IRM 21.7.2 — Employment and Railroad Tax Returns

# Part 21. Customer Account Services

Chapter 7. Business Tax Returns and Non-Master File Accounts Section 2. Employment and Railroad Tax Returns 21.7.2 Employment and Railroad Tax Returns Manual Transmittal August 13, 2025 Purpose (1) This transmits revised IRM 21.7.2, Business Tax Returns and Non-Master File Accounts, Employment and Railroad Tax Returns. Material Changes (1) This IRM was revised to reflect the following changes: SUBSECTION CHANGE IRM 21.7.2.1 Renamed subsection to be in compliance with the IRM requirements. IPU 25U0050 issued 01-15-2025 IRM 21.7.2.2 Added information about discontinued Form 941-SS and Form 94X-PR. IPU 25U0119 issued 01-29-2025 IRM 21.7.2.3.1 Deleted (1), deleted (4), and revised existing (2) to address discontinuance of Publication 51 and Publication 80. Remaining paragraphs renumbered as appropriate. IPU 24U0826 issued 07-05-2024 IRM 21.7.2.3.3(2) Added wage base information in table for 2025 and removed information for 2015. IPU 24U1219 issued 12-13-2024 IRM 21.7.2.3.4(6) Deleted second bullet due to discontinuance of Publication 51. IPU issued 07-05-2024 IRM 21.7.2.3.5 Revised title, deleted outdated information in (4), and added new content in (4) with regards to MeF filing options for Forms 94XX. IPU 24U0928 issued 08-20-2024 IRM 21.7.2.3.6 Added paragraph 3 referencing RFINK for researching RAF. Clarified bullets in paragraph 1. IRM 21.7.2.4.3.3(4) Added information regarding Form 943 and loose Schedule R. IRM 21.7.2.4.4(2) Added Spanish version of forms and removed Form 944-X (PR). IPU 25U0119 issued 01-29-2025 IRM 21.7.2.4.4.1(1) Updated table to include Spanish version of Forms 941 (SP), Form 943 (SP) and Form 944 (SP). Removed reference to obsolete Form 944-SS and Form 944-PR. IPU 25U0119 issued 01-29-2025 IRM 21.7.2.4.4.4.2(4) Updated routing information for Indian Fishing Claims citing IRC 7873 filed by individuals claiming a refund of FICA taxes. IPU 25U0476 04-24-2025 IRM 21.7.2.4.4.5(1) Updated table regarding 90 Day claims. IRM 21.7.2.4.4.6 Clarified requirement for contacting the taxpayer. IPU 25U0050 issued 01-15-2025 IRM 21.7.2.4.4.6(3) Updated to allow for variance in scenarios. IPU 25U0323 issued 03-10-2025 IRM 21.7.2.4.4.7.2 Added exception for Form 94X or Form CT-1 returns filed on or before the due date. IPU 25U3224 issued 04-28-2025 IRM 21.7.2.4.4.10(2) Added an exception with regards to supplemental Forms 94XX filed by certain aggregate employment tax return filers. PU 24U1019 issued 10-08-2024 IRM 21.7.2.4.4.11(1) Reworded reporting agent signature requirements for clarification. IPU 25U0323 issued 03-10-2025 IRM 21.7.2.4.4.13(6) Corrected email address for AM BMF IDT liaison. IPU 25U0269 issued 02-25-2025 IRM 21.7.2.4.4.13(6) Added 971 AC 717 to table regarding IDT cases. IRM 21.7.2.4.5.6 Updated to include Spanish version of Form 941. IPU 25U0119 issued 01-29-2025 IRM 21.7.2.4.5.6(1) Added -X regarding Form 941-X (SP). IPU 25U0269 issued 02-25-2025 IRM 21.7.2.4.5.6 (1) Added Paragraph regarding unchecked certification boxes. IRM 21.7.2.4.5.6(2) Correction in note. Use IRN 107 for the total amount on line number 15. IPU 25U0323 issued 03-10-2025 IRM 21.7.2.4.5.6.3(5) Reworded IRM regarding ascertained date and due date of amended return for an interest free adjustment. IPU 25U0323 issued 03-10-2025 IRM 21.7.2.4.6 Added new (3) with information on MeF filed Forms 94XX. Subsequent paragraphs renumbered as appropriate. IPU 24U0928 issued 08-20-2024 IRM 21.7.2.4.6.3(1) Added Paragraph regarding unchecked certification boxes. IRM 21.7.2.4.6.3(1) Updated to add Form 943 (SP). IPU 25U0269 issued 02-25-2025 IRM 21.7.2.4.6.3(1) Updated to include Spanish version of Form 943. IPU 25U0119 issued 01-29-2025 IRM 21.7.2.4.6.3.3(3) and (5) Corrected date of example in exception. Updated the wording regarding cases that do not qualify for interest free adjustments. IPU 25U0323 issued 03-10-2025 IRM 21.7.2.4.6.6 Revised guidance in the tables in (3) and (4) in regards to handling certain Forms 94XX reporting credit changes. IPU24U0803 issued 06-24-2024 IRM 21.7.2.4.6.6(4) Revised exception in third and sixth rows of the table to comport with revised handling for certain ERC related cases. IPU 24U0879 issued 07-30-2024 IRM 21.7.2.4.6.11(2) Added an exception with regards to RSED imminent/expired case handling to each row of the table with rejection outcomes. IPU 24U0803 issued 06-26-2024 IRM 21.7.2.4.7.3(2) Corrected description of letter 4086C. IPU 25U0050 issued 01-15-2025 IRM 21.7.2.4.7.4 Removed references to Form 944 (PR), Form 944-SS and Form 944-X (PR). IPU 25U0119 issued 01-29-2025 IRM 21.7.2.4.7.4(1) Added Form 944-X (SP). IPU 25U0269 issued 02-25-2025 IRM 21.7.2.4.7.4(1) Added paragraph regarding unchecked certification boxes. IRM 21.7.2.4.7.4.3(3) and (5) Corrected date of example in exception. Updated the wording regarding cases that do not qualify for interest free adjustments. IPU 25U0323 issued 03-10-2025 IRM 21.7.2.4.8.1(3) Update format of valid IRNs and added explanations for Form 945-X to this subsection. IPU 25U0050 issued 01- 15-2025 IRM 21.7.2.4.8.1.3(3) and (5) Corrected date of example in exception. Updated the wording regarding cases that do not qualify for interest free adjustments. IPU 25U0323 issued 03-10-2025 IRM 21.7.2.5.1(3) Removed reference to obselete Form 941c. IRM 21.7.2.5.7.2(4) Added a new paragraph with guidelines for Letter 134C replies. IPU 25U0323 issued 03-10-2025 IRM 21.7.2.5.7.2.1 Corrected subsection title. Added guidance regarding FTD penalties and case documentation. IPU 25U0323 issued 03-10-2025 IRM 21.7.2.5.7.2.1(1) Added new paragraph and caution providing guidance on case documentation and FTD penalties. IPU 25U0323 issued 03-10-2025 IRM 21.7.2.5.7.2.2 Removed subsection. IPU 25U0323 issued 03-10-2025 IRM 21.7.2.5.7.2.2 Renumbered subsection. Editorial changes. IPU 25U0323 issued 03-10-2025 IRM 21.7.2.5.7.2.3 Renumbered and renamed subsection. Clarified procedures for processing cases with no original return posted and open filing requirements. IPU 25U0323 issued 03-10-2025 IRM 21.7.2.5.7.2.4 Removed subsection. IPU 25U0323 issued 03-10-2025 IRM 21.7.2.5.15(2) and (5) Removed paragraph 2 and added it to existing paragraph 5. IPU 25U0476 issued 04-24-2025 IRM 21.7.2.5.15.3 Subsection updated to provide clarification to eligibility status, CAT-A referrals and provides additional IRM references. IPU 25U0476 issued 04-24-2025 IRM 21.7.2.5.15.4 Subsection updated to provide clarification to eligibility status, CAT-A referrals and provides additional IRM references. IPU 25U0476 issued 04-24-2025 IRM 21.7.2.5.15.5 Corrected links and IRM titles, editorial changes for clarity. IPU 25U0476 issued 04-24-2025 IRM 21.7.2.5.15.6 Subsection updated to provide clarity, added links to other subsections, and examples. Removed table that had information covered in other subsections. IPU 25U0476 issued 04-24-2025 IRM 21.7.2.5.15.7 Clarified procedures for processing Forms 5884-C and 5884-D with no TC 150 posted. IPU 25U0476 issued 04-24-2025 IRM 21.7.2.5.15.8 Clarified procedures for processing Forms 5884-C and 5884-D received with a Form 94X. IPU 25U0476 issued 04-24-2025 IRM 21.7.2.5.15.9 Clarified procedures for processing Forms 5884-C and 5884-D received with a Form 94XX. IPU 25U0476 issued 04-24-2025 IRM 21.7.2.5.15.10 Created subsection for processing credit increase requests on Forms 5884-C and 5884-D with a prior CRN 290 on the account. IPU 25U0476 issued 04-24-2025 IRM 21.7.2.5.15.11 Renumbered subsection. Clarified adjustment procedures for credit reversal requests on Forms 5884-C and 5884-D and associated penalty and interest adjustments. IPU 25U0476 issued 04-24-2025 IRM 21.7.2.5.20(3) Updated routing regarding GECS cases. IPU 25U0323 issued 03-10-2025 IRM 21.7.2.5.21.1(5) Changed "line 3" to "column c" IPU 24U1182 issued 12-04-2024 IRM 21.7.2.6.1 Removed information about routing original forms. IPU 25U0050 issued 01-15-2025 IRM 21.7.2.6.4.1 Add information about routing original forms to submission processing. IPU 25U0050 issued 01-15-2025 IRM 21.7.2.6.4.2(3) Added Tier I wage base information in table for 2025 and removed information for 2015. IPU 24U1219 issued 12-13-2024 IRM 21.7.2.6.4.2(5) Added Tier II wage base information in table for 2025 and removed information for 2015. IPU 24U1219 issued 12-13-2024 IRM 21.7.2.6.5.10(1) Added Paragraph regarding unchecked certification boxes. IRM 21.7.2.6.5.10.3(2) and (4) Corrected date of example in exception. Updated the wording regarding cases that do not qualify for interest free adjustments. IPU 25U0323 issued 03-10-2025 IRM 21.7.2.7(11) Revised instructions to include information regarding Spanish Form 941X (SP). IPU 24U1163 issued 11-27-2024 IRM 21.7.2.7(11) Updated instructions to include wall number for replies to 105C and 106C letters that disallowed ERC claims. IPU 24U1231 issued 12-17-2024 IRM 21.7.2.7(11) Updated wall number for unprocessed Spanish Form 941X (SP) ERC claims that have not had RAAS analysis completed. IPU 25U0050 issued 01-15-2025 IRM 21.7.2.7(11) Revised non-COVID case control for cases at OAMC in first bullet. Deleted second bullet containing information about form transcription which is being moved to and expanded upon in new (12). IPU 24U0803 issued 06-26-2024 IRM 21.7.2.7(11) Revised instructions on required case controls for specialized COVID-related credit cases. IPU 24U0988 issued 09-20-2024 IRM 21.7.2.7(12) Added new paragraph with revised and expanded information regarding transcription, control, and resolution of certain Forms 941-X claiming ERC. IPU 24U0803 issued 06-26-2024 IRM 21.7.2.7.2(5) Revised to account for issuance of a news release relative to ERC claims processing status. IPU 24U0792 06-21-2024 IRM 21.7.2.7.2(5) Revised paragraph (5) text and added a new bullet with a link and information for a new press release. IPU 24U0914 issued 08-09-2024 IRM 21.7.2.7.2.1(9) Added Rev Proc 21-33 as a complex out-of-scope quesitons to refer callers to the irs.gov website. IRM 21.7.2.7.2.3(8) Added description regarding referenced IRM 21.7.2.7.2.2 . IRM 21.7.2.7.6(4) Corrected link to IRM 21.7.2.8.12. IPU 25U0269 issued 02-25-2025 IRM 21.7.2.7.6.3 Added exception for cases that will not be risked by RAAS. IPU 24U1163 issued 11-27-2024 IRM 21.7.2.7.6.3 Revised title and content throughout to provide guidance focused on ERC related Forms 94XX cleared for processing (accepted) by RAAS. IPU 24U0803 issued 06-26-2024 IRM 21.7.2.7.6.3 Revised title and content in (2) to clarify that ERC-related Forms 94XX reporting tax increases or credit increases are to be worked per procedures provided in this subsection. Revised caution after (3) correspondingly. IPU 24U0988 issued 09-20-2024 IRM 21.7.2.7.6.3(3) Revised caution to account for handling of supplemental Forms 94XX filed by certain aggregate employment tax return filers. IPU 24U1019 issued 10-08-2024 IRM 21.7.2.7.6.3(12) Update to provide guidance on previously worked cases with duplicates that are RAAS risked. Added Note to use IRM 21.7.2.7.11 for replies to the 105C and 106C. IPU 25U0269 issued 02-25-2025 IRM 21.7.2.7.6.3(12) Updated statute paragraph, added friendly URLs for partial disallow cases and made editorial changes. IPU 25U3224 issued 04-28-2025 IRM 21.7.2.7.6.3(14) Added reminder to last row of table for procedural clarification purposes. Revised instructions for issuance of disallowance letters specified in the second row of the table and in the second exception after the table. IPU 24U1079 issued 10-28-2024 IRM 21.7.2.7.6.3(14) Updated instructions for disallowance for consistency. IPU 25U0050 issued 01-15-2025 IRM 21.7.2.7.6.6 Added new subsection with handling guidance for supplemental Forms 94XX filed by certain aggregate employment tax return filers. IPU 24U1019 issued 10-08-2024 IRM 21.7.2.7.6.6(4) Added information regarding change in deadline. IPU 24U1163 issued 11-27-2024 IRM 21.7.2.7.6.6 (5) Updated IDRS number for holding wall for Supplemental Form 94XX Filed by Certain Aggregate Fliers. IPU 24U1219 issued 12-13-2024 IRM 21.7.2.7.6.6(5) Updated IDRS number to new holding wall. IPU 25U0050 issued 01-15-2025 IRM 21.7.2.7.6.6(7) Revised step list to add an additional required verification item. IPU 24U1054 issued 10-21-2024 IRM 21.7.2.7.6.6(8) Changed routing to CAT-A with primary reason code TPP Supplemental Claim. IPU 24U1163 issued 11-27-2024 IRM 21.7.2.7.6.6(8) Updated note regarding Supplemental Form 94XX cases filed by Certain Aggregate Employment Tax Return Filers. IPU 25U0269 issued 02-25-2025 IRM 21.7.2.7.6.6(8) Corrected name of IRM 21.7.2.7.6.3. IPU 25U0323 issued 03-10-2025 IRM 21.7.2.7.7.1(1) and (3) Updated IDRS number for ERC withdrawal cases holding wall. IPU 25U0476 issued 04-24-2025 IRM 21.7.2.7.7.1(3) Revised for use of specified case category. IPU 24U0988 issued 09-20-2024 IRM 21.7.2.7.7.2(3) Revised case reassignment instructions in multiple table rows. IPU 24U0803 issued 06-26-2024 IRM 21.7.2.7.7.3(4) Revised case reassignment instructions in multiple table rows. IPU 24U0803 issued 06-26-2024 IRM 21.7.2.7.8 Revised title to for subsection to act as lead-in for new content to be added as multiple new underlying subsections. Former content moved to new IRM 21.7.2.7.8.1 and IRM 21.7.2.7.8.2 subsections as appropriate. IPU 24U0803 issued 06-26-2024 IRM 21.7.2.7.8.1 Revised instructions for issuance of disallowance letters specified in multiple rows of the tables in (6) and (7). IPU 24U1079 issued 10-28-2024 IRM 21.7.2.7.8.1 Updated statute paragraph, added friendly URL for irs.gov website and made editorial changes. IPU 25U3224 issued 04-28-2025 IRM 21.7.2.7.8.1 Added new subsection to house content formerly found under IRM 21.7.2.7.8 applicable to Form 94XX ERC claims meeting certain filtering criteria for entity establishment dates. Content also revised for developments in handling requirements. IPU 24U0803 issued 06-26-2024 IRM 21.7.2.7.8.1(5) Corrected paragraph 5 to be consistent with topic of this subsection. IPU 24U1250 issued 12-18-2024 IRM 21.7.2.7.8.1(5) Added caution not to rework Form 94X-X cases that are duplicates of previously processed ERC claims based on subsequent RAAS analysis. IPU 25U0447 issued 04-14-2025 IRM 21.7.2.7.8.1(6) Revised first and second rows of the table to add cross reference clarifying blocking series usage. IPU 24U0860 issued 07-22-2024 IRM 21.7.2.7.8.1(6) Revised first and second rows of the table to add cross reference clarifying blocking series usage. IPU 24U0860 issued 07-22-2024 IRM 21.7.2.7.8.1(6) Removed instructions to run the ERC worksheet on disallowance cases that have non ERC adjustments meeting CAT-A criteria. IPU 25U0447 issued 04-14-2025 IRM 21.7.2.7.8.2 Revised (5) and (6), and added new (7), to add guidance on handling cases meeting the specified filtering criteria on accounts with no posted TC 150 original return. IPU 24U0879 issued 07-30-2024 IRM 21.7.2.7.8.2 Added new subsection to house content formerly found under IRM 21.7.2.7.8 applicable to Form 94XX ERC claims meeting certain filtering criteria for no Forms W-2 filed. Content also revised for developments in handling requirements. IPU 24U0803 issued 06-26-2024 IRM 21.7.2.7.8.2 Revised instructions for issuance of disallowance letters specified in multiple rows of the tables in (6) and (7). IPU 24U1079 issued 10-28-2024 IRM 21.7.2.7.8.2(5) Added caution not to rework Form 94X-X cases that are duplicates of previously processed ERC claims based on subsequent RAAS analysis. IPU 25U0447 issued 04-14-2025 IRM 21.7.2.7.8.2(6) Removed instructions to run the ERC worksheet on disallowance cases that have non ERC adjustments meeting CAT-A criteria. IPU 25U0447 issued 04-14-2025 IRM 21.7.2.7.8.2(6) Revised first and second rows of the table to add cross reference clarifying blocking series usage. IPU 24U0860 issued 07-22-2024 IRM 21.7.2.7.8.2(5) Corrected paragraph 5 to be consistent with topic of this subsection. IPU 24U1250 issued 12-18-2024 IRM 21.7.2.7.8.2 Updated statute paragraph, added friendly URL for irs.gov website and made editorial changes. IPU 25U3224 issued 04-28-2025 IRM 21.7.2.7.8.3(6) Added caution not to rework Form 94X-X cases that are duplicates of previously processed ERC claims based on subsequent RAAS analysis. IPU 25U0447 issued 04-14-2025 IRM 21.7.2.7.8.3 Updated statute paragraph, added friendly URLs for irs.gov website and made editorial changes. IPU 25U3224 issued 04-28-2025 IRM 21.7.2.7.8.3 Added new subsection to provide handling guidance for ERC-related Form 94XX cases released to AM by RAAS for additional processing actions due to potentially having been filed by a fabricated entity. IPU 24U0803 issued 06-26-2024 IRM 21.7.2.7.8.4(2) Revised text and added note to more narrowly define the cases to which the guidance provided in this subsection applies. IPU 24U0879 issued 07-30-2024 IRM 21.7.2.7.8.4 Updated statute paragraph, added friendly URLs for irs.gov website and made editorial changes. IPU 25U3224 issued 04-28-2025 IRM 21.7.2.7.8.4 Added new subsection to provide handling guidance for ERC-related Form 94XX cases released to AM by RAAS for additional processing actions due to missing original returns. IPU 24U0803 issued 06-26-2024 IRM 21.7.2.7.8.4(2) Revised text and added note to more narrowly define the cases to which the guidance provided in this subsection applies. IPU 24U0879 issued 07-30-2024 IRM 21.7.2.7.8.5 Revised instructions for issuance of disallowance letters specified in multiple rows of the tables in (6) and (7). IPU 24U1079 issued 10-28-2024 IRM 21.7.2.7.8.5 Updated statute paragraph, added friendly URLs for irs.gov website and made editorial changes. IPU 25U3224 issued 04-28-2025 IRM 21.7.2.7.8.5 Added new subsection to provide handling guidance for Form 94XX cases meeting RAAS filters for non-payment/non-depositing patterns. IPU 24U0803 issued 06-26-2024 IRM 21.7.2.7.8.5 Revised (5) and (6), and added new (7), to add guidance on handling cases meeting the specified filtering criteria on accounts with no posted TC 150 original return. IPU 24U0879 issued 07-30-2024 IRM 21.7.2.7.8.5(5) Added caution not to rework Form 94X-X cases that are duplicates of previously processed ERC claims based on subsequent RAAS analysis. IPU 25U0447 issued 04-14-2025 IRM 21.7.2.7.8.5(6) Removed instructions to run the ERC worksheet on disallowance cases that have non ERC adjustments meeting CAT-A criteria. IPU 25U0447 issued 04-14-2025 IRM 21.7.2.7.8.5(6) Revised first and second rows of the table to add cross reference clarifying blocking series usage. IPU 24U0860 issued 07-22-2024 IRM 21.7.2.7.8.6 Updated statute paragraph, added friendly URLs for irs.gov website and made editorial changes. IPU 25U3224 issued 04-28-2025 IRM 21.7.2.7.8.6 Added new subsection to provide handling guidance for ERC-related Form 94XX cases meeting RAAS filters for ineligible government entities. IPU 24U0803 issued 06-26-2024 IRM 21.7.2.7.8.6 Revised (5) and (6), and added new (7), to add guidance on handling cases meeting the specified filtering criteria on accounts with no posted TC 150 original return. IPU 24U0879 issued 07-30-2024 IRM 21.7.2.7.8.6(5) Added caution not to rework Form 94X-X cases that are duplicates of previously processed ERC claims based on subsequent RAAS analysis. IPU 25U0447 issued 04-14-2025 IRM 21.7.2.7.8.6(6) Removed instructions to run the ERC worksheet on disallowance cases that have non ERC adjustments meeting CAT-A criteria. IPU 25U0447 issued 04-14-2025 IRM 21.7.2.7.8.6 Revised instructions for issuance of disallowance letters specified in multiple rows of the tables in (6) and (7). IPU 24U1079 issued 10-28-2024 IRM 21.7.2.7.8.6(6) Revised first and second rows of the table to add cross reference clarifying blocking series usage. IPU 24U0860 issued 07-22-2024 IRM 21.7.2.7.8.7 Revised instructions for issuance of disallowance letters specified in multiple rows of the tables in (6) and (7). IPU 24U1079 issued 10-28-2024 IRM 21.7.2.7.8.7 Updated statute paragraph, added friendly URLs for irs.gov website and made editorial changes. IPU 25U3224 issued 04-28-2025 IRM 21.7.2.7.8.7 Added new subsection to provide handling guidance for Form 94XX cases meeting RAAS filters for dormant entities. IPU 24U0803 issued 06-26-2024 IRM 21.7.2.7.8.7 Revised (5) and (6), and added new (7), to add guidance on handling cases meeting the specified filtering criteria on accounts with no posted TC 150 original return. IPU 24U0879 issued 07-30-2024 IRM 21.7.2.7.8.7(5) Added caution not to rework Form 94X-X cases that are duplicates of previously processed ERC claims based on subsequent RAAS analysis. IPU 25U0447 issued 04-14-2025 IRM 21.7.2.7.8.7(6) Revised first and second rows of the table to add cross reference clarifying blocking series usage. IPU 24U0860 issued 07-22-2024 IRM 21.7.2.7.8.7(6) Removed instructions to run the ERC worksheet on disallowance cases that have non ERC adjustments meeting CAT-A criteria. IPU 25U0447 issued 04-14-2025 IRM 21.7.2.7.8.8 Revised instructions for issuance of disallowance letters specified in multiple rows of the tables in (6) and (7). IPU 24U1079 issued 10-28-2024 IRM 21.7.2.7.8.8 Updated statute paragraph, added friendly URLs for irs.gov website and made editorial changes. IPU 25U3224 issued 04-28-2025 IRM 21.7.2.7.8.8 Added new subsection to provide handling guidance for ERC-related fourth quarter 2021 Form 94XX cases meeting RAAS filters for non RSB employers. IPU 24U0803 issued 06-26-2024 IRM 21.7.2.7.8.8 Revised (5) and (6), and added new (7), to add guidance on handling cases meeting the specified filtering criteria on accounts with no posted TC 150 original return. Added verification of Line 31b entry as bullet item in (5) [existing (6) prior to renumbering] and added instructions in succeeding caution for actions to be taken in Line 31b entry is present. IPU 24U0879 issued 07-30-2024 IRM 21.7.2.7.8.8(5) Added caution not to rework Form 94X-X cases that are duplicates of previously processed ERC claims based on subsequent RAAS analysis. IPU 25U0447 issued 04-14-2025 IRM 21.7.2.7.8.8(5) Deleted (5) which duplicated information found in (3). Subsequent paragraphs renumbered accordingly. IPU 24U0860 issued 07-22-2024 IRM 21.7.2.7.8.8(6) Removed instructions to run the ERC worksheet on disallowance cases that have non ERC adjustments meeting CAT-A criteria. IPU 25U0447 issued 04-14-2025 IRM 21.7.2.7.8.8(6) Is being renumbered due to deletion of (5). Revised first and second rows of the table to add cross reference clarifying blocking series usage. IPU 24U0860 issued 07-22-2024 IRM 21.7.2.7.8.9 Revised instructions for issuance of disallowance letters specified in multiple rows of the tables in (6) and (7). IPU 24U1079 issued 10-28-2024 IRM 21.7.2.7.8.9 Updated statute paragraph, added friendly URLs for irs.gov website and made editorial changes. IPU 25U3224 issued 04-28-2025 IRM 21.7.2.7.8.9 Added new subsection to provide handling guidance for ERC-related third quarter 2021 Form 94XX cases meeting RAAS filters for gross receipts. IPU 24U0803 issued 06-26-2024 IRM 21.7.2.7.8.9 Revised (5) and (6), and added new (7), to add guidance on handling cases meeting the specified filtering criteria on accounts with no posted TC 150 original return. Added verification of Line 31b entry as bullet item in (5) and added instructions in succeeding caution for actions to be taken in Line 31b entry is present. IPU 24U0879 Dated issued 07-30-2024 IRM 21.7.2.7.8.9(5) Added caution not to rework Form 94X-X cases that are duplicates of previously processed ERC claims based on subsequent RAAS analysis. IPU 25U0447 issued 04-14-2025 IRM 21.7.2.7.8.9(6) Removed instructions to run the ERC worksheet on disallowance cases that have non ERC adjustments meeting CAT-A criteria. IPU 25U0447 issued 04-14-2025 IRM 21.7.2.7.8.9(6) Revised first and second rows of the table to add cross reference clarifying blocking series usage. IPU 24U0860 issued 07-22-2024 IRM 21.7.2.7.8.9(7) Restored (7) content which had been added with IPU 24U0879 (issued 07-30-2024) but inadvertently omitted in the October 1, 2024 start-up IRM revision. IPU 24U1019 issued 10-08-2024 IRM 21.7.2.7.8.10 Added new subsection to address related individuals. IPU 24U1182 issued 12-04-2024 IRM 21.7.2.7.8.10 Updated statute paragraph, added friendly URLs for irs.gov website and made editorial changes. IPU 25U3224 issued 04-28-2025 IRM 21.7.2.7.8.10(5) Added caution not to rework Form 94X-X cases that are duplicates of previously processed ERC claims based on subsequent RAAS analysis. IPU 25U0447 issued 04-14-2025 IRM 21.7.2.7.8.10(6) Removed instructions to run the ERC worksheet on disallowance cases that have non ERC adjustments meeting CAT-A criteria. IPU 25U0447 issued 04-14-2025 IRM 21.7.2.7.8.11 Added new subsection for Disallowance of Form 94XX ERC Claims Meeting RAAS Filtering Criteria for Overclaimed Paycheck Protection Program (PPP) Loan and ERC. IPU 25U0447 issued 04-14-2025 IRM 21.7.2.7.8.11 Updated statute paragraph, added friendly URLs for irs.gov website and made editorial changes. IPU 25U3224 issued 04-28-2025 IRM 21.7.2.7.8.12 Added new subsection for Disallowance of Form 94XX ERC Claims Meeting RAAS Filtering Criteria for Overclaimed Qualified Sick and Family Leave and ERC. IPU 25U0447 issued 04-14-2025 IRM 21.7.2.7.8.12 Updated statute paragraph, added friendly URLs for irs.gov website and made editorial changes. IPU 25U3224 issued 04-28-2025 IRM 21.7.2.7.8.13 Added new subsection to provide handling guidance on RAAS Risked – Exam Potential cases. IPU 25U3224 issued 04-28-2025 IRM 21.7.2.7.9 Altered title and updated throughout to address operation of a second ERC Voluntary Disclosure Program (ERC VDP). IPU 24U0956 issued 09-04-2024 IRM 21.7.2.7.10 Added new subsection with background information regarding certain compliance projects applicable to COVID-19 related employment tax credits. IPU 24U0576 issued 04-26-2024 IRM 21.7.2.7.10 Updated subsection with AUR contact information, added information regarding recognizing accounts with prior AUR adjustments, and provided information on when cases should be sent to Ogden Campus Exam/AUR. IPU 25U0476 issued 04-24-2025 IRM 21.7.2.7.10.9 Added new subsection with information about Letter 6577C and response handling. IPU 25U0476 issued 04-24-2025 IRM 21.7.2.7.11 Added new subsection with information about 105C and 106C replies to ERC claim disallowances. IPU 24U1231 issued 12-17-2024 IRM 21.7.2.7.11(2) Added information on friendly URL IRS.gov/erc106c. IPU 25U3224 issued 04-28-2025 IRM 21.7.2.7.11(3) Added CAT-A prior to HQ Reserved 9. Removed note regarding CAT-A reviewers that is replaced with IRM 21.7.2.7.11.1. IPU 25U0378 issued 03-17-2025 IRM 21.7.2.7.11(4) Added instructions to link original or amended return cases in CII to the case being worked prior to sending the case to CAT-A HQ Reserved 9. IPU 25U0378 issued 03-17-2025 IRM 21.7.2.7.11(5) Removed prior para 5 and replaced it with instructions to follow IRM 21.7.2.7.11.1 when cases are returned from HQ Reserved 9. IPU 25U0378 issued 03-17-2025 IRM 21.7.2.7.11.1 Added new subsection regarding 105C and 106C replies that are returned from CAT-A HQ Reserved 9. IPU 25U0378 issued 03-17-2025 IRM 21.7.2.8 Revised to account for discontinuance of App 40 for deferred social security tax phone inquiries and resulting generation of Forms 4442. IPU 24U1196 issued 12-10-2024 IRM 21.7.2.8.1 Text updated throughout for tense. IPU 24U1196 issued 12-10-2024 IRM 21.7.2.8.2 Revised title to include an additional notice containing official IRS guidance on the topic covered. Text updated throughout for tense. IPU 24U1196 issued 12-10-2024 IRM 21.7.2.8.3 Text updated throughout for tense. Updated (12) for command code display changes. Revised (14) to provide information on IRS analysis of accounts with unpaid social security tax deferrals and reversal transactions. IPU 24U1196 issued 12-10-2024 IRM 21.7.2.8.4 Text updated throughout for tense. Updated (6) for command code display changes. Inquiry handling guidance in (7) has been replaced with a cross-reference to IRM 21.7.2.8.6 where that information is now located. IPU 24U1196 issued 12-10-2024 IRM 21.7.2.8.5 Text updated throughout for tense. Updated (1) to redefine the context of expected inquiries now that the due dates for payment of the taxes discussed have passed. IPU 24U1196 issued 12-10-2024 IRM 21.7.2.8.6 Revised throughout to account for discontinuance of App 40 for deferred social security tax phone inquiries and resulting generation of Forms 4442. Added columns to the table in (3) for handling phone and paper inquiries, additional inquiry scenarios were added, instructions were updated to conform with the passage of the due dates for paying the taxes discussed, and closing communications guidance was added where appropriate. IPU 24U1196 issued 12-10-2024 IRM 21.7.2.8.6.1 Text updated throughout for tense. Revised (2) instructions to limit the handling to paper cases including Forms 4442 and added reminder with cross reference for related phone inquiry handling. IPU 24U1196 issued 12-10-2024 IRM 21.7.2.8.7(3) Revised instructions to limit the handling to paper cases including Forms 4442 and added reminder with cross reference for related phone inquiry handling. IPU 24U1196 issued 12-10-2024 IRM 21.7.2.8.7.1 Revised instructions in (1) to limit the handling to paper cases including Forms 4442 and added reminder with cross reference for related phone inquiry handling. Revised instructions in (3) with regards to closing communications. IPU 24U1196 issued 12-10-2024 IRM 21.7.2.8.7.2 Revised instructions in (1) to limit the handling to paper cases including Forms 4442 and added reminder with cross reference for related phone inquiry handling. Removed phone inquiry handling scenario in last row of the table in (2) which will no longer be encountered. Revised instructions in (3) with regards to closing communications. IPU 24U1196 issued 12-10-2024 IRM 21.7.2.8.7.3 Revised instructions in (1) to limit the handling to paper cases including Forms 4442 and added reminder with cross reference for related phone inquiry handling. Revised instructions in (3) with regards to closing communications. IPU 24U1196 issued 12-10-2024 IRM 21.7.2.8.8 Revised instructions in (1) to limit the handling to paper cases including Forms 4442 and added reminder with cross reference for related phone inquiry handling. Added new penalty abatement handling scenario in the table in (2). Revised instructions in (3) with regards to closing communications. IPU 24U1196 issued 12-10-2024 IRM 21.7.2.8.9 Revised (3) instructions to limit phone inquiry handling to creation of a Form 4442. Revised instructions in (4) and (5) limit the handling to paper cases including Forms 4442. IPU 24U1196 issued 12-10-2024 IRM 21.7.2.8.9.1 Revised instructions in (1) to limit the handling to paper cases including Forms 4442 and added reminder with cross reference for related phone inquiry handling. Removed second row of the table in (2) and revised guidance in first and last row as special handling to avoid a related unpostable condition is no longer required. Revised guidance in table with regards to closing communications. IPU 24U1196 issued 12-10-2024 IRM 21.7.2.8.9.2 Revised instructions in (1) to limit the handling to paper cases including Forms 4442 and added reminder with cross reference for related phone inquiry handling. Revised instructions in second column, second and third rows, as special handling to avoid a related unpostable condition is no longer required. Removed phone inquiry handling scenario in last row of the table in (2) which will no longer be encountered. Revised guidance in table with regards to closing communications. IPU 24U1196 issued 12-10-2024 IRM 21.7.2.8.9.3 Revised instructions in (1) to limit the handling to paper cases including Forms 4442 and added reminder with cross reference for related phone inquiry handling. Clarified instructions in (2), Step 2. Added new first row to the table in (3) to address an inquiry scenario and associated communications requirement. Revised instructions in second row of the table (previously first row) to account for addition of new first row. Removed original third row of the table in (3) and revised guidance in preceding and succeeding rows as special handling to avoid a related unpostable condition is no longer required. Revised guidance in table with regards to closing communications. IPU 24U1196 issued 12-10-2024 IRM 21.7.2.8.9.4 Revised instructions in (1) to limit the handling to paper cases including Forms 4442 and added reminder with cross reference for related phone inquiry handling. Clarified instructions in (2), Step 2. Added new first row to the table in (3) to address an inquiry scenario and associated communications requirement. Revised instructions in second row of the table (previously first row) to account for addition of new first row. Revised instructions in second column, original third and fourth rows (now fourth and fifth rows as revised), as special handling to avoid a related unpostable condition is no longer required. Revised guidance in table with regards to closing communications. IPU 24U1196 issued 12-10-2024 IRM 21.7.2.8.10 Text updated throughout for tense. Revised instructions in (1) to limit the handling to paper cases including Forms 4442 and added reminder with cross reference for related phone inquiry handling. Added reminder in (8) with regards to use of command code BMFOL definer M. Revised instructions in second column in multiple rows of the table in (10) as special handling to avoid a related unpostable condition is no longer required. Revised guidance in tables in (9) and (10) with regards to closing communications. IPU 24U1196 issued 12-10-2024 IRM 21.7.2.8.11 Revised (4) instructions to limit phone inquiry handling to creation of a Form 4442. Revised instructions in (5) and (6) limit the handling to paper cases including Forms 4442. Revised guidance in table in (7) with regards to closing communications. IPU 24U1196 issued 12-10-2024 IRM 21.7.2.8.12 Deleted subsection as the instructions were outdated and revised associated instructions have now been embedded throughout the related IRM handling guidance. IPU 24U1196 issued 12-10-2024 IRM 21.7.2.8.12(1) Clarified that the content is limited now to accounts with unreversed CRN 280 transactions. IPU 24U1196 issued 12-10-2024 IRM 21.7.2.8.12.1 Revised 5th row of the table in (2) to remove cross reference to specialized handling instructions which no longer apply. Revised (3) guidance in table with regards to closing communications. IPU 24U1196 issued 12-10-2024 IRM 21.7.2.8.12.2 Revised 5th row of the table in (2) to remove cross reference to specialized handling instructions which no longer apply. Revised (3) guidance in table with regards to closing communications. IPU 24U1196 issued 12-10-2024 IRM 21.7.2.8.12.3 Revised 5th row of the table in (2) to remove cross reference to specialized handling instructions which no longer apply. Revised (3) guidance in table with regards to closing communications. IPU 24U1196 issued 12-10-2024 IRM 21.7.2.8.13.4 Deleted subsection since the specialized handling instructions it contained no longer apply. IPU 24U1196 issued 12-10-2024 IRM 21.7.2 Editorial changes made throughout. IPU 24U1163 issued 11-27-2024 Effect on Other Documents IRM 21.7.2 dated September 20, 2023 (effective October 1, 2024) is superseded. The following IRM Procedural Updates (IPU) have been incorporated into this IRM: 24U0792 issued June 21, 2024, 24U0803 issued June 26, 2024, 24U0826 issued July 5, 2024, 24U860 issued July 22, 2024, 24U0879 issued July 30, 2024, 24U0914 issued August 9, 2024, 24U0928 issued August 20, 2024, 24U0956 issued September 4, 2024, 24U0988 issued September 20, 2024, 24U1019 issued October 8, 2024, 24U1054 issued October 21, 2024, 24U1079 issued October 28, 2024, IPU 24U1163 issued November 27, 2024, IPU 24U1182 issued December 4, 2024, IPU 24U1196 issued December 10, 2024, IPU 24U1219 issued December 13, 2024, IPU 24U1231 issued December 17, 2024, IPU 24U1250 issued December 18, 2024, IPU 25U0050 issued January 15, 2025, IPU 25U0119 issued January 29, 2025, IPU 250269 issued February 25, 2025, IPU 250323 issued March 10, 2025, and IPU 25U0378 issued March 17, 2025, IPU 25U0447 issued April 14, 2025, and IPU 25U3224 issued April 28, 2025. Audience The primary users of this IRM are Taxpayer Services employees. The IRM is intended for Customer Account Service issues involving employment tax returns. Effective Date (10-01-2025) LuCinda J. Comegys Director, Accounts Management Taxpayer Services Division

# Program Scope and Objectives

21.7.2.1 (01-15-2025) Program Scope and Objectives This section contains general information and procedures for correcting data recorded on Business Master File (BMF) accounts for employment tax returns and railroad retirement tax returns. Purpose: To provide procedures for resolving taxpayer inquiries (paper and phone) and tax account issues regarding employment taxes and railroad retirement taxes. Audience: The primary users of this IRM are Taxpayer Services (TS), Customer Account Services Customer Service Representatives (CSR) and Tax Examiners who are assigned employment tax and railroad retirement tax inventory. Policy Owner: Director, Accounts Management Program Owner: Policy and Procedures BMF (PPB) Business Adjustments, Accounts Management, Taxpayer Services (TS) Primary Stakeholders: Taxpayer Services (TS), Small Business Self Employed (SBSE), and Large Business and International (LB&I) Program Goals: Program goals for this type of work are included in the Accounts Management Program Letter as well as IRM 1.4.16, Accounts Management Guide for Managers.

# Background

21.7.2.1.1 (10-01-2017) Background Employees in the Accounts Management (AM) organization respond to taxpayer inquiries (phone and paper) as well as claims, certain applications, internal requests, and transcripts. IRM 21.7.2 provides guidance to AM employees assigned employment tax and railroad retirement tax inventory. Both telephone inquiries and paper correspondence can be worked using this information. Included is information for items reported on current forms: Form 941, Employer's QUARTERLY Federal Tax Return Form 941-X, Adjusted Employer's QUARTERLY Federal Tax Return or Claim for Refund Form 943, Employer's Annual Federal Tax Return for Agricultural Employees Form 943-X, Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund Form 944, Employer's ANNUAL Federal Tax Return Form 944-X, Adjusted Employer's ANNUAL Federal Tax Return or Claim for Refund Form 945, Annual Return of Withheld Federal Income Tax Form 945-X, Adjusted Annual Return of Withheld Federal Income Tax or Claim for Refund Form CT-1, Employer's Annual Railroad Retirement Tax Return Form CT-1X, Adjusted Employer's Annual Railroad Retirement Tax Return or Claim for Refund Form CT-2, Employee Representative's Quarterly Railroad Tax Return

# Authority

21.7.2.1.2 (10-01-2017) Authority In addition to all official guidance on general tax matters, the administration of the employment tax and railroad retirement tax matters discussed in this IRM are based primarily on tax law provisions found in Chapters 21 through 25, Subtitle C - Employment Taxes, of the Internal Revenue Code and related Regulations, Treasury Decisions, Revenue Procedures, Revenue Rulings, Notices, tax forms and instructions, and publications. Accounts Management employees applying the procedures provided in this IRM to resolve tax matters related to employment tax and railroad retirement tax accounts act in accordance with policy statements and delegations of authority found in various applicable sections of IRM Part 1, Chapter 2.

# Roles and Responsibilities

21.7.2.1.3 (10-01-2020) Roles and Responsibilities IRM 1.1.13.7.3, Accounts Management, provides various guidance for Accounts Management employees including the following: Identity Protection Strategy & Oversight (IPSO) Policy & Procedures BMF (PPB) Policy & Procedures IMF (PPI) Reports- Equipment & Phones (REP) Resources Mgmt Training (RMT) Tech Asst & Stakeholder Comm (TASC) Field Directors, Accounts Management (AM) Accounts Management Operation Support (AMOS) IRM 21.1.1, Accounts Management and Compliance Services Overview, provides guidance to employees assigned to the Accounts Management organization. The Taxpayer Bill of Rights describes ten basic rights that all taxpayers have when dealing with the IRS. To help you understand what these rights mean to you and how they apply, read Publication 1, Your Rights as a Taxpayer, available at https://www.irs.gov/pub/irs-pdf/p1.pdf, or visit https://www.irs.gov/taxpayer-bill-of-rights. Refer taxpayers to the Taxpayer Advocate Service (TAS) when the contact meets TAS criteria (see IRM 13.1.7, Taxpayer Advocate Service (TAS) Case Criteria) and you cannot resolve the taxpayer's issue the same day. TAS provides assistance to taxpayers who are experiencing economic harm, who are seeking help in resolving tax problems that the IRS has not been able to resolve through normal channels or believe that an IRS system or procedure is not working as it should. See IRM 21.1.3.18, Taxpayer Advocate Services (TAS) Guidelines, for further information. There will also be times that, although you cannot completely resolve the issue within 24 hours, you have taken steps within 24 hours to resolve the taxpayer's issue. These cases also meet the definition of "same day". Do not refer these cases to TAS unless the taxpayer asks to be transferred to TAS and the case meets TAS criteria. Refer to IRM 13.1.7.5, Same Day Resolution by Operations. When referring cases to TAS, use Form 911, Request for Taxpayer Advocate Service Assistance (and Application for Taxpayer Assistance Order), and forward to TAS in accordance with your local procedures.

# Program Management and Review

21.7.2.1.4 (10-01-2017) Program Management and Review IRM 1.4.16, Accounts Management Guide for Managers, provides guidance for program management and review of programs assigned to Account Management.

# Program Controls

21.7.2.1.5 (10-01-2019) Program Controls Goals, measures, and operating guidelines are listed in the yearly Program Letter. IRM 21.10.1, Embedded Quality (EQ) Program for Accounts Management, Campus Compliance, Field Assistance, Tax Exempt/Government Entities, Return Integrity and Compliance Services (RICS) and Electronic Products and Services Support.

# Terms/Definitions/Acronyms

21.7.2.1.6 (08-22-2023) Terms/Definitions/Acronyms Exhibit 21.7.2-1, Acronyms and Abbreviation Used in the IRM contains a list of abbreviations and acronyms used in this IRM.

# Related Resources

21.7.2.1.7 (10-01-2017) Related Resources IRM 21.2.2-2, Accounts Management Mandated IAT Tools Accounts Management Case Management Guidelines Job Aid

# What Are Employment Tax Returns?

21.7.2.2 (01-29-2025) What Are Employment Tax Returns? Form 941, Form 943 and Form 944 are filed by employers of individuals to report: The amount of federal income tax withheld from the employees' wages The employer's and employees' shares of social security and Medicare taxes The amount of Additional Medicare Tax (AdMT) withheld from employees' wages (for tax periods after December 31, 2012) The amount of any non-refundable Qualified Small Business Payroll Tax Credit for Increasing Research Activities Note: Social security and Medicare taxes, including Additional Medicare Tax, are collectively referred to as FICA (Federal Insurance Contributions Act) taxes. Form 945, Annual Return of Withheld Federal Income Tax, is filed to report backup withholding (BUWH) and income tax withheld from non-payroll items, such as: Pensions Annuities IRAs (Individual Retirement Accounts) Gambling winnings Form CT-1, Employer's Annual Railroad Retirement Tax Return, is filed to report both the employer's and employees' shares of Railroad Retirement Tax Act (RRTA) tax including Additional Medicare Tax (AdMT) withheld from employees' wages (for tax periods after December 31, 2012). Forms 94XX are used by employers to correct errors made in reporting employment taxes. These forms include Form 941-X, Form 943-X, Form 944-X, Form 945-X and Form CT-1X. Note: These "X" forms replaced Form 941c, Supporting Statement to Correct Information and Form 843, Claim for Refund or Request for Abatement, for employers. Form 941-SS and Form 94X-PR are no longer available to file for quarters beginning after December 31, 2023. Instead, filers of Form 94X-SS or Form 94X-PR will file Form 94X/94X (SP) starting the first quarter of 2024.

# Employment Tax Returns Research

21.7.2.3 (10-01-2021) Employment Tax Returns Research This section contains general research information applicable to employment taxes. Additional form and issue specific research information and procedures are contained throughout IRM 21.7.2. Note: While line numbers from forms are provided throughout the IRM for easy reference, employees are responsible for taking the proper adjustment action based on the specific form version filed by the taxpayer. Refer to the appropriate reference material to research technical issues. Prior versions of this IRM may be researched on SERP as needed for obsolete procedures and issues. Prior year versions of IRM 21.7.2 not retained on SERP may be researched on the IRS Publishing site.

# Employment Tax Publications

21.7.2.3.1 (07-05-2024) Employment Tax Publications See the following publications for classes of employment and types of payments subject to social security and Medicare taxes: Publication 15, (Circular E), Employer's Tax Guide Publication 15-A, Employer's Supplemental Tax Guide Publication 15-B, Employer's Tax Guide to Fringe Benefits Publication 15-T, Federal Income Tax Withholding Methods Note: Prior to tax year 2024, the IRS also issued (annually) Publication 51, (Circular A), Agricultural Employer's Tax Guide, and Publication 80, (Circular SS), Federal Tax Guide for Employers in the U.S. Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands. Information on topics previously discussed in those publications are now found in Publication 15. See Publication 926, Household Employer's Tax Guide, for information on household employment taxes.

# Income Tax Withholding (Employment Tax Returns)

21.7.2.3.2 (10-01-2020) Income Tax Withholding (Employment Tax Returns) The amount of income tax withheld from wages is based on the following information shown on Form W-4, Employee's Withholding Certificate: Filing Status Number of jobs Number of dependents Any additional amount the employee requests to be withheld Exempt status With certain exceptions (such as household employment wages), all wages which are subject to FICA tax are also generally subject to income tax withholding. An employer is not required to withhold federal income tax from wages paid to a household employee. An employer should withhold federal income tax only if the household employee asks the employer to withhold it and the employer agrees. (See IRM 21.7.4.4.1.11, Social Security Domestic Employment Reform Act and BMF Schedules H.) When unable to determine the proper tax correction on employment tax returns, see IRM 21.7.2.4.4.3.2, Withholding Tax Adjustment When Unable to Determine Proper Tax Correction.

# FICA Taxes (including Additional Medicare Tax)

21.7.2.3.3 (12-13-2024) FICA Taxes (including Additional Medicare Tax) The taxes under the Federal Insurance Contributions Act (FICA) are social security taxes and Medicare taxes (including Additional Medicare Tax). Social security taxes are withheld at a combined tax rate of 12.4% (6.2% contributed by the employer and 6.2% contributed by the employee). However, social security taxes are withheld from wages and tips only up to a wage limit. The table below shows the social security wage limits from year to year. Year Maximum Amount of Wages 2016 118,500 2017 127,200 2018 128,400 2019 132,900 2020 137,700 2021 142,800 2022 147,000 2023 160,200 2024 168,600 2025 176,100 Note: Final regulations under IRC 3121(b)(10) (the "student exception" ) clarified who can be considered a student for purposes of the student exception. The final regulations provide that an employee whose normal work schedule is 40 hours or more per week is considered a full-time employee and is not eligible for the student FICA exception (the "full-time employee" rule). This prevents medical residents from being considered students and therefore wages earned by medical residents are considered wages subject to FICA taxes. The final regulations are applicable with respect to services performed on or after April 1, 2005. Medicare taxes are withheld on all wages and tips. There is no wage limit for Medicare taxes. The combined tax rate is 2.9% (1.45% contributed by employer and 1.45% contributed by employee). See IRM 21.7.2.5.16, IRC Section 132(f) Transportation Benefit Exclusion, for information regarding exclusion of qualified transit benefits from income. An Additional Medicare Tax (AdMT) is effective for tax periods beginning after December 31, 2012: The AdMT tax rate is 0.9%. Employers are required to withhold AdMT at the 0.9% tax rate from wages and tips paid to an employee in excess of $200,000 for a calendar year beginning with the payroll period in which the threshold is exceeded and continuing each pay period until the end of the calendar year. AdMT is in addition to the 1.45% Medicare tax rate withheld from employee wages and tips. AdMT is only imposed on the employee. There is no employer share of AdMT. Amounts of AdMT withheld by the employer will be included on the employee's Form W-2. While employers begin withholding the AdMT as soon as wages paid to an employee exceed the $200,000 threshold, the final amount owed or refunded is calculated as part of the individual's income tax return. Employers may not increase or decrease amounts of AdMT withheld from wages/tips paid to an employee based on an employee's expectation that they will owe more or less tax when filing their individual income tax return. Employees who expect to owe more AdMT than is withheld from their wages should make estimated tax payments and/or use Form W-4, Employee's Withholding Allowance Certificate, to request additional income tax withholding which will be applied against taxes shown on their individual tax return, including any AdMT liability. New lines were added to 2013 (and subsequent) employment tax returns for the purpose of reporting amounts of AdMT withheld by employers. IRN 074 was validated for Form 941, Form 943, and Form 944 to record adjustments to Taxable Wages & tips subject to Additional Medicare Tax withholding. IRN 112 is to be used to record adjustments to Additional Medicare Tax (along with other FICA tax corrections). Although employers are required to calculate, withhold and report AdMT in a manner similar to other FICA taxes, the tax treatment closely follows income tax withholding procedures. AdMT cannot be corrected after the close of a tax year unless the issue constitutes an administrative error, IRC Section 3509 rates are being applied, or as the result of an Examination. This is true even if AdMT was erroneously withheld. See IRM 21.7.2.4.4.3, Income Tax Withholding, Backup Withholding, and Additional Medicare Tax Adjustments, IRM 21.7.2.4.4.3.1, Administrative Errors, and IRM 21.7.2.5.4, IRC Section 3509, for more information. Information on AdMT is found throughout this IRM, in Publication 15, and instructions for employment tax forms. Additional information, including a "questions and answers" link to Frequently Asked Questions (FAQs), may also be found on the IRS website under the "Additional Medicare Tax" topic heading at: Understanding Employment Taxes.

# Individuals Employed by Parent or Spouse

21.7.2.3.3.1 (10-01-2015) Individuals Employed by Parent or Spouse FICA must be paid on services performed by: A child who is 18 or older employed by a parent in the course of the parent's business. A spouse in the course of the employer spouse's trade or business. A child who is 21 or older employed by a parent, whether or not in the course of the parent's business. Note: For federal tax purposes, the term "spouse" includes an individual married to a person of the same sex if the individuals are lawfully married under state laws. See IRM 21.7.2.5.17, DOMA (United States v. Windsor) Related Employment Tax Claims, for more information.

# Employees Receiving or Paid Tips

21.7.2.3.3.2 (10-01-2015) Employees Receiving or Paid Tips Employees must report to their employer all cash, check, and debit and credit card tips received each month if their total tips for any 1 month from any one employer equals or exceeds $20. The report to the employer is due by the 10th of the month following receipt of the tips. Note: See Publication 531, Reporting Tip Income, and Publication 1244, Employee's Daily Record of Tips and Report of Tips to Employer. Publication 1244 includes Form 4070, Employee's Report of Tips to Employer, and Form 4070-A, Employee's Daily Record of Tips, which may be used for reporting purposes (substitute reporting forms are acceptable). Employers must withhold income tax and the employee share of FICA taxes (or railroad retirement tax) on tips reported by employees from any non-tip wages or other funds made available by the employee for this purpose. Tips are also subject to Additional Medicare Tax, if, in combination with other wages or compensation paid by the employer, the total exceeds the $200,000 withholding threshold. Employers must also pay the employer portion of FICA on all tips reported to them by employees. Some employees may not have sufficient additional wages available to cover their share of the FICA tax on tips. In this case, adjustments to the portion uncollected from the employee must be reported on line 9, Form 941 or line 6, Form 944. The employer is still liable for the employer portion of FICA on the tips reported. The employer is not required to have supporting documentation for this reduction in tax. Also, employers must enter the amount of uncollected social security tax and Medicare tax (but not uncollected Additional Medicare Tax) on Form W-2, box 12, with codes "A" and "B". Note: Employers do not withhold income tax or the employee share of FICA from allocated tips. Allocated tips are not reported on Form 941. Rather, allocated tips must be added to income on the employee's tax return (unless the employee has a daily tip record or other credible evidence that shows they did not receive the allocated tips shown on Form W-2).

# Reporting FICA to SSA

21.7.2.3.3.3 (02-27-2013) Reporting FICA to SSA FICA information, including Additional Medicare Tax (AdMT) for calendar years beginning after December 31, 2012, is reported directly to the Social Security Administration (SSA) at the end of the year by the employer on Form W-3 along with Copy A of all Forms W-2 (or on the equivalent electronically filed forms).

# Agents — Filing Forms W-2

21.7.2.3.3.3.1 (10-01-2014) Agents — Filing Forms W-2 An employer may request that the IRS authorize an agent under IRC Section 3504 (Section 3504 Authorized Agent) to withhold, report and pay Federal employment taxes on behalf of the employer by filing a Form 2678, Employer/Payer Appointment of Agent. See IRM 21.7.2.3.7, Section 3504 Agents, for more information on agents. The 3504 Authorized Agent can act as an agent for two or more employers, or can be an employer and act as an agent for another employer. If either situation applies, the agent has special reporting procedures on Form W-2. The agent is instructed to enter its EIN in box b of Form W-2. The agent files separate Forms W-2 reflecting the wages paid by each employer. However, each Form W-2 will have the agent's EIN in box b. In box c of Forms W-2, the agent should enter its name and address and "agent for" . Even though the agent's EIN is shown in box b of Form W-2, the Forms W-2 are considered as being issued from separate employers and the employee may be eligible for a refund of excess social security and/or Tier 1 railroad retirement taxes. In addition, the employer's EIN should be entered in box h of Form W-3.

# Deposits

21.7.2.3.4 (07-05-2024) Deposits Taxpayers who file Form 941, Form 943, Form 944, or Form 945 are required to pay the tax on these returns by making Federal Tax Deposits (FTDs) if the liability equals or exceeds the $2500 threshold amount during the tax period for which the return is filed. Exception: Employers who file Form 941 (only) are not required to make deposits during a quarter if all the following requirements are met: • Their total tax liability for either the current quarter or the prior quarter is less than $2,500, and • They did not incur a $100,000 next-day deposit obligation during the current quarter, and • They fully pay the amount due with a timely filed return for the current quarter. Note: See IRM 21.7.2.6.5.4, Form CT-1 Deposits, for deposit requirements for railroad retirement taxes reported on Form CT-1. Also see IRM 20.1.4.6, De Minimis Exception to Deposit Requirements. All federal tax deposits are required to be made by means of Electronic Funds Transfer (EFT). See IRM 20.1.4.2.2.1, Electronic Funds Transfer (EFT), for more information. Penalties are imposed if deposits are made late, not made in sufficient amounts, made directly to the IRS (e.g., sending a check with a tax return or paying by credit card), or not made using EFT. See IRM 20.1.4, Failure to Deposit Penalty, for more information. Input Computer Condition Code "J" if you are reprocessing a document and no FTD penalty is to be assessed. Edit the "J" in the bottom middle margin of the return. Do not "J" code the re-input document, unless IDRS is unable to correctly figure the penalty, or if reasonable cause is being allowed. Research IDRS to determine if a CP 194, CP 207, or CP 207L was generated whenever tax or periodic liability information is being adjusted. If so, coordinate with the FTD Penalty Function, if necessary, to prevent erroneous FTD penalty assessments. For more information on deposits and penalties, see: Publication 15, (Circular E), Employer's Tax Guide IRM 20.1.4, Failure to Deposit Penalty Balance due payments for Form 941, Form 943, Form 945 (including balances that are up to ten years past due) and Form 944 (including two prior years) can be made over the phone or by internet using a credit card. These payments can be made through one of several authorized third-party service providers who will obtain card authorization during the transaction and provide a confirmation number as proof of payment. Taxpayers currently required to make FTDs, must still make deposits via EFT. FTDs cannot be paid by credit card. For specific information on business payments made by credit card, see IRM 21.2.1.48.6, Credit or Debit Card Payments (Pay by Phone or Internet). Note: Adjusted return payments may be made by credit card for the Form 941-X, Form 943-X, Form 944-X and Form 945-X (includes current year and two prior years).

# Electronic Filing (MeF) for Employment Tax Returns

21.7.2.3.5 (08-20-2024) Electronic Filing (MeF) for Employment Tax Returns See IRM 3.42.4, IRS e-file for Business Tax Returns for detailed information on electronic filing methods for business tax returns including employment tax returns. As of January 2016, electronically filed employment tax returns are filed exclusively through Modernized e-File (MeF). The following employment tax returns and associated schedules can be filed via MeF: Parent Form Attachment to Parent Form Form 940/Form 940-PR Schedule A (Form 940) Schedule R (Form 940) Form 941/Form 941-SS/Form 941-PR Schedule B (Form 941) Anexo B (Formulario 941-PR) Schedule D (Form 941) Schedule R (Form 941) Form 8974 Form 943/Form 943-PR Form 943-A Schedule R (Form 941) Form 8974 Form 944 Form 945-A Schedule D (Form 941) Form 8974 Form 945 Form 945-A Beginning in June of 2024, the following Forms 94XX can be filed using MeF: Form 941-X — Tax periods 202403 and subsequent Form 943-X — Tax periods 202312 and subsequent Form 945-X — Tax periods 202312 and subsequent Note: All attachments applicable to corresponding parent forms as shown in the table in (3) above are also valid with MeF filed Forms 94XX. See IRM 3.42.4.9.2.1, Researching e-file BMF Identification Codes, if Filing Location Code (FLC), Document Code, or other coding information is needed for electronically filed employment tax returns.

# Reporting Agents File (RAF)

21.7.2.3.6 (10-01-2025) Reporting Agents File (RAF) The Reporting Agent File (RAF) is a database of taxpayers who have contracted with a Reporting Agent to perform certain actions on their behalf with regards to filing employment tax returns and/or paying taxes. The taxpayer signs Form 8655, Reporting Agent Authorization, (or an IRS approved substitute form) which authorizes the Reporting Agent to take all or some of the following actions on behalf of their client: Sign and file their federal employment tax returns electronically or on paper.. Make EFTPS (Electronic Federal Tax Payment System) deposits and payments for them. Receive notices/correspondence and to discuss matters with the IRS associated with the tax returns/tax payments they made. File amended forms for the taxpayer. See IRM 21.3.9, Processing Reporting Agents File Authorizations, and IRM 21.1.3.5, Reporting Agents File (RAF) and Form 8655, Reporting Agent Authorization, for more information. Command Code RFINK is used to research IDRS for RAF authorizations. See IRM 2.3.16, Command Codes RFINK and RAFRQ for more information on command code RFINK.

# Section 3504 Agents

21.7.2.3.7 (10-01-2012) Section 3504 Agents An employer may request that the IRS authorize an agent under IRC Section 3504 (Section 3504 Authorized Agent) to withhold, report and pay Federal employment taxes on its behalf. All provisions of law applicable to an employer apply jointly to both the agent and the employer. For example, a corporation may request that the IRS authorize another entity to handle its federal employment tax obligations. For claims for refund of employment taxes made by the agent, treat the agent as an employer for purposes of employment tax deposits and payments made by the agent. Note: Agents cannot obtain refunds of taxes paid for periods for which the agent was not authorized and therefore the taxes were paid under the employer's (or another agent's) EIN. To request approval to act as a Section 3504 Authorized Agent for an employer, the agent files Form 2678, Employer/Payer Appointment of Agent, with the IRS. Note: Processing information may be found in IRM 3.13.2.17, Form 2678, Employer/Payer Appointment of Agent. Specific rules apply to a Section 3504 Authorized Agent acting on behalf of individuals who hire persons to provide home care services (home care service recipients). See IRM 21.7.2.4.9.3, Household Employment Taxes and Section 3504 Agents, for more information. Under Treasury Regulations Section 31.3504-2, effective for wages paid after March 31, 2014, the IRS may designate a payer to perform acts of an employer (Section 3504 Designated Agent). A Section 3504 Designated Agent does not file Form 2678 with the IRS. Instead, the IRS may designate a payer as agent on behalf of an employer if the payer enters into a service agreement with the employer. All provisions of law applicable to an employer apply to both the Section 3504 Designated Agent and the employer. Example: A corporation enters into a service agreement to perform an employer's Federal employment tax obligations, including the payment of wages and filing of employment tax returns but does not file a Form 2678 to become a Section 3504 Authorized Agent. The IRS may designate the corporation to perform acts of employer. Note: A service agreement is an agreement between the payer and its client/employer in which the payer: 1) asserts it is the employer of individuals performing services for the client; 2) pays wages to the individuals that perform services for the client; and 3) assumes responsibility to withhold, report and pay Federal employment taxes with respect to the wages it pays to the individuals that perform services for the client. For claims for refund of employment taxes made by a Section 3504 Authorized Agent or Section 3504 Designated Agent, treat the agent as an employer for purposes of employment tax deposits and payments made by the agent. However, Section 3504 Authorized Agents and Section 3504 Designated Agents cannot obtain refunds of taxes paid for periods for which the agent was not authorized.

# Certified Professional Employer Organization (CPEO) Program

21.7.2.3.8 (10-01-2018) Certified Professional Employer Organization (CPEO) Program The Stephen Beck, Jr., Achieving a Better Life Experience Act of 2014 (ABLE Act) was enacted on December 19, 2014, as part of The Tax Increase Prevention Act of 2014 (P.L. 113–295). Provision 206 of the ABLE Act required the IRS to establish a voluntary Professional Employer Organization (PEO) certification program. Note: PEOs handle various payroll administration and tax reporting responsibilities for their business clients and are typically paid a fee based on payroll costs. PEOs meeting eligibility requirements to be certified follow an online application process before being recorded by the IRS as a Certified Professional Employer Organization (CPEO). Note: Callers inquiring as to certification requirements or with questions about the application process should be referred to information found on the IRS website at Voluntary Certification Program for Professional Employer Organizations (CPEOs). CPEOs use Form 8973, Certified Professional Employer Organization/Customer Reporting Agreement, to report the beginning or end to service contracts with customers. Note: Form 8973 processing information may be found in IRM 3.13.2.30, Form 8973, Certified Professional Employer Organization/Customer Reporting Agreement - CPEO (Ogden Only). CPEOs file aggregate employment tax returns reflecting wage and tax data for employee services provided to client/customer companies and are required to attach the appropriate Schedule R allocation schedule. A CPEO is generally treated as the employer for employment tax purposes of any individual who performs services for a customer of the CPEO and is covered by a contract described in section 7705(e)(2) between the CPEO and the customer (CPEO contract), but only for wages and other compensation paid to the individual by the CPEO.

# Voluntary Classification Settlement Program (VCSP)

21.7.2.3.9 (10-01-2013) Voluntary Classification Settlement Program (VCSP) The Voluntary Classification Settlement Program (VCSP) is a voluntary program described in Announcement 2011-64 (updated in Announcement 2012-45) that provides an opportunity for taxpayers to reclassify their workers as employees for employment tax purposes for future tax periods with partial relief from federal employment taxes. To participate in this voluntary program, the taxpayer must meet certain eligibility requirements, apply to participate in the VCSP by filing Form 8952, Application for Voluntary Classification Settlement Program (VCSP), and enter into a closing agreement with the IRS. Form 8952 includes a computation by the taxpayer of the settlement amount which is based in part on IRC 3509 tax rates. However, this amount is not a tax and will not be assessed on any tax account. The Instructions for Form 8952 caution the taxpayer against submitting payment with Form 8952. The amount determined to be due under VCSP is to be paid with their signed closing agreement and that will take place after their application for participation in the VCSP is considered and accepted. Payments received from taxpayers accepted in the VCSP are not payments of tax and will not be posted to any tax account. Additional information, including Frequently Asked Questions (FAQs), may be found on the IRS website at: Voluntary Classification Settlement Program. Telephone assistors should not attempt to assist callers with questions regarding this program. Instead, direct any caller making inquiries regarding the VCSP to the IRS website information which may be located by searching for "Voluntary Classification Settlement Program" or "VCSP" on irs.gov.

# Employment Tax Returns Procedures

21.7.2.4 (10-01-2011) Employment Tax Returns Procedures This section contains procedures for working common employment tax issues.

# Item Reference Numbers (IRNs) and Credit Reference Numbers (CRNs) — Employment Taxes

21.7.2.4.1 (10-01-2024) Item Reference Numbers (IRNs) and Credit Reference Numbers (CRNs) — Employment Taxes Use Item Reference Numbers (IRNs) to adjust tax, wages, and Credit Reference Numbers (CRNs) to adjust applicable credits on employment tax returns. The current valid reference numbers for Form 941 adjustments are listed in the table below. Except where noted, the reference numbers also apply to Form 944 accounts. Item Reference Number Explanation 111 Total income tax withheld 004 Taxable social security wages 005 Taxable social security tips 073 Taxable Medicare wages & tips 074 Taxable Wages & tips subject to Additional Medicare Tax withholding (valid for Forms 941/943/944 for tax periods beginning after December 31, 2012) 112 Total social security and Medicare tax (including Additional Medicare Tax for tax periods beginning after December 31, 2012) 114 Section 3121(q) Notice and Demand - Tax due on unreported tips Caution: IRN 114 is only valid for Forms 941 and only for tax periods 201103 and subsequent. 104 Special rates for federal income tax (IRC Section 3509) 105 Special rates for social security, Medicare tax, and Additional Medicare Tax (IRC Section 3509) 106 Current quarter's fractions of cents (Form 941)/Current year's adjustments (Form 944) 107 Current quarter's sick pay (N/A for Form 944) 108 Current quarter's adjustment for tips and group life insurance (N/A for Form 944) 113 Total adjustments Reminder: IRN 113 must equal the sum of any IRN 104 through 108 changes (IRNs 104 through 110 for adjustments to returns 200812 and prior) 119 Qualified Small Business Payroll Tax Credit for Increasing Research Activities Note: For ease of reference, this credit is generally referred to as the "QSB Research Credit" throughout this IRM. Caution: IRN 119 is only valid for Form 941 tax periods 201706 and later or for Form 943 and Form 944 tax periods 201712 and later. Credit Reference Number (CRN) Description 290 Work Opportunity Credit for qualified tax-exempt organizations hiring qualified veterans. Caution: This credit is only allowed during the processing of Form 5884-C and Form 5884-D. See IRM 21.7.2.5.15, Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans, and Form 5884-D, Employee Retention Credit for Certain Tax-Exempt Organizations Affected by Qualified Disasters, for more information. Reminder: When adjusting an account, research any Computer Condition Codes (CCC "E" or "S" ) which may indicate a taxpayer's intent to receive a refund or credit elect. See Section 3 of Document 6209, IRS Processing Codes and Information. Caution: See IRM 21.7.2.7.6, COVID-19 Related Employment Tax Relief and Forms 94XX, for information on IRN/CRN usage on tax accounts for 2020 and subsequent tax periods. The following is noted with regards to previous IRN usage with Form 941 (and Form 944 where applicable): See archived versions of this IRM if information is needed on IRN usage for returns posting prior to 2005. IRN 109 (Current year's income tax withholding (Form 941)/Prior year's income tax withholding (Form 944)) and IRN 110 (Prior quarter's social security and Medicare taxes (Form 941)/Prior year's social security and Medicare taxes (Form 944)) are not valid for tax periods after 200812. IRN 072 (Tips deemed to be wages (IRC Section 3121 (q))) should not be used for tax periods after 201012. See the following references for IRNs and CRNs applicable to other employment tax forms discussed in this IRM: For Form 943, see (2) in IRM 21.7.2.4.6.3, Form 943-X, Adjusted Employer's Annual Tax Return for Agricultural Employees or Claim for Refund. For Form 945, see (6) in IRM 21.7.2.4.8, Form 945, Annual Return of Withheld Federal Income Tax. For Form CT-1, see (1) in IRM 21.7.2.6.5.1, Form CT-1 Adjustments. Caution: See IRM 21.7.2.7.6, COVID-19 Related Employment Tax Relief and Forms 94XX, for information on IRN/CRN usage on tax accounts for 2020 and subsequent tax periods.

# TC 29X / Item Reference Number (IRN) Valid Adjustment Formulas — Employment Taxes

21.7.2.4.1.1 (10-01-2024) TC 29X / Item Reference Number (IRN) Valid Adjustment Formulas — Employment Taxes The table which follows provides guidance on mathematical validity checks governing Item Reference Number (IRN) usage with adjustments to employment tax returns on Command Code ADJ54: Tax Form Tax Periods 29X adjustment must equal Form 941 Tax periods 201103 through 201703 The sum of IRNs 111, 112, 114, and 113. Form 941 Tax periods 201706 and after The sum of IRNs 111, 112, 114, and 113 less IRN 119. Form 944 Tax periods 201112 through 201612 The sum of IRNs 111, 112, 114, and 113. Form 944 Tax periods 201712 and after The sum of IRNs 111, 112, 114, and 113 less IRN 119. Form 943 Tax periods 201112 through 201612 The sum of IRNs 003 and 007. Form 943 Tax periods 201712 and after The sum of IRNs 003 and 007 less IRN 119. Note: For any Form 941 or Form 944 adjustment, IRN 113 must equal the sum of IRNs 104 through 110. Caution: For more detailed information on IRN 119 adjustments, see (8) in IRM 21.7.2.5.21, Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities. Caution: See IRM 21.7.2.7.6, COVID-19 Related Employment Tax Relief and Forms 94XX, for information on adjustment formulas on 2020 and subsequent tax periods.

# IRN 185/110 — FICA Tax Adjustments

21.7.2.4.1.2 (10-01-2024) IRN 185/110 — FICA Tax Adjustments IRN 110 is used for adjustments related to federal agency wage payments as discussed in IRM 21.7.2.5.7.2.1, Return Posted (TC 150), Wage Payments Made by Federal Agencies. IRN 185 is used for MFT11/Form 943 (only) to record adjustments for third-party sick pay and for fractions of cents.

# IRNs Do Not Equal TC 150

21.7.2.4.1.3 (10-01-2019) IRNs Do Not Equal TC 150 If an adjustment to an employment tax account is required and the posted IRN amounts do not equal the TC 150, process as follows: Input TC 290 .00 and correct the IRN amounts to agree with the posted TC 150. Use the appropriate Hold Code (usually Hold Code 4) with the adjustment to prevent any incorrect notices from being issued or to hold credit as needed. Input any corrections necessary to complete required account actions with a second adjustment using a post delay code of one cycle. Example: An employer files a Form 941-X reflecting a FICA tax decrease of $500. The TC 150 posted for $1,000.00 (all FICA tax) but the FICA reference line posted as $1,040.00. First, input a TC 290 .00 with a $40.00 decrease to IRN 112 and Hold Code 4. Then, on a second adjustment, input a $500 decrease with TC 291 and IRN 112 along with a post delay code of one cycle. Exception: Adjustments can be made without correcting the IRN(s) if the total of the IRNs are ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ of the posted TC 150 or if the ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ of the posted amount (unpostable check is bypassed). However, the IRNs must equal the TC 29X input on IDRS. Example: The TC 150 for a Form 941 posted as $39.00 (all FICA tax) and the FICA posted as $35.00. The taxpayer has filed a Form 941-X reducing the tax to zero. Input a TC 291 for $39.00 with IRN 112 for a $39.00 decrease.

# Sick Pay

21.7.2.4.2 (10-01-2015) Sick Pay Generally, sick pay is any amount paid under a plan to an employee-participant because of the employee's temporary absence from work due to disability, sickness, or injury. Sick pay may be paid by the employer or by a third party, such as an insurance company. Generally, sick pay is subject to: FICA taxes or railroad retirement taxes (including Additional Medicare Tax to the extent wages/tips (or RRTA compensation) paid to an employee exceed $200,000 for a calendar year beginning after December 31, 2012) Federal unemployment taxes Income tax withholding (unless paid by a third party who is not the employer's agent) Employers include total sick pay in taxable social security and Medicare wages (as well as wages/tips subject to Additional Medicare Tax when appropriate) paid on Form 941, on Form 944, or (rarely) on Form 943 as appropriate: If payments are made by a third-party payor (e.g., an insurance company) and the third-party payor transfers the liability for the employer's share of tax back to the employer as provided in the regulations, the employer reports the sick pay as wages but then deducts the employee's share of social security and Medicare taxes paid by the third party on the appropriate adjustment line of Form 941, Form 944, or Form 943. If the return is being filed by the third-party payor, the third-party payor reports the payments as wages but the employer's share of social security and Medicare taxes on the sick pay is deducted on the appropriate adjustment line of Form 941, Form 944, or Form 943. See Publication 15-A, Employer's Supplemental Tax Guide, for more information on sick pay. Although sick pay can be reported on original employment tax returns, employers and reporting agents often choose to file an adjusted Form 94XX to report sick pay and the associated taxes and adjustment amounts. See the appropriate form specific processing instructions, found later in this IRM, when addressing a Form 94XX reporting a correction to sick pay amounts. Substantiation is not required for sick pay adjustments reported on the appropriate adjustment line of an original employment tax return or a related Form 94XX adjusted return. The appropriate Item Reference Numbers (IRNs) must be used when completing corrections to sick pay reporting: Form Filed Use IRNs Form 941 (or Form 941-X) 004, 073, 074 (as appropriate), 112, 107 and 113 Form 944 (or Form 944-X) 004, 073, 074 (as appropriate), 112, 106 and 113 Form 943 (or Form 943-X) 004, 073, 074 (as appropriate), 007, and 185 Note: If appropriate, also use IRNs 003 or 111 (as applicable) to record corrections to federal income tax withheld on sick pay. In some situations, employers may believe a Third-Party Payor (Insurance Company) has made payment of the employer's share of FICA taxes for them and they may request the third party's payment of the employee's share to be applied to the employer's tax account. In that situation: Provide the employer with Publication 15-A. Explain to the employer how the Third-Party Payor (Insurance Company) reports the employee's share of FICA (and any federal income tax) withheld from the employees' sick pay on their own employment tax return. Explain to the employer that they remain liable to report and pay the employer's share of FICA taxes by including the wages on their employment tax return and deducting the employee's share of FICA reported and paid by Third-Party Payor on the appropriate adjustment line.

# Loose Employment Tax Schedules

21.7.2.4.3 (04-28-2017) Loose Employment Tax Schedules Loose schedules are those that have inadvertently been detached from a return or received from taxpayers without sufficient information to indicate why they have been sent or to allow them to be associated with the proper return. These include, but are not limited to, Schedule B (Form 941), Form 945-A, Schedule D (Form 941), Schedule R (Form 941), and Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities. See the subsections which follow for guidance on handling the most common loose employment tax schedule situations.

# Loose Schedule B (Form 941) or Other Record of Federal Tax Liability (ROFTL)

21.7.2.4.3.1 (01-20-2016) Loose Schedule B (Form 941) or Other Record of Federal Tax Liability (ROFTL) Upon receipt of a loose Schedule B (Form 941) or other loose ROFTL (such as Form 943-A or Form 945-A): If And Then 1) The correct tax period cannot be determined Make two attempts to contact the taxpayer by phone (if a telephone number is available) to determine the correct tax period: If the correct tax period can be determined, continue to process per the instructions in the following rows of this table. If unable to contact the taxpayer by phone, return the schedule and instruct the taxpayer to refile it with a newly signed copy of the related employment tax return. 2) The tax return for which the loose schedule was filed has not posted Normal processing time for the original return has elapsed Return the schedule and instruct the taxpayer to refile it with a newly signed copy of the related employment tax return. 3) The tax return for which the loose schedule was filed has not posted Normal processing time for the original return has not elapsed Suspend the case and allow for normal processing time. When the return posts, continue to process per the instructions in the following rows of this table. 4) The tax return for which the loose schedule was filed has posted IDRS research indicates the loose schedule is a duplication or is unnecessary Treat the loose schedule as classified waste. 5) The tax return for which the loose schedule was filed has posted IDRS research indicates the loose schedule changes originally reported liability data Follow procedures in IRM 20.1.4.21.2, Revised Record of Federal Tax Liability (ROFTL) Provided.

# Loose Schedule D (Form 941)

21.7.2.4.3.2 (10-01-2019) Loose Schedule D (Form 941) Schedule D (Form 941), Report of Discrepancies Caused by Acquisitions, Statutory Mergers, or Consolidations, was introduced in 2005. Refer any loose forms received in Accounts Management to the CAWR (Combined Annual Wage Reporting) unit at the Philadelphia Compliance Campus, Drop Point 4-G08.151.

# Loose Schedule R (Form 941): Allocation Schedule for Aggregate Form 941 Filers

21.7.2.4.3.3 (10-01-2025) Loose Schedule R (Form 941): Allocation Schedule for Aggregate Form 941 Filers Schedule R (Form 941): Allocation Schedule for Aggregate Form 941 Filers (and continuation sheets as needed), must be completed and attached each time an aggregate Form 941 is filed by an approved agent (as defined by IRC 3504). Note: To request authorization to act as a Section 3504 Authorized Agent for an employer, Form 2678, Employer/Payer Appointment of Agent, must be filed with the IRS. See IRM 21.7.2.3.7, Section 3504 Agents, IRM 21.7.2.4.9.3, Household Employment Taxes and Section 3504 Agents, and IRM 3.13.2.17, Form 2678, Employer/Payer Appointment of Agent, for more information. Schedule R (Form 941) is used to allocate the aggregate information reported on Form 941 to each client. If there are more than 15 clients, continuation pages should be completed as necessary. Schedule R (Form 941) and any continuation pages must be attached to the aggregate Form 941, when filed. When a Form 941 is processed and a Schedule R (Form 941) is attached, a Schedule R Indicator (SRI) will be posted to MF. If a taxpayer filed a Schedule R (Form 941) with their original return and needs to correct the previously filed Form 941, then a revised Schedule R (Form 941) should be submitted with the Form 941-X. However, when processing a Form 941-X for an aggregately filed Form 941 (regardless of whether a Schedule R indicator is present), ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. Note: If a taxpayer is required to file a Schedule R (Form 941) and does not do so with their original return, they may submit another Form 941 with a Schedule R (Form 941) attached which may create a TRNS 193. If so, follow existing procedures in IRM 21.7.9, BMF Duplicate Filing Conditions. The chart below indicates procedures for most Schedule R inquiries: If And Then 1) Loose Schedule R is received The original return has posted (regardless if a Schedule R indicator is present) No additional action is needed. Note: If working a CII case, add a case note to identify what was received and close the CII case. 2) Loose Schedule R is received The original return has not posted and the original return processing time for Form 941 has not elapsed Suspend loose schedule pending posting of original return. 3) Loose Schedule R is received The original return has not posted and the original return processing time for Form 941 has elapsed Contact taxpayer, preferably by phone, to obtain a signed copy of the original return and suspend case for 40 days. If taxpayer replies with a copy of the original return, process accordingly. If the taxpayer does not reply, reject the Schedule R back to the taxpayer requesting the original Form 941 (and accompanying Schedule R) be filed. Reminder: The guidance for Schedule R (Form 941) above is also applicable to Schedule R (Form 943).

# Loose Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities

21.7.2.4.3.4 (04-27-2023) Loose Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities See IRM 21.7.2.5.21, Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities, for additional information on Form 8974. Note: For ease of reference, the "Qualified Small Business Payroll Tax Credit for Increasing Research Activities" is generally referred to as the "QSB Research Credit" throughout this IRM. Form 8974 is required to be attached to either an original employment tax return or an adjusted/amended employment tax return as supporting documentation for claims and adjustments to the QSB Research Credit. However, AM may occasionally receive loose Forms 8974 (i.e., not attached to an employment tax form); this will generally result from: The taxpayer incorrectly filed Form 8974 separate from any other document. The taxpayer is providing the Form 8974 in response to a request for missing information. The Form 8974 was inadvertently detached from an original return, an adjusted/amended employment tax form, or correspondence with which it was filed. The Form 8974 was received in Submission Processing (SP) attached to an original employment tax form but there was no corresponding entry on Line 11 (Form 941). In that filing situation, SP has instructions to detach and route Forms 8974 to AM for handling. When working a loose Form 8974, review the document and research the tax account for which it was filed to determine if the credit claimed was already processed or if there is another case document to which it should be associated (e.g., a Form 941-X case). Continue processing as follows: If And Then 1) The loose Form 8974 was filed for an employment tax return period beginning before April 1, 2017 for Form 941 or before January 1, 2017, for Form 943 and Form 944. Contact the IRM author through your management chain and the site P&A Staff for guidance on handling the case. 2) The original employment tax return has not posted The taxpayer does not have employment tax filing requirements Reject the Form 8974 with Letter 916C. Advise the taxpayer in the letter that we cannot consider their Form 8974 because the credit must be taken on an original employment tax return and it does not appear that they file employment tax returns. 3) The original employment tax return has not posted There is a TC 150 pending on the account in open reject status and it appears the loose Form 8974 was submitted in response to (or is related to) the reject condition Close the case and route the Form 8974 to ERS as appropriate. 4) The original employment tax return has not posted Normal processing time for the original employment tax return has not elapsed Monitor the account for posting of the return or until normal processing time is elapsed. 5) The original employment tax return has not posted Normal processing time for the original employment tax return has elapsed Reject the Form 8974 using Letter 4384C and inform the taxpayer they must file the appropriate original employment tax return with Form 8974 attached to claim the credit. Note: If the Form 8974 is missing information that would be required for its processing (see (4) in IRM 21.7.2.5.21.1, Processing Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities, for required verification items), identify the specific items requiring perfection in the rejection letter. 6) The amount of QSB Research Credit claimed on the loose Form 8974 is equal to the amount of credit previously allowed for the tax period identified. If the Form 8974 was submitted in response to a missing information request on a previous Form 94XX case, take action to associate the new case to the previous case. Otherwise, take no further action and close the case. 7) The loose Form 8974 reflects a decrease to a previously allowed credit amount (i.e., would result in a tax increase) Input a TC 290 adjustment in Blocking Series 15 for the amount of the QSB Research Credit change along with IRN 119 (for the same amount but as a negative). If appropriate, adjust the FTD penalty (see IRM 20.1.4.21.3, Amended or Supplemental Return (Tax Decrease or Non-Interest-Free Tax Increase)). Issue Letter 4384C stating we processed the Form 8974 but that in the future changes to previously reported QSB Research Credit amounts must be corrected by filing an amended return (specify form) with Form 8974 attached. Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ 8) The loose Form 8974 reflects an increase to a previously allowed credit amount or no credit was previously claimed (i.e., would result in tax decrease) The loose Form 8974 is a late response to a Letter 21C requesting a missing Form 8974 in support of a QSB Research Credit entry on an original employment tax return which was subsequently disallowed during pipeline processing Treat the issue as a substantiated math error response and allow the amount claimed (not to exceed the amount requested on the original return) so long as the Form 8974 is complete for processing. (see (4) in IRM 21.7.2.5.21.1, Processing Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities, for required verification items.) Input a TC 291 adjustment in Blocking Series 15 for the amount of the QSB Research Credit change along with IRN 119 (for the same amount but as a positive). 9) The loose Form 8974 reflects an increase to a previously allowed credit amount or no credit was previously claimed (i.e., would result in tax decrease) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Input a TC 291 adjustment in Blocking Series 15 along with IRN 119 (for the same amount but as a positive) to allow the credit. Issue Letter 4384C stating we processed the Form 8974 but that in the future changes to previously reported QSB Research Credit amounts must be corrected by filing the appropriate X form (specify form) with Form 8974 attached. 10) The loose Form 8974 reflects an increase to a previously allowed credit amount or no credit was previously claimed (i.e., would result in tax decrease) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Reject the Form 8974 using Letter 4384C and inform the taxpayer they must file the appropriate X form (identify the specific form to be used) to make the adjustment. Note: If the Form 8974 is missing information that would be required for processing (see (4) in IRM 21.7.2.5.21.1, Processing Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities, for required verification items), identify the specific items requiring perfection in the letter. Caution: When rejecting documents, extreme care must be taken to ensure that only the material relative to the taxpayer(s) to which the correspondence is addressed is enclosed in the envelope. See IRM 21.3.3.4.24, Breaches of Personally Identifiable Information (PII) Caused by Manual Stuffing Errors, for additional information.

# Adjusted Employer's Federal Tax Return or Claim for Refund

21.7.2.4.4 (01-29-2025) Adjusted Employer's Federal Tax Return or Claim for Refund Requests for adjustments or claims for refund of previously reported employment taxes must be filed on the appropriate adjusted employer's federal tax return or claim for refund. These forms include: Form 941-X Form 943-X Form 944-X Form 945-X Form CT-1X Note: These forms are collectively referred to as "Forms 94XX" throughout this IRM. Category codes for these forms are shown in the following table. Form Filed Category Code 941-X, 941-X (SP) or 941-X (PR) 941X 943-X, 943-X (SP) or 943-X (PR) 943X 944-X or 944X (SP) 944X 945-X 945X CT-1 X CT1X Note: These forms age 45 days from the IRS received date and are not subject to Policy Statement 21-3 (formerly P-6-12) criteria. Employers are not permitted to use Form 843, Claim for Refund and Request for Abatement, to submit a claim for refund of employment taxes. Employers may still use Form 843 to request an abatement of penalties and/or interest. Note: Employees who are unable to obtain reimbursement of over withheld social security and Medicare taxes from their employer may file Form 843 to obtain a refund. See IRM 21.7.2.4.4.4.2, Excess Social Security and Medicare Tax Withheld — Employee Claims for Refund, for additional information. Beginning in June of 2024, the following Forms 94XX can be filed using Modernized e-File (MeF): Form CII Doc Type Valid Tax Periods Form 941-X F - 941X MEF Tax periods 202403 and subsequent Form 943-X F - 941X MEF Tax periods 202312 and subsequent Form 945-X F - 941X MEF Tax periods 202312 and subsequent Note: The initial systemically generated CII case note provides information with regards to the MeF filed document record. The Form 94XX image is accessed through the Employee User Portal (EUP) using the "MeF Bus Tax Return & Ack PRD" application. Procedures and requirements for use of Forms 94XX were published in Treasury Decision (T.D.) 9405 which provided revised regulations. Employers may use either a claim process or an adjustment process to make corrections: The adjustment process must be used by the employer to report all corrections for underreported amounts. The adjustment process may be used by the employer to report corrections for overreported amounts unless the correction request is made within 90 days of the expiration of the period of limitations on credit or refund (meaning the Refund Statute Expiration Date or RSED). The claim process may be used to report corrections for overreported amounts if the employer is requesting a refund or abatement and must be used when a correction request for overreported amounts is made within 90 days of the RSED. Note: To assist taxpayers in deciding which process they should use (adjustment or claim for refund), a flowchart was developed and is part of the Forms 94XX or instructions. If the employer selects the adjustment process by checking Box 1 in Part 1 of Form 94XX, the amount of any resulting overpayment will be applied as a credit to the tax period in which the adjustment form was filed. Example: If an employer files a Form 941-X in February 2025 for an adjustment to their 202309 Form 941, the credit will be applied to their 202503 account. Example: If an employer files a Form 943-X in February 2025 for an adjustment to their 202312 Form 943, the credit will be applied to their 202512 account. Note: Overpayments arising from adjustments made under these procedures are subject to offset. If the employer selects the claim process by checking Box 2 in Part 1 of Form 94XX, the amount of any resulting overpayment will be refunded to the employer from the period being adjusted along with any allowable overpayment interest. Example: If an employer files a Form 941-X in March 2025 claiming a refund for an overpayment on their 202409 Form 941, the overpayment will be refunded from the 202409 account. Example: If an employer files a Form 943-X in March 2025 claiming a refund for an overpayment on their 202412 Form 943, the overpayment will be refunded from the 202412 account. Note: Overpayments arising from adjustments made under these procedures are subject to offset. Per the regulations, employers who are making a correction for overreported amounts within 90 days of the expiration of the period of limitations on credit or refund (RSED) on the period being corrected, must submit a claim instead of an adjustment request. See IRM 21.7.2.4.4.5, 90 Day — Claim, for more information on when to convert adjustment requests to claims and the form specific procedures found later in this IRM for handling instructions. Example: If wages were paid on June 6, 2021, and an original employment tax return reporting those wages was filed on or by July 31, 2021, and the reported taxes were timely paid, then the period of limitations for assessment or for credit or refund would expire April 15, 2025. An adjusted return reporting an overpayment must be filed by January 17, 2025, the date which is 90 days before the expiration of the period of limitations on credit or refund. In this example, if the Form 94XX requesting correction via the adjustment process was filed after January 17, 2025, we would convert the adjustment request to a claim and inform the employer of that action. Employers who need to make corrections for both underreported and overreported amounts on the same tax period have two filing options: Use the adjustment process and report both the underreported and overreported amounts on one Form 94XX. If this option is selected, the employer may net the corrections and either pay the net balance due with the Form 94XX or have the net overpayment applied to the tax period in which the correction was filed. Use the adjustment process to report the correction for underreported amounts and use the claim process to report the correction for overreported amounts. In this situation, the employer must file separate Forms 94XX to report the underreported amounts and the overreported amounts. The entire underreported amount must be paid by the time they file the Form 94XX. It cannot be netted with the overreported amount reported on the separate Form 94XX. See IRM 21.7.2.4.4.9, One Form 94XX Filed but Two Forms 94XX were Required, and IRM 21.7.2.4.4.10, Processing Multiple Forms 94XX Filed for the Same Tax Period, for more information. Note: Employers making corrections for both underreported and overreported amounts on the same tax period within 90 days of the RSED must file separate Forms 94XX as discussed in the second bulleted item above. They do not have the option of filing one Form 94XX ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ A set of certifications is included on Forms 94XX: Employers are required to certify that they have filed, or will file, Forms W-2, or Form W-2 c, as required. Employers must complete all certifications that apply to the type of return they are filing and the corrections being made. Treasury regulations require the employer to explain in detail the grounds and facts relied upon to support each correction. The taxpayer is instructed to describe the events that caused the underreported or overreported wages, administrative errors or payroll errors. Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ A TC 971 AC 010 systemically generates when any Form 94XX is scanned into the Correspondence Imaging Inventory (CII) system. The generation of this transaction code sets either a -A or an E- freeze on the tax module which must be addressed: -A freeze: Released with a 29X (or 30X) adjustment. See IRM 21.5.6.4.2, -A Freeze, and the appropriate Form 94XX processing instructions found later in this IRM for more information. E- freeze: Released by posting of TC 150 or TC 971 transaction. See IRM 21.5.6.4.9, E- Freeze, and IRM 21.7.2.4.4.6, Adjusted Employer's Tax Return or Claim for Refund Return Filed — No TC 150 Posted, for more information. Reminder: If a TC 971 AC 010 was not systemically posted and there is a TC 150 posted to the module, manually input a TC 971 AC 010 to set the -A freeze and post delay adjustment actions to ensure the resulting freeze is properly released. Note: Also see the fourth paragraph of IRM 21.5.3.4.2, Tax Decrease or Credit Increase, when rejecting a Form 94XX. Blocking series "20" must be used when adjusting an account as a result of a Form 941-X, 943-X, 944-X, 945-X or CT-1X being filed. Note: Blocking series 20 must also be used when adjusting accounts per instructions in IRM 21.7.2.4.4.7, Exception Processing — Incorrect Filing, Including Forms Routed to AM from SP. Exception: Blocking series 98 (or blocking series 99 if the original return is attached) must be used when a Form 94XX is being fully disallowed, blocking series 18 (or blocking series 00 if the original return is attached) must be used when a Form 94XX is being partially disallowed, and blocking series 15 (or blocking series 00 if the original return is attached) must be used when a Form 94XX is being "no considered" . See IRM 21.5.3.4.6, No Consideration and Disallowance of Claims and Amended Returns, for additional information. The AM clerical function (or other campus designated function or employees) should review any Form 94XX received during the last month of a tax period to identify those that are requesting overpayments be applied to the current tax period. Processing of these Forms 94XX should be expedited to prevent the issuance of an incorrect balance due notice to the taxpayer as a result of the original return posting for the current period before the credit arising from the Form 94XX can be applied. Note: The Instructions for the "X" forms encourage employers requesting an overpayment to be credited to a current tax period using the adjustment process to file their Form 94XX prior to the last month of the current tax period. For claims involving IRC 6020(b), see IRM 21.7.9.4.1.6, Duplicate Filing Conditions Involving Returns Prepared Under IRC Section 6020(b). See IRM 21.7.2.4.4.11, Signature Requirements for Form 94XX Amended/Adjusted Employment Tax Returns, for who may sign Forms 94XX (and Form 5884-C/Form 5884-D) and handling guidance for missing signatures. For handling guidance on address changes reported on Forms 94XX, see IRM 21.7.2.4.4.12, Address Changes Reported on Form 94XX Amended/Adjusted Employment Tax Returns. For guidance on identifying and handling Forms 94XX with RICS/RIVO/IDT involvement, see IRM 21.7.2.4.4.13, Forms 94XX with Return Integrity and Compliance Services (RICS), Return Integrity Verification Operations (RIVO), or Identity Theft (IDT) Involvement.

# Employment Tax Returns — Stand Alone Forms

21.7.2.4.4.1 (01-29-2025) Employment Tax Returns — Stand Alone Forms Employers must file the appropriate adjusted employer's federal tax return or claim for refund to request an adjustment or claim a refund of previously reported employment taxes. The following table shows which form must be filed based on the original employment tax return filed and provides a cross-reference to specific processing information. Return originally filed Form to File to make corrections Cross-Reference Form 941, Form 941(SP) or Form 941-SS Form 941-X, Adjusted Employer's QUARTERLY Federal Tax Return or Claim for Refund IRM 21.7.2.4.5.6 Form 943 or Form 943(SP) Form 943-X, Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund IRM 21.7.2.4.6.3 Form 944 or Form 944(SP) Form 944-X, Adjusted Employer's ANNUAL Federal Tax Return or Claim for Refund IRM 21.7.2.4.7.4 Form 945 Form 945-X, Adjusted Annual Return of Withheld Federal Income Tax or Claim for Refund IRM 21.7.2.4.8.1 Form 941-PR Form 941-X (PR), Adjusted QUARTERLY Federal Tax Return or Claim for Refund (Puerto Rican Version) IRM 21.7.2.4.5.6 Form 943-PR Form 943-X (PR), Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund (Puerto Rican Version) IRM 21.7.2.4.6.3 Form 944(SP) Form 944-X (SP), Adjusted Employer's ANNUAL Federal Tax Return or Claim for Refund (Spanish Version) IRM 21.7.2.4.7.4 Form CT-1 Form CT-1X, Adjusted Employer's Annual Railroad Retirement Tax Return or Claim for Refund IRM 21.7.2.6.5.10 Taxpayers must use the applicable form that corresponds to the return type they originally filed for the tax period they are correcting. Example: Taxpayer was a Form 944 filer for 2023 but became a Form 941 filer for 2024. If the taxpayer is correcting tax period 2023, they must file a Form 944-X to make the correction, not a Form 941-X.

