Inventory Returns. Valid for only the following returns:
a. 1120L
b. 1120PC
c. Inactive (low asset)
d. 1120 PHC (low asset)5 To be used to order corporation returns of the current file year prior to Cycle 27. - Orders of miscellaneous returns in the taxable income category are filled from the top of the "file" (highest income to zero.)
- Orders of miscellaneous returns in the non taxable income category are filled from the top of the "file" (greatest loss to zero.)
- Only one indicator code may be used for returns in each examination class in the same cycle. However, different indicator codes may be used for different examination classes in the same cycle.
4.1.3.3.3 (05-19-1999)
Ordering Partnership
- Form 6162, Partnership Returns Order, will be used to order DIF partnership returns. Instructions for completing Form 6162 are found on the back of the form. Returns may be ordered monthly.
- POD orders are not available.
- The Inventory and Delivery Report 1065–1 (Exhibit 4.1.3–12) shows the number of Partnership returns available for ordering and the number of Partnership returns delivered for classification, by DIF score range, Examination Class and file year.
- The Inventory and Delivery Report 1065–2 (Exhibit 4.1.3–13) provides analytical data on Partnership returns processed, inventoried and delivered for classification, including Automatics and Specials.
-
Indicator Codes
are entered on Form 6162 to
designate the type of returns
ordered as follows:
Indicator Code Explanation 0 Should be entered on all orders for Form 1065. 5 To be used to order partnership returns of the current file year prior to Cycle 27. - Section 761(a) Partnership Returns, Investment groups that are not required to file partnership returns, selected for examination by the Service/Customer Service Center will be forwarded to their respective areas.
4.1.3.3.4 (05-19-1999)
Ordering Fiduciary Returns
- Form 5337, Fiduciary Returns Order, will be used to order fiduciary returns. Instructions for completing Form 5337 are found on the back of the form. Returns may be ordered monthly.
- POD orders are not available.
-
The
Inventory
and Delivery Report 1041
(Exhibit 4.1.3–14) shows the
number of Fiduciary returns
available for ordering and the
number of Fiduciary returns
delivered for classification
during the file year. This
report provides the following
information:
- Table 1—Nonautomatic Fiduciary Returns. The total number of Fiduciary returns available, the total number of returns delivered for the current cycle and delivered (cumulative) during the file year.
- Table 2—Automatic Fiduciary Returns. The total number of Fiduciary returns delivered for the current cycle and delivered (cumulative) during the file year.
-
Indicator Codes
are entered on Form 5337 to
designate the type of returns
ordered as follows:
Indicator Code Explanation 0 Should be entered on all orders for Form 1041. 5 To be used to order Fiduciary returns of the current file year prior to Cycle 27.
4.1.3.3.5 (05-19-1999)
REMIC
- U.S. Real Estate Mortgage Investment Conduit (REMIC) REMIC returns can be ordered using Form 8757, U.S. Real Estate Mortgage Investment Conduit Income Tax. Returns may be ordered monthly.
- The Inventory and Delivery Report 1066–1 (Exhibit 4.1.3–15) shows the number of REMIC returns available for ordering and the number of REMIC returns delivered for classification by Examination Class for the file year.