# Interest-Free Adjustments (Employment Tax Returns)

21.7.2.4.4.2 (10-01-2017) Interest-Free Adjustments (Employment Tax Returns) Employers who discover (ascertain) they have reported and paid less FICA tax, income tax withholding, or railroad retirement tax (RRTA) than was due on an original tax return may qualify for an interest-free tax adjustment under IRC 6205 and Regulation 26 CFR 31.6205-1 provisions. FICA and RRTA taxes include Additional Medicare Tax (AdMT) withheld from employees' wages and compensation. Note: These interest-free adjustment rules do not apply to the employee representative tax reported on Form CT-2. Caution: Income tax withholding and Additional Medicare Tax can only be corrected for prior calendar years if there was an administrative error, IRC Section 3509 rates are being applied, or as the result of an Examination. See IRM 21.7.2.4.4.3.1, Administrative Errors and IRM 21.7.2.5.4, IRC Section 3509. An error is considered ascertained when the employer has sufficient knowledge of the error to be able to correct it. To qualify for an interest-free tax adjustment, the employer must file the appropriate Form 94XX reporting the correction by the due date of the tax return for the tax period in which the error was ascertained. The due date is determined based on the type of tax return the employer is correcting. Example: On August 12, 2025, an employer discovers an error with the Form 941 they filed for the 202503 tax period. They must file a Form 941-X reporting the correction by October 31, 2025, in order to qualify for an interest-free tax adjustment. Example: On June 10, 2025, an employer discovers an error with the Form 943 they filed for the 202412 tax period. They must file a Form 943-X reporting the correction by January 31, 2026, in order to qualify for an interest-free tax adjustment. Example: On February 18, 2025, an employer who is currently a Form 944 filer for 2025 discovers an error on a Form 941 they filed for the 202403 tax period. They must file a Form 941-X by April 30, 2025, in order to qualify for an interest-free tax adjustment. Although they are currently a Form 944 filer, it is the original tax form which must be corrected that controls the type of adjusted form they must file and its due date. The employer in this situation cannot file a Form 944-X to make the correction and does not have until January 31, 2026, to file the adjusted tax return. Although employers have until the due date of the tax return for the tax period in which an error was ascertained to file the applicable Form 94XX reporting an underpayment adjustment, regulations require employers to pay any underpayment of tax by the time the adjusted tax return is filed. Otherwise, the correction will not qualify for a completely interest-free tax adjustment. See the table below for more information. If And Then 1) The employer does not file the applicable Form 94XX by the due date of the tax return for the tax period in which the error was ascertained. The adjustment will be input with a TC 290 transaction. Interest will be due as per normal underpayment interest rules. 2) The employer files the applicable Form 94XX by the due date of the tax return for the tax period in which the error was ascertained. Fully pays the underpayment owed by the time the Form 94XX is filed. The adjustment will be input with a TC 298 transaction. No interest will be due on the amount of the underpayment reported if it is paid by the time the Form 94XX is filed. 3) The employer files the applicable Form 94XX by the due date of the tax return for the tax period in which the error was ascertained. Does not fully pay the underpayment owed by the time the Form 94XX is filed. The adjustment will be input with a TC 298 transaction. Interest will be due on the amount of the underpayment from the interest computation date to the date payment is made. Note: Generally, applicability of FTD penalties must be considered whether an increase is input with either a TC 290 or TC 298. This is discussed in greater detail in specific handling guidance found throughout this IRM . When inputting a TC 298, the interest computation date is the IRS received date of the Form 94XX ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ for all errors ascertained after December 31, 2008. See archived copies of this IRM for information on how interest computation dates were determined on errors ascertained prior to January 1, 2009. Example: An employer discovers an error on February 4, 2025, and the adjustment form has an IRS received date of March 4, 2025. Enter the TC 298 with an interest computation date of March 4, 2025. Exception: If an employer files an "X" form that is received prior to the due date of the quarter being corrected, input the due date of the quarter being corrected as the interest computation date. Example: An employer files a Form 941-X (underpayment) correcting the 202503 tax period on April 22, 2025. The interest computation date input should be April 30, 2025, not April 22, 2025. Note: The computer also uses the interest computation date of the TC 298 for the FTP penalty start date if the underpayment is not paid when the Form 94XX is filed. No underpayment can be reported as an interest-free adjustment after receipt of the earlier of either: Notice and Demand for payment Notice of Employment Tax Determination Under IRC Section 7436.

# Income Tax Withholding, Backup Withholding, and Additional Medicare Tax Adjustments

21.7.2.4.4.3 (10-01-2015) Income Tax Withholding, Backup Withholding, and Additional Medicare Tax Adjustments After the end of the year, adjustments (increases or decreases) to income tax withholding, backup withholding (BUWH), or Additional Medicare Tax (AdMT) can only be made if the adjustment is due to an administrative error, IRC Section 3509 rates are being applied, or as the result of an Examination. Even if income tax, BUWH, or AdMT was erroneously withheld, it cannot be adjusted in a subsequent year. Tax erroneously withheld does not constitute an administrative error. Note: See IRM 21.7.2.4.4.3.1, Administrative Errors, and IRM 21.7.2.5.4, IRC Section 3509, for additional information. For corrections to income tax withheld, BUWH, or AdMT, the employer must: Submit the applicable adjustment/claim form. Check the applicable certification box(es). Provide a detailed explanation for the adjustment request. Although income tax withheld and AdMT cannot be changed after the close of the calendar year except for administrative errors, IRC Section 3509 rates being applied, or Examinations, changes to "Wages, tips and other compensation" and "Taxable wages and tips subject to Additional Medicare Tax withholding" can be reported by taxpayers on Forms 94XX to account for nonadministrative errors. See the specific line instructions for those items in the appropriate Form 94XX instructions for more information (e.g., for Form 941-X, see the Line 6 and Line 13 instructions in Instructions for Form 941-X). "Wages, tips and other compensation" is not an adjustable field on employment tax accounts. See IRM 21.7.2.4.5.2, Line 2, Form 941, for more information. "Taxable wages and tips subject to Additional Medicare Tax withholding" is an adjustable field (IRN 074) for Form 941, Form 943, and Form 944 (but not Form CT-1). Changes reported by taxpayers to "Taxable wages and tips subject to Additional Medicare Tax withholding" on Form 941-X, Form 943-X, and Form 943-X (but not Form CT-1X) should be made by via IRN 074 corrections even if an AdMT tax change is not reported or cannot be made as discussed in this IRM section. Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ All general guidance in IRM 21.7.2.4.4, Adjusted Employer's Federal Tax Return or Claim for Refund, and form/situation specific guidance (e.g., for a tax decrease - claim for refund filed on Form 941-X, follow IRM 21.7.2.4.5.6.2, Form 941-X Tax Decrease — Claim) applies to Forms 94XX filed reporting corrections to income tax withheld, BUWH, and AdMT. However, the following table provides additional guidance on special considerations for adjustment requests for income tax withheld, BUWH, and AdMT. If And Then 1) A Form 94XX is filed requesting an adjustment to income tax withheld or AdMT The correction is being made at IRC 3509 rates Process the adjustment as requested so long as the form is complete and processable. See IRM 21.7.2.5.4, IRC Section 3509 for processing instructions. 2) A quarterly Form 941-X is filed requesting an adjustment (increase or decrease) to income tax withheld or AdMT The Form 941-X indicates the error was discovered on or before December 31 of the year for which the adjustment is requested Process the adjustment as requested so long as the form is complete and processable. Follow the general procedures in IRM 21.7.2.4.4, Adjusted Employer's Federal Tax Return or Claim for Refund, and the specific procedures applicable to the type of Form 94XX filed (e.g., for a tax decrease - claim for refund filed on Form 941-X, follow IRM 21.7.2.4.5.6.2, Form 941-X Tax Decrease — Claim) to make any necessary account corrections. 3) A Form 94XX is filed requesting an adjustment (increase or decrease) to income tax withheld, BUWH, or AdMT The explanation section indicates the correction requested is for an administrative error or the taxpayer checked box 4c or 5d in the certification section (does not apply to Form 945-X) Process the adjustment as requested so long as the form is complete and processable. Follow the general procedures in IRM 21.7.2.4.4, Adjusted Employer's Federal Tax Return or Claim for Refund, and the specific procedures applicable to the type of Form 94XX filed (e.g., for a tax decrease - claim for refund filed on Form 941-X, follow IRM 21.7.2.4.5.6.2, Form 941-X Tax Decrease — Claim) to make any necessary account corrections. 4) A Form 94XX is filed (after December 31 of the year for which the adjustment is requested) requesting a decrease to income tax withheld, BUWH, or AdMT The explanation section indicates the correction requested is not for an administrative error. Disallow the income tax withheld, BUWH, or AdMT portion of the claim and send Letter 105C or Letter 106C(as appropriate) per instructions in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures. The following language should be used in the disallowance letter open paragraph: "Amounts reported as income tax withheld, backup withholding, or Additional Medicare Tax withheld in a prior year cannot be changed unless it is to correct an administrative error, Section 3509 applies, or as the result of an examination. An administrative error occurs if the amount you entered on your tax return is not the amount you actually withheld." Caution: If the taxpayer combined tax increases with the decrease being disallowed on a single Form 94XX, all normal procedures for securing missing information (e.g., ascertained dates, revised liability schedules (if required), etc.) must be applied before adjusting the account and issuing the disallowance letter. 5) A Form 94XX is filed (after December 31 of the year for which the adjustment is requested) requesting a decrease to income tax withheld, BUWH, or AdMT It cannot be determined from the explanation whether the correction requested is for an administrative error. See IRM 21.7.2.4.4 (12) for information on explanation requirements. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ 6) A Form 94XX is filed (after December 31 of the year for which the adjustment is requested) requesting an increase to income tax withheld, BUWH, or AdMT The explanation section indicates the correction requested is not for an administrative error Process the adjustment as requested so long as the form is complete and processable. Follow the general procedures in IRM 21.7.2.4.4, Adjusted Employer's Federal Tax Return or Claim for Refund, and the specific procedures applicable to the type of Form 94XX filed (e.g., if filed on Form 941-X, follow IRM 21.7.2.4.5.6.3, Form 941-X Tax Increase — Adjusted Employment Tax Return) to make any necessary account corrections. Send Letter 4384c and include the following language in the two open paragraphs: "We have processed your Form [specify]. However, amounts reported as income tax withheld, backup withholding, or Additional Medicare Tax withheld in a prior year cannot be changed unless it is to correct an administrative error or Section 3509 applies. An administrative error occurs if the amount you entered on your tax return is not the amount you actually withheld." "If the Form [specify] you filed included a correction to income tax withheld, backup withholding, or Additional Medicare Tax withheld in a prior year which was not the result of an administrative error, you may file a new Form [specify] to request a refund or credit of the tax reported in error." 7) A Form 94XX is filed (after December 31 of the year for which the adjustment is requested) requesting an increase to income tax withheld, BUWH, or AdMT It cannot be determined from the explanation whether the correction requested is for an administrative error See IRM 21.7.2.4.4 (12) for information on explanation requirements. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Reminder: See IRM 21.7.2.4.4.3.1, Administrative Errors, for additional information when applying the guidance provided in the table above.

# Administrative Errors

21.7.2.4.4.3.1 (10-01-2015) Administrative Errors Administrative errors are mistakes in reporting which do not change the amount of income tax, BUWH, or Additional Medicare Tax (AdMT) actually withheld from wages or payments. Example: An employer withheld income tax of $7,500 from employee wages and reported the $7,500 figure on the employees' Forms W-2. However, due to an error in addition, the employer reported $7,900 in withholding on their Forms 941 for the year. The employer files a Form 941-X seeking a refund of $400. This situation would constitute an administrative error. Example: An employer withheld income tax of $3,600 from employee wages and reported the $3,600 figure on the employees' Forms W-2. However, due to a transposition error, the employer reported $6,300 in withholding on their Forms 941 for the year. The employer files a Form 941-X seeking a tax abatement of $2,700. This situation would constitute an administrative error. Example: An employer withheld Additional Medicare Tax (AdMT) of $1,200 from employee wages and reported the $1,200 figure on the employees' Forms W-2. However, due to a transposition error, the employer reported $2,100 in AdMT on their Forms 941 for the year. The employer files a Form 941-X seeking a tax abatement of $900. This situation would constitute an administrative error. Income tax withholding, BUWH, and Additional Medicare Tax (AdMT) cannot be corrected after the close of a tax year unless the issue constitutes an administrative error, IRC Section 3509 rates are being applied (IRM 21.7.2.5.4, IRC Section 3509), or as the result of an Examination. This is true even if income tax, BUWH, or AdMT was erroneously withheld. Example: An employer withheld $3,700 in income taxes from an employee's wages instead of $3,400 due to an error in recording the number of allowances the employee could claim. The employer issued a Form W-2 to the employee showing the withholding figure of $3,700. The employer subsequently files a Form 941-X requesting a refund of the $300 erroneously withheld. This situation would not constitute an administrative error and the claim would not be allowable. Example: An employer withheld $800 in Additional Medicare Tax (AdMT) from an employee's wages instead of $600 due to an error in determining when the employee reached the $200,000 wage/tip threshold for AdMT withholding. The employer reported $800 in AdMT withholding on their Form 941 and issued a Form W-2 to the employee which reported the AdMT withheld figure of $800. The employer subsequently files a Form 941-X requesting a refund of the $200 erroneously withheld and reported on their Form 941. This situation would not constitute an administrative error and the claim would not be allowable. A situation in which income tax, BUWH, or Additional Medicare Tax (AdMT) was withheld and reported on a payment (such as a lump sum distribution) mailed to an individual who did not have the ability or legal right to receive the payment in the year the tax was withheld also constitutes an administrative error: This rule applies if a payment was returned as undeliverable in the subsequent year. Income tax, BUWH, or Additional Medicare Tax (AdMT) withheld and the payment received by the individual must both be reported in the year the individual actually receives the payment. See IRM 21.7.2.4.4.3, Income Tax Withholding, Backup Withholding, and Additional Medicare Tax Adjustments, for adjustment procedures relating to income tax withheld, backup withholding, and AdMT, including situations where wage changes can be reported for nonadministrative errors.

# Withholding Tax Adjustment When Unable to Determine Proper Tax Correction

21.7.2.4.4.3.2 (10-01-2014) Withholding Tax Adjustment When Unable to Determine Proper Tax Correction In some cases, Accounts Management cannot determine the proper tax to correct, even after taxpayer contact. Rather than adjusting FICA tax, which is held in a trust account and accrues interest, adjust income tax withholding. Process as follows: Input TC 29X using IRN 003 or 111, whichever is applicable. Advise taxpayer of the action taken by phone, letter, or notice.

# Social Security and Medicare Tax Adjustments

21.7.2.4.4.4 (10-01-2015) Social Security and Medicare Tax Adjustments Social security and Medicare tax adjustments can be made for both current and prior years providing the statute is still open. Employers making corrections to previously reported social security and Medicare taxes must file the applicable "X" form to either file an adjusted employment tax return or claim for refund. Employers are no longer permitted to use Form 843, Claim For Refund and Request for Abatement, to submit a claim for refund of employment taxes. However, employees who are unable to obtain a refund from their employer may file Form 843 to obtain a refund. See IRM 21.7.2.4.4.4.2, Excess Social Security and Medicare Tax Withheld — Employee Claims for Refund, for additional information. For a tax decrease, the employer must check the applicable certification box(es). Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Caution: Although employers are required to calculate, withhold and report Additional Medicare Tax (AdMT) in a manner similar to other FICA taxes, the tax treatment closely follows income tax withholding procedures. AdMT cannot be corrected after the close of a tax year unless the issue constitutes an administrative error, IRC Section 3509 rates are applied, or as the result of an Examination. This is true even if AdMT was erroneously withheld. See IRM 21.7.2.4.4.3, Income Tax Withholding, Backup Withholding, and Additional Medicare Tax Adjustments, for more information (including situations where wage changes can be reported for nonadministrative errors) as well as IRM 21.7.2.4.4.3.1, Administrative Errors, and IRM 21.7.2.5.4, IRC Section 3509.

# Refund or Credit of Employer's Portion of FICA

21.7.2.4.4.4.1 (04-28-2017) Refund or Credit of Employer's Portion of FICA For a refund or credit of ONLY the employer portion of FICA tax, a certification must be present on the appropriate Form 94XX indicating the employer has attempted to locate the employee(s) involved to repay or reimburse them in the amount of the overcollection, or to obtain their consent to the filing of the claim, but that the attempt was unsuccessful or the employee(s) would not provide consent. Exception: This certification requirement does not apply if the only change being made is to the amount of QSB Research Credit claimed. While the allowable amount of any QSB Research Credit is limited to the employer's share of social security tax, there are no employee tax implications which result from adjustments to the QSB Research Credit. See IRM 21.7.2.5.21, Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities for guidance on processing QSB Research Credit adjustment requests. Reminder: Additional Medicare Tax (AdMT) is only imposed on the employee. There is no employer share of AdMT. If the employer has not attempted to locate the employee(s) involved, close the case as per guidance in IRM 21.5.3.4.6.3, No Consideration Procedures, and issue Letter 916C advising the employer: They must send a letter to each former employee's last known address advising them of their right to repayment. For claims of over collected FICA tax for prior years, the letter to the employee must also include a statement that if the individual wishes to be repaid, they must return a written statement to the employer stating the employee has not claimed a refund or credit of the amount of the over-collection, or, if so, such claim has been rejected, and stating the employee will not claim refund or credit of such amount on their individual income tax return. Note: Letter 916C must be sent even if phone contact was made to explain the reason the claim cannot be processed. If the employer follows the procedure described in (2) above and then files a new Form 94XX with the proper certification, the employer is entitled to an adjustment of the employer's share (only) of FICA tax with respect to any employees that could not be found or would not provide consent. Process the claim as appropriate.

# Excess Social Security and Medicare Tax Withheld — Employee Claims for Refund

21.7.2.4.4.4.2 (04-24-2025) Excess Social Security and Medicare Tax Withheld — Employee Claims for Refund Treasury Regulations Section 31.6402(a)-2(b) provides that employees may file claims for refund of excess social security and Medicare tax collected in error when the employer has not repaid or reimbursed the employee, nor has the employee authorized employer to file a claim for refund. These claims will generally be filed on Form 843, Claim For Refund and Request for Abatement. Caution: The procedures in this IRM subsection do not apply to excess Additional Medicare Tax (AdMT) withheld by an employer. If a claim is received for excess AdMT, disallow the claim as per the instructions in row 6 or row 7 (as appropriate) of the table in (3) below. Instruct the claimant in the 105C disallowance letter that any excessive withholding of AdMT must be claimed on a Form 1040 or Form 1040-X with attached Form 8959, Additional Medicare Tax. Upon receipt of a claim: Review the employer's Form 941 account for the last quarter of the year in which FICA wages were paid. If necessary, review the employee's Form 1040 to verify claim information. Reminder: Use online research tools whenever possible. Do not request tax returns from Files unless necessary. The employee must include a statement from the employer indicating the employee has not authorized the employer to file a claim, nor had the employee been repaid or reimbursed by the employer for the amount over withheld. Verify whether the required statement is attached to the Form 843. Continue processing the claim using the table below: If Then 1) The claim filed by the employee involves excess FICA withheld by more than one employer The employee must claim the excess FICA withheld as a credit on their individual tax return. See IRM 21.6.3.4.2.4, Excess Social Security and RRTA Tier I Tax Credits, for more information. Return the claim to the employee using Letter 916C, Claim Incomplete for Processing; No Consideration. Instruct the employee that they must claim the excess FICA withheld by filing either a Form 1040, U.S. Individual Income Tax Return, or Form 1040-X, Amended U.S. Individual Income Tax Return, (depending on whether they have already filed an original tax return for the tax year in question). 2) A statement from the employer is not received Return the claim to the employee using Letter 916C, Claim Incomplete for Processing; No Consideration, requesting they obtain the required statement. See (2) step 2 above. 3) There is no indication the employee has contacted the employer for reimbursement of the excess FICA withheld Encourage the employee to obtain a refund from the employer. 4) The employee is unable to obtain a statement from the employer The employee must make the statement to the best of their knowledge and belief. Note: The employee statement must include an explanation of why the employee was unable to obtain a statement from the employer. 5) A claim is correctly filed with the employer's statement attached 1. Input a TC 291 with HC 2 for the amount of the decrease using IRN 004 (and IRN 073 if appropriate) for the wage amount and IRN 112 for the tax amount on the last Form 941 tax account for the tax year involved. Exception: If there are not enough wages recorded on the last quarter of the tax year (as originally filed or as previously adjusted) to accommodate the current adjustment, adjust the latest quarter(s) within the same calendar year reflecting sufficient recorded wages to accommodate the current adjustment. 2. Prepare Form 5792, Request for IDRS Generated Refund, and compute interest from the Form 941 due date or payment date, whichever is later. Enter TC 770 for amount of allowable interest figured at non-corporate rates. See IRM 20.2.4, Overpayment Interest and IRM 20.2.10.5.7, Employee FICA Tax or RRTA Tax Withheld. Reminder: All procedures in IRM 21.4.4, Manual Refunds, must be followed, including input of a TC 971 Action Code 037 to cross-reference the employee's SSN. 3. Attach a copy of the claim to the refund document and route it to the Accounting Function. 4. Attach the employee's claim to the adjustment document. 6) A claim must be disallowed 1. Input TC 290 .00 in BS 98/99 (99 if electronically filed with a TRPRT print) on the individual employee's IMF tax account for the tax period which includes the period of time for which the claim is filed. 2. Send Letter 105C, Claim Disallowed, to the employee. 7) A claim must be disallowed and the individual employee's IMF tax return has not yet posted 1. Send Letter 105C, Claim Disallowed, to the employee. 2. Push code the claim and a copy of the denial letter using TC 930. 3. After the tax return posts, the disallowed claim and original return is returned to the originator for input of the TC 290 for .00, BS 98/99 (99 if electronically filed with a TRPRT print). Note: There are no special documentation requirements for employee FICA claims related to amounts paid to same-sex spouses which are not taxable as a result of the DOMA (United States v. Windsor) decision. Do not request a copy of a claimant's marriage certificate or information regarding the locality in which a marriage ceremony took place. See IRM 21.7.2.5.17, DOMA (United States v. Windsor) Related Employment Tax Claims, for information on the court decision as it relates to employment taxes. These procedures also apply to Indian Fishing Claims citing IRC 7873 filed by individuals claiming a refund of FICA taxes on Form 843. Processing of these claims is centralized in Accounts Management (AM) at the Ogden campus. Route Indian Fishing Claims filed by individuals on Form 843 received in other operations/sites as follows: Route paper cases to: Internal Revenue Service MS 6462 1973 North Rulon White Blvd Ogden, UT 84404 For cases already scanned into CII, reassign to the Ogden Campus IDRS number 0446689024.

# 90 Day — Claim

21.7.2.4.4.5 (10-01-2025) 90 Day — Claim If a taxpayer files an adjusted employment tax return within 90 days of the expiration of the period of limitations on credit or refund (Refund Statute Expiration Date or RSED), the adjustment request must be converted to a claim for refund. In general, the RSED expires three years from when the original tax return is filed, or two years from when the tax is paid, whichever is later. For employment tax returns reporting FICA taxes and federal withholding, IRC 6513 provides for special time frames for when returns are deemed filed and payments are deemed made. Tax returns and payments received on or before April 15 of the year following the calendar year for which the tax was to be reported are deemed received on April 15 of that following year. See IRM 25.6.1, Statute of Limitations Processes and Procedures, for additional guidance on statute considerations. The following table provides examples of when to convert adjustment requests to claims when a tax return was timely filed and all tax timely paid. Form Tax Period Received Date of Original Return (timely) Statute Expiration Date Convert to Claim for Refund if IRS Received Date of Form 94XX is 941 202212 01-31-2023 04-15-2026 01-15-2026 or subsequent 943 202212 01-31-2023 04-15-2026 01-15-2026or subsequent 944 202212 01-31-2023 04-15-2026 01-15-2026 or subsequent 945 202212 01-31-2023 04-15-2026 01-15-2026 or subsequent CT-1 202212 02-28-2023 02-28-2026 12-1-2025 or subsequent

# Adjusted Employer's Tax Return or Claim for Refund Return Filed — No TC 150 Posted

21.7.2.4.4.6 (03-10-2025) Adjusted Employer's Tax Return or Claim for Refund Return Filed — No TC 150 Posted Occasionally, a Form 941-X, Form 943-X, Form 944-X, Form 945-X, or Form CT-1X is received for a tax period for which no original return (TC 150) is posted. In such cases, research the taxpayer's account for the missing tax return. This research should include reviewing the taxpayer's account for misapplied tax returns and unposted or rejected tax returns. If a missing return is located, take action to process or reprocess it to the proper tax account and then process the adjusted tax return as appropriate. Reminder: If the adjusted employment tax return was scanned into Correspondence Imaging Inventory (CII) system, the tax module will reflect an E- freeze which must be addressed prior to closing the case. For additional information on E- freezes, see IRM 21.5.6.4.9, E- Freeze. Caution: See IRM 21.7.2.4.4.13, Forms 94XX with Return Integrity and Compliance Services (RICS), Return Integrity Verification Operations (RIVO), or Identity Theft (IDT) Involvement, for information on identifying cases with RICS/RIVO/IDT involvement and associated handling before applying the guidance found in (3) and (4) below. If the missing return is not located, process as per instructions in the following table: If And Then 1) The adjusted return was intended for another tax period for which there is a posted TC 150. Follow procedures in IRM 21.7.9.4.10.2, TC 976 Return Posted to Incorrect TIN/Tax Period, Account for Which It was Intended Contains the Original Return (TC 150), to resolve the E-freeze. Adjust the correct account as appropriate. 2) An adjusted return was filed for an incorrect MFT (e.g., employer is Form 941 filer but files a Form 944-X). The adjusted return reports a tax decrease or credit increase Generate Letter 4384C to the taxpayer explaining their adjusted return cannot be processed and inform them of the proper form to be filed. Input a TC 971 AC 002 to release the E- freeze if a TC 971 AC 010 was previously input. 3) An adjusted return was filed for an incorrect MFT (e.g., employer is Form 941 filer but files a Form 944-X). The adjusted return reports a tax increase or credit decrease Follow procedures in IRM 21.7.9.4.10.2, TC 976 Return Posted to Incorrect TIN/Tax Period, Account for Which It was Intended Contains the Original Return (TC 150), to resolve the E-freeze and adjust the correct account as appropriate. Generate Letter 4384C explaining that the adjustment has been made, but in the future they must file the appropriate "X" form (identify the specific form to be used) to make corrections. 4) Less than 60 days have passed from the return due date for the tax period for which the adjusted return was filed Monitor for the posting of the original return through the 60th day following the return due date. If the original return posts, process the adjustment as requested on the Form 94XX as appropriate. Otherwise, continue processing per the following rows of this table. 5) More than 60 days have passed since the return due date for the tax period for which the adjusted return was filed The Form 94XX is a claim for non-refundable and/or refundable credits only (i.e., the Form 94XX reports no other taxable wage figures or other tax figures) Reject the Form 94XX. Indicate in the rejection letter that we cannot process the 94XX because we have no record of having received an original employment tax return. Advise the taxpayer to file an original return incorporating the changes reported on the Form 94XX. Input a TC 971 AC 002 to release the E- freeze if a TC 971 AC 010 was previously input. Note: When rejecting the Form 94XX, follow IRM 21.5.3.4.2, Tax Decrease or Credit Increase Processing, and (9) in IRM 21.5.1.5.6, Incomplete CII claims, for the correct input of TC 971-270. Exception: As per guidance in IRM 21.5.3.4.3, Tax Decrease and Statute Consideration, claims being processed within 180 days or after RSED expiration must be suspended and missing information requested rather than being rejected. Accordingly, continue processing such cases as per guidance in the next two rows of this table as appropriate (i.e., contact the taxpayer and do not reject). 6) More than 60 days have passed since the return due date for the tax period for which the adjusted return was filed The adjusted employer's tax return is intended to be an original return (e.g., Column 2 of the Form 94XX is blank or contains zero figures) Make two attempts to contact the taxpayer by phone if a telephone number is available to obtain a signed copy of an original return including the corrected information along with any required schedules. If you are unable to reach the taxpayer, send a letter requesting a copy of the original return from the taxpayer. Suspend the case for 40 days. Continue processing as per the table in (4) below for response and non-response cases. 7) More than 60 days have passed since the return due date for the tax period for which the adjusted return was filed The adjusted employer's tax return is not intended to be an original return (e.g, Column 2 figures are not blank or zero) Make two attempts to contact the taxpayer by phone if a telephone number is available to obtain a signed copy of their original return along with any required schedules. Advise the taxpayer to provide proof of timely filing if that information is available, as appropriate. If you are unable to reach the taxpayer, send a letter requesting a copy of the original return from the taxpayer. Suspend the case for 40 days. Continue processing as per the table in (4) below for response and non-response cases. Exception: If the only change reported on the Form 94XX is to Line 6 wages (equivalent to Line 2 on Form 941), input a TC 971 AC 002 to release the E- freeze (if a TC 971 AC 010 was previously input) and close the case without contacting the taxpayer. Caution: When rejecting Forms 94XX, extreme care must be taken to ensure that only the material relative to the taxpayer(s) to which the correspondence is addressed is enclosed in the envelope. See IRM 21.3.3.4.24, Breaches of Personally Identifiable Information (PII) Caused by Manual Stuffing Errors, for additional information. Process response and non-response cases as per instructions in the following table: If And Then 1) Taxpayer responds with copy of original return There is no proof of timely filing Continue processing as per the following rows of this table. However, if the copy of the return provided by the taxpayer is routed to be processed, it must be processed using the response received date as the return received date. Do not code the return to suppress penalties or interest. 2) Taxpayer responds with copy of original return There is proof of timely filing Continue processing as per the following rows of this table. However, if the copy of the return provided by the taxpayer is routed to be processed, edit the return to reflect the timely received date and attach the supporting documentation. 3) Taxpayer responds with copy of original return The wage and tax figures reported match the initial figures (Column 2) of the Form 94XX. Process the copy of the return provided by the taxpayer as the original return (see first two rows of this table discussing proof of timely filing) and monitor for its posting. When the original return posts, process the adjusted return as appropriate. Exception: If the Form 94XX reports changes to ERC, correct final handling for the Form 94XX will depend on the instructions provided by RAAS when the case was released to AM to be worked: • If the case was released to AM to be worked as a "RiskedERC-No941" case, do not process the Form 94XX. Instead, follow guidance in the Caution following (6) of IRM 21.7.2.7.8.4, Form 94XX ERC Claims Meeting RAAS Filtering Criteria for Missing Original Returns (No TC 150), to return the Form 94XX case to RAAS for additional required analysis after the original return posts. • If the case was released to AM to be worked as a disallowance case but was also missing a posted original return, continue handling as per guidance in the appropriate corresponding IRM subsection (e.g., for a "RiskedERC-Disallow" case with "Establishment Date" reason, follow instructions in IRM 21.7.2.7.8.2, Disallowance Actions for Form 94XX ERC Claims Meeting RAAS Filtering Criteria for Entity Establishment Dates) after the original return posts. 4) Taxpayer responds with copy of original return The wage and tax figures reported match the corrected figures (Column 1) on the Form 94XX. Attach the Form 94XX to the back of the return provided by the taxpayer. Edit (in dark green) a line across the applicable 94XX form and notate "Do Not Detach" in the margin. Process the return provided by the taxpayer as the original return (see first two rows of this table discussing proof of timely filing). Ensure all applicable deposits are correctly applied. If a TC 971 AC 010 was previously input, input a TC 971 AC 002 to prevent a duplicate filing condition from generating when the return posts. 5) Taxpayer responds with copy of original return The wage and tax figures reported don't match initial or corrected figures on Form 94XX and Form 94XX reflects a tax decrease or credit increase. Research for other unprocessed Forms 94XX for the same tax period. If not found, process the copy of the return provided by the taxpayer as the original return (see first two rows of this table discussing proof of timely filing). Reject the Form 94XX and indicate that we are processing their original return but cannot process the 94XX because the figures don't match. Input a TC 971 AC 002 to release the E- freeze if a TC 971 AC 010 was previously input. 6) Taxpayer responds with copy of original return The wage and tax figures reported don't match initial or corrected figures on Form 94XX and Form 94XX reflects a tax increase or a credit decrease Research for other unprocessed Forms 94XX for the same tax period. If not found, process the copy of the return provided by the taxpayer as the original return and monitor for posting (see first two rows of this table discussing proof of timely filing). When the original return posts, assess tax (TC 290 or TC 298 as appropriate) per the figures in Column 1 or Column 4 of the Form 94XX (whichever will result in the highest recorded tax). Generate a letter to inform the taxpayer of the action taken. Exception: If the Form 94XX reports changes to ERC, correct final handling for the Form 94XX will depend on the instructions provided by RAAS when the case was released to AM to be worked: • If the case was released to AM to be worked as a "RiskedERC-No941" case, do not process the Form 94XX. Instead, follow guidance in the Caution following (6) of IRM 21.7.2.7.8.4, Form 94XX ERC Claims Meeting RAAS Filtering Criteria for Missing Original Returns (No TC 150), to return the Form 94XX case to RAAS for additional required analysis after the original return posts. • If the case was released to AM to be worked as a disallowance case but was also missing a posted original return, continue handling as per guidance in the appropriate corresponding IRM subsection (e.g., for a "RiskedERC-Disallow" case with "Establishment Date" reason, follow instructions in IRM 21.7.2.7.8.2, Disallowance Actions for Form 94XX ERC Claims Meeting RAAS Filtering Criteria for Entity Establishment Dates) after the original return posts. 7) Taxpayer does not respond The Form 94XX does not report any changes to non-refundable or refundable credits Prepare a "dummy" return using the corrected information from the "X" form. Do not code the return to suppress penalties or interest. On the signature line, indicate "Dummy Return - Do not correspond for signature" . Attach the Form 94XX to the back of the "dummy" return. Edit (in dark green) a line across the applicable 94XX form and notate "Do Not Detach" in the margin. Process the "dummy" return as the original. To the extent possible based on available information, ensure all applicable deposits are correctly applied. If a TC 971 AC 010 was previously input, input a TC 971 AC 002 to prevent a duplicate filing condition from generating when the "dummy" return posts. Note: Processing of the "dummy" return in this situation is not considered reprocessing. Do not attach Form 13596 when routing the "dummy" return to be processed. 8)Taxpayer does not respond The Form 94XX reports only changes to non-refundable or refundable credits Input a TC 971 AC 002 to release the E- freeze (if a TC 971 AC 010 was previously input). Close the case without making further contact with the taxpayer (i.e., do not follow guidance in (5) of IRM 21.5.3.4.3, Tax Decrease and Statute Consideration). Reminder: The taxpayer is only contacted in this filing scenario if the Form 94XX reporting credit only changes was being processed within 180 days or after RSED expiration as per Exception guidance in the table in (3) above. 9)Taxpayer does not respond The Form 94XX reports a mix of wage/tax items and either or both non-refundable/refundable credits Reminder: Forms 94XX reporting credit only changes for which no original return was filed are rejection criteria as per guidance in the table in (3) above unless the claim is being worked within 180 days or after RSED expiration. Prepare a "dummy" return using the corrected information from the "X" form. • Do not enter any non-refundable or refundable credits from the Form 94XX on the dummy return. Only enter wage and tax items from the Form 94XX on the dummy return. As needed, recompute mathematical calculation lines and make appropriate entries on the dummy return to account for any credits not being allowed with the dummy return. • Do not code the return to suppress penalties or interest. • On the signature line, indicate "Dummy Return - Do not correspond for signature" . Attach the Form 94XX to the back of the "dummy" return. Edit (in dark green) a line across the applicable 94XX form and notate "Do Not Detach" in the margin. Process the "dummy" return as the original. To the extent possible based on available information, ensure all applicable deposits are correctly applied. If a TC 971 AC 010 was previously input, input a TC 971 AC 002 to prevent a duplicate filing condition from generating when the "dummy" return posts. Send the taxpayer Letter 4384C informing them that since we did not receive a reply to our request for a copy of their original return, we are processing their Form 94XX (specify form type) as an original return but could not allow any credits claimed. Advise the taxpayer that they should file a new Form 94XX (specify form) with a copy of their original return attached if they disagree with our action. Note: Processing of the "dummy" return in this situation is not considered reprocessing. Do not attach Form 13596 when routing the "dummy" return to be processed. Note: To prevent unpostable conditions UPC 381 RC 2 and UPC 305 RC 4, edit the deposits claimed line (e.g., Line 11 for Forms 941) on returns being sent to be processed per instructions provided above to match the total credits posted to the tax module if the posted credit amount exceeds the amount claimed on the return. Caution: Before processing a copy of a missing return provided by the taxpayer, always research the account again to verify an originally filed return was not misapplied or not processed. If found, process or reprocess the original return whenever possible rather than the copy provided by the taxpayer. Note: Except as otherwise discussed in this IRM, taxpayers who have not filed an original return are not entitled to an interest free adjustment under the Regulations.

# Exception Processing — Incorrect Filing, Including Forms Routed to AM from SP

21.7.2.4.4.7 (10-01-2024) Exception Processing — Incorrect Filing, Including Forms Routed to AM from SP The appropriate Form 94XX must be used to report corrections to previously reported employment taxes. However, taxpayers continue to occasionally file the incorrect return to correct errors. The guidance in the following subsections was developed to address the most common incorrect filing situations. Note: When adjusting these accounts, do not use NSI 1. See IRM 21.7.1.4.2, Notice Suppression Indicator (NSI). Reminder: When following these procedures, use blocking series (BS) 20. See IRM 21.7.2.4.4 (14) for more information.

# Form 94X (2009 or subsequent revision) with Form 94XX Attached

21.7.2.4.4.7.1 (10-01-2014) Form 94X (2009 or subsequent revision) with Form 94XX Attached These procedures apply to Form 941-X, 943-X, 944-X, 945-X and/or CT-1X. Form 941 and Form 941-X received in Submission Processing (SP): SP will verify the adjustment on Form 941-X is not being claimed on the original Form 941. If an adjustment is taken on the original return, SP will: Enter CCC "X" on the original return. Send CP 102 to taxpayer explaining their adjustment request is being sent to Accounts Management (AM); and, Prepare Form 3465 and route Form 941-X and copy of Form 941 to AM with a notation "941X to AM" and adjustment not processed. If adjustment is not taken on the original, SP will prepare Form 3465 and route Form 941-X and a copy of Form 941 to AM with a notation "941X to AM" and adjustment not processed. Once received, follow the general procedures in IRM 21.7.2.4.4, Adjusted Employer's Federal Tax Return or Claim for Refund, and the specific procedures applicable to the type of Form 94XX filed (e.g., if the 941-X received is a tax decrease - claim for refund, follow IRM 21.7.2.4.5.6.2, Form 941-X Tax Decrease — Claim) to make any necessary account corrections. Send the taxpayer Letter 4384C informing them the Form 941-X was processed but should be filed separately from their original Form 941.

# "Amended" /"Supplemental" Form 94X

21.7.2.4.4.7.2 (04-28-2025) "Amended" /"Supplemental" Form 94X These procedures apply to Forms 941, 943, 944, 945 and/or CT-1 marked as "amended" , or "supplemental" . Exception: Forms 94X or CT-1 filed on or before the due date for filing should be processed following the guidelines for superseding returns. See IRM 21.7.9.3.4, Business Master File (BMF) Superseding Tax Returns, for more information. Tax increase (or credit decrease): In this particular situation, the Form 94X that was filed by the taxpayer will be processed in the same manner as if the appropriate Form 94XX had been filed. See the general procedures in IRM 21.7.2.4.4, Adjusted Employer's Federal Tax Return or Claim for Refund, and the specific procedures applicable to the type of Form 94XX which should have been filed (e.g., if an amended or supplemental Form 941 is received reporting a tax increase, follow IRM 21.7.2.4.5.6.3, Form 941-X Tax Increases - Adjusted Employment Tax Return). Use Blocking Series 20 for the adjustment. Send Letter 4384C (or other letter as appropriate) explaining that the adjustment indicated on the amended/supplemental return has been made, but in the future they must file the appropriate X form (identify the specific form to be used) to make the adjustment. Reminder: Adjust the tax period of the Form 94X. Tax decrease (or credit increase): If Then The requested adjustment is for ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Process the decrease as a claim using Blocking Series 20 and the appropriate Hold Code. See the general procedures in IRM 21.7.2.4.4, Adjusted Employer's Federal Tax Return or Claim for Refund, and the specific procedures applicable to the type of Form 94XX which should have been filed (e.g., if an amended or supplemental Form 941 reporting an under tolerance decrease, follow IRM 21.7.2.4.5.6.2. Form 941-X Tax Decrease - Claim). Send Letter 4384C (or other letter as appropriate) explaining that the adjustment indicated on the amended/supplemental return has been made, but in the future they must file the appropriate X form (identify the specific form to be used) to make the adjustment. The requested adjustment is for ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Reject the return (claim) using Letter 4384C and inform the taxpayer they must file the appropriate X form (identify the specific form to be used) to make the adjustment. Reminder: When rejecting the return, follow IRM 21.5.3.4.2, Tax Decrease or Credit Increase Processing, and (9) in IRM 21.5.1.5.6, Incomplete CII claims, for the correct input of TC 971-270 and release of the applicable freeze code (use Blocking Series 15 if inputting a TC 290 .00 to release the -A freeze in this situation). Note: Extreme care must be taken to ensure that only the material relative to the taxpayer(s) to which the correspondence is addressed is enclosed in the envelope. See IRM 21.3.3.4.24, Breaches of Personally Identifiable Information (PII) Caused by Manual Stuffing Errors, for additional information.

# Incorrect Form 94XX Version Filed

21.7.2.4.4.7.3 (10-01-2014) Incorrect Form 94XX Version Filed Forms 941-X, 943-X and 944-X have undergone a series of successive modifications due to legislative changes. However, prior versions of Forms 941-X, 943-X and 944-X will continue to be available to the public and lines for expired or expiring tax items have been removed from newer versions of the forms. Accordingly, Accounts Management will occasionally receive adjustment requests submitted on versions of Form 94XX that do not correspond to the tax year for which the adjustment request pertains. Do not reject adjustment requests filed on prior versions of Form 94XX unless it is not possible to determine the correct adjustment action. Review page 2 of Form 94XX, Part 4 of Form 94XX, and any attachments to determine if information missing from Part 3 was provided in written form and process as follows: If And Then 1) The missing information was provided in written form Make the requested correction using general procedures in IRM 21.7.2.4.4, Adjusted Employer's Federal Tax Return or Claim for Refund, and per specific procedures for the form filed (e.g., Form 941-X claim filed, follow procedures in IRM 21.7.2.4.5.6.2, Form 941-X Tax Decrease — Claim). 2) The missing information was not provided in written form The Form 94XX reflects tax increases or credit decreases ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, make two attempts to contact the taxpayer by phone to obtain the missing information if a telephone number is available. If the missing information is provided, make the requested correction as per the first row of this table. Otherwise, assess tax based on the available information and issue Letter 4384C to explain the missing information and action taken. Also see IRM 21.5.3.4.1, Tax Increase or Credit Decrease Processing. 3) The missing information was not provided in written form The Form 94XX reflects tax decreases or credit increases ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, make two attempts to contact the taxpayer by phone to obtain the missing information if a telephone number is available. If the missing information is provided, make the requested correction as per the first row of this table. Otherwise, reject the Form 94XX using Letter 4384C and identify the missing information in the letter. Also see IRM 21.5.3.4.2, Tax Decrease or Credit Increase Processing. Caution: When rejecting Forms 94XX, extreme care must be taken to ensure that only the material relative to the taxpayer(s) to which the correspondence is addressed is enclosed in the envelope. See IRM 21.3.3.4.24, Breaches of Personally Identifiable Information (PII) Caused by Manual Stuffing Errors, for additional information.

# Adjustment Credit Claimed — Refunded in Error

21.7.2.4.4.8 (10-01-2012) Adjustment Credit Claimed — Refunded in Error Sometimes a taxpayer claims a credit on a current employment tax form based on a prior tax period adjustment and overpayment. For example: An adjustment was made to a prior quarter Form 941 which resulted in an overpayment. The taxpayer filed a Form 941 for the current quarter taking the overpayment as a credit. The current quarter Form 941 posted after a refund had been issued from the prior tax period. The taxpayer returned the refund check and requested it be applied to the balance due on the current tax period. The table below provides guidance for handling most situations where an employer returns a refund check issued from an employment tax account and requests reapplication of the credit: If And Then 1) The overpayment was created by the filing of a Form 94XX (filed either as a claim or as an adjusted return) The credit is being applied to the tax period in which the Form 94XX was filed Apply the credit to the account designated by the taxpayer using a TC 830/710 as per the appropriate adjusted return procedures. For example, if Form 941-X was filed, follow the directions in Step 2 of IRM 21.7.2.4.5.6.1 (7) to determine the appropriate credit availability date. 2) The overpayment was created by the filing of a Form 94XX (filed either as a claim or as an adjusted return) The credit is being applied to a tax period earlier than that in which the Form 94XX was filed Apply the credit to the account designated by the taxpayer using a TC 820/700 with the appropriate credit availability date. See IRM 21.5.8.4.2, Determining Correct Credit Transfer Format, and IRM 20.2.4.4, Availability Dates for Overpayments, for more information. 3) The overpayment was created by the filing of a Form 94XX as a claim The credit is being applied to a tax period later than that in which the Form 94XX was filed Apply the credit to the account designated by the taxpayer using a TC 820/700 with the appropriate credit availability date. See IRM 21.5.8.4.2, Determining Correct Credit Transfer Format, and IRM 20.2.4.4, Availability Dates for Overpayments, for more information. Manually calculate and allow overpayment interest with a TC 770 and transfer the overpayment interest using TC 850/730 if appropriate. See IRM 20.2.4.7.1, Interest on Offsets, for more information. 4) The overpayment was created by the filing of a Form 94XX as an adjusted return The credit is being applied to a tax period later than that in which the Form 94XX was filed Follow the directions in the first row of this table to apply the overpayment to the tax period in which the Form 94XX was filed except freeze the credit on the receiving module. Follow the directions in the last row of this table to apply the credit (if available) from the module the credit was applied to in Step 1 above to the account designated by the taxpayer. 5) The overpayment was created by any issue other than the filing of a Form 94XX (missed credit elect, penalty abatement, simple tax overpayment, etc.) The credit is being applied to the same tax period or an earlier tax period Apply the credit to the account designated by the taxpayer using a TC 820/700 with the appropriate credit availability date. See IRM 21.5.8.4.2, Determining Correct Credit Transfer Format, and IRM 20.2.4.4, Availability Dates for Overpayments, for more information. 6) The overpayment was created by any issue other than the filing of a Form 94XX (missed credit elect, penalty abatement, simple tax overpayment, etc.) The credit is being applied to the immediately following tax period for the same MFT Apply the credit using a TC 830/710. See (4) of IRM 21.5.8.4.2, Determining Correct Credit Transfer Format, for more information. 7) The overpayment was created by any issue other than the filing of a Form 94XX (missed credit elect, penalty abatement, simple tax overpayment, etc.) The credit is being applied to a tax period later than that on which the overpayment exists but not to the immediately following tax period for the same MFT Apply the credit to the account designated by the taxpayer using a TC 820/700 with the appropriate credit availability date. See IRM 21.5.8.4.2, Determining Correct Credit Transfer Format, and IRM 20.2.4.4, Availability Dates for Overpayments, for more information. Manually calculate and allow overpayment interest with a TC 770 and transfer the overpayment interest using TC 850/730 if appropriate. See IRM 20.2.4.7.1, Interest on Offsets, for more information. Exception: Normal offset rules apply to overpayments addressed in the table above. If there is an outstanding balance due on a tax period earlier than that to which the taxpayer is requesting an overpayment to be applied, apply the credit to the earliest outstanding balance due(s) instead and inform the taxpayer of the action taken. Reminder: Credit must be available on the module to complete a credit transfer with a debit TC 820 or TC 830 transaction code. Otherwise, the credit transfer will unpost.

# One Form 94XX Filed but Two Forms 94XX were Required

21.7.2.4.4.9 (10-01-2015) One Form 94XX Filed but Two Forms 94XX were Required Employers who need to make corrections for both underreported and overreported amounts on the same tax period cannot combine the correction requests on a single Form 94XX when either of the following applies: A refund of the overreported tax is requested using the claim process. Filing within 90 days of the RSED ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. Reminder: Taxpayers may net underreported and overreported amounts on one Form 94XX when the adjustment process is selected and the Form 94XX is filed more than 90 days prior to the RSED. Process single Form 94XX filing situations where it appears two Forms 94XX were required as follows: If And Then 1) The Form 94XX was filed more than 90 days prior to the RSED Box 2 is checked for the claim process Net the corrections reported into a single adjustment and process as an adjusted employment tax return. Consider general procedures in IRM 21.7.2.4.4, Adjusted Employer's Federal Tax Return or Claim for Refund, and process as per the appropriate specific adjusted employment tax return procedures for the type of form filed (e.g., Form 941-X reporting net increase, follow procedures in IRM 21.7.2.4.5.6.3, Form 941-X Tax Increases — Adjusted Employment Tax Return). If the net tax change is a decrease and credit will be applied to the tax period in which the Form 94XX was filed, issue Letter 4384C to inform the taxpayer we converted their claim to an adjusted employment tax return and indicate the quarter to which the credit is being applied. 2) The Form 94XX was filed within 90 days of the RSED (with either Box 1 for the adjusted employment tax return process or Box 2 for the claim process checked) The ASED is within 90 days of expiring Contact the Statute function per normal procedures to initiate a manual assessment of the underreported amount before the ASED expires. See IRM 25.6.1, Statute of Limitations Processes and Procedures, for additional guidance on handling statute imminent cases. Follow procedures in IRM 21.5.3.4.3, Tax Decrease and Statute Consideration, to request a separate Form 94XX to claim the amount of the tax decrease. Inform the taxpayer that we are processing the reported tax increase but they must file a separate Form 94XX for the decrease requested as per the Form 94XX Instructions. Monitor for the posting of the increase as a manual assessment and for the taxpayer's response to the request for a separately filed Form 94XX for the tax decrease. Complete processing of the case per (4), (5), or (6) of IRM 21.5.3.4.3 as appropriate. 3) The Form 94XX was filed within 90 days of the RSED (with either Box 1 for the adjusted employment tax return process or Box 2 for the claim process checked) The ASED is expired and the net tax change reported on the Form 94XX is a decrease ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ 4) The Form 94XX was filed within 90 days of the RSED (with either Box 1 for the adjusted employment tax return process or Box 2 for the claim process checked) The ASED is expired and the net tax change reported on the Form 94XX is an increase Forward the Form 94XX to the Statute function as per instructions in (1) of IRM 21.5.3.4.1, Tax Increase or Credit Decrease Processing.

# Processing Multiple Forms 94XX Filed for the Same Tax Period

21.7.2.4.4.10 (10-08-2024) Processing Multiple Forms 94XX Filed for the Same Tax Period The IRS often receives multiple Forms 94XX filed by taxpayers for a particular tax period. These may be filed over a period of time for different tax adjustment issues or at the same time due to the requirement to file separate Forms 94XX when using the adjustment process to report corrections for underreported amounts and the claim process to report corrections of overreported amounts. The following general guidance should be considered when processing multiple Forms 94XX cases: Generally, separately filed Forms 94XX cannot be combined into a single adjustment. A separate adjustment must be input for each Form 94XX filed by the taxpayer to report corrections. Separately filed Forms 94XX should generally be processed in received date order whenever possible. Unless there are unusual circumstances in play, it is generally advantageous to process Forms 94XX in the order in which the taxpayer intended. This can usually be determined by reviewing the beginning and ending figures reported on the Forms 94XX. Taxpayers cannot net tax on separately filed Forms 94XX reporting underreported amounts and overreported amounts to determine amounts of required payments. To avoid penalties and/or interest, the entire underreported amount must be paid by the time they file the Form 94XX. If the taxpayer does not fully pay the amount of the increase reported by the time they file the Form 94XX, any overpayment arising from the separately filed claim will be offset against the tax due but does not constitute the payment required with the Form 94XX reporting the tax increase. The amount of the tax increase not paid with the Form 94XX may be subject to an FTD penalty whether the adjustment is input as a TC 290 (see IRM 20.1.4.21.3, Amended or Supplemental (Tax Decrease or Non-Interest-Free Tax Increase)) or as a TC 298 (see IRM 20.1.4.21.5, Adjusted Returns (Forms 941-X, 943-X, 944-X, and CT-1X)). Other systemically generated penalties (FTF and/or FTP) and interest may also apply. Current and expected module balances must be considered when processing multiple Form 94XX cases to ensure taxpayers do not receive incorrect refunds or balance due notices. Use hold codes as appropriate. For example, if processing a decrease which will result in an overpayment and then an increase for which no payment has been received, use Hold Code 1 on the first adjustment to hold the overpayment until the increase posts. Caution: Extreme care must be exercised to prevent barred assessments or erroneous abatements from occurring when employers file Forms 94XX reporting both underreported amounts and overreported amounts. Unique statute of limitations issues may be encountered. It may be necessary in some circumstances to have a Statute function initiate a manual assessment of the underreported amount before processing the adjustment for the overreported amount. It should be particularly noted that a Refund Statute Expiration Date (RSED) for a tax account may remain open after the Assessment Statute Expiration Date (ASED) has expired. See IRM 25.6.1, Statute of Limitations Processes and Procedures, for additional guidance on handling statute imminent cases. Exception: The procedural guidance provided in this subsection does not apply to Forms 94XX discussed and processed per instructions in IRM 21.7.2.7.6.6, Form 94XX — Employee Retention Credit (ERC) — Supplemental Form 94XX Filed by Certain Aggregate Employment Tax Return Filers.

# Signature Requirements for Form 94XX Amended/Adjusted Employment Tax Returns

21.7.2.4.4.11 (03-10-2025) Signature Requirements for Form 94XX Amended/Adjusted Employment Tax Returns Forms 94XX must be signed in order to be considered processable. The table that follows provides guidance on who may sign Forms 94XX: If Then 1) Form 94XX filed by a corporation Any of these officers may sign the Form 94XX: President Vice President Other principal officer with authority to sign Note: The signature on the Form 94XX is evidence that the officer is authorized to sign. 2) Form 94XX filed by a partnership or Limited Liability Company (LLC) treated as a partnership (i.e., entity has MFT 06 filing requirements) Any partner, member or authorized officer may sign. Note: The signature on the Form 94XX is evidence that the individual is authorized to sign. 3) Form 94XX filed by a sole proprietor The owner may sign. Note: The signature on the Form 94XX is evidence that the individual is authorized to sign. However, if the person signing is obviously not the owner (e.g., legible signature/name entered clearly does not match entity record), address the signature as per the rows below for Forms 94XX signed under a power of attorney and/or by a Reporting Agent as appropriate. 4) Form 94XX filed by a single-member Limited Liability Company (LLC) treated as a disregarded entity for federal income tax purposes (i.e., account has no income tax return filing requirement) The owner/member of the LLC may sign or a principal officer duly authorized to sign Note: The signature on the Form 94XX is evidence that the individual is authorized to sign. 5) Form 94XX filed by an exempt organization Any of these officers may sign: Executive Director Director/President Vice President Treasurer Assistant Treasurer Chief Accounting Officer Any other officer with authority to sign Note: The signature on the Form 94XX is evidence that the officer is authorized to sign. 6) Form 94XX filed by a trust or estate The fiduciary must sign. Note: The signature on the claim is evidence that the officer is authorized to sign. 7) Form 94XX signed under a power of attorney Check Command Code CFINK to verify an authorization has been recorded for the individual signing the Form 94XX and authority to sign returns was granted. Note: If a Form 2848 is attached, consider the signature on the Form 94XX to be valid if there is an entry on Line 5a granting authority to sign returns. If the authorization has not been recorded, take action to forward the Form 2848 to the CAF operation as appropriate. Reminder: Signature authority cannot be granted via the filing of Form 8821 or via third party designation on original returns. 8) Form 94XX signed by a Reporting Agent (i.e., "attorney in fact", "agent", or other title indicating individual who signed acts for a Reporting Agent firm) Check Command Code RFINK to verify any authorization has been recorded. If there is a record of any Reporting Agent on RFINK, the signature on the Form 94XX is evidence that the individual has authority to sign for that Reporting Agent. Note: Reporting Agent authorizations on Form 8655 are made at the company/firm level. Note: Form 5884-C and Form 5884-D signature requirements are the same as for Form 94XX. The following table provides guidance on handling common Form 94XX signature problems: If And Then 1) The Form 94XX is not signed There are other conditions present which make the Form 94XX unprocessable Reject the Form 94XX using Letter 4384C and identify all items required to perfect the filing. Advise the taxpayer to resubmit a signed, complete Form 94XX. Exception: Procedures in IRM 21.5.3.4.3, Tax Decrease and Statute Consideration, must be followed if the Form 94XX was received within 180 days of the Refund Statute Expiration Date (RSED). 2) The Form 94XX is not signed but is otherwise processable The Form 94XX reports a net tax increase or credit decrease Process the adjustment requested (as appropriate) and close the case. Correspond for the missing signature (and any other missing information) using Letter 143C. Advise the taxpayer in the letter that we completed the changes requested on their Form 94XX (specify form type). See IRM 21.5.3.4.1, Tax Increase or Credit Decrease Processing, for more information. Note: Letter 143C responses will be treated as a new case. 3) The Form 94XX is not signed but is otherwise processable The Form 94XX reports a net tax decrease or credit increase Reject the Form 94XX using Letter 4384C and advise the taxpayer to resubmit a complete, signed Form 94XX. Exception: Procedures in IRM 21.5.3.4.3, Tax Decrease and Statute Consideration, must be followed if the Form 94XX was received within 180 days of the Refund Statute Expiration Date (RSED). 4) The Form 94XX indicates the person who signed did so as per a power of attorney but there is no authorization recorded granting signature authority (could not be verified via CC CFINK) and there is no Form 2848 attached granting signature authority The Form 94XX reports a net tax increase or credit decrease Process the adjustment requested (as appropriate) and close the case. Correspond for the taxpayer's signature (and any other missing information) using Letter 143C. Advise the taxpayer in the letter that we completed the changes requested on their Form 94XX (specify form type) but that we have no record the person who signed was authorized to do so. See IRM 21.5.3.4.1, Tax Increase or Credit Decrease Processing, for more information. Note: Letter 143C responses will be treated as a new case. 5) The Form 94XX indicates the person who signed did so as per a power of attorney but there is no authorization recorded granting signature authority (could not be verified via CC CFINK) and there is no Form 2848 attached granting signature authority The Form 94XX reports a net tax decrease or credit increase Reject the Form 94XX using Letter 4384C. Advise the taxpayer in the letter that we have no record the person who signed the form was authorized to do so and request that they resubmit a complete Form 94XX (specify form type) signed by an individual authorized to do so for their business or organization. Exception: Procedures in IRM 21.5.3.4.3, Tax Decrease and Statute Consideration, must be followed if the Form 94XX was received within 180 days of the Refund Statute Expiration Date (RSED). 6) The Form 94XX indicates the person who signed did so as a Reporting Agent (i.e., "attorney in fact", "agent", or other title indicating individual who signed acts for a Reporting Agent firm) but there is no authorization recorded (could not be verified via CC RFINK) The Form 94XX reports a net tax increase or credit decrease Process the adjustment requested (as appropriate) and close the case. Correspond for the taxpayer's signature (and any other missing information) using Letter 143C. Advise the taxpayer in the letter that we completed the changes requested on their Form 94XX (specify form type) but that we have no record the person who signed was authorized to do so. See IRM 21.5.3.4.1, Tax Increase or Credit Decrease Processing, for more information. Note: Letter 143C responses will be treated as a new case. 7) The Form 94XX indicates the person who signed did so as a Reporting Agent (i.e., "attorney in fact", "agent", or other title indicating individual who signed acts for a Reporting Agent firm) but there is no authorization recorded (could not be verified via CC RFINK) The Form 94XX reports a net tax decrease or credit increase Reject the Form 94XX using Letter 4384C. Advise the taxpayer in the letter that we have no record the person who signed the form was authorized to do so and request that they resubmit a complete Form 94XX (specify form type) signed by an individual authorized to do so for their business or organization. Exception: Procedures in IRM 21.5.3.4.3, Tax Decrease and Statute Consideration, must be followed if the Form 94XX was received within 180 days of the Refund Statute Expiration Date (RSED). Note: Rev. Proc. 2005-39 provides guidance on the use of facsimile signatures when filing Form 94X series employment tax returns. Do not reject Forms 94XX or correspond for a missing signature if the Form 94XX was signed by means of a rubber stamp, mechanical device, or computer software program. Note: When rejecting a Form 94XX, follow IRM 21.5.3.4.2, Tax Decrease or Credit Increase Processing, and (9) in IRM 21.5.1.5.6, Incomplete CII claims, for the correct input of TC 971-270. Caution: When rejecting documents, extreme care must be taken to ensure that only the material relative to the taxpayer(s) to which the correspondence is addressed is enclosed in the envelope. See IRM 21.3.3.4.24, Breaches of Personally Identifiable Information (PII) Caused by Manual Stuffing Errors, for additional information.

# Address Changes Reported on Form 94XX Amended/Adjusted Employment Tax Returns

21.7.2.4.4.12 (05-10-2023) Address Changes Reported on Form 94XX Amended/Adjusted Employment Tax Returns As per the instructions for Forms 94XX and guidance in Rev. Proc. 2010-16, the IRS will record changes of addresses reported on processable Forms 94XX. If the address shown on a Form 94XX is different than that shown on ENMOD, update the address via CC BNCHG. The following conditions and exceptions must be considered before making an address change: Do not update the address of record based on the filing of a Form 94XX if the Form 94XX is not signed. See IRM 21.7.2.4.4.11, Signature Requirements for Form 94XX Amended/Adjusted Employment Tax Returns, for more information on who may sign Forms 94XX. If an address change was recorded after the filing date of the Form 94XX (verify by reviewing the address change cycle (ADR-CHG-CY) field on ENMOD), do not update the address of record. If the account shows a Z Freeze, review IRM 21.3.5-1, Referral IRM Research List, for referral guidance. If the amended return involves a Fiduciary Name Change or an Address Change on Form 1041, see IRM 21.7.1.4.9, Fiduciary Name/Address Change. If an abbreviation is necessary, IRM 21.7.13.7.3.8.2, Street Address Abbreviations, provides the mandatory street address abbreviations. However, it is not necessary to correct existing abbreviation errors unless accessing the entity for other address corrections. Employers may authorize a Reporting Agent to file and sign employment tax returns on their behalf, including Forms 94XX, via the filing of Form 8655, Reporting Agent Authorization. However, Reporting Agents do not have authority to request address changes for their clients. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Reminder: Any address change made on a BMF entity with open employment tax filing requirements generates a CP 148A and a CP 148B notifying the taxpayer of the action. See IRM 21.7.2.5.19, CP 148A and CP 148B - Dual Notice of Address Change, for more information. If an address change was reported on Form 94XX but is not being completed (e.g., due to missing signature), send any required closing letter to the address of record. If you are not completing a requested address change and are not rejecting the Form 94XX, advise the taxpayer to file a file a Form 8822-B, Change of Address or Responsible Party - Business, when closing the case.

# Forms 94XX with Return Integrity and Compliance Services (RICS), Return Integrity Verification Operations (RIVO), or Identity Theft (IDT) Involvement

21.7.2.4.4.13 (10-01-2025) Forms 94XX with Return Integrity and Compliance Services (RICS), Return Integrity Verification Operations (RIVO), or Identity Theft (IDT) Involvement This subsection provides handling guidance for Form 94XX (or duplicate filed employment tax returns being processed as a Form 94XX) when there is Return Integrity and Compliance Services (RICS), Return Integrity Verification Operations (RIVO), or Identity Theft (IDT) involvement. BMF IDT is defined as creating, using, or attempting to use a business's identifying information to obtain a tax benefit without authority. BMF IDT can involve the use of a business's information to file fraudulent returns to support Individual Master File (IMF) IDT or to obtain refunds from BMF accounts. An individual's stolen personal information can also be used to obtain an Employer Identification Number (EIN) which is used to file false BMF tax returns and income documents. BMF accounts include the following entity types: sole proprietorship, corporation, partnership, estate, trust, exempt organization, or government entity. BMF IDT inquiries are complex and require extensive research. BMF taxpayers are often not aware their identities have been compromised until a notice is received from the IRS. The taxpayer may contact the IRS after receiving an unexpected notice regarding an inactive EIN, a recently established EIN they have no knowledge about, or an IRS notice showing the business name was changed. If you suspect BMF IDT on a case, refer to IRM 25.23.11.4, Business Master File (BMF) ID Theft Research, and IRM 25.23.11.6, Business Master File (BMF) Identity Theft Inquiries. For any cases involving potential identity theft with RICS involvement, refer to IRM 25.23.11.6.3, BMF Returns Selected for RICS Review, for additional guidance. The following indicators (not all inclusive) may be seen on accounts: TC 971 AC 711 TC 973 Open RICS control assigned to 1481055555 with activity showing potential IDT Unreversed TC 971 AC 522 with MISC field "WI RICS CLSIDT" AMS shows Letter 6042C response and a determination Sort name line includes "POTENTIAL FAB EIN" or "Identity Theft" TC 971 AC 524 on module The following table provides guidance on handling common Form 94XX case scenarios with RICS/RIVO/IDT involvement: If And Then 1) -R Freeze See (2) in IRM 21.5.6.4.35, -R Freeze, for guidance on identifying RIVO involvement on cases with -R freezes and IRM 21.5.6.4.35.3, -R Freeze Overview for Accounts With Return Integrity Verification Operations (RIVO) Involvement, for associated handling guidance. 2) E- Freeze Open RIVO control, TC 971 AC 711, and TC 973 on module Do not process the amended return/duplicate return as the original. Refer to IRM 25.23.11.6.3, BMF Returns Selected for RICS Review, for procedures on suspending and monitoring the case until a RICS determination is made. 3) TC 150 and "not IDT" determination has been made TC 971 AC 712, TC 971 AC 713, or TC 971 AC 717 on module Refer to IRM 25.23.11.6.3, BMF Returns Selected for RICS Review, for procedures applicable to TC 971 AC 712, TC 971 AC 713, or TC 971 AC 717 scenarios. 4) IDT or Fabricated EIN determination has been made AMS states IDT determination made or Unreversed TC 971 AC 522 (MISC contains IDTCLM, IDTDOC or CLSIDT) on module or Sort name line includes "POTENTIAL FAB EIN" or "Identity Theft" , TC 971 AC 524 on module Prepare Form 14566, BMF Identity Theft Referral. (See Exhibit 25.23.11-1, Accounts Management Form 14566 Instructions, for information on completing the form.) Send the completed Form 14566 via secure email to the AM BMF IDT liaison at *TS AM BMF IDT. If COVID related credits are claimed on the Form 94XX, include in subject line of the secure email the specific COVID related credit (i.e., "Sick and Family - Form 14566" or "ERC – Form 14566" . Exception: If sending an email as per this instruction and the case involves an ERC claim withdrawal request, enter "ERC - WD - Form 14566" in the subject line of the email. Update the CII History Notes as follows: "Potential BMF IDT - Case referral to AM BMF IDT" Suspend the case and monitor for a response from BMF IDT confirming whether they will accept the case. Do not close the case until a response is received.

# Form 941, Employer's QUARTERLY Federal Tax Return

21.7.2.4.5 (02-27-2013) Form 941, Employer's QUARTERLY Federal Tax Return Employers who are required to withhold income tax on wages, social security tax, Medicare tax, or Additional Medicare Tax (for tax periods ending after December 31, 2012) must file Form 941 quarterly to report both the employer share and employee share of such taxes. Exception: Certain eligible taxpayers report employment taxes annually on Form 944, Employer's ANNUAL Federal Tax Return, instead of quarterly on Form 941. See IRM 21.7.2.4.7, Form 944, Employer's ANNUAL Federal Tax Return, for more information. The taxable period and due dates for Form 941 are always the same. (See below.) Quarter Covered Quarter Ending Due Date January, February, March March 31 April 30 April, May, June June 30 July 31 July, August, September September 30 October 31 October, November, December December 31 January 31 Note: The return due date for Form 941 is extended 10 days if timely deposits are made which full pay the amount of tax reported. Form 941 has the tax year in the title. Taxpayers must be encouraged to use the correct form to ensure proper processing.

# Seasonal Employers

21.7.2.4.5.1 (11-21-2011) Seasonal Employers Seasonal employers are Form 941 filers who do not report a tax liability every quarter because they do not pay wages every quarter. They are relieved from filing tax returns for the quarters in which they have no liability. Taxpayers who meet this criteria must check the seasonal employer box on Form 941 to establish or maintain this status. At least one return must be filed each year. Many seasonal employers also meet the criteria for filing Form 944, Employer's ANNUAL Federal Tax Return. However, seasonal employers not eligible to participate in the Form 944 program, or who have opted out of the Form 944 program, must continue to follow the instructions above. See IRM 21.7.2.4.7, Form 944, Employer's ANNUAL Federal Tax Return, for more information on Form 944 eligibility criteria and participation requirements.

# Line 2, Form 941

21.7.2.4.5.2 (10-01-2015) Line 2, Form 941 The amount from Line 2, Form 941, Wages, tips and other compensation, is identified on MF by the field name "TOTAL-COMP" . It is: Not an adjustable field. For research purposes only. May be used to verify whether a taxpayer mistakenly entered this amount on Form 941-X for the purpose of computing adjustments to taxable wages. If the only change reported on a Form 941-X is to total wages and tips (line 6 of Form 941-X), then input a TC 290 $.00 with blocking series 20 to release the -A freeze. If there are other changes in addition to corrections to total wages and tips, adjust accordingly.

# Multiple Quarters Filed on Form 941

21.7.2.4.5.3 (10-01-2014) Multiple Quarters Filed on Form 941 Sometimes an employer combines the wages for two or more quarters and reports them on a single Form 941. Example: An employer files a Form 941 for the 202012 quarter with full payment. The Form 941 includes a notation or attached statement which indicates the employer is reporting wages and tax for the entire year. Submission Processing (SP) has procedures in IRM 3.11.13.6, Unprocessable Conditions, to address this situation when identified during initial return processing. If taxpayer contact (or a referral from SP) is received identifying a multiple quarter Form 941 filing situation, process as follows: If And Then 1) The multiple quarter Form 941 has been posted Advise the taxpayer (use the appropriate "C" letter if working paper correspondence) to take the following actions: File a correct original Form 941 for each tax period (specify in the letter) for which wages/tax was incorrectly included on the multiple quarter Form 941. File a Form 941-X to correct the tax period to which the multiple quarter Form 941 was processed (specify in the letter) and to attach a breakdown of the federal tax deposits or other payments which should be applied to the respective tax periods previously included on the multiple quarter Form 941. 2) The multiple quarter Form 941 has not been posted There is no indication the multiple quarter Form 941 will post (i.e., not in ERS/Rejects or was previously deleted) Advise the taxpayer (use the appropriate "C" letter if working paper correspondence) to take the following actions: File a correct original Form 941 for each tax period (specify in the letter) for which tax was incorrectly reported on the multiple quarter Form 941. Submit a breakdown of the federal tax deposits or other payments which should be applied to the respective tax periods previously included on the multiple quarter Form 941. Exception: If the multiple quarter Form 941 includes a breakdown of the federal tax deposits or other payments which should be applied to the respective tax periods, do not request the breakdown described in 2) above. Instead, initiate credit transfers to reapply credits as appropriate before closing the case. 3) The multiple quarter Form 941 has not been posted There is an indication that the multiple quarter Form 941 will post (i.e., return is in ERS/Rejects) Monitor for posting or deletion of the return and then process as appropriate per the preceding rows in this table.

# Negative Tax Liability on Form 941

21.7.2.4.5.4 (10-18-2022) Negative Tax Liability on Form 941 For errors discovered prior to January 1, 2009, taxpayers were instructed to adjust a prior period on a current period's return. Therefore, taxpayers could submit a tax return reporting a credit that reduced the net tax liability below zero. This would result in the current period's tax liability being recorded as a negative amount (i.e., the TC 150 posted with a negative figure). Current programming allows for a tax adjustment to be input to reduce an existing liability below zero. However, if the tax liability is being reduced to a negative amount, any FTD penalty must be manually adjusted. See IRM 20.1.4.23, Manual Adjustments. Caution: Do not reduce net module tax (sum of TC 150 and all TC 29X/30X transactions) to a negative amount on any tax period beginning on or after January 1, 2009. The programming which allowed the posting of negative TC 150 amounts for employment tax accounts continued to be supported until June 28, 2021. Beginning June 28, 2021, programming was altered to set the TC 150 tax settlement to zero (i.e., $0.00) if an employment tax return attempts to post reflecting a negative tax liability; all other transcribed tax data on the return is generally recorded as filed. Accordingly, this may lead to account situations wherein the tax recorded (i.e., zero) does not match the corresponding tax data reference fields. This generally occurs when an employer claims excessive nonrefundable COVID credits or excessive nonrefundable QSB Research Credit. When adjusting these accounts, it will generally be necessary to correct reference lines to match tax (i.e., zero) before completing any other tax adjustment. See IRM 21.7.2.4.1.3, IRNs Do Not Equal TC 150, for more information. Caution: Prior to the programming change discussed above, some employers filed incorrect tax returns reporting excessive nonrefundable credits which were processed as filed and posted as negative TC 150 transactions. Careful consideration must be given when adjusting accounts reflecting a negative TC 150. Contact the IRM author through the campus P&A Staff for guidance if you are unable to determine correct actions to resolve a negative TC 150 case encountered in AM work.

# Form 941 Discrepancy — Taxpayer Files Form 941-X

21.7.2.4.5.5 (10-01-2013) Form 941 Discrepancy — Taxpayer Files Form 941-X A taxpayer may disagree with a notice of additional tax assessment due to an error or discrepancy on Form 941 citing any of the following as possible cause(s): Transposition of figures Entry made on wrong line Omission of allowable adjustment Error in computation of tax Erroneous withholding tax or wages reported on Form 941 A Form 941-X is required to correct information previously reported on Form 941 unless the taxpayer's response meets oral statement authority for BMF as described in (2) of IRM 21.7.1.4, Business Master File (BMF) /Non-Master File (NMF) Adjustment Procedures.

# Form 941-X, Adjusted Employer's QUARTERLY Federal Tax Return or Claim for Refund

21.7.2.4.5.6 (10-01-2025) Form 941-X, Adjusted Employer's QUARTERLY Federal Tax Return or Claim for Refund Form 941-X, Form 941-X (SP), or Form 941-X (PR) is filed to correct income tax withholding and/or FICA tax information (including Additional Medicare Tax.) Taxpayers can choose to file either: An adjusted employment tax return, or A claim Note: If the taxpayer did not check a box in Part 1 (or checked both boxes) and the 941-X reflects a tax decrease, make two attempts to contact the taxpayer by phone (if a telephone number is available) to determine whether they intended to follow the adjustment process or the claim process. If unable to contact the taxpayer by phone, verify which set of certification box(es) were checked. If the taxpayer checked only the claim certification(s), process as a claim for refund. If the taxpayer checked the adjustment certification(s), or checked both the adjustment certification(s), or did not check either certification, process as an adjusted employment tax return. Use the applicable reference numbers to adjust tax, wages, and credits on employment tax returns. The following table shows the valid reference numbers for Form 941-X. Item Reference Number (IRN) Explanation 111 Federal income tax withheld from wages, tips, and other compensation (line 7 of Form 941-X - column 4). 004 Taxable social security wages (line 8 of Form 941-X - column 3 plus line 20 of Form 941-X - column 3). 005 Taxable social security tips (line 11 of Form 941-X - column 3). 073 Taxable Medicare wages and tips (line 12 of Form 941-X - column 3 plus line 21 of Form 941-X - column 3). 074 Taxable Wages & tips subject to Additional Medicare Tax withholding (line 13 of Form 941-X - column 3 plus line 22 of Form 941-X - column 3) (valid for tax periods beginning after December 31, 2012). 112 Total social security, Medicare tax, and (for tax periods beginning after December 31, 2012) Additional Medicare Tax. 114 Section 3121(q) Notice and Demand — Tax due on unreported tips (line 14 of Form 941-X - column 4). Only for MFT 01 tax periods 201103 and after. 104 Income tax withheld figured at IRC Section 3509 tax rate on Special addition to wages for federal income tax (line 19 of Form 941-X - column 4). 105 Social security, Medicare taxes, and (for tax periods beginning after December 31, 2012) Additional Medicare taxes figured at IRC Section 3509 tax rates on Special addition to wages for social security taxes, Special addition to wages for Medicare taxes, and Special addition to wages for Additional Medicare Tax (total of lines 20, 21, and 22 from Form 941-X - column 4). 106/107/108 Tax adjustments (line 15 of Form 941-X - column 4). See IRN 113 and Note below table. 113 Total adjustments (total of lines 15, 19, 20, 21, and 22 of Form 941-X - column 4). See IRN 106/107/108 above and Note below table. Reminder: IRN 113 must be used when adjusting IRNs 104 through 108. 119 Qualified Small Business Payroll Tax Credit for Increasing Research Activities (line 16 of Form 941-X - column 4). Note: For ease of reference, this credit is generally referred to as the "QSB Research Credit" throughout this IRM. Caution: For Form 941, IRN 119 is only valid for tax periods 201706 and later. Note: Use Item reference numbers 106, 107, and 108 to adjust any corrections a taxpayer may have for lines 7, 8, and 9 on Form 941. If Form 941-X does not specify what is actually being corrected, use IRN 107 for total amount on line 15 - column 4. See IRM 21.7.2.4.1, Item Reference numbers (IRNs) and Credit Reference Numbers (CRNs) - Employment Taxes, for additional information on IRNs. Caution: Form 941-X is revised on a regular basis and line numbers for particular adjustment items occasionally change. However, there is no requirement for the taxpayer to use the most current version of Form 941-X. Although line numbers are provided in the table above for easy reference, employees are responsible for ensuring the proper adjustment action is taken based on the form version filed by the taxpayer. Note: Although CRN 290 is valid for MFT 01, this credit cannot be claimed or adjusted by filing a Form 941-X. This credit is only allowed during the processing of Form 5884-C and Form 5884-D. See IRM 21.7.2.5.15, Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans, and Form 5884-D, Employee Retention Credit for Certain Tax-Exempt Organizations Affected by Qualified Disasters, for more information. Caution: See IRM 21.7.2.7.6, COVID-19 Related Employment Tax Relief and Forms 94XX, for information on IRN/CRN usage on tax accounts for 2020 and subsequent tax periods.

# Form 941-X Tax Decreases — Adjusted Employment Tax Return

21.7.2.4.5.6.1 (05-10-2023) Form 941-X Tax Decreases — Adjusted Employment Tax Return These tax decreases involve income tax withholding and/or FICA tax (including Additional Medicare Tax for tax periods beginning after December 31, 2012). Verify all required items on Form 941-X are complete, such as: Name, address, and EIN Type of return being corrected Quarter being corrected Calendar year being corrected Box 1 in Part 1 is checked Box 3 and the applicable certification is checked on line 4a, 4b or 4c in Part 2 (if required; see exception criteria in (3) below). Detailed explanation (see IRM 21.7.2.4.4 (12)) Signature (see IRM 21.7.2.4.4.11, Signature Requirements for Form 94XX Amended/Adjusted Employment Tax Returns, for who may sign and handling guidance for missing signatures). If a certification box is not checked, make two attempts to secure the information by phone if a telephone number is available. Otherwise, follow procedures in IRM 21.5.3.4.2, Tax Decrease or Credit Increase Processing. Use Letter 4384C to reject the claim and identify the missing information in the letter. Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Exception: A line 4 certification is only required if the Form 941-X reflects changes to one or more lines 6 through 15. Exception: See (10) in IRM 21.7.2.4.4, Adjusted Employer's Federal Tax Return or Claim for Refund. Caution: When contacting the taxpayer or authorized representative, follow taxpayer authentication guidelines in IRM 21.1.3, Operational Guidelines Overview. The individual contacted by phone must be authorized to prepare taxpayer's employment tax returns. Document the case history with the date, time, name of individual contacted, and information obtained from the individual. Note: If the taxpayer checked both the adjustment certification(s) and the claim certification(s) boxes, process as an adjusted employment tax return. Note: If the certification box checked in Part 2 is inconsistent with the process selected in Part 1, continue processing the Form 941-X based on the information provided in Part 1. If a taxpayer files an adjusted employment tax return within 90 days of the expiration of the period of limitations, the adjustment must be converted to a claim for refund and the taxpayer must be notified. Take the following actions: Notate the Form 941-X with the following text: "90 day - Claim" . Process the Form 941-X per procedures in IRM 21.7.2.4.5.6.2, Form 941-X Tax Decrease — Claim, and refer to IRM 21.7.2.4.4.5, 90 Day — Claim, for additional information. Generate Letter 4384C to the taxpayer explaining the adjustment has been converted to a claim. A decrease in tax may meet examination criteria. See Exhibit 21.5.3–2, Examination Criteria (CAT-A) — General, for additional information. Math verify adjustments to income tax, social security tax, Medicare tax, and Additional Medicare Tax (AdMT).≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the Form 941-X includes an adjustment to the QSB Research Credit, also see IRM 21.7.2.5.21, Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities, for additional processing and verification requirements. Process adjusted employment tax returns as follows: Input TC 291, HC 1, BS 20 and the appropriate IRNs for the amount of decrease. Note: Overpayments arising from adjustments made under these procedures are subject to offset. Omit Hold Code 1 with the adjustment and allow the computer to systemically offset the credit if it will be fully absorbed by an outstanding balance due. Otherwise, if conditions prevent the computer from completing the offset, or if only part of the credit needs to be offset, manual offsets using TC 820/TC 700 transactions will be required. Caution: For tax decreases with an unreversed FTD penalty, see IRM 20.1.4.21.5.1, Amended ROFTL (Forms 941-X, 943-X, 944-X, 945-X, and CT-1X). Transfer the applicable overpayment using TC 830/710 to the period in which the Form 941-X was filed. Caution: To prevent either debit or credit interest from generating, use the later of the return due date of the tax period being adjusted or the availability date of the overpayment as the transaction date of the TC 830 and use the due date of the return the credit is being applied to as the transaction date of the TC 710. See (4) in IRM 21.5.8.4.2, Determining Correct Credit Transfer Format, for more information. If the entire credit is not available to be transferred, generate Letter 4384C to the taxpayer. Explain why the entire amount was not allowable (for example, there was a balance due on the tax period being adjusted or the credit is being offset to a balance due on another tax period). If the taxpayer's filing requirement has changed from Form 944 to Form 941 or vice versa, the credit will be transferred to the filing requirement that was active for the period in which the adjusted return was filed.

# Form 941-X Tax Decrease — Claim

21.7.2.4.5.6.2 (05-10-2023) Form 941-X Tax Decrease — Claim These tax decreases involve income tax withholding, and/or FICA tax (including Additional Medicare Tax for tax periods beginning after December 31, 2012). Verify all required items on Form 941-X are complete, such as: Name, address, and EIN Type of return being corrected Quarter being corrected Calendar year being corrected Box 2 in Part 1 is checked Box 3 and the applicable certification is checked on line 5a, 5b, 5c or 5d in Part 2 (if required; see exception criteria in (3) below). Detailed explanation (see IRM 21.7.2.4.4 (12)) Signature (see IRM 21.7.2.4.4.11, Signature Requirements for Form 94XX Amended/Adjusted Employment Tax Returns, for who may sign and handling guidance for missing signatures). If a certification box is not checked, make two attempts to secure the information by phone if a telephone number is available. Otherwise, follow procedures in IRM 21.5.3.4.2, Tax Decrease or Credit Increase Processing. Use Letter 4384C to reject the claim and identify the missing information in the letter. Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Exception: A line 5 certification is only required if the Form 941-X reflects changes to one or more lines 6 through 15. Exception: See (10) in IRM 21.7.2.4.4, Adjusted Employer's Federal Tax Return or Claim for Refund. Caution: When contacting the taxpayer or authorized representative, follow taxpayer authentication guidelines in IRM 21.1.3, Operational Guidelines Overview. The individual contacted by phone must be authorized to prepare taxpayer's employment tax returns. Document the case history with the date, time, name of individual contacted, and information obtained from the individual. Note: If the taxpayer checked both the adjustment certification(s) and the claim certification(s) boxes, process as an adjusted employment tax return as per guidance in IRM 21.7.2.4.5.6.1, Form 941-X Tax Decreases — Adjusted Employment Tax Return. Note: If the certification box checked in Part 2 is inconsistent with the process selected in Part 1, continue processing the Form 941-X based on the information provided in Part 1. Exception: Claims filed without consent: Unless one of the exceptions above applies, if the taxpayer has not checked a box on line 5 and states (in the explanation or in response to our contact) they are not required to obtain the consents prior to filing the claim and the claim is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, send claim CAT-A. Exam will correspond with the taxpayer to secure applicable certifications. In certain situations, taxpayers may not have repaid or reimbursed their employees or obtained their consents prior to filing a claim (Form 941-X). However, they must certify they have repaid or reimbursed their employees or obtained consents before the IRS can accept the claim. See Instructions for Form 941-X for more information. A decrease in tax may meet examination criteria. See Exhibit 21.5.3–2, Examination Criteria (CAT-A) — General, for additional information. Math verify adjustments to income tax withholding, social security tax, Medicare tax, and Additional Medicare Tax (AdMT).≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the Form 941-X includes an adjustment to the QSB Research Credit, also see IRM 21.7.2.5.21, Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities, for additional processing and verification requirements. Input TC 291, BS 20 and the appropriate IRNs for the amount of the decrease. Caution: For tax decreases with an unreversed FTD penalty, see IRM 20.1.4.21.5.1, Amended ROFTL (Forms 941-X, 943-X, 944-X, 945-X, and CT-1X).

# Form 941-X Tax Increases — Adjusted Employment Tax Return

21.7.2.4.5.6.3 (03-10-2025) Form 941-X Tax Increases — Adjusted Employment Tax Return These tax increases involve income tax withholding and/or FICA tax (including Additional Medicare Tax for tax periods beginning after December 31, 2012). Verify all required items on Form 941-X are complete, such as: Name, address, and EIN Type of return being corrected Quarter being corrected Calendar year being corrected Box 1 in Part 1 is checked Box 3 is checked in Part 2 Detailed explanation (see IRM 21.7.2.4.4 (12)) Signature (see IRM 21.7.2.4.4.11, Signature Requirements for Form 94XX Amended/Adjusted Employment Tax Returns, for who may sign and handling guidance for missing signatures). Note: See (3) and (4) of IRM 21.5.3.4.1, Tax Increase or Credit Decrease Processing, if the Form 941-X is missing required information. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Check for the date the taxpayer discovered the error. If not entered on page 1, review the explanation to see if it was entered there. Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, if the ascertained date is not provided and a telephone number is available, make two attempts to contact the taxpayer by phone to obtain the information. If the ascertained date cannot be obtained by phone, input the adjustment as a TC 290. Exception: If you receive a Form 941-X for the immediately preceding quarter prior to the due date for the current quarter (for example, a Form 941-X reporting a tax increase for the third quarter of 2024 received on or before January 31, 2025), it is not necessary to contact the taxpayer for an ascertained date. In that situation, input a TC 298 with the applicable interest computation date. See IRM 21.7.2.4.4.2, Interest-Free Adjustments (Employment Tax Returns), for more information. Reminder: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ Math verify adjustments to income tax withholding, social security tax, Medicare tax, and Additional Medicare Tax (AdMT).≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the Form 941-X includes an adjustment to the QSB Research Credit, also see IRM 21.7.2.5.21, Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities, for additional processing and verification requirements. Use the table below to make your adjustment(s). If Then 1} The Form 941-X was filed by the due date of the return for the period in which the taxpayer discovered the reporting error Input TC 298 and BS 20 with the correct interest computation date (INTCMP-DT). See IRM 21.7.2.4.4.2, Interest-Free Adjustment (Employment Tax Returns), and example below for additional information. 2) The Form 941-X was not filed by the due date of the return for the period in which the error was ascertained OR"date you discovered errors" was blank and the date error was discovered was not furnished in Part 4 Input TC 290 with BS 20. Example: An employer discovers an error on February 5, 2025, and files a Form 941-X which is received by the IRS on March 4, 2025 for the MFT 01 202412 tax period. The interest computation date would be March 4, 2025. Adjust the FTD penalty when using either a TC 290 (see IRM 20.1.4.21.3, Amended or Supplemental (Tax Decrease or Non-Interest-Free Tax Increase)) or a TC 298 (see IRM 20.1.4.21.5, Adjusted Returns (Forms 941-X, 943-X, 944-X, and CT-1X)). Note: See IRM 20.1.4.21.5.1, Amended ROFTL (Forms 941-X, 943-X, 944-X, 945-X, and CT-1X), when using a TC 298 or TC 290 and an amended ROFTL was provided with the adjusted return. If payment for the additional tax reported on the Form 941-X is not reflected on the tax period being adjusted, research the taxpayer's account for the missing credit and, if located, transfer the payment as appropriate.

# Form 943, Employer's Annual Federal Tax Return for Agricultural Employees

21.7.2.4.6 (02-09-2022) Form 943, Employer's Annual Federal Tax Return for Agricultural Employees Form 943, Employer's Annual Federal Tax Return for Agricultural Employees, must be filed to report income tax withheld and employer and employee FICA taxes (including Additional Medicare Tax for tax periods beginning after December 31, 2012) on farm workers. Agricultural employers with household employees who work in a private home on a farm operated for profit can either: File Schedule H with their Form 1040 series return and report the household employees' portion of wages and taxes, or Include the wages and taxes with farm employees on Form 943. Form 943 is an annual return due on or before January 31 following the close of the calendar year. Exception: The return due date for Form 943 is extended 10 days if timely deposits are made which full pay the amount of tax reported. The Form 943 threshold for making deposits is $2,500. Taxpayers follow either semi-weekly or monthly deposit schedules determined by the Form 943 lookback period. See IRM 20.1.4.8.2, Lookback Periods for Employment Tax. Forms 943 are recorded on MFT 11 and the tax class is 1. See (2)of IRM 21.7.2.4.6.3, Form 943-X, Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund (including Form 943-X (PR)), for valid IRNs and CRNs used to adjust Form 943 accounts. Also see the table in (1) of IRM 21.7.2.4.1.1, TC 29X / Item Reference Number (IRN) Valid Adjustment Formulas — Employment Taxes, for valid Form 943 adjustment formulas. Caution: See IRM 21.7.2.7.6, COVID-19 Related Employment Tax Relief and Forms 94XX, for information on IRN/CRN usage on tax accounts for 2020 and subsequent tax periods.

# Wages Subject to FICA and Income Tax Withholding

21.7.2.4.6.1 (10-01-2020) Wages Subject to FICA and Income Tax Withholding All cash wages paid to farm workers are subject to FICA (including Additional Medicare Tax to the extent wages and tips paid to an employee exceed $200,000 for a calendar year beginning after December 31, 2012) and income tax withholding during the year, if either of the two tests below is met: Cash and non-cash wages paid during the year to all farm workers totals $2,500 or more. Annual cash wages of $150 or more are paid to a farm worker (this test is applied separately to each farm worker). Cash wages paid to a farm worker who receives less than $150 during the year are not subject to FICA and income tax withholding, even if the total paid to all employees exceeds $2,500 or more, if the farm worker: Is employed as a hand-harvest laborer Is paid piece-rates in an operation usually paid on a piece-rate basis in the region of employment Commutes daily from their permanent home to the farm, and Had been employed in agriculture less than 13 weeks in the preceding calendar year Note: Amounts paid to these farm workers, however, count toward the $2,500 or more test for determining the social security and Medicare liability regarding other farm workers. Cash wages paid to a household worker are not counted in the $2,500 test and are not subject to FICA taxes unless the worker is paid cash wages at least equal to the threshold established by the Social Security Domestic Employment Reform Act of 1994 (SSDERA) for that particular year. Wage thresholds may be found in Pub 926, Household Employer's Tax Guide, for the year in question. Foreign agricultural workers may be temporarily admitted into the United States on H-2A visas: Compensation paid to H-2A agricultural workers are not subject to social security or Medicare taxes. However, compensation paid to H-2A agricultural workers is counted towards the tests discussed in (1) and (2) above. Employers are not required to withhold federal income tax from compensation paid to an H-2A visa agricultural worker. However, if both the employer and employee agree, federal income tax may be withheld from compensation and those amounts would be reportable on Form 943. H-2A agricultural workers are eligible to obtain a Social Security Number (SSN) from the Social Security Administration (SSA) and should provide that information to the agricultural employer. An H-2A agricultural worker who fails to provide the employer with their Taxpayer Identification Number (TIN) may be subject to backup withholding (BUWH) which would be reportable on Form 945. Employers must report compensation of $600 or more paid to an H-2A agricultural worker in a calendar year for agricultural labor on Form W-2, Wage and Tax Statement. Additional information may be found on the IRS website at: Foreign Agricultural Workers on H-2A Visas.

# Incorrect Type of Return Filed — Forms 941 and 943

21.7.2.4.6.2 (10-01-2015) Incorrect Type of Return Filed — Forms 941 and 943 Taxpayers occasionally report employment taxes related to agricultural employees on quarterly Forms 941 instead of on an annual Form 943 as required. When a taxpayer files Forms 941 for one or more quarters of a tax year but should have filed an annual Form 943, take the following actions to resolve the accounts: If And Then 1) Taxpayer has filed Form 943 Previously reported employment taxes related to agricultural employees on Form 941 Advise the taxpayer (use the appropriate "C" letter if working paper correspondence) to file a Form 941-X for each quarter in which they incorrectly reported employment taxes related to agricultural employees on Form 941 and attach a statement detailing the amounts of any federal tax deposits or other payments which should be reapplied to their Form 943 tax account. 2) Taxpayer has not yet filed Form 943 Previously reported employment taxes related to agricultural employees on Form 941 Advise the taxpayer (use the appropriate "C" letter if working paper correspondence) to take the following actions: File a Form 943 reflecting the correct tax for the year File a Form 941-X for each quarter in which they incorrectly reported employment taxes related to agricultural employees on Form 941 and attach a statement detailing the amounts of any federal tax deposits or other payments which should be reapplied to their Form 943 tax account.

# Form 943-X, Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund

21.7.2.4.6.3 (10-01-2025) Form 943-X, Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund Form 943-X, Form 943-X (SP), or Form 943-X (PR) is filed to correct income tax withholding and/or FICA tax information (including Additional Medicare Tax for tax periods beginning after December 31, 2012) previously reported on Form 943, Form 943 (SP) or Form 943 (PR). Taxpayers can choose to either file: An adjusted employment tax return, or A claim Note: If the taxpayer did not check a box in Part 1 (or checked both boxes) and the 943-X reflects a tax decrease, make two attempts to contact the taxpayer by phone (if a telephone number is available) to determine whether they intended to follow the adjustment process or the claim process. If unable to contact the taxpayer by phone, verify which set of certification box(es) were checked. If the taxpayer checked only the claim certification(s), process as a claim for refund. If the taxpayer checked the adjustment certification(s), or checked both the adjustment certification(s), or did not check either certification, process as an adjusted employment tax return. Item Reference Numbers (IRNs) valid for Form 943-X are: Item Reference Number (IRN) Explanation 004 Total wages subject to social security tax (line 6 of Form 943-X - column 3 plus line 17 of Form 943-X - column 3). 073 Taxable Medicare wages and tips (line 9 of Form 943-X - column 3 plus line 18 of Form 943-X - column 3). 074 Taxable Wages & tips subject to Additional Medicare Tax withholding (line 10 of Form 943-X - column 3 plus line 19 of Form 943-X - column 3). Valid for tax periods beginning after December 31, 2012. 007 Total social security, Medicare tax, and (for tax periods beginning after December 31, 2012) Additional Medicare Tax (combined figures in column 4 of Form 943-X - lines 6, 9, 10, 17, 18, and 19). 003 Federal income tax withheld (line 11 of Form 943-X - column 4 plus line 16 of Form 943-X - column 4). 185 Tax adjustments (line 12 of Form 943-X - column 4). For tax periods after 200812, IRN 185 is only used on Form 943 adjustments for fractions of cents and third-party sick pay. 119 Qualified Small Business Payroll Tax Credit for Increasing Research Activities Note: For ease of reference, this credit is generally referred to as the "QSB Research Credit" throughout this IRM. Caution: For Form 943, IRN 119 is only valid for tax periods 201712 and later. Caution: See IRM 21.7.2.7.6, COVID-19 Related Employment Tax Relief and Forms 94XX, for information on IRN/CRN usage on tax accounts for 2020 and subsequent tax periods. Caution: Form 943-X is revised on a regular basis and line numbers for particular adjustment items occasionally change. However, there is no requirement for the taxpayer to use the most current version of Form 943-X. Although line numbers are provided in the table above for easy reference, employees are responsible for ensuring the proper adjustment action is taken based on the form version filed by the taxpayer. Caution: Although CRN 290 is valid for MFT 11, this credit cannot be claimed or adjusted by filing a Form 943-X. This credit is only allowed during the processing of Form 5884-C and Form 5884-D. See IRM 21.7.2.5.15, Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans, and Form 5884-D, Employee Retention Credit for Certain Tax-Exempt Organizations Affected by Qualified Disasters, for more information.

# Form 943-X Tax Decreases — Adjusted Employment Tax Return

21.7.2.4.6.3.1 (05-10-2023) Form 943-X Tax Decreases — Adjusted Employment Tax Return These tax decreases involve income tax withholding and/or FICA tax (including Additional Medicare Tax for tax periods beginning after December 31, 2012). Verify all required items on Form 943-X are complete, such as: Name, address, and EIN Calendar year being corrected Box 1 in Part 1 is checked Box 3 and the applicable certification is checked on line 4a, 4b or 4c in Part 2 (if required; see exception criteria in (3) below). Detailed explanation (see IRM 21.7.2.4.4 (12)) Signature (see IRM 21.7.2.4.4.11, Signature Requirements for Form 94XX Amended/Adjusted Employment Tax Returns, for who may sign and handling guidance for missing signatures). If a certification box is not checked, make two attempts to secure the information by phone if a telephone number is available. Otherwise, follow procedures in IRM 21.5.3.4.2, Tax Decrease or Credit Increase Processing. Use Letter 4384C to reject the claim and identify the missing information in the letter. Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Exception: A line 4 certification is only required if the Form 943-X reflects changes to one or more lines 6 through 12. Exception: See (10) in IRM 21.7.2.4.4, Adjusted Employer's Federal Tax Return or Claim for Refund. Caution: When contacting the taxpayer or authorized representative, follow taxpayer authentication guidelines in IRM 21.1.3, Operational Guidelines Overview. The individual contacted by phone must be authorized to prepare taxpayer's employment tax returns. Document the case history with the date, time, name of individual contacted, and information obtained from the individual. Note: If the taxpayer checked both the adjustment certification(s) and the claim certification(s) boxes, process as an adjusted employment tax return. Note: If the certification box checked in Part 2 is inconsistent with the process selected in Part 1, continue processing the Form 943-X based on the information provided in Part 1. If a taxpayer files an adjusted employment tax return within 90 days of the expiration of the period of limitations, the adjustment must be converted to a claim for refund and the taxpayer must be notified. Take the following actions: Notate the Form 943-X with the following text: "90 day - Claim" . Process the Form 943-X per procedures in IRM 21.7.2.4.6.3.2, Form 943-X Tax Decreases — Claim, and refer to IRM 21.7.2.4.4.5, 90 Day — Claim, for additional information. Generate Letter 4384C to the taxpayer explaining the adjustment has been converted to a claim. A decrease in tax may meet examination criteria. See Exhibit 21.5.3–2, Examination Criteria (CAT-A), for additional information. Math verify adjustments to income tax withholding, social security tax, Medicare tax, and Additional Medicare Tax (AdMT).≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the Form 943-X includes an adjustment to the QSB Research Credit, also see IRM 21.7.2.5.21, Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities, for additional processing and verification requirements. Process adjusted employment tax returns as follows: Input TC 291, HC 1, BS 20 and the appropriate IRNs for the amount of decrease. Note: Overpayments arising from adjustments made under these procedures are subject to offset. Omit Hold Code 1 with the adjustment and allow the computer to systemically offset the credit if it will be fully absorbed by an outstanding balance due. Otherwise, if conditions prevent the computer from completing the offset, or if only part of the credit needs to be offset, manual offsets using TC 820/TC 700 transactions will be required. Caution: For tax decreases with an unreversed FTD penalty, see IRM 20.1.4.21.5.1, Amended ROFTL (Forms 941-X, 943-X, 944-X, 945-X, and CT-1X). Transfer the applicable overpayment using TC 830/710 to the period in which the Form 943-X was filed. Caution: To prevent either debit or credit interest from generating, use the later of the return due date of the tax period being adjusted or the availability date of the overpayment as the transaction date of the TC 830 and use the due date of the return the credit is being applied to as the transaction date of the TC 710. See (4) in IRM 21.5.8.4.2, Determining Correct Credit Transfer Format, for more information. If the entire credit is not available to be transferred, generate Letter 4384C to the taxpayer. Explain why the entire amount was not available (for example, there was a balance due on the tax period being adjusted or the credit is being offset to a balance due on another tax period).

# Form 943-X Tax Decreases — Claim

21.7.2.4.6.3.2 (05-10-2023) Form 943-X Tax Decreases — Claim These tax decreases involve income tax withholding and/or FICA (including Additional Medicare Tax for tax periods beginning after December 31, 2012). Verify all required items on Form 943-X are complete, such as: Name, address, and EIN Calendar year being corrected Box 2 in Part 1 is checked Box 3 and the applicable certification is checked on line 5a, 5b, 5c or 5d in Part 2 (if required; see exception criteria in (3) below). Detailed explanation (see IRM 21.7.2.4.4 (12)) Signature (see IRM 21.7.2.4.4.11, Signature Requirements for Form 94XX Amended/Adjusted Employment Tax Returns, for who may sign and handling guidance for missing signatures). If a certification box is not checked, make two attempts to secure the information by phone if a telephone number is available. Otherwise, follow procedures in IRM 21.5.3.4.2, Tax Decrease or Credit Increase Processing. Use Letter 4384C to reject the claim and identify the missing information in the letter. Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Exception: A line 5 certification is only required if the Form 943-X reflects changes to one or more lines 6 through 12. Exception: See (10) in IRM 21.7.2.4.4, Adjusted Employer's Federal Tax Return or Claim for Refund. Caution: When contacting the taxpayer or authorized representative, follow taxpayer authentication guidelines in IRM 21.1.3, Operational Guidelines Overview. The individual contacted by phone must be authorized to prepare taxpayer's employment tax returns. Document the case history with the date, time, name of individual contacted, and information obtained from the individual. Note: If the taxpayer checked both the adjustment certification(s) and the claim certification(s) boxes, process as an adjusted employment tax return as per guidance in IRM 21.7.2.4.6.3.1, Form 943-X Tax Decreases — Adjusted Employment Tax Return. Note: If the certification box checked in Part 2 is inconsistent with the process selected in Part 1, continue processing the Form 943-X based on the information provided in Part 1. Exception: Claims filed without consent: Unless one of the exceptions above applies, if the taxpayer has not checked a box on line 5 and states (in the explanation or in response to our contact) they are not required to obtain the consents prior to filing the claim and the claim is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, send claim CAT-A. Exam will correspond with the taxpayer to secure applicable certifications. In certain situations, taxpayers may not have repaid or reimbursed their employees or obtained their consents prior to filing a claim (Form 943-X). However, they must certify they have repaid or reimbursed their employees or obtained consents before the IRS can accept the claim. See Instructions for Form 943-X for more information. A decrease in tax may meet examination criteria. See Exhibit 21.5.3–2, Examination Criteria (CAT-A), for additional information. Math verify adjustments to income tax, social security tax, Medicare tax, and Additional Medicare Tax (AdMT).≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the Form 943-X includes an adjustment to the QSB Research Credit, also see IRM 21.7.2.5.21, Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities, for additional processing and verification requirements. Input TC 291, BS 20 and the appropriate IRNs for the amount of the decrease. Caution: For tax decreases with an unreversed FTD penalty, see IRM 20.1.4.21.5.1, Amended ROFTL (Forms 941-X, 943-X, 944-X, 945-X, and CT-1X).

# Form 943-X Tax Increases — Adjusted Employment Tax Return

21.7.2.4.6.3.3 (03-10-2025) Form 943-X Tax Increases — Adjusted Employment Tax Return These tax increases involve income tax withholding and/or FICA tax (including Additional Medicare Tax for tax periods beginning after December 31, 2012). Verify all required items on Form 943-X are complete, such as: Name, address, and EIN Calendar year being corrected Box 1 in Part 1 is checked Box 3 is checked in Part 2 Detailed explanation (see IRM 21.7.2.4.4 (12)) Signature (see IRM 21.7.2.4.4.11, Signature Requirements for Form 94XX Amended/Adjusted Employment Tax Returns, for who may sign and handling guidance for missing signatures). Note: See (3) and (4) of IRM 21.5.3.4.1, Tax Increase or Credit Decrease Processing, if the Form 943-X is missing required information. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Check for the date the taxpayer discovered the error. If not entered on page 1, review the explanation to see if it was entered there. Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, if the ascertained date is not provided and a telephone number is available, make two attempts to contact the taxpayer by phone to obtain the information. If the ascertained date cannot be obtained by phone, input the adjustment as a TC 290. Exception: If you receive a Form 943-X for the immediately preceding tax year prior to the due date for the current tax year (for example, a Form 943-X reporting a tax increase for tax year 2024 received on or before January 31, 2026), it is not necessary to contact the taxpayer for an ascertained date. In that situation, input a TC 298 with the applicable interest computation date. See IRM 21.7.2.4.4.2, Interest-Free Adjustments (Employment Tax Returns), for more information. Reminder: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ Math verify adjustments to income tax withholding, social security tax, Medicare tax, and Additional Medicare Tax (AdMT).≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the Form 943-X includes an adjustment to the QSB Research Credit, also see IRM 21.7.2.5.21, Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities, for additional processing and verification requirements. Use the table below to make your adjustment(s). If Then 1) The Form 943-X was filed by the due date of the return for the period in which the taxpayer discovered the reporting error Input TC 298, BS 20, and the appropriate IRNs with the correct interest computation date (INTCMP-DT). See IRM 21.7.2.4.4.2, Interest-Free Adjustments (Employment Tax Returns), and example below for additional information. 2) The Form 943-X was not filed by the due date of the return for the period in which the error was ascertained OR"date you discovered errors" was blank and the date error was discovered was not furnished in Part 4 Input TC 290 and the appropriate IRNs with BS 20. Example: An employer discovers an error on February 5, 2025 and files a Form 943-X which is received by the IRS on March 4, 2025, for the MFT 11 202412 tax period. The interest computation date would be March 4, 2025. Adjust the FTD penalty when using either a TC 290 (see IRM 20.1.4.21.3, Amended or Supplemental (Tax Decrease or Non-Interest-Free Tax Increase)) or a TC 298 (see IRM 20.1.4.21.5, Adjusted Returns (Forms 941-X, 943-X, 944-X, and CT-1X)). Note: See IRM 20.1.4.21.5.1, Amended ROFTL (Forms 941-X, 943-X, 944-X, 945-X, and CT-1X), when using a TC 298 or TC 290 and an amended ROFTL was provided with the adjusted return. If payment for the additional tax reported on the Form 943-X is not reflected on the tax period being adjusted, research the taxpayer's account for the missing credit and, if located, transfer the payment as appropriate.

# Form 944, Employer's ANNUAL Federal Tax Return

21.7.2.4.7 (10-01-2019) Form 944, Employer's ANNUAL Federal Tax Return Form 944 is the annual employment tax return for small employers. Instead of filing quarterly tax returns (Form 941), certain eligible employers file an annual tax return (Form 944). Form 944 is processed under MFT 14 and the tax class is "1" . The first tax year for which Form 944 could be filed was 2006. Caution: MFT 14 is also the MFT for Non-Master File (NMF) Form 8613, Return of Excise Tax on Undistributed Income of Regulated Investment Companies. When generating a "C" letter from a Form 944 account, make sure the letter contains the correct form number. The same filing, paying, and depositing options available for Form 941 are also currently available for Form 944. All penalties and interest applicable to Form 941 also apply to Form 944, including FTD penalties. Federal tax deposits are required for Form 944 filers who report tax of $2,500 or more. To qualify for the Form 944 program one of the following situations must apply: The taxpayer is a new employer who expects to have $1,000 or less in employment tax liability for the calendar year. The taxpayer is an existing employer who expects to have $1,000 or less in employment tax liability for the calendar year, contacts the IRS to request to file Form 944 (rather than Form 941), and receives written notice from the IRS to file Form 944. The taxpayer was required to file Form 944 for the prior year and reported $1,000 or less in total tax liability. Note: Domestic employers will generally have $1,000 or less in employment tax liability if they pay wages of $5,000 or less in a year. Employers in U.S. possessions will generally have $1,000 or less in employment tax liability if they pay wages of $6,536 or less in a year. Taxpayers may either self-identify during EIN assignment or they can contact the IRS to request consideration (opt in) for the Form 944 program. Generally, existing employers must contact the IRS by phone not later than April 1 of the current year, or send a written request postmarked by March 15th to opt in the Form 944 program. If the due date falls on a Saturday, Sunday, or legal holiday, the last day employers may call the IRS or have their written correspondence postmarked is the next business day following that Saturday, Sunday, or legal holiday. Eligible new employers can notify the IRS on Form SS-4, Application for Employer Identification Number, that they would like to file Form 944 by checking the box on line 14 of this form. Alternately, they can opt in by contacting the IRS by phone not later than the first day of the month that the first required Form 941 for the current year is due or in written correspondence postmarked on or before the 15th day of the month before the first required Form 941 is due. If the due date falls on a Saturday, Sunday, or legal holiday, the last day employers may call the IRS or have their written correspondence postmarked is the next business day following that Saturday, Sunday, or legal holiday. Rev. Proc. 2009-51 allows employers to opt out of the Form 944 program for any reason so long as their request is timely made. Employers must contact the IRS by phone not later than April 1 of the current year, or send a written request postmarked by March 15th to opt out of the Form 944 program. If the due date falls on a Saturday, Sunday, or legal holiday, the last day employers may call the IRS or have their written correspondence postmarked is the next business day following that Saturday, Sunday, or legal holiday. See IRM 21.7.2.4.7.2, Form 944 Program — Opt-In and Opt-Out Inquiries, for guidance on handling opt-in and opt-out inquiries. Current procedures for addressing other taxpayer inquiries regarding the Form 944 program (including associated letters and notices), as well as for processing Form 944 adjustment requests, are also found in the following subsections.

# Form 944 Cache

21.7.2.4.7.1 (10-01-2016) Form 944 Cache Form 944 filing requirements are recorded and controlled by data contained in the "Form 944 Cache" . The "Form 944 Cache" is researched on the second page of CC BMFOLE and consists of a row of calendar years and a row of cache values corresponding to each calendar year. The Form 944 Cache displays the current calendar year, the following calendar year, and the preceding eight calendar years. Valid Form 944 Cache values are as follows: "blank" : The employer is required to file Forms 941 for the calendar year, or no filing requirement determination has yet been made for the calendar year in question. "1" : The employer is required to file Form 944 for the calendar year in question. "2" : The employer is required to file Form 944 for the current calendar year but will be required to file Form 941 in the following calendar year. A cache value of "2" automatically updates to a cache value of "1" at the end of the current calendar year. Example: If CC BMFOLE for an employer reflects a F944 CACHE YRS: 2019 = "blank" , 2020 = "1" , 2021 = "1" , and 2022 = "2" , then the employer was required to file Forms 941 for 2019, Forms 944 for 2020 through 2022, and will be required to file Forms 941 for 2023. Forms 941 will not post to a calendar year for which the Form 944 Cache reflects a value of "1" or "2" . A Form 944 will not post to a calendar year for which the Form 944 Cache reflects a "blank" value. This is true regardless of the filing requirement displayed on CC ENMOD or CC BMFOLE which should reflect current filing requirements. It is therefore imperative that the Form 944 Cache on page 2 of BMFOLE be researched any time a taxpayer inquiry is received regarding Form 944 versus Form 941 filing requirements. Note: Form 944 Cache data is also displayed on CC ENMOD. However, it is not recommended that CC ENMOD be used for research purposes because the data is displayed as a string of values without a clear indication of corresponding calendar years. Throughout the following subsections there are instructions to change filing requirements when appropriate. Those references are in regards to changing Form 944 Cache values to reflect a Form 944 filing requirement or Form 941 filing requirement (as appropriate) for a particular calendar year via CC BNCHG rather than changing the separate filing requirement indicators which will display on CC ENMOD and CC BMFOLE. Changing filing requirement indicators without changing the Form 944 Cache value will have no impact on what type of return, Form 941 or Form 944, that the computer will allow to post to a given calendar year. See the description of CC BNCHG element "F944-YR/IND" in Exhibit 2.4.9-13, BMF CC BNCHG General Format, for the input format of Form 944 Cache value changes. The year for which the Form 944 Cache value is being changed must be input along with an indicator of "1" to turn on Form 944 requirements or "9" to turn off Form 944 requirements (as appropriate). If the Form 944 Cache value of more than one year needs to be corrected, separate CC BNCHG inputs must be completed for each year.

# Form 944 Program — Opt-In and Opt-Out Inquiries

21.7.2.4.7.2 (10-01-2018) Form 944 Program — Opt-In and Opt-Out Inquiries See (5) through (9) in IRM 21.7.2.4.7, Form 944, Employer's ANNUAL Federal Tax Return, for a general discussion of Form 944 program eligibility requirements and opt-in/opt-out guidance. The chart below provides specific procedures for handling most opt-in and opt-out inquiries. If And Then 1) Taxpayer with Form 944 filing requirements wishes to file Form 941 for the current year (opt-out) for any reason The taxpayer contact is on or before April 1 or is in correspondence postmarked by March 15th Change the filing requirement from Form 944 to Form 941 and issue Letter 3007C to confirm filing requirement change. 2) Taxpayer with Form 944 filing requirements wishes to file Form 941 for the current year (opt-out) for any reason The taxpayer contact is after April 1 or is in correspondence postmarked after March 15th Instruct the taxpayer as follows: They must file Form 944 for the current year. If their Form 944 for the current year reports tax of $1,000 or more, they will be notified that they are no longer eligible to file Form 944. They should contact us again after the close of the current year but before April 1 if they want to opt-out of filing Form 944 for the following year. Exception: If the taxpayer is a new employer, see the last row of this table. 3) Taxpayer states they are not required to file an employment tax return (no employees, etc.) An employment tax filing requirement is open Close the open employment tax filing requirement. Note: You must verify the date the last wages were paid. 4) Existing Form 941 filer (or existing taxpayer with no current employment tax filing requirement) wants to file Form 944 The taxpayer contact is on or before April 1 or is in correspondence postmarked by March 15th Review the taxpayer's Form 941 accounts for the current and preceding tax years. If the tax reported for the preceding year is $1,000 or less, change filing requirement from Form 941 to Form 944 and issue Letter 3007C to confirm filing requirement change. If the tax reported for the preceding year is more than $1,000, inform the taxpayer that they must file Form 941 for the current year and can request to file Form 944 for the following year if they meet eligibility requirements and contact us after the close of the year but before April 1. Note: If the tax for the preceding year was slightly over $1,000 and account analysis indicates a decreasing tax liability, the first bullet above can be followed. However, use caution when considering this action. 5) Existing Form 941 filer (or existing taxpayer with no current employment tax filing requirement) wants to file Form 944 The taxpayer contact is after April 1 or is in correspondence postmarked after March 15th Instruct the taxpayer as follows that they must file Form 941 for the current year and to contact us again after the close of the current year but before April 1 if they want to file Form 944 for the following year. 6) Taxpayer states they are a new employer and believe their liability will not exceed $1,000 for the year and want to file Form 944 It is any time during the year Research CC ENMOD. If CC ENMOD shows no filing requirement prior to the current year, establish filing requirements for Form 944 (delete Form 941 filing requirements if applicable) and issue Letter 3007C to taxpayer. 7) The taxpayer is a new employer that received a CP 575 stating they have Form 944 filing requirements and wants to file Form 941 instead because they expect to exceed the $1,000 threshold for the year ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Change the filing requirement from Form 944 to Form 941 and issue Letter 3007C to confirm filing requirement change. Caution: Any time the filing requirements are changed per the above instructions, it is necessary to consider all payments previously made for the current tax year. If payments have been applied to MFT 01 for tax that will be reported on MFT 14, or if payments have been applied to MFT 14 for tax that will be reported on MFT 01, transfer those payments to the appropriate tax account and tax period. Note: Do not change the filing requirement to Form 944 for any taxpayer that has a tax period in the preceding tax year which is in Master File status 02 or 03 (TDI status). Reminder: Always research the "Form 944 Cache" when addressing taxpayer contacts regarding Form 944 filing requirements. See IRM 21.7.2.4.7.1, Form 944 Cache, for more information on researching the "Form 944 Cache" and changing filing requirements to and from Form 944. If the taxpayer requests immediate confirmation of a filing requirement change made per the instructions in (4) above and the taxpayer will accept a handwritten faxed document, notate on approved IRS fax cover sheet and sign statement indicating the taxpayer's request for filing requirement change has been made. Make sure the filing requirement change is made prior to closing the call. Caution: If faxing an acknowledgement, refer to IRM 11.3.1.14, Facsimile (FAX), Electronic Facsimile (E-FAX), and IRS Internal Enterprise Electronic Facsimile (EEFAX) Transmission of Tax Information, for proper faxing guidance. Chief Counsel has determined that Reporting Agents (RA) are not permitted to request to "opt out" of the Form 944 program on behalf of their clients. Do not change filing requirements based on a request from an RA unless the RA also has a valid Power of Attorney (POA) (i.e., Form 2848) either on file or that can be faxed to us. Third-Party PIN designees are also not authorized to "opt out" of the Form 944 program for the taxpayer.

# Form 944 — CP Notices and Letters

21.7.2.4.7.3 (01-15-2025) Form 944 — CP Notices and Letters There are three CP notices that may be issued to employers informing them of changes to their filing requirements based on the taxes reported on their most recently processed Form 944. CP 250A — See IRM 21.7.2.4.7.3.1, CP 250A CP 250B — See IRM 21.7.2.4.7.3.2, CP 250B CP 250C — See IRM 21.7.2.4.7.3.3, CP 250C There are also three "C" letters used for Form 944 filing requirement issues: Letter 3007C — Issued when changing filing requirement to or from Form 944. Instructions for sending and considering this Letter 3007C are found throughout these procedures for Form 944 issues and in IRM 21.7.2.4.7.3.4, Taxpayer Files Form 944 or Form 941 in Error — Letter 4148C/4086C/3007C Responses. Letter 4148C — Issued when a taxpayer files a Form 941 but is instead required to file Form 944. See IRM 21.7.2.4.7.3.4, Taxpayer Files Form 944 or Form 941 in Error — Letter 4148C/4086C/3007C Responses. Letter 4086C — Issued when a taxpayer files a Form 944 but is instead required to file Form 941. See IRM 21.7.2.4.7.3.4, Taxpayer Files Form 944 or Form 941 in Error — Letter 4148C/4086C/3007C Responses. Reminder: Always research the "Form 944 Cache" when addressing taxpayer contacts regarding Form 944 filing requirements. See IRM 21.7.2.4.7.1, Form 944 Cache, for more information on researching the "Form 944 Cache" and changing filing requirements to and from Form 944.

# CP 250A

21.7.2.4.7.3.1 (10-01-2014) CP 250A CP 250A is issued to taxpayers who filed Form 944 with a total reported tax liability of more than $1,000 on line 7 and the Form 944 was posted in cycle 09 or earlier. The notice instructs the taxpayer that they are no longer eligible to file Form 944 and that Form 941 must be filed quarterly for the current year. The notice also informs the taxpayer that they may be required to make federal tax deposits as appropriate. The Form 944 Cache on CC BMFOLE will continue to reflect a value of "1" for the prior tax year when a CP 250A is issued to show they were eligible to file Form 944 for that tax year. However, the current year Cache value will be blank and the filing requirements will be changed to Form 941 to show that the taxpayer is no longer eligible for the Form 944 program. Follow the chart below for inquiries from taxpayers who received CP 250A. If Then 1) The taxpayer states they want to remain in the Form 944 program and will not exceed the $1,000 threshold in the current year Verify with the taxpayer that they will in fact have a total tax liability of $1,000 or less for the current year. If the explanation provided is reasonable, allow the taxpayer to remain in the Form 944 program. Change the filing requirement to Form 944. Issue Letter 3007C to the taxpayer for verification of filing requirement change. Instruct the taxpayer of their deposit requirements. Note: Taxpayers may have exceeded the $1,000 threshold for many reasons (for example, the taxpayer corrected an administrative error from a prior year or a unique situation occurred in the preceding tax year that will not recur in the current year). However, if doubt exists do not allow the taxpayer to change back to Form 944 filing requirements for the current year. 2) The taxpayer states they want to remain in the Form 944 program even though they will again exceed the threshold in the current year Instruct the taxpayer that they are not eligible for the Form 944 program and must file Form 941 for the current year. Reminder: Always research the "Form 944 Cache" when addressing taxpayer contacts regarding Form 944 filing requirements. See IRM 21.7.2.4.7.1, Form 944 Cache, for more information on researching the "Form 944 Cache" and changing filing requirements to and from Form 944.

# CP 250B

21.7.2.4.7.3.2 (12-02-2014) CP 250B CP 250B is issued to taxpayers who filed Form 944 with a total reported tax liability on line 7 of more than $1,000 and the Form 944 was posted in cycles 10 through 49. The notice instructs the taxpayer that: They must file Form 944 for the current year. They may be required to make federal tax deposits as appropriate for the current year. They will not be eligible to file Form 944 for the following tax year and that Form 941 must be filed quarterly for the following tax year. Note: Taxpayers that receive CP 250B in the current year will also receive a CP 250C later in the year reminding them that they must file Form 941 quarterly for the following year. See IRM 21.7.2.4.7.3.3, CP 250C, for more information. The Form 944 Cache on CC BMFOLE will initially reflect a value of "2" when a CP 250B is issued because a Form 944 posted in cycles 10 through 49 and the tax reported exceeds the $1,000 threshold. This cache value allows the computer to correctly identify taxpayers who should be sent CP 250C at the end of the year. Once the CP 250C is issued, the cache value will update for the year in which the CP 250B was issued from "2" to "1" . Example: Taxpayer filed Form 944 for 202012 which posted after cycle 09 (in 2021) and reported a tax liability of more than $1,000 (taxpayer will receive CP 250B). The "Form 944 Cache" for tax year 2021 is set to "2" when the 2020 return posts and will remain that value until the end of the year when Master File generates a CP 250C reminder notice to the taxpayer regarding their Form 941 filing requirement for 2019. At that time, the "2" cache value for 2018 will change to a "1" and the taxpayer's filing requirement will be changed to Form 941 for tax year 2021. Follow the chart below for inquiries from taxpayers who received CP 250B. If And Then 1) Taxpayer states they wish to file Form 941 for the current year It is April 1 or prior (or postmarked on or before March 15th for written responses) Allow the taxpayer to file Form 941 for the current year. Change the filing requirement to Form 941. Issue Letter 3007C to the taxpayer for verification of filing requirement change. Inform taxpayer of their deposit requirements and Form 941 due dates. Verify that all applicable deposits are transferred to the Form 941 account. 2) Taxpayer states they wish to file Form 941 for the current year It is after April 1 (or postmarked after March 15th for written responses) Instruct the taxpayer they must file Form 944 for the current year and that they will be required to file Form 941 quarterly for the following year. 3) Taxpayer contacts us in the current year and states they wish to remain in the Form 944 program for the following tax year Inform the taxpayer that we cannot consider their request until they file their Form 944 for the current year. Instruct the taxpayer to contact us again once they have filed their Form 944 for the current year but not later than April 1 of the following year. 4) Taxpayer contacts us in the year following the issuance of the CP 250B and states they wish to remain in the Form 944 program for that year The taxpayer reported a tax liability of $1,000 or less on the Form 944 filed for the year in which the CP 250B and it is April 1 or prior (or postmarked on or before March 15th for written responses) Allow the taxpayer to remain in the Form 944 program. Change the filing requirement for the current year to Form 944. Issue Letter 3007C to the taxpayer for verification of filing requirement change. Instruct the taxpayer of their deposit requirements. 5) Taxpayer contacts us in the year following the issuance of the CP 250B and states they wish to remain in the Form 944 program for that year The taxpayer reported a tax liability of more than $1,000 on the Form 944 filed for the year in which the CP 250B was issued or it is after April 1 (or postmarked after March 15th for written responses) Instruct the taxpayer that they are not eligible for the Form 944 program for the current year and must file Form 941. Note: If the due date falls on a Saturday, Sunday, or legal holiday, the last day employers may call the IRS or have their written correspondence postmarked is the next business day following that Saturday, Sunday, or legal holiday. Reminder: Always research the "Form 944 Cache" when addressing taxpayer contacts regarding Form 944 filing requirements. See IRM 21.7.2.4.7.1, Form 944 Cache, for more information on researching the "Form 944 Cache" and changing filing requirements to and from Form 944. Note: If you receive an inquiry from a taxpayer stating they filed their Form 944 and it exceeds the $1,000 threshold and the return has not posted, do not change the filing requirement. Allow the Form 944 to post and the taxpayer will either receive a CP 250A or CP 250B, depending on when the 944 posts. Instruct the taxpayer to respond to the notice at that time.

# CP 250C

21.7.2.4.7.3.3 (10-01-2014) CP 250C CP 250C is generated in cycle 52 and is issued to taxpayers who: Received a CP 250B earlier in the year; or, Filed a Form 944 reporting more than $1,000 in total tax liability which posted after cycle 49 of the current calendar year. (Due to the timing involved, these taxpayers will receive a CP 250C but not a CP 250B,) The notice instructs the taxpayer that they are no longer eligible to file Form 944 and that Form 941 must be filed quarterly for the current year. The notice also informs the taxpayer that they may be required to make federal tax deposits as appropriate. Follow the chart below for inquiries from taxpayers who received CP 250C. If And Then 1) The taxpayer states they want to remain in the Form 944 program for the current year It is April 1 or prior Follow the procedures for CP 250A responses provided in the table in IRM 21.7.2.4.7.3.1 (4). 2) The taxpayer states they want to remain in the Form 944 program for the current year It is after April 1 Instruct the taxpayer that they are not eligible for the Form 944 program and must file Form 941 for the current year. Reminder: Always research the "Form 944 Cache" when addressing taxpayer contacts regarding Form 944 filing requirements. See IRM 21.7.2.4.7.1, Form 944 Cache, for more information on researching the "Form 944 Cache" and changing filing requirements to and from Form 944.

# Taxpayer Files Form 944 or Form 941 in Error — Letter 4148C/4086C/3007C Responses

21.7.2.4.7.3.4 (11-16-2023) Taxpayer Files Form 944 or Form 941 in Error — Letter 4148C/4086C/3007C Responses If a taxpayer files a Form 941 in a calendar year in which they are designated as a Form 944 filer, the Form 941 unposts (Unpostable Code (UPC) 329 Reason Code (RC) 6). Similarly, if a taxpayer files a Form 944 for a year in which they are designated to file Form 941, the Form 944 will unpost (also UPC 329 RC 6). Reminder: See IRM 21.7.2.4.7.1, Form 944 Cache, for information on researching the taxpayer's filing requirement. BMF Entity Unpostables uses an IAT tool to resolve these unposted returns. In most situations, the IAT tool resolves the unpostable based on recorded Form 944 Cache data as of when the tool is run: If the 944 Cache was updated to match the form filed after it unposted and before the tool is run, the tool will take action to accept the return as filed. On the other hand, if the unposted return is not compatible with the 944 Cache value, the tool generally initiates action to delete the return and generates a letter informing the taxpayer of the correct return to be filed for the tax year in question. Note: The IAT tool in question includes programming to reapply tax deposits appropriately for those unpostable cases on which it is run. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The role of Accounts Management employees working taxpayer inquiries addressed in IRM 21.7.2 procedures is generally to advise the taxpayer as to the correct tax return to be filed based on the current filing requirement reflected in the Form 944 Cache as of when the inquiry is worked. Procedures which follow below also allow for changes to filing requirements based on taxpayer responses to letters issued by the IAT tool in the limited circumstances described. The IAT tool used by Entity Unpostables is programmed to issue the following letters: Letter 4148C is used by the tool to inform taxpayers who filed Form 941 in error that they must file Form 944 annually. Letter 4086C is used by the tool to inform taxpayers who filed Form 944 in error that they must file Form 941 quarterly. Letter 3007C may also be used by the tool in certain circumstances to inform taxpayers who filed either Form 941 or Form 944 that their return was accepted for processing. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If you receive an inquiry concerning Letter 4148C, follow the procedures below: If And Then 1) The entity reflects a TC 000 with a transaction date in the range of January 1, 2015, through September 19, 2016 See (8) below. 2) Taxpayer states that they opted out of the Form 944 program by the April 1st deadline Note: Taxpayer must have submitted a written request and/or made contact via phone and the request was not processed. Accept the taxpayer's word. The filing requirement was not changed to Form 941 and the 944 Cache is set to the current year and request is received in the current year Example: Taxpayer is required to file Form 944 in 2021 and the request is received in 2021. Allow the taxpayer to continue to file Form 941. Request the originally filed return from Files using the DLN (Document Locator Number) of the unpostable/rejected TC 150. If you are not able to secure the originally filed return, request a signed copy of the originally filed Form 941 from the taxpayer, via fax. (See NOTE below table.) Change the filing requirement to Form 941. Send Letter 3007C to confirm filing requirement change, even if resulting from a phone call. Transfer all applicable deposits to the Form 941 account. Send Form 941, secured from Files, for processing as the original. (If you are unable to secure the original return from Files and must use a faxed return, edit the received date on faxed forms to reflect a timely filed return. See Note below table.) Exception: If you are staffing the toll-free telephone lines at a remote call site, do not follow steps 1-5 above; instead complete Form 4442/e-4442 and route to the Campus AM account paper function within your Directorate or designated campus except Puerto Rico who will send the Form 4442 to the Brookhaven Campus paper function until further notice. Include the DLN of the unpostable/rejected TC 150 on the Form 4442. 3) Taxpayer states they opted out of the 944 program by the April 1st deadline The filing requirement was not changed to Form 941 and the 944 Cache is set to the current year and request is received in a subsequent year Example: Taxpayer is required to file Form 944 in 2020 and a request is received in 2021. DO NOT change the filing requirement. Explain to the taxpayer they must file a Form 944 for the year in question because we are not able to change the 944 filing requirement in a subsequent year. 4) Taxpayer did not opt out of the 944 program by April 1st DO NOT change the taxpayer's filing requirement to Form 941. Instruct the taxpayer that they must file Form 944 and deposit accordingly. Input history items (via CC ACTON) to document that the taxpayer did not opt out and must file Form 944. Ensure all applicable deposits are applied to the 944 account. Advise taxpayer that if they file a timely Form 944 and exceed the $1,000 annual threshold, they will be notified that they are required to file a Form 941 for the next year. 5) Taxpayer cites any other extenuating circumstances Refer to your manager/lead for approval. Reminder: Always research the "Form 944 Cache" when addressing taxpayer contacts regarding Form 944 filing requirements. See IRM 21.7.2.4.7.1, Form 944 Cache, for more information on researching the "Form 944 Cache" and changing filing requirements to and from Form 944. Note: If the unpostable/rejected DLN of the Form 941 is not available on IDRS, the Letter 4148C contains the DLN of the unprocessed return and can be used to request the return from Files. If you secure the originally filed return from Files and are forwarding to be processed as the original, cross out the DLN and make sure the received date is on the return. Reminder: Only the taxpayer or their authorized representatives may "opt out" of the Form 944 program. Chief Counsel has determined that Reporting Agents are not permitted to "opt out" of the program on behalf of their clients. Do not change filing requirements based on a request from an RA unless the RA also has a valid Power of Attorney (POA) (i.e., Form 2848) either on file or that can be faxed to us. Third-Party PIN designees are also not authorized to "opt out" of the Form 944 program for the taxpayer. Reminder: If the taxpayer's filing requirement is changed based on a 4148C reply, be sure to secure any missing returns (not already filed) that need to be filed. If the taxpayer has missing Forms 941, secure the returns, preferably by fax. Once returns are received, forward for processing with the actual received date. Letter 4086C responses are not common. And, the letter will generally only be issued after the close of the tax year when it is too late to opt in to the Form 944 program. If a taxpayer responds to a 4086c and states they wish to file Form 944 instead of Form 941 for the tax year in question, do not change the filing requirement to Form 944 unless the taxpayer provides a copy of a written notification from the IRS (i.e., Letter 3007C) instructing the taxpayer to file Form 944 for that tax year or there is clear documentation in the IRS records that a timely request to opt-in was made but failed to be properly acted upon by the IRS. Exception: See (8) below if the entity reflects a TC 000 with a transaction date in the range of January 1, 2015 through September 19, 2016. Letter 3007C responses are usually received by the IRS as documentation from the taxpayer to support their position with regards to filing requirements. Procedures for those cases are found throughout subsections of IRM 21.7.2.4.9, Form 944 ANNUAL Federal Tax Return. However, if the taxpayer is disputing the content of a 3007C letter, contact the IRM author through the campus P&A Staff for guidance on resolving the case. Exception: See (8) below if the entity reflects a TC 000 with a transaction date in the range of January 1, 2015 through September 19, 2016. From January 1, 2015 through September 19, 2016, a programming error existed which caused Form 944 Cache values to be incorrectly set for new business entities self-identifying as Form 944 filers during EIN assignment. Instead of setting a Cache value of "1" for the year in which the taxpayer stated they would first have wages, the computer left that year as a "blank" value in the Cache and incorrectly set a Form 944 Cache value of "1" for the following year (e.g., an EIN assigned to a taxpayer opting in for filing Form 944 in 2015 would have incorrectly reflected a "blank" Cache value for 2015 and a Cache value of "1" for 2016). As a result of this error, the initial Form 944 returns filed by many taxpayers have (or will), at least initially, gone unpostable. And, taxpayers who opted to file Forms 944 for their initial year but instead incorrectly filed Form 941 returns had those returns accepted as filed (instead of being rejected) due to the Cache value being "blank" instead of a "1" . Many of the incorrect filing situations created by this programming error have been, or will be, resolved by routine operation of the IAT tool described in (2), (3) and (4) above. However, due to obstacles in systemically identifying all impacted taxpayers, some account situations will only be able to be addressed in the event that an impacted taxpayer contacts us after receiving a Letter 4148C, Letter 4086C, or Letter 3007C generated by the IAT tool. Accordingly, if you receive an inquiry concerning either a Letter 4148C, Letter 4086C, or Letter 3007Cand there is a TC 000 posted to the entity with a transaction date in the range of January 1, 2015 through September 19, 2016, follow the procedures below: If And Then 1) The taxpayer received a Letter 4086C instructing them to file Form 941 returns for 2015 States they requested to file Form 944 for 2015 when they applied for their EIN Allow the taxpayer to file Form 944 for 2015. Request the originally filed return from Files using the DLN (Document Locator Number) of the unpostable/rejected TC 150. If you are not able to secure the originally filed return, request a signed copy of the originally filed Form 944 from the taxpayer, via fax. Change the filing requirement for 2015 to Form 944. Send Letter 3007C to confirm filing requirement change, even if resulting from a phone call. Transfer all applicable deposits to the Form 944 account. Send Form 944, secured from Files, for processing as the original. (If you are unable to secure the original return from Files and must use a faxed return, edit the received date on faxed forms to reflect a timely filed return. Exception: If you are staffing the toll-free telephone lines at a remote call site, do not follow steps 1-5 above; instead complete Form 4442/e-4442 and route to the Campus AM account paper function within your Directorate or designated campus except Puerto Rico who will send the Form 4442 to the Brookhaven Campus paper function until further notice. Include the DLN of the unpostable/Rejected TC 150 on the Form 4442. 2) The taxpayer received a Letter 4148C instructing them to file a Form 944 return for 2016 Filed Form(s) 941 for 2015 (or filed no employment tax returns for 2015) and wishes to file Form 941 for 2016 Allow the taxpayer to file Form 941 for 2016. Request the originally filed return from Files using the DLN (Document Locator Number) of the unpostable/rejected TC 150. If you are not able to secure the originally filed return, request a signed copy of the originally filed Form 941 from the taxpayer, via fax. Change the filing requirement for 2016 to Form 941. Send Letter 3007C to confirm filing requirement change, even if resulting from a phone call. Transfer all applicable deposits to the Form 941 account. Send Form(s) 941, secured from Files, for processing as the original. (If you are unable to secure the original return from Files and must use a faxed return, edit the received date on faxed forms to reflect a timely filed return. Exception: If you are staffing the toll-free telephone lines at a remote call site, do not follow steps 1-5 above; instead complete Form 4442/e-4442 and route to the Campus AM account paper function within your Directorate or designated campus except Puerto Rico who will send the Form 4442 to the Brookhaven Campus paper function until further notice. Include the DLN of the unpostable/Rejected TC 150 on the Form 4442. 3) The taxpayer received a Letter 4086C instructing them to file Form 941 returns for 2016 States they requested to file Form 944 for 2016 when they applied for their EIN Allow the taxpayer to file Form 944 for 2016. Request the originally filed return from Files using the DLN (Document Locator Number) of the unpostable/rejected TC 150. If you are not able to secure the originally filed return, request a signed copy of the originally filed Form 944 from the taxpayer, via fax. Change the filing requirement for 2016 to Form 944. Send Letter 3007C to confirm filing requirement change, even if resulting from a phone call. Transfer all applicable deposits to the Form 944 account. Send Form 944, secured from Files, for processing as the original. (If you are unable to secure the original return from Files and must use a faxed return, edit the received date on faxed forms to reflect a timely filed return. Exception: If you are staffing the toll-free telephone lines at a remote call site, do not follow steps 1-5 above; instead complete Form 4442/e-4442 and route to the Campus AM account paper function within your Directorate or designated campus except Puerto Rico who will send the Form 4442 to the Brookhaven Campus paper function until further notice. Include the DLN of the unpostable/Rejected TC 150 on the Form 4442. 4) The taxpayer received a Letter 4148C instructing them to file a Form 944 return for 2017 Filed Form(s) 941 for 2016 (or filed no employment tax returns for 2016) and wishes to file Form 941 for 2017 Allow the taxpayer to file Form 941 for 2017. Request the originally filed return from Files using the DLN (Document Locator Number) of the unpostable/rejected TC 150. If you are not able to secure the originally filed return, request a signed copy of the originally filed Form 941 from the taxpayer, via fax. Change the filing requirement for 2017 to Form 941. Send Letter 3007C to confirm filing requirement change, even if resulting from a phone call. Transfer all applicable deposits to the Form 941 account. Send Form(s) 941, secured from Files, for processing as the original. (If you are unable to secure the original return from Files and must use a faxed return, edit the received date on faxed forms to reflect a timely filed return. Exception: If you are staffing the toll-free telephone lines at a remote call site, do not follow steps 1-5 above; instead complete Form 4442/e-4442 and route to the Campus AM account paper function within your Directorate or designated campus except Puerto Rico who will send the Form 4442 to the Brookhaven Campus paper function until further notice. Include the DLN of the unpostable/rejected TC 150 on the Form 4442. 5) The taxpayer received Letter 3007C for 2015, 2016, or 2017 Disputes the filing instructions in the 3007C Contact the IRM author through the campus P&A Staff for guidance on resolving the case. Caution: The instructions in the table in (8) above are only to be followed if there is a TC 000 with transaction date in the range of January 1, 2015 through September 19, 2016. Reminder: Always research the "Form 944 Cache" when addressing taxpayer contacts regarding Form 944 filing requirements. See IRM 21.7.2.4.7.1, Form 944 Cache, for more information on researching the "Form 944 Cache" and changing filing requirements to and from Form 944.

# Form 944-X — Adjusted Employer's ANNUAL Federal Tax Return or Claim for Refund

21.7.2.4.7.4 (10-01-2025) Form 944-X — Adjusted Employer's ANNUAL Federal Tax Return or Claim for Refund Form 944-X or Form 944-X (SP) is filed to correct income tax withholding and/or FICA tax information (including Additional Medicare Tax for tax periods beginning after December 31, 2012) previously reported on Form 944 or Form 944(SP). Taxpayers can choose to either file: An adjusted employment tax return, or A claim Note: If the taxpayer did not check a box in Part 1 (or checked both boxes) and the 944-X reflects a tax decrease, make two attempts to contact the taxpayer by phone (if a telephone number is available) to determine whether they intended to follow the adjustment process or the claim process. If unable to contact the taxpayer by phone, verify which set of certification box(es) were checked. If the taxpayer checked only the claim certification(s), process as a claim for refund. If the taxpayer checked the adjustment certification(s), or checked both the adjustment certification(s), or did not check either certification, process as an adjusted employment tax return. Refer to the table below for valid item reference numbers for Form 944-X. Item Reference Number Explanation 111 Federal income tax withheld from wages, tips, and other compensation (line 7 of Form 944-X - column 4). 004 Taxable social security wages (line 8 of Form 944-X - column 3 plus line 19 of Form 944-X - column 3). 005 Taxable social security tips (line 11 of Form 944-X - column 3). 073 Taxable Medicare wages and tips (line 12 of Form 944-X - column 3 plus line 20 of Form 944-X - column 3). 074 Taxable Wages & tips subject to Additional Medicare Tax withholding (valid for tax periods beginning after December 31, 2012) (line 13 of Form 944-X - column 3 plus line 21 of Form 944-X - column 3). 112 Total social security, Medicare tax, and Additional Medicare Tax (for tax periods beginning after December 31, 2012). 106 Tax adjustments (line 14 of Form 944-X - column 4). 104 Income tax withheld figured at IRC Section 3509 tax rate on Special addition to wages for federal income tax (line 18 of Form 944-X - column 4). 105 Social security, Medicare taxes, and (for tax periods beginning after December 31, 2012) Additional Medicare taxes figured at IRC Section 3509 tax rates on Special addition to wages for social security taxes, Special addition to wages for Medicare taxes, and Special addition to wages for Additional Medicare Tax (total of lines 19, 20, and 21 from Form 944-X - column 4). 113 Total adjustments (total of lines 14, 18, 19, 20, and 21 of Form 944-X - column 4). Reminder: IRN 113 must be used when adjusting IRNs 104 through 106. 119 Qualified Small Business Payroll Tax Credit for Increasing Research Activities Note: For ease of reference, this credit is generally referred to as the "QSB Research Credit" throughout this IRM. Caution: For Form 944, IRN 119 is only valid for tax periods 201712 and later. Caution: See IRM 21.7.2.7.6, COVID-19 Related Employment Tax Relief and Forms 94XX, for information on IRN/CRN usage on tax accounts for 2020 and subsequent tax periods. Caution: Form 944-X is revised on a regular basis and line numbers for particular adjustment items occasionally change. However, there is no requirement for the taxpayer to use the most current version of Form 944-X. Although line numbers are provided in the table above for easy reference, employees are responsible for ensuring the proper adjustment action is taken based on the form version filed by the taxpayer. Note: See IRM 21.7.2.4.1, Item Reference Numbers (IRNs) and Credit Reference Numbers (CRNs) - Employment Tax, for additional requirements with specific item reference numbers. Caution: Although CRN 290 is valid for MFT 14, this credit cannot be claimed or adjusted by filing a Form 944-X. This credit is only allowed during the processing of Form 5884-C and Form 5884-D. See IRM 21.7.2.5.15, Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans, and Form 5884-D, Employee Retention Credit for Certain Tax-Exempt Organizations Affected by Qualified Disasters, for more information. Line 1 of Form 944, wages tips and other compensation, is the equivalent of Line 2 on Form 941. The same considerations and adjustment procedures discussed in IRM 21.7.2.4.5.2, Line 2, Form 941, apply to adjustments to Line 1 of Form 944 reported on Form 944-X.

# Form 944-X Decreases — Adjusted Employment Tax Return

21.7.2.4.7.4.1 (05-10-2023) Form 944-X Decreases — Adjusted Employment Tax Return These tax decreases involve income tax withholding and/or FICA (including Additional Medicare Tax for tax periods beginning after December 31, 2012). Verify all required items on Form 944-X are complete, such as: Name, address, and EIN Type of return being corrected Calendar year being corrected Box 1 in Part 1 is checked Box 3 and the applicable certification is checked on line 4a, 4b or 4c in Part 2 (if required; see exception criteria in (3) below). Detailed explanation (see IRM 21.7.2.4.4 (12)) Signature (see IRM 21.7.2.4.4.11, Signature Requirements for Form 94XX Amended/Adjusted Employment Tax Returns, for who may sign and handling guidance for missing signatures). If a certification box is not checked, make two attempts to secure the information by phone if a telephone number is available. Otherwise, follow procedures in IRM 21.5.3.4.2, Tax Decrease or Credit Increase Processing. Use Letter 4384C to reject the claim and identify the missing information in the letter. Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Exception: A line 4 certification is only required if the Form 944-X reflects changes to one or more lines 6 through 14. Exception: See (10) in IRM 21.7.2.4.4, Adjusted Employer's Federal Tax Return or Claim for Refund. Caution: When contacting the taxpayer or authorized representative, follow taxpayer authentication guidelines in IRM 21.1.3, Operational Guidelines Overview. The individual contacted by phone must be authorized to prepare taxpayer's employment tax returns. Document the case history with the date, time, name of individual contacted, and information obtained from the individual. Note: If the taxpayer checked both the adjustment certification(s) and the claim certification(s) boxes, process as an adjusted employment tax return. Note: If the certification box checked in Part 2 is inconsistent with the process selected in Part 1, continue processing the Form 944-X based on the information provided in Part 1. If a taxpayer files an adjusted employment tax return within 90 days of the expiration of the period of limitations, the adjustment must be converted to a claim for refund and the taxpayer must be notified. Take the following actions: Notate the Form 944-X with the following text: "90 day - Claim" . Process the Form 944-X per procedures in IRM 21.7.2.4.7.4.2, Form 944-X Decreases — Claim, and refer to IRM 21.7.2.4.4.5, 90 Day — Claim, for additional information. Generate Letter 4384C to the taxpayer explaining the adjustment has been converted to a claim. A decrease in tax may meet examination criteria. See Exhibit 21.5.3–2, Examination Criteria (CAT-A) - General, for additional information. Math verify adjustments to income tax, social security tax, Medicare tax, and Additional Medicare Tax (AdMT).≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the Form 944-X includes an adjustment to the QSB Research Credit, also see IRM 21.7.2.5.21, Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities, for additional processing and verification requirements. Process adjusted employment tax returns as follows: Input TC 291, HC 1, BS 20 and the appropriate IRNs for the amount of decrease. Note: Overpayments arising from adjustments made under these procedures are subject to offset. Omit Hold Code 1 with the adjustment and allow the computer to systemically offset the credit if it will be fully absorbed by an outstanding balance due. Otherwise, if conditions prevent the computer from completing the offset, or if only part of the credit needs to be offset, manual offsets using TC 820/TC 700 transactions will be required. Caution: For tax decreases with an unreversed FTD penalty, see IRM 20.1.4.21.5.1, Amended ROFTL (Forms 941-X, 943-X, 944-X, 945-X, and CT-1X). Transfer the applicable overpayment using TC 830/TC 710 to the period in which the Form 944-X was filed. Caution: To prevent either debit or credit interest from generating, use the later of the return due date of the tax period being adjusted or the availability date of the overpayment as the transaction date of the TC 830 and use the due date of the return the credit is being applied to as the transaction date of the TC 710. See (4) in IRM 21.5.8.4.2, Determining Correct Credit Transfer Format, for more information. If the entire credit is not available to be transferred, generate Letter 4384C to the taxpayer. Explain why the entire amount was not available (for example, there was a balance due on the tax period being adjusted or the credit is being offset to a balance due on another tax period). If the taxpayer's filing requirement has changed from Form 944 to Form 941 or vice versa, the credit will be transferred to the filing requirement that was active for the period in which the adjusted return was filed.

# Form 944-X Decreases — Claim

21.7.2.4.7.4.2 (05-10-2023) Form 944-X Decreases — Claim These tax decreases involve income tax withholding and/or FICA tax (including Additional Medicare Tax for tax periods beginning after December 31, 2012). Verify all required items on Form 944-X are complete, such as: Name, address, and EIN Type of return being corrected Calendar year being corrected Box 2 in Part 1 is checked Box 3 and the applicable certification is checked on line 5a, 5b, 5c or 5d in Part 2 (if required; see exception criteria in (3) below). Detailed explanation (see IRM 21.7.2.4.4 (12)) Signature (see IRM 21.7.2.4.4.11, Signature Requirements for Form 94XX Amended/Adjusted Employment Tax Returns, for who may sign and handling guidance for missing signatures). If a certification box is not checked, make two attempts to secure the information by phone if a telephone number is available. Otherwise, follow procedures in IRM 21.5.3.4.2, Tax Decrease or Credit Increase Processing. Use Letter 4384C to reject the claim and identify the missing information in the letter. Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Exception: A line 5 certification is only required if the Form 944-X reflects changes to one or more lines 6 through 14. Exception: See (10) in IRM 21.7.2.4.4, Adjusted Employer's Federal Tax Return or Claim for Refund. Caution: When contacting the taxpayer or authorized representative, follow taxpayer authentication guidelines in IRM 21.1.3, Operational Guidelines Overview. The individual contacted by phone must be authorized to prepare taxpayer's employment tax returns. Document the case history with the date, time, name of individual contacted, and information obtained from the individual. Note: If the taxpayer checked both the adjustment certification(s) and the claim certification(s) boxes, process as an adjusted employment tax return as per guidance in IRM 21.7.2.4.7.4.1, Form 944-X Decreases — Adjusted Employment Tax Return. Note: If the certification box checked in Part 2 is inconsistent with the process selected in Part 1, continue processing the Form 944-X based on the information provided in Part 1. Exception: Claims filed without consent: Unless one of the exceptions above applies, if the taxpayer has not checked a box on line 5 and states (in the explanation or in response to our contact) they are not required to obtain the consents prior to filing the claim and the claim is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, send claim CAT-A. Exam will correspond with the taxpayer to secure applicable certifications. In certain situations, taxpayers may not have repaid or reimbursed their employees or obtained their consents prior to filing a claim (Form 944-X). However, they must certify they have repaid or reimbursed their employees or obtained consents before the IRS can accept the claim. See Instructions for Form 944-X for more information. A decrease in tax may meet examination criteria. See Exhibit 21.5.3–2, Examination Criteria (CAT-A) — General, for additional information. Math verify adjustments to income tax, social security tax, Medicare tax, and Additional Medicare Tax (AdMT).≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the Form 944-X includes an adjustment to the QSB Research Credit, also see IRM 21.7.2.5.21, Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities, for additional processing and verification requirements. Input TC 291, BS 20 and the appropriate IRNs for the amount of the decrease. Caution: For tax decreases with an unreversed FTD penalty, see IRM 20.1.4.21.5.1, Amended ROFTL (Forms 941-X, 943-X, 944-X, 945-X, and CT-1X).

# Form 944-X Increases — Adjusted Employment Tax Return

21.7.2.4.7.4.3 (03-10-2025) Form 944-X Increases — Adjusted Employment Tax Return These tax increases involve income tax withholding and/or FICA tax (including Additional Medicare Tax for tax periods beginning after December 31, 2012). Verify all required items on Form 944-X are complete, such as: Name, address, and EIN Type of return being corrected Calendar year being corrected Box 1 in Part 1 is checked Box 3 is checked in Part 2 Detailed explanation (see IRM 21.7.2.4.4 (12)) Signature (see IRM 21.7.2.4.4.11, Signature Requirements for Form 94XX Amended/Adjusted Employment Tax Returns, for who may sign and handling guidance for missing signatures). Note: See (3) and (4) of IRM 21.5.3.4.1, Tax Increase or Credit Decrease Processing, if the Form 944-X is missing required information. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Check for the date the taxpayer discovered the error. If not entered on page 1, review the explanation. Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, if the ascertained date is not provided and a telephone number is available, make two attempts to contact the taxpayer by phone to obtain the information. If the ascertained date cannot be obtained by phone, input the adjustment as a TC 290. Exception: If you receive a Form 944-X for the immediately preceding tax year prior to the due date for the current tax year (for example, a Form 944-X reporting a tax increase for tax year 2024 received on or before January 31, 2026), it is not necessary to contact the taxpayer for an ascertained date. In that situation, input a TC 298 with the applicable interest computation date. See IRM 21.7.2.4.4.2, Interest-Free Adjustments (Employment Tax Returns), for more information. Reminder: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ Math verify adjustments to income tax withholding, social security tax, Medicare tax, and Additional Medicare Tax (AdMT).≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the Form 944-X includes an adjustment to the QSB Research Credit, also see IRM 21.7.2.5.21, Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities, for additional processing and verification requirements. Use the table below to make your adjustment(s). If Then 1) Return is filed by the due date of the return for the period in which the taxpayer discovered the reporting error Input TC 298, BS 20 and the correct interest computation date (INTCMP-DT). See IRM 21.7.2.4.4.2, Interest-Free Adjustments (Employment Tax Returns), and example below for additional information. 2) Return is not filed by the due date of the return for the period in which the error was ascertained OR"date you discovered errors" was blank and the date error was discovered was not furnished in Part 4 Input TC 290 with BS 20. Example: An employer discovers an error on February 5, 2025 and files a Form 944-X which is received by the IRS on March 4, 2025 for the MFT 14 202412 tax period. The interest computation date would be March 4, 2025. Adjust the FTD penalty when using either a TC 290 (see IRM 20.1.4.21.3, Amended or Supplemental (Tax Decrease or Non-Interest-Free Tax Increase)) or a TC 298 (see IRM 20.1.4.21.5, Adjusted Returns (Forms 941-X, 943-X, 944-X, and CT-1X)). Note: See IRM 20.1.4.21.5.1, Amended ROFTL (Forms 941-X, 943-X, 944-X, 945-X, and CT-1X), when using a TC 298 or TC 290 and an amended ROFTL was provided with the adjusted return. Be sure any payments are credited to period(s) where the tax is being assessed.

# Form 945, Annual Return of Withheld Federal Income Tax

21.7.2.4.8 (10-01-2012) Form 945, Annual Return of Withheld Federal Income Tax Form 945, Annual Return of Withheld Federal Income Tax, must be filed to report backup withholding (BUWH) and income tax withheld from non-payroll items, such as: Pensions Annuities IRAs Military retirement Gambling winnings Indian Gaming Profits Note: As a general rule, all income tax withholding and BUWH (backup withholding) reported on Forms 1099 or W-2G must be reported on Form 945. Form 945 is an annual return due January 31 following the close of the calendar year. Exception: The return due date for Form 945 is extended 10 days if timely deposits are made which full pay the amount of tax reported. A taxpayer is required to file Form 945 only for a calendar year in which the taxpayer is required to withhold tax required to be reported on Form 945. The threshold for making deposits for Form 945 is $2,500. Form 945 tax deposit requirements are separate from Form 941. They cannot be combined. Taxpayers follow either semi-weekly or monthly deposit schedules determined by the Form 945 lookback period. See IRM 20.1.4, Failure to Deposit Penalty. Forms 945 are recorded on MFT 16 and the tax class is 1. Valid IRNs for Form 945 are 003 (federal income tax withheld) and 008 (BUWH). Note: IRN 184 (adjustment of withheld income tax) was valid for Form 945 for tax periods 199512 through 200812.

# Form 945-X — Adjusted Annual Return of Withheld Federal Income Tax or Claim for Refund

21.7.2.4.8.1 (01-15-2025) Form 945-X — Adjusted Annual Return of Withheld Federal Income Tax or Claim for Refund Form 945-X is filed to correct income tax withholding and/or BUWH information previously reported on Form 945. Taxpayers can choose to either file: An adjusted return of withheld federal income tax, or A claim Note: If the taxpayer does not check a box in Part 1 (or checks both boxes) and the Form 945-X reflects a tax decrease, make two attempts to contact the taxpayer by phone (if a telephone number is available) to determine whether they intended to follow the adjustment process or the claim process. If unable to contact the taxpayer by phone, process as an adjusted employment tax return. Reminder: When contacting the taxpayer or authorized representative, follow taxpayer authentication guidelines in IRM 21.1.3, Operational Guidelines Overview. Adjustments on Form 945-X can only be made if they are the result of an administrative error. See IRM 21.7.2.4.4.3.1, Administrative Errors, for more information on administrative errors. Even if income tax or BUWH was erroneously withheld, it cannot be corrected in a subsequent year. This includes erroneous withholding on IRAs. The amount withheld must be reported on Form 945-X under the same EIN as was actually used to do the withholding. Withholding amounts cannot be transferred or delegated to different EINs, unless such action involves a successor employer. Example: The mutual fund industry has an "industry practice" involving transfer agents where one agent has control of an account and withholds taxes for part of the year. Another agent may take control of the account and withhold taxes for the remainder of the year. The industry practice is for the agent in control of the account at the end of the year to report all taxes withheld. This CANNOT be done. Each agent must report and deposit the amount of tax withheld under their own EIN and issue a Form 1099. Any requests for adjustments involving this practice must be denied. Input TC 290 .00 in block 98 (without return) or 99 (with return) and issue Letter 105C or 106C as appropriate. Item reference numbers valid for Form 945-X are: Item Reference Number (IRN) Explanation 003 Federal income tax withheld (line 3 of Form 945-X - column 3). 008 Backup withholding (BUWH) (line 4 of Form 945-X - column 3).

# Form 945-X Decreases — Adjusted Employment Tax Return

21.7.2.4.8.1.1 (05-10-2023) Form 945-X Decreases — Adjusted Employment Tax Return These tax decreases involve income tax withholding and/or BUWH. Verify all required items on Form 945-X are complete, such as: Name, address, and EIN Calendar year being corrected Box 1 in Part 1 is checked Detailed explanation (see IRM 21.7.2.4.4 (12)) Signature (see IRM 21.7.2.4.4.11, Signature Requirements for Form 94XX Amended/Adjusted Employment Tax Returns, for who may sign and handling guidance for missing signatures). If a taxpayer files an adjusted employment tax return within 90 days of the expiration of the period of limitations, the adjustment must be converted to a claim for refund and the taxpayer must be notified. Take the following actions: Notate the Form 945-X with the following text: "90 day - Claim" . Process the Form 945-X per procedures in IRM 21.7.2.4.8.1.2, Form 945-X Decreases — Claim, and refer to IRM 21.7.2.4.4.5, 90 Day — Claim, for additional information. Generate Letter 4384C to the taxpayer explaining the adjustment has been converted to a claim. A decrease in tax may meet examination criteria. See Exhibit 21.5.3–2, Examination Criteria (CAT-A) — General, for additional information. Math verify adjustments to income tax and/or BUWH. Process adjusted employment tax returns as follows: Input TC 291, HC 1, BS 20 and the appropriate IRNs (003 and/or 008) for the amount of decrease. Note: Overpayments arising from adjustments made under these procedures are subject to offset. Omit Hold Code 1 with the adjustment and allow the computer to systemically offset the credit if it will be fully absorbed by an outstanding balance due. Otherwise, if conditions prevent the computer from completing the offset, or if only part of the credit needs to be offset, manual offsets using TC 820/TC 700 transactions will be required. Caution: For tax decreases with an unreversed FTD penalty, see IRM 20.1.4.21.5.1, Amended ROFTL (Forms 941-X, 943-X, 944-X, 945-X, and CT-1X). Transfer the applicable overpayment using TC 830/710 to the period in which the Form 945-X was filed. Caution: To prevent either debit or credit interest from generating, use the later of the return due date of the tax period being adjusted or the availability date of the overpayment as the transaction date of the TC 830 and use the due date of the return the credit is being applied to as the transaction date of the TC 710. See (4) in IRM 21.5.8.4.2, Determining Correct Credit Transfer Format, for more information. If the entire credit is not available to be transferred, generate Letter 4384C to the taxpayer. Explain why the entire amount was not available (for example, there was a balance due on the tax period being adjusted or the credit is being offset to a balance due on another tax period).

# Form 945-X Decreases — Claim

21.7.2.4.8.1.2 (05-10-2023) Form 945-X Decreases — Claim These tax decreases involve income tax withholding and/or BUWH. Verify all required items on Form 945-X are complete, such as: Name, address, and EIN Calendar year being corrected Box 2 in Part 1 is checked Detailed explanation (see IRM 21.7.2.4.4 (12)) Signature (see IRM 21.7.2.4.4.11, Signature Requirements for Form 94XX Amended/Adjusted Employment Tax Returns, for who may sign and handling guidance for missing signatures). A decrease in tax may meet examination criteria. See Exhibit 21.5.3–2, Examination Criteria (CAT-A) — General, for additional information. Math verify adjustments to income tax and/or BUWH. Input TC 291, BS 20 and the appropriate IRNs (003 and/or 008) for the amount of the decrease. Caution: For tax decreases with an unreversed FTD penalty, see IRM 20.1.4.21.5.1, Amended ROFTL (Forms 941-X, 943-X, 944-X, 945-X, and CT-1X).

# Form 945-X Increases — Adjusted Employment Tax Return

21.7.2.4.8.1.3 (03-10-2025) Form 945-X Increases — Adjusted Employment Tax Return These tax increases involve income tax withholding and/or BUWH. Verify all required items on Form 945-X are complete, such as: Name, address, and EIN Calendar year being corrected Box 1 in Part 1 is checked Detailed explanation (see IRM 21.7.2.4.4 (12)) Signature (see IRM 21.7.2.4.4.11, Signature Requirements for Form 94XX Amended/Adjusted Employment Tax Returns, for who may sign and handling guidance for missing signatures). Note: See (3) and (4) of IRM 21.5.3.4.1, Tax Increase or Credit Decrease Processing, if the Form 945-X is missing required information. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Check for the date the taxpayer discovered the error. If not entered on page 1, review the explanation. Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, if the ascertained date is not provided and a telephone number is available, make two attempts to contact the taxpayer by phone to obtain the information. If the ascertained date cannot be obtained by phone, input the adjustment as a TC 290. Exception: If you receive a Form 945-X for the immediately preceding tax year prior to the due date for the current tax year (for example, a Form 945-X reporting a tax increase for tax year 2024 received on or before January 31, 2026), it is not necessary to contact the taxpayer for an ascertained date. In that situation, input a TC 298 with the applicable interest computation date. See IRM 21.7.2.4.4.2, Interest-Free Adjustments (Employment Tax Returns), for more information. Reminder: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ Math verify adjustments to income tax and/or BUWH. Use the table below to make your adjustment(s). If Then 1) The Form 945-X was filed by the due date of the return for the period in which the taxpayer discovered the reporting error Input TC 298, BS 20, IRN 003 and/or IRN 008 as appropriate, and the correct interest computation date (INTCMP-DT). See IRM 21.7.2.4.4.2, Interest-Free Adjustments (Employment Tax Returns), and example below for additional information. 2) The Form 945-X was not filed by the due date of the return for the period in which the error was ascertained OR"date you discovered errors" was blank and the date error was discovered was not furnished in Part 4 Input TC 290 with BS 20 along with IRN 003 and/or IRN 008 as appropriate. Example: An employer discovers an error on February 5, 2025 and files a Form 945-X which is received by the IRS on March 4, 2025 for the MFT 16 202412 tax period. The interest computation date would be March 4, 2025. Adjust the FTD penalty when using either a TC 290 (see IRM 20.1.4.21.3, Amended or Supplemental (Tax Decrease or Non-Interest-Free Tax Increase)) or a TC 298 (see IRM 20.1.4.21.5, Adjusted Returns (Forms 941-X, 943-X, 944-X, and CT-1X)). Note: See IRM 20.1.4.21.5.1, Amended ROFTL (Forms 941-X, 943-X, 944-X, 945-X, and CT-1X), when using a TC 298 or TC 290 and an amended ROFTL was provided with the adjusted return. If payment for the additional tax reported on the Form 945-X is not reflected on the tax period being adjusted, research the taxpayer's account for the missing credit and, if located, transfer the payment as appropriate.

# Taxpayer Reports Non-Payroll Withholding on Incorrect Form

21.7.2.4.8.2 (10-01-2014) Taxpayer Reports Non-Payroll Withholding on Incorrect Form Non-payroll items including backup withholding and withholding for pensions, annuities, gambling winnings, Individual Retirement Account (IRA), 401K, military pensions, etc., are required to be reported on Form 945, Annual Return of Withheld Federal Income Tax. However, taxpayers occasionally report these amounts on an incorrect tax form. If taxpayer contact (or a referral from SP) is received identifying a situation in which non-payroll items were reported on Form 941, process as follows: If And Then 1) Taxpayer has filed Form 945 Previously reported non-payroll withholding on Form 941 Advise the taxpayer (use the appropriate "C" letter if working paper correspondence) to file a Form 941-X for each quarter in which they incorrectly reported non-payroll withholding on Form 941 and attach a statement detailing the amounts of any federal tax deposits or other payments which should be reapplied to their Form 945 tax account. 2) Taxpayer has not yet filed Form 945 Previously reported non-payroll withholding on Form 941 Advise the taxpayer (use the appropriate "C" letter if working paper correspondence) to take the following actions: File a Form 945 reflecting the correct non-payroll withholding for the tax year File a Form 941-X for each quarter in which they incorrectly reported non-payroll withholding on Form 941 and attach a statement detailing the amounts of any federal tax deposits or other payments which should be reapplied to their Form 945 tax account. 3) Taxpayer files Form 941 indicating non-payroll items were included on the return Code & Edit (C&E) identifies the situation As per procedures in (4) of IRM 3.11.13.14, C&E will correspond with the taxpayer to determine their intent. If the taxpayer's reply indicates they should have filed Form 945, C&E will forward the Form 941 to Accounts Management on Form 3465 indicating "Non-payroll on Form 941" Take the following actions to resolve the situation: If appropriate, delete the filing requirements for Form 941 and establish Form 945 filing requirements. Return the Form 941 to the taxpayer using the appropriate "C" letter and inform the taxpayer of their correct filing requirements. Input credit transfers as appropriate to move credits from the Form 941 account to the Form 945 account.

# Backup Withholding (BUWH) Claims on Form 945

21.7.2.4.8.3 (10-01-2018) Backup Withholding (BUWH) Claims on Form 945 Backup withholding (BUWH) is imposed under IRC 3406 on certain reportable payments as defined in IRC 3406(b), such as interest and dividends, if a condition for backup withholding exists. The BUWH tax rate is 28% of reportable payments made in tax years 2003 through 2017 and 24% of reportable payments made in tax year 2018 or in subsequent tax years. Once withheld, BUWH must generally be deposited and reported by the payor on Form 945. Payments described in IRC 3406(g) are exempt from BUWH. On occasion, a payor may incorrectly withhold the tax from exempt payments or exempt recipients: If the error is discovered and the payor refunds the amount withheld to the payee before the close of the calendar year in which the BUWH occurred, the payor should report only the correct amount of BUWH on their Form 945. The payor should also report the correct amount of tax deposits made on their Form 945 and any resulting overpayment will be automatically refunded or offset, as appropriate, when their return is processed. After the end of the calendar year, adjustments (increases or decreases) to BUWH can only be made if the adjustment is due to an administrative error (or as the result of an Examination). Even if BUWH was erroneously withheld, it cannot be adjusted in a subsequent year. Tax erroneously withheld does not constitute an administrative error. See IRM 21.7.2.4.4.3, Income Tax Withholding, Backup Withholding, and Additional Medicare Tax Adjustments, and IRM 21.7.2.4.4.3.1, Administrative Errors, for additional information, including instructions for disallowing Forms 945-X reflecting a decrease to reported BUWH filed after the close of a calendar year. After the end of the calendar year, the process a taxpayer who has had BUWH deducted from payment(s) must follow to obtain credit or a refund depends on the organization type and whether they are required to file an income tax return: If the taxpayer is... Then they must claim credit for BUWH on... 1) A Private Foundation filing Form 990-PF Their Form 990-PF. See IRM 21.7.7.6.3.5, Backup Withholding, for more information. 2) An organization exempt from taxation under IRC 501(a) or an individual retirement plan Form 990-T. See IRM 21.7.7.6.3.5, Backup Withholding, for more information. 3) One of the following organizations exempt from BUWH under IRC 3406(g)(1): The United States, its wholly owned agency or instrumentality. A State, the District of Columbia, a possession of the United States, any political subdivision of any of the foregoing, or any wholly owned agency, or instrumentality of these entities. A foreign government, political subdivision of a foreign government, wholly owned agency or instrumentality of these entities. A Form 843 with a statement attached as follows from each payor who erroneously withheld tax: The statement must be signed by the person authorized to sign the payor's Form 945 and must list the EIN of the account the BUWH was paid under. The statement must include the amount of tax withheld, the date withheld, and a statement to the effect that the payor did not repay or reimburse the recipient and will not claim an adjustment for the amount on Form 945. Reject the claim if it is incomplete or missing the required statement(s). Otherwise, process complete Form 843 claims with the required statement attached as follows: Input a TC 291 and IRN 008 on the payor's Form 945 account, with Blocking Series 15 and the appropriate Hold Code, to reduce BUWH for the amount of the claim. Issue a manual refund to the payee/claimant. Prepare Form 5792, Request for IDRS Generated Refund, and compute interest from the Form 945 due date or payment date, whichever is later. (See IRM 20.2.4, Overpayment Interest.) Reminder: All procedures in IRM 21.4.4, Manual Refunds, must be followed, including input of a TC 971 Action Code 037 to cross-reference the payee's TIN. Attach a copy of the claim to the refund document and route it to the Accounting Function. 4) A non-exempt entity required to file an income tax return Their income tax return for the year in which the BUWH occurred. See IRM 21.7.4.4.10, Federal Income Tax Withheld (FITW)/Backup Withholding (BUWH) on Income Tax Returns, for more information. Note: Prior to the end of the calendar year, a payor may refund an amount erroneously withheld to the payee. If a payee files a Form 843 for tax withheld before the end of the tax year, advise the payee to seek reimbursement from the payor.

# Tax Equity and Fiscal Responsibility Act (TEFRA)

21.7.2.4.8.4 (10-01-2013) Tax Equity and Fiscal Responsibility Act (TEFRA) TEFRA requires pension trusts to withhold federal income tax from pension income. The withholding is subject to deposit rules and is reported on Form 945. Taxpayers can request a separate EIN for the pension trust, however, it is not a requirement. Separate branches within a company may want a different EIN for internal purposes only. If multiple Form 945 tax returns are filed under one EIN and the taxpayer's intent cannot be determined: Correspond to inform taxpayer to combine all the withholding from pension incomes on one Form 945, or to request separate EINs for each pension trust. Inform taxpayer, if separate EINs are assigned, they are responsible for all filing requirements and penalty assessments. If Then 1) No reply, or taxpayer states they do not want separate EINs Input TC 290 to assess any additional tax. Taxpayer requests separate EINs Photocopy the case file and forward to Entity for assignment of EINs. When EINs are assigned, re-input the returns and transfer any credits to the new EINs. 2) Refunds were issued prior to the posting of the second return Contact taxpayer as stated in (3) above.

# Household Employment Taxes

21.7.2.4.9 (10-01-2015) Household Employment Taxes The Social Security and Domestic Employment Reform Act of 1994 (SSDERA) added IRC 3510 which provides that the collection of domestic service employment taxes on services performed after December 31, 1994 be coordinated with the collection of income taxes. Domestic service in the private home of the employer is also referred to as household employment. Domestic employees are also referred to as household employees. The FICA taxes, federal income tax withholding (if any), and FUTA taxes incurred by employers of household employees are referred to as household employment taxes. Note: Household employers are required to withhold Additional Medicare Tax on household employees who they pay wages/tips in excess of $200,000 for a calendar year beginning after December 31, 2012. Although collected with income tax, household employment taxes are employment taxes. See IRM 21.7.2.4.9.1, Forms Used in Reporting Employment Taxes for Household Employees, for information on the proper form to be filed for reporting household employment taxes. For additional guidance on household employment taxes, see: Pub 926, Household Employer's Tax Guide Notice 95-18 (1995-1 C.B. 300) which clarifies issues related to SSDERA. Rev. Proc. 2013-39, IRB 2013.-52.

# Forms Used in Reporting Employment Taxes for Household Employees

21.7.2.4.9.1 (10-01-2013) Forms Used in Reporting Employment Taxes for Household Employees Schedule H (Form 1040), Household Employment Taxes, is used to report FICA tax, any federal income tax withheld, and FUTA tax for household employees as follows: Individuals file Schedule H (Form 1040) with their Form 1040 series income tax return. These are processed on MFT 30. See IRM 21.6.4.4.8, Schedule H, Household Employment Taxes, for more information. Trusts file Schedule H (Form 1040) with Form 1041. These are processed on MFT 05. See IRM 21.7.4.4.1.11, Social Security Domestic Employment Reform Act and BMF Schedules H, for more information. If no income tax return is required to be filed, Schedule H (Form 1040) is filed by itself. These are processed to either MFT 30 or MFT 05 as appropriate. Taxpayers who are sole proprietors, or whose home is on a farm operated for profit, may include FICA tax and income tax withholding for domestic employees on their employment tax returns (Forms 941, 943, or 944 as appropriate) along with the employment taxes for their other business or farm employees. If the employer chooses to report household employment taxes in this manner, FUTA taxes for the household employees must be reported on Form 940. Partnerships cannot be domestic employers. Corporations cannot be domestic employers. See IRM 21.7.2.4.9.3, Household Employment Taxes and Section 3504 Agents, for filing and payment requirements when an employer has designated an agent (including state and local governments or their subagents) to withhold, report, and make payment of household employment taxes.

# Procedures for Household Employment Tax Inquiries

21.7.2.4.9.2 (05-29-2020) Procedures for Household Employment Tax Inquiries The table below provides guidance for handling common household employment tax inquiries received in Accounts Management. If And Then 1) A general inquiry is received regarding household employment taxes. Example: Questions regarding wage thresholds, tax rates, forms to be filed, etc. Research Pub 926, Household Employer's Tax Guide, forms, and form instructions as appropriate to provide the taxpayer with the guidance needed. 2) An inquiry is received about a Schedule H (Form 1040) which was or will be filed with Form 1041. See IRM 21.7.4.4.1.11, Social Security Domestic Employment Reform Act and BMF Schedules H, for more information. 3) An inquiry is received about a Schedule H (Form 1040) which was or will be filed with Form 1040. See IRM 21.6.4.4.8, Schedule H, Household Employment Taxes for more information. 4) An inquiry is received about a Form 941, Form 943, Form 944 filed to report household employment taxes (FICA and/or federal income tax withheld). The household employment taxes (FICA and/or federal income tax withheld) should have instead been reported on Schedule H (Form 1040) with a Form 1040 See IRM 21.6.4.4.8.12, BMF Form 941 Filed Instead of IMF Schedule H, for more information. 5) An inquiry is received about a Form 941, Form 943, Form 944 filed to report household employment taxes (FICA and/or federal income tax withheld). The household employment taxes (FICA and/or federal income tax withheld) should have instead been reported on Schedule H (Form 1040) with a Form 1041 See paragraph (5) of IRM 21.7.4.4.1.11.2.3, Adjustments (Amended Returns, TRNS 193s, etc.) Involving Forms 1041 With Schedule H, for more information. 6) An inquiry is received regarding a Form 940 filed to report FUTA taxes for household employees. The FUTA tax should have instead been reported on Schedule H (Form 1040) with either a Form 1040 or Form 1041 See IRM 21.7.3.4.14, Schedule H FUTA Erroneously Reported. 7) An inquiry is received from an entity claiming to be a partnership The entity has reported household employment taxes Advise the taxpayer that a partnership cannot be a domestic employer. Instruct the taxpayer that they must follow one of the following options for reporting household employment wages and tax: One member of the unit can report all taxes and wages on Schedule H filed with their Form 1040, or; Each member can report their portion on Schedule H filed with their Form 1040. 8) An inquiry is received from a state or local government acting as an IRC 3504 agent on behalf of Home Care Service Recipients (HCSR) Note: These entities may be identified by the presence of Employment Code "A" , the literals "HHCSR" or "HCSR" in the name line, or use of the following terms: "Household Employer Agency" , "Fiscal Agent" , or "Choreworker" . An FTD penalty has been charged (on any tax module) Abate any FTD penalties identified on these accounts even if taxpayer is not requesting abatement. Taxes can be paid with the return. No deposits are necessary. See IRM 20.1.4.4.2, State and Local Health and Welfare, for more information. 9) An inquiry is received from a party who is operating as an IRC 3504 agent for one or more household employers but is not a state or local government. An FTD penalty has been charged Do not adjust the penalty unless other abatement criteria applies. These agents are responsible for making timely federal tax deposits as any other employer or Section 3504 agent.

# Household Employment Taxes and Section 3504 Agents

21.7.2.4.9.3 (10-01-2014) Household Employment Taxes and Section 3504 Agents An employer may appoint an agent under IRC Section 3504 to withhold, report and pay Federal employment taxes. To request approval to act as a Section 3504 agent for an employer, the agent files Form 2678, Employer/Payer Appointment of Agent, with the IRS. Note: Form 2678 processing information may be found in IRM 3.13.2.17, Form 2678, Employer/Payer Appointment of Agent. Specific rules apply when the employer is a Home Care Service Recipient (HCSR). A Home Care Service Recipient (HCSR) is an individual who receives home care services while enrolled in a program administered by a Federal, state, or local government agency that provides funding for the home care services. "Home care services" are personal and attendant care services rendered to the Home Care Service Recipient. Generally, the Home Care Service Recipient (HCSR) is the employer if they have the right to direct and control the provision of services by the home care services provider. The provision of services to the HCSR also generally constitutes household employment. The Home Care Service Recipient (HCSR) may designate, and the IRS may approve, a Section 3504 agent to act on behalf of the HCSR to withhold, report and pay the Federal employment taxes for the workers they hire to provide home care services. Agents may be also be authorized for purposes of Federal Unemployment Tax Act (FUTA) taxes if they are acting on behalf of an HCSR (only). There are two types of Section 3504 agents that act on behalf of Home Care Service Recipients (HCSRs): Federal, state or local government agency operating in accordance with Rev. Proc. 2013-39. See IRM 21.7.2.4.9.3.1, State or Local Government Agency Acting as IRC 3504 Agent for Home Care Service Recipients, for special procedures that apply to these agents and their subagents. Any other non-governmental entity engaged by the Federal, state or local government agency to participate in various aspects of a home care services program. These entities may choose to act as the Section 3504 agent for the HCSRs in accordance with Rev. Proc. 2013-39 by filing a Form 2678 for each HCSR. Note: Both types of agents may elect to perform the employment tax obligations themselves or to further contract with a reporting agent or subagent.

# State or Local Government Agency Acting as IRC 3504 Agent for Home Care Service Recipients

21.7.2.4.9.3.1 (10-01-2014) State or Local Government Agency Acting as IRC 3504 Agent for Home Care Service Recipients A state or local government agency may be approved to act as a Section 3504 agent on behalf of Home Care Service Recipients (HCSRs) who hire home care service providers. These entities may be identified by one or more of the following characteristics: The presence of Employment Code "A" . The literals "HHCSR" or "HCSR" in the name line of the entity. Returns or correspondence referencing the terms "Household Employer Agency" , "Fiscal Agent" , or "Choreworker" . Rev. Proc. 2013-39, 2013-52 I.R.B. 830, provides guidance to state and local government health and welfare agencies acting on behalf of HCSRs. Rev. Proc. 2013-39 superseded Rev. Proc. 70-6, Rev. Proc. 80-4, and Notice 2003-70. If the government agency operates according to Rev. Proc. 2013-39, then several special procedures apply: Government agencies acting on behalf of HCSRs enrolled in a program they administer do not need to file a Form 2678, Employer/Payer Appointment of Agent, for each HCSR. For more information on Form 2678, see IRM 21.7.2.3.7, Section 3504 Agents, and IRM 3.13.2.17, Form 2678, Employer/Payer Appointment of Agent. The government agency obtains a special EIN that is used for the sole purpose of acting as a Section 3504 agent for HCSRs. See Rev. Proc. 2013-39, section 10.03(3). The government agency files aggregate Form 941 and Form 940 tax returns using the government agency's special EIN to report all wages paid on behalf of HCSRs. Note: Section 3504 agents are required to attach an allocation schedule when filing aggregate employment tax returns. See IRM 21.7.2.4.3.3, Loose Schedule R (Form 941): Allocation Schedule for Aggregate Form 941 Filers, and IRM 21.7.3.4.6.1, Schedule R (Form 940): Allocation Schedule for Aggregate Form 940 Filers, for more information. The government agency may remit all taxes related to HCSRs with a timely filed Form 941 or Form 940. Government agencies acting as Section 3504 agents for HCSRs are not required to make Federal Tax Deposits (FTDs) or follow the deposit schedules applicable to employers and other Section 3504 agents. If the government agency hires a reporting agent to perform employment tax obligations, the reporting agent may perform those obligations as if it were the government agency. However, if the government agency uses Form 2678 to appoint a Section 3504 Agent (called a "subagent" ) to perform the employment tax obligations of the HCSRs, the subagent must file returns using its own EIN and make deposits under normal deposit rules. Note: FTD penalties are systemically waived for accounts bearing Employment Code "A" . However, incorrect penalties may be charged on accounts which have not been correctly coded. See the table in IRM 21.7.2.4.9.2, Procedures for Household Employment Tax Inquiries, for instructions on addressing FTD penalties charged on accounts of state or local government agencies acting as Section 3504 agents for HCSRs.

# Specific Claims and Other Issues

21.7.2.5 (10-01-2011) Specific Claims and Other Issues This section includes information and procedures for specific claims and other issues associated with employment taxes.

# Frivolous Employment Tax Claims

21.7.2.5.1 (10-01-2025) Frivolous Employment Tax Claims Claims citing IRC 861 may be frivolous claims and must be sent to the Ogden Campus Frivolous Return Program as outlined in IRM 21.5.3.4.16.7, Identifying Frivolous Returns/Correspondence and Responding to Frivolous Arguments. Do not, under any circumstances, adjust the account prior to sending to Ogden. Some claims may be received that don't indicate this section. However, they may also be considered frivolous. See (3) for examples. There may be a Form 941 annotated across the top "Amended or Corrected" , or Form 941-X filed to reduce payroll taxes ≡ ≡ ≡ ≡ ≡ ≡ ≡ for all open payroll tax quarters. Most of these returns have been prepared by hand. The explanation generally states "see attached..." which is usually a cover letter. The letters do not state a specific reason for filing the amended return, or they provide a general explanation such as "I have enclosed a corrected Form 941-X as required by law when the filer discovers any error made on such return." Often the cover letter contains a cc: to a congress person. The taxpayer only cites "Administrative Error" and does not indicate further why they are reducing the tax ≡ ≡ ≡ ≡ ≡. If doubt exists as to whether the claim is frivolous, do not send the claim to Ogden. Reject the claim back to the taxpayer following "No Consideration" procedures outlined in IRM 21.5.3.4.6, No Consideration and Disallowance of Claims and Amended Returns. Inform the taxpayer sufficient information was not received to consider the claim at this time and that a detailed explanation is necessary. If the claim received is a numbered return, or statute is imminent, contact the taxpayer for a complete explanation before adjusting the account.

# Employer's Wages Erroneously Reported on Form 941, 943 or 944

21.7.2.5.2 (10-01-2016) Employer's Wages Erroneously Reported on Form 941, 943 or 944 On occasion, individual taxpayers erroneously treat personal withdrawals as wages and pay FICA taxes on Form 941, Form 943, or Form 944. To correct such errors in reporting, taxpayers must file the appropriate Form 94XX. If a taxpayer files a Form 94XX on this basis, take the following actions: Adjust the impacted employment tax account(s) as per the appropriate Form 94XX procedures (e.g., for a tax decrease - claim for refund filed on Form 941-X, follow IRM 21.7.2.4.5.6.2, Form 941-X Tax Decrease — Claim). If the taxpayer wishes the overpayment(s) on the employment tax return(s) to be applied to their individual Form 1040 account (for example, to pay a balance due), input credit transfers as appropriate. See IRM 21.5.8, Credit Transfers, for general guidance on credit transfers.

# Worker Classification Determinations

21.7.2.5.3 (10-01-2022) Worker Classification Determinations A worker, whose firm reported earnings on a Form 1099-NEC (Form 1099-MISC prior to tax year 2020), can request IRS to determine whether or not they are an employee. (The term "Firm" is used here instead of "employer" since the issuer of the Form 1099-NEC (Form 1099-MISC prior to tax year 2020) has not been determined to be an employer at this stage.) A Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding, must be filed by the worker or the firm in order for the IRS to make the determination. The form can also be filed by workers treated as employees if they want to determine their proper classification. In order to file Form SS-8: The worker must have filed a tax return(s) for the period(s) in question. (See (6) or (7) below, depending on tax year, for procedures when the taxpayer has not yet filed a return for the period(s) in question.) The statute of limitations must be open for that period(s). The worker must have no objection to disclosing their name to the firm. Note: If the taxpayer initially objects to disclosing their name to the firm, encourage them to do so. If Form SS-8 is not filed, the matter becomes an issue which the worker must resolve. Usually this involves contact with the firm. That process is time consuming and frustrating for both the worker and the firm. If worker still objects, see (5) below. If the worker meets the criteria in (2) above, follow the steps below. Send Form SS-8 to the worker. Instruct the worker to complete Form SS-8 and mail it to the address provided in the "Where to File" section of the Instructions for Form SS-8.. Alert the taxpayer that the determination can take up to 180 days after the Form SS-8 is received. Note: If the statute of limitations for the period in question may expire before the determination is made, inform the worker that a letter will be sent when the Form SS-8 is received advising of procedures for filing a protective claim for that period. The SS-8 group contacts the firm and asks them to complete Form SS-8 from their perspective of the work relationship. The SS-8 group compares the two Forms SS-8. The SS-8 group makes a determination, and: If And Then 1) Worker is determined to be an employee Worker originally filed Schedule SE and paid self-employment tax Worker should file Form 8919, Uncollected Social Security and Medicare Tax on Wages, to report only the employee share of social security and Medicare tax and file Form 1040X attaching an amended Schedule SE to correct the self-employment tax previously reported. 2) Worker is determined to be an employee Worker originally reported only the employee share of social security and Medicare tax Note: Currently the use of Form 8919, Uncollected Social Security and Medicare Tax on Wages, requires the filing of a Form SS-8 except in limited cases indicated on the form. Worker does not need to file Form 1040X, but simply keeps a copy of the determination letter for their records. 3) Worker is determined to be an employee Section 530 of the Revenue Act of 1978 applies to the firm The firm is not required to treat worker as an employee for employment tax purposes. The worker is liable for only the employee share of social security and Medicare taxes. IRM 21.6.4.4.15, Workers Whose Employers Qualify Under the Revenue Act of 1978, Section 530, contains additional information. 4) Worker is determined to be an independent contractor The SS-8 group sends the worker a letter advising of the necessary actions including self-employment tax liability. See the Note in (2) above. Form SS-8 will not be processed if the worker does not agree to disclose their name to the firm. In that situation, the worker must determine to the best of their knowledge whether they are an employee. A worker receiving a Form 1099-NEC (Form 1099-MISC prior to tax year 2020) would be assumed to not be an employee (unless the worker can convince the employer they are, in fact, an employee and have Form W-2 issued instead of Form 1099-NEC (Form 1099-MISC prior to tax year 2020)). A worker who does not agree to disclose their name to the firm should be advised as follows: If Then 1) The worker believes they should be classified as an employee and determination has not been made The worker should report the income on the "wages" line on Form 1040 and attach Form 1099-NEC (Form 1099-MISC prior to tax year 2020).The taxpayer will not be assessed self-employment tax on original processing. However, Examination may review the return to determine if the taxpayer is liable for self-employment tax. 2) The worker believes they should be classified as self-employed The worker should: 1. Report income on Schedule C. 2. Compute self-employment tax on Schedule SE. 3. Attach Forms 1099-NEC (Forms 1099-MISC prior to tax year 2020), Schedule C, and Schedule SE to Form 1040. Note: Always encourage the workers to participate in the Form SS-8 process. Only inform the workers of the filing/reporting options in the table above if they refuse to participate. Inform them that if they do report the income as if they were an employee, it is possible they could be classified as self-employed at a later date and owe additional taxes. If the taxpayer has not yet filed a return for the tax period involved and the tax year is 2006 or prior, see archived files for this IRM for handling instructions. If the taxpayer has not yet filed a return for the tax period involved (2007 or subsequent), instruct them to: File Form 1040. Report the amount on Form 1099-NEC (Form 1099-MISC prior to tax year 2020) on the "wages" line. (The taxpayer may also want to indicate "Form SS-8 filed" on the dotted line to the left of the "wages" if they filed, or will file, Form SS-8.) Complete Form 8919 and attach it to Form 1040. Follow the instructions on Form 8919 for computing the social security and Medicare tax, and enter the amount on Form 1040, page 2 as instructed on Form 8919. File Form SS-8 by mailing it to the address provided in the "Where to File" section of the Instructions for Form SS-8. It is not to be filed with Form 1040. If an inquiry is received during current year and the taxpayer wants a determination prior to the end of the year, inform the taxpayer that a determination cannot be made until a payer document (i.e., Form 1099-NEC (Form 1099-MISC prior to tax year 2020)) is received by the taxpayer.

# IRC Section 3509

21.7.2.5.4 (10-01-2022) IRC Section 3509 In certain circumstances, IRC 3509 provides for reduced employer liability for employment taxes when a worker is reclassified from being treated as an independent contractor to being treated as an employee. If IRC 3509 tax rates apply, the amount of employment taxes owed by the employer will depend on whether information returns (e.g., Form 1099-NEC (Form 1099–MISC prior to tax year 2020) were filed as required for treatment of the individuals as independent contractors. The employer pays their share of FICA tax and either 20% or 40% of the employee's share (including Additional Medicare Tax to the extent wages and tips paid to an employee exceed $200,000 for a calendar year beginning after December 31, 2012). The employer also pays income tax withholding figured at either 1.5% or 3% of the wages. IRC 3509 assessments are often made by the IRS and can be identified by the use of IRN 079. However, the employer may self-assess under IRC 3509 provisions if they determine the worker was misclassified and all requirements are satisfied. See Pub 4341, Information Guide for Employers Filing Form 941 or Form 944, Frequently Asked Questions about the Reclassification of Workers as Employees. The following procedures address employer self-assessments of employment taxes for misclassified employees where IRC 3509 special tax rates apply. Note: The following paragraphs reference the line numbers for Form 941 and Form 941-X. If the employer is filing another adjusted employment tax return, use the applicable line and column numbers. For misclassified workers discovered on or after January 1, 2009, employers must file Form 941-X (or other applicable "X" form) for each tax period involved to report employment taxes owed under the special IRC 3509 tax rates. The Form 941-X must be prepared as follows: The wage amounts must be entered in column 1 on lines 19, 20, 21, and 22. Zeroes should be entered in column 2 of lines 19, 20, 21, and 22. Columns 3 and 4 must be completed as per the Part 3 instructions. Note: See archived IRM 21.7.2 if information is needed on IRC 3509 handling prior to January 1, 2009. If an original tax return was not filed for each tax period involved, the employer must also file the delinquent tax return(s) as follows: An original tax return must be prepared for each tax period with "Misclassified Employees" written in dark, bold letters across the top margin of page 1. A zero must be entered on line 10 ("Total taxes after adjustments" ). Part 5 ("Sign here" ) must be completed. The completed Form 941-X (or other applicable "X" form) must be attached to the original return being filed. Note: These filing instructions are an exception to normal filing and processing. Submission Processing has instructions to forward Forms 941-X filed under these special procedures to Accounts Management for adjustment action and will code the original return to freeze any credit on the tax module. See IRM 3.11.13.10.3, Non-Taxable Returns With No Line Entries. Adjust the tax account per the Form 941-X (or other applicable "X" form) as follows: Input an increase to IRN 004 to match the figure in column 3 of line 20. Input an increase to IRN 073 to match the figure in column 3 of line 21. Input an increase to IRN 074 to match the figure in column 3 of line 22 (valid for Forms 941/943/944 for tax periods beginning after December 31, 2012). Input an increase to IRN 104 to match the figure in column 4 of line 19. Input an increase to IRN 105 for the combined figures found in column 4 for lines 20, 21, and 22(and any amount reported for AdMT). Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Input an increase to IRN 113 for the combined IRN 104 and IRN 105 figures as determined above. Input a TC 290 or TC 298 increase as per IRM 21.7.2.4.4.2, Interest-Free Adjustments (Employment Tax Returns), procedures to match the IRN 113 figure as determined above. Note: The IRNs indicated above also apply to Form 944-X adjustments for this issue. However, IRNs 104, 105, and 113 are not valid for Form 943. So, for Forms 943-X filed for this adjustment issue, the IRNs to be used are 004, 073, 074 (if applicable), 003 and 007. Adjust the FTD penalty when using either a TC 290 (see IRM 20.1.4.21.3, Amended or Supplemental (Tax Decrease or Non-Interest-Free Tax Increase)) or a TC 298 (see IRM 20.1.4.21.5, Adjusted Returns (Forms 941-X, 943-X, 944-X, and CT-1X)). Note: See IRM 20.1.4.21.5.1, Amended ROFTL (Forms 941-X, 943-X, 944-X, 945-X, and CT-1X), when using a TC 298 or TC 290 and an amended ROFTL was provided with the adjusted return. If payment for the additional tax reported on the Form 941-X is not reflected on the tax period being adjusted, research the taxpayer's account for the missing credit and, if located, transfer the payment as appropriate. Note: Employers who discover they have misclassified employees but who do not qualify for the special IRC 3509 tax rates are also required to file Form 941-X (or other applicable "X" form) to report the employment taxes owed and may qualify for interest-free tax adjustments. In cases where the employer did not file an original return for the tax period involved, the employer is instructed to file an original tax return with "Misclassified Employees" written across the top margin of page 1 in dark, bold letters and to attach a completed Form 941-X (or other applicable "X" form). Accounts Management may receive documents filed under those procedures for misclassified employees. Normal tax rates and adjustment procedures are to be applied when the special IRC 3509 rates do not apply.

# Railroad Retirement Board (RRB) Determinations

21.7.2.5.5 (01-13-2005) Railroad Retirement Board (RRB) Determinations If a Form 941-X mentions RRB determinations or transferring overpaid FICA taxes to Form CT-1, see IRM 21.7.2.6.5.8, RRB Employer Status Determinations.

# Form SS-16, Certificate of Election of Coverage Under the Federal Insurance Contributions Act (FICA)

21.7.2.5.6 (10-01-2022) Form SS-16, Certificate of Election of Coverage Under the Federal Insurance Contributions Act (FICA) A religious order whose members are required to take a vow of poverty (or any autonomous subdivision of such an order) may elect to have FICA extended to services performed by its members in the exercise of duties required by such order. They are excluded from "employment" for FICA purposes, except when an election of coverage is in effect. See IRC 3121(b)(8)(A) and § 31.3121(b)(8)-1; IRC 3121(r) and § 31.3121(r)-1. A religious order making an election of coverage must file Form SS-16, Certificate of Election of Coverage Under the Federal Insurance Contributions Act. See IRM 3.13.12.15, Form SS-16, for additional information. On Form SS-16, the religious order must designate one of the following dates as the effective date for the election: The first day of the calendar quarter in which the Form SS-16 was filed, or The first day of the calendar quarter immediately after the calendar quarter in which Form SS-16 is filed, or The first day of any one of the 20 quarters before the quarter in which the Form SS-16 was filed. The following table illustrates the last day the Form SS-16 can be filed to elect retroactive coverage for 20 quarters: If the religious order wants coverage retroactive to: Then Form SS-16 is due: January 1, 2019 (1st quarter 2019) March 31, 2025 April 1, 2019 (2nd quarter 2019) June 30, 2025 July 1, 2019 (3rd quarter 2019) September 30, 2025 October 1, 2019 (4th quarter 2019) December 31, 2025 January 1, 2020 (1st quarter 2020) March 31, 2026 April 1, 2020 (2nd quarter 2020) June 30, 2026 July 1, 2020 (3rd quarter 2020) September 30, 2026 October 1, 2020 (4th quarter 2020) December 31, 2026 If Then 1) Form SS-16 is made effective the first day of the calendar quarter in which the SS-16 is filed The return is due the normal due date for Form 941 for the current quarter. 2) Form SS-16 is made effective the first day of the calendar quarter immediately after the calendar quarter in which the SS-16 is filed The return is due the normal due date for Form 941. Under IRC 3121(r), the due date of the returns for all retroactive quarters is determined by the date the Form SS-16 is "filed" . The due date for filing the returns and paying the tax, for calendar quarters prior to the quarter in which the SS-16 is filed, is the last day of the calendar month following the calendar quarter in which the Form SS-16 is filed. If the Form SS-16 is filed any day during the Then all the returns for the retroactive quarters must be filed and tax paid by 1st quarter 2025 April 30, 2025 2nd quarter 2025 July 31, 2025 3rd quarter 2025 October 31, 2025 4th quarter 2025 January 31, 2026 1st quarter 2026 April 30, 2026 2nd quarter 2026 July 31, 2026 3rd quarter 2026 October 31, 2026 4th quarter 2026 January 31, 2027 Note: Generally, the received date is the date Form SS-16 is "filed" for purposes of determining when returns are due. If the religious order or subdivision selects an effective date that is the first day of the 20th calendar quarter preceding the quarter in which Form SS-16 is postmarked, but the Form SS-16 is received in a later quarter, the IRS will use the postmark date to determine the date filed to ensure the intended 20th quarter can be included. A religious order will not be subject to a failure to pay penalty or interest, if it files the returns for the retroactive quarters and pays the total tax liability by the due date. IRC 3121(r) provides that the period of limitations for assessment for retroactive quarters will not expire before the expiration of 3 years from such due date. A religious order must report its tax liability for each quarter it is electing coverage. The form that must be filed for each of the retroactive quarters depends on whether an original Form 941, Employer's QUARTERLY Federal Tax Return, was filed for the specific retroactive period. Refer to table below: If Then 1) Form 941 was never filed for one or more quarters for which the election is effective The religious order must file Forms 941 for those retroactive quarters. 2) Original Forms 941 were filed for any of the retroactive quarters for which the election is effective The religious order must file Form 941-X, Employer's QUARTERLY Federal Tax Return or Claim for Refund, for those retroactive quarters. If a Form 941-X is properly and timely filed as described above, it will be necessary to extend the Assessment Statute Expiration Date (ASED) posted on the module when processing the Form 941-X. Initiate CC FRM49 with CC REQ77 using the EIN, MFT, and tax period. Complete CC FRM49 as follows: Transaction Code: TC 560 Extension Date: Enter the date three years following the due date for filing the Form 941-X and paying the tax as described earlier. Transaction Date: If the posted ASED is expired, enter the date one day before the posted ASED. Otherwise, leave blank. DLN-CD field: Enter "70" . Remarks: "Enter NSD Per Form SS-16 filed."

# Federal Labor Laws — Wage Payments Made by Federal Agencies

21.7.2.5.7 (04-25-2012) Federal Labor Laws — Wage Payments Made by Federal Agencies Certain government agencies are empowered to collect wages from employers that were erroneously not paid to current or former employees. These federal agencies disburse the wage amounts to the employees concerned. Agencies allowed to take this action and some of the provisions which allow such action are: Department of Labor (DOL) – Fair Labor Standards Act Government Accountability Office (GAO) – Davis-Bacon Act Housing and Urban Development (HUD) – Davis-Bacon Act National Labor Relations Board (NLRB) – Labor Management Relations Act Note: Extensive investigations are performed by the federal agencies to determine if claims for back wages or unfair labor practices are valid. Therefore, a relatively long period of time may elapse between the time employees become entitled to the wages and the time they actually receive payment from the agency involved.

# Processing of Tax Returns Filed by Federal Agencies to Report Withheld Income Taxes and Employee Share of FICA Taxes (Wage Payments Made by Federal Agencies)

21.7.2.5.7.1 (01-09-2012) Processing of Tax Returns Filed by Federal Agencies to Report Withheld Income Taxes and Employee Share of FICA Taxes (Wage Payments Made by Federal Agencies) Federal agencies making wage determinations withhold income taxes and the employee's share of FICA taxes from payments made to employees. The federal agency then reports and pays the withheld income taxes and the employee share of FICA with an employment tax return filed with the IRS under a separate EIN assigned to the federal agency. Employment tax returns filed by the federal agencies are processed at the campus of receipt. In addition to federal income tax withheld, the federal agency will report wages on the appropriate lines of Form 941 and compute the full amount of FICA taxes. The employer share of FICA is then deducted on one of the adjustment lines of Form 941 as a negative adjustment. Note: Wages may also be reported on Form 943 or Form 944. An aggregate Form 941-X will generally be attached to the federal agency's Form 941. The aggregate Form 941-X will reflect the total wages and tax withheld for all employees for which wage determinations were made by the federal agency for that tax period. In the explanation area, the agency indicates the name of the agency and the Act which authorizes them to collect and pay back wages. The Form 941-X is stamped "Do Not Transmit to SSA" . Note: The federal agency also prepares two copies of Form 941-X for each employer showing the wage determinations for their employees and the FICA taxes owed by the employer. The federal agency sends one copy to the employer to inform them of their tax liability. The federal agency files the other copy with the IRS for assessment of the employer's share of FICA on the employer's EIN. See IRM 21.7.2.5.7.2, Processing of Forms 941-X Filed by Federal Agencies to Report Employer Share of FICA Taxes (Wage Payments Made by Federal Agencies), for instructions on processing those Forms 941-X.

# Processing of Forms 941-X Filed by Federal Agencies to Report Employer Share of FICA Taxes (Wage Payments Made by Federal Agencies)

21.7.2.5.7.2 (03-10-2025) Processing of Forms 941-X Filed by Federal Agencies to Report Employer Share of FICA Taxes (Wage Payments Made by Federal Agencies) Federal agencies collecting wages from employers on behalf of employees withhold income taxes and the employee's share of FICA taxes from the payments made to the employees. However, the employer remains liable for the employer's share of FICA taxes. The federal agency prepares two copies of Form 941-X for the employer showing the wage determinations for their employees and the FICA taxes owed by the employer. One copy is sent to the employer to inform them of their tax liability. The other copy is filed by the federal agency with the IRS for assessment of the employer's share of FICA on the employer's EIN. Reminder: Additional Medicare Tax (AdMT) is only imposed on the employee (for tax periods beginning after December 31, 2012). There is no employer share of AdMT. Therefore, no AdMT should be assessed in the course of handling cases per the procedures found in the following subsections. The Form 941-X used by federal agencies for this purpose is generally not filed on the official Form 941-X version and does not include line numbers. However, it will be accepted so long as all information needed to compute the employer's share of the FICA tax liability and to process the adjustment is provided. If the employer replies to a Letter 134C indicating they disagree with the assessment or they submit an amended return attempting to reduce or remove the prior assessment, do not reduce or remove the assessment resulting from the information received from the federal agency. Refer the employer to the Letter 134C for information on how to contact the federal agency if they disagree with the assessment.

# Return Posted (TC 150), Wage Payments Made by Federal Agencies

21.7.2.5.7.2.1 (03-10-2025) Return Posted (TC 150), Wage Payments Made by Federal Agencies If a return for the employer is posted: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Caution: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Example: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Exception: If the return on file has an entry on one of the adjustment lines corresponding to the federal agency wage determination, no further adjustment is necessary. Use IRN 004 to show the amount of taxable social security wages. Use IRN 073 to show the amount of taxable Medicare wages. Use IRN 112 for the total FICA tax adjustment (employee and employer shares). Use IRN 110 and IRN 113 to reduce tax for the employee share of FICA tax already collected from the employee's wages by the federal agency. Initiate Letter 134C to the employer (use the address currently showing on ENMOD/BMFOLE) advising that we have processed the Form 941-X and a notice of adjustment for the employer's portion of FICA will be issued. Include a copy of the Form 941-X from the government agency. Document the case indicating the Form 941-X was received from the federal agency. Caution: Do not include FITW (Federal Income Tax Withheld) (IRN 003/111) in the adjustment. Caution: FTD penalties are not applicable on tax increases resulting from information received from various government agencies due to U.S. Department of Labor (USDOL) back wage audits under Titles 26 USC 3121 and 40 USC 3141, etc. Do not unnecessarily restrict the account from systemic penalty computation. Note: If the TC 150 on the module was a dummy return prepared per procedures later in this IRM section and there is a credit balance on the module which exceeds the amount of the assessment reflected on the Form 941-X filed by the federal agency, then use Hold Code 1 with the adjustment to hold the credit and allow the notice of adjustment to be issued. Also, in this particular situation, inform the employer in the Letter 134C being issued that they must file the appropriate original employment tax return to report any other taxes due and/or to claim a refund for any overpaid taxes.

# No Return Posted, No Filing Requirements (Wage Payments Made by Federal Agencies)

21.7.2.5.7.2.2 (03-10-2025) No Return Posted, No Filing Requirements (Wage Payments Made by Federal Agencies) If no return for the employer has posted and there are no filing requirements for the current quarter, take the following actions: Initiate Letter 134C to the employer (use the address currently showing on ENMOD/BMFOLE). • Include a copy of the Form 941-X received from the federal agency. • Advise the employer that we will be processing the Form 941-X and will issue a notice of adjustment once that action is complete. • Advise the employer of the amount of tax that will be assessed. • Advise the employer that they should go ahead and make payment for the amount of tax to be assessed in order to limit any interest charges that may be due. Prepare a dummy return on the applicable employment tax return (usually Form 941) showing zero tax for the tax period for which the Form 941-X was filed. • Enter "Dummy Return Prepared by IRS — Do Not Correspond for Signature" on the signature line. • Mark the block for "Final" return. • Enter Computer Condition Codes (CCC) "F" and "X" on the face of the dummy return. DO NOT enter any other Computer Condition Codes such as "M" , "D" , "J" , or "R" to restrict penalties or interest. • Route the completed dummy return to Submission Processing. Monitor the account until the dummy return posts to the module. Follow the procedures in IRM 21.7.2.5.7.2.1, Return Posted (TC 150), Wage Payments Made by Federal Agencies, to adjust the account per the Form 941-X. Note: Do not issue a second Letter 134C to the employer when the assessment is made under these procedures.

# No Return Posted, Open Filing Requirements (Wage Payments Made by Federal Agencies)

21.7.2.5.7.2.3 (03-10-2025) No Return Posted, Open Filing Requirements (Wage Payments Made by Federal Agencies) A federal agency may submit a Form 941-X before the employer's tax return is processed and posted to their tax account. This includes some situations where the federal agency submits the Form 941-X prior to the return due date for the tax period affected. In these situations, it will be necessary to research the employer's account for the missing tax return and take the appropriate action prior to taking action on the Form 941-X. This research should include reviewing the employer's account for misapplied tax returns and unposted or rejected tax returns. The employer's tax return data must also be reviewed to determine whether they have reported the additional wages and tax on their Form 941 and used one of the adjustment lines to back out the employee share collected by the federal agency. Take the following action: If And Then 1) An original return is located There is an entry on one of the adjustment lines corresponding to the federal agency wage determination Take the appropriate action to process or reprocess the return to the account. Input a TC 971 AC 002 to release the E- freeze if a TC 971 AC 010 was previously input. No further adjustment action is necessary. Document the case indicating the Form 941-X was received from the federal agency reporting back wages paid. 2) An original return is located There is no entry on one of the adjustment lines corresponding to the federal agency wage determination Take the appropriate action to process or reprocess the return to the account. Monitor the account for posting of the original return. Follow the procedures in IRM 21.7.2.5.7.2.1, Return Posted (TC 150), Wage Payments Made by Federal Agencies. 3) Less than 60 days have passed from the return due date for the tax period the Form 941-X was filed for There is no indication a return has been filed Monitor the account for posting of the original return through the 60th day following the return due date. If a return posts, follow guidelines in IRM 21.7.2.5.7.2.1 , Return Posted (TC 150), Wage Payments Made by Federal Agencies. 4) More than 60 days have passed from the return due date for the tax period the Form 941-X was filed for There is no indication of a return being filed; e.g., Unpostable, Reject, open controls, etc. Follow the procedures in IRM 21.7.2.5.7.2.2, No Return Posted, No Filing Requirements (Wage Payments Made by Federal Agencies), except: • Do not indicate "Final" and do not CCC "F" . • If there are credits on the module, be certain to enter CCC "X" on the dummy return and use Hold Code 1 when adjusting the account to hold any excess credits. Reminder: All open controls and assignments must be considered and contacts made as appropriate prior to taking action on a tax account per these procedures.

# Missing or Incorrect Employer EIN (Wage Payments Made by Federal Agencies)

21.7.2.5.7.2.4 (10-01-2014) Missing or Incorrect Employer EIN (Wage Payments Made by Federal Agencies) If the Form 941-X is otherwise processable and is missing only a correct EIN for the employer (or an SSN was provided in either SSN or EIN format), research for the correct EIN. If the correct EIN is not found, forward the case to Entity Control (5 day turnaround) and request that they determine the correct EIN or assign an EIN to the business. If the Form 941-X is missing data (address, money amount, etc.) necessary to process the case in addition to a missing or incorrect EIN, return the Form 941-X to the agency initiating the case and request the missing data. If the agency returns the Form 941-X with the missing information but states the employer does not have an EIN, forward the case to Entity Control as in (1) above. Note: Use Letter 134C or other appropriate "C" letter when rejecting documents back to the initiating federal agency. Agency addresses may be found in the text of Letter 134C.

# Section 3402(d) and Section 3102(f)(3), Tax Relief in Employment Tax Cases (Forms 4668, 4669, and 4670)

21.7.2.5.8 (01-14-2015) Section 3402(d) and Section 3102(f)(3), Tax Relief in Employment Tax Cases (Forms 4668, 4669, and 4670) During the course of an examination, the IRS may determine an employer/employee relationship exists and propose the assessment of tax, penalties and interest. This assessment may include income tax and/or Additional Medicare Tax (AdMT) that should have been withheld from amounts paid to employees. Form 4668, Employment Tax Examination Changes Report, is the basic report used for all employment tax return examinations. It is used to show the additional tax, over-assessment, or delinquent tax proposed by the examiner. It should be attached to the last quarter return examined as part of the Revenue Agents Report. Note: TC 971 AC 057 is sometimes used by Exam to designate a cross-reference account where relevant documentation is located. Note: Form 4668-B, Report of Examination of Withheld Federal Income Tax Reported on Forms 1099 and W-2G, is generally used for backup withholding issues as well as withholding reported on Forms 1099 and W-2G. Form 2504, Agreement to Assessment and Collection of Additional Tax and Acceptance of Overassessment (Employment Tax Adjustments Not Subject to IRC 7436), and Form 2504-WC, Agreement to Assessment and Collection of Additional Employment Tax and Acceptance of Overassessment in Worker Classification Cases, are used to obtain a taxpayer's agreement to the proposed assessment or over-assessment of employment tax. An error is considered ascertained on the date the signed Form 2504 or Form 2504-WC is received by the IRS. Therefore, the additional tax must be paid at the time the signed Form 2504 is received for the assessment to be completely interest-free. Form 2504 or Form 2504-WC should be attached to the same period's return as Form 4668. When specific conditions are met, the Internal Revenue Code (IRC) provides relief from paying certain employment taxes proposed or assessed by Exam: IRC 3402(d) provides relief from paying income tax proposed or assessed by Exam if the employee reported the income and paid the taxes due with the employee's income tax return. IRC 3402(d) relief also applies to Exam assessments of backup withholding. IRC 3102(f)(3) provides relief from paying Additional Medicare Tax (AdMT) proposed or assessed by Exam (for tax periods beginning after December 31, 2012) if the employee reported the income and paid AdMT due with the employee's income tax return. Caution: Income tax withholding assessed under IRC 3509 is not subject to abatement. See IRM 21.7.2.5.4 for more information on IRC 3509. To obtain relief under IRC 3402(d) and/or IRC 3102(f)(3), employers must: Secure a signed Form 4669, Statement of Payments Received, from the employee(s) covered by the examination. Prepare and sign a Form 4670, Request for Relief of Payment of Certain Withholding Taxes, indicating the tax year and number of statements (Form 4669) secured. Submit the signed Form 4670 with the signed Form(s) 4669 attached. Exception: If the tax due was paid prior to the filing of the Forms 4670 and 4669, then the Forms 4670 and 4669 must be attached to a properly completed claim form (Form 94XX) since that situation constitutes a claim for refund rather than a request for relief from payment as provided for under IRC 3402(d) or IRC 3102(f)(3). The Revenue Agent/Officer conducting the examination provides the employer with an extra copy of Form 4668 along with blank Forms 4669 and 4670. The employer is instructed to file the copy of the Form 4668, a Form 4670, and Form(s) 4669 with the appropriate campus. Note: Revenue Agents/Officers may process Forms 4670 and 4669 received before the examination is closed as per guidance in IRM 4.23.8.4.3, Procedures for Granting Relief Under IRC 3402(d) and/or IRC 3102(f)(3) in Examination.

# Processing Procedures for Forms 4669 and 4670

21.7.2.5.8.1 (02-28-2018) Processing Procedures for Forms 4669 and 4670 Requests for relief under IRC 3402(d) and/or IRC 3102(f)(3) are not Exam criteria even though they involve tax accounts that were previously examined. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The Form 4668 for the case must be secured to determine the amount of tax for which relief can be granted under IRC 3402(d) and IRC 3102(f)(3). Take the following actions if the employer submits Forms 4669 and 4670 without a copy of the Form 4668: Make two attempts to contact the employer (or an authorized representative) by phone to obtain a copy of the Form 4668. If unable to obtain the Form 4668 from the employer, request the TC 30X assessment document (or controlling DLN) on the last quarter of the calendar year shown on Form 4670. Note: If the TC 30X assessment document is charged out to Examination on an initial document request, suspend the case and request the document again after 30 days. If a copy of the Form 4668 cannot be obtained from the employer or from Files as per the above procedures, return the Forms 4669 and Form 4670 to the employer with instructions to resubmit the documents with a copy of the Form 4668. Use Forms 4668 and 4669 to determine the amount of tax to be adjusted as follows: Exception: Area Office Forms 3870, Request for Adjustment, do not need to be verified against Form 4668. IRC 3402(d) relief requests: 1) For the calendar year involved, add the figures shown on line 6a, "Payments subject to Income Tax Withholding" (line 6b, "Payments subject to Backup Withholding" , for backup withholding), of the Form(s) 4669 submitted with Form 4670. 2) Multiply the figure determined in step 1 above by 28% (.28) for tax years 2003 through 2017 or 24% (.24) for tax years 2018 and subsequent. 3) The amount of the tax adjustment to be made is limited to the lesser of the tax figure determined in step 2 above or the amount shown on line 12, "Maximum tax available for abatement under IRC 3402(d)" , of Form 4668 (or line 20 of Form 4668-B). Caution: If line 12, Form 4668, is zero, blank or "none" , do not make any adjustment to income tax withheld (or backup withholding). IRC 3102(f)(3) relief requests: 1) For the calendar year involved, add the figures shown on line 6d, "Payments subject to Additional Medicare Tax Withholding" , of the Form(s) 4669 submitted with Form 4670. 2) Multiply the figure determined in step 1 above by 0.9% (.009). 3) The amount of the tax adjustment to be made is limited to the lesser of the tax figure determined in step 2 above or the amount shown on line 13, "Maximum tax available for abatement under IRC 3102(f)(3)" , of Form 4668. Caution: If line 13, Form 4668, is zero, blank or "none" , do not make any adjustment to AdMT. Note: The instructions above are based on current form versions. Relief requests filed on earlier versions of Form 4669 are to be processed whenever possible. See archived IRM versions if information relating to previous form versions is needed, including previous line numbers and line titles. Note: Revised Form 4669 includes line 6c, "Payments to Foreign Persons subject to Withholding Tax" , which can be used by taxpayers to request relief from payment of certain taxes proposed or assessed by Exam. Requests for relief of taxes related to payments which could be reported on line 6c of Form 4669 should not be received in Accounts Management. Contact the IRM author through the campus P&A Staff for guidance on resolving or rerouting the case if a Form 4669 is received in Accounts Management with a figure entered on line 6c of Form 4669. When the claim can be processed, adjust the module for the proper amount using either TC 291 or TC 299 (along with the appropriate IRNs) as follows: If And Then 1) The employer signed the Form 2504 Interest is not restricted on the module Input TC 299 with an "interest from" date using the date the original signed Form 2504 was received by the IRS. 2) The employer signed the Form 2504 Interest is restricted on the module Interest must be manually computed and adjusted unless the assessment qualified as a completely interest-free adjustment. Input TC 299 with an "interest from" date using the date the original signed Form 2504 was received by the IRS and the appropriate TC 34X amount. No underpayment interest is due on the amount being abated under IRC 3402(d) and/or IRC 3102(f)(3). However, underpayment interest is due on any remaining amount of the assessment from the date the original Form 2504 was received to the date of full payment. 3) The employer did not sign the Form 2504 Interest is not restricted on the module See IRM 20.2.10.5.5.3, Interest on Income Tax Withholding Assessment Abated under IRC 3402(d). Input TC 299 with an interest from date. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ 4) The employer did not sign the Form 2504 Interest is restricted on the module See IRM 20.2.10.5.5.3, Interest on Income Tax Withholding Assessment Abated under IRC 3402(d). Interest must be manually computed and adjusted. Input TC 299 with an interest from date and adjust interest with a TC 34x transaction as appropriate. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: If the Form 2504 is unavailable, and there is a TC 308 on the module, use the date of the TC 308 for the interest computation date when following the procedures in the table above. If there is no TC 308, request the assessment document or contact the employer for a copy of the Form 2504. Fax copies are acceptable. Restrict any penalty assessments on the module if a tax decrease made under these procedures would cause penalties to recompute. The employer is liable for all penalties as a result of the examination. Penalties should not be decreased when tax is adjusted. Documentation for the adjustment must include the Forms 4669 and 4670 provided by the employer, copy of the Form 4668, and Form 2504 (if secured).

# IRC Section 127, Educational Exclusions

21.7.2.5.9 (10-01-2011) IRC Section 127, Educational Exclusions Under IRC Section 127, an employer can exclude from gross income up to $5,250 per employee for educational assistance benefits. This benefit expired and was reinstated a number of times over the years until the Economic Growth and Tax Relief Reconciliation Act of 2001 permanently extended IRC 127. Employers should account for IRC Section 127 exclusions as they pay wages and report employment taxes during the year. However, employers may file claims on Forms 94XX if necessary when errors in reporting have occurred. Follow the procedures for the appropriate Form 94XX adjusted employment tax return when working these claims or adjustment requests. Employees unable to obtain refunds from their employer may file Form 843 to obtain a refund. A statement from the employer must be attached listing any amount which has been reimbursed by employer. If employee is unable to obtain this statement, they must provide this information to the best of their ability. (Contact the taxpayer if neither an employer or employee statement has been provided with the claim. Fax copies are acceptable.) When the required documentation is secured, follow procedures in IRM 21.7.2.4.4.4.2, Excess Social Security and Medicare Tax Withheld — Employee Claims for Refund, under "Claim is correctly filed with employer's statement attached" , in the "If/Then" table. See archived IRM 21.7.2 if information is needed with regards to the handling of claims for tax years ending December 31, 2001 or earlier.

# Foreign Students — FICA Tax Erroneously Withheld

21.7.2.5.10 (10-01-2013) Foreign Students — FICA Tax Erroneously Withheld Per IRC 3121(b)(19), certain foreign students and other non-resident aliens are exempt from FICA for services performed as specified in Section 101(a)(15)(F), (J), (M), or (Q) of the Immigration and Nationality Act. It is generally the employer's responsibility to determine the tax status of foreign students and other non-resident employees for employment tax purposes. However, employers sometimes erroneously treat an exempt employee's wages as taxable for FICA. In that situation, claims for refund or credit may be filed by either the employer or the employee: See IRM 21.7.2.5.10.1, Procedures for Inquiries Received From Foreign Students, for handling guidance on inquiries and claims filed by employees for this issue. See IRM 21.7.2.5.10.2, Employer Claims Involving Foreign Students, for handling guidance on inquiries and claims filed by employers for this issue.

# Procedures for Inquiries Received from Foreign Students

21.7.2.5.10.1 (10-01-2017) Procedures for Inquiries Received from Foreign Students Employers may in some instances erroneously withhold FICA taxes from exempt foreign students and other non-resident aliens holding F, J, M, or Q visas. Employees for whom FICA taxes are erroneously withheld should seek reimbursement from their employer. However, If the employee is unable to obtain repayment or reimbursement from their employer, they may file a claim on Form 843 for refund of the erroneously withheld FICA taxes. Caution: Any excess Additional Medicare Tax (AdMT) withheld by an employer and not repaid or reimbursed to the employee in the same calendar year must be claimed on an income tax return. Foreign student claims filed by employees are processed by International teams at the Ogden campus as per procedures in IRM 21.8.2.7.3, Processing Employee Claims. Route foreign student claims received at any campus other than at Ogden as follows: Paper Case — Route the case to the following address and advise the taxpayer of the transfer via Letter 86C: Ogden Campus 1973 N Rulon White Blvd Ogden, Utah 84404 M/S 6552 CII Cases — Reassign to work type "BMF INTL" , document type "VISA" , category "IETP" , program "33032" , and campus "OSC" . Note: Employer claims involving foreign students must be filed on the appropriate Form 94XX and are processed at the Cincinnati or Ogden Campuses. See IRM 21.7.2.5.10.2, Employer Claims Involving Foreign Students.

# Employer Claims Involving Foreign Students

21.7.2.5.10.2 (12-21-2015) Employer Claims Involving Foreign Students Employer claims must be filed on the appropriate Form 94XX and are processed at the Cincinnati or Ogden Campuses. There are no special procedures (see Exception in (3) below) for Forms 94XX filed by employers seeking refunds or credits of FICA taxes erroneously withheld from employees who are foreign students and other exempt non-resident aliens holding F, J, M, or Q visas or for the associated employer's share of FICA taxes. Forms 94XX filed by employers for this issue are to be processed as per the general Form 94XX processing instructions in IRM 21.7.2.4.4, Adjusted Employer's Federal Tax Return or Claim for Refund, and the procedures for the specific type of Form 94XX and filing situation (e.g., if the 941-X received is a tax decrease - claim for refund, follow IRM 21.7.2.4.5.6.2, Form 941-X Tax Decrease — Claim). Exception: If the employee has already filed a Form 843 claim and received a refund of erroneously withheld FICA taxes, then the employer may only obtain a refund or credit for the employer's share of associated FICA taxes. In that instance, the account will reflect a reduction in wages and a reduction in tax equal to the employee's share of FICA taxes. The Form 94XX filed by the employer may reflect an identical reduction in wages as was posted with the employee claim adjustment. If so, adjust IRN 112 (or IRN 007 as appropriate) but do not reduce wages a second time. Note: Employee claims involving foreign students are filed on Form 843 and are processed by International teams at the Ogden Campus. See IRM 21.7.2.5.10.1, Procedures for Inquiries Received From Foreign Students, for handling and routing information if an employee claim is received at a site other than Ogden.

# IRC Section 3121(q) Adjustments

21.7.2.5.11 (10-01-2018) IRC Section 3121(q) Adjustments IRC section 3121(q) provides that the employers pay their share of FICA taxes on tips reported by their employees. Such remuneration is deemed to have been paid at a time a written statement including such tips is furnished to the employer. If no such statement is furnished (or to the extent the statement is incomplete or inaccurate) such remuneration shall be deemed paid on the date on which notice and demand for such taxes is made to the employer. Following a tip examination, employers must pay the employer portion of FICA taxes on unreported tips shown on the Section 3121(q) Notice and Demand. See Letter 3263 and Letter 4520 for more information. They are instructed to include the taxes due on line 5f of their Form 941 for the quarter in which the Section 3121(q) Notice and Demand is made. Generally, the statute of limitations for assessment is three years after April 15 of the calendar year following the Section 3121(q) Notice and Demand date. However, if the employer files Form 941 late and the filing date is after April 15 of the calendar year following the year the Section 3121(q) Notice and Demand is made, the IRS must assess the employer FICA taxes within 3 years after the date the return was filed. Example: If the employer files Form 941 for the first quarter of 2014 on July 13, 2025, the assessment period ends on July 13, 2028. Note: If the employer files a false or fraudulent Form 941 for the quarter in which the liability is required to be reported or fails to file Form 941 for that quarter, the additional employer FICA taxes on the unreported tips can be assessed at any time.

# Procedures for Section 3121(q) Adjustments — Forms 941-X

21.7.2.5.11.1 (10-01-2018) Procedures for Section 3121(q) Adjustments — Forms 941-X Even though employers are instructed to report a Section 3121(q) tip liability on their current period original Form 941, a Form 941-X may be received reporting a Section 3121(q) liability as an adjustment. If Form 941-X is received reporting a Section 3121(q) adjustment, verify all applicable sections are complete. See IRM 21.7.2.4.4, Adjusted Employer's Federal Tax Return or Claim for Refund, and IRM 21.7.2.4.5.6, Form 941-X, Adjusted Employer's QUARTERLY Federal Tax Return or Claim for Refund (including Form 941-X (PR)). Note: IRC Section 3121(q) liabilities must be reported for the tax period in which the Section 3121(q) Notice and Demand was dated. Example: Section 3121(q) Notice and Demand was dated March 30, 2025. If Form 941-X is filed, the adjustment must be input on the 202503 tax period. Section 3121(q) adjustments reported on Forms 941-X may qualify for interest-free treatment in limited situations. See IRM 21.7.2.5.11.2, Section 3121(q) and Interest-Free Adjustments, for information on when to use a TC 298 or TC 290 when making Section 3121(q) adjustments. IRN 114 is used to adjust the employer's share of social security and Medicare tax for Section 3121(q) liability on Form 941 for tax periods beginning on or after 01/01/2011. IRN 114 corresponds to Line 5f of Form 941 and Line 14 of Form 941-X. Note: IRN 112 was used for Section 3121(q) adjustments on MFT 01 for tax periods ending on or before 12/31/2010. Accept the employer's figure as reported unless a Section 3121(q) Notice of Demand is attached indicating the amount should be higher. In that case, adjust the account using the higher figure shown on the Section 3121(q) Notice of Demand and inform the employer using Letter 4384C. Exception: If an employer attaches a copy of a Section 3121(q) Notice and Demand to Form 941-X and it can be determined the employer reported both the employee and employer shares of the social security and Medicare tax adjustment, assess only the employer share of social security and Medicare taxes and inform the employer using Letter 4384C. Note: If an employer attaches a copy of a Section 3121(q) Notice and Demand to Form 941-X but does not report the tax on the Form 941-X and it was not reported with the original Form 941, assess the amount shown on the Section 3121(q) Notice and Demand and inform the employer using Letter 4384C. Do not adjust IRN 005 (Taxable social security tips), IRN 072 (Tips deemed to be wages), or IRN 073 (Medicare wages) when making Section 3121(q) adjustments even if the employer provides wage information related to the adjustment on a Form 941-X or attaches the Section 3121(q) Notice and Demand. Wage data figures related to Section 3121(q) adjustments are not recorded with adjustments made under these procedures. Exception: If the taxpayer reports other changes on the Form 941-X in addition to the Section 3121(q) adjustment, adjust wage reference lines as appropriate based on the other, non-Section 3121(q) related changes reported. See IRM 21.7.2.5.11.3, Taxpayer Reports Other Adjustments In Addition to Section 3121(q) Adjustments, for more information on handling forms filed in that manner. Ensure all applicable deposits have been applied to the account being adjusted. Adjust the FTD penalty when using either a TC 290 (see IRM 20.1.4.21.3, Amended or Supplemental (Tax Decrease or Non-Interest-Free Tax Increase)) or a TC 298 (see IRM 20.1.4.21.5, Adjusted Returns (Forms 941-X, 943-X, 944-X, and CT-1X)). Note: See IRM 20.1.4.21.5.1, Amended ROFTL (Forms 941-X, 943-X, 944-X, 945-X, and CT-1X), when using a TC 298 or TC 290 and an amended ROFTL was provided with the adjusted return. Caution: For tax decreases with an unreversed FTD penalty, see IRM 20.1.4.21.5, Adjusted Returns (Forms 941-X, 943-X, 944-X, and CT-1X).

# Section 3121(q) and Interest-Free Adjustments

21.7.2.5.11.2 (10-01-2012) Section 3121(q) and Interest-Free Adjustments The date of the Section 3121(q) Notice and Demand is the ascertained date for the taxes due. To qualify for interest-free treatment, a Form 941-X reporting additional tax must be filed by the due date for the tax period in which the liability for additional tax was ascertained. See IRM 21.7.2.4.4.2, Interest-Free Adjustments (Employment Tax Returns). IRC Section 3121(q) liability must be reported for the tax period in which the Section 3121(q) Notice and Demand letter was dated. Therefore, a Form 941-X reporting taxes due for a Section 3121(q) adjustment has the same filing due date as the tax period being adjusted. If the Form 941-X is filed after the return due date for the tax period being adjusted, the adjustment does not qualify for interest-free treatment. Example: An employer receives a Section 3121(q) Notice and Demand dated June 22, 2020. The ascertained date for the taxes due is therefore June 22, 2020. Per the instructions provided to the employer, the taxes shown on the Section 3121(q) Notice and Demand should be reported on their Form 941 for the second quarter of 2020 which has a filing due date of July 31, 2020. Instead, the employer reports the correction on a Form 941-X. The ascertained date is still June 22, 2020 based on the Section 3121(q) Notice and Demand and the Form 941-X reporting the Section 3121(q) tax is due by July 31, 2020. The employer files the Form 941-X on July 27, 2020. Therefore, the adjustment qualifies for interest-free treatment. Example: An employer receives a Section 3121(q) Notice and Demand dated September 21, 2020. The ascertained date for the taxes due is therefore September 21, 2020. Per the instructions provided to the employer, the taxes shown on the Section 3121(q) Notice and Demand should be reported on their Form 941 for the third quarter of 2020 which has a filing due date of October 31, 2020. Instead, the employer reports the correction on a Form 941-X. The ascertained date is still September 21, 2020 based on the Section 3121(q) Notice and Demand and the Form 941-X reporting the Section 3121(q) tax is due by October 31, 2020. The employer files the Form 941-X on November 15, 2020. The Form 941-X was filed late and therefore the adjustment does not qualify for interest-free treatment. Use the following table to determine whether to make the Section 3121(q) adjustment using a TC 290 or TC 298: If Then 1) The Form 941-X is not filed by the due date of the tax period for which the Section 3121(q) adjustment is reported Input the adjustment using a TC 290. 2) The Form 941-X is filed by the due date of the tax period for which the Section 3121(q) adjustment is reported Input the adjustment using a TC 298. Input the return due date of the tax period being adjusted as the interest computation date. Exception: If the Page 1 error discovery date, information in Part 4, or the date of the Section 3121(q) Notice and Demand (if attached) indicate the employer filed the Form 941-X for a tax period other than that required based on the ascertained date, input the adjustment as a TC 290 or TC 298 (if timely filed) on the tax period associated with the ascertained date and inform the employer using Letter 4384C. Note: For the Section 3121(q) adjustment to be completely interest-free, the tax must be paid by the return due date of the tax period for which the adjustment is reported. Otherwise, underpayment interest accrues from that date to the date of full payment.

# Taxpayer Reports Other Adjustments in Addition to Section 3121(q) Adjustments

21.7.2.5.11.3 (10-01-2012) Taxpayer Reports Other Adjustments in Addition to Section 3121(q) Adjustments Even though employers are instructed to report a Section 3121(q) liability on their current period original Form 941, a Form 941-X may be received reporting a Section 3121(q) liability as an adjustment. And, if a taxpayer reports a Section 3121(q) adjustment on Form 941-X, it is possible they may also report other adjustments on the same Form 941-X. If a Section 3121(q) adjustment and other corrections are reported on the same Form 941-X, separate adjustment actions may be required as per the following table: If And Then 1) The Form 941-X is filed by the due date of the tax period for which the Section 3121(q) adjustment is reported Input one adjustment for the entire amount of the corrections reported using a TC 298. Input the return due date of the tax period being adjusted as the interest computation date. Reminder: Use IRN 114 for the Section 3121(q) portion of the tax adjustment. 2) The Form 941-X is not filed by the due date of the tax period for which the Section 3121(q) adjustment is reported The employer provided an ascertained date for the other errors being corrected and the Form 941-X was timely filed by the associated due date Input the Section 3121(q) adjustment using a TC 290 and IRN 114. Input the adjustment for the other errors being corrected as a separate TC 298 adjustment using the Form 941-X received date as the interest computation date. 3) The Form 941-X is not filed by the due date of the tax period for which the Section 3121(q) adjustment is reported The employer did not provide an ascertained date for the other errors being corrected Input one adjustment for the entire amount of the corrections reported using a TC 290. Reminder: Use IRN 114 for the Section 3121(q) portion of the tax adjustment. 4) The Form 941-X is not filed by the due date of the tax period for which the Section 3121(q) adjustment is reported The employer provided an ascertained date for the other errors being corrected but the Form 941-X was not timely filed by the associated due date Input one adjustment for the entire amount of the corrections reported using a TC 290. Reminder: Use IRN 114 for the Section 3121(q) portion of the tax adjustment. Reminder: If the Page 1 error discovery date, information in Part 4, or the date of the Section 3121(q) Notice and Demand (if attached) indicate the employer filed the Form 941-X for a tax period other than for which the Section 3121(q) liability is required to be reported, input the adjustment for the Section 3121(q) liability as a TC 290 or TC 298 (if timely filed) on the correct tax period and inform the employer using Letter 4384C.

# IRC Section 3121(v)

21.7.2.5.12 (10-01-2016) IRC Section 3121(v) FICA tax is generally imposed at the time wages are actually or constructively paid. However, IRC Section 3121(v)(2)(A), contains a special timing rule. This special timing rule usually results in imposition of FICA tax before benefit payments under the plan begin. The rule provides that any amount deferred under a non-qualified deferred compensation (NQDC) plan must be taken into account as wages for FICA tax purposes the later of: When the services are performed; or When there is no substantial risk of forfeiture of the rights to such amount Section 31.3121(v)(2)-1, of the employment tax regulations provides guidance as to when amounts deferred under, or paid from, an NQDC plan are taken into account as wages for purposes of FICA tax.

# IRC Section 3121(v) Claims and Requests for Adjustments

21.7.2.5.12.1 (10-01-2024) IRC Section 3121(v) Claims and Requests for Adjustments Any claims or requests for adjustments (including increases) received on Form 94XX (or Form 843) that indicate any of the following must be routed as CAT-A (Category A): 3121(v) Regulations Section 31.3121(v) Non-qualified deferred compensation (or NQDC) Deferred compensation Transitional rules Treasury Decision 8814 Other indications suggesting that IRC Section 3121(v) is at issue Exception: See archived versions of this IRM if information is needed on previous handling related to airline employee/retiree claims. These cases must be recontrolled to Exam. If Exam returns the case, handling instructions will be included. Note: If a claim is received on Form 843 and Exam provides instructions to disallow the claim, follow normal claim disallowance procedures. See archived files for this IRM if information is needed on previous handling for this issue.

# FICA Adjustments on Exempt Organizations Pursuant to IRC Section 501(c)(3)

21.7.2.5.13 (01-01-2005) FICA Adjustments on Exempt Organizations Pursuant to IRC Section 501(c)(3) Organizations exempt under IRC Section 501(c)(3) are liable for FICA taxes with few exceptions. Churches and qualified church-controlled organizations opposed to the payment of FICA taxes for religious reasons, are provided a method to elect exemption from the employer's share of FICA taxes. See IRM 21.7.2.5.13.2, Form 8274, Churches Making the Election for Exemption From FICA.

# IRC Section 501(c) Definitions

21.7.2.5.13.1 (10-01-2018) IRC Section 501(c) Definitions Church means a church described in IRC Section 501(c)(3) and IRC Section 170(b)(1)(A)(i) which includes conventions or associations of churches. It also includes elementary or secondary schools controlled, operated, or principally supported by a church. IRC Section 3121(w)(3)(B) provides that a qualified church-controlled organization includes any church-controlled tax-exempt organization described in IRC Section 501(c)(3), except if the organization both: Offers goods, services, or facilities for sale to the general public, other than on an incidental basis or other than for a nominal charge which is substantially less than the cost of providing such goods, services, or facilities; and Normally receives more than 25% of its support from either (I) governmental sources, or (II) receipts from admissions, sales of merchandise, performance of services, or finishing of facilities in related trade or business activities, or both.

# Form 8274, Churches Making the Election for Exemption From FICA

21.7.2.5.13.2 (10-01-2012) Form 8274, Churches Making the Election for Exemption From FICA The election is made by filing Form 8274, Certification by Churches and Qualified Church-Controlled Organizations Electing Exemption From Employer Social Security and Medicare Taxes. Form 8274 is filed after the electing organization has hired employees, but before the first date on which Form 941 (or Form 944) is due, or would otherwise be due, except for this election. Form 8274 is processed by the Entity Control Function. See IRM 3.13.2, BMF Account Numbers. Form 8274 can be recognized by Employment Code (EC) "C" . The election applies to services performed by all current and future employees of the electing organization. The election does not apply to: Service as minister of a church Members of a religious order Service performed in unrelated trade or business of the church or qualified church-controlled organization The electing organization is required to withhold federal income tax on wages, tips, and other compensation. Forms W-2 and 941 (or 944) must be filed as appropriate. The IRS will permanently revoke the election if the organization does not file Form W-2 for two years or more and does not provide the information within 60 days after a written request by the IRS. By filing a Form 941 (or Form 944) and paying FICA taxes, the election can be permanently revoked.

# Claims (IRC Section 501(c))

21.7.2.5.13.3 (01-01-2005) Claims (IRC Section 501(c)) Allow the claim if the TC 070 establishment date is within, or prior to, the quarter for which the claim is filed, and either of the conditions below exists: The claim is filed under one of the exceptions from wages under IRC Section 3121(a). There is a miscalculation of tax on a previously filed return. Do not allow the claim if any of the conditions below exist: A nonprofit organization requests a refund based on "constitutional rights" . It is filed for refund of FICA taxes and the establishment date posted with TC 070 is after the quarter for which it is filed. The Form 8274 election was revoked by IRS (TC 071). The exempt Status under IRC Section 501(c)(3) was revoked (EO Status Code 22) or denied (EO Status Code 70). See IRM 3.13.12.6.18.2, EO Status Codes. Also, see IRM 21.5.3, General Claims Procedures, for Category A issues.

# State and Local Government FICA Under Section 218

21.7.2.5.14 (01-01-2005) State and Local Government FICA Under Section 218 Both the employer and employee share of FICA taxes are collected and reported to IRS by state and local government employers if the employees are covered under Section 218 of the Social Security Act. Section 218 provides a state may enter into a voluntary agreement with the Commissioner of Social Security to provide social security coverage for its employees and the employees of local governments within the state. Employers under Section 218 agreements are identified by Employment Code (EC) "T" . See Section 3.15, Document 6209, IRS Processing Codes and Information, for additional information on Employment Codes. If taxpayer states they are not liable for FICA: If Then 1) EC is "T" Inform taxpayer they are liable for FICA. 2) EC is not"T" Abate any FICA taxes assessed. 3) Taxpayer states they did not have any employees during the period Abate any FICA taxes assessed. 4) TC 150 shows zero tax and no FICA taxes or wages are shown No adjustment action is necessary. 5) There are any discrepancies concerning the agreement Advise taxpayer to contact SSA. If taxpayer writes concerning payments made to the State, advise taxpayer to contact the State.

# Internally Generated Transcripts (IRC Section 218 Coverage)

21.7.2.5.14.1 (01-01-2005) Internally Generated Transcripts (IRC Section 218 Coverage) Transcripts may be received from Accounting which involve Employment Code (EC) "T" or EC "G" issues. If it can be determined taxpayer has Section 218 coverage, take the following action: Change EC to "T" with a filing requirement of "01" , if not already posted on the entity module. After input of the EC, or if EC "T" has already posted, input TC 29X (see IRM 21.5.2.4.17, Posting Delay Code (PDC)) with IRNs 004, 112, and 073 to assess FICA taxes based on the wages shown on the return. Advise taxpayer of action taken. If no wages are reflected on return, correspond with taxpayer to obtain correct wages. If you cannot determine taxpayer coverage, verify with appropriate State Social Security Office whether entity is covered by a Section 218 agreement. See IRM 3.13.12.6.28.11, Employment Code T, for contact information. If Section 218 coverage is elected, process as in (2) above. If Section 218 coverage is not elected, correspond with taxpayer to resolve issues regarding social security coverage status.

# Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans, and Form 5884-D, Employee Retention Credit for Certain Tax-Exempt Organizations Affected by Qualified Disasters

21.7.2.5.15 (04-24-2025) Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans, and Form 5884-D, Employee Retention Credit for Certain Tax-Exempt Organizations Affected by Qualified Disasters This section provides guidance on processing Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans, and Form 5884-D, Employee Retention Credit for Certain Tax-Exempt Organizations Affected by Qualified Disasters. The two forms are for different credits with different eligibility and time period requirements, but have similar handling features: The credits are both claimed after the original employment tax form is filed (i.e., there are no lines on the original forms to claim these credits). Credit Reference Number (CRN) 290 is used to record or change the amount of credit claimed on either form. Note: Form 941 revisions for second quarter 2020 through first quarter 2021 included Line 23 to report amounts of anticipated credit to be claimed later on Form 5884-C. Any figure reported on Line 23 was used for certain COVID-related employment tax credit reconciliation purposes but any figure reported on Line 23 was not used to record the credit on the related tax account. Eligible employers are directed to file Form 5884-C and Form 5884-D at the Ogden campus. Processing of Form 5884-C and Form 5884-D is centralized in Accounts Management (AM) at the Ogden campus. If you receive a Form 5884-C or Form 5884-D and are not part of the centralized team, route the claim as follows: If you receive a paper case, route to: Internal Revenue Service 1973 North Rulon White Blvd Ogden, UT 84404 MS 6700 Lead, Team B2-206 If you receive a case that has already been scanned into CII, reassign to the Ogden Campus IDRS number 0435646714 and notate on AMS/CII "Form 5884-C" or Form 5884-D as appropriate. The Form 5884-C and Form 5884-D processing guidelines found in the IRM subsections which follow are for use by the centralized processing team. They include a general information section and a specific handling section for each of the two forms (Form 5884-C and Form 5884-D), followed by sections containing guidance which applies to the handling of both forms.

# Form 5884-C — General Information

21.7.2.5.15.1 (07-28-2022) Form 5884-C — General Information The VOW to Hire Heroes Act of 2011 expanded the Work Opportunity Credit (WOC) to businesses that hired certain eligible qualified veterans who began work before January 1, 2013. This law also made the Work Opportunity Credit available to certain tax-exempt organizations who hire qualified veterans (see IRC 52(c)(2) and IRC 3111(e)). The initial eligibility period has been legislatively extended multiple times (Section 309 of the American Tax Relief Act of 2012 (ATRA 2012), Section 119 of the Tax Increase Prevention Act of 2014 (TIPA 2014), Section 142, Division Q of the Consolidated Appropriations Act, 2016, Section 143 of the Taxpayer Certainty and Disaster Tax Relief Act of 2019 (P.L. 116-94), and Section 113 of the Taxpayer Certainty and Disaster Relief Act of 2020 (enacted as Division EE of the Consolidated Appropriations Act, 2021 (P.L. 116-260))) and can now apply to qualified veterans who began work on or after November 22, 2011, and before January 1, 2026. Qualified tax-exempt organizations (organizations described in IRC 501(c) and exempt from tax under IRC 501(a)) claim this credit against the employer portion of social security tax on wages paid to all employees during the 1-year period beginning on the day a qualified veteran begins working for the organization. Qualified tax-exempt organizations entitled to a credit under IRC 3111(e) must use Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans, to claim the credit after they file their employment tax return (Form 941, Form 943, or Form 944). The credit cannot be claimed on an original employment tax return or on a Form 94XX. Note: For-profit employers claim the credit as part of the general business credit by filing Form 5884, Work Opportunity Credit, and Form 3800, General Business Credit, with their income tax return. Note: Form 941 revisions for second quarter 2020 through first quarter 2021 included Line 23 to report amounts of anticipated credit to be claimed later on Form 5884-C. Any figure reported on Line 23 was used for certain COVID-related employment tax credit reconciliation purposes but any figure reported on Line 23 was not used to record the credit on the related tax account. Key points relative to the filing of Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans, are as follows: Although the credit under IRC 3111(e) is applied against the employer social security tax liability for the employment tax period in which the credit is claimed, the liability reported on the qualified tax-exempt organization's employment tax return (Form 941, Form 943, or Form 944) is not reduced when that return is filed. Accordingly, the qualified tax-exempt organization should not reduce tax liabilities reported on an original or subsequently filed Schedule B (or other tax liability schedules for Forms 941, 943 and 944) by the amount of any credit claimed on Form 5884-C. The IRS recommends that qualified tax-exempt organizations not reduce their required deposits in anticipation of any credit claimed on Form 5884-C. However, any balance due, including applicable penalties and/or interest, will generally be recomputed when the credit is allowed. See IRM 21.7.2.5.15.5, CRN 290 Impact on Penalties and Interest, for more information. Any credit claimed on Form 5884-C will be refunded to the qualified tax-exempt organization (along with any applicable overpayment interest) unless the IRS corrects the Form 5884-C during processing or the organization owes other taxes (including any amounts of deferred social security taxes recorded with CRN 280 for the same tax period for which the Form 5884-C was filed), penalties, or interest. Form 5884-C is filed separately and should not be attached to any other return filed by the qualified tax-exempt organization. Form 5884-C should be filed after the qualified tax-exempt organization files its employment tax return for the tax period for which the credit is claimed. However, Form 5884-C must be filed within 2 years from the date the tax reported on the employment tax return was paid, or 3 years from the date the original employment tax return was filed, whichever is later. The qualified tax-exempt organization using Form 5884-C must calculate the cumulative credit to which the qualified tax-exempt organization is entitled under IRC 3111(e) for all qualified veterans hired on or after November 22, 2011 and before January 1, 2021. The qualified tax-exempt organization must reduce the cumulative credit by any credits claimed on any Forms 5884-C filed for prior tax periods. The amount of the credit claimed on each Form 5884-C will be limited to the amount of employer social security tax reported on the employment tax return filed by the qualified tax-exempt organization for the employment tax period for which the credit is claimed. Any excess credit (i.e., credit that exceeds the employer social security tax for the period the credit is claimed) may be carried forward and will be included in the qualified tax-exempt organization's cumulative calculation on Form 5884-C for a subsequent tax period to the extent provided in the instructions for Form 5884-C. Note: Due to the cumulative calculation method incorporated into Form 5884-C, it should generally not be necessary for a qualified tax exempt organization to file more than one Form 5884-C per employment tax return period (quarterly or annually). Additional information on this credit may be found in the Form 5884-C instructions, Notice 2012-13, and under the heading "Tax-exempt Employers" on the following irs.gov webpage: Work Opportunity Tax Credit. Qualified tax-exempt organizations are directed in the form instructions to file Form 5884-C at the Ogden campus. Specific Form 5884-C processing requirements are found in IRM 21.7.2.5.15.3, Processing Guidelines Specific to Form 5884-C.

# Form 5884-D — General Information

21.7.2.5.15.2 (07-28-2022) Form 5884-D — General Information As enacted by section 303(d) of the 2020 Disaster Relief Act the employee retention payroll tax credit is now available for qualified tax-exempt organizations in qualified disasters declared after December 31, 2019, for a business inoperable before December 28, 2020 because of damage sustained by reason of the qualified disaster. Form 5884-D, Employee Retention Credit for Certain Tax-Exempt Organizations Affected by Qualified Disasters is used to claim this credit. Caution: Form 5884-D cannot be used to claim the credit discussed in IRM 21.7.2.7.2, Employee Retention Credit (ERC). Qualified disaster area: For purposes of the credit claimed on Form 5884-D, the term qualified disaster area means any area with respect to which a major disaster was declared, but specifically excludes any area where a major disaster has been declared solely by reason of COVID-19. Qualified disaster zone: For purposes of the credit claimed on Form 5884-D, the term qualified disaster zone means that portion of any qualified disaster area determined to warrant individual or individual and public assistance from the federal government under the Robert T. Stafford Disaster Relief and Emergency Assistance Act by reason of the qualified disaster. Note: Specific eligible qualified disaster zones are listed and described in the Instructions for Form 5884-D. Qualified tax-exempt organization: A qualified tax-exempt organization is an organization described in section 501(c) and exempt from tax under section 501(a) that: Conducted its activities in a qualified disaster zone at any time during the incident period of the qualified disaster; and, Was inoperable as a result of damage sustained by reason of that qualified disaster at any time during the period beginning on the first day of the incident period of the qualified disaster and ending on December 27, 2020. Note: An agency or instrumentality of the federal government, or of a state, local, or Indian tribal government, is not a qualified tax-exempt organization unless it is: a) a federally chartered corporation described in section 501(c)(1) and exempt from tax under section 501(a); or b) a federal, state, or local college or university; or c) an entity whose principal purpose or function is providing hospital, or medical care. Eligible employee: An eligible employee is one whose principal place of employment with a qualified tax-exempt organization immediately before the qualified disaster was in the qualified disaster zone. Qualified wages: Qualified wages are generally wages subject to social security tax paid by a qualified tax-exempt organization to an eligible employee beginning on the day the qualified tax-exempt organization's activity in the qualified disaster zone became inoperable and ending on the resumption of significant operations or, if earlier, 150 days after the end of the incident period of the qualified disaster. Caution: Qualified wages do not include any wages that exceed $6,000 for an eligible employee for a calendar quarter (reduced by the amount of qualified wages credited for any prior calendar quarter). With regards to the filing of Form 5884-D to claim the credit: The organization files Form 5884-D after it files its employment tax return for the employment tax period for which it is claiming the credit. The credit cannot be claimed on an original employment tax return or on a Form 94XX. The organization files Form 5884-D for each employment tax period during which qualified wages are paid to an eligible employee. Each Form 5884-D figures the cumulative credit to which the organization is entitled for all periods during which qualified wages are paid to an eligible employee and reduces the amount claimed for the period by any amounts claimed on previously filed Forms 5884-D. A qualified tax-exempt organization filing its own Form 5884-D under its own Employer Identification Number (EIN) (including organizations that file using a payroll service provider or reporting agent) should file one Form 5884-D for the organization per employment tax period. A third-party payer, such as a certified professional employer organization, a non-certified professional employer organization, or an agent under section 3504, who files an aggregate employment tax return and is filing Form 5884-D for a qualified tax-exempt organization claiming the credit should use the third party's name and EIN on Form 5884-D and should enter the qualified tax-exempt organization's name, address, and EIN on Line 1. A third-party payer who files an aggregate employment tax return must file a single separate Form 5884-D for each qualified tax-exempt organization claiming the credit in an employment tax period. The credit claimed on Form 5884-D does not affect the tax liability reported on the organization's employment tax returns. Accordingly, the qualified tax-exempt organization should not reduce tax liabilities reported on an original or subsequently filed Schedule B (or other tax liability schedules for Forms 941, 943 and 944) by the amount of any credit claimed on Form 5884-D. A qualified tax-exempt organization may reduce its required deposits for an employment tax period by the amount of its anticipated credit for that employment tax period. Any balance due, including applicable penalties and/or interest, will generally be recomputed when the credit is allowed. See IRM 21.7.2.5.15.5, CRN 290 Impact on Penalties and Interest, for more information. The IRS will refund the amount shown on line 12 of Form 5884-D, plus any interest that applies, unless the IRS corrects Form 5884-D during processing or the organization owes other taxes (including any amounts of deferred social security taxes recorded with CRN 280 for the same tax period for which the Form 5884-D was filed), penalties, or interest. Note: The amount properly claimed on Form 5884-D is treated as a credit on the first day of the organization's employment tax return period. Additional information on this credit may be found in the Instructions for Form 5884-D. Qualified tax-exempt organizations are directed in the form instructions to file Form 5884-D at the Ogden campus. Specific Form 5884-D processing requirements are found in IRM 21.7.2.5.15.4, Processing Guidelines Specific to Form 5884-D.

# Processing Guidelines Specific to Form 5884-C

21.7.2.5.15.3 (04-24-2025) Processing Guidelines Specific to Form 5884-C Qualified tax-exempt organizations claim the Work Opportunity Credit by filing Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans, after they file their employment tax return (Form 941, Form 943, or Form 944). Reminder: The credit cannot be claimed on an original employment tax return or on a Form 94XX. Note: Form 941 revisions for second quarter 2020 through first quarter 2021 included Line 23 to report amounts of anticipated credit to be claimed later on Form 5884-C. Any figure reported on Line 23 were used for certain COVID-related employment tax credit reconciliation purposes but any figure reported on Line 23 was not used to record the credit on the related tax account. The credit applies to qualified tax-exempt organizations hiring certain eligible unemployed veterans who begin work on or after November 22, 2011, and before January 1, 2026. Note: See IRM 21.7.2.5.15.1, Form 5884-C — General Information, for more information on credit eligibility requirements. The valid forms and tax periods for Form 5884-C claims are as follows: Form 941 (MFT 01): 201112 through 202612 Form 943 (MFT 11): 201112 through 202612 Form 944 (MFT 14): 201112 through 202612 Note: Formally disallow any Form 5884-C filed for an invalid form or tax periods. As appropriate, follow guidance in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures, and issue Letter 105C explaining that the form was filed for an invalid form or tax period. Credit Reference Number (CRN) 290 is used to adjust the Work Opportunity Credit (WOC) claimed on Form 5884-C (as well as the Employee Retention Credit for Certain Tax-Exempt Organizations Affected by Qualified Disasters claimed on Form 5884-D). An increase to the credit will be recorded with a positive CRN 290 and a TC 290 $.00. The CRN 290 input will generate a TC 766. A decrease to the credit will be recorded with a negative CRN 290 and a TC 290 $.00. The CRN 290 input will generate a TC 767. Note: The programming for CRN 290 will permit it to be input separately or with any combination of other TCs, IRNs, or CRNs. However, because of the unique nature of this credit, any allowance or correction of a CRN 290 amount should generally be input as a separate adjustment unless manual penalty and/or interest corrections are required. Caution: CRN 290 was selected to record and adjust the credit claimed on Form 5884-C (and later for the credit claimed on Form 5884-D) due to the immediate effective date of the initial legislation and other administrative reasons. However, by law, the credits recorded with CRN 290 are NOT refundable credits. The maximum credit allowable is limited to the employer portion of social security tax on wages paid to all employees during any period. Forms 5884-C are scanned into Correspondence Imaging Inventory (CII) system with Document Type 941-X, 943-X or 944-X (as appropriate) and Category Code SPC3. The scanning of a Form 5884-C systemically generates a TC 971 AC 010 and sets a -A or E- freeze which must be addressed before closing the case. See IRM 21.5.6.4.2, -A Freeze, and/or IRM 21.5.6.4.9, E- Freeze, for additional information. Reminder: If a TC 971 AC 010 was not systemically posted and there is a TC 150 posted to the module, manually input a TC 971 AC 010 to set the -A freeze and post delay adjustment actions to ensure the resulting freeze is properly released. Use blocking series 15, 18, or 00 as appropriate when adjusting an account per a Form 5884-C. Do not use blocking series 20. Form 5884-C cases are to be worked under the 1005X program. Forms 5884-C requesting a credit (or an increase to credit) are considered claims. Special processing instructions applicable to Forms 5884-C (and Form 5884-D) are provided in the subsections which follow. However, guidance found in IRM 21.5.3, General Claims Procedures, also applies to their handling. Eligibility for the credit claimed on Form 5884-C is limited to qualified tax-exempt organizations (organizations described in IRC 501(c) and exempt from tax under IRC 501(a)). Review the entity and EO submodule data on INOLES and follow the instructions in the table below to determine if the Form 5884-C was filed by an eligible entity and the appropriate handling: If And Then 1) There is an EO submodule The EO status is 18, 19, 20, 22, 70, 71, 72, 97, 98 or 99 Suspend the claim to CAT-A using HQ Reserved 18. 2) There is an EO submodule The EO status is 12 or 34 Formally disallow the claim and send Letter 105C. Use the following text in an open paragraph: "Our records indicate you are not a qualified tax-exempt organization (an organization described in Section 501(c) and exempt from tax under Section 501(a)) and you are therefore not eligible for the credit you claimed on Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans." Also refer to IRM 21.5.3.4.6, No Consideration and Disallowance of Claims and Amended Returns, for additional information. Exception: If there is no TC 150 posted to the tax period for which the Form 5884-C was filed, issue Letter 916C using the text provided above instead of issuing a Letter 105C and "no consider" the claim. 3) There is an EO submodule The EO status is not one of those listed in an earlier row of this table Continue to process the claim. 4) There is no EO submodule The account reflects an Employment Code of W or C Continue to process the claim. 5) There is no EO submodule None of the other rows of this table apply Formally disallow the claim in the same manner as discussed in the second row of this table. In addition to the claims described in the first row of the table in (9) above, send all Forms 5884-C (including amended Forms 5884-C) reflecting a line 11 claim amount of ≡ ≡ ≡ ≡ or more to CAT-A using HQ Reserved 18. Reminder: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Refer to the following table if the Form 5884-C reflects both a claim amount on line 11 and an amount due on line 12: If Then 1) The sum of lines 11 and 12 on Form 5884-C would be a net amount due Continue processing per the paragraphs below treating the net amount due as if it had been reported on line 12 of Form 5884-C. Exception: Contact the IRM author through the Ogden Accounts Management Campus P&A Staff for guidance on resolving the case if there is documentation attached indicating the separate amounts reported as increases and decreases apply to different tax periods. 2) The sum of Lines 11 and 12 on Form 5884-C would be a net credit Continue processing per the paragraphs below treating the net credit as if it had been claimed on line 11 of Form 5884-C. Exception: Contact the IRM author through the Ogden Accounts Management Campus P&A Staff for guidance on resolving the case if there is documentation attached indicating the separate amounts reported as increases and decreases apply to different tax periods. Refer to the subsections referenced below, if applicable, before continuing processing per guidance in the following paragraphs: If there is no TC 150 posted to the account for the tax period the Form 5884-C was filed for, see IRM 21.7.2.5.15.7 , Form 5884-C or Form 5884-D Filed — No TC 150 Posted. If a Form 94X (original or duplicate) return was filed with the Form 5884-C, see IRM 21.7.2.5.15.8 , Form 5884-C or Form 5884-D Filed with Form 94X (Original or Duplicate) Return. If a Form 94XX was filed with the Form 5884-C, see IRM 21.7.2.5.15.9, Form 5884-C or Form 5884-D Filed with Form 94XX. If the Form 5884-C reflects a credit amount on line 11 and there is a previous CRN 290 adjustment on the account for the tax period the Form 5884-C was filed for, see IRM 21.7.2.5.15.10, Form 5884-C or Form 5884-D Filed — Credit Increase, Prior CRN 290. Verify the following items to ensure the Form 5884-C is complete for processing: Verify the entity information (EIN, organization name, and address) entered on the Form 5884-C matches IRS records. Verify there are entries in lines 4a/4b and/or 5a/5b, in lines 6 through 10, and in either line 11 or 12, as appropriate. Verify the Form 5884-C is signed. Form 5884-C signature requirements are the same as for Form 94XX. See IRM 21.7.2.4.4.11, Signature Requirements for Form 94XX Amended/Adjusted Employment Tax Returns, for who may sign and handling guidance for missing signatures. Verify the tax form and tax period for which the Form 5884-C was filed. If blocks on lines 2 and/or 3 are not marked, attempt to determine the correct tax form and tax period by comparing the line 9 entry to posted return data. If not found, make two attempts to contact the taxpayer by phone (if a telephone number is available) for the missing information. Otherwise, if the contact was unsuccessful or if no telephone number is available, reject the Form 5884-C with Letter 916C. Compare the entry on line 9 to the appropriate wage/tips figure(s) (original or as adjusted) on the account. Math verify lines 10 and 11 (only) to ensure the claim amount does not exceed the employer share of social security tax for the claim period. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ After applying the guidance provided above for verifying the form is processable, continue processing Form 5884-C cases as per guidance in either IRM 21.7.2.5.15.6, Form 5884-C, or Form 5884-D, Filed — TC 150 Posted, or IRM 21.7.2.5.15.11, CRN 290 Credit Reversals — Form 5884-C, Line 12 or Form 5884-D, Line 13, as appropriate.

# Processing Guidelines Specific to Form 5884-D

21.7.2.5.15.4 (04-24-2025) Processing Guidelines Specific to Form 5884-D Qualified tax-exempt organizations claim the qualified disaster related employee retention credit by filing Form 5884-D, Employee Retention Credit for Certain Tax-Exempt Organizations Affected by Qualified Disasters, after they file their employment tax return (Form 941, Form 943, or Form 944). Reminder: The credit cannot be claimed on an original employment tax return or on a Form 94XX. The credit applies to qualified tax-exempt organizations paying qualifying wages to certain eligible employees in non-COVID-19 related qualified disaster zones. Note: See IRM 21.7.2.5.15.2, Form 5884-D — General Information, and the Instructions for Form 5884-D for more information on credit eligibility requirements. The valid forms and tax periods for Form 5884-D claims are as follows: Form 941 (MFT 01): 201912 and subsequent Form 943 (MFT 11): 201912 and subsequent Form 944 (MFT 14): 201912 and subsequent Note: Formally disallow any Form 5884-D filed for an invalid form or tax period. As appropriate, follow guidance in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures, and issue Letter 105C explaining that the form was filed for an invalid form or tax period. Credit Reference Number (CRN) 290 is used to adjust the Employee Retention Credit for Certain Tax-Exempt Organizations Affected by Qualified Disasters (as well as the Work Opportunity Credit (WOC) claimed on Form 5884-C). An increase to the credit will be recorded with a positive CRN 290 and a TC 290 $.00. The CRN 290 input will generate a TC 766. A decrease to the credit will be recorded with a negative CRN 290 and a TC 290 $.00. The CRN 290 input will generate a TC 767. Note: The programming for CRN 290 will permit it to be input separately or with any combination of other TCs, IRNs, or CRNs. However, because of the unique nature of this credit, any allowance or correction of a CRN 290 amount should generally be input as a separate adjustment unless manual penalty and/or interest corrections are required. Caution: CRN 290 was selected to record and adjust the credit claimed on Form 5884-D (similar as for the credit claimed on Form 5884-C) due to the immediate effective date of the legislation and other administrative reasons. However, by law, this credit is NOT a refundable credit. The maximum credit allowable is limited to the employer portion of social security tax on wages paid to all employees during any period. Forms 5884-D are scanned into Correspondence Imaging Inventory (CII) system with Document Type 941-X, 943-X or 944-X (as appropriate) and Category Code SPC3. The scanning of a Form 5884-D will systemically generate a TC 971 AC 010 and set a -A or E- freeze which must be addressed before closing the case. See IRM 21.5.6.4.2, -A Freeze, and/or IRM 21.5.6.4.9, E- Freeze, for additional information. Reminder: If a TC 971 AC 010 was not systemically posted and there is a TC 150 posted to the module, manually input a TC 971 AC 010 to set the -A freeze and post delay adjustment actions to ensure the resulting freeze is properly released. Use blocking series 15, 18, or 00 as appropriate when adjusting an account per a Form 5884-D. Do not use blocking series 20. Form 5884-D cases are to be worked under the 1005X program. Forms 5884-D requesting a credit (or an increase to credit) are considered claims. Special processing instructions applicable to Form 5884-D (and Form 5884-C) are provided in the following subsections. However, guidance found in IRM 21.5.3, General Claims Procedures, also applies to their handling. Eligibility for the credit claimed on Form 5884-D is limited to qualified tax-exempt organizations (organizations described in IRC 501(c) and exempt from tax under IRC 501(a)). Review the entity and EO submodule data on INOLES and follow the instructions in the table below to determine if the Form 5884-D was filed by an eligible entity and the appropriate handling: If And Then 1) There is an EO submodule The EO status is 18, 19, 20, 22, 70, 71, 72, 97, 98, or 99 Suspend the claim to CAT-A using HQ Reserved 18. 2) There is an EO submodule The EO status is 12 or 34 Formally disallow the claim and send Letter 105C. Use the following text in an open paragraph: "Our records indicate you are not a qualified tax-exempt organization (an organization described in Section 501(c) and exempt from tax under Section 501(a)) and you are therefore not eligible for the credit you claimed on Form 5884- D, Employee Retention Credit for Certain Tax-Exempt Organizations Affected by Qualified Disasters." Also refer to IRM 21.5.3.4.6, No Consideration and Disallowance of Claims and Amended Returns, for additional information. Exception: If there is no TC 150 posted to the tax period for which the Form 5884-D was filed, issue Letter 916C using the text provided above instead of issuing a Letter 105C and "no consider" the claim. 3) There is an EO submodule The EO status is not one of those listed in an earlier row of this table Continue to process the claim. 4) There is no EO submodule The account reflects an Employment Code of A, C, F, G, I, Q, T, W or Z Continue to process the claim. 5) There is no EO submodule None of the other rows of this table apply Formally disallow the claim in the same manner as discussed in the second row of this table. In addition to the claims described in the first row of the table in (10) above, send all Forms 5884-D (including amended Forms 5884-D) reflecting a line 12 claim amount of ≡ ≡ ≡ ≡ ≡ ≡ ≡ or more to CAT-A using HQ Reserved 18. Reminder: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Refer to the following table if the Form 5884-D reflects both a claim amount on line 12 and an amount due on line 13: If Then 1) The sum of lines 12 and 13 on Form 5884-D would be a net amount due Continue processing per the paragraphs below treating the net amount due as if it had been reported on line 13 of Form 5884-D. Exception: Contact the IRM author through the Ogden Accounts Management Campus P&A Staff for guidance on resolving the case if there is documentation attached indicating the separate amounts reported as increases and decreases apply to different tax periods. 2) The sum of Lines 12 and 13 on Form 5884-D would be a net credit Continue processing per the paragraphs below treating the net credit as if it had been claimed on line 12 of Form 5884-D. Exception: Contact the IRM author through the Ogden Accounts Management Campus P&A Staff for guidance on resolving the case if there is documentation attached indicating the separate amounts reported as increases and decreases apply to different tax periods. Refer to the subsections referenced below, if applicable, before continuing processing per guidance in the following paragraphs: If there is no TC 150 posted to the account for the tax period the Form 5884-D was filed for, see IRM 21.7.2.5.15.7 , Form 5884-C or Form 5884-D Filed — No TC 150 Posted. If a Form 94X (original or duplicate) return was filed with the Form 5884-D, see IRM 21.7.2.5.15.8 , Form 5884-C or Form 5884-D Filed with Form 94X (Original or Duplicate) Return. If a Form 94XX was filed with the Form 5884-D, see IRM 21.7.2.5.15.9, Form 5884-C or Form 5884-D Filed with Form 94XX. If the Form 5884-D reflects a credit amount on line 12 and there is a previous CRN 290 adjustment on the account for the tax period the Form 5884-D was filed for, see IRM 21.7.2.5.15.10 , Form 5884-C or Form 5884-D Filed — Credit Increase, Prior CRN 290. Verify the following items to ensure the Form 5884-D is complete for processing: Verify the entity information (EIN, organization name, and address) entered on the Form 5884-D matches IRS records. Verify the Form 5884-D is signed. Form 5884-D signature requirements are the same as for Form 94XX. See IRM 21.7.2.4.4.11, Signature Requirements for Form 94XX Amended/Adjusted Employment Tax Returns, for who may sign and handling guidance for missing signatures. Verify either box 2a or box 2b is checked "Yes" : • If neither box is checked"Yes" , make two attempts to contact the taxpayer by phone (if a telephone number is available) for the missing information. Otherwise, if the contact was unsuccessful or if no telephone number is available, reject the Form 5884-D with Letter 916C and indicate in the letter that an entry on Line 2a and/or 2b is required for form processing purposes. • If both boxes are checked"No," "no consider" the Form 5884-D following IRM 21.5.3.4.6.3, No Consideration Procedures, and indicate in Letter 916C that based on their entries on boxes 2a and 2b that they are not eligible to claim the credit. Verify information has been entered in line 3 as follows: • If there is an entry in column a, verify it corresponds to a qualified disaster zone listed in the Instructions for Form 5884-D. • If there is a valid entry in column a, but no entry in column b, continue processing the Form 5884-D. • If there is an entry in column b but no entry in column a, review the list of qualified disaster zones in the Instructions for Form 5884-D. If the correct qualified disaster zone can be determined, continue processing the Form 5884-D. If not, make two attempts to contact the taxpayer by phone (if a telephone number is available) for the missing information. Otherwise, if the contact was unsuccessful or if no telephone number is available, reject the Form 5884-D with Letter 916C and indicate in the letter that entries in all three columns of line 3 on Form 5884-D are required for form processing purposes. • If there is no entry in column b and no entry in column a, make two attempts to contact the taxpayer by phone (if a telephone number is available) for the missing information. Otherwise, if the contact was unsuccessful or if no telephone number is available, reject the Form 5884-D with Letter 916C and indicate in the letter that entries in all three columns of line 3 on Form 5884-D are required for form processing purposes. • If there is no entry in column c, make two attempts to contact the taxpayer by phone (if a telephone number is available) for the missing information. Otherwise, if the contact was unsuccessful or if no telephone number is available, reject the Form 5884-C with Letter 916C and indicate in the letter that entries in all three columns of line 3 on Form 5884-D are required for form processing purposes. Verify the tax form and tax period for which the Form 5884-D was filed. • If blocks on lines 4 and/or 5 are not marked, attempt to determine the correct tax form and tax period by comparing the Line 10 entry to posted return data. If not found, make two attempts to contact the taxpayer by phone (if a telephone number is available) for the missing information. Otherwise, if the contact was unsuccessful or if no telephone number is available, reject the Form 5884-D with Letter 916C. Verify there are entries in Lines 6a and 6b, Line 7, and Lines 10, 11a, and 11d, and in either Line 12 or Line 13, as appropriate (Lines 8 and 9 are only required to account for carryforwards and may not be completed on every Form 5884-D). If there are missing required entries that cannot be mathematically perfected, make two attempts to contact the taxpayer by phone (if a telephone number is available) for the missing information. Otherwise, if the contact was unsuccessful or if no telephone number is available, reject the Form 5884-D with Letter 916C and indicate in the letter which required Form 5884-D entries were missing. Multiply the number entered on Line 7 by $6,000. Multiply the lesser (smaller) of the amount reported on Line 6a or the amount calculated in Step 7 above by 40% (0.40). Use the lesser (smaller) of this calculated amount or the amount entered on Line 6b for continued verification in Step 9 and Step 10 below. If there is an entry on Line 8, math verify Line 9 or Line 13 as appropriate. Compare the entry on Line 10 to the appropriate wage/tips figure(s) (original or as adjusted) on the account. Math verify Lines 9, 10, 11a, 11d and 12 to ensure any claim amount does not exceed the employer share of social security tax for the claim period. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ After applying the guidance provided above for verifying the form is processable, continue processing Form 5884-D cases as per guidance in either IRM 21.7.2.5.15.6, Form 5884-C, or Form 5884-D Filed - TC 150 Posted, or IRM 21.7.2.5.15.7, CRN 290 Credit Reversals — Form 5884-C, Line 12 or Form 5884-D, Line 13, as appropriate.

# CRN 290 Impact on Penalties and Interest

21.7.2.5.15.5 (04-24-2025) CRN 290 Impact on Penalties and Interest FTD penalty: The credits claimed on Form 5884-C and Form 5884-D do not reduce the tax liability reported on the associated employment tax return. However, the TC 766 / CRN 290 credit is applied by Master File as a credit against tax liability using the first day of the tax period as the credit effective date for FTD penalty purposes (only). Any previously assessed FTD penalty will be recomputed on that basis when a CRN 290 credit is allowed. This recomputation will generally occur systemically unless the FTD penalty was previously restricted. Note: The employer filing Form 5884-C or Form 5884-D should not reduce tax liabilities reported on an original or subsequently filed Schedule B (or other tax liability schedules for Forms 941, 943 and 944) by the amount of any credit claimed on Form 5884-C or Form 5884-D. FTF penalty: For purposes of any late filing penalty, the CRN 290 credit is considered a timely credit as of the return due date for the tax period to which it is applied. Similarly, a reversal of the credit is considered a reduction in timely credits as of the return due date. Accordingly, the computer will generally recompute the FTF penalty systemically with CRN 290 adjustments unless the penalty was previously restricted. FTP penalty: For FTP penalty purposes, allowances and reversals of a CRN 290 credit will be treated in the same manner as an increase or decrease to tax liability even though we are not actually increasing or decreasing recorded tax when making these adjustments. When allowing a CRN credit (or increasing the amount allowed), the computer will accurately compute FTP if there has not been an additional tax assessment made after the original return posted on the account. However, if there has been a previous tax increase on the account, or if the credit is being reversed in part or full, the FTP penalty will generally need to be manually computed and restricted as discussed in (2) of IRM 21.7.2.5.15.6, CRN 290 Credit Increase — Form 5884-C, Line 11 or Form 5884-D, Line 12, and IRM 21.7.2.5.15.11, CRN 290 Credit Reversals — Form 5884-C, Line 12 or Form 5884-D, Line 13. Overpayment interest: For the purposes of calculating any applicable overpayment interest, a CRN 290 credit will be considered to be available as of the return due date for the tax period for which the Form 5884-C or Form 5884-D was filed. Note: The 45-day interest rule for claims and amended returns applies to Forms 5884-C and Forms 5884-D claiming (or increasing) a CRN 290 credit. See (10) through (13) of IRM 21.5.3.4, General Claims Procedures, and IRM 20.2.4.8.3.2, 45-Day Rule and Amended Returns and Claims, OBRA 1993, for more information, including instructions for inputting the date the processable claim was received by the IRS as the Amended Claims Date on ADJ54. Underpayment interest: Any applicable underpayment interest arising from the reversal of a CRN 290 credit, or arising from an amount reported due on line 12 of Form 5884-C or line 13 of Form 5884-D, will be charged from the return due date of the tax period for which the Form 5884-C or Form 5884-D was filed. Note: Because Form 5884-C and Form 5884-D are not adjusted returns, the regulations which allow for interest-free payment periods for underpayments reported on Forms 94XX do not apply to reversals of the CRN 290 credit or to amounts reported as due on line 12 of Form 5884-C or on line 13 of Form 5884-D. Do not input these adjustments with a TC 298.

# Form 5884-C or Form 5884-D Filed — TC 150 Posted

21.7.2.5.15.6 (04-24-2025) Form 5884-C or Form 5884-D Filed — TC 150 Posted After considering all verification requirements in IRM 21.7.2.5.15.3, Processing Guidelines Specific to Form 5884-C, or IRM 21.7.2.5.15.4, Processing Guidelines Specific to Form 5884-D, follow the procedures provided below to process a Form 5884-C showing a claim amount on Line 11 or a Form 5884-D showing a claim amount on line 12 when there is a TC 150 posted to the tax account for which the Form 5884-C or Form 5884-D was filed. Input a TC 290 $.00 with CRN 290, using blocking series 15, 18, or 00, as appropriate, for the allowable claim amount determined in IRM 21.7.2.5.15.3, Processing Guidelines Specific to Form 5884-C, or IRM 21.7.2.5.15.4, Processing Guidelines Specific to Form 5884-D. Also, include the appropriate Amended Claims Date with the adjustment. Special FTP penalty procedures when allowing CRN 290 credits: See (3) in IRM 21.7.2.5.15.11, CRN 290 Credit Reversals — Form 5884-C, Line 12 or Form 5884-D, Line 13. If an FTP penalty was charged in association with an additional tax assessment made after the original return posted, special procedures must be applied when allowing a CRN 290 credit. The procedures in the following table apply to CRN 290 credit increases where an FTP penalty has previously been assessed ONLY on additional tax assessment(s) after the original return has posted: If Then 1) The CRN 290 amount being allowed is equal to or exceeds the tax assessment amount to which the FTP applied Input an adjustment to reverse the full amount of FTP that posted in association with the tax assessment amount with a restricting TC 271 transaction along with the appropriate CRN 290 amount being allowed (and the appropriate Amended Claims Date). Interest will be accurately recomputed by the computer. 2) The CRN 290 amount being allowed is less than the tax assessment amount to which the FTP penalty applied Manually recompute the amount of FTP due by treating the CRN 290 amount as a reduction to the tax assessment (for calculation purposes only). Input an adjustment to reduce or reverse (as appropriate) the assessed FTP penalty with a restricting TC 271 transaction along with the appropriate CRN 290 amount being allowed (and the appropriate Amended Claims Date). Interest will be accurately recomputed by the computer. Example: The IRS receives a processable Form 5884-C for the second quarter of 2024 reporting a credit amount of $500 on line 11. The account reflects a posted TC 150 and there are no subsequent adjustments to tax. To record the $500 credit increase in this example, a TC 290 for $0.00 would be input with a CRN 290 transaction for $500. No TC 27X would be input with the CRN 290 adjustment. Because there are no subsequent tax assessments made after the original return posted, the computer will correctly recompute the FTP penalty and interest. Example: The IRS receives a processable Form 5884-C for the fourth quarter of 2024 reporting a credit amount of $5000 on line 11. The account reflects a posted TC 150 for $30,000 which was timely paid. A subsequent TC 290 tax increase for $4000 has posted to the account. The tax increase was unpaid and a FTP penalty was assessed on the additional tax assessment. The current FTP penalty posted to the account, including accruals, is $50. To record the $5000 credit increase in this example, a TC 290 for $0.00 would be input with a CRN 290 for $5000 and a TC 271 for -$50. Because FTP has been assessed on only the additional tax assessment and the credit increase amount exceeds the tax increase amount associated with the FTP penalty, the FTP penalty can be removed in full with the credit increase adjustment. Example: The IRS receives a processable Form 5884-C for the first quarter of 2024 reporting a credit amount of $3000 on line 11. The account reflects a posted TC 150 for $30,000 which was timely paid. A subsequent TC 290 tax increase for $4000 has posted to the account. The tax increase was not paid within 21 days of the 23C date of the tax increase and remains unpaid. A FTP penalty was assessed on the additional tax assessment. The credit amount reported is less than the amount of the additional tax assessment associated with the FTP penalty, so the FTP penalty must be manually recomputed. Applying the CRN 290 credit amount of $3000 as a reduction to the tax assessment, we determine the new unpaid amount of the additional tax assessment is $1000. The FTP penalty is manually recomputed on the amount of $1000. To record the $3000 credit in this example, a TC 290 for $0.00 would be input with a CRN 290 for $3000 and a TC 271 to adjust the FTP penalty to the manually recomputed amount. See IRM 20.1.2.3, Failure to File a Tax Return or to Pay Tax — IRC 6651, and IRM 20.1.2.3.8.8, IDRS Command Code COMPA, for more information on FTP penalty computation. Note: Contact the IRM author through the Ogden Accounts Management Campus P&A Staff for guidance in the event that an unusual credit increase situation is encountered which the special instructions provided above do not address. Reminder: The procedures above do not apply to FTP penalty assessments associated with the original return. The computer will generally accurately recompute penalties and interest associated with original return filing when allowing a CRN 290 credit unless penalties and/or interest were previously restricted. See IRM 21.7.2.5.15.5, CRN 290 Impact on Penalties and Interest, for more information.

# Form 5884-C or Form 5884-D Filed — No TC 150 Posted

21.7.2.5.15.7 (04-24-2025) Form 5884-C or Form 5884-D Filed — No TC 150 Posted A Form 5884-C or Form 5884-D may be received for a tax period for which no TC 150 is posted. In such cases, research the taxpayer's account for the missing tax return. This research should include reviewing the taxpayer's account for misapplied tax returns and unposted or rejected tax returns. If a missing return is located, take action to process or reprocess it to the proper tax account, as appropriate, before processing the Form 5884-C or Form 5884-D following guidelines in IRM 21.7.2.5.15.3, Processing Guidelines Specific to Form 5884-C, or IRM 21.7.2.5.15.4, Processing Guidelines Specific to Form 5884-D, as appropriate. Note: If Submission Processing receives a Form 5884-C or Form 5884-D with a Form 94X for the same tax period, Submission Processing will process the original return, notate on the Form 5884-C or Form 5884-D that it was received with an original return, and route the Form 5884-C or Form 5884-D with a copy of the Form 94X to be scanned into CII and assigned to the designated AM unit for handling. If the missing return is not located, handle as follows: If Then 1) The Form 5884-C or Form 5884-D was intended for another tax period for which there is a posted TC 150 Follow procedures in IRM 21.7.9.4.10.2, TC 976 Return Posted to Incorrect TIN/Tax Period, Account for Which It was Intended Contains the Original Return (TC 150), to resolve the E- freeze. Process the Form 5884-C or Form 5884-D on the correct account as appropriate. 2) The Form 5884-C or Form 5884-D was received with a Form 94XX See IRM 21.7.2.5.15.9, Form 5884-C or Form 5884-D Filed with Form 94XX. 3) Less than 60 days have passed from the return due date for the tax period for which the adjusted return was filed Monitor the account for the posting of the employment tax return through the 60th day following the return due date. If the original return posts, process the Form 5884-C or Form 5884-D as per handling instructions in IRM 21.7.2.5.15.3, Processing Guidelines Specific to Form 5884-C, or IRM 21.7.2.5.15.4, Processing Guidelines Specific to Form 5884-D, as appropriate. 4) More than 60 days have passed since the return due date for the tax period for which the adjusted return was filed Reject the Form 5884-C or Form 5884-D using Letter 916C and include the following text in an open paragraph: We are unable to process your Form [specify Form 5884-C or Form 5884-D] because we have no record of receiving your original Form [enter form number] for [enter tax period]. If liable for employment taxes, you may resubmit your Form [specify Form 5884-C or Form 5884-D] for our consideration after you file your original employment tax return. Reminder: Any E- freeze set on these cases must be resolved prior to closing the case. If rejecting the Form 5884-C or Form 5884-D, release the E- freeze by inputting a TC 971 Action Code 002. See IRM 21.5.6.4.9, E- Freeze. Caution: When rejecting documents, extreme care must be taken to ensure that only the material relative to the taxpayer(s) to which the correspondence is addressed is enclosed in the envelope. See IRM 21.3.3.4.24, Breaches of Personally Identifiable Information (PII) Caused by Manual Stuffing Errors, for additional information.

# Form 5884-C or Form 5884-D Filed with Form 94X (Original or Duplicate) Return

21.7.2.5.15.8 (04-24-2025) Form 5884-C or Form 5884-D Filed with Form 94X (Original or Duplicate) Return Taxpayers are instructed to file Form 5884-C and Form 5884-D separately from the associated employment tax returns. However, some taxpayers may file a Form 5884-C or Form 5884-D with an original or duplicated filed Form 94X despite the instructions. If Submission Processing receives a Form 5884-C or Form 5884-D with a Form 94X for the same tax period, Submission Processing will process the original return, notate on the Form 5884-C or Form 5884-D that it was received with an original return, and route the Form 5884-C or Form 5884-D with a copy of the Form 94X to be scanned into CII and assigned to the designated AM unit for handing. If a Form 5884-C or Form 5884-D is received with a Form 94X attached, handle as follows: If And Then 1) There is no TC 150 posted to the tax period for which the Form 5884-C or Form 5884-D was filed Follow procedures in IRM 21.7.2.5.15.7, Form 5884-C or Form 5884-D Filed — No TC 150 Posted. 2) There is a posted TC 150 Follow normal adjustment procedures for duplicate filed Forms 94X to process the Form 94X received with the Form 5884-C or Form 5884D, as appropriate. Process the Form 5884-C or Form 5884-D per IRM 21.7.2.5.15.3, Processing Guidelines Specific to Form 5884-C, or IRM 21.7.2.5.15.4, Processing Guidelines Specific to Form 5884-D, as appropriate. Exception: If unable to process the Form 94X and there is an indication a tax adjustment is necessary for the tax period the Form 5884-C or Form 5884-D was filed for, reject the Form 5884-C or Form 5884-D. Explain that we are unable to process their form because the Form 94X does not match our records. Advise the taxpayer to refile the Form 5884-C or Form 5884-D when they take the needed action to resolve the Form 94X issue. Example: A Form 5884-C is filed with a Form 941 reflecting a tax decrease. It is determined the Form 941 is to be rejected and a Form 941X requested from the taxpayer following normal processing procedures. Reject both the Form 941 and the Form 5884-C. In your letter to request the Form 941X, advise the taxpayer we are unable to process their Form 5884-C because the Form 941 does not match our records and to refile their Form 5884-C separately or with the Form 941X requested. Reminder: Procedures in IRM 21.5.3.4.3, Tax Decrease and Statute Consideration, must be followed if the Form 5884-C or Form 5884-D was received within 180 days of the Refund Statute Expiration Date (RSED). Caution: When rejecting documents, extreme care must be taken to ensure that only the material relative to the taxpayer(s) to which the correspondence is addressed is enclosed in the envelope. See IRM 21.3.3.4.24, Breaches of Personally Identifiable Information (PII) Caused by Manual Stuffing Errors, for additional information.

# Form 5884-C or Form 5884-D Filed with Form 94XX

21.7.2.5.15.9 (04-24-2025) Form 5884-C or Form 5884-D Filed with Form 94XX Taxpayers are instructed to file Form 5884-C and Form 5884-D separately from the associated employment tax returns. However, some taxpayers may file a Form 5884-C or Form 5884-D with a Form 94XX despite the instructions. If a Form 5884-C or Form 5884-D is received with a Form 94XX, handle as follows: If Then 1) There is no TC 150 posted Follow the procedures in IRM 21.7.2.4.4.6, Adjusted Employer's Tax Return or Claim for Refund Return Filed — No TC 150 Posted. Once a TC 150 is posted and any tax changes reported on the Form 94XX are processed, continue processing the Form 5884-C or Form 5884-D as per procedures in IRM 21.7.2.5.15.3, Processing Guidelines Specific to Form 5884-C or IRM 21.7.2.5.15.4, Processing Guidelines Specific to Form 5884-D, as appropriate. 2) The Form 94XX reflects no tax data or reflects only the credit claimed on the Form 5884-C or Form 5884-D Process the Form 5884-C or Form 5884-D as per procedures in IRM 21.7.2.5.15.3, Processing Guidelines Specific to Form 5884-C or IRM 21.7.2.5.15.4, Processing Guidelines Specific to Form 5884-D, as appropriate. 3) The Form 94XX reflects a tax increase Continue processing the Form 5884-C or Form 5884-D as per procedures in IRM 21.7.2.5.15.3, Processing Guidelines Specific to Form 5884-C or IRM 21.7.2.5.15.4, Processing Guidelines Specific to Form 5884-D, as appropriate. However, use Hold Code 1 if allowing the CRN 290 credit or if there are other credits on the account needed to pay the Form 94XX tax increase. Process the Form 94XX using applicable procedures. However, use a post delay code of 1 cycle with this adjustment. Note: Because of the unique nature of this credit, CRN 290 adjustments should generally NOT be combined with other tax or credit adjustments in a single ADJ54 input. 4) The Form 94XX reflects a tax decrease Process the Form 94XX using applicable procedures. However, use Hold Code 1 if Line 12 of Form 5884-C or Line 13 of Form 5884-D reflects an amount due. Continue processing the Form 5884-C or Form 5884-D as per procedures in IRM 21.7.2.5.15.3, Processing Guidelines Specific to Form 5884-C or IRM 21.7.2.5.15.4, Processing Guidelines Specific to Form 5884-D. However, use a post delay code of 1 cycle with this adjustment. Note: Because of the unique nature of this credit, CRN 290 adjustments should generally NOT be combined with other tax or credit adjustments in a single ADJ54 input.

# Form 5884-C or Form 5884-D Filed - Credit Increase, Prior CRN 290

21.7.2.5.15.10 (04-24-2025) Form 5884-C or Form 5884-D Filed - Credit Increase, Prior CRN 290 In some rare instances, employers may file a subsequent Form 5884-C or Form 5884-D for a tax period they have previously claimed a credit on. Follow the table below if a Form 5884-C or Form 5884-D reporting a claim amount is received and there is a previous CRN 290 adjustment on the account: If Then 1) The current form type being processed is different than the previous form type processed (i.e., previous Form 5884-C processed, current Form 5884-D being processed, or vice versa) Contact the IRM author through the Ogden Accounts Management Campus P&A Staff for guidance on resolving the case. 2) The previous CRN 290 credit on the tax period for which the Form 5884-C or Form 5884-D was filed is for the same amount as shown on the current form Treat as a previous action situation. Input a TC 290 $.00 to release the -A freeze. 3) The previous CRN 290 credit on the tax period for which the Form 5884-C or Form 5884-D was filed is less than the amount shown on the current form (i.e., the Form 5884-C or Form 5884-D reflects an increase to the credit claimed) Treat the difference between the net posted CRN 290 amount and the amount claimed on line 11 of Form 5884-C or line 12 of Form 5884-D as if it had been reported on line 11 of Form 5884-C or Line 12 of Form 5884-D and continue processing per procedures in IRM 21.7.2.5.15.3, Processing Guidelines Specific to Form 5884-C or IRM 21.7.2.5.15.4, Processing Guidelines Specific to Form 5884-D, as appropriate. 4) The previous CRN 290 credit on the tax period for which the Form 5884-C or Form 5884-D was filed is more than the amount shown on the current form (i.e., the Form 5884-C or Form 5884-D reflects a decrease to the credit claimed) Treat the difference between the net posted CRN 290 amount and the amount claimed on line 11 of Form 5884-C or line 12 of Form 5884-D as if it had been reported on line 12 of Form 5884-C or Line 13 of Form 5884-D and continue processing per procedures in IRM 21.7.2.5.15.3, Processing Guidelines Specific to Form 5884-C or IRM 21.7.2.5.15.4, Processing Guidelines Specific to Form 5884-D, as appropriate.

# CRN 290 Credit Reversals — Form 5884-C, Line 12 or Form 5884-D, Line 13

21.7.2.5.15.11 (04-24-2025) CRN 290 Credit Reversals — Form 5884-C, Line 12 or Form 5884-D, Line 13 In some rare instances, eligible employers may report a balance due on line 12 of Form 5884-C or line 13 of Form 5884-D. These cases require special handling due to programming limitations associated with use of CRN 290 to administer this credit. Caution: An unpostable will result if a CRN 290 credit reversal is input for more than the net posted CRN 290 credit on a tax module. After considering all verification requirements in either (as appropriate) IRM 21.7.2.5.15.3, Processing Guidelines Specific to Form 5884-C, or IRM 21.7.2.5.15.4, Processing Guidelines Specific to Form 5884-D, follow the procedures provided in the table below to process a Form 5884-C showing an amount due on line 12 or a Form 5884-D showing an amount due on Line 13. If Then 1) The amount reported due on line 12 of Form 5884-C or line 13 of Form 5884-D is less than or equal to the net previously posted CRN 290 credit on the tax period for which the Form 5884-C or Form 5884-D was filed. Input a CRN 290 transaction to reverse the amount reported on line 12 of Form 5884-C or line 13 of Form 5884-D. See (4) and (5) below for required actions with regards to penalties and interest. 2) The amount reported due on line 12 of Form 5884-C or line 13 of Form 5884-D is more than the net previously posted (non-zero) CRN 290 credit on the tax period for which the Form 5884-C or Form 5884-D was filed. Input a TC 290 $.00 with a CRN 290 transaction to fully reverse the net posted (non-zero) CRN 290 on the tax period for which the Form 5884-C or Form 5884-D was filed. See (4), (5), and (6) below for required actions with regards to penalties and interest. Determine the remaining amount of credit reversal to be addressed by subtracting the amount reversed in step 1) from the amount shown on line 12 of Form 5884-C or line 13 of Form 5884-D. Address the remaining amount of credit to be reversed by following the procedures provided in the next row of this table. 3) There is no previously posted net CRN 290 credit on the period for which the Form 5884-C or Form 5884-D was filed Review the employment tax accounts for the tax periods immediately preceding the tax period shown on the Form 5884-C or Form 5884-D. Locate the most recent tax period reflecting the allowance of a CRN 290 credit. Input a TC 290 $.00 with a CRN 290 to reverse the previously posted credit allowance for the amount shown on line 12 of the Form 5884-C or line 13 of Form 5884-D. See (4) and (6) below for required actions with regards to penalties and interest. Exception: If the amount on line 12 of Form 5884-C or line 13 of Form 5884-D exceeds the CRN credit allowed on the most recent tax period, reverse the entire posted CRN 290 on that most recent tax period. Note: If the taxpayer paid the amount due on line 12 of Form 5884-C or line 13 of Form 5884-D, transfer credit as appropriate to the tax period in which the CRN 290 credit reversal was actually made. If the full amount reported on line 12 of Form 5884-C or line 13 of Form 5884-D has not been fully accounted for by credit reversal(s), repeat steps 1) and 2) until the full amount reported on line 12 of Form 5884-C or line 13 of Form 5884-D has been accounted for by credit reversals. Special FTP penalty and underpayment interest procedures when reversing CRN 290 credits: Due to systemic limitations associated with use of CRN 290 for administering this credit, the computer is generally unable to accurately calculate the FTP penalty or underpayment interest when CRN 290 credits are reversed in part or whole. See (3) and (5) in IRM 21.7.2.5.15.5CRN 290 Impact on Penalties and Interest. The special procedures in the tables in (5) and (6) below must be followed when reversing CRN 290 credits as per the guidance in (3) above. Apply the following special procedures for FTP penalty and underpayment interest when reversing a CRN 290 on the same tax period for which the Form 5884-C or Form 5884-D was filed: If And Then 1) The CRN 290 amount to be reversed has been paid by the time the adjustment is being input Input the appropriate CRN 290 reversal with a TC 270 for $.00 and close the case. Accurate underpayment interest will be systemically generated with the adjustment. 2) The CRN 290 amount to be reversed has not been paid by the time the adjustment is being input Input the appropriate CRN 290 reversal with a TC 270 for $.00. Accurate underpayment interest will be systemically generated with the adjustment. Suspend the case for 60 days and monitor the account for the posting of a payment. Continue processing the case as per the guidance in the last three rows of this table. 3) The case was suspended as per instructions in the second row of this table Payment is received within 21 days (10 days for amounts of $100,000 or more) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ of the 23c date for the adjustment No additional penalties or interest are due. Close the case. 4) The case was suspended as per instructions in the second row of this table Payment is received but not within 21 days (10 days for amounts of $100,000 or more) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ of the 23c date for the adjustment Compute FTP on the amount of the CRN 290 credit reversal from the 23c date of the previous adjustment to the date of payment. Input an adjustment with a TC 270 using the amounts computed in step 1). Accurate underpayment interest will be systemically generated with the adjustment. Close the case. 5) The case was suspended as per instructions in the second row of this table Payment is not received by the close of the 60 day suspense period. Compute FTP on the amount of the CRN 290 credit reversal from the 23c date of the previous adjustment to the 23c date for the adjustment to be input in step 2) below. Input an adjustment with a TC 270 using the amount computed in step 1) above. Accurate underpayment interest will be systemically generated with the adjustment. Close the case. Apply the following special procedures for FTP penalty and underpayment interest when reversing a CRN 290 on a tax period earlier than the tax period for which the Form 5884-C or Form 5884-D was filed: If And Then 1) The CRN 290 amount to be reversed has been paid by the time the adjustment is being input Compute the underpayment interest due on the amount of the credit reversal from the return due date of the tax period for which the Form 5884-C or Form 5884-D was filed to the date of payment. Input the appropriate CRN 290 reversal with a TC 340 for the amount computed in step 1) and a TC 270 for $.00. Close the case. 2) The CRN 290 amount to be reversed has not been paid by the time the adjustment is being input Compute the underpayment interest due on the amount of the credit reversal from the return due date of the tax period for which the Form 5884-C or Form 5884-D was filed to the 23c date of your adjustment. Input the appropriate CRN 290 reversal with a TC 340 for the amount computed in step 1) and a TC 270 for $.00. Suspend the case for 60 days and monitor for the account for the posting of a payment. Continue processing the case as per the guidance in the last three rows of this table. 3) The case was suspended as per instructions in the second row of this table Payment is received within 21 days (10 business days for amounts of $100,000 or more) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ of the 23c date for the adjustment No additional penalties or interest are due. Close the case. 4) The case was suspended as per instructions in the second row of this table Payment is received but not within 21 days (10 business days for amounts of $100,000 or more) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ of the 23c date for the adjustment Compute additional interest due on the amount of the CRN 290 credit reversal and the previously input TC 340 amount from the 23c date of the previous adjustment to the date of payment. Compute FTP on the amount of the CRN 290 credit reversal from the 23c date of the previous adjustment to the date of payment. Input an adjustment with a TC 340 and TC 270 using the amounts computed in steps 1) and 2). Close the case. 5) The case was suspended as per instructions in the second row of this table Payment is not received by the close of the 60 day suspense period. Compute additional interest due on the amount of the CRN 290 credit reversal and the previously input TC 340 amount from the 23c date of the previous adjustment to the 23c date for the adjustment to be input in step 3 below. Compute FTP on the amount of the CRN 290 credit reversal from the 23c date of the previous adjustment to the 23c date for the adjustment to be input in step 3 below. Input an adjustment with a TC 340 and TC 270 using the amounts computed in steps 1) and 2). Close the case. Caution: The guidance in the table above is specific to CRN 290 adjustment situations. Keep in mind when restricting penalties and/or interest that it may be necessary to recompute and adjust penalty and/or interest on the full tax module depending on the account situation. The following examples are provided to illustrate the application of the procedures discussed in the table above. Example: The IRS receives a Form 5884-C for the second quarter of 2024 on September 16, 2024 along with a payment of $200 which is posted to the second quarter of 2024. The Form 5884-C reports a balance owed of $200 on line 12. The taxpayer is a quarterly Form 941 filer and previously claimed a CRN 290 credit of $450 on the second quarter of 2024. To record the $200 owed in this example, a CRN 290 reversal transaction for $200 would be input to the second quarter of 2024. No FTP penalty would be owed because the amount due was paid before the credit reversal was made, so a TC 270 for $.00 must be input to prevent the computer from charging the penalty from the second quarter due date to the date of payment. The computer will accurately compute underpayment interest in this example from July 31, 2024 (the second quarter due date) to September 16, 2024 (date of payment) and issue a bill for the correct amount due. The CRN 290 and TC 270 transactions must be input with the same ADJ54. Example: The IRS receives a Form 5884-C for the third quarter of 2024 on November 15, 2024 along with a payment of $500 which is posted to the third quarter of 2024. The Form 5884-C reports a balance owed of $500 on line 12. The taxpayer is a quarterly Form 941 filer has not claimed a CRN 290 credit on the third quarter of 2024. The taxpayer has claimed a CRN 290 credit of $900 on the second quarter of 2024 and a CRN 290 credit of $750 on the first quarter of 2023. To record the $500 owed in this example, a CRN 290 reversal transaction for $500 would be input to the second quarter of 2024 and the $500 payment would be transferred from the third quarter to the second quarter. No FTP penalty would be owed because the amount due was paid before the credit reversal was made, so a TC 270 for $.00 must be input to prevent the computer from charging the penalty from the second quarter due date to the date of payment. Underpayment interest must be manually computed and assessed with a TC 340 on the $500 credit reversal from October 31, 2024 (the third quarter due date) to the November 15, 2024 payment date and manually assessed with a TC 340. The CRN 290, TC 270, and TC 340 transactions must be input with the same ADJ54 on the second quarter account. Example: The IRS receives a Form 5884-C for the fourth quarter of 2024 on February 17, 2022 without payment. The Form 5884-C reports a balance owed of $1,200 on line 12. The taxpayer is a quarterly Form 941 filer and has not claimed a CRN 290 credit on the fourth quarter of 2024. The taxpayer has claimed a CRN 290 credit of $2,500 on the third quarter of 2024 and a CRN 290 credit of $750 on the first quarter of 2024. To record the $1,200 owed in this example, a CRN 290 reversal transaction for $1,200 would be input to the third quarter of 2024. The case is worked on March 9, 2022, so the adjustment will carry a 23c date of April 4, 2022. Because the amount due for the credit reversal was not paid by the time the adjustment is being made, the CRN 290 reversal adjustment will be input with a TC 270 for .00 and a TC 340 for the amount of interest calculated as due from January 31, 2022 to April 4, 2022. The case is then suspended for 60 days (counting days from March 9, 2022). On April 20, 2022, the case is reviewed and it is seen that a payment for the CRN 290 reversal and underpayment interest assessed with TC 340 posted to the account on April 11, 2022. Since payment was received within 21 days of the 23c date (notice date)≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, no additional penalty or interest would be due and the case would be closed with no additional action. Example: The IRS receives a Form 5884-C for the fourth quarter of 2024 on January 25, 2022 along with a payment of $700 which is posted to the fourth quarter of 2024. The Form 5884-C reports a balance owed of $700 on line 12. The taxpayer is a quarterly Form 941 filer and has not claimed a CRN 290 credit on the fourth quarter of 2024. The taxpayer has claimed a CRN 290 credit of $300 on the third quarter of 2024, a CRN 290 credit of $500 on the second quarter of 2024, and a CRN 290 credit of $200 on the first quarter of 2024. To record the $700 owed in this example, a CRN 290 reversal transaction for $300 would be input to the third quarter of 2024, $300 of the payment dated January 25, 2022 on the fourth quarter would be transferred to the third quarter, and penalties and interest associated with this portion of the credit reversal would be restricted to zero amounts (with a TC 270 $.00 and TC 340 $.00 on the same ADJ54 input as the CRN 290 credit reversal) since payment was received before the fourth quarter 2024 return due date of January 31, 2025. The remaining $400 of the amount reported owed on Line 12 of Form 5884-C would be accounted for by inputting a CRN 290 reversal transaction for $400 on the second quarter of 2024, transferring the remaining $400 of the payment dated January 25, 2022 on the fourth quarter to the second quarter, and penalties and interest associated with this portion of the credit reversal would be restricted to zero amounts (with a TC 270 $.00 and TC 340 $.00 on the same ADJ54 input as the CRN 290 credit reversal) since payment was received before the fourth quarter 2024 return due date of January 31, 2025. Note: Although the examples provided above reference instances of line 12 entries on Form 5884-C, the same principles illustrated also apply to similar instances of line 13 entries on Form 5884-D. Contact the IRM author through the Ogden Accounts Management Campus P&A Staff for guidance in the event that an unusual credit reversal situation is encountered which the special instructions provided above do not address. Example: Cases involving partial payments, multiple payments or credit offsets may require additional guidance for correct penalty and interest computation.

# IRC Section 132(f) Transportation Benefit Exclusion

21.7.2.5.16 (01-20-2016) IRC Section 132(f) Transportation Benefit Exclusion Certain fringe benefits, subject to limitations, are excludable from gross income under IRC Section 132, including qualified transportation benefits under IRC Section 132(f)(2). These amounts are also excluded from FICA and federal income tax withholding. See "Transportation (Commuting) Benefits" in Publication 15-B, Employer's Tax Guide to Fringe Benefits, for more information. As enacted, the excludable limit for combined commuter highway vehicle transportation and transit passes under (A) of IRC Section 132(f)(2) was less than the excludable limit for qualified parking under (B). However, subsequent legislation equalized the excludable amounts (also termed transportation or transit benefit parity) under (A) and (B) of IRC Section 132(f)(2) as follows: Section 1151 of the American Recovery and Reinvestment Act of 2009 (ARRA 2009) equalized the excludable limits for the period March 2009 through December 31, 2010. Section 727 of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 extended the equalization of excludable limits for the period of January 1, 2011 through December 2011. Section 203 of the American Tax Relief Act of 2012 (ATRA 2012) retroactively equalized the excludable limits for the period January 1, 2012 through December 31, 2012 and extended the equalization through December 31, 2013. Section 103 of the Tax Increase Prevention Act of 2014 (TIPA 2014) retroactively equalized the excludable limits for the period January 1, 2014 through December 31, 2014. Section 105 of the Consolidated Appropriations Act, 2016, permanently equalized the excludable limits for periods after December 31, 2014. Due to the date of enactment, the equalization was retroactive for periods within the 2015 tax year. Caution: The amounts of excludable qualified transit benefits are adjusted annually for inflation. See "Transportation (Commuting) Benefits" in the appropriate year version of Publication 15-B, Employer's Tax Guide to Fringe Benefits, for more information. The three subsections which follow describe guidance that was provided to employers for applying retroactive transit benefit parity for 2012 under ATRA 2012, for 2014 under TIPA 2014, and for 2015 under the Consolidated Appropriations Act, 2016.

# FICA Claims for Calendar Year 2012 Transit Benefit Exclusion

21.7.2.5.16.1 (01-20-2016) FICA Claims for Calendar Year 2012 Transit Benefit Exclusion Section 203 of the American Tax Relief Act of 2012 (ATRA 2012) retroactively increased the monthly transit benefit exclusion under IRC Section 132(f)(2)(A) from $125 to $240 per participating employee for the period of January 1 through December 31, 2012. Notice 2013-8 provided guidance to employers regarding the retroactive application of the increased exclusion for 2012 and provided a special administrative procedure for employers to use in filing Form 941 (or other required employment or railroad retirement tax returns) for the fourth quarter of 2012 to reflect changes in the excludable amount for transit benefits provided in all quarters of 2012 and in filing Forms W-2. This special administrative procedure was for employers that provided transit benefits during 2012 in excess of $125 per month up to $240 per month (excess transit benefits). Employers who repaid or reimbursed the over collected FICA on the excess transit benefits for all four quarters of 2012 on or before filing the fourth quarter Form 941 (or other required employment or railroad retirement tax return) were permitted to reduce the fourth quarter Wages, tips, and compensation reported on line 2, Taxable social security wages on 5a, and Taxable Medicare wages and tips on line 5c (or equivalent lines on other required employment tax returns) by the excess transit benefits for all four quarters of 2012. By taking advantage of this special administrative rule, employers could avoid having to file a Form 941-X (or other required "X" form) for each quarter of 2012 and avoid having to file Forms W-2c. Note: To ensure required tax liability schedules matched the tax reported on employment tax returns, employers following the special administrative procedure provided in Notice 2013-8 were advised to reduce the last liability reported on the tax liability schedule for the fourth quarter by the amount of the correction made to tax. If the correction made under the special administrative procedure exceeded the amount of the last tax liability, additional tax liabilities on the schedule were to be reduced in reverse date order until the full amount of the correction being made was absorbed. Employers who filed the fourth quarter Form 941 (or other required employment or railroad retirement tax return) prior to the issuance of Notice 2013-8, employers who chose not to follow the special administrative procedure, and employers who were unable to repay or reimburse all or some of the employees within the required time frame, must use Form 941-X (or other required "X" form) to make an adjustment or claim a refund for any quarter with regard to overpayment of tax on the excess transit benefits after repaying or reimbursing employees or, for refund claims, securing consents from its employees.

# FICA Claims for Calendar Year 2014 Transit Benefit Exclusion

21.7.2.5.16.2 (01-20-2016) FICA Claims for Calendar Year 2014 Transit Benefit Exclusion Section 103 of the Tax Increase Prevention Act of 2014 (TIPA 2014) retroactively increased the monthly transit benefit exclusion under IRC Section 132(f)(2)(A) from $130 to $250 per participating employee for the period of January 1 through December 31, 2014. Notice 2015-2 provided guidance to employers regarding the retroactive application of the increased exclusion for 2014 and provided a special administrative procedure for employers to use in filing Form 941 (or other required employment or railroad retirement tax returns) for the fourth quarter of 2014 to reflect changes in the excludable amount for transit benefits provided in all quarters of 2014 and in filing Forms W-2. This special administrative procedure was for employers that provided transit benefits during 2014 in excess of $130 per month up to $250 per month (excess transit benefits). Employers who repaid or reimbursed the over collected FICA (including Additional Medicare Tax (AdMT)) on the excess transit benefits for all four quarters of 2014 on or before filing the fourth quarter Form 941 (or other required employment or railroad retirement tax return) were permitted to reduce the fourth quarter Wages, tips, and compensation reported on line 2, Taxable social security wages on 5a, Taxable Medicare wages on line 5c, and Taxable wages and tips subject to Additional Medicare Tax withholding on line 5d (or equivalent lines on other required employment tax returns) by the excess transit benefits for all four quarters of 2014. By taking advantage of this special administrative rule, employers could avoid having to file a Form 941-X (or other required "X" form) for each quarter of 2014 and avoid having to file Forms W-2c. Note: To ensure required tax liability schedules matched the tax reported on employment tax returns, employers following the special administrative procedure provided in Notice 2015-2 were advised to reduce the last liability reported on the tax liability schedule for the fourth quarter by the amount of the correction made to tax. If the correction made under the special administrative procedure exceeded the amount of the last tax liability, additional tax liabilities on the schedule were to be reduced in reverse date order until the full amount of the correction being made was absorbed. Caution: The ability to repay or reimburse employees for over collected Additional Medicare Tax which was deducted or withheld in 2014 was an exception to the rule that employers may not repay or reimburse Additional Medicare Tax withholding after the end of the year for which it was withheld. As always, employers may not repay or reimburse federal income tax withholding after the end of the year for which it was withheld. Employers who filed the fourth quarter Form 941 (or other required employment or railroad retirement tax return) prior to the issuance of Notice 2015-2, employers who chose not to follow the special administrative procedure, and employers who were unable to repay or reimburse all or some of the employees within the required time frame, must use Form 941-X (or other required "X" form) to make an adjustment or claim a refund for any quarter with regard to overpayment of social security and Medicare taxes on the excess transit benefits after repaying or reimbursing employees or, for refund claims, securing consents from its employees. However, employers filing Forms 941-X may not repay or reimburse federal income tax withholding or Additional Medicare Tax withholding after the end of the year for which it was withheld.

# FICA Claims for Calendar Year 2015 Transit Benefit Exclusion

21.7.2.5.16.3 (01-20-2016) FICA Claims for Calendar Year 2015 Transit Benefit Exclusion Section 105 of the Consolidated Appropriations Act, 2016, retroactively increased the monthly transit benefit exclusion under IRC Section 132(f)(2)(A) from $130 to $250 per participating employee for the period of January 1 through December 31, 2015. Notice 2016-6 provides guidance to employers regarding the retroactive application of the increased exclusion for 2015 and provides a special administrative procedure for employers to use in filing Form 941 (or other required employment or railroad retirement tax returns) for the fourth quarter of 2015 to reflect changes in the excludable amount for transit benefits provided in all quarters of 2015 and in filing Forms W-2. This special administrative procedure is for employers that provided transit benefits during 2015 in excess of $130 per month up to $250 per month (excess transit benefits). Employers who repay or reimburse the over collected FICA (including Additional Medicare Tax (AdMT)) on the excess transit benefits for all four quarters of 2015 on or before filing the fourth quarter Form 941 (or other required employment or railroad retirement tax return) are permitted to reduce the fourth quarter Wages, tips, and compensation reported on line 2, Taxable social security wages on 5a, Taxable Medicare wages on line 5c, and Taxable wages and tips subject to Additional Medicare Tax withholding on line 5d (or equivalent lines on other required employment tax returns) by the excess transit benefits for all four quarters of 2015. By taking advantage of this special administrative rule, employers can avoid having to file a Form 941-X (or other required "X" form) for each quarter of 2015 and avoid having to file Forms W-2c. Note: To ensure required tax liability schedules matched the tax reported on employment tax returns, employers following the special administrative procedure provided in Notice 2016-6 are advised to reduce the last liability reported on the tax liability schedule for the fourth quarter by the amount of the correction made to tax. If the correction made under the special administrative procedure exceeds the amount of the last tax liability, additional tax liabilities on the schedule are to be reduced in reverse date order until the full amount of the correction being made is absorbed. Caution: The ability to repay or reimburse employees for over collected Additional Medicare Tax which was deducted or withheld in 2015 is an exception to the rule that employers may not repay or reimburse Additional Medicare Tax withholding after the end of the year for which it was withheld. As always, employers may not repay or reimburse federal income tax withholding after the end of the year for which it was withheld. Employers who filed the fourth quarter Form 941 (or other required employment or railroad retirement tax return) prior to the issuance of Notice 2016-6, employers who choose not to follow the special administrative procedure, and employers who are unable to repay or reimburse all or some of the employees within the required time frame, must use Form 941-X (or other required "X" form) to make an adjustment or claim a refund for any quarter with regard to overpayment of social security and Medicare taxes on the excess transit benefits after repaying or reimbursing employees or, for refund claims, securing consents from its employees. However, employers filing Forms 941-X may not repay or reimburse federal income tax withholding or Additional Medicare Tax withholding after the end of the year for which it was withheld.

# DOMA (United States v. Windsor) Related Employment Tax Claims

21.7.2.5.17 (10-01-2018) DOMA (United States v. Windsor) Related Employment Tax Claims In United States v. Windsor, 570 U.S. 12, 133 S. Ct. 2675 (2013), the Supreme Court held section 3 of the Defense of Marriage Act (DOMA) to be unconstitutional and found that it was impermissible to deny federal recognition to marriages that are valid under state law. Subsequent to the Court's decision, the Service issued Rev. Rul. 2013-17, effective September 16, 2013, with the following guidance on tax treatment of same-sex spouses: For federal tax purposes, the terms "spouse" , "husband and wife" , "husband" , and "wife" include an individual married to a person of the same sex if the individuals are lawfully married under state law, and the term "marriage" includes such a marriage between individuals of the same sex. For federal tax purposes, the Service adopted a general rule recognizing a marriage of same-sex individuals that was validly entered into in a state whose laws authorize the marriage of two individuals of the same sex even if the married couple resides in a state that does not recognize the validity of same-sex marriages. For federal tax purposes, the terms "spouse", "husband and wife" , "husband", and "wife" do not include individuals (whether of the opposite sex or the same sex) who have entered into a registered domestic partnership, civil union, or other similar formal relationship recognized under state law that is not denominated as a marriage under the laws of that state, and the term "marriage" does not include such formal relationships. Note: On June 26, 2015, the Supreme Court held in Obergefell v. Hodges, 576 U.S. 135 S.Ct. 2584 (2015) that all states must allow same-sex couples to marry on the same terms and conditions as opposite-sex couples. Therefore, for federal tax purposes, the Service recognizes a marriage of same-sex individuals that was validly entered into in any state, regardless of the married couple's place of domicile. As a result of the Court's decision, certain amounts previously deemed to be wages for employment tax purposes (also referred to as "imputed wages" ) are no longer taxable for federal tax purposes. The Service issued Notice 2013-61 to provide guidance to employers regarding the application of United States v. Windsor to employment taxes. Notice 2013-61 included special administrative procedures for employers to use in filing original and corrected returns for tax periods 2013 and earlier (so long as the Refund Statute Expiration Date (RSED) had not expired). IRM 21.7.2 previously included detailed guidance on handling claims filed under those special administrative procedures. See archived versions of this IRM if information on previous handling is needed.

# Claims Citing Rev. Rul. 90-72 (SUB-pay)

21.7.2.5.18 (10-01-2024) Claims Citing Rev. Rul. 90-72 (SUB-pay) Rev. Rul. 90-72 provides a limited administrative exception from FICA, FUTA and RRTA taxes for certain payments that supplement state unemployment compensation (sometimes referred to as SUB-pay). The revenue ruling provides for an exception from FICA, FUTA, and RRTA taxes for a stream of payments coordinated with the receipt of unemployment compensation but specifically indicates that lump-sum payments (e.g., severance pay) do not qualify for the exception. Claims citing Rev. Rul. 90-72 are CAT-A criteria. See Exhibit 21.5.3–2, Examination Criteria (CAT-A) — General.

# CP 148A and CP 148B - Dual Notice of Address Change

21.7.2.5.19 (10-19-2015) CP 148A and CP 148B - Dual Notice of Address Change Beginning in 2015, any address change made on a BMF entity with open employment tax filing requirements generates two notices to the taxpayer: CP 148A: Confirmation of address change mailed to the taxpayer's new address. CP 148B: Confirmation of address change, mailed to the taxpayer's previous address Note: Paper responses to CP 148A and CP 148B are worked in BMF Entity per procedures in IRM 3.13.2.4.9, CP 148A and CP 148B, Dual Notice of Address Change. Any paper responses received in AM inventory are to be rerouted to that operation for handling. The following Transaction Codes (TC) can reflect address changes and will trigger issuance of a CP 148A and a CP 148B: TC 013, "Name Change" TC 014, "Address Change" TC 016, "Miscellaneous Change Entity Codes" TC 150, "Return Filed & Tax Liability Assessed" (if showing on ENMOD or BMFOLE) Note: See (5) of IRM 3.13.2.4.9 if guidance on researching address changes is needed. Caution: IRS notices for business entities generate with a maximum of four address lines. If there are more than four address elements (Sort Name, Care of Name, etc.) in the IRS record for the taxpayer's address, what will print on the second address line of a notice is variable and is determined based on a priority system. So, the address element that was changed may not be present on the notice generated to the taxpayer. Accordingly, it is important to thoroughly research account records to verify the source of any address change to which the taxpayer is responding. Handle responses to CP 148A and CP 148B received via the toll-free lines as follows: If Then 1) Taxpayer agrees with address change but is confused/concerned why we sent one or both of the notices Explain to the taxpayer that the IRS is required by law to send employers notices to both their previous address and to their new address if an address change is recorded for their account. These address change confirmation notices are intended to guard against inappropriate address change requests being made against their wishes. 2) Taxpayer receives one or both notices, disagrees with address change Correct the address per the information provided by the taxpayer. See (3) in IRM 21.1.3.20, Oral Statement Authority, and (2) in IRM 21.5.2.4.2, Adjustments With Oral Statement, for more information. Advise the taxpayer the change was made and that a new CP 148A and CP 148B will be issued to the current and new address. 3) Taxpayer receives one or both notices, disagrees with address change and questions the source of address change that was made Correct the address per the information provided by the taxpayer. See (3) in IRM 21.1.3.20, Oral Statement Authority, and (2) in IRM 21.5.2.4.2, Adjustments With Oral Statement, for more information. Advise the taxpayer the change was made and that a new CP 148A and CP 148B will be issued to the current and new address. Conduct online research to determine, if possible, the source of the previous address change: • If appropriate, share information for the previous address change with the taxpayer. • If the information provided does not satisfy the taxpayer's concerns, advise the taxpayer to respond to the CP 148A and/or CP 148B expressing their concerns in writing. Note: Responses to Spanish versions of these notices, CP 848A and CP 848B, are to be handled in the same manner as CP 148A and CP 148B. Reminder: Address any other issue raised by the taxpayer as appropriate. Caution: If the caller is unable to pass disclosure verification requirements (see IRM 21.1.3.2.3, Required Taxpayer Authentication), advise the caller to respond to the CP 148A and/or CP 148B in writing.

# Exclusion of Indian General Welfare Benefits

21.7.2.5.20 (03-10-2025) Exclusion of Indian General Welfare Benefits Indian general welfare benefits are excluded from gross income per provisions of the Tribal General Welfare Exclusion Act of 2014. Related BMF claims may be received on Form 843 or Form 945-X. These claims can be identified by the presence of one or more of the following key words in the explanation section of the claim or written across the top margin of the form: Tribal General Welfare Exclusion Act of 2014 H.R. 3043 Notice 2012-75 Rev. Proc. 2015-35 General Welfare Do not process these claims. Route any claims identified for this issue to: Internal Revenue Service GECS M/S 7700 1973 North Rulon White Blvd Ogden, UT 84404

# Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities

21.7.2.5.21 (04-27-2023) Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities Section 121(a) of the Protecting Americans from Tax Hikes (PATH) Act of 2015, Division Q of P.L. 114-113 permanently extended the Credit for Increasing Research Activities. This non-refundable credit is generally used to reduce federal income tax liability and is claimed by completing Form 6765, Credit for Increasing Research Activities, and Form 3800, General Business Credit, which are attached to an income tax return. Note: See IRM 21.7.4.4.8.3.5, Form 6765, Credit for Increasing Research Activities, for information on processing claims for the credit on income tax returns. Section 121(c) of the PATH Act added IRC Section 41(h) and IRC Section 3111(f) which allow certain qualified small businesses to apply a portion of the income tax credit for increasing research activities as a payroll tax credit against the employer's portion of social security tax. The payroll tax credit is in lieu of an income tax credit and is a non-refundable credit (i.e., reduces tax liability). Qualified small businesses elect the payroll tax credit on Form 6765 filed with a timely filed (including extensions) original income tax return. Once made, the election may only be revoked with the consent of the IRS. Qualified small businesses may make the election on Form 6765 for no more than five tax years. For tax years beginning after December 31, 2015 and before January 1, 2023, employers may elect to apply up to $250,000 for each eligible income tax period against employer's share of social security taxes reported on one or more specified employment tax returns (i.e., until the credit is fully utilized). Note: For ease of reference, the "Qualified Small Business Payroll Tax Credit for Increasing Research Activities" is generally referred to as the "QSB Research Credit" throughout this IRM. Section 13902 of P.L. 117-169, the Inflation Reduction Act of 2022, increased and modified the QSB Research Credit. For tax years beginning after December 31, 2022, the maximum amount for which an election can be made on Form 6765 was increased to $500,000. Starting in the first quarter of 2023, the payroll tax credit is first used to reduce the employer's share of social security tax up to $250,000 per quarter and any remaining credit reduces the employer's share of Medicare tax for the quarter. (Credit amounts so applied may include election amounts arising from income tax returns filed for tax years beginning before January 1, 2023.) Any remaining credit, after reducing the employer's share of social security tax and the employer's share of Medicare tax, is then carried forward to the next quarter. Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities, is used by taxpayers to compute the amount of QSB Research Credit that they are eligible to claim on an employment tax return for a particular tax period after accounting (in Part 1) for any credits claimed on previously filed employment tax returns. Form 8974 must be attached as supporting documentation to any original employment tax return on which the credit is claimed and to any Form 94XX filed to claim or adjust a QSB Research Credit. Note: Companies filing aggregate employment tax returns (e.g., IRC 3504 agents, etc.) are required to attach a Form 8974 for each client taking the QSB Research Credit. An eligible taxpayer must file their income tax return with Form 6765 attached reflecting the binding election before they can claim the QSB Research Credit on an employment tax return with Form 8974. The QSB Research Credit can then be claimed starting with the first employment tax return filed reporting wages and tax for a calendar quarter beginning after the income tax return was filed. Example: On March 10, 2025, a taxpayer files their Form 1120 for calendar year 2024 with Form 6765 attached reflecting an election to claim an amount for the QSB Research Credit on their employment tax returns. The taxpayer files quarterly Form 941 to report employment taxes. The taxpayer may first claim the QSB Research Credit on their Form 941 for the second quarter of 2025 since that tax period begins April 1, 2025 which is after the filing date of the income tax return. Example: On July 15, 2025, a taxpayer files their Form 1120 for calendar year 2024 with Form 6765 attached reflecting an election to claim an amount for the QSB Research Credit on their employment tax returns. The taxpayer files quarterly Form 941 to report employment taxes. The taxpayer may first claim the QSB Research Credit on their Form 941 for the fourth quarter of 2025 since that tax period begins October 1, 2025 which is after the filing date of the income tax return. Example: On August 5, 2025, a taxpayer files their Form 1120 for calendar year 2024 with Form 6765 attached reflecting an election to claim an amount for the QSB Research Credit on their employment tax returns. The taxpayer files annual Form 943 to report employment taxes. The taxpayer may first claim the QSB Research Credit on their Form 943 for calendar year 2025 since that return includes the fourth calendar quarter of 2024 which begins after the filing date of the income tax return. Example: On November 3, 2024, a taxpayer files their Form 1120 for calendar year 2023 with Form 6765 attached reflecting an election to claim an amount for the QSB Research Credit on their employment tax returns. The taxpayer files annual Form 944 to report employment taxes. Since the Form 1120 was filed during the last calendar quarter of 2024, the taxpayer may first claim the QSB Research Credit on their Form 944 for calendar year 2025. Note: The first full calendar year income tax return on which an eligible taxpayer could make an election to claim the QSB Research Credit against employment taxes was 2016. Credit limitations: For tax years beginning before January 1, 2023, the maximum amount of research credit for which an election could be made on Form 6765 to be applied against employment tax returns was $250,000 per tax year (i.e., on the income tax return side). However, the only limitation on the amount of the credit so elected that could be taken on a particular associated employment tax return filed for tax periods beginning before January 1, 2023 was the employer's share of social security tax. So, the credit taken on a particular employment tax return could exceed $250,000 if the taxpayer was applying credits from multiple elections, either due to carrying forward credits that could not be previously fully utilized or in the filing of an aggregate employment tax return filer. For tax years beginning after December 31, 2022, the election that can be taken on the income tax return with Form 6765 was increased to $500,000. However, changes to how the credit is applied against employment tax returns were effective with the first calendar quarter of 2023, including for amounts arising from earlier tax years which had not been fully utilized. Up to $250,000 of the election amount(s) may be applied to the employer's share of social security tax reported for a particular employment tax period, the remainder is then applied against the employer's share of Medicare taxes for a particular employment tax period, and any amounts remaining thereafter may be carried forward until fully utilized. Most questions from employers about the QSB Research Credit (including questions about elections, credit limitations, and how the credit is applied against employment taxes) can be resolved by directing the employer to the forms, form instructions, or Notice 2017-23. Employers can also be directed to related information on the irs.gov website at Qualified Small Business Payroll Tax Credit for Increasing Research Activities: For Form 8974 handling guidance: See IRM 21.7.2.5.21.1, Processing Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities, for guidance on processing Form 8974 filed with a Form 94XX. See IRM 21.7.2.5.21.2, Form 94XX Claiming QSB Research Credit — Missing Form 8974, for guidance on processing Forms 94XX reporting changes to QSB Research Credits without Form 8974 attached. See IRM 21.7.2.4.3.4, Loose Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities, for guidance on handling loose Forms 8974.

# Processing Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities

21.7.2.5.21.1 (12-04-2024) Processing Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities This subsection provides specialized handling guidance for Form 8974 attached to a Form 94XX or to a duplicate filed employment tax return being processed as a Form 94XX. All other Form 94XX processing guidelines and requirements also apply to Forms 94XX with Form 8974 attached. Note: For Form 94XX cases with missing Form 8974, see IRM 21.7.2.5.21.2, Form 94XX Claiming QSB Research Credit — Missing Form 8974. Note: For loose Form 8974 cases, see IRM 21.7.2.4.3.4, Loose Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities. IRN 119 is used along with TC 290, TC 291, or TC 298 (as appropriate) to record adjustments to the QSB Research Credit on Form 941, Form 943, and Form 944 tax accounts. IRN 119 is valid for Form 941 (tax period 201706 and subsequent), Form 943 (tax period 201712 and subsequent), and Form 944 (tax period 201712 and subsequent). An increase to the credit will be recorded with a positive IRN 119 amount and a corresponding decrease to tax (i.e., a TC 291 for the same amount if no other changes were reported). A decrease to the credit will be recorded with a negative IRN 119 amount and a corresponding increase to tax (i.e., a TC 290/298 for the same amount if no other changes were reported). Example: A Form 941-X is filed with Form 8974 attached claiming an increase to the QSB Research Credit in the amount of $75. Assuming all processing requirements are met, the adjustment to be made would be a TC 291 for $75.00- and an IRN 119 for $75.00. Example: A Form 941-X is filed with Form 8974 attached reporting a decrease to the QSB Research Credit in the amount of $90. Assuming all processing requirements are met, the adjustment to be made would be a TC 290 (or TC 298 as applicable) for $90.00 and an IRN 119 for $90.00-. Example: A Form 941-X is filed with Form 8974 attached claiming an increase to the QSB Research Credit in the amount of $50. The Form 941-X also reports social security and Medicare wage increases of $1,000 each and a corresponding increase to social security and Medicare taxes in the amount of $153.00. Assuming all processing requirements are met, the adjustment to be made would be a TC 290 (or TC 298 as applicable) for $103.00, an IRN 004 for $1,000.00, an IRN 073 for $1,000, an IRN 112 for $153.00 and an IRN 119 for $50.00. Note: IRN 119 can be combined on Command Code ADJ54 adjustments with any other IRN valid for the form being adjusted. An increase to the credit (i.e., decrease to tax) may meet examination criteria. See Exhibit 21.5.3–2, Examination Criteria (CAT-A) — General. Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ In addition to all other verification requirements applicable to the Form 94XX (or original tax return) to which a Form 8974 is attached, the following items are required to be verified on Form 8974 prior to processing: Verify a name and EIN were entered in entity section of Form 8974. Note: Companies filing aggregate employment tax returns (e.g., IRC 3504 agents, etc.) are required to file a Form 8974 for each client taking a QSB Research Credit. So, there may be multiple Forms 8974 attached to a single Form 94XX and these Forms 8974 may reflect the client's information in the entity section of Form 8974 rather than that of the company under whose EIN the QSB Research Credit is being claimed. Verify the taxpayer claiming the QSB credit has filing requirements for the type of employment tax return identified on Form 8974. If the taxpayer does not have employment tax filing requirements, use Letter 4384C to reject the Form 94XX and Form 8974 and inform the taxpayer in the letter that we cannot consider the requested changes since our records indicate they do not file employment tax returns. Verify the taxpayer filed an original employment tax return for the calendar year and quarter (if applicable) being corrected. If the taxpayer has employment tax filing requirements but no return is posted, see IRM 21.7.2.4.4.6, Adjusted Employer's Tax Return or Claim for Refund Return Filed — No TC 150 Posted, for handling guidance. Caution: If the QSB Research Credit is being filed for an employment tax return period beginning earlier than April 1, 2017 for Form 941 or earlier than January 1, 2017 for Form 943 and Form 944, contact the IRM author through your management chain and the site P&A Staff for guidance on handling the case. Verify the taxpayer filed the correct version of Form 8974 for the tax period under consideration. • Adjustment requests filed for tax periods 202212 and prior must be filed with Form 8974 having a revision date of December 2017. • Adjustment requests filed for tax periods 202303 and subsequent must be filed with a Form 8974 having a revision date of March 2023 or later. • If the taxpayer filed the adjustment request with an incorrect Form 8974 version, use Letter 4384C to reject the Form 94XX and Form 8974 and inform the taxpayer in the letter that we cannot consider the requested changes because the incorrect Form 8974 version was submitted. Verify the taxpayer identified in Part 1 of Form 8974 has filed an original income tax return for the specified form type and tax period. Note: ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ a) If there is more than one Form 8974 attached to the Form 94XX, or if multiple EINs are listed in Part 1 of Form 8974, or if there is a single EIN listed in Part 1 of Form 8974 and it does not match the EIN on the Form 94XX, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. b) If more than one income tax return is listed in Part 1 of Form 8974 (all with the same EIN), ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. c) If the taxpayer identified in Part 1 of Form 8974 does not file Form 1040, Form 1065, Form 1120, Form 1120-F, or Form 1120S income tax returns, they are not eligible to claim the QSB Research Credit. If the taxpayer enters an income tax return other than one of those specified (or its corresponding amended income tax form), or research shows they file an income tax return other than one printed on Line 1 of Form 8974, reject the claim with Letter 916C. Advise the taxpayer in the letter that we cannot consider the amount claimed on their Form 8974 because our records show their organization type is not eligible to claim the QSB Research Credit. d) If the income tax return has not posted and the date entered in column (c) of Form 8974 is less than 30 days prior to the received date of the Form 8974, suspend the case for 40 days and monitor for posting of the income tax return. If the return posts, continue to process as appropriate. e) If the date entered is 30 days or more from the received date of the Form 8974, or the suspense period has passed and no income tax return is posted, follow the instructions in (5) below to reject the Form 94XX and Form 8974 with instructions to refile their QSB Research Credit claim after they file their income tax return. Verify the Form 8974 has been filed for an employment tax period covering a calendar quarter that began after the income tax return identified in Part 1 of Form 8974 was filed. See (5) in IRM 21.7.2.5.21, Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities, for guidance. If the Form 8974 was filed for an employment tax period before what is permitted based on when the identified income tax return was filed, follow procedures in IRM 21.5.3.4.6.3, No Consideration Procedures and instruct the taxpayer to refile their QSB Research Credit claim for the appropriate tax period. Reminder: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Caution: For timely filed returns, TXMOD and BMFOL return received dates fields reflect the associated return due date rather than the actual filing date. In some cases, it may be necessary to review MeF to verify the true filing date of the income tax return (if filed electronically) to verify the Form 8974 has been filed for a correct employment tax return period. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Continue processing the Form 8974 as per instructions below in (5) or (6) based on the tax period for which the filing was made. Math verification of Forms 8974 filed for tax periods 202212 and earlier: Verify the figures reported on Line 8 and Line 9 in Part 2 of Form 8974 agree with the amounts on the corresponding lines of the Form 94XX (or employment tax return) and math verify Lines 8 through 11 of Form 8974 to ensure the amount of QSB Research Credit claimed does not exceed the employer's share of social security tax. Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Verify the figure reported on Line 12 of Form 8974 is the lesser of the entry on Line 7 or the math verified amount for 11 and agrees with the amount reported for the QSB Research Credit claimed on the corresponding line of the Form 94XX (or employment tax return). If the Line 12 entry, or the corresponding figure on the Form 94XX (or employment tax return), exceeds the lesser of the Line 7 or verified Line 11 amounts ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, the amount to be allowed is the lesser of the Line 7 or verified Line 11 amounts. Note: If the amount to be recorded for the credit is less than the taxpayer's entry on Line 12 of Form 8974 or the corresponding line of the Form 94XX (or employment tax return), follow partial disallowance procedures in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures, including issuing the appropriate Letter 106C. Math verification of Forms 8974 filed for tax periods 202303 and later: Verify the figures reported on Line 8 and Line 9 in Part 2 of Form 8974 agree with the amounts on the corresponding lines of the Form 94XX (or employment tax return) and math verify Lines 8 through 11 of Form 8974 to ensure the amount of QSB Research Credit claimed does not exceed the employer's share of social security tax. Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Verify the figure reported on Line 12 of Form 8974 is the lesser of the entry on Line 7, the math verified amount for 11, or $250,000. Math verify the figure reported on Line 13 of Form 8974 by subtracting the verified figure for Line 12 (from Step b above) from the taxpayer entry on Line 7 of Form 8974. Verify the figure reported on Line 14 in Part 2 of Form 8974 agrees with the amount on the corresponding line of the Form 94XX (or employment tax return) and math verify Lines 14 and 15 of Form 8974 to ensure the amount of QSB Research Credit claimed does not exceed the employer's share of Medicare tax. Reminder: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Verify the figure reported on Line 16 of Form 8974 is the lesser of the entry on Line 15 or the math verified amount for 13 (from Step c above). Math verify Line 17 of Form by adding the math verified figures for Line 12 and Line 16 of Form 8974. This is the amount of QSB research credit to be recorded as per guidance in (7) and (8) below. Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Reminder: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: If the amount to be recorded for the credit is less than the taxpayer's entry on Line 17 of Form 8974 or the corresponding line of the Form 94XX (or employment tax return), follow partial disallowance procedures in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures, including issuing the appropriate Letter 106C. If any information required to be verified on the Form 8974 is missing ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, make two attempts to secure the information by phone if a telephone number is available. Otherwise, follow procedures in IRM 21.5.3.4.2, Tax Decrease or Credit Increase Processing. Use Letter 4384C to reject the claim and identify the missing information in the letter. When rejecting the Form 94XX, follow IRM 21.5.3.4.2, Tax Decrease or Credit Increase Processing, and (9) in IRM 21.5.1.5.6, Incomplete CII claims, for the correct input of TC 971-270 and release of the applicable freeze code (use Blocking Series 20 if inputting a TC 290 .00 to release the -A freeze in this situation). Exception: Do not contact the taxpayer to request a missing income tax return. Address missing income tax returns as per a), b), c), d), and e) in Step 5 in (4) above. Caution: The individual contacted by phone must be authorized to prepare taxpayer's employment tax returns. Document the case history with the date, time, name of individual contacted, and information obtained from the individual. After applying the verification procedures (as appropriate) in (4), (5), (6), and (7) above, continue processing complete QSB Research Credit claims and requests for adjustment as per the general procedures in IRM 21.7.2.4.4, Adjusted Employer's Federal Tax Return or Claim for Refund, and the specific procedures applicable to the type of Form 94XX filed (e.g., for a tax decrease - claim for refund filed on Form 941-X, follow IRM 21.7.2.4.5.6.2, Form 941-X Tax Decrease — Claim). Record any changes to the QSB Research credit with IRN 119 as appropriate per guidance in (2) above. Exception: If the Form 8974 is attached to an original return filed in response to a 6020(b) assessment, continue processing per handling guidance in IRM 21.7.9.4.1.6, Duplicate Filing Conditions Involving Returns Prepared Under IRC Section 6020(b). Reminder: Credit limitations are discussed in (10) of IRM 21.7.2.5.21, Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities.≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

# Form 94XX Claiming QSB Research Credit — Missing Form 8974

21.7.2.5.21.2 (10-01-2018) Form 94XX Claiming QSB Research Credit — Missing Form 8974 On occasion, a taxpayer may submit a Form 94XX (or employment tax return) with an entry for the QSB Research Credit but fail to attach Form 8974 as would usually be required. Handle missing Form 8974 situations as follows: If And Then 1) The entry on Form 94XX (or employment tax return) is equal to the amount of credit previously allowed for the tax period identified. A Form 8974 is not required. Continue to process the Form 94XX (or employment tax return) as appropriate. 2) The entry on Form 94XX (or employment tax return) reflects a decrease to a previously allowed credit amount (i.e., would result in a tax increase) Continue to process the Form 94XX (or employment tax return) as appropriate and complete the change to the QSB Research Credit as requested (using IRN 119) if all other requirements are met (see IRM 21.7.2.5.21.1, Processing Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities). Close the case and issue Letter 4384C stating we processed the adjustment requested on their Form 94XX but that the required Form 8974 was not attached. Instruct the taxpayer to submit the missing Form 8974. Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: A taxpayer response with the missing Form 8974 will be treated as a new case. 3) The entry on Form 94XX (or employment tax return) reflects an increase to a previously allowed credit amount or no credit was previously claimed (i.e., would result in tax decrease) The Form 94XX (or employment tax return) also reflects other tax changes which, considered on their own, would result in a net tax decrease Make two attempts to secure the missing Form 8974 by phone if a telephone number is available. If the missing Form 8974 is secured, continue processing as per instructions in IRM 21.7.2.5.21.1, Processing Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities, and disregard the instructions which follow in this table. Otherwise, if there is no telephone number, or there was and efforts to secure the missing Form 8974 via phone were unsuccessful, go to step 2) immediately below. Continue to process the other changes reported Form 94XX (or employment tax return) as appropriate but do not allow the requested change to the QSB Research Credit. Follow partial disallowance procedures in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures, including issuing the appropriate Letter 106C. Advise the taxpayer that we processed the other changes requested but could not allow the QSB Research Credit change because the required Form 8974 was not attached. Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ 4) The entry on Form 94XX (or employment tax return) reflects an increase to a previously allowed credit amount or no credit was previously claimed (i.e., would result in tax decrease) The Form 94XX (or employment tax return) also reflects other tax changes which, considered on their own, would result in a net tax increase Continue to process the other changes reported Form 94XX (or employment tax return) as appropriate but do not allow the requested change to the QSB Research Credit. Issue Letter 4384C. Advise the taxpayer that we processed the other changes requested but could not allow the QSB Research Credit change because the required Form 8974 was not attached. Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ 5) The entry on Form 94XX (or employment tax return) reflects an increase to a previously allowed credit amount or no credit was previously claimed (i.e., would result in tax decrease) The change to the QSB Research Credit is the only correction being made Make two attempts to secure the missing Form 8974 by phone if a telephone number is available. If the missing Form 8974 is secured, continue processing as per instructions in IRM 21.7.2.5.21.1, Processing Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities, and disregard the instructions which follow in this table. Otherwise, if there is no telephone number, or there was and efforts to secure the missing Form 8974 via phone were unsuccessful, go to step 2) immediately below. Reject the Form 94XX using Letter 4384C. Inform the taxpayer Form 8974 must be attached to their Form 94XX (specify form) when changes are requested to amounts of QSB Research Credit claimed. When rejecting the Form 94XX, follow IRM 21.5.3.4.2, Tax Decrease or Credit Increase Processing, and (9) in IRM 21.5.1.5.6, Incomplete CII claims, for the correct input of TC 971-270 and release of the applicable freeze code (use Blocking Series 20 if inputting a TC 290 .00 to release the -A freeze in this situation). Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Caution: When rejecting documents, extreme care must be taken to ensure that only the material relative to the taxpayer(s) to which the correspondence is addressed is enclosed in the envelope. See IRM 21.3.3.4.24, Breaches of Personally Identifiable Information (PII) Caused by Manual Stuffing Errors, for additional information.

# CT-1, CT-2 Railroad Tax Returns

21.7.2.6 (01-01-2005) CT-1, CT-2 Railroad Tax Returns This section contains information on: Form CT-1, Employer's Annual Railroad Retirement Tax Return Form CT-2, Employee Representative's Quarterly Railroad Tax Return Unexplained adjustments to Form CT-1 (CP 177) Railroad Retirement Board (RRB) Employer Status Determinations A revised Memorandum of Understanding (MOU) was executed by RRB and IRS in March 2010 (Agreement between RRB and IRS (2010)) to govern data sharing between the two agencies.

# What are Forms CT-1 and CT-2?

21.7.2.6.1 (01-15-2025) What are Forms CT-1 and CT-2? Form CT-1, Employer's Annual Railroad Retirement Tax Return, is used to report and pay railroad retirement taxes (including Additional Medicare Tax (AdMT)) imposed on compensation paid to railroad employees. Form CT-1 is a calendar year return due by the last day of February of the following year. The MFT is 09 Tax Class 7 Document Code 11 Form CT-2, Employee Representative's Quarterly Railroad Tax Return, is used to report railroad retirement taxes (including AdMT) imposed on compensation received by employee representatives. Form CT-2 is a quarterly return due the last day of the second month following the end of the quarter. It is filed using the representative's Social Security Number (SSN). Forms CT-2 are processed to NMF. The MFT is 72 Tax Class 6 Document Code 2

# Imposition of RRTA Tax (Forms CT-1)

21.7.2.6.2 (10-01-2014) Imposition of RRTA Tax (Forms CT-1) The Railroad Retirement Tax Act (RRTA) imposed two tiers of taxes on employee compensation. Tier I is designed to mirror the taxes imposed by the Federal Insurance Contributions Act (FICA) and Tier II is an additional tax to provide a pension benefit. Both the employer and the employee are subject to Tier I and Tier II taxes. A railroad employer must withhold Tier I and Tier II taxes from each employee's compensation. A railroad employer who does not withhold the applicable tax is liable for that tax. Forms CT-1 do not include any listing of employees' names, account numbers, or amount of compensation paid (except for statements attached in certain circumstances to support adjustments to Tier l and Tier ll). The railroad employer provides wage information reports directly to the Railroad Retirement Board (RRB). The railroad employer reports railroad retirement compensation, Tier I tax, Tier II tax, Medicare tax and Additional Medicare Tax in Box 14 of Form W-2.

# Imposition of RRTA Tax (Forms CT-2)

21.7.2.6.3 (10-01-2013) Imposition of RRTA Tax (Forms CT-2) RRTA also imposes the same two tiers of taxes described in (1) of IRM 21.7.2.6.2, Imposition of RRTA Tax (Forms C-1), on employee representatives. The employee representative is liable for both the employer and the employee portion of the Tier I taxes and the employer portion of the Tier II taxes.

# Forms CT-1 and CT-2 Research

21.7.2.6.4 (01-01-2005) Forms CT-1 and CT-2 Research This section discusses research on Forms CT-1 and CT-2.

# Required Routing for Form CT-1, Form CT-1X, and Form CT-2

21.7.2.6.4.1 (01-15-2025) Required Routing for Form CT-1, Form CT-1X, and Form CT-2 Original Form CT-1 and Form CT-2 tax returns are processed at the Kansas City Processing Campus (KCSPC). Amended/duplicate forms, claims or correspondence received at other campuses must be routed or coordinated with: IRS Large Corp/Technical Unit (LCTU) Stop 537G 7940 Kentucky Dr. Florence, KY 41042 Note: For Form CT-1 cases in debit status that are being routed as above, input a STAUP for 8 cycles and send Letter 86C to advise taxpayer the case is being transferred. Notate the routing form that the STAUP and letter action were taken. For inquiries received via the toll-free line, prepare Form 4442/e4442 and EEFax to the Technical Unit at 855-307-3090, Team 402.

# Form CT-1 and Form CT-2 Tax Rates (including Additional Medicare Tax)

21.7.2.6.4.2 (12-13-2024) Form CT-1 and Form CT-2 Tax Rates (including Additional Medicare Tax) There are separate tax rates for Tier l and Tier ll taxes for both employers and employees. Tier l taxes are equivalent to FICA taxes. Since Tier I and Tier II have separate wage bases, separate lines appear on the return. The Medicare portion of the Tier l tax is 1.45% of all compensation for both the employer and employee (2.9% total). The Tier l portion equivalent to the social security portion is 6.2% for both employer and employee (12.4% total). Tier I taxes are withheld from wages and tips only up to a wage limit. The table below shows the Tier I wage limits from year to year. Tax Year Taxable Amount 2016 On the first $118,500 2017 On the first $127,200 2018 On the first $128,400 2019 On the first $132,900 2020 On the first $137,700 2021 On the first $142,800 2022 On the first $147,000 2023 On the first $160,200 2024 On the first $168,600 2025 On the first $176,100 An Additional Medicare Tax (AdMT) is effective for tax periods beginning after December 31, 2012: The AdMT tax rate is 0.9%. Employers are required to withhold AdMT at the specified tax rate from wages and tips paid to an employee in excess of $200,000 for a calendar year beginning with the payroll period in which the threshold is exceeded and continuing each pay period until the end of the calendar year. AdMT is in addition to the 1.45% Medicare tax rate withheld from employee wages and tips. AdMT is only imposed on the employee. There is no employer share of AdMT. Amounts of AdMT withheld by the employer will be reported on the employee's Form W-2. While employers will begin withholding the Additional Medicare Tax (AdMT) as soon as wages paid to an employee exceed the $200,000 threshold, the final amount owed or refunded will be calculated as part of the individual's income tax return. Employers may not increase or decrease amounts of AdMT withheld from wages/tips paid to an employee based on an employee's expectation that they will owe more or less tax when filing their individual income tax return. Employees who expect to owe more AdMT than is withheld from their wages should make estimated tax payments and/or use Form W-4, Employee's Withholding Allowance Certificate, to request additional income tax withholding which will be applied against taxes shown on their individual tax return, including any AdMT liability. Lines were added to 2013 and subsequent railroad retirement tax returns for the purpose of reporting amounts of AdMT withheld. IRN 070 will be used to record adjustments to Additional Medicare Tax on Form CT-1 accounts (along with other tax corrections). Although employers are required to calculate, withhold and report Additional Medicare Tax in a manner similar to other RRTA taxes, the tax treatment closely follows income tax withholding procedures. AdMT cannot be corrected after the close of a tax year unless the issue constitutes an administrative error, IRC Section 3509 rates are being applied, or as the result of an Examination. This is true even if AdMT was erroneously withheld. See IRM 21.7.2.4.4.3, Income Tax Withholding, Backup Withholding, and Additional Medicare Tax Adjustments, IRM 21.7.2.4.4.3.1, Administrative Errors, and IRM 21.7.2.5.4, IRC Section 3509, for more information. Information on AdMT is found throughout this IRM, in Publication 15, and instructions for railroad retirement tax returns. Additional information, including a "questions and answers" link to Frequently Asked Questions (FAQs), may also be found on the IRS website under the "Additional Medicare Tax" topic heading at: Understanding Employment Taxes. Tier ll tax rates are shown in the table below. Tax Year Employer %/Employee % On the first: 2016 13.1%/4.9% $88,200 2017 13.1%/4.9% $94,500 2018 13.1%/4.9% $95,400 2019 13.1%/4.9% $98,700 2020 13.1%/4.9% $102,300 2021 13.1%/4.9% $106,200 2022 13.1%/4.9% $109,200 2023 13.1%/4.9% $118,800 2024 13.1%/4.9% $125,100 2025 13.1%/4.9% $130,800 See IRM 21.7.2.5.16, IRC Section 132(f) Transportation Benefit Exclusion, for information regarding exclusion of qualified transit benefits from income.

# Forms CT-1 and CT-2 Procedures

21.7.2.6.5 (10-01-2014) Forms CT-1 and CT-2 Procedures This section contains procedures for working common railroad retirement issues.

# Form CT-1 Tax Adjustments

21.7.2.6.5.1 (10-01-2024) Form CT-1 Tax Adjustments IRN 070 is necessary for adjusting the total of railroad retirement tax (including Additional Medicare Tax for calendar years beginning after December 31, 2012). Returns for 199412 and subsequent do not reflect the taxpayer's original liability (assessed with TC 150) in the field ADJ-RR-RETIRMNT. If Then 1) A TC 290 is input Field reflects the TC 290 amount only. 2) A TC 291 is input Field shows nothing (unless a previous TC 290 was input). 3) Adjusting these returns Do not rely on this field to determine current tax liability, add the original assessment plus all increases; and then subtract all decreases to compute taxpayer's current tax liability. Caution: See IRM 21.7.2.7.6, COVID-19 Related Employment Tax Relief and Forms 94XX, for information on IRN/CRN usage on tax accounts for 2020 and subsequent tax periods.

# Form CT-1 Duplicate Filing Cases

21.7.2.6.5.2 (01-01-2005) Form CT-1 Duplicate Filing Cases ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Use approved local procedures when working duplicate filing cases involving tax decreases. Input TC 29X with IRN 070 in appropriate BS. Route claims received involving large case controls to the area office where the railroad is located.

# Interest-Free Adjustments

21.7.2.6.5.3 (01-01-2005) Interest-Free Adjustments If an employer has made an undercollection and underpayment of taxes for a prior period under the IRC sections listed below, the employer may be entitled to an interest-free adjustment, per Treasury Regulations Section 31.6205-1. See IRM 21.7.2.4.4.2, Interest-Free Adjustments (Employment Tax Returns), for additional information. IRC Section 3101, FICA tax on employees IRC Section 3111, FICA tax on employers IRC Section 3201, RRTA tax on employees IRC Section 3221, RRTA tax on employers The interest-free adjustment rules under section 6205 do not apply to the employee representative tax under IRC 3211 reported on Form CT-2.

# Form CT-1 Deposits

21.7.2.6.5.4 (10-01-2019) Form CT-1 Deposits Federal tax deposits of RRTA taxes reported on Form CT-1 are due based on a pre-determined deposit schedule under which the frequency of deposits generally remains consistent throughout the year. See IRM 20.1.4, Failure to Deposit Penalty, for more information on deposit requirements. Note: Tax liabilities are incurred when compensation is paid, not when the payroll period ends. Federal tax deposits are required if the tax reported on Form CT-1 is $2,500 or more. See IRM 20.1.4.6, De Minimis Exception to Deposit Requirements, for more information. All federal tax deposits are required to be made by means of Electronic Funds Transfer (EFT). See IRM 20.1.4.2.2.1, Electronic Funds Transfer (EFT), for more information.

# Form CT-1 Discrepancy Report

21.7.2.6.5.5 (01-01-2005) Form CT-1 Discrepancy Report RRB performs a yearly reconciliation of tax, and reports any discrepancies using CT-1 Discrepancy Report to the SB/SE Specialty Tax Program Analyst. See Agreement between RRB and IRS (2010), Section 6.1(d). Forward any inquiries related to this procedure to the CT-1 specialist at the address cited in IRM 21.7.2.6.4.1, Required Routing for Form CT-1 and Form CT-1X Inquiries and Claims.

# Unexplained Adjustment on Form CT-1 (CP 177)

21.7.2.6.5.6 (10-01-2014) Unexplained Adjustment on Form CT-1 (CP 177) CP 177 (and CP 175/875) is no longer generated. See archived IRM 21.7.2 if information is needed on CP 177 (or CP175/875).

# Claims filed on Form CT-1X and Form 843

21.7.2.6.5.7 (10-01-2019) Claims filed on Form CT-1X and Form 843 Forward all excess Tier I and Tier II claims filed by employees or employers on Form CT-1X or Form 843 to the Large Corp/Technical Unit at the Cincinnati campus at the address shown in IRM 21.7.2.6.4.1, Required Routing for Form CT- and Form CT-1X Inquires and Claims. The instructions which follow are only for the Large Corp/Technical Unit at the Cincinnati campus. Forward claims on Form CT-1X (or Form 843) which meet CAT-A criteria specified in Exhibit 21.5.3–2 (only) as follows: Internal Revenue Service % Moony Ho 7940 Kentucky Dr. Florence, KY 41042 Mail Stop 5702A Route claims involving large case control (taxes of $1,000,000 or more) to the area office where the railroad is located. Excess Tier I and Tier II tax claims filed on Form 843 by employees are worked following the procedures outlined in IRM 21.7.2.4.4.4.2, Excess Social Security and Medicare Tax Withheld — Employee Claims for Refund.

# RRB Employer Status Determinations

21.7.2.6.5.8 (10-01-2014) RRB Employer Status Determinations The RRB may determine that a railroad has been reporting and paying FICA taxes in error. The employer may then file a claim or make an adjustment using Form 941-X to remove the FICA taxes in previous years and request they be applied to their Railroad Retirement Tax account (Form CT-1). Employers are instructed to file Form CT-1X, Adjusted Employer's Annual Railroad Retirement Tax Return or Claim for Refund. If the employer had not filed Form CT-1 for the prior period, see IRM 21.7.2.6.5.9, Incorrect Type of Return Filed – RRTA vs. FICA. They may also file an amended Form 940 for refund of FUTA taxes based on the RRB determination. Do not work these claims or correspondence in sites other than Cincinnati. If a claim or correspondence is received, forward to CAMC as indicated in IRM 21.7.2.6.4.1, Required Routing for Form CT-1 and Form CT-1X Inquiries and Claims.

# Incorrect Type of Return Filed – RRTA vs. FICA

21.7.2.6.5.9 (10-01-2013) Incorrect Type of Return Filed – RRTA vs. FICA There are instances where taxpayer files Form 941/944 but should file Form CT-1, or vice versa. If the employer should have filed a Form CT-1 to report RRTA taxes, the employer can make an interest-free adjustment by filing an original return, Form CT-1, reporting the correct amount of RRTA tax and attaching an adjusted return (Form 941-X/944-X/CT-1X) to correct the erroneously reported FICA tax. Example: Taxpayer files Form 941 for the 202103, 202106, and 202109 quarters. At the end of the year, the taxpayer realizes they filed incorrect Forms 941 for the first three quarters of 2021 and should have filed Form CT-1. Instruct the taxpayer to file an original Form CT-1 for 202112 and include RRTA for the entire year (including what was previously reported on Forms 941 as FICA tax). Also, instruct the taxpayer to file Forms 941-X for each of the first three quarters of 2021. Note: Reapply credits as appropriate when adjusting accounts for the situation described above.

# Form CT-1X — Adjusted Employer's Annual Railroad Retirement Tax Return or Claim for Refund

21.7.2.6.5.10 (10-01-2025) Form CT-1X — Adjusted Employer's Annual Railroad Retirement Tax Return or Claim for Refund Form CT-1X is filed to correct taxes previously reported on Form CT-1. Taxpayers can choose to either file: An adjusted railroad retirement tax return, or A claim for refund or abatement Note: If the taxpayer did not check a box in Part 1 (or checked both boxes) and the CT1-X reflects a tax decrease, make two attempts to contact the taxpayer by phone (if a telephone number is available) to determine whether they intended to follow the adjustment process or the claim process. If unable to contact the taxpayer by phone, verify which set of certification box(es) were checked. If the taxpayer checked only the claim certification(s), process as a claim for refund. If the taxpayer checked the adjustment certification(s), or checked both the adjustment certification(s), or did not check either certification, process as an adjusted employment tax return.

# Form CT-1X Decreases — Adjusted Employment Tax Return

21.7.2.6.5.10.1 (05-10-2023) Form CT-1X Decreases — Adjusted Employment Tax Return Verify all required items on Form CT-1X are complete, such as: Name, address, and EIN Calendar year being corrected Box 1 in Part 1 is checked Box 3 and the applicable certification is checked on line 4a, 4b or 4c in Part 2 (if required; see exception criteria in (2) below). Detailed explanation (see IRM 21.7.2.4.4 (12)) Signature (see IRM 21.7.2.4.4.11, Signature Requirements for Form 94XX Amended/Adjusted Employment Tax Returns, for who may sign and handling guidance for missing signatures). If a certification box is not checked, make two attempts to secure the information by phone if a telephone number is available. Otherwise, follow procedures in IRM 21.5.3.4.2, Tax Decrease or Credit Increase Processing. Use Letter 4384C to reject the claim and identify the missing information in the letter. Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Exception: A line 4 certification is only required if the Form CT-1X reflects changes to one or more lines 6 through 17. Exception: See (10) in IRM 21.7.2.4.4, Adjusted Employer's Federal Tax Return or Claim for Refund. Caution: When contacting the taxpayer or authorized representative, follow taxpayer authentication guidelines in IRM 21.1.3, Operational Guidelines Overview. The individual contacted by phone must be authorized to prepare taxpayer's employment tax returns. Document the case history with the date, time, name of individual contacted, and information obtained from the individual. Note: If the taxpayer checked both the adjustment certification(s) and the claim certification(s) boxes, process as an adjusted employment tax return. Note: If the certification box checked in Part 2 is inconsistent with the process selected in Part 1, continue processing the Form CT-1X based on the information provided in Part 1. If a taxpayer files an adjusted employment tax return within 90 days of the expiration of the period of limitations, the adjustment must be converted to a claim for refund and the taxpayer must be notified. Take the following actions: Notate the Form CT-1X with the following text: "90 day - Claim" . Process the Form CT-1X per procedures in IRM 21.7.2.6.5.10.2, Form CT-1X Decreases — Claim, and refer to IRM 21.7.2.4.4.5, 90 Day — Claim, for additional information. Generate Letter 4384C to the taxpayer explaining the adjustment has been converted to a claim. Math verify all Tier I and Tier II tax adjustment items reported on the Form CT-1X. Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Process adjusted employment tax returns as follows: Input TC 291, HC 1, BS 20 for the amount of decrease along with IRN 070. Note: Overpayments arising from adjustments made under these procedures are subject to offset. Omit Hold Code 1 with the adjustment and allow the computer to systemically offset the credit if it will be fully absorbed by an outstanding balance due. Otherwise, if conditions prevent the computer from completing the offset, or if only part of the credit needs to be offset, manual offsets using TC 820/TC 700 transactions will be required. Caution: For tax decreases with an unreversed FTD penalty, see IRM 20.1.4.21.5.1, Amended ROFTL (Forms 941-X, 943-X, 944-X, 945-X, and CT-1X). Transfer the applicable overpayment using TC 830/710 to the period in which the Form CT-1X was filed. Caution: To prevent either debit or credit interest from generating, use the later of the return due date of the tax period being adjusted or the availability date of the overpayment as the transaction date of the TC 830 and use the due date of the return the credit is being applied to as the transaction date of the TC 710. See (4) in IRM 21.5.8.4.2, Determining Correct Credit Transfer Format, for more information. If the entire credit is not available to be transferred, generate Letter 4384C to the taxpayer. Explain why the entire amount was not available (for example, there was a balance due on the tax period being adjusted or the credit is being offset to a balance due on another tax period).

# Form CT-1X Decreases — Claim

21.7.2.6.5.10.2 (05-10-2023) Form CT-1X Decreases — Claim Verify all required items on Form CT-1X are complete, such as: Name, address, and EIN Calendar year being corrected Box 2 in Part 1 is checked Box 3 and the applicable certification is checked on line 5a, 5b, 5c or 5d in Part 2 (if required; see exception criteria in (2) below). Detailed explanation (see IRM 21.7.2.4.4 (12)) Signature (see IRM 21.7.2.4.4.11, Signature Requirements for Form 94XX Amended/Adjusted Employment Tax Returns, for who may sign and handling guidance for missing signatures). If a certification box is not checked, make two attempts to secure the information by phone if a telephone number is available. Otherwise, follow procedures in IRM 21.5.3.4.2, Tax Decrease or Credit Increase Processing. Use Letter 4384C to reject the claim and identify the missing information in the letter. Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Exception: A line 5 certification is only required if the Form CT-1X reflects changes to one or more lines 6 through 17. Exception: See (10) in IRM 21.7.2.4.4, Adjusted Employer's Federal Tax Return or Claim for Refund. Caution: When contacting the taxpayer or authorized representative, follow taxpayer authentication guidelines in IRM 21.1.3, Operational Guidelines Overview. The individual contacted by phone must be authorized to prepare taxpayer's employment tax returns. Document the case history with the date, time, name of individual contacted, and information obtained from the individual. Exception: Claims filed without consent: Unless one of the exceptions above applies, if the taxpayer has not checked a box on line 5 and states (in the explanation or in response to our contact) they are not required to obtain the consents prior to filing the claim and the claim is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, send claim CAT-A. Exam will correspond with the taxpayer to secure applicable certifications. In certain situations, taxpayers may not have repaid or reimbursed their employees or obtained their consents prior to filing a claim (Form CT-1X). However, they must certify they have repaid or reimbursed their employees or obtained consents before the IRS can allow the claim. See Instructions for Form CT-1X for more information. Math verify all Tier I and Tier II tax adjustment items reported on the Form CT-1X. Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Input TC 291, BS 20 for the amount of the decrease along with IRN 070. Caution: For tax decreases with an unreversed FTD penalty, see IRM 20.1.4.21.5.1, Amended ROFTL (Forms 941-X, 943-X, 944-X, 945-X, and CT-1X).

# Form CT-1X Increases — Adjusted Employment Tax Return

21.7.2.6.5.10.3 (03-10-2025) Form CT-1X Increases — Adjusted Employment Tax Return Verify all required items on Form CT-1X are complete, such as: Name, address, and EIN Calendar year being corrected Box 1 in Part 1 is checked Box 3 is checked in Part 2 Detailed explanation (see IRM 21.7.2.4.4 (12)) Signature (see IRM 21.7.2.4.4.11, Signature Requirements for Form 94XX Amended/Adjusted Employment Tax Returns, for who may sign and handling guidance for missing signatures). Note: See (3) and (4) of IRM 21.5.3.4.1, Tax Increase or Credit Decrease Processing, if the Form CT-1X is missing required information. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Check for the date the taxpayer discovered the error. If not entered on page 1, review the explanation. Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, if the ascertained date is not provided and a telephone number is available, make two attempts to contact taxpayer by phone to obtain the information. If the ascertained date cannot be obtained by phone, input the adjustment as a TC 290. Exception: If you receive a Form CT-1X for the immediately preceding tax year prior to the due date for the current tax year (for example, a Form CT-1X reporting a tax increase for tax year 2024 received on or before February 28, 2026), it is not necessary to contact the taxpayer for an ascertained date. In that situation, input a TC 298 with the applicable interest computation date. See IRM 21.7.2.4.4.2, Interest-Free Adjustments (Employment Tax Returns), for more information. Reminder: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ Math verify all Tier I and Tier II tax adjustment items reported on the Form CT-1X. Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Use the table below to make your adjustment(s). If Then 1) Return is filed by the due date of the return for the period in which the taxpayer discovered the reporting error Input TC 298, IRN 070, BS 20 and the correct interest computation date (INTCMP-DT). See IRM 21.7.2.4.4.2, Interest-Free Adjustments (Employment Tax Returns), and example below for additional information. 2) Return is not filed by the due date of the return for the period in which the error was ascertained OR"date you discovered errors" was blank and the date error was discovered was not furnished in Part 4 Input TC 290 and IRN 070 with BS 20. Example: An employer discovers an error on February 5, 2025 and files a Form CT-1X which is received by the IRS on March 4, 2025 for the MFT 09 202312 tax period. The interest computation date would be March 4, 2025. Adjust the FTD penalty when using either a TC 290 (see IRM 20.1.4.21.3, Amended or Supplemental (Tax Decrease or Non-Interest-Free Tax Increase)) or a TC 298 (see IRM 20.1.4.21.5, Adjusted Returns (Forms 941-X, 943-X, 944-X, and CT-1X)). Note: See IRM 20.1.4.21.5.1, Amended ROFTL (Forms 941-X, 943-X, 944-X, 945-X, and CT-1X), when using a TC 298 or TC 290 and an amended ROFTL was provided with the adjusted return. Be sure any payments are credited to period(s) where the tax is being assessed.

# COVID-19 Related Employment Tax Relief

21.7.2.7 (01-15-2025) COVID-19 Related Employment Tax Relief This section of the IRM provides guidance on COVID-19 related employment tax credits and other administrative tax relief applicable to employment taxes. COVID-19 related legislation with direct impact on employment tax administration includes: Sections 7001, 7003, and 7005 of P.L. 116-127, Families First Coronavirus Response Act (FFCRA), established new refundable employment tax credits for employers that applied to qualified sick leave wages and qualified family leave wages (collectively "qualified leave wages" ) paid for periods of leave taken from April 1, 2020 and through December 31, 2020. Additionally, the qualified leave wages were not subject to the employer's share of security tax (or the equivalent portion of the Railroad Retirement Tax Act Tier 1 tax). See IRM 21.7.2.7.1, Credit for Qualified Sick and Family Leave Wages, for more information. Section 2301 of P.L. 116-136, Coronavirus Aid, Relief, and Economic Security (CARES) Act, established a new refundable employee retention tax credit applicable to qualified wages paid after March 12, 2020 and before January 1, 2021. See IRM 21.7.2.7.2, Employee Retention Credit (ERC), for more information. Section 3606 of P.L. 116-136, authorized the Service to provide advance payments of the FFCRA credits identified above to employers prior to the filing of the corresponding employment tax return. And, Section 2301(l) authorized the Service to provide advance payments of the Employee Retention Credit. See IRM 21.7.2.7.5, Form 7200, Advance Payment of Employer Credits due to COVID-19, for more information. Section 2302 of the CARES Act defers the required payment due date for the employer's share of social security taxes effective March 27, 2020 and applicable to wages paid before January 1, 2021. 50 percent of the amounts for which payment can be deferred are due by December 31, 2021 with the remaining 50 percent due by December 31, 2022. See IRM 21.7.2.8, Deferred Payment of Social Security Taxes for 2020, and IRM 21.7.2.8.1, Deferred Payment of Employer's Share of Social Security Taxes for 2020, for more information. The Service has provided administrative relief for certain employment tax obligations in addition to the legislative relief provided in the FFCRA and the CARES Act. The most notable administrative relief provisions for purposes of handling employment tax account related issues addressed in this IRM are described in IRM 21.7.2.7.4, Other COVID-19 Related Employment Tax Relief — Notice 2020-22, Notice 2020-23, and Notice 2020-35. On August 8, 2020, the President issued a Presidential Memorandum directing the Secretary of the Treasury to use his authority pursuant to Section 7508A of the Internal Revenue Code to defer the withholding, deposit, and payment of certain payroll tax obligations. As specified in Notice 2020-65, the Secretary determined that employers required to withhold social security taxes or the equivalent portion of Tier 1 railroad retirement taxes (RRTA) from wages paid to employees are affected taxpayers for purposes of the relief described in the Presidential Memorandum and in Notice 2020-65. See IRM 21.7.2.8, Deferred Payment of Social Security Taxes for 2020, and IRM 21.7.2.8.2, Notice 2020-65 and Notice 2021-11 — Deferred Payment of Employee's Share of Social Security Taxes for 2020, for more information. Several provisions of P.L. 116-260, Consolidated Appropriations Act, 2021 altered and/or extended COVID-19 related relief for employment tax, including: Sections 206 and 207 of the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (enacted as Division EE of the Consolidated Appropriations Act, 2021 (P.L. 116-260)) modified the Employee Retention Credit (ERC), including several retroactive changes, and extended it through June 30, 2021. Sections 286 and 288 of the COVID-related Tax Relief Act of 2020, (enacted as Subtitle B, Division N of the Consolidated Appropriations Act, 2021 (P.L. 116-260)) amended employment tax credits for qualified sick leave wages and qualified family leave wages and extended them for periods of leave taken through March 31, 2021. Section 274 of the COVID-related Tax Relief Act of 2020, (enacted as Subtitle B, Division N of the Consolidated Appropriations Act, 2021 (P.L. 116-260)) extended the due date for payment of employee social security taxes deferred per guidance in Notice 2020-65 to December 31, 2021. Section 303 of the Taxpayer Certainty and Disaster Relief Act of 2020 (enacted as Division EE of the Consolidated Appropriations Act, 2021 (P.L. 116-260)) established a new employment tax credit for certain eligible employers. Form 5884-D, Employee Retention Credit for Certain Tax-Exempt Organizations Affected by Qualified Disasters, was developed for use by eligible employers to claim the credit. Form 5884-D is filed after the filing of an original employment tax return. Form 5884-D processing guidance is currently under development. Administering the new credits and other employment tax relief required substantial revision to employment tax forms: Beginning with the second quarter of 2020, Form 941 was revised multiple times to administer the new employment tax credits and deferred payment features provided for in COVID relief related legislation and for other administrative relief provisions impacting the completion of employment tax returns. Annual employment tax forms (Form 943, Form 944, and Form CT-1) were also revised beginning with tax year 2020. The IRS developed Form 7200, Advance Payment of Employer Credits Due to COVID-19, for taxpayers to file requests for advance payments for tax years 2020 and 2021. Caution: Advance payments ceased being issued after January 31, 2022. See IRM 21.7.2.7.5, Form 7200, Advance Payment of Employer Credits due to COVID-19, for more information. Due to timing matters, Form 941 for the first quarter of 2020 could not be revised before the filing due date to report certain aspects of the legislative employment tax relief applicable to a portion of that tax period. See IRM 21.7.2.7.2.5, First Quarter 2020 Form 941 — Employee Retention Credits and Notice 1447, and IRM 21.7.2.8.11, First Quarter 2020 Form 941 — Deferred Payment of Social Security Taxes and Notice 1447, for guidance on handling taxpayer responses related to first quarter 2020 reporting matters. Adjusting employment tax accounts for tax years 2020 and 2021 will, in many cases, require special handling. See IRM 21.7.2.7.6, COVID-19 Related Employment Tax Relief and Forms 94XX, for more information. Several provisions of P.L. 117-2, The American Rescue Plan Act of 2021 (the ARP) altered and/or extended COVID-19 related relief for employment tax, including: Section 9641 of the ARP added new Sections 3131, 3132, and 3133 to the Internal Revenue Code to provide credits for qualified sick and family leave wages similar to the credits that were previously enacted under the Families First Coronavirus Response Act (FFCRA) and amended and extended by the COVID-related Tax Relief Act of 2020. The credits under Sections 3131 and 3132 are available for qualified leave wages paid for leave taken after March 31, 2021, and before October 1, 2021. Section 9651 of the ARP added new Section 3134 to the Internal Revenue Code, effective for calendar quarters beginning after June 30, 2021, to extend the employee retention credit for wages paid after June 30, 2021, and before January 1, 2022. Section 9501 of the ARP added new Section 6432 to the Internal Revenue Code providing for COBRA premium assistance in the form of a full reduction in the premium otherwise payable by certain individuals and their families who elect COBRA continuation coverage due to a loss of coverage as the result of a reduction in hours or an involuntary termination of employment (assistance eligible individuals). This COBRA premium assistance is available for periods of coverage beginning on or after April 1, 2021, through periods of coverage beginning on or before September 30, 2021. Section 80604 of P.L. 117-58, the Infrastructure Investment and Jobs Act (Infrastructure Act), amended IRC 3134 to limit the availability of the Employee Retention Credit (ERC) in the fourth quarter of 2021 to employers that are recovery startup businesses. See IRM 21.7.2.7.2.4, Employee Retention Credit (ERC) — Infrastructure Investment and Jobs Act (Infrastructure Act) Provisions, for more information. Specialization of COVID-related credit PAPER cases within AM. Form 94XX and other paper cases involving COVID-related employment tax credits (Employee Retention Credit (ERC), Credit for Qualified Sick and Family Leave Wages and COBRA Premium Assistance Credit) received within AM will be handled by designated employees (only). Submission Processing (SP) is screening Form 94XX work prior to ICT scanning to identify claims for ERC and Credit for Qualified Sick and Family Leave Wages (but not claims for COBRA Premium Assistance Credit). Cases identified by SP will be assigned with case Priority Code 1 for ERC cases and case Priority Code 3 for Credit for Qualified Sick and Family Leave Wages cases. However, to ensure proper tracking and delivery, employees must take the following actions when such cases are identified in AM inventory, including those missed during SP screening: Unprocessed Form 94XX ERC claims (tax decreases or credit increases) including correspondence with unprocessed Form 94XX claims attached: Unprocessed Forms 94XX (or duplicate filed employment tax returns being processed as a Form 94XX), including correspondence with unprocessed Form 94XX claims attached, reporting ERC related tax decreases or credit increases are to be controlled with Priority Code 1, case category SPC6, and IDRS number 0230281416. Use OFP Code 710-10056 when processing ERC claims. Note: Case category SPC6 is also used with ERC claim withdrawal requests as discussed in (3) of IRM 21.7.2.7.7.1, ERC Claim Withdrawal Requests — Case Receipts and Case Association Actions. Unprocessed Spanish Form 941X (SP) ERC Claims that have NOT had RAAS analysis completed: should remain in IDRS number 0230281416. Unprocessed Spanish Form 941X (SP) ERC claims (tax decreases or credit increases) including Spanish correspondence with unprocessed Form 941X (SP) claims attached with RAAS analysis completed: Unprocessed Spanish Forms 94XX or duplicate filed employment tax returns being processed as a Form 941X (SP), including correspondence with unprocessed Form 94X1X (SP) claims attached, reporting ERC related tax decreases or credit increases with completed RAAS analysis are to be controlled with Priority Code 1, case category SPC6, and IDRS number 0433020103. Use OFP Code 710-10056 when processing ERC claims. Forms 94XX reporting ERC reversals (tax increases or credit decreases): Forms 94XX (or duplicate filed employment tax returns being processed as a Form 94XX) reporting ERC related tax increases or credit decreases are to be controlled with IDRS number 0430404307 with no priority code and with the usual case category. ERC Adjacent/Related cases (including correspondence): Paper cases involving ERC related inquiries are to be controlled with Priority Code 1, usual case category, and IDRS number 0430404307. Exception: If the case includes or is in regards to an unprocessed ERC claim, follow guidance in the first bullet above. Spanish ERC Adjacent/Related cases (including correspondence): Spanish paper cases involving ERC related inquiries are to be controlled with Priority Code 1, usual case category, and IDRS number 0433055447. Replies to ERC disallowance letters 105C or 106C: Replies to full and partial disallowance letters (105C and 106C) issued on ERC claims are to be controlled with Priority Code 1, case category SPC6, and IDRS number 0234086256. Exception: If the case includes or is in regards to an unprocessed Spanish ERC claim, follow guidance in the third bullet above, specific to unprocessed Spanish Form 941X (SP) ERC claims. Cases involving Credit for Qualified Sick and Family Leave Wages: Form 94XX and other paper cases involving claims for Credit for Qualified Sick and Family Leave Wages are to be controlled with Priority Code 3, usual case category, and IDRS number 0430404307. Exception: If the case also involves ERC, follow guidance in the first, second or third bullets above as appropriate. Cases involving Credit for COBRA Premium Assistance Credit: Form 94XX and other paper cases involving claims for COBRA Premium Assistance Credit are to be controlled with IDRS number 0430404307 with no priority code and with the usual case category. Exception: If the case also involves ERC, follow guidance in the first, second or third bullets above as appropriate. Note: The appropriate Priority Code must be recorded on CII cases for ERC claims (tax decreases or credit increases) and Credit for Qualified Sick and Family Leave Wage cases prior to closing the case. Case category SPC6 must be recorded on CII cases for ERC claims (tax decreases or credit increases) prior to closing the case. Caution: If a non-COVID-related case is identified in the inventory of COVID-related credit cases (either assigned to IDRS number 0230281416 or to an employee designated to work COVID-related credit cases), remove any Priority Code 1 or Priority Code 3 recorded for the case on CII and reassign it to either IDRS number 0230265402 (CAMC) or 0440078330 (OAMC) as appropriate. Reminder: See (3) in IRM 21.7.2.8, Deferred Payment of Social Security Taxes for 2020, for instructions on controlling inquiries and cases involving deferred social security tax. Transcription of Forms 94XX claiming ERC: Forms 941-X reporting changes to ERC amounts are being partially transcribed for RAAS analysis to determine handling patterns to be applied. When released to AM for handling, these cases will be controlled as follows: IDRS number: 0230265187 — Workable, cleared for processing IDRS number: 0230281088 — Workable, disallow Caution: Transcribed cases will be worked by designated employees as per specific guidance found in IRM 21.7.2.7.6.3, Form 94XX — Employee Retention Credit (ERC) — Claims and Adjustments Cleared for Processing (Accepted) by RAAS and Forms 94XX Reporting Tax Increases or Credit Decreases, and subsections following IRM 21.7.2.7.8, Additional Case Processing Actions and/or Disallowance Actions for Forms 94XX Meeting ERC-related Filtering Criteria. Do not take actions on these cases unless specifically directed to do so.

# Credit for Qualified Sick and Family Leave Wages

21.7.2.7.1 (12-01-2021) Credit for Qualified Sick and Family Leave Wages P.L. 116-127, Families First Coronavirus Response Act (FFCRA), provides certain eligible small and midsize employers refundable tax credits that reimburse them, dollar-for-dollar, for the cost of providing qualified sick and family leave wages to their employees for paid leave related to COVID-19. For employment tax administration purposes, the tax credits for providing qualified sick leave and qualified family leave wages are collectively referred to as "Credit for Qualified Sick and Family Leave Wages" . The Credit for Qualified Sick and Family Leave Wages is a fully refundable tax credit against certain employment taxes reported on quarterly and annual employment tax returns. The Credit for Qualified Sick and Family Leave Wages can be a non-refundable credit, a refundable credit, or both, depending on the amount of the credit that can be claimed for a particular tax period and the amount(s) of certain other non-refundable credit(s) being reported. How the credit is applied depends on the tax period for which it is being claimed. Time frames for claiming the Credit for Qualified Sick and Family Leave Wages, the eligibility requirements, and credit limits/amounts have been modified by subsequent legislation. For detailed descriptions of credit features and eligibility requirements as initially enacted and as modified, see: IRM 21.7.2.7.1.1, Credit for Qualified Sick and Family Leave Wages — Families First Coronavirus Response Act (FFCRA) Provisions IRM 21.7.2.7.1.2, Credit for Qualified Sick and Family Leave Wages — COVID-related Tax Relief Act of 2020 Provisions IRM 21.7.2.7.1.3, Credit for Qualified Sick and Family Leave Wages — The American Rescue Plan Act of 2021 (the ARP) Provisions IRM 21.7.2.7.1.4, Timing Considerations Applicable to Reporting Qualified Sick and Family Leave Wages, Tax, and Associated Credits Corrections to amounts of Credit for Qualified Sick and Family Leave Wages previously reported (or omitted) on an employment tax return will generally require the filing of the appropriate Form 94XX adjusted return. See IRM 21.7.2.7.6.1, Form 94XX — Credit for Qualified Sick and Family Leave Wages for Leave Taken Before April 1, 2021, and IRM 21.7.2.7.6.2 , Form 94XX — Credit for Qualified Sick and Family Leave Taken After March 31, 2021, for handling guidance.

# Credit for Qualified Sick and Family Leave Wages — Families First Coronavirus Response Act (FFCRA) Provisions

21.7.2.7.1.1 (04-20-2022) Credit for Qualified Sick and Family Leave Wages — Families First Coronavirus Response Act (FFCRA) Provisions This subsection provides information of the timeframes, eligibility requirements, and credit limits/amounts for the Credit for Qualified Sick and Family Leave Wages as initially enacted in P.L. 116-127, Families First Coronavirus Response Act (FFCRA). For other Credit for Qualified Sick and Family Leave Wages inquiries and information: See IRM 21.7.2.7.1, Credit for Qualified Sick and Family Leave Wages, for general information on the credit. See IRM 21.7.2.7.1.2, Credit for Qualified Sick and Family Leave Wages — COVID-related Tax Relief Act of 2020 Provisions, for information on timeframes, eligibility requirements, and credit limits/amounts as modified by the subsequent legislation referenced in the title. See IRM 21.7.2.7.1.3, Credit for Qualified Sick and Family Leave Wages — The American Rescue Plan Act of 2021 (the ARP) Provisions, for information on timeframes, eligibility requirements, and credit limits/amounts as modified by the subsequent legislation referenced in the title. See IRM 21.7.2.7.6.1, Form 94XX — Credit for Qualified Sick and Family Leave Wages for Leave Taken Before April 1, 2021, and IRM 21.7.2.7.6.2 , Form 94XX — Credit for Qualified Sick and Family Leave Taken After March 31, 2021, for credit correction requests reported on Form 94XX adjusted returns. P.L. 116-127, Families First Coronavirus Response Act (FFCRA), provides small and midsize employers refundable tax credits that reimburse them, dollar-for-dollar, for the cost of providing qualified sick and family leave wages to their employees for leave related to COVID-19. The FFCRA gives eligible employers funds to provide employees with paid sick and family and medical leave for reasons related to COVID-19, either for the employee's own health needs or to care for family members. Eligible employers are required to provide paid leave for periods of leave beginning April 1, 2020, through December 31, 2020, as a result of two separate provisions: The Emergency Paid Sick Leave Act (EPSLA), which entitles workers to up to 80 hours of paid sick time when they are unable to work (or telework) for certain reasons related to COVID-19, including for their own health needs or to care for others. The Emergency Family and Medical Leave Expansion Act (Expanded FMLA), which entitles workers to certain paid family and medical leave, including up to an additional ten weeks of paid family leave to care for a child whose school or place of care is closed or childcare provider is closed or unavailable due to COVID-19 precautions. Under the initial legislation, eligible employers are businesses and tax-exempt organizations with fewer than 500 employees that are required to provide paid sick leave under the EPSLA and to provide paid family leave under the Expanded FMLA. Note: Under the FFCRA, tribal governments that provide paid sick leave and paid family leave wages may claim tax credits if they are otherwise eligible employers. Caution: Under the FFCRA, the federal government, the government of any state or political subdivision thereof, and any agency or instrumentality of those governments are not entitled to receive tax credits for paid sick leave or paid family leave wages. Tribal governments that provide paid sick leave and paid family leave wages may claim tax credits if they are otherwise eligible employers. The FFCRA covers the costs of this required paid leave by providing eligible employers with tax credits for providing qualified sick leave and qualified family leave wages, collectively referred to as "Credit for Qualified Sick and Family Leave Wages" . Under FFCRA, the tax credits applied to qualified sick leave wages and qualified family leave wages paid for periods of leave beginning April 1, 2020, and ending December 31, 2020. The following table summarizes employee eligibility, benefits and associated eligible employer tax credit provision under EPSLA and Expanded FMLA: Type of Credit IF an employee is unable to work because: Then Paid Sick Leave Credit They're subject to a COVID-19 quarantine or isolation order. They're advised to self-quarantine because of COVID-19. They have COVID-19 symptoms and are seeking a medical diagnosis. The credit is at the employee's regular rate of pay (or, if higher, the Federal, State, or local minimum wage), up to $511 per day and $5,110 in total up to 80 hours. The employer is also eligible for credits for allocable qualified health plan expenses for the employee and the employer's portion of Medicare tax expenses for the employee. Note: The 80 hours of paid sick leave is the maximum allowed for any reason, including those reasons noted below that are subject to a $200 per day limit. They're caring for someone who is subject to a COVID-19 quarantine or isolation order, or for someone who is advised to self-quarantine because of COVID-19. They're caring for a child whose school or place of care is closed due to COVID-19. They're caring for a child whose childcare provider is unavailable due to COVID-19. The credit is for two-thirds of the employee's regular rate of pay (or, if higher, the Federal, State, or local minimum wage), up to $200 per day and $2,000 in total, for up to 80 hours. The employer is also eligible for credits for allocable qualified health plan expenses for the employee and the employer's portion of Medicare tax. Note: The 80 hours of paid sick leave is the maximum allowed for any reason, including those reasons noted above that are subject to a $511 per day limit. As a result, if the employee was provided paid sick leave for reasons in both categories, the maximum will between $2,000 and $5,110. Family Leave Credit They're caring for a child whose school or place of care is closed due to COVID-19. They're caring for a child whose childcare provider is unavailable due to COVID-19. This credit is equal to two-thirds of the employee's regular rate of pay, capped at $200 per day or $10,000 in total. Up to 10 weeks of qualifying leave can be counted toward the Family Leave Credit. This can be combined with the sick leave credit, so an employer could be entitled to a credit for pay for up to 12 weeks: 2 weeks of sick leave and 10 weeks of family leave. The employer is also eligible for credits for allocable qualified health plan expenses for the employee and the employer's portion of Medicare tax. For tax periods 202006, 202009, and 202012,the Credit for Qualified Sick and Family Leave Wages can be a non-refundable credit, a refundable credit, or both, depending on the amount of the Credit for Qualified Sick and Family Leave Wages that can be claimed for a particular tax period and amounts of certain other non-refundable credits being reported. The table which follows shows how non-refundable/refundable portions of sick and family leave credits are determined for tax period 202006, 202009, and 202012: Tax Period(s) Credit Type How Credit is Taken 202006, 202009, and 202012 Non-refundable Credit for Qualified Sick and Family Leave Wages The credit is first applied, to the extent possible, as a non-refundable credit against amounts of otherwise due employer's share of social security taxes (or the equivalent portion of Tier 1 RRTA taxes) as previously reduced (in order) by credits for the "Qualified Small Business Payroll Tax Credit for Increasing Research Activities" (QSB Research Credit ) from Form 8974 (filed with Form 941 or other employment tax form), the "Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans" from Form 5884-C (filed after original employment tax forms are filed), and the "Employee Retention Credit for Certain Tax-Exempt Organizations Affected by Qualified Disasters" from Form 5884-D (filed after original employment tax forms are filed). 202006, 202009, and 202012 Refundable Credit for Qualified Sick and Family Leave Wages Any amount of Credit for Qualified Sick and Family Leave Wages for the tax period that cannot be applied as a non-refundable credit can instead be claimed as a refundable credit on the applicable employment tax return. Caution: Although not originally termed as such, the credit addressed in the table above is, for current employment tax administration purposes, considered as being "for leave taken before April 1, 2021" . Note: Also see Exhibit 21.7.2-2, Application of Credits by Tax Period: Credit for Qualified Sick and Family Leave Wages, Employee Retention Credit (ERC), and COBRA premium assistance credit. Caution: See IRM 21.7.2.7.1.4, Timing Considerations Applicable to Reporting Qualified Sick and Family Leave Wages, Tax, and Associated Credits, for information on Credit for Qualified Sick and Family Leave Wages claimed in tax periods later than that in which qualified leave was taken by an employee. In addition to other COVID-19 tax relief provisions, qualified sick leave wages and qualified family leave wages paid to employees by eligible employers are exempt from the employer's share of social security taxes (or the equivalent portion of Railroad Retirement Tax Act Tier 1 tax). Form 941 was revised to administer the Credit for Qualified Sick and Family Leave Wages beginning with the second quarter of 2020: The employee share of social security tax on qualified sick leave wages is reported on lines 5a(i) of Form 941. The employee share of social security tax on qualified family leave wages is reported on lines 5a(ii) of Form 941. The non-refundable portion of the Credit for Qualified Sick and Family Leave Wages, if applicable, is reported on Line 11b of Form 941. The refundable portion of the Credit for Qualified Sick and Family Leave Wages, if applicable, is reported on Line 13c of Form 941 (and will post as a TC 766 with CRN 299). Qualified health plan expenses allocable to qualified sick leave wages are reported on line 19 of Form 941. Qualified health plan expenses allocable to qualified family leave wages are reported on line 20 of Form 941. Reminder: Qualified sick and family leave wages aren't subject to the employer share of social security tax (or the equivalent portion of Railroad Retirement Tax Act Tier 1 tax). Note: The Instructions for Form 941 include a worksheet for calculating amounts of non-refundable and refundable portions of Credit for Qualified Sick and Family Leave Wages to be carried to Lines 11b, and 13c(respectively) of Form 941. Note: Annual employment tax forms and instructions were revised in similar fashion to enable reporting Credit for Qualified Sick and Family Leave Wages amounts. In anticipation of claiming the Credit for Qualified Sick and Family Leave Wages, eligible employers can: Obtain immediate access to the credit by retaining (i.e., not paying) a corresponding amount of the employment taxes that otherwise would have been deposited. The amount retained can include federal income tax withholding, the employees' share of social security and Medicare taxes, and the employer's share of social security and Medicare taxes for all employees, up to the amount of the credit. Amounts eligible to be retained for this purpose are not subject to federal tax deposit penalties. Request an advance payment of the Credit for Qualified Sick and Family Leave Wages (for amounts that cannot be obtained by reducing federal tax deposits and payments) by submitting Form 7200. See IRM 21.7.2.7.5, Form 7200, Advance Payment of Employer Credits due to COVID-19 for more information on advance payments. Caution: Advance payments ceased being issued after January 31, 2022. See IRM 21.7.2.7.5, Form 7200, Advance Payment of Employer Credits due to COVID-19, for more information. If a taxpayer has questions on eligibility for the Credit for Qualified Sick and Family Leave Wages for tax periods in calendar year 2020, impact on payment or depositing, or how to report these amounts on tax returns, general information as described above can be provided to the taxpayer. For more complex questions, including those which are out-of-scope, refer the taxpayer to the irs.gov website at: New Employer Tax Credits Coronavirus Tax Relief for Businesses and Tax-Exempt Entities (which include links to Frequently Asked Questions (FAQs) and other guidance.) Tax Credits for Paid Leave Under the Families First Coronavirus Response Act for Leave Prior to April 1, 2021

# Credit for Qualified Sick and Family Leave Wages — COVID-related Tax Relief Act of 2020 Provisions

21.7.2.7.1.2 (04-20-2022) Credit for Qualified Sick and Family Leave Wages — COVID-related Tax Relief Act of 2020 Provisions This subsection provides information of the timeframes, eligibility requirements, and credit limits/amounts for the Credit for Qualified Sick and Family Leave Wages as modified and extended by Sections 286, 287, and 288 of the COVID-related Tax Relief Act of 2020 (enacted as Subtitle B of Title II of Division N of the Consolidated Appropriations Act, 2021 (P.L. 116-260)). For other Credit for Qualified Sick and Family Leave Wages inquiries and information: See IRM 21.7.2.7.1, Credit for Qualified Sick and Family Leave Wages, for general information on the credit. See IRM 21.7.2.7.1.1, Credit for Qualified Sick and Family Leave Wages — Families First Coronavirus Response Act (FFCRA) Provisions, for information on timeframes, eligibility requirements, and credit limits/amounts as established by original legislation. See IRM 21.7.2.7.1.3, Credit for Qualified Sick and Family Leave Wages — The American Rescue Plan Act of 2021 (the ARP) Provisions, for information on timeframes, eligibility requirements, and credit limits/amounts as modified by the subsequent legislation referenced in the title. See IRM 21.7.2.7.6.1, Form 94XX — Credit for Qualified Sick and Family Leave Wages for Leave Taken Before April 1, 2021, and IRM 21.7.2.7.6.2IRM 21.7.2.7.6.2, Form 94XX — Credit for Qualified Sick and Family Leave Taken After March 31, 2021, for credit correction requests reported on Form 94XX adjusted returns. The COVID-related Tax Relief Act of 2020 amended and extended Credit for Qualified Sick and Family Leave Wages availability for employers as follows: Sections 286 and 287 of the COVID-related Tax Relief Act of 2020, (enacted as Subtitle B of Title II of Division N of the Consolidated Appropriations Act, 2021 (P.L. 116-260)) extended employment tax credits for qualified sick leave wages and qualified family leave wages (collectively referred to as "Credit for Qualified Sick and Family Leave Wages" ) for periods of leave taken through March 31, 2021. Employers are not required to provide paid sick and family leave to employees after December 31, 2020; however, eligible employers that voluntarily provide paid sick or family leave that would have met the requirements of the EPSLA or Expanded FMLA to employees may claim the tax credits for providing the qualified leave wages for periods of leave taken through March 31, 2021. (The EPSLA and Expanded FMLA only require employers to provide paid sick and family leave, respectively, to employees unable to work or telework for periods after March 31, 2020, and before January 1, 2021.) Note: Other aspects of the credit, including eligibility requirements and amounts, remained the same as applied for calendar year 2020. Credit limits carry over from calendar year 2020. See IRM 21.7.2.7.1.1, Credit for Qualified Sick and Family Leave Wages — Families First Coronavirus Response Act (FFCRA) Provisions, for more information. For tax period 202103, the Credit for Qualified Sick and Family Leave Wages can be a non-refundable credit, a refundable credit, or both, depending on the amount of the Credit for Qualified Sick and Family Leave Wages that can be claimed for the tax period and amounts of certain other non-refundable credits being reported. The table which follows shows how non-refundable/refundable portions of sick and family leave credits are determined for tax period 202103: Tax Period(s) Credit Type How Credit is Taken 202103 Non-refundable Credit for Qualified Sick and Family Leave Wages The credit is first applied, to the extent possible, as a non-refundable credit against amounts of otherwise due employer's share of social security taxes (or the equivalent portion of Tier 1 RRTA taxes) as previously reduced (in order) by credits for the "Qualified Small Business Payroll Tax Credit for Increasing Research Activities" (QSB Research Credit ) from Form 8974 (filed with Form 941 or other employment tax form), the "Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans" from Form 5884-C (filed after original employment tax forms are filed), and the "Employee Retention Credit for Certain Tax-Exempt Organizations Affected by Qualified Disasters" from Form 5884-D (filed after original employment tax forms are filed). 202103 Refundable Credit for Qualified Sick and Family Leave Wages Any amount of Credit for Qualified Sick and Family Leave Wages for the tax period that cannot be applied as a non-refundable credit can instead be claimed as a refundable credit on the applicable employment tax return. Caution: Although not originally termed as such, the credit addressed in the table above is, for current employment tax administration purposes, considered as being "for leave taken before April 1, 2021" . Note: Also see Exhibit 21.7.2-2, Application of Credits by Tax Period: Credit for Qualified Sick and Family Leave Wages, Employee Retention Credit (ERC), and COBRA premium assistance credit. Caution: See IRM 21.7.2.7.1.4, Timing Considerations Applicable to Reporting Qualified Sick and Family Leave Wages, Tax, and Associated Credits, for information on Credit for Qualified Sick and Family Leave Wages claimed in tax periods later than that in which qualified leave was taken by an employee. The March 2021 revision of Form 941 retained the line number structure used for calendar year 2020 reporting of Credit for Qualified Sick and Family Leave Wages. See (10) in IRM 21.7.2.7.1.1, Credit for Qualified Sick and Family Leave Wages — Families First Coronavirus Response Act (FFCRA) Provisions, for more information. Note: Annual employment tax forms (Form 943, Form 944, and Form CT-1) and instructions will also be revised for tax year 2021. Employers continued to be able to reduce deposits and request advance payment in anticipation of claiming the Credit for Qualified Sick and Family Leave Wages (by filing a Form 7200) for the first quarter of 2021. See (11) in IRM 21.7.2.7.1.1, Credit for Qualified Sick and Family Leave Wages — Families First Coronavirus Response Act (FFCRA) Provisions, for more information. Caution: Advance payments ceased being issued after January 31, 2022. See IRM 21.7.2.7.5, Form 7200, Advance Payment of Employer Credits due to COVID-19, for more information. If a taxpayer has questions on eligibility for the Credit for Qualified Sick and Family Leave Wages for tax period 202103, see (12) in IRM 21.7.2.7.1.1, Credit for Qualified Sick and Family Leave Wages — Families First Coronavirus Response Act (FFCRA) Provisions.

# Credit for Qualified Sick and Family Leave Wages — The American Rescue Plan Act of 2021 (the ARP) Provisions

21.7.2.7.1.3 (04-20-2022) Credit for Qualified Sick and Family Leave Wages — The American Rescue Plan Act of 2021 (the ARP) Provisions This subsection provides information of the timeframes, eligibility requirements, and credit limits/amounts for the Credit for Qualified Sick and Family Leave Wages as modified and extended by Section 9641 of The American Rescue Plan Act of 2021 (the ARP). For other Credit for Qualified Sick and Family Leave Wages inquiries and information: See IRM 21.7.2.7.1, Credit for Qualified Sick and Family Leave Wages, for general information on the credit. See IRM 21.7.2.7.1.1, Credit for Qualified Sick and Family Leave Wages — Families First Coronavirus Response Act (FFCRA) Provisions, for information on timeframes, eligibility requirements, and credit limits/amounts as established by original legislation. See IRM 21.7.2.7.1.2, Credit for Qualified Sick and Family Leave Wages — COVID-related Tax Relief Act of 2020 Provisions, for information on timeframes, eligibility requirements, and credit limits/amounts as modified by the subsequent legislation referenced in the title. See IRM 21.7.2.7.6.1, Form 94XX — Credit for Qualified Sick and Family Leave Wages for Leave Taken Before April 1, 2021, and IRM 21.7.2.7.6.2 , Form 94XX — Credit for Qualified Sick and Family Leave Taken After March 31, 2021, for credit correction requests reported on Form 94XX adjusted returns. Section 9641(a) of the ARP added new IRC 3131, IRC 3132, and IRC 3133 to provide employment tax credits for qualified sick leave wages and qualified family leave wages (collectively referred to as "Credit for Qualified Sick and Family Leave Wages" ) similar to the credits that were previously enacted under the Families First Coronavirus Response Act (FFCRA) and amended and extended by the COVID-related Tax Relief Act of 2020. The significant changes to the credits for qualified sick leave wages and qualified family leave wages under the ARP are as follows: The credits under Sections 3131 and 3132 are available for qualified leave wages and certain other wage-related expenses (such as health plan expenses and certain collectively bargained benefits) paid for leave taken after March 31, 2021, and before October 1, 2021. The paid leave credits under the ARP are tax credits against the employer's share of Medicare tax (or the equivalent portion of the Railroad Retirement Tax Act Tier 1 tax). See (4) below for more information on how the non-refundable and refundable portions are determined by the employer. The Credit for Qualified Sick and Family Leave Wages under the ARP is figured separately from the Credit for Qualified Sick and Family Leave Wages under the FFCRA. Credits claimed under the FFCRA do not limit the similar credits claimed under the ARP. The tax credits are fully refundable, which means that the employer is entitled to payment of the full amount of the credits to the extent it exceeds the employer's share of Medicare tax. The ARP keeps the daily wage thresholds that previously existed and the aggregate cap on qualified sick leave wages remains at 80 hours (10 days). However, the limitation on the number of days resets with respect to leave taken by employees beginning on April 1, 2021, the aggregate cap on qualified family leave wages increases to $12,000 from the previous cap of $10,000, and the aggregate cap resets with respect to leave taken by employees beginning on April 1, 2021. The ARP created a new category of leave under the Emergency Paid Sick Leave Act (EPSLA) and the Expanded Family and Medical Leave Act (Expanded FMLA) to include the time the employee is seeking or awaiting the results of a diagnostic test for, or a medical diagnosis of, COVID-19 (and the employee has been exposed to COVID-19 or the employee's employer has requested such test or diagnosis), or the employee is obtaining immunizations related to COVID-19 or recovering from an injury, disability, illness, or condition related to such immunization. Additionally, employers may provide employees with paid family leave if the employee is unable to work due to any of the conditions for which eligible employers may provide paid sick leave under the EPSLA. The ARP expanded the categories of paid family leave to include any category available for paid sick leave. For purposes of the ARP only, the Secretary of Health and Human Services in consultation with the Secretaries of Labor and Treasury expanded the new category to paid sick leave to leave subject to the $200 per day limit if the employee accompanies an individual to obtain immunization related to COVID-19, or is caring for an individual who is recovering from any injury, disability, illness, or condition related to the immunization. Under IRC 3133, the credits are increased by the amount of the employer share of social security tax and Medicare tax on the qualified sick and family leave wages. Governmental employers (except for the federal government and its agencies and instrumentalities unless described in section 501(c)(1)) may now claim Credit for Qualified Sick and Family Leave Wages. Generally, the same wages can't be used as both qualified sick leave wages and qualified family leave wages. Additionally, the employer may not benefit from both the credit for qualified sick and family leave wages and the employee retention credit with respect to the same wages. The credit for qualified sick leave wages and qualified family leave wages doesn't apply to wages taken into account as payroll costs for a Small Business Interruption Loan under the Paycheck Protection Program (PPP) that is forgiven or in connection with shuttered operator grants and restaurant revitalization grants. The Credit for Qualified Sick and Family Leave Wages isn't allowed in a quarter in which the employer provides the leave in a manner that discriminates in favor of certain highly compensated employees, full-time employees, or employees on the basis of employment tenure. For tax periods 202106 and subsequent, the Credit for Qualified Sick and Family Leave Wages can be a non-refundable credit, a refundable credit, or both, depending on the amount of the Credit for Qualified Sick and Family Leave Wages that can be claimed for a particular tax period, whether the wages upon which the credit is derived were for leave taken before April 1, 2021 (under the FFCRA) or for leave taken after March 31, 2021 (under the ARP), and amounts of certain other non-refundable credits being reported. The table which follows shows how non-refundable/refundable portions of sick and family leave credits are determined for tax periods 202106 and subsequent: Tax Period(s) Credit Type How Credit is Taken 202106 and subsequent Non-refundable Credit for Qualified Sick and Family Leave Wages for leave taken before April 1, 2021 The credit is first applied, to the extent possible, as a non-refundable credit against amounts of otherwise due employer's share of social security taxes (or the equivalent portion of Tier 1 RRTA taxes) as previously reduced (in order) by credits for the "Qualified Small Business Payroll Tax Credit for Increasing Research Activities" (QSB Research Credit ) from Form 8974 (filed with Form 941 or other employment tax form), the "Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans" from Form 5884-C (filed after original employment tax forms are filed), and the "Employee Retention Credit for Certain Tax-Exempt Organizations Affected by Qualified Disasters" from Form 5884-D (filed after original employment tax forms are filed). 202106 and subsequent Refundable Credit for Qualified Sick and Family Leave Wages for leave taken before April 1, 2021 Any amount of Credit for Qualified Sick and Family Leave Wages for leave taken before April 1, 2021 that cannot be applied as a non-refundable credit can instead be claimed as a refundable credit on the applicable employment tax return. 202106 and subsequent Non-refundable Credit for Qualified Sick and Family Leave Wages for leave taken after March 31, 2021 The credit is first applied, to the extent possible, as a non-refundable credit against amounts of otherwise due employer's share of Medicare tax (or the equivalent portion of Tier 1 RRTA taxes). 202106 and subsequent Refundable Credit for Qualified Sick and Family Leave Wages for leave taken after March 31, 2021 Any amount of Credit for Qualified Sick and Family Leave Wages for leave taken after March 31, 2021 that cannot be applied as a non-refundable credit can instead be claimed as a refundable credit on the applicable employment tax return. Caution: See IRM 21.7.2.7.1.4, Timing Considerations Applicable to Reporting Qualified Sick and Family Leave Wages, Tax, and Associated Credits, for information on Credit for Qualified Sick and Family Leave Wages claimed in tax periods later than that in which qualified leave was taken by an employee. Note: Also see Exhibit 21.7.2-2, Application of Credits by Tax Period: Credit for Qualified Sick and Family Leave Wages, Employee Retention Credit (ERC), and COBRA premium assistance credit. Form 941 (June 2021 revision) and associated Instructions for Form 941 were revised beginning with the second quarter of 2021 to address changes required under the ARP (including reporting of wages, tax and credits for qualified leave taken after March 31, 2021) while continuing to support previous modifications required to administer earlier legislative changes (including reporting of wages, tax and credits for qualified leave taken before April 1, 2021). In particular: Taxable qualified sick and family leave wages for leave taken after March 31, 2021, are included on line 5a and taxed at 12.4% for social security tax purposes. Qualified sick and family leave wages for leave taken before April 1, 2021, are reported on lines 5a(i) and 5a(ii), respectively, and taxed at 6.2% for social security tax purposes. For leave taken before April 1, 2021, the credit for qualified sick and family leave wages is reported on line 11b (non-refundable portion) and, if applicable, line 13c (refundable portion). The refundable portion of the credit for leave taken before April 1, 2021 will continue to post as a TC 766 with CRN 299. For leave taken after March 31, 2021, the credit for qualified sick and family leave wages is reported on line 11d (nonrefundable portion) and, if applicable, line 13e (refundable portion); and the non-refundable portion of the credit is against the employer share of Medicare tax. The refundable portion of the credit for leave taken after March 31, 2021 will post as a TC 766 with new CRN 271. Previous Worksheet 1 in the Form 941 instructions (April 2020, July 2020, and March 2021 revisions) was replaced with new Worksheets 1 through 5. New Worksheet 1 is used to figure the credit for leave taken before April 1, 2021. New Worksheet 3 is used to figure the credit for leave taken after March 31, 2021. Under the ARP, employers continued to be able to reduce deposits and request advance payment in anticipation of claiming the Credit for Qualified Sick and Family Leave Wages (by filing a Form 7200) for the second and third quarters of 2021. See (11) in IRM 21.7.2.7.1.1, Credit for Qualified Sick and Family Leave Wages — Families First Coronavirus Response Act (FFCRA) Provisions, for more information. Caution: Advance payments ceased being issued after January 31, 2022. See IRM 21.7.2.7.5, Form 7200, Advance Payment of Employer Credits due to COVID-19, for more information. If a taxpayer has questions on eligibility for the Credit for Qualified Sick and Family Leave Wages for tax periods 202106 or 202109: See (12) in IRM 21.7.2.7.1.1, Credit for Qualified Sick and Family Leave Wages — Families First Coronavirus Response Act (FFCRA) Provisions. In addition, employers with questions specific to changes to Credit for Qualified Sick and Family Leave Wages related provisions in the ARP can be referred to Tax Credits for Paid Leave Under the American Rescue Plan Act of 2021 for Leave After March 31, 2021.

# Timing Considerations Applicable to Reporting Qualified Sick and Family Leave Wages, Tax, and Associated Credits

21.7.2.7.1.4 (12-01-2021) Timing Considerations Applicable to Reporting Qualified Sick and Family Leave Wages, Tax, and Associated Credits Wages for qualified sick or family leave may be paid at any point in time during or after the period leave was taken. For employment tax reporting purposes, the wages and taxes are reportable and the Credit for Qualified Sick and Family Leave Wages is available to the employer when those wages are paid to the employee. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Credit amounts claimed for wages paid in tax period 202103 for eligible leave periods in calendar year 2020 (i.e., for leave taken before April 1, 2021) are determined by employers in the same manner as described in the appropriate row of the table in (3) of IRM 21.7.2.7.1.2, Credit for Qualified Sick and Family Leave Wages — COVID-related Tax Relief Act of 2020 Provisions. Credit amounts claimed for wages paid in tax period 202106 or subsequent for eligible leave periods in calendar year 2020 or tax period 202103 (i.e., for leave taken before April 1, 2021) are determined by employers in the same manner as described in the appropriate row of the table in (4) of IRM 21.7.2.7.1.3, Credit for Qualified Sick and Family Leave Wages — The American Rescue Plan Act of 2021 (the ARP) Provisions. Credit amounts claimed for wages paid in tax period 202112 or subsequent for eligible leave periods in tax periods 202106 or 202109 (i.e., for leave taken after March 31, 2021) are determined by employers in the same manner as described in the appropriate row of the table in (4) of IRM 21.7.2.7.1.3, Credit for Qualified Sick and Family Leave Wages — The American Rescue Plan Act of 2021 (the ARP) Provisions. Example: An employee took leave in July of 2020 which met the requirements for paid sick leave under the Emergency Paid Sick Leave Act (EPSLA). However, the employer declined to pay wages to the employee when the leave was taken under the mistaken belief that the leave did not meet ESPLA requirements. Subsequently, in May of 2022, the employer becomes aware of the error in characterizing the leave and pays the employee wages for the leave taken. The wages, tax, and associated tax credit would be reported on the employer's Form 941 filed for the second quarter of 2022. And, because the wages were paid "for leave taken before April 1, 2021" , the credit would be first taken as a non-refundable credit against employer share social security taxes reported for the second quarter of 2022 and then any remaining amount would be taken as a refundable credit. Example: An employee took leave in September 2021 which met the requirements for paid sick leave under the Emergency Paid Sick Leave Act (EPSLA). However, the employer did not pay the employee the associated wages until October of 2021. The wages, tax, and associated tax credit would be reported on the employer's Form 941 filed for the fourth quarter of 2021. And, because the wages were paid "for leave taken after March 31, 2021" , the credit would be first taken as a non-refundable credit against employer share Medicare taxes reported for the fourth quarter of 2021 and then any remaining amount would be taken as a refundable credit.

# Employee Retention Credit (ERC)

21.7.2.7.2 (08-09-2024) Employee Retention Credit (ERC) Section 2301 of P.L. 116-136, Coronavirus Aid, Relief, and Economic Security (CARES) Act, established a new Employee Retention Credit (ERC): The ERC is a tax credit against certain employment taxes reported on quarterly and annual employment tax returns. The ERC is a fully refundable credit designed to encourage employers to keep employees on their payroll. The ERC can be a non-refundable credit, a refundable credit, or both, depending on the amount of the credit that can be claimed for a particular tax period and the amount(s) of certain other non-refundable credit(s) being reported. How the credit is applied depends on the tax period for which it is being claimed. Time frames for claiming the ERC, the eligibility requirements, and credit limits/amounts have been modified by subsequent legislation. For detailed descriptions of credit features and eligibility requirements as initially enacted and as modified, see: IRM 21.7.2.7.2.1, Employee Retention Credit (ERC) — Coronavirus Aid, Relief, and Economic Security (CARES) Act Provisions IRM 21.7.2.7.2.2, Employee Retention Credit (ERC) — Taxpayer Certainty and Disaster Tax Relief Act of 2020 Provisions IRM 21.7.2.7.2.3, Employee Retention Credit (ERC) — The American Rescue Plan Act of 2021 (the ARP) Provisions IRM 21.7.2.7.2.4, Employee Retention Credit (ERC) — Infrastructure Investment and Jobs Act (Infrastructure Act) Provisions For handling inquiries related to Notice 1447 or other matters related to the lack of first quarter lines for claiming the credit, see IRM 21.7.2.7.2.5, First Quarter 2020 Form 941 — Employee Retention Credits and Notice 1447. Corrections to amounts of Employee Retention Credit (ERC) previously reported (or omitted) on an employment tax return will generally require the filing of the appropriate Form 94XX adjusted return. See IRM 21.7.2.7.6.3, Form 94XX — Employee Retention Credit — Claims and Adjustments Cleared for Processing (Accepted) by RAAS and Forms 94XX Reporting Tax Increases or Credit Decreases, for handling guidance. Due to concerns with increasing volumes of dubious and inaccurate claims, the IRS instituted a moratorium on processing new ERC claims received after the moratorium was announced on September 14, 2023 (see the third bullet below for information on a subsequent revision altering the moratorium effective date to January 31, 2024). The IRS has also slowed the pace of processing previously filed but unpaid ERC claims. If you receive a call regarding a Form 94XX claiming ERC, advise the taxpayer as per the preceding two sentences and refer the taxpayer to the following news releases on the IRS.gov website: To protect taxpayer from scams, IRS orders immediate stop to new Employee Retention Credit processing amid surge of questionable claims; concerns from tax pros. The press release includes an Employee Retention Credit Eligibility Checklist to help taxpayers determine their eligibility for the credit as well as other important information regarding ERC. IRS enters next stage of Employee Retention Credit work; review indicates vast majority show risk of being improper was issued on June 20, 2024 to provide details of IRS efforts to address Forms 94XX claiming ERC including an anticipated increase in processing pace for pre-moratorium filings while retaining the moratorium on processing claims filed after September 14, 2023. IRS moves forward with Employee Retention Credit claims: Agency accelerates work on complex credit as more payments move into processing; vigilance, monitoring continues on potentially improper claims was issued on August 8, 2024 to provide updates on IRS efforts to address Forms 94XX claiming ERC and altered the moratorium effective date to apply only to claims for ERC filed after January 31, 2024. Claims filed in the period between the initially announced moratorium date of September 14, 2023 and the new moratorium effective date will continue to receive increased scrutiny and may experience delays in processing. Note: If the taxpayer asks about the processing status of a previously filed Form 94XX after having been directed to the web resources identified above, complete account research as usual to verify whether we have a record of having received their Form 94XX. If found, confirm receipt of the Form 94XX and advise the taxpayer that we cannot provide any additional information at this time as to the status or timeframe for processing their Form 94XX and that we will contact them in the event more information is needed to complete its processing.

# Employee Retention Credit (ERC) — Coronavirus Aid, Relief, and Economic Security (CARES) Act Provisions

21.7.2.7.2.1 (10-01-2025) Employee Retention Credit (ERC) — Coronavirus Aid, Relief, and Economic Security (CARES) Act Provisions This subsection provides information of the timeframes, eligibility requirements, and credit limits/amounts for the Employee Retention Credit (ERC) as initially enacted in Section 2301 of P.L. 116-136, Coronavirus Aid, Relief, and Economic Security (CARES) Act. For other ERC inquiries and information: See IRM 21.7.2.7.2, Employee Retention Credit (ERC), for general information on the credit. See IRM 21.7.2.7.2.2, Employee Retention Credit (ERC) — Taxpayer Certainty and Disaster Tax Relief Act of 2020 Provisions, for information on timeframes, eligibility requirements, and credit limits/amounts as modified by subsequent legislation. See IRM 21.7.2.7.2.3, Employee Retention Credit (ERC) — The American Rescue Plan Act of 2021 (the ARP) Provisions, for information on timeframes, eligibility requirements, and credit limits/amounts as modified by the subsequent legislation referenced in the title. See IRM 21.7.2.7.2.4, Employee Retention Credit (ERC) — Infrastructure Investment and Jobs Act (Infrastructure Act) Provisions See IRM 21.7.2.7.2.5, First Quarter 2020 Form 941 — Employee Retention Credits and Notice 1447, for handling specific to ERC claims associated with first quarter 2020 Form 941 accounts. See IRM 21.7.2.7.6.3, Form 94XX — Employee Retention Credit (ERC) — Claims and Adjustments Cleared for Processing (Accepted) by RAAS and Forms 94XX Reporting Tax Increases or Credit Decreases, for credit correction requests reported on Form 94XX adjusted returns. For calendar year 2020, as initially enacted: The amount of the Employee Retention Credit (ERC) was equal to 50 percent of the qualified wages an eligible employer paid to employees after March 12, 2020, and before January 1, 2021. For each employee, wages up to $10,000 (including certain health plan costs) in calendar year 2020 can be counted to determine the amount of the 50% credit. The maximum credit amount per employee in calendar year 2020 is $5,000. Employers, including tax-exempt organizations, were eligible for the credit if they operated a trade or business during calendar year 2020 and experienced either: A full or partial suspension of their trade or business operations during any calendar quarter because of governmental orders limiting commerce, travel, or group meetings due to COVID-19; or, A significant decline in gross receipts. Note: A significant decline in gross receipts begins on the first day of the first calendar quarter of 2020 for which an employer's gross receipts are less than 50 percent of its gross receipts for the same calendar quarter in 2019. The significant decline in gross receipts ends on the first day of the first calendar quarter following the calendar quarter in which gross receipts are more than of 80 percent of its gross receipts for the same calendar quarter in 2019, or, if earlier, January 1, 2021. For 2020 ERC purposes, the definition of qualified wages depends on the average number of individuals employed by an eligible employer during 2019: If an employer averaged 100 or fewer full-time employees during 2019, qualified wages are those wages up to $10,000 per employee (including certain health care costs) paid to any employee during the period operations were suspended or the period of the decline in gross receipts, regardless of whether or not its employees were providing services. If an employer averaged more than 100 full-time employees during 2019, qualified wages are generally those wages (up to $10,000 per employee including certain health care costs) paid to employees that were not providing services because operations were suspended or due to the decline in gross receipts. These employers can only count wages up to the amount that the employee would have been paid for working an equivalent duration during the 30 days immediately preceding the period of full or partial suspension or decline in gross receipts. Note: If an employer is eligible to claim the credit due to a full or partial suspension of operations, only wages paid with respect to the period of suspension will be considered qualified wages. An eligible employer's ability to claim the Employee Retention Credit was impacted by other credit and relief provisions as follows: Employers who received a Small Business Interruption Loan under the Paycheck Protection Program (authorized under the CARES Act) administered by the Small Business Administration (SBA) were not eligible under CARES Act provisions for the Employee Retention Credit. However, employers that applied for Paycheck Protection Program (PPP loans), received payment and repaid the loans by May 18, 2020 will be treated as though they had not received the loan. Caution: This bar on eligibility was rescinded retroactively through subsequent legislation. See (6) in IRM 21.7.2.7.2.2, Employee Retention Credit (ERC) — Taxpayer Certainty and Disaster Tax Relief Act of 2020 Provisions. Wages for this credit do not include wages for which the employer received a tax credit for qualified sick and family leave under the Families First Coronavirus Response Act. Wages counted for this credit can't be counted for the credit for qualified family and medical leave under section 45S of the Internal Revenue Code. Employees are not counted for this credit if the employer is allowed a Work Opportunity Tax Credit under section 51 of the Internal Revenue Code for the employee. For tax periods 202006, 202009, and 202012, the Employee Retention Credit (ERC) can be a non-refundable credit, a refundable credit, or both, depending on the amount of the Employee Retention Credit that can be claimed for a particular tax period and amounts of certain other non-refundable credits being reported. The table which follows shows how non-refundable/refundable portions of ERC credits are determined for tax periods 202006, 202009 and 202012: Tax Period(s) Credit Type How Credit is Taken 202006, 202009 and 202012 Non-refundable Employee Retention Credit (ERC) The credit is first applied, to the extent possible, as a non-refundable credit against amounts of otherwise due employer's share of social security taxes as previously reduced (in order) by credits for the "Qualified Small Business Payroll Tax Credit for Increasing Research Activities" (QSB Research Credit ) from Form 8974 (filed with Form 941 or other employment tax form), the "Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans" from Form 5884-C (filed after original employment tax forms are filed), the "Employee Retention Credit for Certain Tax-Exempt Organizations Affected by Qualified Disasters" from Form 5884-D (filed after original employment tax forms are filed) and any Credit for Qualified Sick and Family Leave Wages reported for the tax period. 202006, 202009 and 202012 Refundable Employee Retention Credit (ERC) Any amount of Employee Retention Credit for a tax period that cannot be applied as a non-refundable credit can instead be claimed as a refundable credit on the applicable employment tax return. Caution: See IRM 21.7.2.7.1.4, Timing Considerations Applicable to Reporting Qualified Sick and Family Leave Wages, Tax, and Associated Credits, for information on Credit for Qualified Sick and Family Leave Wages claimed in tax periods later than that in which qualified leave was taken by an employee. Note: Also see Exhibit 21.7.2-2, Application of Credits by Tax Period: Credit for Qualified Sick and Family Leave Wages, Employee Retention Credit (ERC), and COBRA premium assistance credit. Form 941 was revised to administer the Employee Retention Credit (ERC) beginning with the second quarter of 2020: The non-refundable portion of the ERC, if applicable, is reported on Line 11c of Form 941. The refundable portion of the ERC, if applicable, is reported on Line 13d of Form 941 (and will post as a TC 766 with CRN 296). Qualified wages (excluding qualified health plan expenses) for the ERC are reported on line 21 (these amounts should also be included as wages on lines 5a and 5c, and, if applicable, line 5d). Qualified health plan expenses allocable to the qualified wages for the ERC are reported on line 22. For the second quarter Form 941 only, qualified wages (excluding qualified health plan expenses) for the ERC and qualified health plan expenses allocable to the qualified wages for the period from March 13, 2020, to March 31, 2020, were reported on lines 24 and 25, respectively. Note: The Instructions for Form 941 include a worksheet for calculating amounts of non-refundable and refundable portions of ERC to be carried to Lines 11c and 13d (respectively) of Form 941. Note: Annual employment tax forms and instructions were revised in similar fashion to enable reporting ERC amounts. In anticipation of claiming the Employee Retention Credit (ERC), eligible employers could: Obtain immediate access to the credit by retaining (i.e., not paying) a corresponding amount of the employment taxes that otherwise would have been deposited. The amount retained could include federal income tax withholding, the employees' share of social security and Medicare taxes, and the employer's share of social security and Medicare taxes for all employees, up to the amount of the credit, taking into account any reduction for deposits in anticipation of the qualified sick and family leave credit provided in the Families First Coronavirus Response Act. Amounts eligible to be retained for this purpose are not subject to federal tax deposit penalties. Request an advance payment of the ERC (for amounts that could not be obtained by reducing federal tax deposits and payments) by submitting Form 7200. See IRM 21.7.2.7.5, Form 7200, Advance Payment of Employer Credits due to COVID-19 for more information on advance payments. Caution: Advance payments ceased being issued after January 31, 2022. See IRM 21.7.2.7.5, Form 7200, Advance Payment of Employer Credits due to COVID-19, for more information. If a taxpayer has questions on eligibility for the ERC for tax periods in calendar year 2020, impact on payment or depositing, or how to report these amounts on tax returns, general information as described above can be provided to the taxpayer. For more complex questions, including those which are out-of-scope, refer the taxpayer to the irs.gov website at: New Employer Tax Credits Coronavirus Tax Relief for Businesses and Tax-Exempt Entities which include links to Frequently Asked Questions (FAQs) and other guidance. Notice 2021-20 Employee Retention Credit - 2020 vs 2021 Comparison Chart Rev. Proc. 21-33.

# Employee Retention Credit (ERC) — Taxpayer Certainty and Disaster Tax Relief Act of 2020 Provisions

21.7.2.7.2.2 (04-20-2022) Employee Retention Credit (ERC) — Taxpayer Certainty and Disaster Tax Relief Act of 2020 Provisions This subsection provides information of the timeframes, eligibility requirements, and credit limits/amounts for the Employee Retention Credit (ERC) as modified and extended by Section 206 and Section 207 of the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (enacted as Division EE of the Consolidated Appropriations Act, 2021 (P.L. 116-260)). For other ERC inquiries and information: See IRM 21.7.2.7.2, Employee Retention Credit (ERC), for general information on the credit. See IRM 21.7.2.7.2.1, Employee Retention Credit (ERC) — Coronavirus Aid, Relief, and Economic Security (CARES) Act Provisions, for information on timeframes, eligibility requirements, and credit limits/amounts as established by original legislation. See IRM 21.7.2.7.2.3, Employee Retention Credit (ERC) — The American Rescue Plan Act of 2021 (the ARP) Provisions, for information on timeframes, eligibility requirements, and credit limits/amounts as modified by the subsequent legislation referenced in the title. See IRM 21.7.2.7.2.4, Employee Retention Credit (ERC) — Infrastructure Investment and Jobs Act (Infrastructure Act) Provisions See IRM 21.7.2.7.2.5, First Quarter 2020 Form 941 — Employee Retention Credits and Notice 1447, for handling specific to ERC claims associated with first quarter 2020 Form 941 accounts. See IRM 21.7.2.7.6.3, Form 94XX — Employee Retention Credit (ERC) — Claims and Adjustments Cleared for Processing (Accepted) by RAAS and Forms 94XX Reporting Tax Increases or Credit Decreases, for credit correction requests reported on Form 94XX adjusted returns. The Taxpayer Certainty and Disaster Relief Act of 2020 amended the Employee Retention Credit (ERC) enacted under the Coronavirus Aid, Relief, and Economic Security (CARES) Act and extended the credit to apply to the first and second quarters of 2021. The amount of the ERC is equal to 70 percent of the qualified wages an eligible employer paid to employees after December 31, 2020, and before July 1, 2021. For each employee, wages up to $10,000 (including certain health plan costs) per calendar quarter in 2021 can be counted to determine the amount of the 70% credit. The maximum ERC credit amount per employee is $7,000 per calendar quarter. Effective January 1, 2021, employers are eligible if they operate a trade or business during January 1, 2021, through June 30, 2021, and experience either: A full or partial suspension of the operation of their trade or business during this period because of governmental orders limiting commerce, travel or group meetings due to COVID-19; or, A decline in gross receipts in a calendar quarter in 2021 where the gross receipts of that calendar quarter are less than 80% of the gross receipts in the same calendar quarter in 2019 (to be eligible based on a decline in gross receipts in 2020 the gross receipts were required to be less than 50%). Employers that did not exist in 2019 can use the corresponding quarter in 2020 to measure the decline in their gross receipts. In addition, for the first and second calendar quarters in 2021, employers may elect to measure the decline in their gross receipts using the immediately preceding calendar quarter compared to the same calendar quarter in 2019 (for example, comparing the fourth calendar quarter of 2020 to the fourth calendar quarter of 2021 for purposes of the first quarter of 2021). As discussed in Notice 2021-23, employers make an election to use an alternative quarter by claiming the employee retention credit for the quarter using the alternative quarter to calculate gross receipts. In addition, effective January 1, 2021, the definition of qualified wages was changed to provide: For an employer that averaged more than 500 full-time employees in 2019, qualified wages are generally those wages paid to employees that are not providing services because operations were fully or partially suspended or due to the decline in gross receipts. For an employer that averaged 500 or fewer full-time employees in 2019, qualified wages are generally those wages paid to all employees during a period that operations were fully or partially suspended or during the quarter that the employer had a decline in gross receipts regardless of whether the employees are providing services. Retroactive to the March 27, 2020, enactment of the CARES Act: The law now allows employers who received Paycheck Protection Program (PPP) loans to claim the ERC for qualified wages that are not treated as payroll costs in obtaining forgiveness of the PPP loan. Previously, employers receiving PPP loans were not eligible to claim the ERC as discussed in the first bullet of (5) in IRM 21.7.2.7.2.1, Employee Retention Credit (ERC) — Coronavirus Aid, Relief, and Economic Security (CARES) Act Provisions. Under specific conditions, certain employers eligible to claim the ERC retroactively were permitted (but not required) under a special rule to claim ERC amounts for earlier quarters in 2020 on their original employment tax return for the fourth quarter of 2020 (or on a Form 941-X filed for the fourth quarter of 2020). Taxpayers with questions on this subject should be directed to Q&A 57 and Q&A 58 in Notice 2021-20 and to Didn't Get Requested PPP Loan Forgiveness? You Can Claim the Employee Retention Credit for 2020 on the 4th Quarter Form 941 on irs.gov. For the first and second calendar quarters in 2021, an eligible employer's ability to claim the Employee Retention Credit is impacted by other credit and relief provisions as follows: Wages for this credit do not include wages for which the employer received a tax credit for paid sick and family leave under the Families First Coronavirus Response Act. Any wages taken into account in determining the ERC cannot be counted for purposes of Sections 41, 45A, 45P, 45S, 51, and 1396. For tax periods 202103 and 202106, the Employee Retention Credit (ERC) can be a non-refundable credit, a refundable credit, or both, depending on the amount of the Employee Retention Credit that can be claimed for a particular tax period and amounts of certain other non-refundable credits being reported. The table which follows shows how non-refundable/refundable portions of ERC credits are determined for tax periods 202103 and 202106: Tax Period(s) Credit Type How Credit is Taken 202103 Non-refundable Employee Retention Credit (ERC) The credit is first applied, to the extent possible, as a non-refundable credit against amounts of otherwise due employer's share of social security taxes (or the equivalent portion of Tier 1 RRTA taxes) as previously reduced (in order) by credits for the "Qualified Small Business Payroll Tax Credit for Increasing Research Activities" (QSB Research Credit ) from Form 8974 (filed with Form 941 or other employment tax form), the "Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans" from Form 5884-C (filed after original employment tax forms are filed), the "Employee Retention Credit for Certain Tax-Exempt Organizations Affected by Qualified Disasters" from Form 5884-D (filed after original employment tax forms are filed) and any Credit for Qualified Sick and Family Leave Wages reported for the tax period. 202106 Non-refundable Employee Retention Credit (ERC) The credit is first applied, to the extent possible, as a non-refundable credit against amounts of otherwise due employer's share of social security taxes (or the equivalent portion of Tier 1 RRTA taxes) as previously reduced (in order) by credits for the "Qualified Small Business Payroll Tax Credit for Increasing Research Activities" (QSB Research Credit ) from Form 8974 (filed with Form 941 or other employment tax form), the "Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans" from Form 5884-C (filed after original employment tax forms are filed), the "Employee Retention Credit for Certain Tax-Exempt Organizations Affected by Qualified Disasters" from Form 5884-D (filed after original employment tax forms are filed) and any Credit for Qualified Sick and Family Leave Wages for leave taken before April 1, 2021 (but is not reduced for Credit for Qualified Sick and Family Leave Wages for leave taken after March 31, 2021) reported for the tax period. 202103 and 202106 Refundable Employee Retention Credit (ERC) Any amount of Employee Retention Credit for tax periods 202103 and 202106 that cannot be applied as a non-refundable credit can instead be claimed as a refundable credit on the applicable employment tax return. Caution: See IRM 21.7.2.7.1.4, Timing Considerations Applicable to Reporting Qualified Sick and Family Leave Wages, Tax, and Associated Credits, for information on Credit for Qualified Sick and Family Leave Wages claimed in tax periods later than that in which qualified leave was taken by an employee. Note: Also see Exhibit 21.7.2-2, Application of Credits by Tax Period: Credit for Qualified Sick and Family Leave Wages, Employee Retention Credit (ERC), and COBRA premium assistance credit. The March 2021 revision of Form 941 retained the line number structure used for calendar year 2020 reporting of quarterly non-refundable and refundable portions of ERC amounts. See (7) in IRM 21.7.2.7.2.1, Employee Retention Credit (ERC) — Coronavirus Aid, Relief, and Economic Security (CARES) Act Provisions, for more information. Caution: Form 941 was revised again for second quarter of 2021 for subsequent legislation. See (5) of IRM 21.7.2.7.2.3, Employee Retention Credit (ERC) — The American Rescue Plan Act of 2021 (the ARP) Provisions, for more information, including information with regards to new worksheets for figuring ERC in the associated revised form instructions. Note: Annual employment tax forms (Form 943, Form 944, and Form CT-1) and instructions were revised for tax year 2021. Certain employers continued to be able to reduce deposits and request advance payment in anticipation of claiming the ERC (by filing a Form 7200) for the first and second quarters of 2021. See (8) in IRM 21.7.2.7.2.1, Employee Retention Credit (ERC) — Coronavirus Aid, Relief, and Economic Security (CARES) Act Provisions, for more information. Caution: Advance payments ceased being issued after January 31, 2022. See IRM 21.7.2.7.5, Form 7200, Advance Payment of Employer Credits due to COVID-19, for more information. If a taxpayer has questions on eligibility for the ERC for tax periods 202103 or 202106: See (9) in IRM 21.7.2.7.2.1, Employee Retention Credit (ERC) — Coronavirus Aid, Relief, and Economic Security (CARES) Act Provisions. In addition, employers with questions specific to changes to ERC related provisions in the Taxpayer Certainty and Disaster Relief Act of 2020 can be referred to New law extends COVID tax credit for employers who keep workers on payroll, Notice 2021-23Rev. Proc. 2021-33, and Employee Retention Credit - 2020 vs 2021 Comparison Chart.

# Employee Retention Credit (ERC) — The American Rescue Plan Act of 2021 (the ARP) Provisions

21.7.2.7.2.3 (10-01-2025) Employee Retention Credit (ERC) — The American Rescue Plan Act of 2021 (the ARP) Provisions This subsection provides information of the timeframes, eligibility requirements, and credit limit/amounts for the Employee Retention Credit (ERC) as modified and extended by provisions in Section 9651 of P.L. 117-2, The American Rescue Plan Act of 2021 (the ARP). For other ERC inquiries and information: See IRM 21.7.2.7.2, Employee Retention Credit (ERC), for general information on the credit. See IRM 21.7.2.7.2.1, Employee Retention Credit (ERC) — Coronavirus Aid, Relief, and Economic Security (CARES) Act Provisions, for information on timeframes, eligibility requirements, and credit limits/amounts as established by original legislation. See IRM 21.7.2.7.2.2, Employee Retention Credit (ERC) — Taxpayer Certainty and Disaster Relief Act of 2020 Provisions, for information on timeframes, eligibility requirements, and credit limits/amounts as modified by the subsequent legislation referenced in the title. See IRM 21.7.2.7.2.4, Employee Retention Credit (ERC) — Infrastructure Investment and Jobs Act (Infrastructure Act) Provisions. See IRM 21.7.2.7.2.5, First Quarter 2020 Form 941 — Employee Retention Credits and Notice 1447, for handling specific to ERC claims associated with first quarter 2020 Form 941 accounts. See IRM 21.7.2.7.6.3, Form 94XX — Employee Retention Credit (ERC) — Claims and Adjustments Cleared for Processing (Accepted) by RAAS and Forms 94XX Reporting Tax Increases or Credit Decreases, for credit correction requests reported on Form 94XX adjusted returns. Section 9651(a) of the ARP added new IRC 3134 to provide an Employee Retention Credit (ERC) effective for wages paid after June 30, 2021 and before January 1, 2022. The ERC under the ARP is similar to the credit enacted under the Coronavirus Aid, Relief, and Economic Security (CARES) Act which was later amended and extended by the Taxpayer Certainty and Disaster Tax Relief Act of 2020. The rules for ERC for the third and fourth quarters of 2021 are substantially similar to those that applied for first and second quarters of 2021. Under the ARP: The amount of the ERC is equal to 70 percent of the qualified wages an eligible employer paid to employees after June 30, 2021, and before January 1, 2022. For each employee, wages up to $10,000 (including certain health plan costs) per calendar quarter in 2021 can be counted to determine the amount of the 70% credit. The maximum ERC credit amount per employee is $7,000 per calendar quarter. Caution: See IRM 21.7.2.7.2.4, Employee Retention Credit (ERC) — Infrastructure Investment and Jobs Act (Infrastructure Act) Provisions, for subsequent legislative changes that limited the availability of the ERC in the fourth quarter of 2021 to employers that are recovery startup businesses (only). In addition, the following changes under the ARP began July 1, 2021 and are applicable for the third and fourth quarters of 2021 (only): The ARP creates a new category of an eligible employer called a recovery startup business. The ERC is limited to a maximum of $50,000 per quarter for employers which are recovery startup businesses. For more information, see "Recovery startup business" in Instructions for Form 941. Note: Aggregate employment tax return filers (Section 3504 Agents, CPEOs, and PEOs) reporting tax data for multiple client recovery startup businesses may exceed the $50,000 per quarter limitation on a single employment tax return. Any wages counted for purposes of Internal Revenue Code Sections 41, 45A, 45P, 45S, 51, 1396, 3131, and 3132 cannot be taken into account in determining the ERC. Qualified wages for the employee retention credit cannot include amounts used as payroll costs for a Small Business Interruption Loan under the Paycheck Protection Program (PPP) that is forgiven or amounts used as payroll costs for shuttered operator grants and restaurant revitalization grants. For wages paid after June 30, 2021, the nonrefundable portion of the ERC retention credit is against the employer share of Medicare tax. (For wages paid prior to July 1, 2021, the non-refundable portion of the ERC was against employer share of social security taxes.) Note: IRC Section 3131 and 3132, cited in the second bullet in the list above, pertain to credits for paid sick leave and family leave applicable to the second and third quarters of 2021. ERC cannot be taken for wages reported in the second and third quarters of 2021 for which the Credit for Qualified Sick and Family Leave Wages was taken. For tax periods 202109 and 202112, the Employee Retention Credit (ERC) can be a non-refundable credit, a refundable credit, or both, depending on the amount of the Employee Retention Credit that can be claimed for a particular tax period and amounts of certain other non-refundable credits being reported. The table which follows shows how non-refundable/refundable portions of ERC credits are determined for tax periods 202109 and 202112: Tax Period(s) Credit Type How Credit is Taken 202109 and 202112 Non-refundable Employee Retention Credit (ERC) The credit is first applied, to the extent possible, as a non-refundable credit against amounts of otherwise due employer's share of Medicare tax (or the equivalent portion of Tier 1 RRTA taxes) as previously reduced by non-refundable Credit for Qualified Sick and Family Leave Wages for leave taken after March 31, 2021 (but is not reduced for Credit for Qualified Sick and Family Leave Wages for leave before April 1, 2021) reported for the tax period. 202109 and 202112 Refundable Employee Retention Credit (ERC) Any amount of Employee Retention Credit for tax periods 202109 and 202112 that cannot be applied as a non-refundable credit can instead be claimed as a refundable credit on the applicable employment tax return. Caution: See IRM 21.7.2.7.1.4, Timing Considerations Applicable to Reporting Qualified Sick and Family Leave Wages, Tax, and Associated Credits, for information on Credit for Qualified Sick and Family Leave Wages claimed in tax periods later than that in which qualified leave was taken by an employee. Note: Also see Exhibit 21.7.2-2, Application of Credits by Tax Period: Credit for Qualified Sick and Family Leave Wages, Employee Retention Credit (ERC), and COBRA premium assistance credit. Form 941 and associated Instructions for Form 941 were revised beginning with the second quarter of 2021 to address changes required under the ARP while continuing to support previous modifications required to administer earlier changes under Taxpayer Certainty and Disaster Relief Act of 2020. As revised for use with second, third, and fourth quarters: The nonrefundable portion of ERC is claimed on line 11c whether it is against employer share social security tax (second quarter of 2021) or against employer share of Medicare tax (third and fourth quarters of 2021). The refundable portion of ERC is claimed on line 13d (second, third, and fourth quarters of 2021). The refundable portion of the ERC will continue to post as a TC 766 with CRN 296. Previous Worksheet 1 in the Form 941 instructions (April 2020, July 2020, and March 2021 revisions) was replaced with new Worksheets 1 through 5. Worksheet 2 is used by employers to compute ERC amounts to be reported on Form 941 for second quarter of 2021. Worksheet 4 is used by employers to compute ERC amounts to be reported on Form 941 for third and fourth quarters of 2021. Note: Annual employment tax forms (Form 943, Form 944, and Form CT-1) and instructions will also be revised for tax year 2021. Under the ARP, certain employers continued to be able to reduce deposits and request advance payment in anticipation of claiming the ERC (by filing a Form 7200) for the third and fourth quarters of 2021. See (8) in IRM 21.7.2.7.2.1, Employee Retention Credit (ERC) — Coronavirus Aid, Relief, and Economic Security (CARES) Act Provisions, for more information. Caution: Advance payments ceased being issued after January 31, 2022. See IRM 21.7.2.7.5, Form 7200, Advance Payment of Employer Credits due to COVID-19, for more information. If a taxpayer has questions on eligibility for the ERC for tax periods 202109 or 202112: See (11) in IRM 21.7.2.7.2.2, Employee Retention Credit (ERC) — Taxpayer Certainty and Disaster Relief Act of 2020 Provisions, which discusses rules related to eligibility applicable to 2020 and 2021, except for recovery startup businesses discussed in (4), above. In addition, employers with questions specific to changes to ERC related provisions in the ARP can be referred to Notice 2021-49 and Employee Retention Credit - 2020 vs 2021 Comparison Chart. Caution: See IRM 21.7.2.7.2.4, Employee Retention Credit (ERC) — Infrastructure Investment and Jobs Act (Infrastructure Act) Provisions, for subsequent legislative changes that limited the availability of the ERC in the fourth quarter of 2021 to employers that are recovery startup businesses (only).

# Employee Retention Credit (ERC) — Infrastructure Investment and Jobs Act (Infrastructure Act) Provisions

21.7.2.7.2.4 (04-20-2022) Employee Retention Credit (ERC) — Infrastructure Investment and Jobs Act (Infrastructure Act) Provisions This subsection provides information regarding modified eligibility requirements for the Employee Retention Credit (ERC) pursuant to Section 80604 of P.L. 117-58, the Infrastructure Investment and Jobs Act (Infrastructure Act), enacted November 15, 2021. For other ERC inquiries and information: See IRM 21.7.2.7.2, Employee Retention Credit (ERC), for general information on the credit. See IRM 21.7.2.7.2.1, Employee Retention Credit (ERC) — Coronavirus Aid, Relief, and Economic Security (CARES) Act Provisions, for information on timeframes, eligibility requirements, and credit limits/amounts as established by original legislation. See IRM 21.7.2.7.2.2, Employee Retention Credit (ERC) — Taxpayer Certainty and Disaster Relief Act of 2020 Provisions, for information on timeframes, eligibility requirements, and credit limits/amounts as modified by the subsequent legislation referenced in the title. See IRM 21.7.2.7.2.3, Employee Retention Credit (ERC) — The American Rescue Plan Act of 2021 (the ARP) Provisions, for information on timeframes, eligibility requirements, and credit limits/amounts as modified by the subsequent legislation referenced in the title. See IRM 21.7.2.7.2.5, First Quarter 2020 Form 941 — Employee Retention Credits and Notice 1447, for handling specific to ERC claims associated with first quarter 2020 Form 941 accounts. See IRM 21.7.2.7.6.3, Form 94XX — Employee Retention Credit (ERC) — Claims and Adjustments Cleared for Processing (Accepted) by RAAS and Forms 94XX Reporting Tax Increases or Credit Decreases, for credit correction requests reported on Form 94XX adjusted returns. Section 80604 of the Infrastructure Act amended IRC 3134 to limit the availability of the Employee Retention Credit (ERC) in the fourth quarter of 2021 to employers that are recovery startup businesses. In effect, this retroactively terminated eligibility for the Employee Retention Credit (ERC) for all employers on wages paid after September 30, 2021 except for eligible employers which are recovery startup businesses. Eligible employers which are recovery startup businesses could continue to claim ERC for qualified wages paid through December 31, 2021. Section 80604 of the legislation also modified the definition of a recovery startup business. Reminder: See the first bullet in (4) of IRM 21.7.2.7.2.3, Employee Retention Credit (ERC) — The American Rescue Plan Act of 2021 (the ARP) Provisions, for more information on recovery startup businesses. For employers that are eligible recovery startup businesses, the method of claiming ERC against employer's share of Medicare tax as a non-refundable or refundable credit remained the same as under the ARP Act (see IRM 21.7.2.7.2.3, Employee Retention Credit (ERC) — The American Rescue Plan Act of 2021 (the ARP) Provisions) and no changes were required to Form 941 or annual employment tax forms. Some employers which are not eligible recovery startup businesses may have reduced deposits for the fourth quarter of 2021 or requested advance payments on Form 7200 for anticipated credits prior to enactment of the retroactive termination of ERC. Employers who did so may have a balance due of tax, penalties or interest on their account when their return is processed unless they later made payment(s)/deposit(s) to address the shortfall in a timely manner as per guidance provided in Notice 2021-65. Repayment of excessive fourth quarter 2021 advance payments: Employers who needed to repay excess advance payments of ERC were required to do so by the due date for their fourth quarter tax return in order to avoid penalties and interest charges. Fourth quarter deposits due on or before December 20, 2021 and FTD penalties: Employers who reduced deposits in anticipation of claiming ERC which could not be claimed due to the legislative change will not be subject to FTD penalties if they reported the liability on the tax return or liability schedule as per applicable form/schedule instructions and made an associated timely tax deposit. Caution: The relief described in Notice 2021-65 doesn't apply to deposits/payments that were untimely due to any circumstance other than the change in eligibility for the ERC or to employers who reduced deposits after December 20, 2021. Note: See IRM 20.1.4.29, Retroactive Termination of the Employee Retention Credit, for information on addressing related FTD penalty abatement requests. For questions specific to retroactive termination of ERC for employers which are not eligible recovery startup businesses, the taxpayer may be referred to the following resources on the irs.gov webpage: Notice 2021-65 Employee Retention Credit - 2020 vs 2021 Comparison Chart IRS issues guidance regarding the retroactive termination of the Employee Retention Credit

# First Quarter 2020 Form 941 — Employee Retention Credits and Notice 1447

21.7.2.7.2.5 (11-16-2021) First Quarter 2020 Form 941 — Employee Retention Credits and Notice 1447 Due to timing matters, Form 941 for the first quarter of 2020 could not be revised before the filing due date to account for the new Employee Retention Credit (ERC) applicable to tax year 2020. Accordingly, there are no lines on the form for the taxpayer to report any Employee Retention Credit or associated qualified wages and qualified health plan expenses paid for the period beginning on March 13, 2020 and ending March 31, 2020. Instead, taxpayers must report amounts allocable to this time period on their Form 941 for the second quarter of 2020. However, employers were permitted to reduce otherwise required federal tax deposits for the first quarter in anticipation of claiming Employee Retention Credit attributable to the first quarter when they filed their Form 941 for the second quarter of 2020. As such, some taxpayers may have a balance due on their first quarter account after filing. Note: See IRM 21.7.2.7.2, Employee Retention Credit (ERC), for general information on this credit. Reminder: The refundable portion of the Employee Retention Credit is recorded with CRN 296. To address this circumstance, the IRS developed Notice 1447 to be mailed with initial balance due notices issued for first quarter 2020 Form 941 accounts. The notice directs taxpayers who have a balance due to this situation to contact the Service for assistance either in writing or by phone. Note: Some taxpayers received Notice 1447 in error with initial balance due notices for tax periods other than the first quarter of 2020. See SERP Alert 20A0283 dated July 6, 2020 for more information. Process inquiries regarding reduced deposits for first quarter 2020 Form 941 accounts in anticipation of claiming Employee Retention Credit, including responses to Notice 1447, and any Forms 4442 previously created per temporary instructions pending development of handling guidance (treated as a paper case for resolution purposes), as per the guidance found in (4), (5), and (6) below. For phone inquiries, advise the taxpayer that the amount by which deposits for the first quarter 2020 could be reduced is limited to the amount of Employee Retention Credit attributable to qualified wages and health plan expenses paid for the period beginning on March 13, 2020 and ending March 31, 2020 as reported on their second quarter 2020 Form 941. Ask the taxpayer for the amount by which they reduced first quarter deposits and continue processing as per instructions in the table which follows: If Then 1) The first quarter 2020 Form 941 has not posted Advise the taxpayer we are unable to take any action on their account at this time because their first quarter 2020 Form 941 has not yet been processed, to file the return (or a newly signed copy) if they have not already done so, and to either contact us again when they receive a balance due notice or to submit their request in writing, including the amount by which they reduced their first quarter deposits. If the second quarter 2020 Form 941 tax account is posted and overpaid, input a TC 570 on that module to freeze the overpayment. Input a history item "1STQTRERC" on TXMOD for both tax periods. 2) The second quarter 2020 Form 941 has not posted Advise the taxpayer we are unable to take any action on their account at this time because their second quarter 2020 Form 941 has not been processed, to file the return (or a newly signed copy) if they have not already done so, and to submit their request in writing, including the amount by which they reduced their first quarter deposits. Input STAUPS on the first quarter 2020 account for 9 weeks if the account reflects a balance due. Input a history item "1STQTRERC" on TXMOD for both tax periods. 3) The second quarter 2020 Form 941 was overpaid and a refund was issued If the taxpayer has not yet cashed or received the refund check, advise the taxpayer to annotate the refund check with "VOID" and to return it with correspondence explaining the issue, including the amount by which they reduced first quarter deposits. If the taxpayer has cashed the refund check, advise taxpayer to pay the first quarter amount showing as due along with correspondence explaining the issue, including the amount by which they reduced first quarter deposits, and to request reconsideration of penalties and interest in writing. 4) The second quarter 2020 Form 941 was overpaid and the overpayment was offset (whether to first quarter 2020 or some other outstanding balance due) Advise the taxpayer we are unable to take any action on their account at this time and to submit their request in writing, including the amount by which they reduced their first quarter deposits. Input STAUPS on the first quarter 2020 account for 9 weeks if the account reflects a balance due. Input a history item "1STQTRERC" on TXMOD for both tax periods. 5) The amount of the balance due on the first quarter 2020 Form 941 account is less than the amount provided by the taxpayer for reduced deposits (or there is no balance due on the account) Advise the taxpayer we are unable to take any action on their account at this time and to submit their request in writing, including the amount by which they reduced their first quarter deposits. Input STAUPS on the first quarter 2020 account for 9 weeks if the account reflects a balance due. If the second quarter 2020 Form 941 tax account is posted and overpaid, input a TC 570 on that module to freeze the overpayment. Input a history item "1STQTRERC" on TXMOD for both tax periods. 6) The taxpayer indicates a portion of the balance due on the first quarter 2020 Form 941 account is related to deferred payment of employer's share of social security taxes or the taxpayer deferred payment of employer's share of social security taxes on the second quarter 2020 Form 941 account (i.e., posted CRN 280 amount) Advise the taxpayer we are unable to take any action on their account at this time and to submit their request in writing with their calculation of the social security tax deferral amount and the amount by which they reduced deposits on the first quarter for Employee Retention Credit. Input STAUPS on the account for 9 weeks if the account reflects a balance due. If the second quarter 2020 Form 941 tax account is posted and overpaid, input a TC 570 on that module to freeze the overpayment. Input a history item "1STQTRERC" on TXMOD for both tax periods. 7) No other row of this table applies The amount by which first quarter deposits could be reduced for Employee Retention Credit reported on second quarter return must be established. If not already done, ask the taxpayer for the amount by which deposits for the first quarter 2020 were reduced in anticipation of claiming Employee Retention Credit. Review the second quarter Form 941 tax return record and obtain the figures corresponding to Lines 24 (TC 970 field "QLFY-EMPL-MARCH-WG-PD-AMT" ) and 25 (TC 970 field "QLFY-HLTH-PLN-MARCH-AMT" ), add those two figures together, and divide the sum by 2. Review the first quarter Form 941 to determine the tax reported and subtract the total payments made by the return due date (April 30, 2020). The figure to be used for further processing is the lesser of the result determined in Step 1, Step 2, or Step 3 above. Continue to process the taxpayer's inquiry as per guidance in the table in (5) below. For paper responses, including inquiries previously documented/suspended on Forms 4442 pending guidance development, handle as follows: If And Then 1) The first quarter 2020 Form 941 has not posted There is an indication the return was received and is being processed If the second quarter 2020 Form 941 tax account is posted and overpaid, input a TC 570 on that module to freeze the overpayment. Input a history item "1STQTRERC" on TXMOD for both first and second quarter 2020 Form 941 tax periods. Monitor the account for posting of the first quarter return. If the return posts, or it is determined the in-house return will never post, continue to process per guidance found in the table rows below. 2) The first quarter 2020 Form 941 has not posted There is no indication the return was received and is being processed or handling was previously suspended as per instructions in the table row above and it has been determined the return in-house will never post Send the taxpayer a letter and indicate we cannot address their inquiry because their Form 941 return for the first quarter of 2020 has not been processed. Advise them to file the return (or a newly signed copy) for that tax period and to contact us again if they receive a balance due notice. If the second quarter 2020 Form 941 tax account is posted and overpaid, input a TC 570 on that module (if not already done) to freeze the overpayment. Input a history item "1STQTRERC" on TXMOD for both first and second quarter 2020 Form 941 tax periods (if not already done). Close the case. 3) The second quarter 2020 Form 941 has not posted The normal timeframe for posting has not expired Input a history item "1STQTRERC" on TXMOD for both first and second quarter 2020 Form 941 tax periods (if not already done). Monitor the account for posting of the second quarter return. If the return posts, or the normal timeframe for posting has expires, continue to process per guidance found in the table rows below. 4) The second quarter 2020 Form 941 has not posted The normal timeframe for posting has expired Send the taxpayer a letter and indicate we cannot address their inquiry because their Form 941 return for the second quarter of 2020 has not been processed. Advise them to file the return (or a newly signed copy) and to resubmit their request regarding first quarter reduced deposits at that time. Input STAUPS on the first quarter 2020 account for 9 weeks if the account reflects a balance due. Input a history item "1STQTRERC" on TXMOD for both first and second quarter 2020 Form 941 tax periods (if not already done). Close the case. 5) The second quarter 2020 Form 941 was overpaid and a refund was issued The refund can be intercepted Initiate an intercept request and suspend the case until the TC 841 posts. Once the TC 841 is posted, continue to process the correspondence per guidance found in the table rows below. 6) The second quarter 2020 Form 941 was overpaid and a refund was issued The refund cannot be intercepted or an intercept request failed Send the taxpayer a letter and indicate we cannot address their inquiry because the overpayment on their Form 941 return for the second quarter of 2020 was refunded. Advise the taxpayer to annotate the refund check with "VOID" and to return it with correspondence explaining the issue, including the amount by which they reduced first quarter deposits or to pay the first quarter amount showing as due and request reconsideration of penalties and interest in writing. Input STAUPS on the first quarter 2020 account for 9 weeks if the account reflects a balance due. Input a history item "1STQTRERC" on TXMOD for both first and second quarter 2020 Form 941 tax periods (if not already done). Close the case. 7) The correspondence indicates the taxpayer is also deferring employer's share of social security taxes for the first quarter 2020 Form 941 account or the taxpayer deferred payment of employer's share of social security taxes on the second quarter 2020 Form 941 account (i.e., posted CRN 280 amount) Contact the IRM author through your management chain and the site P&A Staff for guidance on handling the case. 8) The taxpayer's correspondence does not provide an amount by which they reduced first quarter deposits in anticipation of claiming Employee Retention Credit A telephone number is available Make two attempts to contact the taxpayer by phone to determine the amount by which they reduced first quarter deposits for anticipated Employee Retention Credit. If contact is successful, follow the guidance for phone contacts in the last row (only) of the table in (3) above. Otherwise, proceed to the next row of this table. 9) The taxpayer's correspondence does not provide an amount by which they reduced first quarter deposits in anticipation of claiming Employee Retention Credit A telephone number is not available or attempts to obtain the information via telephone were unsuccessful The amount by which first quarter deposits could be reduced for Employee Retention Credit reported on second quarter return must be established. Review the second quarter Form 941 tax return record and obtain the figures corresponding to Lines 24 (TC 970 field "QLFY-EMPL-MARCH-WG-PD-AMT" ) and 25 (TC 970 field "QLFY-HLTH-PLN-MARCH-AMT" ), add those two figures together, and divide the sum by 2. Review the first quarter Form 941 to determine the tax reported and subtract the total payments made by the return due date (April 30, 2020). The figure to be used for further processing is the lesser of the result determined in Step 1 or Step 2 above. Continue to process the taxpayer's inquiry as per guidance in the table in (5) below. 10) The taxpayer's correspondence provided an amount by which they reduced first quarter deposits in anticipation of claiming Employee Retention Credit None of the conditions in the rows above apply (or they do not continue to apply after the specified processing steps were followed) The amount by which first quarter deposits could be reduced for Employee Retention Credit reported on second quarter return must be established. Review the second quarter Form 941 tax return record and obtain the figures corresponding to Lines 24 (TC 970 field "QLFY-EMPL-MARCH-WG-PD-AMT" ) and 25 (TC 970 field "QLFY-HLTH-PLN-MARCH-AMT" ), add those two figures together, and divide the sum by 2. Review the first quarter Form 941 to determine the tax reported and subtract the total payments made by the return due date (April 30, 2020). The figure to be used for further processing is the lesser of the taxpayer supplied figure, the figure determined in Step 1 above, or the figure determined Step 2 above. Continue to process the taxpayer's inquiry as per guidance in the table in (5) below. For inquiries (phone or paper) for which an amount by which first quarter 2020 Form 941 deposits were reduced in anticipation of Employee Retention Credit was determined as per guidance in (3) or (4) above, handle as follows: If Then 1) The amount determined in (3) or (4) above is less than or equal to the amount of overpayment available on the second quarter 2020 Form 941 account Input a TC 820/700 credit transfer to move the amount determined as per (3) or (4) above from the second quarter 2020 Form 941 account to the first quarter 2020 Form 941 account. Enter "07312020" (second quarter return due date) for the transaction date of the TC 820 debit transaction. Enter "03132020" (legislative effective date) for the transaction date of the TC 700 credit transaction. As appropriate, take action to address any remaining overpayment on the second quarter account after initiation of the credit transfer. Advise the taxpayer verbally or in writing as to the amount of credit reapplied, that any penalties or interest on first quarter account will be recomputed, and that a notice reflecting the correction will be issued. 2) The amount determined in (3) or (4) above is more than the amount of overpayment available on the second quarter 2020 Form 941 account (or there is no overpayment) For Phone Inquiries: Advise the taxpayer we are unable to take any action on their account at this time and to submit their request in writing, including the amount by which they reduced their first quarter deposits. Input STAUPS on the first quarter 2020 account for 9 weeks if the account reflects a balance due. If the second quarter 2020 Form 941 tax account is posted and overpaid, input a TC 570 on that module to freeze the overpayment. Input a history item "1STQTRERC" on TXMOD for both tax periods. For Paper Cases: Contact the IRM author through your management chain and the site P&A Staff for guidance on handling the case.

# COBRA Premium Assistance Credit — The American Rescue Plan Act of 2021 (the ARP)

21.7.2.7.3 (10-01-2024) COBRA Premium Assistance Credit — The American Rescue Plan Act of 2021 (the ARP) Section 9501 of P.L. 117-2, The American Rescue Plan Act of 2021 (the ARP), provides for COBRA premium assistance in the form of a full reduction in the premium otherwise payable by certain individuals (i.e., an "Assistance Eligible Individual" ) and their families who elect COBRA continuation coverage due to a loss of coverage as the result of a reduction in hours or an involuntary termination of employment. COBRA premium assistance is available for periods of coverage beginning on or after April 1, 2021, through periods of coverage beginning on or before September 30, 2021. Credits may be claimed on employment tax returns for the second, third or fourth quarters of 2021 and the first quarter of 2022 depending on when the employer (or other person) becomes entitled to the credit. Section 9501(b) of the ARP added new IRC 6432 allowing a credit (COBRA premium assistance credit) against the employer share of Medicare tax (or the equivalent portion of Tier 1 RRTA taxes) for each calendar quarter in an amount equal to the premiums not paid by assistance eligible individuals for COBRA continuation coverage. Employers eligible to claim the COBRA premium assistance credit may reduce federal tax deposits by an amount equal to (or less than) their anticipated associated employment tax credit. Employers may request an advance by filing Form 7200 if the anticipated COBRA premium assistance credit exceeds the available reduction in deposits. Caution: Advance payments ceased being issued after January 31, 2022. See IRM 21.7.2.7.5, Form 7200, Advance Payment of Employer Credits due to COVID-19, for more information. Notice 2021-24 provides that employers who reduce deposits will not be subject to FTD penalties if (1) the employer is a person to whom premiums are payable; (2) the amount of employment taxes that the employer does not timely deposit (after reduction for other credits) is less than or equal to the amount of the employer's anticipated COBRA premium assistance credits for the calendar quarter as of the time of the required deposit; and (3) the employer did not seek payment of an advance credit by filing Form 7200 with respect to the anticipated credits it relied upon to reduce its deposits. For Form 941 tax periods 202106, 202109, 202112, and 202203 and for Form 943/Form 944/Form CT-1 tax periods 202112 and 202212, the COBRA premium assistance credit can be a non-refundable credit, a refundable credit, or both, depending on the amount of the COBRA premium credit that can be claimed for a particular tax period and the amount(s) of certain other non-refundable credit(s) being reported. The table which follows shows how non-refundable/refundable portions of COBRA premium assistance credits are determined for applicable tax periods: Tax Period(s) Credit Type How Credit is Taken 202106 Non-refundable COBRA premium assistance credit The credit is first applied, to the extent possible, as a non-refundable credit against amounts of otherwise due employer's share of Medicare tax (or the equivalent portion of Tier 1 RRTA taxes) as previously reduced by any non-refundable Credit for Qualified Sick and Family Leave Wages reported for the tax period for leave taken after March 31, 2021 (but is not reduced for any non-refundable portion of Credit for Qualified Sick and Family Leave Wages reported for the tax period for leave taken before April 1, 2021 or any ERC credit reported for the tax period). 202109 and 202112 Non-refundable COBRA premium assistance credit The credit is first applied, to the extent possible, as a non-refundable credit against amounts of otherwise due employer's share of Medicare tax (or the equivalent portion of Tier 1 RRTA taxes) as previously reduced (in order) by non-refundable portion of Credit for Qualified Sick and Family Leave Wages for leave taken after March 31, 2021 and non-refundable portion of credit for Employee Retention (ERC) reported for the tax period (but is not reduced for any non-refundable portion of Credit for Qualified Sick and Family Leave Wages reported for the tax period for leave taken before April 1, 2021). 202203 (and 202212 for annual returns) Non-refundable COBRA premium assistance credit The credit is first applied, to the extent possible, as a non-refundable credit against amounts of otherwise due employer's share of Medicare tax (or the equivalent portion of Tier 1 RRTA taxes) as previously reduced by non-refundable portion of Credit for Qualified Sick and Family Leave Wages for leave taken after March 31, 2021 (but is not reduced for any non-refundable portion of Credit for Qualified Sick and Family Leave Wages reported for the tax period for leave taken before April 1, 2021). 202106, 202109, 202112 and 202203 (and 202212 for annual forms) Refundable COBRA premium assistance credit Any amount of COBRA premium assistance credit for a tax period that cannot be applied as a non-refundable credit can instead be claimed as a refundable credit on the applicable employment tax return. Caution: See IRM 21.7.2.7.1.4, Timing Considerations Applicable to Reporting Qualified Sick and Family Leave Wages, Tax, and Associated Credits, for information on Credit for Qualified Sick and Family Leave Wages claimed in tax periods later than that in which qualified leave was taken by an employee. Note: Also see Exhibit 21.7.2-2, Application of Credits by Tax Period: Credit for Qualified Sick and Family Leave Wages, Employee Retention Credit (ERC), and COBRA premium assistance credit. Form 941 was revised to administer the COBRA premium assistance beginning with the second quarter of 2021: The non-refundable portion of the COBRA Premium assistance, if applicable, is reported on Line 11e of Form 941. The refundable portion of the COBRA Premium assistance, if applicable, is reported on Line 13f of Form 941 and will post as a TC 766 with new CRN 276. Number of individuals provided COBRA Premium assistance are reported on line 11f (see (4) below for more information). Employers use Worksheet 3 in the Instructions for Form 941 to compute the COBRA premium assistance credit amounts reported on Form 941. Note: Annual employment tax forms and instructions will be revised in similar fashion to enable reporting COBRA premium assistance credit amounts. In addition to reporting COBRA premium assistance credit amounts, eligible employers must also report (on line 11f of Form 941) a count of the number of individuals who were provided the COBRA assistance. The Instructions for Form 941 indicate employers should "Count each assistance eligible individual that received assistance as one individual, whether or not the COBRA coverage was for insurance that covered more than one assistance eligible individual. For example, if the coverage was for a former employee, spouse, and two children, you would include one individual on line 11f." . Note: For employers who use COBRA administrators, the administrators may be able to produce a report to assist employers in claiming the credit. For additional information, including Frequently Asked Questions (FAQs), see: Notice 2021-31 and Notice 2021-46. Corrections to amounts of COBRA Premium assistance credit previously reported (or omitted) on an employment tax return will generally require the filing of the appropriate Form 94XX adjusted return. See IRM 21.7.2.7.6.4, Form 94XX — COBRA Premium Assistance Credit, for handling guidance.

# Other COVID-19 Related Employment Tax Relief — Notice 2020-22, Notice 2020-23, and Notice 2020-35

21.7.2.7.4 (07-28-2020) Other COVID-19 Related Employment Tax Relief — Notice 2020-22, Notice 2020-23, and Notice 2020-35 The Service has provided administrative relief for certain employment tax obligations in addition to the legislative relief provided in the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The most notable administrative relief provisions for purposes of handling employment tax account related issues addressed in IRM 21.7.2 are described in the paragraphs which follow. Notice 2020-22: Employers who pay qualified sick and family leave wages and/or qualified retention wages may reduce federal tax deposits by an amount equal to (or less than) their anticipated associated employment tax credits. Notice 2020-22 provides that employers who reduce deposits will not be subject to FTD penalties so long as they paid qualified wages prior to the time such deposit was due, the amount not deposited was less than or equal to the anticipated amount of the associated credits as of when the deposit was due, and the employer did not request an advanced payment of the credits on Form 7200 in addition to reducing deposits. Notice 2020-23: Notice 2020-23 extended the due date for the filing of a claim for credit or refund of any tax. Any claim otherwise required to be filed on or after April 1, 2020 and before July 15, 2020 will be considered timely so long as it is filed on or before July 15, 2020. Notice 2020-35: Notice 2020-35 extends the timeframe for making corrections of employment tax reporting errors using the interest-free adjustment process. If a Form 94XX was required to be filed and paid on or after March 31, 2020 and before July 15, 2020 to be considered timely for interest free adjustment provisions, it will be considered to be timely filed and paid so long as it is filed and paid on or before July 15, 2020. See IRM 21.7.2.4.4.2 Interest-Free Adjustments (Employment Tax Returns), and the appropriate subsection within this IRM specific to the Form 94XX type being filed for more information on processing interest free employment tax adjustments. Reminder: The administrative relief provision described above are those which most directly apply to the handling of employment tax account issues addressed in this IRM. However, the notices listed above (and other recent notices not addressed here) include other important administrative relief provisions which may need to be considered in handling taxpayer inquiries and submissions addressed in other IRMs.

# Form 7200, Advance Payment of Employer Credits due to COVID-19

21.7.2.7.5 (04-20-2022) Form 7200, Advance Payment of Employer Credits due to COVID-19 A number of legislative provisions authorized the IRS to provide advance payments of certain employment tax credits prior to the filing of associated employment tax returns (Form 941, Form 943, Form 944, and Form CT-1) for 2020 and 2021 tax periods. Section 3606 of P.L. 116-136, Coronavirus Aid, Relief, and Economic Security (CARES) Act, authorized advance payments of the Credit for Qualified Sick and Family Leave Wages. (See IRM 21.7.2.7.1, Credit for Qualified Sick and Family Leave Wages, for more information about that credit). Advance payments of the credits associated with wages paid after March 31, 2021 and before October 1, 2021 were authorized by provisions in IRC 3131 and IRC 3132, added by Section 9641(a) of P.L. 117-2, The American Rescue Plan Act of 2021 (the ARP). Section 2301(l) of the CARES Act authorized advance payments of the Employee Retention Credit . (See IRM 21.7.2.7.2, Employee Retention Credit (ERC), for more information about that credit.) Advance payments of the ERC associated with wages paid after June 30, 2021 and before January 1, 2022 were authorized by a provision in IRC 3134, added by Section 9651(a) of P.L. 117-2, The American Rescue Plan Act of 2021 (the ARP). IRC 6432, added by Section 9501(b) of P.L. 117-2, The American Rescue Plan Act of 2021 (the ARP), included a provision authorizing advance payments of the COBRA premium assistance credit. (See IRM 21.7.2.7.3, COBRA Premium Assistance Credit — The American Rescue Plan Act of 2021 (the ARP), for more information about that credit.) Form 7200, Advance Payment of Employer Credits due to COVID-19, was used by employers to request advance payments for 2020 and 2021 tax periods. When employers pay their employees, they're required to withhold federal income tax and the employees' share of social security and Medicare taxes. Employers are required to deposit these taxes, along with their employer share of social security and Medicare taxes, with the IRS and file employment tax returns (Form(s) 941, 943, 944, or CT-1) with the IRS. However, eligible employers were permitted to retain an amount of withheld employment taxes equal to the anticipated amount of the employment tax credits identified above rather than depositing these amounts with the IRS. The employment taxes available for this purpose included withheld federal income tax, the employee share of social security and Medicare taxes, and the employer share of social security and Medicare taxes with respect to all employees. If there weren't sufficient employment taxes to cover the anticipated amount of the employment tax credits identified above, employers who file Form 941, Form 943, Form 944, or Form CT-1 were permitted to file Form 7200 to request an advance payment from the IRS. However, employers were not permitted to reduce their deposits as described above and also request advance credit payments for the same anticipated credit. As discussed in (6) below, employers were required to reconcile advance credit payments and reduced deposits when filing their employment tax return. Example: If an employer was entitled to a $5,000 Credit for Qualified Sick and Family Leave Wages and was otherwise required to deposit $8,000 in employment taxes, the employer was permitted to reduce its federal employment tax deposits by $5,000 and only the remaining $3,000 was required to be deposited on its next regular deposit date. Example: If an employer was entitled to an Employee Retention Credit (ERC) of $10,000 and was required to deposit $8,000 in employment taxes, the employer was permitted to retain the entire $8,000 of taxes otherwise due and file a request for an advance payment for the remaining $2,000 using Form 7200. Employers were directed in the Instructions for Form 7200 to file Forms 7200 with the Service via e-fax: Form 7200 could be filed for an advance payment of the credits anticipated for a quarter at any time before the end of the month following the quarter in which qualified wages were paid. If necessary, Form 7200 could be filed several times during each quarter. Form 7200 could not be filed to request an advance payment for any anticipated credit for which the taxpayer had already reduced otherwise required federal tax deposits. Employers could not file a corrected Form 7200. The taxpayer was instead directed in the form instructions to account for any errors made on Form 7200 when filing their associated Form 941, Form 943, Form 944, or Form CT-1. See (5) and (6) below for more information on how advance payments were reconciled when the related employment tax returns were filed and processed. Clients of aggregate employment tax return filers (Section 3504 Agents, CPEOs, and PEOs) were entitled to any credits for sick and family leave wages or the employee retention credit with respect to their common-law employees and could file Form 7200 advance payment requests on their own behalf. Such clients were required to provide their Section 3504 Agent, CPEO, or PEO with copies of the Form(s) 7200 they submitted to the IRS so the 3504 Agent, CPEO, or PEO could reconcile the credits on their aggregate employment tax return (with Schedule R attached). Any Form 7200 which was not processed by the time the associated employment tax return was processed could not (and cannot) subsequently be processed. See discussion of UPC 306 RC 3 in the note following (4) below and discussion of advance payment reconciliation in (5) and (6) below. Note: Reporting Agents were permitted to sign and file Form 7200 on behalf of clients. For more information, see: Payroll Reporting Agents Can Sign and Submit Form 7200 on Behalf of Clients. Note: Although employers were directed to file Form 7200 via fax, some forms may be received on paper. See IRM 21.7.2.7.5.3, Form 7200 — Guidance on Handling Paper Receipts, if Form 7200 is received on paper either by itself or attached to correspondence/amended returns. Form 7200 was processed by a specialized work operation referred to internally as the "Employer Credit Team" : Forms 7200 were retained and managed on a shared drive file system until they were worked. Access to the shared drive used for this purpose is restricted to employees tasked with processing the forms and associated management/support staff. The Employer Credit Team did not control tax accounts to reflect receipt of a Form 7200 until a transaction was input to process the advance request or until a letter was issued (for unprocessable forms). Processed Forms 7200 can be identified on an account by a posted TC 290 .00 transaction with first position Reason Code 219 and a CRN 299 for the amount requested by the taxpayer. When the TC 766/CRN 299 posted, the resulting overpayment associated with that TC 766 (only) would either offset or refund (TC 826 or TC 846) as appropriate prior to the posting of the TC 150. Generated refund transactions from this processing were accelerated and could not be intercepted. The date printed on the refund check for these transactions was the 23c date less 13 days. Form 7200 transactions were input via Command Code ADJ54 as "No Source Document" (NSD) adjustments. Accordingly, the Form 7200 cannot be obtained from Files. Instead, the Form 7200 remains as a file record within the shared drive used by the Employer Credit Team. Note: Programming would allow the specific transactions described above to post, and a refund or offset(s) to generate, before a TC 150 was posted to the tax module. Any adjustment input as described above with Reason Code 219 after the TC 150 was posted would unpost (i.e., an advance payment could not be issued after the original return was posted). Note: Forms 7200 filed by clients of aggregate employment tax return filers (Section 3504 Agent, CPEO, or PEO) were processed under the client's EIN rather than the EIN of the aggregate filer. Note: The last tax period for which Form 7200 could be filed was 202112 (i.e., tax periods ending December 31, 2021) and processing for Forms 7200 ceased after January 31, 2022. The Employer Credit Team issued the following letters when corresponding with employers regarding unprocessable Forms 7200: Letter 6312, Form 7200 Response. Letter 6313, Address Change Verification for Form 7200. Note: See IRM 21.7.2.7.5.2, Form 7200 — Letter 6312 and Letter 6313 Replies, for guidance on handling common responses to these letters. Note: The Employer Credit Team will continue to issue Letter 6312 for any late filed Forms 7200. Advance credit payments were reconciled by the employer when completing their employment tax return for the associated tax period: The Instructions for Form 941 included a worksheet for the taxpayer to calculate the entries to be made on Form 941 for non-refundable and refundable credits. These figures were then carried to Lines 11b, 11c, 11d, 11e, 13c, 13d, 13e, and 13f on Form 941 (or the equivalent lines on annual employment tax returns) as appropriate. Aggregate employment tax return filers (Section 3504 Agents, CPEOs, and PEOs) were required to include any amounts to which they or their clients were entitled. The figures entered on these lines of the Form 941 (or the equivalent lines on annual employment tax return) were not to be reduced for any amounts requested or received as advance payments via the filing of Form 7200. The taxpayer was instructed to enter the amount of all advance payments received for a quarterly tax period on Line 13h of Form 941 (or the equivalent line on annual employment tax returns). Aggregate employment tax return filers (Section 3504 Agents, CPEOs, and PEOs) were required to include any advance payment amounts requested and received by their clients. Any amount requested as an advance payment but not received by the taxpayer (or their clients) by the time they filed their employment tax return was not to be included on this line. As a function of entering data as described above, the taxpayer's bottom-line overpayment or balance due calculations would then properly account for employment tax credits for which they were eligible and any advance payments received. Caution: Line numbers identified above correspond to the last revision of Form 941 to which the advance payments applied. Previously, the credits were carried to Lines 11b, 11c, 13c and 13d with the amount of advance payments received entered on Line 13h. Advance credit payments are reconciled by the Service when the taxpayer's employment tax return is processed: When an original employment tax return is posted to a tax module for which one or more Form 7200 advance payments were systemically refunded, all previously posted TC 766 transactions with CRN 299 amounts and Reason Code 219 are systemically reversed with corresponding TC 767 transactions. The figures reported by the taxpayer (or as corrected by the Service) on Lines 11b, 11c, 11d, and 11e of their Form 941 (or the equivalent lines on annual employment tax returns) for non-refundable credits (factoring into the TC 150 total tax amount) and on Lines 13c, 13d, 13e, and 13f (or the equivalent lined on annual employment tax returns) for refundable credits (TC 766 amounts recorded with CRN 299, CRN 296, CRN 271, and CRN 276) are then posted to the account. As a function of the processing described above, the "temporary" CRN 299 credit figure used to generate advance payment(s) was essentially replaced with actual total credit amounts for which the taxpayer was eligible. And, having thus properly accounted for any advance payments received, the correct amount remaining due the taxpayer, or due the Treasury, was correctly calculated by the computer system. Reminder: See the caution following (6) above regarding changes to line numbers. Caution: Once a TC 150 has been processed to a tax account and the computer has reversed the CRN 299 Reason Code 219 amounts, any CRN 299 amount with Reason Code 219 attempting to post to the module will unpost with UPC 306 RC3. Any corrections to refundable credits allowed with the original return must be made with CRN 296 or with CRN 299 and any corrections to non-refundable credits must be made with a TC 29X and appropriate IRNs. Corrections made after the TC 150 posts cannot be accompanied by Reason Code 219. Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The subsections which follow provide guidance on handling common inquiries received in Accounts Management with regards to Form 7200.

# Form 7200 — Phone Inquiries

21.7.2.7.5.1 (04-20-2022) Form 7200 — Phone Inquiries The last tax period for which Form 7200 could be filed was 202112 (i.e., tax periods ending December 31, 2021) and processing for Forms 7200 ceased after January 31, 2022. The following table provides guidance on handling common phone inquiries relating to Form 7200: If And Then 1) The taxpayer has general questions on eligibility or how/where to file Form 7200 Advise the taxpayer that the IRS no longer accepts and will not process any Form 7200 advance payment request. If the taxpayer still has general questions about how the form was filed, refer the taxpayer to guidance on the Form 7200 landing page on irs.gov: About Form 7200, Advance Payment of Employer Credits Due to COVID-19. 2) The taxpayer received either Letter 6312 or Letter 6313 Advise the taxpayer that the IRS no longer accepts and will not process any Form 7200 advance payment request, including any previously filed Form 7200. Advise the taxpayer that any credits for which they requested an advance must be reported on their original employment tax return or on an amended employment tax return (specify form). 3) IDRS history/activity indicates either Letter 6312 or Letter 6313 has been issued The taxpayer has not yet received the letter If three or less weeks have passed since the letter was issued, advise the taxpayer that our records indicate they will receive a letter within three weeks regarding their previously filed Form 7200. If more than three weeks have passed since the letter was issued, advise the taxpayer that any credits for which they requested an advance must be reported on their original employment tax return or on an amended employment tax return (specify form). 4) The taxpayer is an aggregate employment tax filer (Section 3504 Agents, CPEOs, and PEOs) Is inquiring about a refund generated from the processing of their original employment tax return (either expected but not received or received but not expected) See IRM 21.7.2.7.5.4, Reconciliation of Advance Payment Amounts for Aggregate Employment Tax Return Filers. 5) The taxpayer has questions about the processing of a previously filed Form 7200 A TC 766 transaction with CRN 299 and Reason Code 219 corresponding to the Form 7200 described by the taxpayer is present on the tax module The dates and amounts of any refunds/offsets generated by previous processing of Forms 7200, as recorded on the tax account, may be relayed verbally or in writing to the taxpayer. The date printed on the refund check is the 23c date less 13 days. Note: Refunds issued from the processing of Form 7200 were accelerated and could not be intercepted. 6) The taxpayer is inquiring as to whether one or more specific advanced payments have been issued A TC 766 transaction with CRN 299 and Reason Code 219 corresponding to the Form 7200 described by the taxpayer is not present on the tax module Advise the taxpayer that the IRS no longer accepts and will not process any Form 7200 advance payment request, including any previously filed Form 7200. Advise the taxpayer that any credits for which they requested an advance must be reported on their original employment tax return or on an amended employment tax return (specify form). 7) Taxpayer states they made a computation error on a previously filed Form 7200 The advance payment received was less than what they could have requested Advise the taxpayer that corrected/amended Forms 7200 cannot be filed. Advise the taxpayer that the IRS no longer accepts and will not process any Form 7200 advance payment request, including any previously filed Form 7200. Advise the taxpayer that any credits for which they could have requested an advance must be reported on their original employment tax return or on an amended employment tax return (specify form). 8) Taxpayer states they made a computation error on a previously filed Form 7200 The advance payment requested and received was more than the taxpayer was eligible to receive Advise the taxpayer that corrected/amended Forms 7200 cannot be filed. Advise the taxpayer that they were required to claim the correct amount of credits on their employment tax return. Advise the taxpayer that any credits for which they were eligible that were either incorrectly or not claimed on an original employment tax return must be corrected by filing an amended return (specify form). If the taxpayer received excessive advance payment(s) and the original employment tax return has not yet posted, advise the taxpayer that their account will reflect a balance due when the return is processed unless there are sufficient credits applied and that payment for any shortfall should be made as soon as possible to limit any applicable penalty or interest charges. If there is a balance due on the account as the result of the taxpayer having received excessive advance payment(s), advise the taxpayer the balance due is correct. Address the balance due as appropriate. Note: Do not advise the taxpayer to return the advance payment check received unless the entire amount of the payment was in error. 9) Taxpayer is responding to a balance due notice Received one or more advance payments but did not report/claim the associated Credit for Qualified Sick and Family Leave Wages or Employee Retention Credit on their original employment tax return Advise the taxpayer that Form 7200 was used to request advance payment but that any credits for which they were eligible were required to be reported/claimed on their original employment tax return. If the taxpayer was eligible to claim less credit on their employment tax return than the amount of advance payment(s) received, advise the taxpayer that they owe the excessive amount advanced. Address the balance due as appropriate. Advise the taxpayer that if they were eligible for credits which were not reported on their employment tax return, they must file an amended return (specify form) to resolve the balance due. 10) Taxpayer is responding to a balance due notice ( or received a refund less than what was expected) Received one or more advance payments but did not report the correct amount(s) on Line 13h of Form 941 Advise the taxpayer that: Advance payments should not have been requested on Form 7200 if they also reduced required federal tax deposits/payments for the same expected credit amount. The amount of any advance payment received is a factor in reconciling Form 941 (i.e., determining whether the account is in full paid, balance due, or overpaid status) and must be reported on Line 13f of Form 941. If they reported the correct amount of credits for which they were eligible but did not enter the amount of any advance payments on Line 13f, the balance due notice (or reduced refund amount) is correct.

# Form 7200 — Letter 6312 and Letter 6313 Replies

21.7.2.7.5.2 (04-20-2022) Form 7200 — Letter 6312 and Letter 6313 Replies The last tax period for which Form 7200 could be filed was 202112 (i.e., tax periods ending December 31, 2021) and processing for Forms 7200 ceased after January 31, 2022. Letter 6312, Form 7200 Response, was previously issued by the Employer Credit Team when the form could not be processed as filed by the taxpayer. The letter will continue to be issued by the Employer Credit Team for any Form 7200 received by the Employer Credit Team subsequent to the end of the program. The following table provides guidance on handling common phone replies to Letter 6312: If Then 1) The taxpayer is asking for general information on the purpose or filing of Form 7200 Advise the taxpayer that the IRS no longer accepts and will not process any Form 7200 advance payment request. If the taxpayer still has general questions about how the form was filed, refer the taxpayer to guidance on the Form 7200 landing page on irs.gov: About Form 7200, Advance Payment of Employer Credits Due to COVID-19. 2) The taxpayer does not understand the Letter 6312 received or disagrees with the reasons provided in Letter 6312 for rejection of their Form 7200 Advise the taxpayer that the IRS no longer accepts and will not process any Form 7200 advance payment request, including any previously filed Form 7200. Advise the taxpayer that any credits for which they requested an advance must be reported on their original employment tax return or on an amended employment tax return (specify form). 3) The taxpayer wants to file a corrected or amended Form 7200 to obtain the previously requested advance payment Advise the taxpayer that the IRS no longer accepts and will not process any Form 7200 advance payment request, including any previously filed Form 7200. Advise the taxpayer that any credits for which they requested an advance must be reported on their original employment tax return or on an amended employment tax return (specify form). Note: Paper responses to Letter 6312 should rarely be received in Accounts Management. If they are, see the second row of the table in (2) of IRM 21.7.2.7.5.3, Form 7200 — Guidance on Handling Paper Receipts, if the reply is attached to a Form 7200. Otherwise, the directions in the table above for handling phone responses would generally also apply to paper responses. However, if specific guidance on handling a paper response to Letter 6312 is needed, contact the IRM author through your management chain and the site P&A Staff. Letter 6313, Address Change Verification for Form 7200, was previously issued by the Employer Credit Team when the address on Form 7200 differed from what was reflected in the IRS records. The letter requested the taxpayer complete and return Form 8822-B, Change of Address or Responsible Party - Business, via fax with a copy of the letter or to confirm any advance payment should be issued to the address of record by marking a checkbox on the letter and faxing it back to the processing group. The following table provides guidance on handling common phone replies to Letter 6313: If Then 1) The taxpayer wishes to respond for the purposes of obtaining the advance payment previously requested on Form 7200 Advise the taxpayer that the IRS no longer accepts and will not process any Form 7200 advance payment request, including any previously filed Form 7200. Advise the taxpayer that any credits for which they requested an advance must be reported on their original employment tax return or on an amended employment tax return (specify form). 2) The taxpayer requests an address change be made to their account See (2), Item (e) in IRM 21.7.1.4 and (3) in IRM 21.1.3.20 to determine if the address change can be made based on oral statement authority. Otherwise, advise the taxpayer to file Form 8822-B as per the form instructions. Note: Paper responses to Letter 6313 should rarely be received in Accounts Management. If they are, see the second row of the table in (2) of IRM 21.7.2.7.5.3, Form 7200 — Guidance on Handling Paper Receipts, if the reply is attached to a Form 7200. Otherwise, the directions in the table above for handling phone responses would generally also apply to paper responses. However, if specific guidance on handling a paper response to Letter 6313 is needed, contact the IRM author through your management chain and the site P&A Staff.

# Form 7200 — Guidance on Handling Paper Receipts

21.7.2.7.5.3 (04-20-2022) Form 7200 — Guidance on Handling Paper Receipts The last tax period for which Form 7200 could be filed was 202112 (i.e., tax periods ending December 31, 2021) and processing for Forms 7200 ceased after January 31, 2022. Handle any paper Forms 7200 received in Accounts Management as follows: If And Then 1) Form 7200 is attached to correspondence or an amended return It is intended as supporting documentation (whether previously processed or not) Leave Form 7200 attached and resolve the other issues presented as appropriate. 2) Form 7200 is attached to a Letter 6312 or Letter 6313 reply Reject the Form 7200 with Letter 4384C . Insert the following text in an open paragraph: "The IRS no longer accepts or processes Form 7200 advance payment requests. Any employment tax credits for which you were eligible must be claimed on an original or amended employment tax return." Caution: Form 7200 does not constitute a claim for refund. Do not send a 105C or 106C to formally disallow an amount requested on Form 7200. 3) Form 7200 is submitted by itself on paper Account research shows it was previously processed (whether adjusted or rejected via Letter 6312) Treat the document as classified waste. 4) Form 7200 is submitted by itself on paper There is no indication it was previously processed (neither an adjustment for the amount requested nor an indication it was rejected via Letter 6312) E-fax the document to 844-265-7821. Note: For any paper Form 7200 response scenario not addressed above, contact the IRM author through your management chain and the site P&A Staff for guidance on handling the case.

# Reconciliation of Advance Payment Amounts for Aggregate Employment Tax Return Filers

21.7.2.7.5.4 (08-03-2022) Reconciliation of Advance Payment Amounts for Aggregate Employment Tax Return Filers As noted in (7) of IRM 21.7.2.7.5, Form 7200, Advance Payment of Employer Credits due to COVID-19, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ As discussed in (3) of that IRM section, clients of aggregate employment tax return filers (Section 3504 Agents, CPEOs, and PEOs) could file Form 7200 on their own behalf to request advance payments of credits for sick and family leave wages or the employee retention credit with respect to their common-law employees. And, clients who chose to file such advance payment requests were required to provide their Section 3504 Agent, CPEO, or PEO with copies of the Form(s) 7200 they submitted so the 3504 Agent, CPEO, or PEO could reconcile the credits on their aggregate employment tax return (with Schedule R attached). As discussed in (6) of that IRM section, such aggregate return filer were required to report the correct amounts of employment tax credits for which they and their clients were entitled on Lines 11b, 11c, 13c, and 13d of Form 941 and were required to include the amount of any advance payment received by a client on Line 13f of Form 941 (or the equivalent lines on annual employment tax returns). As discussed in (7) of that IRM section, any previously posted CRN 299 amount with Reason Code 219 recording an advance payment on a tax account is systemically reversed with a corresponding TC 767 transaction when an original employment tax return is posted to a tax module. And, as noted in (4) of that same IRM section, such Forms 7200 filed by clients of aggregate employment tax return filers were processed under the EIN of the client rather than that of the aggregate filer. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The following table contains guidance for handling common inquiries related to reconciling advance credits for aggregate employment tax return filers (Section 3504 Agents, CPEOs, and PEOs): ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

# COVID-19 Related Employment Tax Relief and Forms 94XX

21.7.2.7.6 (02-25-2025) COVID-19 Related Employment Tax Relief and Forms 94XX Form 941 was revised beginning with the second quarter (and remainder) of 2020 to include new lines for reporting tax information related to COVID-19 employment tax relief. 2020 Form 941 field displays: Due to timing issues, the associated new fields and field values reported on revised Form 941 for 2020 could not be immediately posted in the posted return information sections of Command Codes (CC) TXMOD and BMFOLR. Instead, the field names and field values were recorded in the posted transaction sections of CC TXMOD and CC BMFOLT with a TC 970 transaction. At the close of 2020, the new field values were migrated to the posted return information sections of the CC displays and the TC 970 carrying transactions were removed from the transaction record. 2021 Form 941 field displays: Similarly, new fields and field values reported on revised Form 941 for second quarter 2021 and subsequent could not be immediately posted in the posted return information sections of Command Codes (CC) TXMOD and BMFOLR. Instead, new field names and field values for 2021 were recorded in the posted transaction sections of CC TXMOD and CC BMFOLT with a TC 970 transaction. At the close of 2021, the new field values were migrated to the posted return information sections of the CC displays and the TC 970 carrying transactions were removed from the transaction record. Note: Since annual employment tax returns (Form 943/Form 944/Form CT-1) for 2020 were not processed until after the close of 2020, TC 970 transactions were not required for display of new fields on MFT 11, MFT 14, or MFT 09. This was true for 2021 annual employment forms which were not be processed until after the close of 2021. The table which follows shows previous and current field displays for CC TXMOD and CC BMFOLR, IRNs and CRNs for new adjustment items on 2020 and 2021 employment tax returns, and corresponding line numbers/descriptions for Form 941 and Form 941-X. TXMOD Field Name BMFOLR Field Name Form 941 Line Number and Title Form 941-X Line Number and Title IRN/CRN S-COV-SIC-LV SSW SICK LEAVE Line 5a(i), Col. 1 Qualified sick leave wages (for leave taken before April 1, 2021) Line 9 Qualified sick leave wages (for leave taken before April 1, 2021) IRN 200 for wages, IRN 112 for associated tax S-COV-FAM-LV SSW FAMILY LEAVE Line 5a(ii), Col. 1 Qualified family leave wages (for leave taken before April 1, 2021) Line 10 Qualified family leave wages (for leave taken before April 1, 2021) IRN 201 for wages, IRN 112 for associated tax CR-QLFY-SIC-FAM CR QLFY SICK FAM Line 11b Nonrefundable portion of credit for qualified sick and family leave wages (for leave taken before April 1, 2021) Line 17 Nonrefundable portion of credit for qualified sick and family leave wages for leave taken before April 1, 2021 IRN 202 CR-EMP-RTN CR EMP RTNTN Line 11c Nonrefundable portion of employee retention credit Line 18a Nonrefundable portion of employee retention credit IRN 203 ARP-CR-QLFY-COVID-SICK-FAM-AMT ARP CR QFY SK FAM Line 11d Nonrefundable portion of credit for qualified sick and family leave wages for leave taken after March 31, 2021 (and before October 1, 2021) Line 18b Nonrefundable portion of credit for qualified sick and family leave wages for leave taken after March 31, 2021 (and before October 1, 2021) IRN 281 ARP-COBRA-NONREF-CR-AMT ARP CBRA NREF CR Line 11e Nonrefundable portion of COBRA premium assistance credit Line 18c Nonrefundable portion of COBRA premium assistance credit IRN 282 ARP-COBRA-RECIPENT-NUM ARP CBRA RECP NUM Line 11f Number of individuals provided COBRA premium assistance Line 18d Number of individuals provided COBRA premium assistance IRN 283 Caution: See (6) in IRM 21.7.2.7.6.4, Form 94XX — COBRA Premium Assistance Credit, for special input requirements when making changes with this IRN. N/A Review posted CRN 280 transaction amounts DEFER SECT 2302 Line 13b April 2020 Revision: Deferred amount of the employer share of social security tax July 2020 Revision: Deferred amount of social security tax Line 24 Deferred amount of social security tax CRN 280 to alter posted transaction amount, posted field value will not change. N/A Review posted CRN 299 transaction amounts RFDBL SICK FAM Line 13c Refundable portion of credit for qualified sick and family leave wages (for leave taken before April 1, 2021) Line 25 Refundable portion of credit for qualified sick and family leave wages for leave taken before April 1, 2021 CRN 299 to alter posted transaction amount, posted field value will not change. Caution: See IRM 21.7.2.7.5, Form 7200, Advance Payment of Employer Credits due to COVID-19, for discussion of CRN 299 with Reason Code 219 input prior to posting of original employment tax returns. N/A Review posted CRN 296 transaction amounts RFDBL EMP RTNTN Line 13d Refundable portion of employee retention credit Line 26a Refundable portion of employee retention credit CRN 296 to alter posted transaction amount, posted field value will not change. N/A Review posted CRN 271 transaction amounts ARP RDBL SCK FAM Line 13e Refundable portion of credit for qualified sick and family leave wages for leave taken after March 31, 2021 (and before October 1, 2021) Line 26b Refundable portion of credit for qualified sick and family leave wages for leave taken after March 31, 2021 (and before October 1, 2021) CRN 271 to alter posted transaction amount, posted field value will not change. F7200-ADV-PMT F7200 ADV PAYMNT Line 13f Total advances received from filing Form(s) 7200 for the quarter N/A N/A N/A Review posted CRN 276 transaction amounts ARP CBRA REF CR Line 13f Refundable portion of COBRA premium assistance credit Line 26c Refundable portion of COBRA premium assistance credit CRN 276 to alter posted transaction amount, posted field value will not change. N/A F7200 ADV PAYMNT Line 13h Total advances received from filing Form(s) 7200 for the quarter N/A N/A HLTH-PLN-EXP-AI QLF HLTH EXP AI Line 19 Qualified health plan expenses allocable to qualified sick leave wages (for leave taken before April 1, 2021) Line 28 Qualified health plan expenses allocable to qualified sick leave wages for leave taken before April 1, 2021 IRN 204 HLTH-PLN-EXP-AII QLF HLTH EXP AII Line 20 Qualified health plan expenses allocable to qualified family leave wages (for leave taken before April 1, 2021) Line 29 Qualified health plan expenses allocable to qualified family leave wages for leave taken before April 1, 2021 IRN 205 WGS-EMP-RTN-COV QLF WGS EMP RTNTN Line 21 Qualified wages for employee retention credit Line 30 Qualified wages for employee retention credit IRN 206 HLTH-PLN-EXP-RPT QLF HLTH PLN EXP Line 22 Qualified health plan expenses allocable to wages reported on Line 21 Line 31a Qualified health plan expenses for the employee retention credit IRN 207 QTR-CR-F5884C QTR CRED F5884C Line 23 Credit from Form 5884-C, line 11, for this quarter Line 32 Credit from Form 5884-C, line 11, for this quarter N/A ARP-QLFY-SICK-WAGES-AMT ARP QLFY SCK WGS Line 23 Qualified sick leave wages for leave taken after March 31, 2021 (and before October 1, 2021) Line 35 Qualified sick leave wages for leave taken after March 31, 2021 (and before October 1, 2021) IRN 284 EMP-MARCH-WG-PD QLF EMP MARCH WG Line 24 April 2020 Revision: Qualified wages paid March 13 through March 31, 2020, for the employee retention credit Line 33a April 2020 Revision: Qualified wages paid March 13 through March 31, 2020, for the employee retention credit IRN 208 Caution: Line 24 of Form 941 represents different tax reporting items for 202006 versus 202009 and 202012. See (5) in IRM 21.7.2.8.2, Notice 2020-65 and Notice 2021-11 — Deferred Payment of Employee's Share of Social Security Taxes for 2020, for more information. N/A If reported, constitutes a portion of the CRN 280 transaction amount(s) reflected on TXMOD (and BMFOLT). If an adjustment for this item is necessary, see BMFOLR for the separately recorded amount. DEFR EE FICA AMT Line 24 July 2020 Revision: Deferred amount of the employee share of social security tax included on line 13b Line 33b Deferred amount of the employee share of social security tax included on Form 941 or Form 941-SS, line 13b IRN 208 Caution: Line 24 of Form 941 represents different tax reporting items for 202006 versus 202009 and 202012. See (5) in IRM 21.7.2.8.2, Notice 2020-65 — and Notice 2021-11 Deferred Payment of Employee's Share of Social Security Taxes for 2020, for more information. ARP-QLFY-HLTHPLN-EXPNS-AI-AMT ARP QLFY HLTH AI Line 24 Qualified health plan expenses allocable to qualified sick leave wages reported on line 23 Line 36 Qualified health plan expenses allocable to qualified sick leave wages for leave taken after March 31, 2021 IRN 285 HLTH-PLN-MARCH QLF HLTH PL MAR Line 25 April 2020 Revision: Qualified health plan expenses allocable to wages reported on Line 24 July 2020 Revision: Reserved for future use Line 34 Qualified health plan expenses allocable to wages reported on Form 941 or Form 941-SS, line 24 IRN 209 Caution: Only applicable to second quarter 2020 Form 941 tax returns. CBA-QLFY-SICK-WAGES-AMT CBA QLFY SCK WAGS Line 25 Amounts under certain collectively bargained agreements allocable to qualified sick leave wages reported on line 23 Line 37 Amounts under certain collectively bargained agreements allocable to qualified sick leave wages for leave taken after March 31, 2021 IRN 286 ARP-QLFY-FAM-WAGES-AMT ARP QLFY FAM WAGS Line 26 Qualified family leave wages for leave taken after March 31, 2021 (and before October 1, 2021) Line 38 Qualified family leave wages for leave taken after March 31, 2021 (and before October 1, 2021 IRN 287 ARP-QLFY-HLTHPLN-EXPNS-AII-AMT ARP QLFY HLTH AII Line 27 Qualified health plan expenses allocable to qualified family leave wages reported on line 26 Line 39 Qualified health plan expenses allocable to qualified family leave wages for leave taken after March 31, 2021 IRN 288 CBA-QLFY-FAM-WAGES-AMT CBA QLFY FAM WAGS Line 28 Amounts under certain collectively bargained agreements allocable to qualified family leave wages reported on line 26 Line 40 Amounts under certain collectively bargained agreements allocable to qualified family leave wages for leave taken after March 31, 2021 IRN 289 Caution: All other IRN and CRN usage for Form 941 remains in place. However certain existing lines of Form 941 were renumbered with the current revision. Most notably, previous Line 11 is now Line 11a and will continue to be adjusted with IRN 119. Note: See archived versions of this IRM if information is needed with regards to field displays for former TC 970 carrying transactions. Caution: Form 941-X is revised on a regular basis and line numbers for particular adjustment items occasionally change. However, there is no requirement for the taxpayer to use the most current version of Form 941-X. Although line numbers are provided in the table above for easy reference, employees are responsible for ensuring the proper adjustment action is taken based on the form version filed by the taxpayer. The following table provides adjustment formulas for 2020 employment tax returns: Tax Form Tax Periods 29X adjustment must equal Form 941 Tax periods 202006, 202009, 202012, and 202103 (only) The sum of IRNs 111, 112, 114, and 113 less IRN 119, less IRN 202, less IRN 203. Form 941 Tax periods 202106, 202109, and 202112 (only) The sum of IRNs 111, 112, 114, and 113 less IRN 119, less IRN 202, less IRN 203, less IRN 281, less IRN 282. Form 941 Tax periods 202203 (only) The sum of IRNs 111, 112, 114, and 113 less IRN 119, less IRN 202, less IRN 281, less IRN 282. Form 941 Tax periods 202206 and subsequent The sum of IRNs 111, 112, 114, and 113 less IRN 119, less IRN 202, less IRN 281. Form 944 Tax period 202012 (only) The sum of IRNs 111, 112, 114, and 113, less IRN 119, less IRN 202, less IRN 203. Form 944 Tax period 202112 (only) The sum of IRNs 111, 112, 114, and 113, less IRN 119, less IRN 202, less IRN 203, less IRN 281, less IRN 282. Form 944 Tax period 202212 (only) The sum of IRNs 111, 112, 114, and 113, less IRN 119, less IRN 202, less IRN 281, less IRN 282. Form 944 Tax period 202312 and subsequent The sum of IRNs 111, 112, 114, and 113, less IRN 119, less IRN 202, less IRN 281. Form 943 Tax period 202012 (only) The sum of IRNs 003 and 007, less IRN 119, less IRN 202, less IRN 203. Form 943 Tax period 202112 (only) The sum of IRNs 003 and 007, less IRN 119, less IRN 202, less IRN 203, less IRN 281, less IRN 282. Form 943 Tax period 202212 (only) The sum of IRNs 003 and 007, less IRN 119, less IRN 202, less IRN 281, less IRN 282. Form 943 Tax period 202312 and subsequent The sum of IRNs 003 and 007, less IRN 119, less IRN 202, less IRN 281. Form CT-1 Tax period 202012 and subsequent IRN 070 Note: ADJ54 does not validate the math for any IRNs in use on MFT 09 other than IRN 070. Procedures for processing Forms 94XX changing new credits are found in the subsections which follow. Procedures for processing Forms 94XX with deferred social security tax implications are found in IRM 21.7.2.8.12, Form 94XX — Adjusting Accounts with a Posted CRN 280 and/or Corrections to Deferred Social Security Tax Payment Amounts. Reminder: Form 94XX and other paper cases involving claims for COVID-related employment tax credits (Employee Retention Credit (ERC), Credit for Qualified Sick and Family Leave Wages, and COBRA Premium Assistance Credits) and deferred payment of social security tax inquiries/cases received within AM are specialized work. See (11) in IRM 21.7.2.7, COVID-19 Related Employment Tax Relief, and (3) in IRM 21.7.2.8, Deferred Payment of Social Security Taxes for 2020, for instructions on required case control activities and case reassignments by employees not designated to work the described cases.

# Form 94XX — Credit for Qualified Sick and Family Leave Wages for Leave Taken Before April 1, 2021

21.7.2.7.6.1 (10-01-2022) Form 94XX — Credit for Qualified Sick and Family Leave Wages for Leave Taken Before April 1, 2021 This subsection provides specialized handling guidance for adjusting the Credit for Qualified Sick and Family Leave Wages as for leave taken before April 1, 2021 reported on Form 94XX (or duplicate filed employment tax returns being processed as a Form 94XX). Note: All other Form 94XX processing guidelines and requirements also apply to Forms 94XX reporting changes to Credit for Qualified Sick and Family Leave Wages. Credit for Qualified Sick and Family Leave Wages can be a non-refundable credit, a refundable credit, or both, depending on the amount of the Credit for Qualified Sick and Family Leave Wages that can be claimed for a particular tax period and the amount(s) of any other non-refundable credit(s) being reported. For general information regarding this credit, see IRM 21.7.2.7.1, Credit for Qualified Sick and Family Leave Wages (and the four subsections that follow the cross-referenced IRM section). For guidance on handling Form 94XX adjustment requests for Credit for Qualified Sick and Family Leave Wages for leave taken after March 31, 2021, see IRM 21.7.2.7.6.2, Form 94XX — Credit for Qualified Sick and Family Leave Wages for Leave Taken After March 31, 2021. The following IRNs and CRNs are associated with adjustments to the Credit for Qualified Sick and Family Leave Wages for leave taken before April 1, 2021: TXMOD Field Name BMFOLR Field Name Form 941 Line Number and Title Form 941-X Line Number and Title IRN/CRN S-COV-SIC-LV SSW SICK LEAVE Line 5a(i), Col. 1 Qualified sick leave wages (for leave taken before April 1, 2021) Line 9 Qualified sick leave wages (for leave taken before April 1, 2021) IRN 200 for wages, IRN 112 for associated tax S-COV-FAM-LV SSW FAMILY LEAVE Line 5a(ii), Col. 1 Qualified family leave wages (for leave taken before April 1, 2021) Line 10 Qualified family leave wages (for leave taken before April 1, 2021) IRN 201 for wages, IRN 112 for associated tax CR-QLFY-SIC-FAM CR QLFY SICK FAM Line 11b Nonrefundable portion of credit for qualified sick and family leave wages (for leave taken before April 1, 2021) Line 17 Nonrefundable portion of credit for qualified sick and family leave wages for leave taken before April 1, 2021 IRN 202 N/A Review posted CRN 299 transaction amounts RFDBL SICK FAM Line 13c Refundable portion of credit for qualified sick and family leave wages (for leave taken before April 1, 2021) Line 25 Refundable portion of credit for qualified sick and family leave wages for leave taken before April 1, 2021 CRN 299 to alter posted transaction amount, posted field value will not change. Caution: See IRM 21.7.2.7.5, Form 7200, Advance Payment of Employer Credits due to COVID-19, for discussion of CRN 299 with Reason Code 219 input prior to posting of original employment tax returns. HLTH-PLN-EXP-AI QLF HLTH EXP AI Line 19 Qualified health plan expenses allocable to qualified sick leave wages (for leave taken before April 1, 2021) Line 28 Qualified health plan expenses allocable to qualified sick leave wages for leave taken before April 1, 2021 IRN 204 HLTH-PLN-EXP-AII QLF HLTH EXP AII Line 20 Qualified health plan expenses allocable to qualified family leave wages (for leave taken before April 1, 2021) Line 29 Qualified health plan expenses allocable to qualified family leave wages for leave taken before April 1, 2021 IRN 205 Caution: Form 941-X is revised on a regular basis and line numbers for particular adjustment items occasionally change. However, there is no requirement for the taxpayer to use the most current version of Form 941-X. Although line numbers are provided in the table above for easy reference, employees are responsible for ensuring the proper adjustment action is taken based on the form version filed by the taxpayer. IRN 202 is used along with TC 290, TC 291, or TC 298 (as appropriate) to record adjustments to the non-refundable portion of Credit for Qualified Sick and Family Leave Wages for leave taken before April 1, 2021 on Form 941, Form 943, Form 944 and Form CT-1 tax accounts. An increase to the credit will be recorded with a positive IRN 202 amount and a corresponding decrease to tax (i.e., a TC 291 for the same amount if no other changes were reported). A decrease to the credit will be recorded with a negative IRN 202 amount and a corresponding increase to tax (i.e., a TC 290/298 for the same amount if no other changes were reported). Example: A Form 941-X is filed claiming an increase to non-refundable Credit for Qualified Sick and Family Leave Wages for leave taken before April 1, 2021 in the amount of $75. Assuming all processing requirements are met, the adjustment to be made would be a TC 291 for $75.00- and an IRN 202 for $75.00. Example: A Form 941-X is filed reporting a decrease to non-refundable Credit for Qualified Sick and Family Leave Wages for leave taken before April 1, 2021 in the amount of $90. Assuming all processing requirements are met, the adjustment to be made would be a TC 290 (or TC 298 as applicable) for $90.00 and an IRN 202 for $90.00-. Note: IRN 202 can be combined on Command Code ADJ54 adjustments with any other IRN or CRN valid for the form being adjusted. CRN 299 is used to record adjustment to the refundable portion of Credit for Qualified Sick and Family Leave Wages for leave taken before April 1, 2021 on Form 941, Form 943, Form 944 and Form CT-1 tax accounts. Use a positive CRN 299 when increasing the credit (TC 766 is generated) or a minus (-) CRN 299 when decreasing the credit (TC 767 is generated). Note: CRN 299 can be combined on Command Code ADJ54 adjustments with any other IRN or CRN valid for the form being adjusted. Caution: As discussed in IRM 21.7.2.7.5, Form 7200, Advance Payment of Employer Credits due to COVID-19, CRN 299 (with Reason Code 219) is also used to record temporary credits for purposes of triggering systemic refunds/offsets when advance payments requests filed on Form 7200 are processed. The temporary credits are reversed in full when the original employment tax return is processed and replaced with the "true" credits reported on the employment tax return. As such, reversed CRN 299 / Reason Code 219 amounts are not to be considered when processing Forms 94XX reporting changes to refundable Credit for Qualified Sick and Family Leave Wages. Corrections to this credit will usually be seen along with corrections to the related wage figures and/or allocable qualified health plan expenses. IRN 200 is used to either increase or decrease qualified sick leave wages for leave taken before April 1, 2021. IRN 201 is used to either increase or decrease qualified family leave wages for leave taken before April 1, 2021. IRN 204 is used to either increase or decrease qualified health plan expenses allocable to qualified sick leave wages for leave taken before April 1, 2021. IRN 205 is used to either increase or decrease qualified health plan expenses allocable to qualified family leave wages for leave taken before April 1, 2021. Reminder: These wages are not subject to employer's share of social security tax (i.e., the wages are only subject to employee's share of social security tax at a 6.2% tax rate). Changes (increase or decrease) to the employee's share of social security tax (reported in Column 2 of Line 5a(i) and Line 5a(i)(i)) are recorded with the appropriate IRN 112 adjustment. An increase to the refundable or nonrefundable (i.e., decrease to tax) portions of the credit may meet examination criteria. See Exhibit 21.5.3–2, Examination Criteria (CAT-A) — General. Process Forms 94XX claiming non-refundable or refundable amounts of Credit for Qualified Sick and Family Leave Wages for leave taken before April 1, 2021 as per guidance in the paragraphs which follow. Caution: When working Forms 94XX filed for tax year 2020, review the tax account for which the Form 94XX was filed for any posted CRN 280 deferred payment amount. If the account reflects a previously recorded CRN 280 amount, or if the Form 94XX under consideration includes a change to deferred payment amounts (increase or decrease), see IRM 21.7.2.8.12, Form 94XX — Adjusting Accounts with a Posted CRN 280 and/or Corrections to Deferred Social Security Tax Payment Amounts, for handling guidance prior to adjusting the account. Reject any Form 94XX claiming non-refundable or refundable amounts of Credit for Qualified Sick and Family Leave Wages for leave taken before April 1, 2021 that is filed for an invalid tax period or tax form. As appropriate, follow guidance in IRM 21.5.3.4.6.3, No Consideration Procedures, and issue Letter 916C advising the employer the credit is not available for the form/tax period (specify) for they filed a Form 94XX. The valid forms and tax periods for the Credit for Qualified Sick and Family Leave Wages are as follows: Form 941: Tax periods 202006 and subsequent. Form 943, Form 944, and Form CT-1: Tax period 202012 and subsequent. Reminder: Wages for qualified sick or family leave may be paid at any point in time during or after the period leave was taken and the credit is available to the employer when the wages are paid the employee. See IRM 21.7.2.7.1.4, Timing Considerations Applicable to Reporting Qualified Sick and Family Leave Wages, Tax, and Associated Credits, for more information. Note: Credit for Qualified Sick and Family Leave Wages is also applicable to Schedule H filed with Form 1041. Guidance for handling adjustments on those account will be developed and placed in the appropriate subsection of IRM 21.7.4, Income Tax/Information Returns. All verification requirements applicable to other Form 94XX filings are required to be completed prior to processing a Form 94XX requesting a change to the non-refundable or refundable portions of Credit for Qualified Sick and Family Leave Wages (e.g., for a tax decrease - claim for refund filed on Form 941-X, follow IRM 21.7.2.4.5.6.2, Form 941-X Tax Decrease — Claim). ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Exception: Disallow Forms 94XX (claims and adjustments) adding or increasing non-refundable or refundable Credit for Qualified Sick and Family Leave Wages for leave taken before April 1, 2021 if the account reflects Employment Code "A," "F" , "G" , "Q" , or "T" . Send Letter 105C or Letter 106C (as appropriate) per instructions in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures, and insert the following text in an open paragraph: "You aren't eligible to claim Credit for Qualified Sick and Family Leave Wages for leave taken before April 1, 2021 because you are a Federal, State or local government entity according to your previous filings." Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ As appropriate, follow guidance in IRM 21.5.3.4.6.3, No Consideration Procedures, and issue Letter 916C with the following text inserted in two open paragraphs: "We processed any other changes requested on your Form [specify] but could not process the requested changes to [specify credit(s)] because the amounts you reported exceeded the tax against which the credit is applied." "If you are eligible for employment tax credits which have not been recorded, complete and file a new Form [specify form] after using the appropriate worksheet(s) in the Instructions for Form [specify form] to compute eligible credit amounts to be entered on specific lines of Form [specify form]." After following (10) above to determine the adjustment amounts for the non-refundable and refundable portions of the Qualified Sick and Family Leave Wages for leave taken before April 1, 2021, record the corrections with IRNs 200/201/202/204/205 and CRN 299 as described in (3), (4), (5), and (6) above. Note: See IRM 21.7.2.7.6.5, Form 94XX — Adjustments When the Number of CRN and IRN Corrections Exceed Command Code ADJ54 Input Limitations, to determine the order of adjusting IRNs and CRNs when multiple adjustments are required to record a single Form 94XX. Caution: If the amount claimed for either the non-refundable or the refundable portions of Credit for Qualified Sick and Family Leave Wages for leave taken before April 1, 2021 is being disallowed or partially disallowed for a reason other than those specified in the exceptions in (10) above, send Letter 105C or Letter 106C (as appropriate) per instructions in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures, and state the basis for the disallowance in the letter. After applying the processing guidance provided above, continue processing complete claims and requests for adjustment of the Credit for Qualified Sick and Family Leave Wages for leave taken before April 1, 2021 as per the general procedures in IRM 21.7.2.4.4, Adjusted Employer's Federal Tax Return or Claim for Refund, and the specific procedures applicable to the type of Form 94XX filed (e.g., for a tax decrease - claim for refund filed on Form 941-X, follow IRM 21.7.2.4.5.6.2, Form 941-X Tax Decrease — Claim).

# Form 94XX — Credit for Qualified Sick and Family Leave Wages for Leave Taken After March 31, 2021

21.7.2.7.6.2 (10-01-2022) Form 94XX — Credit for Qualified Sick and Family Leave Wages for Leave Taken After March 31, 2021 This subsection provides handling guidance for adjusting the Credit for Qualified Sick and Family Leave Wages for leave taken after March 31, 2021 and before October 1, 2021 as reported on Form 94XX (or duplicate filed employment tax returns being processed as a Form 94XX). Note: All other Form 94XX processing guidelines and requirements also apply to Forms 94XX reporting changes to Credit for Qualified Sick and Family Leave Wages. Credit for Qualified Sick and Family Leave Wages can be a non-refundable credit, a refundable credit, or both, depending on the amount of the Credit for Qualified Sick and Family Leave Wages that can be claimed for a particular tax period and the amount(s) of any other non-refundable credit(s) being reported. For general information regarding this credit, see IRM 21.7.2.7.1, Credit for Qualified Sick and Family Leave Wages (and the four subsections that follow the cross-referenced IRM section). For guidance on handling Form 94XX adjustment requests for Credit for Qualified Sick and Family Leave Wages for leave before April 1, 2021, see IRM 21.7.2.7.6.1, Form 94XX — Credit for Qualified Sick and Family Leave Wages for Leave Taken Before April 1, 2021. The following IRNs and CRNs are associated with adjustments to the Credit for Qualified Sick and Family Leave Wages for leave taken after March 31, 2021 and before October 1, 2021: TXMOD Field Name BMFOLR Field Name Form 941 Line Number and Title Form 941-X Line Number and Title IRN/CRN ARP-CR-QLFY-COVID-SICK-FAM-AMT ARP CR QFY SK FAM Line 11d Nonrefundable portion of credit for qualified sick and family leave wages for leave taken after March 31, 2021 (and before October 1, 2021) Line 18b Nonrefundable portion of credit for qualified sick and family leave wages for leave taken after March 31, 2021 (and before October 1, 2021) IRN 281 N/A Review posted CRN 271 transaction amounts ARP RDBL SCK FAM Line 13e Refundable portion of credit for qualified sick and family leave wages for leave taken after March 31, 2021 (and before October 1, 2021) Line 26b Refundable portion of credit for qualified sick and family leave wages for leave taken after March 31, 2021 (and before October 1, 2021) CRN 271 to alter posted transaction amount, posted field value will not change. ARP-QLFY-SICK-WAGES-AMT ARP QLFY SCK WGS Line 23 Qualified sick leave wages for leave taken after March 31, 2021 (and before October 1, 2021) Line 35 Qualified sick leave wages for leave taken after March 31, 2021 (and before October 1, 2021) IRN 284 ARP-QLFY-HLTHPLN-EXPNS-AI-AMT ARP QLFY HLTH AI Line 24 Qualified health plan expenses allocable to qualified sick leave wages reported on line 23 Line 36 Qualified health plan expenses allocable to qualified sick leave wages for leave taken after March 31, 2021 IRN 285 CBA-QLFY-SICK-WAGES-AMT CBA QLFY SCK WAGS Line 25 Amounts under certain collectively bargained agreements allocable to qualified sick leave wages reported on line 23 Line 37 Amounts under certain collectively bargained agreements allocable to qualified sick leave wages for leave taken after March 31, 2021 IRN 286 ARP-QLFY-FAM-WAGES-AMT ARP QLFY FAM WAGS Line 26 Qualified family leave wages for leave taken after March 31, 2021 (and before October 1, 2021) Line 38 Qualified family leave wages for leave taken after March 31, 2021 (and before October 1, 2021 IRN 287 ARP-QLFY-HLTHPLN-EXPNS-AII-AMT ARP QLFY HLTH AII Line 27 Qualified health plan expenses allocable to qualified family leave wages reported on line 26 Line 39 Qualified health plan expenses allocable to qualified family leave wages for leave taken after March 31, 2021 IRN 288 CBA-QLFY-FAM-WAGES-AMT CBA QLFY FAM WAGS Line 28 Amounts under certain collectively bargained agreements allocable to qualified family leave wages reported on line 26 Line 40 Amounts under certain collectively bargained agreements allocable to qualified family leave wages for leave taken after March 31, 2021 IRN 289 Caution: Form 941-X is revised on a regular basis and line numbers for particular adjustment items occasionally change. However, there is no requirement for the taxpayer to use the most current version of Form 941-X. Although line numbers are provided in the table above for easy reference, employees are responsible for ensuring the proper adjustment action is taken based on the form version filed by the taxpayer. IRN 281 is used along with TC 290, TC 291, or TC 298 (as appropriate) to record adjustments to the non-refundable portion of Credit for Qualified Sick and Family Leave Wages for leave taken after March 31, 2021 and before October 1, 2021 on Form 941, Form 943, Form 944 and Form CT-1 tax accounts. An increase to the credit will be recorded with a positive IRN 281 amount and a corresponding decrease to tax (i.e., a TC 291 for the same amount if no other changes were reported). A decrease to the credit will be recorded with a negative IRN 281 amount and a corresponding increase to tax (i.e., a TC 290/298 for the same amount if no other changes were reported). Example: A Form 941-X is filed claiming an increase to non-refundable Credit for Qualified Sick and Family Leave Wages for leave taken after March 31, 2021 in the amount of $95. Assuming all processing requirements are met, the adjustment to be made would be a TC 291 for $95.00- and an IRN 281 for $95.00. Example: A Form 941-X is filed reporting a decrease to non-refundable Credit for Qualified Sick and Family Leave Wages for leave taken after March 31, 2021 in the amount of $110. Assuming all processing requirements are met, the adjustment to be made would be a TC 290 (or TC 298 as applicable) for $110.00 and an IRN 281 for $110.00-. Note: IRN 281 can be combined on Command Code ADJ54 adjustments with any other IRN or CRN valid for the form being adjusted. CRN 271 is used to record adjustment to the refundable portion of Credit for Qualified Sick and Family Leave Wages for leave taken after March 31, 2021 and before October 1, 2021 on Form 941, Form 943, Form 944 and Form CT-1 tax accounts. Use a positive CRN 271 when increasing the credit (TC 766 is generated) or a minus (-) CRN 271 when decreasing the credit (TC 767 is generated). Note: CRN 271 can be combined on Command Code ADJ54 adjustments with any other IRN or CRN valid for the form being adjusted. Corrections to this credit will usually be seen along with corrections to the related wage figures and/or allocable qualified health plan expenses. IRN 284 is used to either increase or decrease qualified sick leave wages for leave taken after March 31, 2021 (and before October 1, 2021). IRN 285 is used to either increase or decrease qualified health plan expenses allocable to qualified sick leave wages for leave taken after March 31, 2021 (and before October 1, 2021). IRN 286 is used to either increase or decrease amounts under certain collectively bargained agreements allocable to qualified sick leave wages for leave taken after March 31, 2021 (and before October 1, 2021). IRN 287 is used to either increase or decrease qualified family leave wages for leave taken after March 31, 2021 (and before October 1, 2021). IRN 288 is used to either increase or decrease qualified health plan expenses allocable to qualified family leave wages for leave taken after March 31, 2021 (and before October 1, 2021). IRN 289 is used to either increase or decrease amounts under certain collectively bargained agreements allocable to qualified family leave wages for leave taken after March 31, 2021 (and before October 1, 2021). An increase to the refundable or nonrefundable (i.e., decrease to tax) portions of the credit may meet examination criteria. See Exhibit 21.5.3–2, Examination Criteria (CAT-A) — General. Process Forms 94XX claiming non-refundable or refundable amounts of Credit for Qualified Sick and Family Leave Wages for leave taken after March 31, 2021 (and before October 1, 2021) as per guidance in the paragraphs which follow. Reject any Form 94XX claiming non-refundable or refundable amounts of Credit for Qualified Sick and Family Leave Wages for leave taken after March 31, 2021 (and before October 1, 2021) that is filed for an invalid tax period or tax form. As appropriate, follow guidance in IRM 21.5.3.4.6.3, No Consideration Procedures, and issue Letter 916C advising the employer the credit is not available for the form/tax period (specify) for they filed a Form 94XX. The valid forms and tax periods for the Credit for Qualified Sick and Family Leave Wages are as follows: Form 941: Tax periods 202106 and subsequent. Form 943, Form 944, and Form CT-1: Tax period 202112 and subsequent. Reminder: Wages for qualified sick or family leave may be paid at any point in time during or after the period leave was taken and the credit is available to the employer when the wages are paid the employee. See IRM 21.7.2.7.1.4, Timing Considerations Applicable to Reporting Qualified Sick and Family Leave Wages, Tax, and Associated Credits, for more information. Note: Credit for Qualified Sick and Family Leave Wages is also applicable to Schedule H filed with Form 1041. Guidance for handling adjustments on those account will be developed and placed in the appropriate subsection of IRM 21.7.4, Income Tax/Information Returns. All verification requirements applicable to other Form 94XX filings are required to be completed prior to processing a Form 94XX requesting a change to the non-refundable or refundable portions of Credit for Qualified Sick and Family Leave Wages (e.g., for a tax decrease - claim for refund filed on Form 941-X, follow IRM 21.7.2.4.5.6.2, Form 941-X Tax Decrease — Claim). ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Exception: Disallow Forms 94XX (claims and adjustments) filed to add or increase non-refundable or refundable credit for qualified sick and family leave wages for leave taken after March 31, 2021 if the account reflects Employment Code "F" unless the EO subsection code (see the EO submodule on Command Code INOLES) is "01" or there is a Form 990 filing requirement of "07" . Send Letter 105C or Letter 106C (as appropriate) per instructions in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures, and insert the following text in an open paragraph: "You aren't eligible for the credit for qualified sick & family leave wages for leave taken after March 31, 2021 because you are a Federal agency or instrumentality that is not described in I.R.C. Section 501(c)(1) according to your previous filings." Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ As appropriate, follow guidance in IRM 21.5.3.4.6.3, No Consideration Procedures, and issue Letter 916C with the following text inserted in two open paragraphs: "We processed any other changes requested on your Form [specify] but could not process the requested changes to [specify credit(s)] because the amounts you reported exceeded the tax against which the credit is applied." "If you are eligible for employment tax credits which have not been recorded, complete and file a new Form [specify form] after using the appropriate worksheet(s) in the Instructions for Form [specify form] to compute eligible credit amounts to be entered on specific lines of Form [specify form]." After following (10) above to determine the adjustment amounts for the non-refundable and refundable portions of the Qualified Sick and Family Leave Wages for leave taken after March 31, 2021, record the corrections with IRNs 281/284/285/286/287/288/289 and CRN 271 as described in (3), (4), (5), and (6) above. Note: See IRM 21.7.2.7.6.5, Form 94XX — Adjustments When the Number of CRN and IRN Corrections Exceed Command Code ADJ54 Input Limitations, to determine the order of adjusting IRNs and CRNs when multiple adjustments are required to record a single Form 94XX. Caution: If the amount claimed for either the non-refundable or the refundable portions of Credit for Qualified Sick and Family Leave Wages for leave taken before April 1, 2021 is being disallowed or partially disallowed for a reason other than those specified in the exceptions in (10) above, send Letter 105C or Letter 106C (as appropriate) per instructions in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures, and state the basis for the disallowance in the letter. After applying the processing guidance provided above, continue processing complete claims and requests for adjustment of the Credit for Qualified Sick and Family Leave Wages for leave taken after March 31, 2021 (and before October 1, 2021) as per the general procedures in IRM 21.7.2.4.4, Adjusted Employer's Federal Tax Return or Claim for Refund, and the specific procedures applicable to the type of Form 94XX filed (e.g., for a tax decrease - claim for refund filed on Form 941-X, follow IRM 21.7.2.4.5.6.2, Form 941-X Tax Decrease — Claim).

# Form 94XX — Employee Retention Credit (ERC) — Claims and Adjustments Cleared for Processing (Accepted) by RAAS and Forms 94XX Reporting Tax Increases or Credit Decreases

21.7.2.7.6.3 (04-28-2025) Form 94XX — Employee Retention Credit (ERC) — Claims and Adjustments Cleared for Processing (Accepted) by RAAS and Forms 94XX Reporting Tax Increases or Credit Decreases Certain Form 94XX cases reflecting Employee Retention Credit (ERC) adjustment requests are being released to be worked by AM after having been analyzed by Research, Applied Analytics & Statistics (RAAS). These cases will be delivered to AM with instructions on how the ERC portion of the claim or adjustment is to be handled (i.e., additional handling required, assessment to be made, claim is allowable, disallowance criteria, or partial disallowance criteria). Caution: RAAS analysis for these cases generally does not include consideration of non-ERC related tax items that may be reported on a Form 94XX, including those with a mix of ERC and non-ERC change items. This subsection provides handling guidance for adjusting ERC as reported on: Forms 94XX (or duplicate filed employment tax returns being processed as a Form 94XX) which have been cleared for processing (accepted) after filtering criteria were applied by RAAS (i.e., cases which did not fail one or more of the filters). Forms 94XX reporting tax increases or credit decreases (i.e., credit reversals). Note: Guidance on processing ERC related claims and adjustments which failed one or more of the filters and require disallowance actions or require additional processing steps to determine a correct disposition is found in IRM 21.7.2.7.8, Additional Case Processing Actions and/or Disallowance Actions for Forms 94XX Meeting ERC-related Filtering Criteria, and succeeding subsections (e.g., ERC claims failing the filter for filing Forms W-2 are processed as per guidance in IRM 21.7.2.7.8.1, Disallowance Actions for Form 94XX ERC Claims Meeting RAAS Filtering Criteria for No Forms W-2 Filed). Caution: Due to concerns with increasing volumes of dubious and inaccurate claims, the IRS has instituted a moratorium on processing new ERC claims through the end of 2023 and possibly longer. In addition, the IRS has slowed the pace of processing previously filed but unpaid ERC claims. See (5) in IRM 21.7.2.7.2 for more information including guidance on resolving related phone contacts. Cases cleared by RAAS for processing as per guidance in this subsection will be identified to AM as follows: IDRS Number: 0230265187 CII case notation: "Cleared to Process" Note: CII case notes for these cases will also indicate the EIN and tax period that was identified during data transcription for RAAS analysis. This information is a factor in processing validation described in (12) below. Note: CII case notes for accepted Forms 941-X will also include two (2) dollar value data elements required for operating the math verification worksheet discussed in (14) below. Caution: Take no actions to process Forms 94XX reporting ERC-related tax decreases or credit increases unless the case has been controlled/annotated with instructions permitting the case to be worked as indicated above or as indicated in another subsection providing instructions for special handling (i.e., case handling instructions for a failed analysis factor or case handling instructions for certain supplemental Forms 94XX). Exception: Certain designated AM employees will be directed to work some cases that have not been risked by RAAS. These cases will be distributed to designated employees through AM management. These will include certain priority cases and cases that were in CAT-A status during the moratorium. Designated employees specifically assigned to work these cases will be provided an ERC worksheet to process these cases. Employees should document these cases with the following case note: "Not RAAS risked, worked per exception in IRM 21.7.2.7.6.3(3)". Employee Retention Credit can be a non-refundable credit, a refundable credit, or both, depending on the amount of the Employee Retention Credit that can be claimed for a particular tax period and the amount(s) of any other non-refundable credit(s) being reported. Note: For general information regarding this credit, see IRM 21.7.2.7.2, Employee Retention Credit (ERC), (and the four subsections that follow the cross-referenced IRM section). The following IRNs and CRNs are associated with adjustments to the Employee Retention Credit: TXMOD Field Name BMFOLR Field Name Form 941 Line Number and Title Form 941-X Line Number and Title IRN/CRN CR-EMP-RTN CR EMP RTNTN Line 11c Nonrefundable portion of employee retention credit Line 18a Nonrefundable portion of employee retention credit IRN 203 N/A Review posted CRN 296 transaction amounts RFDBL EMP RTNTN Line 13d Refundable portion of employee retention credit Line 26a Refundable portion of employee retention credit CRN 296 to alter posted transaction amount, posted field value will not change. WGS-EMP-RTN-COV QLF WGS EMP RTNTN Line 21 Qualified wages for employee retention credit Line 30 Qualified wages for employee retention credit IRN 206 HLTH-PLN-EXP-RPT QLF HLTH PLN EXP Line 22 Qualified health plan expenses allocable to wages reported on Line 21 Line 31a Qualified health plan expenses for the employee retention credit IRN 207 EMP-MARCH-WG-PD QLF EMP MARCH WG Line 24 April 2020 Revision: Qualified wages paid March 13 through March 31, 2020, for the employee retention credit July 2020 Revision: Deferred amount of the employee share of social security tax included on line 13b Line 33a April 2020 Revision: Qualified wages paid March 13 through March 31, 2020, for the employee retention credit IRN 208 Caution: Line 24 of Form 941 represents different tax reporting items for 202006 versus 202009 and 202012. See (5) in IRM 21.7.2.8.2, Notice 2020-65 and Notice 2021-11 — Deferred Payment of Employee's Share of Social Security Taxes for 2020, for more information. HLTH-PLN-MARCH QLF HLTH PL MAR Line 25 April 2020 Revision: Qualified health plan expenses allocable to wages reported on Line 24 July 2020 Revision: Reserved for future use Line 34 Qualified health plan expenses allocable to wages reported on Form 941 or Form 941-SS, line 24 IRN 209 Caution: Only applicable to second quarter 2020 Form 941 tax returns. Caution: Form 941-X is revised on a regular basis and line numbers for particular adjustment items occasionally change. However, there is no requirement for the taxpayer to use the most current version of Form 941-X. Although line numbers are provided in the table above for easy reference, employees are responsible for ensuring the proper adjustment action is taken based on the form version filed by the taxpayer. IRN 203 is used along with TC 290, TC 291, or TC 298 (as appropriate) to record adjustments to the non-refundable portion of Employee Retention Credit on Form 941, Form 943, Form 944 and Form CT-1 tax accounts. An increase to the credit will be recorded with a positive IRN 203 amount and a corresponding decrease to tax (i.e., a TC 291 for the same amount if no other changes were reported). A decrease to the credit will be recorded with a negative IRN 203 amount and a corresponding increase to tax (i.e., a TC 290/298 for the same amount if no other changes were reported). Example: A Form 941-X is filed claiming an increase to non-refundable Employee Retention Credit in the amount of $75. Assuming all processing requirements are met, the adjustment to be made would be a TC 291 for $75.00- and an IRN 203 for $75.00. Example: A Form 941-X is filed reporting a decrease to non-refundable Employee Retention Credit in the amount of $90. Assuming all processing requirements are met, the adjustment to be made would be a TC 290 (or TC 298 as applicable) for $90.00 and an IRN 203 for $90.00-. Note: IRN 203 can be combined on Command Code ADJ54 adjustments with any other IRN or CRN valid for the form being adjusted. CRN 296 is used to record adjustment to the refundable portion of Employee Retention Credit on Form 941, Form 943, Form 944 and Form CT-1 tax accounts. Use a positive CRN 296 when increasing the credit (TC 766 is generated) or a minus (-) CRN 296 when decreasing the credit (TC 767 is generated). Note: CRN 296 can be combined on Command Code ADJ54 adjustments with any other IRN or CRN valid for the form being adjusted. Corrections to this credit will usually be seen along with corrections to a related wage figure and/or allocable qualified health plan expenses. IRN 206 is used to either increase or decrease qualified wages for employee retention credit. IRN 207 is used to either increase or decrease qualified health plan expenses allocable to wages reported on Line 21 (i.e., qualified wages for employee retention credit). In addition, for second quarter 2020 Form 941 accounts (only), it may be necessary to record changes to figures relating to amounts of Employee Retention Credit attributable to first quarter 2020 which were required to be reported on second quarter Forms 941. (See the last bullet in (7) of IRM 21.7.2.7.2.1, Employee Retention Credit (ERC) — Coronavirus Aid, Relief, and Economic Security (CARES) Act Provisions, and IRM 21.7.2.7.2.5, First Quarter 2020 Form 941 — Employee Retention Credits and Notice 1447, for more information on that topic.) IRN 208 is used to either increase or decrease qualified wages paid March 13 through March 31, 2020, for the employee retention credit. Caution: Line 24 on Form 941 represents different tax reporting items for 202006 versus 202009 and 202012. See (5) in IRM 21.7.2.8.2, Notice 2020-65 and Notice 2021-11 — Deferred Payment of Employee's Share of Social Security Taxes for 2020, for more information. IRN 209 is used to either increase or decrease qualified health plan expenses allocable to wages reported on Line 24 (i.e., qualified wages paid March 13 through March 31, 2020, for the employee retention credit) . Process Forms 94XX claiming non-refundable or refundable amounts of Employee Retention Credit released by RAAS as per guidance in the paragraphs which follow. Caution: When working Forms 94XX filed for tax year 2020, review the tax account for which the Form 94XX was filed for any posted CRN 280 deferred payment amount. If the account reflects a previously recorded CRN 280 amount, or if the Form 94XX under consideration includes a change to deferred payment amounts (increase or decrease), see IRM 21.7.2.8.12, Form 94XX — Adjusting Accounts with a Posted CRN 280 and/or Corrections to Deferred Social Security Tax Payment Amounts, for handling guidance prior to adjusting the account. Reject any Form 94XX claiming non-refundable or refundable amounts of Employee Retention Credit that is filed for an invalid tax period or tax form. As appropriate, follow guidance in IRM 21.5.3.4.6.3, No Consideration Procedures, and issue Letter 916C advising the employer the credit is not available for the form/tax period (specify) for which they filed a Form 94XX. The valid forms and tax periods for the Employee Retention Credit are as follows: Form 941: Tax periods 202006 through 202112 only. Form 943, Form 944, and Form CT-1: Tax period 202012 and 202112 only. Reminder: For Form 941, any Employee Retention Credit attributable to first quarter 2020 must be claimed on an original or adjusted employment tax return filed for the second quarter of 2020. See (9) above. Note: See (6) in IRM 21.7.2.7.2.2, Employee Retention Credit (ERC) — Taxpayer Certainty and Disaster Relief Act of 2020 Provisions. Certain employers eligible to retroactively claim ERC credits for earlier tax periods during 2020 were permitted (but not required) under a special rule to claim the combined amounts on their original Form 941 for the fourth quarter. Employers who were eligible to apply the special rule when filing original fourth quarter 2020 Form 941 returns are also eligible to apply the same special rule to combine eligible ERC amounts from earlier quarters on Forms 941-X filed for fourth quarter of 2020. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ All other Form 94XX processing guidelines and requirements also apply to Forms 94XX reporting changes to ERC that are cleared for processing by RAAS. Cases cleared for processing by RAAS have generally not been reviewed for completeness (e.g., presence of signature, certification block(s) marked, etc.) and processability (e.g., prior figures match, mathematically correct, etc.). As such, all preliminary reviews to ensure the Form 94XX is complete for processing must be conducted before taking action to allow claims cleared by RAAS. As usual: Review the associated Form 94XX for completeness and processability (e.g.,for a Form 941-X claim, see (2) and (3) in IRM 21.7.2.4.5.6.2, Form 941-X Tax Decrease — Claim). Perfect or reject any unprocessable Forms 94XX as appropriate. Review for account conditions that require special handling (i.e., open CAT-A or AIMS status, RICS/RIVO/IDT, etc.) which must be addressed prior to taking further action on the Form 94XX. Suspend, route, or otherwise address the account condition encountered as appropriate. In addition, if a Form 94X-X is received that is a duplicate of a previously processed ERC claim, do not rework the original claim based on any subsequent RAAS analysis. In addition, compare the EIN and tax period entered on the Form 941-X to the EIN and tax period specified in CII case notes releasing the case to be worked. Caution: If the tax period or EIN shown on the form do not match CII case controls or the tax period or EIN specified in CII case notes releasing the case to be worked do not match CII case controls, the case must be returned to RAAS for additional analysis (i.e., do not adjust the account). Take the following actions to refer such a case for further RAAS consideration: 1) Correct case controls as necessary and appropriate. 2) Enter/update the case with Priority Code 6. 3) Enter the appropriate case note as follows: "EIN mismatch" or "Tax Period mismatch" or "EIN and Tax Period mismatch." 4) Reassign the case to IDRS number 0230281416. Reminder: The ASED has expired on Form 94XX for 2020 and 2021 except for certain ERC credits for 2021. See IRM 25.6.1.9.5.10. COVID-19 Related Employment Tax Credits, for information regarding 2021 tax periods with an extended ASED. The suspended inventory was reviewed for statute imminent 2020 and 2021 account situations prior to normal ASED expirations of April 15, 2024 and April 15, 2025. There is still heightened risk of encountering statute barred assessments in this work. Consider guidance in (2) of IRM 25.6.1.13.2.6, Routing and Controlling Form 9355, if such cases are identified. Note: See IRM 21.7.2.7.11 , Replies to 105C disallowance and 106C Partial Disallowance Letters issued disallowing ERC claims , for replies to the 105C and 106C letters. The friendly URL for the 105C is IRS.gov/erc105c. The friendly URL for the 106C is IRS.gov/erc106c. An increase to the refundable or nonrefundable (i.e., decrease to tax) portions of the credit may meet examination criteria. See Exhibit 21.5.3–2, Examination Criteria (CAT-A) — General. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ As usual, verify the math on the face of the Form 94XX for the credit adjustment (i.e., verify Column 2 matches IRS records and the math across Columns 1 through 4 are correct). ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡" ≡ ≡ ≡ ≡"≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Caution: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Reminder: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Reminder: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Exception: ERC claims for which no corresponding wages or qualified health plan expenses were reported (on either the Form 94XX being processed, the original employment tax return, or previously processed Form(s) 94XX) are unprocessable. Reject the Form 94XX using Letter 4384C and insert the following text in an open paragraph: "We could not process your claim for Employee Retention Credit because you did not report any corresponding qualified wages or qualified health expenses." Exception: For MFT 01, tax periods 202109 and 202112 (only): If Line 31b of Form 941-X is checked and the amount of ERC claimed on a Form 941-X reporting an increase to non-refundable or refundable ERC exceeds $50,000, including any amount claimed on the original return or as previously adjusted, limit the amount of ERC allowed with the Form 941-X to $50,000 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡unless there is a Schedule R indicator present on the original return (verify via Command Code BRTVU or BMFOL definer "R" ). If ERC is being limited per these instructions, send Letter 105C or Letter 106C (as appropriate) per instructions in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures and insert the following text in two open paragraphs: "The maximum amount of Employee Retention Credit which can be claimed by an employer which is a recovery startup business is $50,000 per quarter." "For more information on Employee Retention Credit (ERC) eligibility requirements and how to respond to this letter if you disagree, please see IRS.gov/erc105c." Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ As appropriate, follow guidance in IRM 21.5.3.4.6.3, No Consideration Procedures, and issue Letter 916C with the following text inserted in two open paragraphs: "We processed any other changes requested on your Form [specify] but could not process the requested changes to [specify credit(s)] because the amounts you reported exceeded the tax against which the credit is applied." "If you are eligible for employment tax credits which have not been recorded, complete and file a new Form [specify form] after using the appropriate worksheet(s) in the Instructions for Form [specify form] to compute eligible credit amounts to be entered on specific lines of Form [specify form]." After following (14) above to determine the adjustment amounts for the non-refundable and refundable portions of the Employee Retention Credit, record the corrections with IRNs 203/206/207/208/209 and CRN 296 as described in (5), (6), (7), (8), and (9) above. Note: See IRM 21.7.2.7.6.5, Form 94XX — Adjustments When the Number of CRN and IRN Corrections Exceed Command Code ADJ54 Input Limitations, to determine the order of adjusting IRNs and CRNs when multiple adjustments are required to record a single Form 94XX. Caution: If the amount claimed for either the non-refundable or the refundable portions of Employee Retention Credit is being disallowed or partially disallowed for a reason other than those specified in the exceptions in (14) above, send Letter 105C or Letter 106C (as appropriate) per instructions in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures, and state the basis for the disallowance in the letter. After applying the processing guidance provided above, continue processing complete claims and requests for adjustment of the Employee Retention Credit as per the general procedures in IRM 21.7.2.4.4. Adjusted Employer's Federal Tax Return or Claim for Refund, and the specific procedures applicable to the type of Form 94XX filed (e.g., for a tax decrease - claim for refund filed on Form 941-X, follow IRM 21.7.2.4.5.6.2, Form 941-X Tax Decrease — Claim).

# Form 94XX — COBRA Premium Assistance Credit

21.7.2.7.6.4 (10-01-2024) Form 94XX — COBRA Premium Assistance Credit This subsection provides handling guidance for adjusting the COBRA Premium Assistance Credit as reported on Form 94XX (or duplicate filed employment tax returns being processed as a Form 94XX). Note: All other Form 94XX processing guidelines and requirements also apply to Forms 94XX reporting changes to COBRA Premium Assistance Credit. COBRA Premium Assistance Credit can be a non-refundable credit, a refundable credit, or both, depending on the amount of the COBRA Premium Assistance Credit that can be claimed for a particular tax period and the amount(s) of any other non-refundable credit(s) being reported. Note: For general information regarding this credit, see IRM 21.7.2.7.3, COBRA Premium Assistance Credit — The American Rescue Plan Act of 2021 (the ARP). The following IRNs and CRNs are associated with adjustments to the COBRA Premium Assistance Credit: TXMOD Field Name BMFOLR Field Name Form 941 Line Number and Title Form 941-X Line Number and Title IRN/CRN ARP-COBRA-NONREF-CR-AMT ARP CBRA NREF CR Line 11e Nonrefundable portion of COBRA premium assistance credit Line 18c Nonrefundable portion of COBRA premium assistance credit IRN 282 ARP-COBRA-RECIPENT-NUM ARP CBRA RECP NUM Line 11f Number of individuals provided COBRA premium assistance Line 18d Number of individuals provided COBRA premium assistance IRN 283 Caution: See (6) below for special input requirements when making changes with this IRN. N/A Review posted CRN 276 transaction amounts ARP CBRA REF CR Line 13f Refundable portion of COBRA premium assistance credit Line 26c Refundable portion of COBRA premium assistance credit CRN 276 to alter posted transaction amount, posted field value will not change. Caution: Form 941-X is revised on a regular basis and line numbers for particular adjustment items occasionally change. However, there is no requirement for the taxpayer to use the most current version of Form 941-X. Although line numbers are provided in the table above for easy reference, employees are responsible for ensuring the proper adjustment action is taken based on the form version filed by the taxpayer. IRN 282 is used along with TC 290, TC 291, or TC 298 (as appropriate) to record adjustments to the non-refundable portion of COBRA Premium Assistance Credit on Form 941, Form 943, Form 944 and Form CT-1 tax accounts. An increase to the credit will be recorded with a positive IRN 282 amount and a corresponding decrease to tax (i.e., a TC 291 for the same amount if no other changes were reported). A decrease to the credit will be recorded with a negative IRN 282 amount and a corresponding increase to tax (i.e., a TC 290/298 for the same amount if no other changes were reported). Example: A Form 941-X is filed claiming an increase to non-refundable COBRA Premium Assistance Credit in the amount of $300. Assuming all processing requirements are met, the adjustment to be made would be a TC 291 for $300.00- and an IRN 282 for $300.00. Example: A Form 941-X is filed reporting a decrease to non-refundable COBRA Premium Assistance Credit in the amount of $750. Assuming all processing requirements are met, the adjustment to be made would be a TC 290 (or TC 298 as applicable) for $750.00 and an IRN 282 for $750.00-. Note: IRN 282 can be combined on Command Code ADJ54 adjustments with any other IRN or CRN valid for the form being adjusted. CRN 276 is used to record adjustment to the refundable portion of COBRA Premium Assistance Credit on Form 941, Form 943, Form 944 and Form CT-1 tax accounts. Use a positive CRN 276 when increasing the credit (TC 766 is generated) or a minus (-) CRN 276 when decreasing the credit (TC 767 is generated). Note: CRN 276 can be combined on Command Code ADJ54 adjustments with any other IRN or CRN valid for the form being adjusted. IRN 283 is used to record changes to the number of individuals to whom COBRA premium assistance was provided. To record a change to this value: Input IRN 283 on line 7 of the ADJ54 input screen in the "DATA-REF-1>" field. Input the new value (not the difference between the old value and the new value) for number of individuals to whom COBRA premium assistance was provided on line 7 of the ADJ54 input screen in the "REF-CHG-1>" field. The field value must be 10 numerals with leading zeros before the significant value (i.e., to input a new value of "1,450" , enter "0000001450" with no commas). Example: A Form 941-X is filed reporting a change to increase the number of individuals to whom COBRA premium assistance was provided from "3,157" to "5,148" . To record the correction, enter IRN 283 in the "DATA-REF-1>" field and "0000005148" in the "REF-CHG-1>" field. When the adjustment posts, the previously recorded field value of "3157" will be replaced with the new field value of "5148" . Example: A Form 941-X is filed reporting a change to increase the number of individuals to whom COBRA premium assistance was provided from "0" to "742" . To record the correction, enter IRN 283 in the "DATA-REF-1>" field and "0000000742" in the "REF-CHG-1>" field. When the adjustment posts, the previously recorded field value of "0" will be replaced with the new field value of "742" . Example: A Form 941-X is filed reporting a change to decrease the number of individuals to whom COBRA premium assistance was provided from "17,125" to "16,837" . To record the correction, enter IRN 283 in the "DATA-REF-1>" field and "0000016837" in the "REF-CHG-1>" field. When the adjustment posts, the previously recorded field value of "17125" will be replaced with the new field value of "16387" . Example: A Form 941-X is filed reporting a change to decrease the number of individuals to whom COBRA premium assistance was provided from "18" to "0" . To record the correction, enter IRN 283 in the "DATA-REF-1>" field and "0000000000" in the "REF-CHG-1>" field. When the adjustment posts, the previously recorded field value of "18" will be replaced with the new field value of "0" . Caution: IRN 283 cannot be input in a "CD>" field position and the change value cannot be input in an "AMT>" field position on lines 17, 18, or 19 of the ADJ54 input screen. An increase to the refundable or nonrefundable (i.e., decrease to tax) portions of the credit may meet examination criteria. See Exhibit 21.5.3–2, Examination Criteria (CAT-A) — General. Process Forms 94XX claiming non-refundable or refundable amounts of COBRA Premium Assistance Credit as per guidance in the paragraphs which follow. Reject any Form 94XX claiming non-refundable or refundable amounts of COBRA Premium Assistance Credit that is filed for an invalid tax period or tax form. As appropriate, follow guidance in IRM 21.5.3.4.6.3, No Consideration Procedures, and issue Letter 916C advising the employer the credit is not available for the form/tax period (specify) for they filed a Form 94XX. The valid forms and tax periods for the COBRA Premium Assistance Credit are as follows: Form 941: Tax periods 202106, 202109, 202112, and 202203 (only). Form 943, Form 944, and Form CT-1: Tax period 202112 and 202212 (only). Exception: There are certain rare circumstances in which employers may be eligible for the COBRA Premium Assistance Credit after the specified tax periods. Accordingly, continue processing cases claiming COBRA Premium Assistance Credit on Form 941-X for tax periods 202206 and subsequent (and on Form 943-X/Form 944-X/Form CT-1X for tax periods 202312 and subsequent) as per guidance in (10) below and then as per special handling guidance in (12) below. All verification requirements applicable to other Form 94XX filings are required to be completed prior to processing a Form 94XX requesting a change to the non-refundable or refundable portions of COBRA Premium Assistance Credit (e.g., for a tax decrease - claim for refund filed on Form 941-X, follow IRM 21.7.2.4.5.6.2, Form 941-X Tax Decrease — Claim). ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Exception: Disallow Forms 94XX (claims and adjustments) filed to add or increase non-refundable or refundable COBRA Premium Assistance Credit if the account reflects Employment Code "F" unless the EO subsection code (see the EO submodule on Command Code INOLES) is "01" or there is a Form 990 filing requirement of "07" . Send Letter 105C or Letter 106C (as appropriate) per instructions in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures, and insert the following text in an open paragraph: "You aren't eligible for the credit for COBRA premium assistance because you are a Federal agency or instrumentality that is not described in I.R.C. Section 501(c)(1) according to your previous filings." Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ As appropriate, follow guidance in IRM 21.5.3.4.6.3, No Consideration Procedures, and issue Letter 916C with the following text inserted in two open paragraphs: "We processed any other changes requested on your Form [specify] but could not process the requested changes to [specify credit(s)] because the amounts you reported exceeded the tax against which the credit is applied." "If you are eligible for employment tax credits which have not been recorded, complete and file a new Form [specify form] after using the appropriate worksheet(s) in the Instructions for Form [specify form] to compute eligible credit amounts to be entered on specific lines of Form [specify form]." After following (10) above to determine the adjustment amounts for the non-refundable and refundable portions of COBRA Premium Assistance Credit, record the corrections with IRN 282, IRN 283, and CRN 276 as described in (3), (4), (5), and (6) above. Note: See IRM 21.7.2.7.6.5, Form 94XX — Adjustments When the Number of CRN and IRN Corrections Exceed Command Code ADJ54 Input Limitations, to determine the order of adjusting IRNs and CRNs when multiple adjustments are required to record a single Form 94XX. Caution: If the amount claimed for either the non-refundable or the refundable portions of COBRA Premium Assistance Credit is being disallowed or partially disallowed for a reason other than those specified in the exceptions in (10) above, send Letter 105C or Letter 106C (as appropriate) per instructions in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures, and state the basis for the disallowance in the letter. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ After applying the processing guidance provided above, continue processing complete claims and requests for adjustment of the COBRA Premium Assistance Credit as per the general procedures in IRM 21.7.2.4.4, Adjusted Employer's Federal Tax Return or Claim for Refund, and the specific procedures applicable to the type of Form 94XX filed (e.g., for a tax decrease - claim for refund filed on Form 941-X, follow IRM 21.7.2.4.5.6.2, Form 941-X Tax Decrease — Claim).

# Form 94XX — Adjustments When the Number of CRN and IRN Corrections Exceed Command Code ADJ54 Input Limitations

21.7.2.7.6.5 (02-09-2022) Form 94XX — Adjustments When the Number of CRN and IRN Corrections Exceed Command Code ADJ54 Input Limitations With the addition of new Credit Reference Numbers (CRNs) and Item Reference Numbers (IRNs) applicable to 2020 and 2021 employment tax accounts, there will often be occasions where the number of CRNs and IRNs required to record changes requested on Form 94XX will exceed the entry capacity of eight data fields for a single Command Code ADJ54 input screen. Generally speaking, when more than one adjustment is required to record all necessary IRN/CRN correction items: The first adjustment should include all the CRNs being adjusted and those IRNs that directly factor into the 29x adjustment. IRN changes that do not directly factor into the tax calculation which could not be input with the first adjustment should be input with a subsequent TC 290 .00 adjustment (or more than one if needed) using Hold Code 3 and a Posting Delay Code. If there are too many CRNs and IRNs that directly factor into the 29x adjustment to fit in one ADJ54 input, it will be necessary to do two adjustments for that purpose: The first tax adjustment should include the non-COVID-related tax adjustment items and be done with a Hold Code 4. The second tax adjustment should then be input for the COVID-related tax adjustment items with a Post Delay Code and a Hold Code 3. A third, fourth, and fifth adjustment with additional post delay may then be needed to adjust any remaining IRNs that could not be entered in the first two (or more) adjustments. Issue a Letter 4384C explaining the adjustment action taken (required due to Hold Code usage described above). Note: Contact the IRM author through your management chain and the site P&A Staff for guidance on handling cases for any unusual adjustment situations are encountered for which the guidance provided here appears to be inconsistent with the necessary account outcome. The following table contains information on IRNs and CRNs usage to assist in the ordering of transactions described above: Non-COVID Related Tax/Credit Adjustment Items COVID Related Tax/Credit Adjustment Items Non-Tax/Credit Adjustment Items Form 941 IRN 111 IRN 112 IRN 114 IRN 113 IRN 119 Reminder: If adjusting IRN 113, a corresponding change is required to one or more of IRNs 104 through 110. IRN 202 IRN 203 IRN 281 IRN 282 CRN 296 CRN 299 CRN 280 CRN 271 CRN 276 IRN 004 IRN 005 IRN 073 IRN 074 IRN 200 IRN 201 IRN 204 IRN 205 IRN 206 IRN 207 IRN 208 IRN 209 IRN 284 IRN 285 IRN 286 IRN 287 IRN 288 IRN 289 Form 944 IRN 111 IRN 112 IRN 113 IRN 119 Reminder: If adjusting IRN 113, a corresponding change is required to one or more of IRNs 104 through 110. IRN 202 IRN 203 IRN 281 IRN 282 CRN 296 CRN 299 CRN 280 CRN 271 CRN 276 IRN 004 IRN 005 IRN 073 IRN 074 IRN 200 IRN 201 IRN 204 IRN 205 IRN 206 IRN 207 IRN 208 IRN 209 IRN 284 IRN 285 IRN 286 IRN 287 IRN 288 IRN 289 Form 943 IRN 003 IRN 007 IRN 202 IRN 203 IRN 281 IRN 282 CRN 296 CRN 299 CRN 280 CRN 271 CRN 276 IRN 004 IRN 073 IRN 074 IRN 185 IRN 200 IRN 201 IRN 204 IRN 205 IRN 206 IRN 207 IRN 208 IRN 209 IRN 284 IRN 285 IRN 286 IRN 287 IRN 288 IRN 289 Form CT-1 IRN 070 CRN 296 CRN 299 CRN 280 CRN 271 CRN 276 IRN 200 IRN 201 IRN 202 IRN 203 IRN 204 IRN 205 IRN 206 IRN 207 IRN 208 IRN 209 IRN 281 IRN 282 IRN 284 IRN 285 IRN 286 IRN 287 IRN 288 IRN 289 Note: IRN 283 is also valid for adjustment purposes for each of the form types in the table above and can be input in combination with any other valid IRN/CRN. However, there are special data entry requirements associated with its input. See (6) in IRM 21.7.2.7.6.4, Form 94XX — COBRA Premium Assistance Credit, for more information. Note: CRN 290 is used in the processing of Form 5884-C and Form 5884-D and will generally not be adjusted in connection with Forms 94XX addressed under these procedures. Form 5884-C and Form 5884-D are processed as per guidance in IRM 21.7.2.5.15, Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans, and Form 5884-D, Employee Retention Credit for Certain Tax-Exempt Organizations Affected by Qualified Disasters For additional information on employment tax adjustment formulas, see: The table in (3) in IRM 21.7.2.7.6, COVID-19 Related Employment Tax Relief and Forms 94XX for 2020 employment tax accounts: The table in (1) of IRM 21.7.2.4.1.1, TC 29X / Item Reference Number (IRN) Valid Adjustment Formulas — Employment Taxes, for employment tax accounts for other years. For additional guidance on IRN and CRN usage with employment tax accounts, see: See (2) of IRM 21.7.2.7.6, COVID-19 Related Employment Tax Relief and Forms 94XX, for a list of the new IRNs and CRNs applicable to 2020 employment tax accounts including Form 941, Form 943, Form 944, and Form CT-1. See (2) of IRM 21.7.2.4.1, Item Reference Numbers (IRNs) and Credit Reference Numbers (CRNs) — Employment Taxes, for a list of other IRNs/CRNs applicable to Form 941 and Form 944 accounts. See (2) in IRM 21.7.2.4.6.3, Form 943-X, Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund (including Form 943-X (PR)), for a list of other IRNs/CRNs applicable to Form 943 accounts. See IRM 21.7.2.6.5.1, Form CT-1 Tax Adjustments, for a list of other IRNs/CRNs applicable to Form CT-1 accounts. Reminder: Processing of Form CT-1 claims and inquiries is centralized. See IRM 21.7.2.6.4.1, Required Routing for Form CT-1 and Form CT-1X Inquiries and Claims, for more information.

# Form 94XX — Employee Retention Credit (ERC) — Supplemental Form 94XX Filed by Certain Aggregate Employment Tax Return Filers

21.7.2.7.6.6 (03-10-2025) Form 94XX — Employee Retention Credit (ERC) — Supplemental Form 94XX Filed by Certain Aggregate Employment Tax Return Filers Certain aggregate employment tax return filers (Section 3504 Agents, CPEOs, and PEOs) are permitted to file a single supplemental amended return on Form 94XX to replace one or more previously filed Forms 94XX claiming Employee Retention Credit (ERC). Information on the filing of these supplemental Forms 94XX may be found at the following links: IRS opens new process for payroll companies, third-party payers to help clients resolve incorrect claims for the Employee Retention Credit Filing a supplemental claim for the Employee Retention Credit Supplemental claims for third-party payers: Frequently asked questions The supplemental Forms 94XX filed in the limited circumstances described in the linked guidance: Will be processed instead of (i.e., replace) the related previously filed Forms 94XX. Will be recorded with a single TC 29X adjustment as reported on the supplemental Form 94XX (i.e., do not follow instructions in IRM 21.7.2.4.4.10, Processing Multiple Forms 94XX Filed for the Same Tax Period, to record separate adjustments for each previously filed Form 94XX the supplemental Form 94XX is intended to replace). Supplemental Forms 94XX filed in this manner: Must be submitted via a dedicated fax line (855-782-2161). Must be submitted not later than 11:59 p.m. on December 31, 2024. Must identify the previous Form 94XX filing(s) the supplemental Form 94XX is intended to replace in the explanation section of the form. Cannot replace previous Forms 94XX filed after January 31, 2024. Cannot replace previously filed Forms 94XX which have already been processed. Supplemental Forms 94XX received via the fax line are delivered as electronic images to a shared drive. Ephesoft imaging software is then applied to create a new case in CII with Priority Code 1 and assigned to IDRS number 0230288222 with case category SPC6. Caution: Creation of the case will generate a TC 971 AC 010 and (if not already present) set a -A freeze or E- freeze which must be resolved before the case is closed. Note: Any other forms or correspondence submitted via the specified efax line will not be considered and must be submitted/resubmitted by the taxpayer as otherwise required. Caution: No other case types are to be assigned to IDRS number 0230288222. This IDRS number is used exclusively for controlling supplemental Forms 94XX described in this IRM subsection. Review the supplemental Form 94XX and then follow guidance provided in the table below when previous filings cannot be verified, one or more of the previous Forms 94XX were received after January 31, 2024, one or more of the Forms 94XX was previously processed, or there are more Forms 94XX on file than the supplemental Form 94XX was intended to replace: If Then 1) The previously filed Form(s) 94XX the supplemental Form 94XX is intended to replace is/are not identified on the supplemental Form 94XX Reject the supplemental Form 94XX. Send Letter 916C and include the following text in an open paragraph: "We could not process your supplemental Form [specify form] because it did not identify the previously filed forms that it was intended to replace." If a separate case was opened for the supplemental Form 94XX filing, close that case but do not close any other open Form 94XX case. Reminder: If there are no open Form 94XX cases (or duplicate filing condition cases) and a -A or E- freeze was set in association with the supplemental Form 94XX, the freeze must be released via a TC 290 .00 or TC 971 cc 002 transaction as appropriate. 2) One or more of the previously filed Forms 94XX the supplemental Form 94XX is intended to replace has already been processed For each related Form 94XX case that was located, add a case note as follows: "Unprocessable supplemental Form 94XX rejected." Link each related Form 94XX case that was located to the case for the supplemental Form 94XX but do not close any of the related Form 94XX cases which remain open. Reject the supplemental Form 94XX. Send letter 916C and include the following text in an open paragraph: "We could not process your supplemental Form [specify form] because we already processed one or more of the previously filed forms that it was intended to replace." In a second open paragraph, identify the previously processed Form(s) 94XX by date filed and/or the claim amount as space allows. (e,g., "We previously processed your Form 941-X received on January 15, 2024 claiming $10,000.00 in ERC credit.)" Reminder: If there are no open Form 94XX cases (or duplicate filing condition cases) and a -A or E- freeze was set in association with the supplemental Form 94XX, the freeze must be released via a TC 290 .00 or TC 971 cc 002 transaction as appropriate. 3) One or more of the previously filed Forms 94XX the supplemental Form 94XX is intended to replace has not been received (i.e., cannot be located) Continue handling the case as directed in the following rows of this table and instructions in (7) and (8) below. However, see instructions in Step 2 in (8) below for a corresponding required case note when referring the case for SBSE review. 4) One or more of the previously filed Forms 94XX the supplemental Form 94XX is intended to replace was received after January 31, 2024 Continue handling the case as directed in the following row of this table and instructions in (7) and (8) below. However, see instructions in Step 2 in (8) below for a corresponding required case note when referring the case for SBSE review. 5) AMS/CII reflects one or more unprocessed Forms 94XX in addition to those the supplemental Form 94XX was intended to replace (i.e., unprocessed Forms 94XX not listed on the supplemental Form 94XX) Continue handling the case as per instructions in (7) and (8) below. However, see instructions in Step 2 in (8) below for a corresponding required case note when referring the case for SBSE review. Caution: When rejecting documents, extreme care must be taken to ensure that only the material relative to the taxpayer(s) to which the correspondence is addressed is enclosed in the envelope. See IRM 21.3.3.4.24, Breaches of Personally Identifiable Information (PII) Caused by Manual Stuffing Errors, for additional information. All other Form 94XX processing guidelines and requirements also apply to supplemental Forms 94XX filed in the manner discussed in (1) through (4) above: Review the supplemental Form 94XX for completeness and processability (e.g., for a Form 941-X claim, see (2) and (3) in IRM 21.7.2.4.5.6.2, Form 941-X Tax Decrease — Claim). In addition, review the explanation section of any supplemental Form 94XX received on or after October 17, 2024 (when webpage instructions were changed) for the presence of the following required statement: "This Form 941-X does not contain an increase in the aggregate amount of ERC claimed on any Forms 941-X filed prior to January 31, 2024, or claimed on behalf of any clients listed on Schedule R, attached to any Form 941-X filed before January 31, 2024. Further, this Form 941-X does not include a claim for ERC for clients not previously listed on Schedule R attached to Forms 941-X filed prior to January 31, 2024." If the statement is not present or is not entered in the precise manner described above, reject the supplemental Form 94XX (see Step 5 below). In addition, review the supplemental Form 94XX for the presence of a Schedule R. If no Schedule R is attached, reject the supplemental Form 94XX (see Step 5 below). In addition, compare the beginning tax figures reported in Column 2 of the supplemental Form 94XX to the corresponding figures currently recorded on TXMOD or BMFOLR. If the figures entered on the supplemental Form 94XX do not match IRS records, reject the supplemental Form 94XX (see Step 5 below). Perfect or reject unprocessable supplemental Forms 94XX as appropriate. Note: If rejecting an unprocessable supplemental Form 94XX, add a case note to each related Form 94XX case the supplemental Form 94XX was intended to replace as follows: "Unprocessable supplemental Form 94XX rejected." Link the related cases to the case for the rejected supplemental Form 94XX but do not close any of the related Form 94XX cases which remain open. Reminder: If there are no open Form 94XX cases (or duplicate filing condition cases) and a -A or E- freeze was set in association with the supplemental Form 94XX, the freeze must be released via a TC 290 .00 or TC 971 cc 002 transaction as appropriate. Review for account conditions that require special handling (i.e., open CAT-A or AIMS status, RICS/RIVO/IDT, etc.) which must be addressed prior to taking further action on the supplemental Form 94XX. Suspend, route, or otherwise address the account condition encountered as appropriate. After applying the guidance in (6) and (7) above, continue handling processable supplemental Forms 94XX as follows: If not already done, link and close each previously filed Form 94XX case the supplemental Form 94XX was intended to replace to the case for the supplemental Form 94XX. Take action to submit the supplemental Form 94XX for SBSE review/analysis. • Add the following case note: "Supplemental Form 94XX submitted for SBSE review/analysis." • If one or more of the Forms 94XX the supplemental Form 94XX was intended to replace could not be located, also add an appropriate case note (e.g., "Second and fourth listed Forms 94XX could not be located." ) identifying the missing Forms 94XX. • If one or more of the Forms 94XX the supplemental Form 94XX was intended to replace was received after January 31, 2024, also add an appropriate case note (e.g., "Third and fourth listed Forms 94XX were received after January 31, 2024." ). • If AMS/CII reflects one or more unprocessed Forms 94XX in addition to those the supplemental Form 94XX was intended to replace, also add a case note as follows: "Additional unprocessed Forms 94XX on file." • Suspend the CII case control to CAT-A with primary reason code TPP Supplemental Claim. For cases returned by SBSE after review/analysis, complete the processing of the supplemental Form 94XX by following guidance in the appropriate IRM subsection corresponding to the SBSE handling instructions (e.g., if SBSE clears the Form 94XX for processing as a full allowance, follow handling guidance in IRM 21.7.2.7.6.3, Form 94XX — Employee Retention Credit (ERC) — Claims and Adjustments Cleared for Processing (Accepted) by RAAS). Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Caution: For amended claims date field and refund schedule date field purposes, use the received date for the earliest Form 94XX being replaced by the supplemental Form 94XX when completing any final adjustments on the account. Note: If the supplemental Form 94XX reports a net tax increase/credit decrease, use the ascertained (error discovery) date from the supplemental Form 94XX or, if blank, the latest error discovery date entered on the Form(s) 94XX it is intended to replace, for interest computation date purposes.

# ERC Claim Withdrawal Program

21.7.2.7.7 (11-01-2023) ERC Claim Withdrawal Program The IRS developed a new ERC claim withdrawal program to assist certain employers who may have filed incorrect claims for Employee Retention Credit (ERC) after having fallen prey to aggressive advertising and other contacts misrepresenting eligibility requirements. In general, employers who filed an ERC claim (only) which has not yet been processed or who received a refund check for an ERC claim (only) but have not yet cashed or deposited the refund check are permitted to withdraw their claim. Participation in the withdrawal program: May prevent issuance of an incorrect refund. May allow an employer to return a refund check and correct their account, penalty and interest-free, without the burden of filing another Form 94XX. Employers requesting eligibility and filing information for the ERC claim withdrawal program can be referred to: IR 2023-193 dated Oct 19, 2023 — "IRS announces withdrawal process for Employee Retention Credit claims; special initiative aimed at helping businesses concerned about an ineligible claim amid aggressive marketing, scams" FS-2023-24 dated October 2023 — "Help for businesses: Steps for withdrawing an Employee Retention Credit claim | Internal Revenue Service (irs.gov)" IRS.gov/withdrawmyerc — "Withdraw an Employee Retention Credit (ERC) claim" Updated FAQs — "Frequently asked questions about the Employee Retention Credit" To be eligible, employers must withdraw the entire amount of ERC claimed (only) on a previously filed Form 94XX and: Must not have received an associated refund check or credit to their account; or, Received an associated refund check but did not cash or deposit the refund check; or, The Form 94XX is currently under examination/audit. Note: If a client company wishes to withdraw an ERC claim filed on their behalf by an aggregate employment tax return filer (Section 3504 Agent, CPEO, or PEO), they must contact the third-party payer to coordinate the ERC claim withdrawal request. The ERC claim withdrawal program can't be used to: Withdraw a claim for ERC made on an original employment tax form. Withdraw only a portion of a previous ERC claim. Withdraw a claim for ERC if the associated Form 94XX reported other non-ERC wage/tax/credit corrections. Withdraw a claim for ERC if the associated refund check was received and cashed/deposited. Withdraw a claim for ERC if the credit was previously disallowed in full (i.e., previously recorded ERC amount(s) were reversed and a letter or notice was issued). Make other corrections to the account. Note: Employers who incorrectly claimed ERC but who are ineligible to participate in the ERC claim withdrawal program should file a new Form 94XX as usual to make corrections and pay any amount owing when they file. Employers meeting ERC claim withdrawal program eligibility requirements are instructed to: Make a copy of the Form 94XX which incorrectly claimed ERC. Write "Withdrawn" on the left margin of the first page. Sign, date, and include the individual signer's name and title on the right margin of the first page. Fax the withdrawal request to (855) 738-7609. (Alternately, taxpayers may use the address for filing Form 94XX to mail a withdrawal request; however, taxpayers should be discouraged from mailing withdrawal requests due to potential delays in processing.) Exception: Taxpayers must submit withdrawal requests for Forms 94XX under examination/audit to the assigned examiner or by responding to the audit notice instead of making a request via the withdrawal program fax line. Note: Signature requirements for ERC claim withdrawal requests are the same as for Forms 94XX. Note: Employers returning refund checks in association with ERC claim withdrawals are instructed to include a copy of the voided check with the withdrawal request. Caution: The fax line identified above is dedicated to the ERC claim withdrawal program and can't be used for any other submissions. Handling guidance for ERC claim withdrawal requests is found in succeeding IRM subsections.

# ERC Claim Withdrawal Requests — Case Receipts and Case Association Actions

21.7.2.7.7.1 (04-24-2025) ERC Claim Withdrawal Requests — Case Receipts and Case Association Actions Withdrawal requests submitted via the dedicated fax line (see (5) in IRM 21.7.2.7.7, ERC Claim Withdrawal Program) are delivered as electronic images to a shared drive. Ephesoft imaging software is then applied to create a new case in CII with Priority Code 2 and assigned to IDRS number 0430406002 for inventory control purposes. ERC claim withdrawal cases are controlled with case category 941X, 943X, 944X or CT1X as appropriate. Similarly, withdrawal cases identified in paper receipts are scanned by ICT to create new cases in CII coded as above. Generally, a TC 971 AC 010 will be generated when an ERC withdrawal case is established. If not already present in association with an open Form 94XX case, the generation of this transaction code sets either a -A or an E- freeze on the tax module which must be considered when closing ERC withdrawal cases: Procedures which follow for closing actions on accepted ERC withdrawal request cases include instructions on inputting transactions for releasing the -A or E- freeze as appropriate. For rejected or "no-considered" ERC withdrawal requests cases where there is still an open Form 94XX to be worked, the -A or E- freeze must remain on the account until the Form 94XX is worked. Accordingly, procedures which follow for rejection of ERC withdrawal cases do not include instructions for releasing the -A or E- freeze. However, for rejected withdrawal request cases where there is no open Form 94XX to be worked (i.e., no Form 94XX on file or the Form 94XX associated with the ERC withdrawal request was previously resolved), the -A or E- freeze must be released when the ERC withdrawal case is closed via input of either a TC 290 .00 with Hold Code 4 (to release a -A freeze) or a TC 971 AC 002 (to release an E- freeze) with appropriate remarks corresponding to the rejection reason. Note: See (13) in IRM 21.7.2.4.4, Adjusted Employer's Federal Tax Return or Claim for Refund, for more information on the setting and required release of -A and E- freezes in association with the processing of Forms 94XX. Take the following actions when missed ERC claim withdrawal requests are identified in inventory: ERC claim withdrawal requests identified in CII electronic inventory are to be coded with Priority Code 2, case category SPC6, and reassigned to IDRS number 0430406002. ERC claim withdrawal requests (only) identified in paper inventory are to be faxed to (855) 738-7609. AM employees specifically designated to work ERC claim withdrawal request cases (only) must take the following preliminary actions to ensure withdrawal requests are properly associated with any related open or closed Form 94XX case. Review the ERC claim withdrawal request case document for a copy of a previously filed Form 94XX claiming ERC with "withdrawn" entered on it (usually found in the left hand margin of the first page) or other indication that the document submitted was intended to be an ERC claim withdrawal request. • If the case includes a general information request about the ERC claim withdrawal program (e.g., how to submit a withdrawal request), handle as per the last row of the table in (2) below. (It is not necessary to search for a related Form 94XX case.) • If there is no indication the taxpayer is making an ERC claim withdrawal request, continue handling per guidance in IRM 21.7.2.7.7.7, Handling for Miscellaneous Incorrect Submissions Received in the ERC Claim Withdrawal Program. • Otherwise, proceed to Step 2. Review the entity, tax form, and tax period data on the ERC claim withdrawal request, research CII for a related Form 94XX case, and then continue handling per guidance in the table below: If Then An open related Form 94XX case is located Enter "ERC WD REQ RCVD" in CII case notes for the Form 94XX case. Close the open Form 94XX case. Link the now closed Form 94XX case to the new ERC claim withdrawal request case in CII. Continue processing the ERC claim withdrawal request case as per guidance in IRM 21.7.2.7.7.2, Processing ERC Claim Withdrawal Requests — Review for Unprocessable Conditions, and subsequent IRM subsections as appropriate. A closed related Form 94XX case is located Enter "ERC WD REQ RCVD" in CII case notes for the closed Form 94XX case. Link the closed Form 94XX case to the new ERC claim withdrawal request case in CII. Continue processing the ERC claim withdrawal request case as per guidance in IRM 21.7.2.7.7.2, Processing ERC Claim Withdrawal Requests — Review for Unprocessable Conditions, and subsequent IRM subsections as appropriate. No related Form 94XX case is located Continue processing the ERC claim withdrawal request case as per guidance in IRM 21.7.2.7.7.2, Processing ERC Claim Withdrawal Requests — Review for Unprocessable Conditions, and subsequent IRM subsections as appropriate. On all accepted and rejected ERC claim withdrawal request cases, certain data (claim dollar amounts, reject reasons, etc.) for each case is required to be captured and entered on a data collection template when the case is resolved.

# Processing ERC Claim Withdrawal Requests — Review for Unprocessable Conditions

21.7.2.7.7.2 (06-26-2024) Processing ERC Claim Withdrawal Requests — Review for Unprocessable Conditions The guidance in this subsection is intended to be applied by AM employees specifically designated to process ERC claim withdrawal program requests (only). ERC claim withdrawal requests must meet certain submission criteria to be considered processable. See (5) in IRM 21.7.2.7.7, ERC Claim Withdrawal Program, for more information. Review ERC claim withdrawal request documents for the following required elements, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, and then take actions as directed in the table which follows: A copy of the previously filed Form 94XX claiming ERC. A "withdrawn" notation on the Form 94XX copy (usually found in the left margin of the first page) or other indication that the document submitted was intended to be an ERC claim withdrawal request. Signature, date, name of the signer, and title of the signer (usually found in the right margin of the first page) If And Then 1) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Caution: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ 2) The taxpayer submission is a general information request about the ERC claim withdrawal program (e.g., how to submit a withdrawal request) Send an appropriate "C" letter directing the taxpayer to information on the irs.gov webpage or provide other information responsive to the taxpayer inquiry as appropriate. Remove the Priority 2 coding from the CII case. Enter "GENERAL ERC WD INQ" in CII case notes. Close the CII case. Note: If there is a related Form 94XX case, it should not be closed and it is not necessary to update case notes for the Form 94XX case in this instance. Reminder: Correspondence which is not related to the ERC claim withdrawal program is handled per guidance in IRM 21.7.2.7.7.7, Handling for Miscellaneous Incorrect Submissions Received in the ERC Claim Withdrawal Program. 3) The withdrawal request does not include a copy of a Form 94XX claiming ERC There is insufficient information to associate the withdrawal request to a previously filed Form 94XX claiming ERC (i.e., the withdrawal request was loaded as a new CII case, no previous Form 94XX case is linked, and no previous Form 94XX case can be located) Send Letter 916C with the following text inserted in an open paragraph: "We can't process your request to withdraw your Employee Retention Credit (ERC) claim because you did not include a copy of your Form [specify form] and we are unable to locate the claim you're trying to withdraw." Input a TC 971 with the following data elements: • Enter the received date of the ERC withdrawal case as the transaction date • Enter Action Code 333 • Enter Remarks: "NSD ERC WD REQ RJCT - NO CLAIM" Enter "ERC WD REQ RJCT - NO CLAIM" in CII case notes. Close the CII case. 4) The withdrawal request does not include a copy of a Form 94XX claiming ERC There is sufficient information to associate the withdrawal request to a previously filed Form 94XX claiming ERC (i.e., the withdrawal request was attached to an open case, a new CII case was opened and linked to a closed case, or a new CII case was opened and can now be linked to a closed or open case) Continue to process the ERC claim withdrawal request as per guidance which follows in this table and in succeeding IRM subsections 5) The withdrawal request is unsigned Send Letter 916C with the following text inserted in two open paragraphs: "We can't process your request to withdraw your Employee Retention Credit (ERC) claim because you didn't sign the copy of the Form [specify form] you're requesting to withdraw, or you didn't include your printed name and/or title." "See IRS.gov/ercsignature for a list of persons authorized to sign an amended return for each type of business entity." Input a TC 971 with the following data elements: • Enter the received date of the ERC withdrawal case as the transaction date • Enter Action Code 333 • Enter Remarks: "NSD ERC WD REQ RJCT - SIGNATURE" Enter "ERC WD REQ RJCT - SIGNATURE" in CII case notes. Update the CII case as follows: • Update the CII case with Priority Code 1. • Change the received date to that of the related Form 94XX case that was closed during case association. • Reassign the case to the IDRS number to which the Form 94XX case was assigned when closed. 6) The withdrawal request is signed The signer's name and/or title is not entered Send Letter 916C with the following text inserted in two open paragraphs: "We can't process your request to withdraw your Employee Retention Credit (ERC) claim because you didn't sign the copy of the Form [specify form] you're requesting to withdraw, or you didn't include your printed name and/or title." "See IRS.gov/ercsignature for a list of persons authorized to sign an amended return for each type of business entity." Input a TC 971 with the following data elements: • Enter the received date of the ERC withdrawal case as the transaction date • Enter Action Code 333 • Enter Remarks: "NSD ERC WD REQ RJCT - SIGNATURE" Enter "ERC WD REQ RJCT - SIGNATURE" in CII case notes. Update the CII case as follows: • Update the CII case with Priority Code 1. • Change the received date to that of the related Form 94XX case that was closed during case association. • Reassign the case to the IDRS number to which the Form 94XX case was assigned when closed. 7) The withdrawal request is signed The person signing is not authorized to do so. Note: See the table in (1) of IRM 21.7.2.4.4.11, Signature Requirements for Form 94XX Amended/Adjusted Employment Tax Returns, including the notes in each row of the table, for who can sign the withdrawal request and research requirements. Caution: Do not follow resolution guidance in (2) of IRM 21.7.2.4.4.11 when working an ERC claim withdrawal request. Send Letter 916C with the following text inserted in two open paragraphs: "We can't process your request to withdraw your Employee Retention Credit (ERC) claim because we have no record you authorized [specify name] to act for you." "See IRS.gov/ercsignature for a list of persons authorized to sign an amended return for each type of business entity. See www.irs.gov/ercwithdrawal for instructions on how to submit a request to withdraw your ERC claim." Input a TC 971 with the following data elements: • Enter the received date of the ERC withdrawal case as the transaction date • Enter Action Code 333 • Enter Remarks: "NSD ERC WD REQ RJCT - SIGNATURE" Enter "ERC WD REQ RJCT - SIGNATURE" in CII case notes. Update the CII case as follows: • Update the CII case with Priority Code 1. • Change the received date to that of the related Form 94XX case that was closed during case association. • Reassign the case to the IDRS number to which the Form 94XX case was assigned when closed. 8) The withdrawal request is signed under a power of attorney The authority of the power of attorney to sign cannot be verified. Note: See the seventh row of the table in (1) of IRM 21.7.2.4.4.11, Signature Requirements for Form 94XX Amended/Adjusted Employment Tax Returns, that addresses a signature by a power of attorney, including the notes, for research requirements. Caution: Do not follow resolution guidance in (2) of IRM 21.7.2.4.4.11 when working an ERC claim withdrawal request. Send Letter 916C with the following text inserted in two open paragraphs: "We can't process your request to withdraw your Employee Retention Credit (ERC) claim because we have no record you authorized [specify name] to act for you." "See IRS.gov/ercsignature for a list of persons authorized to sign an amended return for each type of business entity. See www.irs.gov/ercwithdrawal for instructions on how to submit a request to withdraw your ERC claim." Input a TC 971 with the following data elements: • Enter the received date of the ERC withdrawal case as the transaction date • Enter Action Code 333 • Enter Remarks: "NSD ERC WD REQ RJCT - SIGNATURE" Enter "ERC WD REQ RJCT - SIGNATURE" in CII case notes. Update the CII case as follows: • Update the CII case with Priority Code 1. • Change the received date to that of the related Form 94XX case that was closed during case association. • Reassign the case to the IDRS number to which the Form 94XX case was assigned when closed. 9) The withdrawal request is signed by a Reporting Agent (i.e., "attorney in fact", "agent", or other title indicating individual who signed acts for a Reporting Agent firm) The Reporting Agent authority cannot be verified. Note: See the last row of the table in (1) of IRM 21.7.2.4.4.11, Signature Requirements for Form 94XX Amended/Adjusted Employment Tax Returns, that addresses a signature by a Reporting Agent, including the note, for research requirements. Caution: Do not follow resolution guidance in (2) of IRM 21.7.2.4.4.11 when working an ERC claim withdrawal request. Send Letter 916C with the following text inserted in two open paragraphs: "We can't process your request to withdraw your Employee Retention Credit (ERC) claim because we have no record you authorized [specify name] to act for you." "See IRS.gov/ercsignature for a list of persons authorized to sign an amended return for each type of business entity. See www.irs.gov/ercwithdrawal for instructions on how to submit a request to withdraw your ERC claim." Input a TC 971 with the following data elements: • Enter the received date of the ERC withdrawal case as the transaction date • Enter Action Code 333 • Enter Remarks: "NSD ERC WD REQ RJCT - SIGNATURE" Enter "ERC WD REQ RJCT - SIGNATURE" in CII case notes. Update the CII case as follows: • Update the CII case with Priority Code 1. • Change the received date to that of the related Form 94XX case that was closed during case association. • Reassign the case to the IDRS number to which the Form 94XX case was assigned when closed. Caution: See (2) in IRM 21.7.2.7.7.1, ERC Claim Withdrawal Requests — Case Receipts and Case Association Actions, for required consideration and possible release of -A and E- freezes when rejecting or "no-considering" ERC withdrawal requests. Reminder: As indicated in (5) of IRM 21.7.2.7.7.1, ERC Claim Withdrawal Requests — Case Receipts and Case Association Actions, the ERC claim withdrawal case information template must be completed when each accepted or rejected ERC claim withdrawal case is resolved/closed. Continue handling processable ERC claim withdrawal cases (i.e., those not rejected or otherwise addressed per instructions in (3) above) as per guidance in IRM 21.7.2.7.7.3, Processing ERC Claim Withdrawal Requests — Review for Ineligible Submissions.

# Processing ERC Claim Withdrawal Requests — Review for Ineligible Submissions

21.7.2.7.7.3 (06-26-2024) Processing ERC Claim Withdrawal Requests — Review for Ineligible Submissions The guidance in this subsection is intended to be applied by AM employees specifically designated to process ERC claim withdrawal program requests (only). The procedures in this subsection are to be applied to ERC claim withdrawal requests which did not meet rejection criteria described in IRM 21.7.2.7.7.2, Processing ERC Claim Withdrawal Requests — Review for Unprocessable Conditions. ERC claim withdrawal requests must meet certain eligibility criteria. See (3) and (4) in IRM 21.7.2.7.7, ERC Claim Withdrawal Program, for more information on eligibility requirements and exclusionary criteria. Review the ERC claim withdrawal request document(s), the previous Form 94XX claiming ERC that the taxpayer is trying to withdraw (if not already associated, conduct research to locate the Form 94XX if possible), and the related tax account to evaluate eligibility factors addressed in the table which follows: If And Then 1) The ERC claim withdrawal request is a duplicate request The previous ERC claim withdrawal request has not been processed Link the ERC claim withdrawal case with the most recent received date to the case with the oldest received date. Enter "ERC WD REQ LIVE DUPLICATE" in CII case notes for both cases. Close the CII case with the most recent received date. Continue processing the original ERC claim withdrawal request as appropriate. 2) The ERC claim withdrawal request is a duplicate request The previous ERC claim withdrawal request has already been processed Send Letter 916C with the following text inserted in an open paragraph: "We didn't process your request to withdraw your Employee Retention Credit (ERC) claim because we consider it a duplicate submission. We issued a letter on [enter date] in response to your original withdrawal request." Input a TC 971 with the following data elements: • Enter the received date of the ERC withdrawal case as the transaction date • Enter Action Code 333 • Enter Remarks: "NSD ERC WD REQ RJCT - DUPLICATE" Link the current ERC claim withdrawal case with the previously worked case. Enter "ERC WD REQ RJCT - DUPLICATE" in CII case notes for both cases. Close the current CII case. 3) The ERC claim withdrawal request was filed by a company which is a client of an aggregate employment tax return filer (Section 3504 Agent, CPEO, or PEO) The ERC claim the taxpayer is trying to withdraw was filed on their behalf by the aggregate employment tax return filer (i.e., under the EIN of the Section 3504 Agent, CPEO, or PEO) Send Letter 916C with the following text inserted in two open paragraphs: "We can't process your request to withdraw your Employee Retention Credit (ERC) claim because our records show your employment taxes were reported by a third-party payor on an aggregate employment tax return they filed." "You should contact your third-party payor if you wish to withdraw or correct an ERC claim they filed on your behalf." Enter "ERC WD REQ RJCT - AGG FILER" in CII case notes. Input a TC 971 with the following data elements: • Enter the received date of the ERC withdrawal case as the transaction date • Enter Action Code 333 • Enter Remarks: "NSD ERC WD REQ RJCT - AGG FILER" Update the CII case as follows: • Update the CII case with Priority Code 1. • Change the received date to that of the related Form 94XX case that was closed during case association. • Reassign the case to the IDRS number to which the Form 94XX case was assigned when closed. 4) The withdrawal request includes a copy of a Form 94XX claiming ERC The case is not linked to a Form 94XX case and no related Form 94XX case can be located Send Letter 916C with the following text inserted in an open paragraph: "We can't process your request to withdraw your Employee Retention Credit (ERC) claim because we didn't receive a Form [specify form] for the claim you're trying to withdraw." Input a TC 971 with the following data elements: • Enter the received date of the ERC withdrawal case as the transaction date • Enter Action Code 333 • Enter Remarks: "NSD ERC WD REQ RJCT - NO CLAIM" Enter "ERC WD REQ RJCT - NO CLAIM" in CII case notes. Close the CII case. 5) The ERC claim withdrawal request is for ERC claimed entirely on the original employment tax return Send Letter 916C with the following text inserted in two open paragraphs: "We can't process your request to withdraw your Employee Retention Credit (ERC) claim because our records show the amounts you're requesting to withdraw were claimed on your original Form [specify form]." "You should file Form [specify form] to make corrections to information reported on your original return, including any changes to claimed ERC amounts, and pay any amount due." Input a TC 971 with the following data elements: • Enter the received date of the ERC withdrawal case as the transaction date • Enter Action Code 333 • Enter Remarks: "NSD ERC WD REQ RJCT - ERC TC 150" Enter "ERC WD REQ RJCT - ERC TC 150" in CII case notes. Close the CII case. 6) The Form 94XX for which the ERC claim withdrawal request was made has already been processed The claim was closed as a "no consideration" case Update the CII case with Priority Code 4. Send Letter 916C with the following text inserted in an open paragraph: "We can't process your request to withdraw your Employee Retention Credit (ERC) claim because our records show we sent you a letter on [specify date] stating that we could not process the Form [specify] you're trying to withdraw." Input a TC 971 with the following data elements: • Enter the received date of the ERC withdrawal case as the transaction date • Enter Action Code 333 • Enter Remarks: "NSD ERC WD REQ RJCT - CLAIM NO CONSIDERED" Enter "ERC WD REQ RJCT - CLAIM NO CONSIDERED" in CII case notes. Close the CII case. 7) The Form 94XX for which the ERC claim withdrawal request was made has already been processed The claim was formally disallowed in part or in full Update the CII case with Priority Code 4. Send Letter 916C with the following text inserted in an open paragraph: "We can't process your request to withdraw your Employee Retention Credit (ERC) claim because our records show we previously disallowed all or a portion of your claim. A disallowance letter was sent on [specify date]." Input a TC 971 with the following data elements: • Enter the received date of the ERC withdrawal case as the transaction date • Enter Action Code 333 • Enter Remarks: "NSD ERC WD REQ RJCT - CLAIM DISALLOWANCE" Enter "ERC WD REQ RJCT - CLAIM DISALLOWANCE" in CII case notes. Close the CII case. 8) The Form 94XX for which the ERC claim withdrawal request was made has already been processed A refund was issued but there is no indication the taxpayer returned the refund check Update the CII case with Priority Code 4. Send Letter 916C with the following text inserted in two open paragraphs: "We can't accept your request to withdraw your Employee Retention Credit (ERC) claim because we already processed the claim you're trying to withdraw." "If you haven't cashed or deposited your refund check, see www.irs.gov/ercwithdrawal for instructions on how to return your refund check and make a new request to withdraw your ERC claim. If you cashed the refund check, you should file Form [specify form] to make corrections and pay any amount due." Input a TC 971 with the following data elements: • Enter the received date of the ERC withdrawal case as the transaction date • Enter Action Code 333 • Enter Remarks: "NSD ERC WD REQ RJCT - CLAIM PROCESSED" Enter "ERC WD REQ RJCT - CLAIM PROCESSED" in CII case notes. Close the CII case. 9) The Form 94XX for which the ERC claim withdrawal request was made has already been processed The taxpayer repaid the amount refunded via EFTPS or with a personal/business check Update the CII case with Priority Code 4. Send Letter 916C with the following text inserted in two open paragraphs: "We can't accept your request to withdraw your Employee Retention Credit (ERC) claim because we already processed the claim you're trying to withdraw." "You should file Form [specify form] to report corrections to any amounts previously claimed in error." Input a TC 971 with the following data elements: • Enter the received date of the ERC withdrawal case as the transaction date • Enter Action Code 333 • Enter Remarks: "NSD ERC WD REQ RJCT - CLAIM PROCESSED" Enter "ERC WD REQ RJCT - CLAIM PROCESSED" in CII case notes. Close the CII case. Caution: Do not release any overpayment associated with the repayment since the funds will be required to pay the Form 94XX the taxpayer is expected to file. 10) The Form 94XX for which the ERC claim withdrawal request was made has already been processed All or part of the overpayment resulting from the previous credit allowance was: Applied to other amounts due on the account adjusted; or, Offset to balances owed on another tax account; or, Applied to a succeeding tax period as the result of the processed Form 94XX having been marked as an adjusted return. Update the CII case with Priority Code 4. Contact the IRM author through your management chain and the site P&A Staff for guidance on case handling. 11) The Form 94XX for which the ERC claim withdrawal request was made has already been processed A refund was issued and there is an indication present that the taxpayer returned the refund check. Review for one or more of the following indicators: A photocopy of a voided check or other notation is attached to the withdrawal request. An open IDRS control for a returned refund check. A posted TC 841 with credit held by a P- freeze. A posted TC 740 with credit held by a S- freeze. Continue processing as per guidance in IRM 21.7.2.7.7.6, Processing ERC Claim Withdrawal Requests with a Returned Refund Check. 12) The ERC claim withdrawal request is for less than the ERC claimed on the related Form 94XX claiming ERC Send Letter 916C with the following text inserted in two open paragraphs: "We can't process your request to withdraw your Employee Retention Credit (ERC) claim because the amount shown on your request is less than the amount reported on the associated Form [specify form] we received on [specify date]." "If you qualify for some amount of ERC but less than the amount previously claimed, you should file Form [specify form] to make corrections and pay any amount due." Input a TC 971 with the following data elements: • Enter the received date of the ERC withdrawal case as the transaction date • Enter Action Code 333 • Enter Remarks: "NSD ERC WD REQ RJCT - CLAIM MISMATCH" Enter "ERC WD REQ RJCT - CLAIM MISMATCH" in CII case notes. Update the CII case as follows: • Update the CII case with Priority Code 1. • Change the received date to that of the related Form 94XX case that was closed during case association. • Reassign the case to the IDRS number to which the Form 94XX case was assigned when closed. 13) The ERC claim withdrawal request is for more than the ERC claimed on the related Form 94XX claiming ERC Send Letter 916C with the following text inserted in two open paragraphs: "We can't process your request to withdraw your Employee Retention Credit (ERC) claim because the amount shown on your request is more than the amount reported on the associated Form [specify form] we received on [specify date]." "If you need to reduce or remove previously claimed ERC in excess of the amount reported on a specific Form [specify form], you should file a new Form [specify form] to make corrections and pay any amount due." Input a TC 971 with the following data elements: • Enter the received date of the ERC withdrawal case as the transaction date • Enter Action Code 333 • Enter Remarks: "NSD ERC WD REQ RJCT - CLAIM MISMATCH" Enter "ERC WD REQ RJCT - CLAIM MISMATCH" in CII case notes. Update the CII case as follows: • Update the CII case with Priority Code 1. • Change the received date to that of the related Form 94XX case that was closed during case association. • Reassign the case to the IDRS number to which the Form 94XX case was assigned when closed. 14) The Form 94XX related to the ERC claim withdrawal request reported other non-ERC wage/tax/credit corrections in addition to claiming ERC Send Letter 916C with the following text inserted in two open paragraphs: "We can't process your request to withdraw your Employee Retention Credit (ERC) claim because the claim you're trying to withdraw reported other corrections in addition to claiming ERC." "You should file a new Form [specify form] to make corrections to ERC you previously claimed, along with any other necessary corrections, and pay any amount due." Input a TC 971 with the following data elements: • Enter the received date of the ERC withdrawal case as the transaction date • Enter Action Code 333 • Enter Remarks: "NSD ERC WD REQ RJCT - CLAIM NOT ERC ONLY" Enter "ERC WD REQ RJCT - CLAIM NOT ERC ONLY" in CII case notes. Update the CII case as follows: • Update the CII case with Priority Code 1. • Change the received date to that of the related Form 94XX case that was closed during case association. • Reassign the case to the IDRS number to which the Form 94XX case was assigned when closed. 15) The ERC claim withdrawal request includes other corrections in addition to withdrawing the previous ERC claimed Send Letter 916C with the following text inserted in two open paragraphs: "We can't process your request to withdraw your Employee Retention Credit (ERC) claim because you requested other changes to your account information in addition to the ERC claim withdrawal." "You should file a new Form [specify form] to make corrections to ERC you previously claimed, along with any other necessary corrections, and pay any amount due." Input a TC 971 with the following data elements: • Enter the received date of the ERC withdrawal case as the transaction date • Enter Action Code 333 • Enter Remarks: "NSD ERC WD REQ RJCT - WD REQ INC OTHER CHANGES" Enter "ERC WD REQ RJCT - WD REQ INC OTHER CHANGES" in CII case notes. Update the CII case as follows: • Update the CII case with Priority Code 1. • Change the received date to that of the related Form 94XX case that was closed during case association. • Reassign the case to the IDRS number to which the Form 94XX case was assigned when closed. Caution: See (2) in IRM 21.7.2.7.7.1, ERC Claim Withdrawal Requests — Case Receipts and Case Association Actions, for required consideration and possible release of -A and E- freezes when rejecting or "no-considering" ERC withdrawal requests. Reminder: As indicated in (5) of IRM 21.7.2.7.7.1, ERC Claim Withdrawal Requests — Case Receipts and Case Association Actions, the ERC claim withdrawal case information template must be completed when each accepted or rejected ERC claim withdrawal case is resolved/closed. Continue processing eligible ERC claim withdrawal cases (i.e., those not rejected or otherwise addressed per instructions in (4) above) as per guidance in IRM 21.7.2.7.7.4, Processing ERC Claim Withdrawal Requests — Review for Account Conditions Requiring Special Handling.

# Processing ERC Claim Withdrawal Requests — Review for Account Conditions Requiring Special Handling

21.7.2.7.7.4 (11-01-2023) Processing ERC Claim Withdrawal Requests — Review for Account Conditions Requiring Special Handling The guidance in this subsection is intended to be applied by AM employees specifically designated to process ERC claim withdrawal program requests (only). The procedures in this subsection are to be applied to ERC claim withdrawal requests which did not meet rejection criteria described in IRM 21.7.2.7.7.2, Processing ERC Claim Withdrawal Requests — Review for Unprocessable Conditions, or IRM 21.7.2.7.7.3, Processing ERC Claim Withdrawal Requests — Review for Ineligible Submissions, or IRM 21.7.2.7.7.6, Processing ERC Claim Withdrawal Requests with a Returned Refund Check. For processable/eligible ERC claim withdrawal requests, review related tax accounts and case history for account conditions described in the table below and take appropriate action as indicated: If And Then 1) The Form 94XX related to the ERC claim withdrawal request was referred to CAT-A The Form 94XX remains in the CAT-A queue awaiting a Classifier response Send a secure email to "sbse.et.wsd.claims@irs.gov" for HQ Reserved 10 cases or "Thomas J Kassay" for HQ Reserved 18 cases with the following text (or appropriate equivalent text as needed): "A processable ERC claim withdrawal request has been received related to the Form [specific form] for [specify TIN/MFT/tax period and any other appropriate information to identify the Form 94XX in question]. The case is currently in the CAT-A queue and needs to be returned to AM for the withdrawal request to be acted upon." Enter "ERC WD REQ CATA SUSPEND" in CII case notes and suspend the case. When the case is returned from CAT-A, enter "ERC WD REQ CATA RETURNED" in CII case notes and continue processing the withdrawal request, including reviewing the account for other conditions requiring special handling as described in other rows of this table. 2) The Form 94XX related to the ERC claim withdrawal request was referred to CAT-A A response was entered by the Classifier with claim handling instructions (i.e., accept, disallow, selected, correspond for missing information, etc.) Enter "ERC WD REQ IRM AUTHOR" in CII case notes and contact the IRM author through your management chain and the site P&A Staff for guidance on case handling. 3) The Form 94XX related to the ERC claim withdrawal request was previously selected for audit Open AIMS status is 08 Send a secure email to "sbse.et.wsd.claims@irs.gov" (for BOD Code SB/LM cases) or "Thomas J Kassay" (for BOD Code TE cases) using the following text (or appropriate equivalent text as needed): "A processable ERC claim withdrawal request has been received related to the Form [specific form] for [specify TIN/MFT/tax period and any other appropriate information to identify the Form 94XX in question]. The case is currently in AIMS status 08. The AIMS control base needs to be closed and the case returned to AM for the withdrawal request to be acted upon ." Enter "ERC WD REQ EXAM 08 SUSPEND" in CII case notes and suspend the case. When AIMS control base has been closed, enter "ERC WD REQ EXAM 08 RETURNED" in CII case notes and continue processing the withdrawal request, including reviewing the account for other conditions requiring special handling as described in other rows of this table. 4) The Form 94XX related to the ERC claim withdrawal request was previously selected for audit Open AIMS status is 09 through 19 Send a secure email to "David W King" (for BOD Code SB/LM cases) or "Thomas J Kassay" (for BOD Code TE cases) with the following text (or appropriate equivalent text as needed): "A processable ERC claim withdrawal request has been received related to the Form [specific form] for [specify TIN/MFT/tax period and any other appropriate information to identify the Form 94XX in question]. The case is currently in AIMS status [09 or 10]. The AIMS control base needs to be closed and the case returned to AM for the withdrawal request to be acted upon ." Enter "ERC WD REQ EXAM 09-19 SUSPEND" in CII case notes and suspend the case. When AIMS control base has been closed, enter "ERC WD REQ EXAM 09-19 RETURNED" in CII case notes and continue processing the withdrawal request, including reviewing the account for other conditions requiring special handling as described in other rows of this table. 5) The Form 94XX related to the ERC claim withdrawal request was previously selected for audit Open AIMS status greater than 19 Enter "ERC WD REQ IRM AUTHOR" in CII case notes and contact the IRM author through your management chain and the site P&A Staff for guidance on case handling. 6) The account for which the ERC claim withdrawal (and related Form 94XX) was submitted is in status 26 Enter "ERC WD REQ STAT 26" in CII case notes and contact the IRM author through your management chain and the site P&A Staff for guidance on case handling. 7) Return Integrity and Compliance Services (RICS), Return Integrity Verification Operations (RIVO), or Identity Theft (IDT) indicators are present on the account for which the ERC claim withdrawal request was made Reminder: See IRM 21.7.2.4.4.13, Forms 94XX with Return Integrity and Compliance Services (RICS), Return Integrity Verification Operations (RIVO), or Identity Theft (IDT) Involvement, and cross-referenced guidance for identifiers. The RICS, RIVO, or IDT condition must be resolved before the ERC claim withdrawal request can be considered. Address the RICS/RIVO/IDT condition as appropriate per guidance in IRM 21.7.2.4.4.13, Forms 94XX with Return Integrity and Compliance Services (RICS), Return Integrity Verification Operations (RIVO), or Identity Theft (IDT) Involvement, and cross-referenced guidance. Enter "ERC WD REQ [insert] SUSPEND" in CII case notes with RICS, RIVO, or IDT inserted as appropriate. As appropriate, suspend the case until the RICS/RIVO/IDT condition is resolved and then resume handling. Caution: Enter "ERC - WD - Form 14566" in the subject line if a secure email is being sent to the AM BMF IDT liaison as per instructions in (6) of IRM 21.7.2.4.4.13, Forms 94XX with Return Integrity and Compliance Services (RICS), Return Integrity Verification Operations (RIVO), or Identity Theft (IDT) Involvement. 8) There are multiple unprocessed Forms 94XX or duplicate filing conditions present Enter "ERC WD REQ IRM AUTHOR" in CII case notes and contact the IRM author through your management chain and the site P&A Staff for guidance on case handling. Caution: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Reminder: ERC claim withdrawal cases with a returned refund check are handled as per guidance in IRM 21.7.2.7.7.6, Processing ERC Claim Withdrawal Requests with a Returned Refund Check. After considering and applying the handling guidance provided above, continue processing ERC claim withdrawal cases as per guidance in IRM 21.7.2.7.7.5, Processing ERC Claim Withdrawal Requests — Closing Actions for Cases with Open ERC Claims, or as per (8) in IRM 21.7.2.7.7.6, Processing ERC Claim Withdrawal Requests with a Returned Refund Check, as appropriate.

# Processing ERC Claim Withdrawal Requests — Closing Actions for Cases with Open ERC Claims

21.7.2.7.7.5 (11-01-2023) Processing ERC Claim Withdrawal Requests — Closing Actions for Cases with Open ERC Claims The guidance in this subsection is intended to be applied by AM employees specifically designated to process ERC claim withdrawal program requests (only). The procedures in this subsection are to be applied to ERC claim withdrawal requests: After unprocessable ERC claim withdrawal requests are rejected as per guidance in IRM 21.7.2.7.7.2, Processing ERC Claim Withdrawal Requests — Review for Unprocessable Conditions; After ineligible ERC claim withdrawal requests are rejected as per guidance in IRM 21.7.2.7.7.3, Processing ERC Claim Withdrawal Requests — Review for Ineligible Submissions; and, After any special account conditions are addressed as per guidance in IRM 21.7.2.7.7.4, Processing ERC Claim Withdrawal Requests — Review for Account Conditions Requiring Special Handling. Take the following actions to record acceptance of processable, eligible ERC claim withdrawal requests: Send Letter 916C with the following text inserted in an open paragraph: "We accepted your request to withdraw your Employee Retention Credit (ERC) claim. As requested, we will not process your Form [specify form] for the tax period ending [enter date]." Input a TC 290 .00 transaction in Blocking Series 20 on the tax account to release the -A freeze on the account with the following remarks: "ERC WD REQ ACCEPTED" . Exception: If the taxpayer is withdrawing a Form 94XX for which there is no corresponding original return posted, release the E- freeze by entering a TC 971 with Action Code 002 and enter the following remarks: "ERC WD REQ ACCEPTED" . Input a TC 971 with the following data elements: • Enter the received date of the ERC withdrawal case as the transaction date • Enter Action Code 332 • Enter Remarks: "NSD ERC WD REQ ACCEPTED" Enter "ERC WD REQ ACCEPTED" in CII case notes. Close the CII case. Reminder: As indicated in (5) of IRM 21.7.2.7.7.1, ERC Claim Withdrawal Requests — Case Receipts and Case Association Actions, the ERC claim withdrawal case information template must be completed when each accepted or rejected ERC claim withdrawal case is resolved/closed. Reminder: ERC claim withdrawal cases with a returned refund check are handled as per guidance in IRM 21.7.2.7.7.6, Processing ERC Claim Withdrawal Requests with a Returned Refund Check.

# Processing ERC Claim Withdrawal Requests with a Returned Refund Check

21.7.2.7.7.6 (03-15-2024) Processing ERC Claim Withdrawal Requests with a Returned Refund Check The guidance in this subsection is intended to be applied by AM employees specifically designated to process ERC claim withdrawal program requests (only). The procedures in this subsection are to be applied to ERC claim withdrawal requests with returned (or otherwise uncashed) refund checks which did not meet rejection criteria described in IRM 21.7.2.7.7.2, Processing ERC Claim Withdrawal Requests — Review for Unprocessable Conditions or the first ten rows of the table in IRM 21.7.2.7.7.3, Processing ERC Claim Withdrawal Requests — Review for Ineligible Submissions. Take the following actions on ERC claim withdrawal request cases with a returned refund check for which the credit has not yet posted to the associated tax account: Update the CII case with Priority Code 4. Enter "ERC WD REQ RETD REFUND SUSPEND" in CII case notes. Suspend the CII case and monitor the account for posting of a TC 841 transaction. Once credit for the returned refund check is posted to the account, resume processing as per guidance in (6) and succeeding paragraphs below. Take the following actions on ERC claim withdrawal request cases with a returned refund check for which the credit has posted to the associated tax account: If not already done, update the CII case with Priority Code 4. Enter "ERC WD REQ RETD REFUND POSTED" in CII case notes. Continue/resume processing as per guidance in (6) and succeeding paragraphs below. ERC claim withdrawal requests must meet certain eligibility criteria. See (3) and (4) in IRM 21.7.2.7.7, ERC Claim Withdrawal Program, for more information on eligibility requirements and exclusionary criteria. Review the ERC claim withdrawal request document(s), the previous Form 94XX claiming ERC that the taxpayer is trying to withdraw (if not already associated, conduct research to locate the Form 94XX if possible), and the related tax account to evaluate eligibility factors addressed in the table which follows: If Then 1) The ERC claim withdrawal request is for less than the ERC claimed on the related Form 94XX claiming ERC Send Letter 916C with the following text inserted in two open paragraphs: "We can't process your request to withdraw your Employee Retention Credit (ERC) claim because the amount shown on your request is less than the amount reported on the associated Form [specify form] we received on [specify date]." "If you qualify for some amount of ERC but less than the amount previously claimed, you should file Form [specify form] to make corrections and pay any amount due." Input a TC 971 with the following data elements: • Enter the received date of the ERC withdrawal case as the transaction date • Enter Action Code 333 • Enter Remarks: "NSD ERC WD REQ RJCT - CLAIM MISMATCH" Enter "ERC WD REQ RJCT - CLAIM MISMATCH" in CII case notes. Close the CII case. 2) The ERC claim withdrawal request is for more than the ERC claimed on the related Form 94XX claiming ERC Send Letter 916C with the following text inserted in two open paragraphs: "We can't process your request to withdraw your Employee Retention Credit (ERC) claim because the amount shown on your request is more than the amount reported on the associated Form [specify form] we received on [specify date]." "If you need to reduce or remove previously claimed ERC in excess of the amount reported on a specific Form [specify form], you should file a new Form [specify form] to make corrections and pay any amount due." Input a transaction with the following data elements: • Enter the received date of the ERC withdrawal case as the transaction date • Enter Action Code 333 • Enter Remarks: "NSD ERC WD REQ RJCT - CLAIM MISMATCH" Enter "ERC WD REQ RJCT - CLAIM MISMATCH" in CII case notes. Close the CII case. 3) The Form 94XX related to the ERC claim withdrawal request reported other non-ERC wage/tax/credit corrections in addition to claiming ERC Send Letter 916C with the following text inserted in two open paragraphs: "We can't process your request to withdraw your Employee Retention Credit (ERC) claim because the claim you're trying to withdraw reported other corrections in addition to claiming ERC." "You should file a new Form [specify form] to make corrections to ERC you previously claimed, along with any other necessary corrections, and pay any amount due." Input a transaction with the following data elements: • Enter the received date of the ERC withdrawal case as the transaction date • Enter Action Code 333 • Enter Remarks: "NSD ERC WD REQ RJCT - CLAIM NOT ERC ONLY" Enter "ERC WD REQ RJCT - CLAIM NOT ERC ONLY" in CII case notes. Close the CII case. 4) The ERC claim withdrawal request includes other corrections in addition to withdrawing the previous ERC claimed Send Letter 916C with the following text inserted in two open paragraphs: "We can't process your request to withdraw your Employee Retention Credit (ERC) claim because you requested other changes to your account information in addition to the ERC claim withdrawal." "You should file a new Form [specify form] to make corrections to ERC you previously claimed, along with any other necessary corrections, and pay any amount due." Input a TC 971 with the following data elements: • Enter the received date of the ERC withdrawal case as the transaction date • Enter Action Code 333 • Enter Remarks: "NSD ERC WD REQ RJCT - WD REQ INC OTHER CHANGES" Enter "ERC WD REQ RJCT - WD REQ INC OTHER CHANGES" in CII case notes. Close the CII case. Caution: See (2) in IRM 21.7.2.7.7.1, ERC Claim Withdrawal Requests — Case Receipts and Case Association Actions, for required consideration and possible release of -A and E- freezes when rejecting or "no-considering" ERC withdrawal requests. Reminder: As indicated in (5) of IRM 21.7.2.7.7.1, ERC Claim Withdrawal Requests — Case Receipts and Case Association Actions, the ERC claim withdrawal case information template must be completed when each accepted or rejected ERC claim withdrawal case is resolved/closed. For eligible ERC claim withdrawal cases (i.e., those not rejected or otherwise addressed per instructions in (6) above) with a returned refund check, continue processing as per guidance in IRM 21.7.2.7.7.4, Processing ERC Claim Withdrawal Requests — Review for Account Conditions Requiring Special Handling. Take the actions in the step list below to record acceptance of processable, eligible ERC claim withdrawal requests with a returned refund check: After unprocessable ERC claim withdrawal requests are rejected as per guidance in IRM 21.7.2.7.7.2, Processing ERC Claim Withdrawal Requests — Review for Unprocessable Conditions; After ineligible ERC claim withdrawal requests are rejected as per guidance in IRM 21.7.2.7.7.3, Processing ERC Claim Withdrawal Requests — Review for Ineligible Submissions or guidance in (6) above; and, After any special account conditions are addressed as per guidance in IRM 21.7.2.7.7.4, Processing ERC Claim Withdrawal Requests — Review for Account Conditions Requiring Special Handling. Send Letter 916C with the following text inserted in two open paragraphs: "We accepted your request to withdraw your Employee Retention Credit (ERC) claim." "As per your request, we applied credit to your tax account for the refund check you returned and completed a correction to your account to reverse the ERC amount we previously recorded based on your Form [specify form] received [enter date]." Input a TC 298 in Blocking Series 20 on the tax account to reverse the previously processed Form 94XX as follows: • Enter .00 for the transaction amount if the previous adjustment did not include non-refundable ERC • Enter the amount of the previous TC 291 for the transaction amount if the previous adjustment included non-refundable ERC • Enter a TC 180 for .00 • Enter the ERC claim withdrawal request received date as the Interest Computation Date (ICD) • Enter CRN 296 and IRN 203, IRN 206, IRN 207, IRN 208 and IRN 209 amounts as appropriate • Enter the following remarks: "ERC WD REQ ACCEPTED - REF RETD" Input a TC 971 with the following data elements: • Enter the received date of the ERC withdrawal case as the transaction date • Enter Action Code 332 • Enter Remarks: "NSD ERC WD REQ ACCEPTED RETD REFUND" Enter "ERC WD REQ ACCEPTED RETD REFUND" in CII case notes. Close the CII case. Reminder: As indicated in (5) of IRM 21.7.2.7.7.1, ERC Claim Withdrawal Requests — Case Receipts and Case Association Actions, the ERC claim withdrawal case information template must be completed when each accepted or rejected ERC claim withdrawal case is resolved/closed.

# Handling for Miscellaneous Incorrect Submissions Received in the ERC Claim Withdrawal Program

21.7.2.7.7.7 (11-01-2023) Handling for Miscellaneous Incorrect Submissions Received in the ERC Claim Withdrawal Program The guidance in this subsection is intended to be applied by AM employees specifically designated to process ERC claim withdrawal program requests (only). This subsection provides guidance on handling various documents incorrectly received via the ERC claim withdrawal program fax line for which CII cases were created and assigned to AM for handling or that were otherwise misidentified as an ERC claim withdrawal request and are in AM inventory. Handle such receipts as per guidance in the table which follows: If And Then 1) The document was initially received as a paper submission Was misidentified as an ERC claim withdrawal request Remove the Priority 2 coding from the CII case. Enter "NOT AN ERC WD REQ" in CII case notes. Reassign or reroute the case as appropriate to ensure proper handling of the issue presented by the taxpayer. 2) The document was incorrectly faxed to the ERC claim withdrawal program fax line Is a Form 94XX or other amended return reporting a tax increase or credit decrease Remove the Priority 2 coding from the CII case. Enter "94XX INCREASE NOT AN ERC WD REQ" in CII case notes. Reassign as appropriate to ensure the Form 94XX is worked as usual. Caution: See (13) in IRM 21.7.2.4.4, Adjusted Employer's Federal Tax Return or Claim for Refund, for required handling if no -A freeze was set on the account. Exception: If the ASED is imminent, take immediate action to ensure an assessment is made before expiration. Note: When closing these cases (after entering the appropriate adjustment), send Letter 4384C with the following text inserted in an open paragraph: "We processed your Form [specify] dated [specify]. However, the fax line used to submit it to the IRS is not to be used for anything other than ERC claim withdrawal requests." 3) The document was incorrectly faxed to the ERC claim withdrawal program fax line Is a Form 94XX or other amended return reporting a tax decrease or credit increase Remove the Priority 2 coding from the CII case. Enter "94XX DECREASE NOT AN ERC WD REQ" in CII case notes. Reject the Form 94XX and send Letter 4384C with the following text inserted in two open paragraphs: "We cannot process your Form [specify] dated [specify] because it was sent to the IRS via a fax line which can only be used to submit ERC claim withdrawal requests." "You should file your Form [specify] at the address specified in the form instructions." Close the CII case. 4) The document was incorrectly faxed to the ERC claim withdrawal program fax line Is correspondence or other documentation not related to an ERC claim withdrawal request Remove the Priority 2 coding from the CII case. Enter "NOT AN ERC WD REQ" in CII case notes. Reject the correspondence or other documentation and send an appropriate "C" letter with the following text inserted in two open paragraphs: "We cannot process your [specify correspondence/document/form] dated [specify] because it was sent to the IRS via a fax line which can only be used to submit ERC claim withdrawal requests." "If you were responding to an IRS notice or letter, you should submit your [specify correspondence/document/form] as instructed in the notice or letter." Close the CII case. Reminder: Correspondence with general information requests about the ERC claim withdrawal program (e.g., how to submit a withdrawal request) are handled per guidance in the table in (3) of IRM 21.7.2.7.7.2, Processing ERC Claim Withdrawal Requests — Review for Unprocessable Conditions. Note: When rejecting a Form 94XX, follow IRM 21.5.3.4.2, Tax Decrease or Credit Increase Processing, and (9) in IRM 21.5.1.5.6, Incomplete CII claims, for the correct input of TC 971-270. Caution: When rejecting documents, extreme care must be taken to ensure that only the material relative to the taxpayer(s) to which the correspondence is addressed is enclosed in the envelope. See IRM 21.3.3.4.24, Breaches of Personally Identifiable Information (PII) Caused by Manual Stuffing Errors, for additional information.

# Additional Case Processing Actions and/or Disallowance Actions for Forms 94XX Meeting ERC-related Filtering Criteria

21.7.2.7.8 (06-26-2024) Additional Case Processing Actions and/or Disallowance Actions for Forms 94XX Meeting ERC-related Filtering Criteria Certain Form 94XX cases reporting Employee Retention Credit (ERC) adjustment requests are being released to be worked by AM after having been analyzed by Research, Applied Analytics & Statistics (RAAS). These cases will be delivered to AM with instructions on how the ERC portion of the claim or adjustment is to be handled (i.e., additional handling required, assessment to be made, claim is allowable, disallowance criteria, or partial disallowance criteria). The subsections which follow provide handling guidance for specific case types identified through operation of RAAS filtering criteria.

# Disallowance Actions for Form 94XX ERC Claims Meeting RAAS Filtering Criteria for No Forms W-2 Filed

21.7.2.7.8.1 (04-28-2025) Disallowance Actions for Form 94XX ERC Claims Meeting RAAS Filtering Criteria for No Forms W-2 Filed Certain Form 94XX cases reflecting Employee Retention Credit (ERC) adjustment requests are being released to be worked by AM after having been analyzed by Research, Applied Analytics & Statistics (RAAS). These cases will be delivered to AM with instructions on how the ERC portion of the claim or adjustment is to be handled (i.e., additional handling required, assessment to be made, claim is allowable, disallowance criteria, or partial disallowance criteria). Caution: RAAS analysis for these cases generally does not include consideration of non-ERC related tax items that may be reported on a Form 94XX, including those with a mix of ERC and non-ERC change items. This subsection provides handling guidance for Forms 94XX reporting ERC amounts which were identified by RAAS as being filed by employers who did not file Forms W-2 as expected. The IRS has determined that Forms 94XX reporting new or increased ERC amounts (only) filed for accounts meeting the specified filtering criteria for missing Forms W-2 will be formally disallowed. Cases identified by RAAS for disallowance handling per guidance in this subsection will be identified to AM as follows: IDRS Number: 0230281088 CII case notation: "RiskedERC-Disallow" and "No W2 filed" Note: CII case notes for these cases will also indicate the EIN and tax period that was identified during data transcription for RAAS analysis. This information is a factor in processing validation described in (5) below. Note: CII case notes for these cases may indicate multiple filtering criteria as having been met. If so, the first case notation is deemed the primary indicator and controls handling. Additional filtering notes are deemed secondary indicators and are potentially a factor in handling as discussed in the last row of the table in (6) below. All other Form 94XX processing guidelines and requirements also apply to Forms 94XX reporting changes to ERC that have been identified to AM by RAAS as having been filed for accounts meeting the specified filtering criteria for missing Forms W-2. Forms 94XX so identified by RAAS have generally not been reviewed for completeness (e.g., presence of signature, certification block(s) marked, etc.) and processability (e.g., prior figures match, mathematically correct, etc.). As such, all preliminary reviews to ensure the Form 94XX is complete for processing must be conducted before taking action to disallow the Form 94XX on the basis of it having failed filtering analysis for no Forms W-2 filed. As usual: Review the Form 94XX for completeness and processability (e.g., for a Form 941-X claim, see (2) and (3) in IRM 21.7.2.4.5.6.2, Form 941-X Tax Decrease — Claim). Perfect or reject any unprocessable Forms 94XX as appropriate. Exception: If there is no posted original return, do not follow guidance in IRM 21.7.2.4.4.6, Adjusted Employer's Tax Return or Claim for Refund Return Filed — No TC 150 Posted unless directed to do so per instructions in (7) below and do not follow procedures in IRM 21.7.2.7.8.4, Form 94XX ERC Claims Meeting RAAS Filtering Criteria for Missing Original Returns (No TC 150). Continue processing as per guidance in this paragraph and then follow guidance in (7) below instead of (6). Caution: The missing TC 150 condition will generally be identified by RAAS in the CII case notes. However, AM employees are responsible for reviewing the account for the presence of an original return when processing the released Form 941-X regardless of whether such a note is present and for applying (6) or (7) guidance below as appropriate. Review for account conditions that require special handling (i.e., open CAT-A or AIMS status, RICS/RIVO/IDT, etc.) which must be addressed prior to taking further action on the Form 94XX. Suspend, route, or otherwise address the account condition encountered as appropriate. In addition, if a Form 94X-X is received that is a duplicate of a previously processed ERC claim, do not rework the original claim based on any subsequent RAAS analysis. In addition, compare the EIN and tax period entered on the Form 941-X to the EIN and tax period specified in CII case notes releasing the case to be worked. Caution: If the tax period or EIN shown on the form do not match CII case controls or the tax period or EIN specified in CII case notes releasing the case to be worked do not match CII case controls, the case must be returned to RAAS for additional analysis. Take the following actions to refer such a case for further RAAS consideration: 1) Correct case controls as necessary and appropriate. 2) Enter/update the case with Priority Code 6. 3) Enter the appropriate case note as follows: "EIN mismatch" or "Tax Period mismatch" or "EIN and Tax Period mismatch" 4) Reassign the case to IDRS number 0230281416. Note: Procedures found in (6) below do not apply to Form 94XX cases rejected or "no-considered" as the result of following guidance in (5) above and such cases do not require further RAAS consideration. Note: If the Form 94XX does not report a new or increased ERC amount, enter "No W-2 filter does not apply" in CII case notes. Also, reassign the case and correct any case Priority Code as per guidance in (11) of IRM 21.7.2.7, COVID-19 Related Employment Tax Relief. Reminder: The ASED has expired on Form 94XX for 2020 and 2021 except for certain ERC credits for 2021. See IRM 25.6.1.9.5.10, COVID-19 Related Employment Tax Credits for information regarding 2021 tax periods with extended ASED. The suspended inventory was reviewed for statute imminent 2020 and 2021 account situations prior to normal ASED expirations of April 15, 2024 and April 15, 2025. There is still heightened risk of encountering statute barred assessments in this work. Consider guidance in (2) of IRM 25.6.1.13.2.6, Routing and Controlling Form 9355, if such cases are identified. For accounts with a posted TC 150 original return: After applying the guidance in (5) above, continue handling processable Forms 94XX identified to AM by RAAS as having been filed for accounts meeting the specified filtering criteria for missing Forms W-2 as follows: If And Then 1) The Form 94XX reports only changes to ERC Disallow the claim: Complete a TC 290 .00 adjustment in Blocking Series 98 or 99 as appropriate (see (1) in IRM 21.5.3.4.6.1,Disallowance and Partial Disallowance Procedures) to record a full disallowance of the claim. Send Letter 105C as per instructions in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures and insert the following text in two open paragraphs: "Employee Retention Credit (ERC) is only available for eligible employers that paid qualified wages to employees between March 13, 2020, and December 31, 2021. Our records show that your business did not file Forms W-2, Wage and Tax Statement, for tax years ended December 31, 2020, or December 31, 2021, reporting the payment of any wages to employees." "For more information on Employee Retention Credit (ERC) eligibility requirements and how to respond to this letter if you disagree, please see IRS.gov/erc105c." 2) The Form 94XX reports other tax or credit changes in addition to ERC changes The other changes do not meet CAT-A criteria when considered separately from the ERC changes reported Partially disallow the claim: Complete a TC 29X adjustment in Blocking Series 18 or 00 as appropriate (see (2) in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures) with appropriate IRNs/CRNs to record the allowable portion of the correction requested on the Form 94XX. Send Letter 106C as per instructions in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures and insert the following text in two open paragraphs: "Employee Retention Credit (ERC) is only available for eligible employers that paid qualified wages to employees between March 13, 2020, and December 31, 2021. Our records show that your business did not file Forms W-2, Wage and Tax Statement, for tax years ended December 31, 2020, or December 31, 2021, reporting the payment of any wages to employees." "For more information on Employee Retention Credit (ERC) eligibility requirements and how to respond to this letter if you disagree, please see IRS.gov/erc106c." 3) The Form 94XX reports other tax or credit changes in addition to ERC changes The other changes do meet CAT-A criteria when considered separately from the ERC changes reported Complete the CAT-A referral as usual. Take action to complete processing of the Form 94XX based on instructions received from Exam Classification when the case is returned including (as appropriate): • Completing an adjustment as per guidance in other rows of this table to record a full or partial disallowance. • Issuing an appropriate 105C or 106C full/partial disallowance letter with text as per guidance in other rows of this table or as instructed by Exam Classification. 4) The CII case notes indicate multiple RAAS disallowance filters were met Each failed filter must be considered: As appropriate, consider handling guidance provided in this subsection as well as any applicable guidance in other subsections based on the identified failed filters. If the Form 94XX is deemed processable after all applicable guidance has been considered (i.e., did not meet rejection or "no consideration" criteria), then take action as appropriate to fully or partially disallow the Form 94XX. When issuing the appropriate 105C or 106C disallowance letter, insert text into the letter as described in the previous rows of this table as well as any text provided in other subsections applicable to the other failed filter(s). Note: If a secondary failed filter notation "Establishment Date" is present, insert the following text in three open paragraphs: "Employee Retention Credit (ERC) is only available for eligible employers that paid qualified wages to employees between March 13, 2020, and December 31, 2021." "Our records show that your business was established after December 31, 2021. Our records also show that your business did not file Forms W-2, Wage and Tax Statement, for tax years ended December 31, 2020, or December 31, 2021, reporting the payment of any wages to employees." "For more information on Employee Retention Credit (ERC) eligibility requirements and how to respond to this letter if you disagree, please see [insert appropriate friendly URL IRS.gov/erc105c or IRS.gov/erc106c, as appropriate]." For accounts with no posted TC 150 original return: After applying the guidance in (5) above, continue handling otherwise processable Forms 94XX identified to AM by RAAS as having been filed for accounts meeting the specified filtering criteria for missing Forms W-2 as follows: If Then 1) The Form 94XX reports only changes to ERC Disallow the claim: Input a TC 971 AC 002 to release the E- freeze if a TC 971 AC 010 was previously input. Send Letter 105C as per instructions in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures and insert the following text in two open paragraphs: "Employee Retention Credit (ERC) is only available for eligible employers that paid qualified wages to employees between March 13, 2020, and December 31, 2021. Our records show that your business did not file Forms W-2, Wage and Tax Statement, for tax years ended December 31, 2020, or December 31, 2021, reporting the payment of any wages to employees." "For more information on Employee Retention Credit (ERC) eligibility requirements and how to respond to this letter if you disagree, please see IRS.gov/erc105c." 2) The Form 94XX reports other tax or credit changes in addition to ERC changes Follow guidance in IRM 21.7.2.4.4.6, Adjusted Employer's Tax Return or Claim for Refund Return Filed — No TC 150 Posted If an original return is secured, complete processing of the Form 941-X as per guidance in (6) above after the original return is posted. 3) The CII case notes indicate multiple RAAS disallowance filters were met Each failed filter must be considered: As appropriate, consider handling guidance provided in this subsection as well as any applicable guidance in other subsections based on the identified failed filters. If the Form 94XX is deemed processable after all applicable guidance has been considered (i.e., did not meet rejection or "no consideration" criteria), then take action as appropriate to fully or partially disallow the Form 94XX. When issuing the appropriate 105C or 106C disallowance letter, insert text into the letter as described in the previous rows of this table as well as any text provided in other subsections applicable to the other failed filter(s). Note: If a secondary failed filter notation "Establishment Date" is present, insert the following text in three open paragraphs: "Employee Retention Credit (ERC) is only available for eligible employers that paid qualified wages to employees between March 13, 2020, and December 31, 2021." "Our records show that your business was established after December 31, 2021. Our records also show that your business did not file Forms W-2, Wage and Tax Statement, for tax years ended December 31, 2020, or December 31, 2021, reporting the payment of any wages to employees." "For more information on Employee Retention Credit (ERC) eligibility requirements and how to respond to this letter if you disagree, please see [insert friendly URL IRS.gov/erc105c or IRS.gov/erc106c, as appropriate]."

# Disallowance Actions for Form 94XX ERC Claims Meeting RAAS Filtering Criteria for Entity Establishment Dates

21.7.2.7.8.2 (04-28-2025) Disallowance Actions for Form 94XX ERC Claims Meeting RAAS Filtering Criteria for Entity Establishment Dates Certain Form 94XX cases reflecting Employee Retention Credit (ERC) adjustment requests are being released to be worked by AM after having been analyzed by Research, Applied Analytics & Statistics (RAAS). These cases will be delivered to AM with instructions on how the ERC portion of the claim or adjustment is to be handled (i.e., additional handling required, assessment to be made, claim is allowable, disallowance criteria, or partial disallowance criteria). Caution: RAAS analysis for these cases generally does not include consideration of non-ERC related tax items that may be reported on a Form 94XX, including those with a mix of ERC and non-ERC change items. This subsection provides handling guidance for Forms 94XX reporting ERC amounts which were identified by RAAS as being filed by employers whose entity establishment date does not support their having been eligible for ERC. The IRS has determined that Forms 94XX reporting new or increased ERC amounts (only) filed for accounts meeting the specified filtering criteria for entity establishment dates will be formally disallowed. Cases identified by RAAS for disallowance handling per guidance in this subsection will be identified to AM as follows: IDRS Number: 0230281088 CII case notation: "RiskedERC-Disallow" and "Establishment Date" Note: CII case notes for these cases will also indicate the EIN and tax period that was identified during data transcription for RAAS analysis. This information is a factor in processing validation described in (5) below. Note: CII case notes for these cases may indicate multiple filtering criteria as having been met. If so, the first case notation is deemed the primary indicator and controls handling. Additional filtering notes are deemed secondary indicators and are potentially a factor in handling as discussed in the last row of the table in (6) below. All other Form 94XX processing guidelines and requirements also apply to Forms 94XX reporting changes to ERC that have been identified to AM by RAAS as having been filed for accounts meeting the specified filtering criteria for entity establishment dates. Forms 94XX so identified by RAAS have generally not been reviewed for completeness (e.g., presence of signature, certification block(s) marked, etc.) and processability (e.g., prior figures match, mathematically correct, etc.). As such, all preliminary reviews to ensure the Form 94XX is complete for processing must be conducted before taking action to disallow the Form 94XX on the basis of it having failed filtering analysis for entity establishment date. As usual: Review the Form 94XX for completeness and processability (e.g., for a Form 941-X claim, see (2) and (3) in IRM 21.7.2.4.5.6.2, Form 941-X Tax Decrease — Claim). Perfect or reject any unprocessable Forms 94XX as appropriate. Exception: If there is no posted original return, do not follow guidance in IRM 21.7.2.4.4.6, Adjusted Employer's Tax Return or Claim for Refund Return Filed — No TC 150 Posted unless directed to do so per instructions in (7) below and do not follow procedures in IRM 21.7.2.7.8.4, Form 94XX ERC Claims Meeting RAAS Filtering Criteria for Missing Original Returns (No TC 150). Continue processing as per guidance in this paragraph and then follow guidance in (7) below instead of (6). Caution: The missing TC 150 condition will generally be identified by RAAS in the CII case notes. However, AM employees are responsible for reviewing the account for the presence of an original return when processing the released Form 941-X regardless of whether such a note is present and for applying (6) or (7) guidance below as appropriate. Review for account conditions that require special handling (i.e., open CAT-A or AIMS status, RICS/RIVO/IDT, etc.) which must be addressed prior to taking further action on the Form 94XX. Suspend, route, or otherwise address the account condition encountered as appropriate. In addition, if a Form 94X-X is received that is a duplicate of a previously processed ERC claim, do not rework the original claim based on any subsequent RAAS analysis. In addition, compare the EIN and tax period entered on the Form 941-X to the EIN and tax period specified in CII case notes releasing the case to be worked. Caution: If the tax period or EIN shown on the form do not match CII case controls or the tax period or EIN specified in CII case notes releasing the case to be worked do not match CII case controls, the case must be returned to RAAS for additional analysis. Take the following actions to refer such a case for further RAAS consideration: 1) Correct case controls as necessary and appropriate. 2) Enter/update the case with Priority Code 6. 3) Enter the appropriate case note as follows: "EIN mismatch" or "Tax Period mismatch" or "EIN and Tax Period mismatch" 4) Reassign the case to IDRS number 0230281416. Note: Procedures found in (6) below do not apply to Form 94XX cases rejected or "no-considered" as the result of following guidance in (5) above and such cases do not require further RAAS consideration. Note: If the Form 94XX does not report a new or increased ERC amount, enter "Establishment date filter does not apply" in CII case notes. Also, reassign the case and correct any case Priority Code as per guidance in (11) of IRM 21.7.2.7, COVID-19 Related Employment Tax Relief. Reminder: The ASED has expired on Form 94XX for 2020 and 2021 except for certain ERC credits for 2021. See IRM 25.6.1.9.5.10, COVID-19 Related Employment Tax Credits for information regarding 2021 tax periods with extended ASED. The suspended inventory was reviewed for statute imminent 2020 and 2021 account situations prior to normal ASED expirations of April 15, 2024 and April 15, 2025. There is still heightened risk of encountering statute barred assessments in this work. Consider guidance in (2) of IRM 25.6.1.13.2.6, Routing and Controlling Form 9355, if such cases are identified. For accounts with a posted TC 150 original return: After applying the guidance in (5) above, continue handling processable Forms 94XX identified to AM by RAAS as having been filed for accounts meeting the specified filtering criteria for entity establishment dates as follows: If And Then 1) The Form 94XX reports only changes to ERC Disallow the claim: Complete a TC 290 .00 adjustment in Blocking Series 98 or 99 as appropriate (see (1) in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures) to record a full disallowance of the claim. Send Letter 105C as per instructions in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures and insert the following text in two open paragraphs: "Employee Retention Credit (ERC) is only available for eligible employers that paid qualified wages to employees between March 13, 2020, and December 31, 2021. Our records show that your business was established after December 31, 2021." "For more information on Employee Retention Credit (ERC) eligibility requirements and how to respond to this letter if you disagree, please see IRS.gov/erc105c." 2) The Form 94XX reports other tax or credit changes in addition to ERC changes The other changes do not meet CAT-A criteria when considered separately from the ERC changes reported Partially disallow the claim: Complete a TC 29X adjustment in Blocking Series 18 or 00 as appropriate (see (2) in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures) with appropriate IRNs/CRNs to record the allowable portion of the correction requested on the Form 94XX. Send Letter 106C as per instructions in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures and insert the following text in two open paragraphs: "Employee Retention Credit (ERC) is only available for eligible employers that paid qualified wages to employees between March 13, 2020, and December 31, 2021. Our records show that your business was established after December 31, 2021." "For more information on Employee Retention Credit (ERC) eligibility requirements and how to respond to this letter if you disagree, please see IRS.gov/erc106c." 3) The Form 94XX reports other tax or credit changes in addition to ERC changes The other changes do meet CAT-A criteria when considered separately from the ERC changes reported Complete the CAT-A referral as usual. Take action to complete processing of the Form 94XX based on instructions received from Exam Classification when the case is returned including (as appropriate): • Completing an adjustment as per guidance in other rows of this table to record a full or partial disallowance. • Issuing an appropriate 105C or 106C full/partial disallowance letter with text as per guidance in other rows of this table or as instructed by Exam Classification. 4) The CII case notes indicate multiple RAAS disallowance filters were met Each failed filter must be considered: As appropriate, consider handling guidance provided in this subsection as well as any applicable guidance in other subsections based on the identified failed filters. If the Form 94XX is deemed processable after all applicable guidance has been considered (i.e., did not meet rejection or "no consideration" criteria), then take action as appropriate to fully or partially disallow the Form 94XX. When issuing the appropriate 105C or 106C disallowance letter, insert text into the letter as described in the previous rows of this table as well as any text provided in other subsections applicable to the other failed filter(s). Note: If a secondary failed filter notation "No W2 filed" is present, insert the following text in three open paragraphs: "Employee Retention Credit (ERC) is only available for eligible employers that paid qualified wages to employees between March 13, 2020, and December 31, 2021." "Our records show that your business was established after December 31, 2021. Our records also show that your business did not file Forms W-2, Wage and Tax Statement, for tax years ended December 31, 2020, or December 31, 2021, reporting the payment of any wages to employees." "For more information on Employee Retention Credit (ERC) eligibility requirements and how to respond to this letter if you disagree, please see [insert friendly URL IRS.gov/erc105c or IRS.gov/erc106c, as appropriate]." For accounts with no posted TC 150 original return: After applying the guidance in (5) above, continue handling otherwise processable Forms 94XX identified to AM by RAAS as having been filed for accounts meeting the specified filtering criteria for entity establishment dates as follows: If Then 1) The Form 94XX reports only changes to ERC Disallow the claim: Input a TC 971 AC 002 to release the E- freeze if a TC 971 AC 010 was previously input. Send Letter 105C as per instructions in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures and insert the following text in two open paragraphs: "Employee Retention Credit (ERC) is only available for eligible employers that paid qualified wages to employees between March 13, 2020, and December 31, 2021. Our records show that your business was established after December 31, 2021." "For more information on Employee Retention Credit (ERC) eligibility requirements and how to respond to this letter if you disagree, please see IRS.gov/erc105c." 2) The Form 94XX reports other tax or credit changes in addition to ERC changes Follow guidance in IRM 21.7.2.4.4.6, Adjusted Employer's Tax Return or Claim for Refund Return Filed — No TC 150 Posted If an original return is secured, complete processing of the Form 941-X as per guidance in (6) above after the original return is posted. 3) The CII case notes indicate multiple RAAS disallowance filters were met Each failed filter must be considered: As appropriate, consider handling guidance provided in this subsection as well as any applicable guidance in other subsections based on the identified failed filters. If the Form 94XX is deemed processable after all applicable guidance has been considered (i.e., did not meet rejection or "no consideration" criteria), then take action as appropriate to fully or partially disallow the Form 94XX. When issuing the appropriate 105C or 106C disallowance letter, insert text into the letter as described in the previous rows of this table as well as any text provided in other subsections applicable to the other failed filter(s). Note: If a secondary failed filter notation "No W2 filed" is present, insert the following text in three open paragraphs: "Employee Retention Credit (ERC) is only available for eligible employers that paid qualified wages to employees between March 13, 2020, and December 31, 2021." "Our records show that your business was established after December 31, 2021. Our records also show that your business did not file Forms W-2, Wage and Tax Statement, for tax years ended December 31, 2020, or December 31, 2021, reporting the payment of any wages to employees." "For more information on Employee Retention Credit (ERC) eligibility requirements and how to respond to this letter if you disagree, please see [insert friendly URL IRS.gov/erc105c or IRS.gov/erc106c, as appropriate]."

# Handling for Form 94XX ERC Claims Meeting RAAS Filtering Criteria for Fabricated Entities

21.7.2.7.8.3 (04-28-2025) Handling for Form 94XX ERC Claims Meeting RAAS Filtering Criteria for Fabricated Entities Certain Form 94XX cases reporting Employee Retention Credit (ERC) adjustment requests are being released to be worked by AM after having been analyzed by Research, Applied Analytics & Statistics (RAAS). These cases will be delivered to AM with instructions on how the ERC portion of the claim or adjustment is to be handled (i.e., additional handling required, assessment to be made, claim is allowable, disallowance criteria, or partial disallowance criteria). Caution: RAAS analysis for these cases generally does not include consideration of non-ERC related tax items that may be reported on a Form 94XX, including those with a mix of ERC and non-ERC change items. This subsection provides handling guidance for Forms 94XX reporting ERC amounts which were identified by RAAS as having been potentially filed by fabricated entities. Cases identified by RAAS for additional handling per guidance in this subsection will be identified to AM as follows: IDRS Number: 0230281088 CII case notation: "RiskedERC-Fabricated" Note: CII case notes for these cases will also indicate the EIN and tax period that was identified during data transcription for RAAS analysis. This information is a factor in processing validation described in (5) below. These cases generally require additional processing actions by AM before the Forms 94XX reporting ERC amounts can be fully analyzed by RAAS. This handling may include: Making contacts with or referrals to other IRS operations to confirm fabricated entity determinations and handling for the Form 94XX. Returning some cases to RAAS for additional analysis if the Form 94XX is deemed processable (i.e., was determined to have not been filed by a fabricated entity). All other Form 94XX processing guidelines and requirements also apply to Forms 94XX reporting changes to ERC that are returned by RAAS to AM for additional processing actions, including those returned to AM to address possible fabricated entity issues. Cases returned for additional handling actions by RAAS have generally not been reviewed for completeness (e.g., presence of signature, certification block(s) marked, etc.) and processability (e.g., prior figures match, mathematically correct, etc.). As such, all preliminary reviews to ensure the Form 94XX is complete for processing must be conducted before taking additional actions to address the potentially fabricated entity issue identified by RAAS. As usual: Review the Form 94XX for completeness and processability (e.g., for a Form 941-X claim, see (2) and (3) in IRM 21.7.2.4.5.6.2, Form 941-X Tax Decrease — Claim). Perfect or reject any unprocessable Forms 94XX as appropriate. Review for account conditions that require special handling (i.e., open CAT-A or AIMS status, etc.) which must be addressed prior to taking further action on the Form 94XX. Suspend, route, or otherwise address the account condition encountered as appropriate. If a Form 94X-X is received that is a duplicate of a previously processed ERC claim, do not rework the original claim based on any subsequent RAAS analysis. In addition, compare the EIN and tax period entered on the Form 941-X to the EIN and tax period specified in CII case notes releasing the case to be worked. Caution: If the tax period or EIN shown on the form do not match CII case controls or the tax period or EIN specified in CII case notes releasing the case to be worked do not match CII case controls, the case must be returned to RAAS for additional analysis. Take the following actions to refer such a case for further RAAS consideration: 1) Correct case controls as necessary and appropriate. 2) Enter/update the case with Priority Code 6. 3) Enter the appropriate case note as follows: "EIN mismatch" or "Tax Period mismatch" or "EIN and Tax Period mismatch" 4) Reassign the case to IDRS number 0230281416. Reminder: The ASED has expired on Form 94XX for 2020 and 2021 except for certain ERC credits for 2021. See IRM 25.6.1.9.5.10, COVID-19 Related Employment Tax Credits for information regarding 2021 tax periods with extended ASED. The suspended inventory was reviewed for statute imminent 2020 and 2021 account situations prior to normal ASED expirations of April 15, 2024 and April 15, 2025. There is still heightened risk of encountering statute barred assessments in this work. Consider guidance in (2) of IRM 25.6.1.13.2.6, Routing and Controlling Form 9355, if such cases are identified. After applying the guidance in (5) above, continue to address otherwise processable Forms 94XX identified to AM by RAAS as possible fabricated entity issues as appropriate per guidance in IRM 21.7.2.4.4.13, Forms 94XX with Return Integrity and Compliance Services (RICS), Return Integrity Verification Operations (RIVO), or Identity Theft (IDT) Involvement, and other IRM guidance linked therein. Caution: After following the guidance above, if instructions are received that the Form 94XX should be allowed (e.g., a determination was made that the entity was not fabricated), the case must be returned to RAAS for additional analysis before an adjustment to the tax account can be made. Take the following actions to refer such a case for further RAAS consideration: 1) Enter/update the case with Priority Code 6. 2) Enter an appropriate case note to document the reason the case is being referred for additional RAAS analysis (e.g., if the EIN was determined to have not been fabricated, enter "EIN not fabricated" ). 3) Reassign the case to IDRS number 0230281416. Note: Form 94XX cases rejected or "no-considered" as the result of following guidance in (5) above or after following guidance in IRM 21.7.2.4.4.13, Forms 94XX with Return Integrity and Compliance Services (RICS), Return Integrity Verification Operations (RIVO), or Identity Theft (IDT) Involvement, and other linked IRM guidance do not require further RAAS consideration. Caution: If a Form 94X-X is received that is a duplicate of a previously processed ERC claim, do not rework the original claim based on any subsequent RAAS analysis.

# Form 94XX ERC Claims Meeting RAAS Filtering Criteria for Missing Original Returns (No TC 150)

21.7.2.7.8.4 (04-28-2025) Form 94XX ERC Claims Meeting RAAS Filtering Criteria for Missing Original Returns (No TC 150) Certain Form 94XX cases reporting Employee Retention Credit (ERC) adjustment requests are being released to be worked by AM after having been analyzed by Research, Applied Analytics & Statistics (RAAS). These cases will be delivered to AM with instructions on how the ERC portion of the claim or adjustment is to be handled (i.e., additional handling required, assessment to be made, claim is allowable, disallowance criteria, or partial disallowance criteria). Caution: RAAS analysis for these cases generally does not include consideration of non-ERC related tax items that may be reported on a Form 94XX, including those with a mix of ERC and non-ERC change items. This subsection provides handling guidance for Forms 94XX reporting ERC amounts which were identified by RAAS as having been filed for tax accounts to which no original employment tax return has been processed and no other filtering criteria was met. Note: Cases where other filtering criteria were met and there is no TC 150 original return posted are handled per guidance specific to that filtering criteria (e.g., a case meeting filtering criteria for ineligible government entities that also has no posted TC 150 is worked per guidance in IRM 21.7.2.7.8.6, Disallowance of Form 94XX ERC Claims Meeting RAAS Filtering Criteria for Ineligible Government Entities). Cases identified by RAAS for additional handling per guidance in this subsection will be identified to AM as follows: IDRS Number: 0230281088 CII case notation: "RiskedERC-No941" Note: CII case notes for these cases will also indicate the EIN and tax period that was identified during data transcription for RAAS analysis. This information is a factor in processing validation described in (5) below. These cases generally require additional processing actions by AM before the Forms 94XX reporting ERC amounts can be fully analyzed by RAAS. This handling may include: Rejection of some Forms 94XX. In some instances, contacting the taxpayer to secure an original tax return. Returning some cases to RAAS for additional analysis after an original return is secured and processed. All other Form 94XX processing guidelines and requirements also apply to Forms 94XX reporting changes to ERC that are returned by RAAS to AM for additional processing actions, including those returned to AM to address missing original returns. Cases returned for additional handling actions by RAAS have generally not been reviewed for completeness (e.g., presence of signature, certification block(s) marked, etc.) and processability (e.g., prior figures match, mathematically correct, etc.). As such, all preliminary reviews to ensure the Form 94XX is complete for processing must be conducted before taking additional actions to address the missing original return issue identified by RAAS. As usual: Review the Form 94XX for completeness and processability (e.g., for a Form 941-X claim, see (2) and (3) in IRM 21.7.2.4.5.6.2, Form 941-X Tax Decrease — Claim). Perfect or reject any unprocessable Forms 94XX as appropriate. Review for account conditions that require special handling (i.e., open CAT-A or AIMS status, RICS/RIVO/IDT, etc.) which must be addressed prior to taking further action on the Form 94XX. Suspend, route, or otherwise address the account condition encountered as appropriate. In addition, if a Form 94X-X is received that is a duplicate of a previously processed ERC claim, do not rework the original claim based on any subsequent RAAS analysis. In addition, compare the EIN and tax period entered on the Form 941-X to the EIN and tax period specified in CII case notes releasing the case to be worked. Caution: If the tax period or EIN shown on the form do not match CII case controls or the tax period or EIN specified in CII case notes releasing the case to be worked do not match CII case controls, the case must be returned to RAAS for additional analysis. Take the following actions to refer such a case for further RAAS consideration: 1) Correct case controls as necessary and appropriate. 2) Enter/update the case with Priority Code 6. 3) Enter the appropriate case note as follows: "EIN mismatch" or "Tax Period mismatch" or "EIN and Tax Period mismatch" 4) Reassign the case to IDRS number 0230281416. Note: Some cases identified to AM for action by RAAS in this workstream may be the result of the original return being held for review by RICS/RIVO/IDT. See IRM 21.7.2.4.4.13, Forms 94XX with Return Integrity and Compliance Services (RICS), Return Integrity Verification Operations (RIVO), or Identity Theft (IDT) Involvement, for information on researching those account conditions. Reminder: The ASED has expired on Form 94XX for 2020 and 2021 except for certain ERC credits for 2021. See IRM 25.6.1.9.5.10. COVID-19 Related Employment Tax Credits for information on the 2021 tax periods with extended ASED. The suspended inventory was reviewed for statute imminent 2020 and 2021 account situations prior to normal ASED expirations of April 15, 2024 and April 15, 2025. There is still heightened risk of encountering statute barred assessments in this work. Consider guidance in (2) of IRM 25.6.1.13.2.6, Routing and Controlling Form 9355, if such cases are identified. After applying the guidance in (5) above, continue to address otherwise processable missing original return issues identified to AM by RAAS as per guidance in IRM 21.7.2.4.4.6, Adjusted Employer's Tax Return or Claim for Refund Return Filed — No TC 150 Posted. Caution: After following the guidance above, if an original return was located/secured and processed, the case must be returned to RAAS for additional analysis after the return is posted to the account and before an adjustment to the tax account can be made. Take the following actions to refer such a case for further RAAS consideration: 1) Enter/update the case with Priority Code 6. 2) Enter the following case note: "TC 150 posted" . 3) Reassign the case to IDRS number 0230281416. Note: Form 94XX cases rejected or "no-considered" as the result of following guidance in (5) above or as per guidance in IRM 21.7.2.4.4.6, Adjusted Employer's Tax Return or Claim for Refund Return Filed — No TC 150 Posted, do not require further RAAS consideration.

# Disallowance of Form 94XX ERC Claims Meeting RAAS Filtering Criteria for Certain Patterns of Non-Payment/Non-Depositing

21.7.2.7.8.5 (04-28-2025) Disallowance of Form 94XX ERC Claims Meeting RAAS Filtering Criteria for Certain Patterns of Non-Payment/Non-Depositing Certain Form 94XX cases reporting Employee Retention Credit (ERC) adjustment requests are being released to be worked by AM after having been analyzed by Research, Applied Analytics & Statistics (RAAS). These cases will be delivered to AM with instructions on how the ERC portion of the claim or adjustment is to be handled (i.e., additional handling required, assessment to be made, claim is allowable, disallowance criteria, or partial disallowance criteria). Caution: RAAS analysis for these cases generally does not include consideration of non-ERC related tax items that may be reported on a Form 94XX, including those with a mix of ERC and non-ERC change items. This subsection provides handling guidance for Forms 94XX reporting ERC amounts which were identified by RAAS as having been filed by entities with payment/depositing patterns indicative of a lack of employment activity and/or business activity. The IRS has determined that Forms 94XX reporting new or increased ERC amounts (only) filed for accounts identified by RAAS as meeting filtering criteria for non-payment/non-depositing patterns will be formally disallowed. Cases identified by RAAS for disallowance handling per guidance in this subsection will be identified to AM as follows: IDRS Number: 0230281088 CII case notation: "RiskedERC-Disallow" and "No payments" Note: CII case notes for these cases will also indicate the EIN and tax period that was identified during data transcription for RAAS analysis. This information is a factor in processing validation described in (5) below. Note: CII case notes for these cases may indicate multiple filtering criteria as having been met. If so, the first case notation is deemed the primary indicator and controls handling. Additional filtering notes are deemed secondary indicators and are potentially a factor in handling as discussed in the last row of the table in (6) below. All other Form 94XX processing guidelines and requirements also apply to Forms 94XX reporting changes to ERC that have been identified to AM by RAAS as having been filed by an entity with payment/depositing patterns indicative of a lack of employment activity and/or business activity. Forms 94XX so identified by RAAS have generally not been reviewed for completeness (e.g., presence of signature, certification block(s) marked, etc.) and processability (e.g., prior figures match, mathematically correct, etc.). As such, all preliminary reviews to ensure the Form 94XX is complete for processing must be conducted before taking action to disallow the Form 94XX on the basis of it having been filed an entity with payment/depositing patterns indicative of a lack of employment activity and/or business activity. As usual: Review the Form 94XX for completeness and processability (e.g., for a Form 941-X claim, see (2) and (3) in IRM 21.7.2.4.5.6.2, Form 941-X Tax Decrease — Claim). Perfect or reject any unprocessable Forms 94XX as appropriate. Exception: If there is no posted original return, do not follow guidance in IRM 21.7.2.4.4.6, Adjusted Employer's Tax Return or Claim for Refund Return Filed — No TC 150 Posted unless directed to do so per instructions in (7) below and do not follow procedures in IRM 21.7.2.7.8.4, Form 94XX ERC Claims Meeting RAAS Filtering Criteria for Missing Original Returns (No TC 150). Continue processing as per guidance in this paragraph and then follow guidance in (7) below instead of (6). Caution: The missing TC 150 condition will generally be identified by RAAS in the CII case notes. However, AM employees are responsible for reviewing the account for the presence of an original return when processing the released Form 941-X regardless of whether such a note is present and for applying (6) or (7) guidance below as appropriate. Review for account conditions that require special handling (i.e., open CAT-A or AIMS status, RICS/RIVO/IDT, etc.) which must be addressed prior to taking further action on the Form 94XX. Suspend, route, or otherwise address the account condition encountered as appropriate. In addition, compare the EIN and tax period entered on the Form 941-X to the EIN and tax period specified in CII case notes releasing the case to be worked. Caution: If the tax period or EIN shown on the form do not match CII case controls or the tax period or EIN specified in CII case notes releasing the case to be worked do not match CII case controls, the case must be returned to RAAS for additional analysis. Take the following actions to refer such a case for further RAAS consideration: 1) Correct case controls as necessary and appropriate. 2) Enter/update the case with Priority Code 6. 3) Enter the appropriate case note as follows: "EIN mismatch" or "Tax Period mismatch" or "EIN and Tax Period mismatch" 4) Reassign the case to IDRS number 0230281416. Note: Procedures found in (6) below do not apply to Form 94XX cases rejected or "no-considered" as the result of following guidance in (5) above and such cases do not require further RAAS consideration. Reminder: The ASED has expired on Form 94XX for 2020 and 2021 except for certain ERC credits for 2021. See IRM 25.6.1.9.5.10. COVID-19 Related Employment Tax Credits. The suspended inventory was reviewed for statute imminent 2020 and 2021 account situations prior to normal ASED expirations of April 15, 2024 and April 15, 2025. There is still heightened risk of encountering statute barred assessments in this work. Consider guidance in (2) of IRM 25.6.1.13.2.6, Routing and Controlling Form 9355, if such cases are identified. Caution: If a Form 94X-X is received that is a duplicate of a previously processed ERC claim, do not rework the original claim based on any subsequent RAAS analysis. For accounts with a posted TC 150 original return: After applying the guidance in (5) above, continue handling processable Forms 94XX identified to AM by RAAS as having been filed an entity with payment/depositing patterns indicative of a lack of employment activity and/or business activity as follows: If And Then 1) The Form 94XX reports only changes to ERC Disallow the claim: Complete a TC 290 .00 adjustment in Blocking Series 98 or 99 as appropriate (see (1) in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures) to record a full disallowance of the claim. Send Letter 105C as per instructions in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures and insert the following text in two open paragraphs: "Based on our records, we have determined you are not an Eligible Employer or did not pay qualified wages for purposes of the Employee Retention Credit (ERC). ERC is a credit only against the employer's portion of social security or Medicare tax. We have no record you made employment tax deposits required for employers operating a trade or business from 2019 through 2022." "For more information on Employee Retention Credit (ERC) eligibility requirements and how to respond to this letter if you disagree, please see IRS.gov/erc105c." 2) The Form 94XX reports other tax or credit changes in addition to ERC changes The other changes do not meet CAT-A criteria when considered separately from the ERC changes reported Partially disallow the claim: Complete a TC 29X adjustment in Blocking Series 18 or 00 as appropriate (see (2) in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures) with appropriate IRNs/CRNs to record the allowable portion of the correction requested on the Form 94XX. Send Letter 106C as per instructions in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures and insert the following text in three open paragraphs: " we have determined you are not an Eligible Employer or did not pay qualified wages for purposes of the Employee Retention Credit (ERC)." "ERC is a credit only against the employer's portion of social security or Medicare tax. We have no record you made employment tax deposits required for employers operating a trade or business from 2019 through 2022." "we recorded the other changes you reported. For more information on Employee Retention Credit (ERC) eligibility requirements and how to respond to this letter if you disagree, please see IRS.gov/erc106c." 3) The Form 94XX reports other tax or credit changes in addition to ERC changes The other changes do meet CAT-A criteria when considered separately from the ERC changes reported Complete the CAT-A referral as usual. Take action to complete processing of the Form 94XX based on instructions received from Exam Classification when the case is returned including (as appropriate): . • Completing an adjustment as per guidance in other rows of this table to record a full or partial disallowance. • Issuing an appropriate 105C or 106C full/partial disallowance letter with text as per guidance in other rows of this table or as instructed by Exam Classification. 4) The CII case notes indicate multiple RAAS disallowance filters were met Each failed filter must be considered: As appropriate, consider handling guidance provided in this subsection as well as any applicable guidance in other subsections based on the identified failed filters. If the Form 94XX is deemed processable after all applicable guidance has been considered (i.e., did not meet rejection or "no consideration" criteria), then take action as appropriate to fully or partially disallow the Form 94XX. When issuing the appropriate 105C or 106C disallowance letter, insert text into the letter as described in the previous rows of this table as well as any text provided in other subsections applicable to the other failed filter(s). For accounts with no posted TC 150 original return: After applying the guidance in (5) above, continue handling otherwise processable Forms 94XX identified to AM by RAAS as having been filed an entity with payment/depositing patterns indicative of a lack of employment activity and/or business activity as follows: If Then 1) The Form 94XX reports only changes to ERC Disallow the claim: Input a TC 971 AC 002 to release the E- freeze if a TC 971 AC 010 was previously input. Send Letter 105C as per instructions in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures and insert the following text in two open paragraphs: "Based on our records, we have determined you are not an Eligible Employer or did not pay qualified wages for purposes of the Employee Retention Credit (ERC). ERC is a credit only against the employer's portion of social security or Medicare tax. We have no record you made employment tax deposits required for employers operating a trade or business from 2019 through 2022." "For more information on Employee Retention Credit (ERC) eligibility requirements and how to respond to this letter if you disagree, please see IRS.gov/erc105c." 2) The Form 94XX reports other tax or credit changes in addition to ERC changes Follow guidance in IRM 21.7.2.4.4.6, Adjusted Employer's Tax Return or Claim for Refund Return Filed — No TC 150 Posted If an original return is secured, complete processing of the Form 941-X as per guidance in (6) above after the original return is posted. 3) The CII case notes indicate multiple RAAS disallowance filters were met Each failed filter must be considered: As appropriate, consider handling guidance provided in this subsection as well as any applicable guidance in other subsections based on the identified failed filters. If the Form 94XX is deemed processable after all applicable guidance has been considered (i.e., did not meet rejection or "no consideration" criteria), then take action as appropriate to fully or partially disallow the Form 94XX. When issuing the appropriate 105C or 106C disallowance letter, insert text into the letter as described in the previous rows of this table as well as any text provided in other subsections applicable to the other failed filter(s).

# Disallowance of Form 94XX ERC Claims Meeting RAAS Filtering Criteria for Ineligible Government Entities

21.7.2.7.8.6 (04-28-2025) Disallowance of Form 94XX ERC Claims Meeting RAAS Filtering Criteria for Ineligible Government Entities Certain Form 94XX cases reporting Employee Retention Credit (ERC) adjustment requests are being released to be worked by AM after having been analyzed by Research, Applied Analytics & Statistics (RAAS). These cases will be delivered to AM with instructions on how the ERC portion of the claim or adjustment is to be handled (i.e., additional handling required, assessment to be made, claim is allowable, disallowance criteria, or partial disallowance criteria). Caution: RAAS analysis for these cases generally does not include consideration of non-ERC related tax items that may be reported on a Form 94XX, including those with a mix of ERC and non-ERC change items. This subsection provides handling guidance for Forms 94XX reporting ERC amounts which were identified by RAAS as having been filed by ineligible government entities. The IRS has determined that Forms 94XX reporting new or increased ERC amounts (only) filed by ineligible government entities will be formally disallowed. Cases identified by RAAS for disallowance handling per guidance in this subsection will be identified to AM as follows: IDRS Number: 0230281088 CII case notation: "RiskedERC-Disallow" and "Government Entity" Note: CII case notes for these cases will also indicate the EIN and tax period that was identified during data transcription for RAAS analysis. This information is a factor in processing validation described in (5) below. Note: CII case notes for these cases may indicate multiple filtering criteria as having been met. If so, the first case notation is deemed the primary indicator and controls handling. Additional filtering notes are deemed secondary indicators and are potentially a factor in handling as discussed in the last row of the table in (6) below. All other Form 94XX processing guidelines and requirements also apply to Forms 94XX reporting changes to ERC that have been identified to AM by RAAS as having been filed by an ineligible government entity. Forms 94XX so identified by RAAS have generally not been reviewed for completeness (e.g., presence of signature, certification block(s) marked, etc.) and processability (e.g., prior figures match, mathematically correct, etc.). As such, all preliminary reviews to ensure the Form 94XX is complete for processing must be conducted before taking action to disallow the Form 94XX on the basis of it having been filed by an ineligible government entity. As usual: Review the Form 94XX for completeness and processability (e.g., for a Form 941-X claim, see (2) and (3) in IRM 21.7.2.4.5.6.2, Form 941-X Tax Decrease — Claim). Perfect or reject any unprocessable Forms 94XX as appropriate. Exception: If there is no posted original return, do not follow guidance in IRM 21.7.2.4.4.6, Adjusted Employer's Tax Return or Claim for Refund Return Filed — No TC 150 Posted unless directed to do so per instructions in (7) below and do not follow procedures in IRM 21.7.2.7.8.4, Form 94XX ERC Claims Meeting RAAS Filtering Criteria for Missing Original Returns (No TC 150). Continue processing as per guidance in this paragraph and then follow guidance in (7) below instead of (6). Caution: The missing TC 150 condition will generally be identified by RAAS in the CII case notes. However, AM employees are responsible for reviewing the account for the presence of an original return when processing the released Form 941-X regardless of whether such a note is present and for applying (6) or (7) guidance below as appropriate. Review for account conditions that require special handling (i.e., open CAT-A or AIMS status, RICS/RIVO/IDT, etc.) which must be addressed prior to taking further action on the Form 94XX. Suspend, route, or otherwise address the account condition encountered as appropriate. In addition, if a Form 94X-X is received that is a duplicate of a previously processed ERC claim, do not rework the original claim based on any subsequent RAAS analysis. In addition, compare the EIN and tax period entered on the Form 941-X to the EIN and tax period specified in CII case notes releasing the case to be worked. Caution: If the tax period or EIN shown on the form do not match CII case controls or the tax period or EIN specified in CII case notes releasing the case to be worked do not match CII case controls, the case must be returned to RAAS for additional analysis. Take the following actions to refer such a case for further RAAS consideration: 1) Correct case controls as necessary and appropriate. 2) Enter/update the case with Priority Code 6. 3) Enter the appropriate case note as follows: "EIN mismatch" or "Tax Period mismatch" or "EIN and Tax Period mismatch" 4) Reassign the case to IDRS number 0230281416. Note: Procedures found in (6) below do not apply to Form 94XX cases rejected or "no-considered" as the result of following guidance in (5) above and such cases do not require further RAAS consideration. Reminder: The ASED has expired on Form 94XX for 2020 and 2021 except for certain ERC credits for 2021. See IRM 25.6.1.9.5.10,COVID-19 Related Employment Tax Credits for information regarding 2021 tax periods with an extended ASED. The suspended inventory was reviewed for statute imminent 2020 and 2021 account situations prior to normal ASED expirations of April 15, 2024 and April 15, 2025. There is still heightened risk of encountering statute barred assessments in this work. Consider guidance in (2) of IRM 25.6.1.13.2.6, Routing and Controlling Form 9355, if such cases are identified. For accounts with a posted TC 150 original return: After applying the guidance in (5) above, continue handling processable Forms 94XX identified to AM by RAAS as having been filed by an ineligible government entity as follows: If And Then 1) The Form 94XX reports only changes to ERC Disallow the claim: Complete a TC 290 .00 adjustment in Blocking Series 98 or 99 as appropriate (see (1) in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures) to record a full disallowance of the claim. Send Letter 105C as per instructions in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures and insert the following text in two open paragraphs: "You aren't eligible to claim a 2020 Employee Retention Credit because you are a Federal, State or local government entity (or instrumentality thereof) according to your previous filings." "For more information on Employee Retention Credit (ERC) eligibility requirements and how to respond to this letter if you disagree, please see IRS.gov/erc105c." 2) The Form 94XX reports other tax or credit changes in addition to ERC changes The other changes do not meet CAT-A criteria when considered separately from the ERC changes reported Partially disallow the claim: Complete a TC 29X adjustment in Blocking Series 18 or 00 as appropriate (see (2) in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures) with appropriate IRNs/CRNs to record the allowable portion of the correction requested on the Form 94XX. Send Letter 106C as per instructions in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures and insert the following text in two open paragraphs: "We recorded the other changes reported on your Form [specify form]. However, you aren't eligible to claim a 2020 Employee Retention Credit because you are a Federal, State or local government entity (or instrumentality thereof) according to your previous filings." "For more information on Employee Retention Credit (ERC) eligibility requirements and how to respond to this letter if you disagree, please see IRS.gov/erc106c." 3) The Form 94XX reports other tax or credit changes in addition to ERC changes The other changes do meet CAT-A criteria when considered separately from the ERC changes reported Complete the CAT-A referral as usual. Take action to complete processing of the Form 94XX based on instructions received from Exam Classification when the case is returned including (as appropriate): • Completing an adjustment as per guidance in other rows of this table to record a full or partial disallowance. • Issuing an appropriate 105C or 106C full/partial disallowance letter with text as per guidance in other rows of this table or as instructed by Exam Classification. 4) The CII case notes indicate multiple RAAS disallowance filters were met Each failed filter must be considered: As appropriate, consider handling guidance provided in this subsection as well as any applicable guidance in other subsections based on the identified failed filters. If the Form 94XX is deemed processable after all applicable guidance has been considered (i.e., did not meet rejection or "no consideration" criteria), then take action as appropriate to fully or partially disallow the Form 94XX. When issuing the appropriate 105C or 106C disallowance letter, insert text into the letter as described in the previous rows of this table as well as any text provided in other subsections applicable to the other failed filter(s). For accounts with no posted TC 150 original return: After applying the guidance in (5) above, continue handling otherwise processable Forms 94XX identified to AM by RAAS as having been filed by an ineligible government entity as follows: If Then 1) The Form 94XX reports only changes to ERC Disallow the claim: Input a TC 971 AC 002 to release the E- freeze if a TC 971 AC 010 was previously input. Send Letter 105C as per instructions in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures and insert the following text in two open paragraphs: "You aren't eligible to claim a 2020 Employee Retention Credit because you are a Federal, State or local government entity (or instrumentality thereof) according to your previous filings." "For more information on Employee Retention Credit (ERC) eligibility requirements and how to respond to this letter if you disagree, please see IRS.gov/erc105c." 2) The Form 94XX reports other tax or credit changes in addition to ERC changes Follow guidance in IRM 21.7.2.4.4.6, Adjusted Employer's Tax Return or Claim for Refund Return Filed — No TC 150 Posted If an original return is secured, complete processing of the Form 941-X as per guidance in (6) above after the original return is posted. 3) The CII case notes indicate multiple RAAS disallowance filters were met Each failed filter must be considered: As appropriate, consider handling guidance provided in this subsection as well as any applicable guidance in other subsections based on the identified failed filters. If the Form 94XX is deemed processable after all applicable guidance has been considered (i.e., did not meet rejection or "no consideration" criteria), then take action as appropriate to fully or partially disallow the Form 94XX. When issuing the appropriate 105C or 106C disallowance letter, insert text into the letter as described in the previous rows of this table as well as any text provided in other subsections applicable to the other failed filter(s).

# Disallowance of Form 94XX ERC Claims Meeting RAAS Filtering Criteria for Dormant Entities

21.7.2.7.8.7 (04-28-2025) Disallowance of Form 94XX ERC Claims Meeting RAAS Filtering Criteria for Dormant Entities Certain Form 94XX cases reporting Employee Retention Credit (ERC) adjustment requests are being released to be worked by AM after having been analyzed by Research, Applied Analytics & Statistics (RAAS). These cases will be delivered to AM with instructions on how the ERC portion of the claim or adjustment is to be handled (i.e., additional handling required, assessment to be made, claim is allowable, disallowance criteria, or partial disallowance criteria). Caution: RAAS analysis for these cases generally does not include consideration of non-ERC related tax items that may be reported on a Form 94XX, including those with a mix of ERC and non-ERC change items. This subsection provides handling guidance for Forms 94XX reporting ERC amounts which were identified by RAAS as having been filed by dormant (i.e., otherwise inactive) entities. The IRS has determined that Forms 94XX reporting new or increased ERC amounts (only) filed for accounts identified by RAAS as having been filed by dormant (i.e., otherwise inactive) entities will be formally disallowed. Cases identified by RAAS for disallowance handling per guidance in this subsection will be identified to AM as follows: IDRS Number: 0230281088 CII case notation: "RiskedERC-Disallow" and "Dormant EIN" Note: CII case notes for these cases will also indicate the EIN and tax period that was identified during data transcription for RAAS analysis. This information is a factor in processing validation described in (5) below. Note: CII case notes for these cases may indicate multiple filtering criteria as having been met. If so, the first case notation is deemed the primary indicator and controls handling. Additional filtering notes are deemed secondary indicators and are potentially a factor in handling as discussed in the last row of the table in (6) below. All other Form 94XX processing guidelines and requirements also apply to Forms 94XX reporting changes to ERC that have been identified to AM by RAAS as having been filed by a dormant (i.e., otherwise inactive) entity. Forms 94XX so identified by RAAS have generally not been reviewed for completeness (e.g., presence of signature, certification block(s) marked, etc.) and processability (e.g., prior figures match, mathematically correct, etc.). As such, all preliminary reviews to ensure the Form 94XX is complete for processing must be conducted before taking action to disallow the Form 94XX on the basis of it having been filed by a dormant entity. As usual: Review the Form 94XX for completeness and processability (e.g., for a Form 941-X claim, see (2) and (3) in IRM 21.7.2.4.5.6.2, Form 941-X Tax Decrease — Claim). Perfect or reject any unprocessable Forms 94XX as appropriate. Exception: If there is no posted original return, do not follow guidance in IRM 21.7.2.4.4.6, Adjusted Employer's Tax Return or Claim for Refund Return Filed — No TC 150 Posted unless directed to do so per instructions in (7) below and do not follow procedures in IRM 21.7.2.7.8.4, Form 94XX ERC Claims Meeting RAAS Filtering Criteria for Missing Original Returns (No TC 150). Continue processing as per guidance in this paragraph and then follow guidance in (7) below instead of (6). Caution: The missing TC 150 condition will generally be identified by RAAS in the CII case notes. However, AM employees are responsible for reviewing the account for the presence of an original return when processing the released Form 941-X regardless of whether such a note is present and for applying (6) or (7) guidance below as appropriate. Review for account conditions that require special handling (i.e., open CAT-A or AIMS status, RICS/RIVO/IDT, etc.) which must be addressed prior to taking further action on the Form 94XX. Suspend, route, or otherwise address the account condition encountered as appropriate. In addition, if a Form 94X-X is received that is a duplicate of a previously processed ERC claim, do not rework the original claim based on any subsequent RAAS analysis. In addition, compare the EIN and tax period entered on the Form 941-X to the EIN and tax period specified in CII case notes releasing the case to be worked. Caution: If the tax period or EIN shown on the form do not match CII case controls or the tax period or EIN specified in CII case notes releasing the case to be worked do not match CII case controls, the case must be returned to RAAS for additional analysis. Take the following actions to refer such a case for further RAAS consideration: 1) Correct case controls as necessary and appropriate. 2) Enter/update the case with Priority Code 6. 3) Enter the appropriate case note as follows: "EIN mismatch" or "Tax Period mismatch" or "EIN and Tax Period mismatch" 4) Reassign the case to IDRS number 0230281416. Note: Procedures found in (6) below do not apply to Form 94XX cases rejected or "no-considered" as the result of following guidance in (5) above and such cases do not require further RAAS consideration. Reminder: The ASED has expired on Form 94XX for 2020 and 2021 except for certain ERC credits for 2021. See IRM 25.6.1.9.5.10,COVID-19 Related Employment Tax Credits for information regarding 2021 tax periods with an extended ASED. The suspended inventory was reviewed for statute imminent 2020 and 2021 account situations prior to normal ASED expirations of April 15, 2024 and April 15, 2025. There is still heightened risk of encountering statute barred assessments in this work. Consider guidance in (2) of IRM 25.6.1.13.2.6, Routing and Controlling Form 9355, if such cases are identified. For accounts with a posted TC 150 original return: After applying the guidance in (5) above, continue handling processable Forms 94XX identified to AM by RAAS as having been filed by a dormant entity as follows: If And Then 1) The Form 94XX reports only changes to ERC Disallow the claim: Complete a TC 290 .00 adjustment in Blocking Series 98 or 99 as appropriate (see (1) in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures) to record a full disallowance of the claim. Send Letter 105C as per instructions in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures and insert the following text in two open paragraphs: "Based on a review of IRS records, we have determined you aren't an Eligible Employer for purposes of the Employee Retention Credit (ERC) because you weren't operating a trade or business during the period(s) shown above. Only employers operating a trade or business (including tax-exempt organizations and certain government entities operating in 2021) are eligible for ERC." "For more information on Employee Retention Credit (ERC) eligibility requirements and how to respond to this letter if you disagree, please see IRS.gov/erc105c." 2) The Form 94XX reports other tax or credit changes in addition to ERC changes The other changes do not meet CAT-A criteria when considered separately from the ERC changes reported Partially disallow the claim: Complete a TC 29X adjustment in Blocking Series 18 or 00 as appropriate (see (2) in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures) with appropriate IRNs/CRNs to record the allowable portion of the correction requested on the Form 94XX. Send Letter 106C as per instructions in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures and insert the following text in three open paragraphs: " we have determined you aren't an Eligible Employer for purposes of the Employee Retention Credit (ERC) because you weren't operating a trade or business during the period(s) shown above." "Only employers operating a trade or business (including tax-exempt organizations and certain government entities operating in 2021) are eligible for ERC." "we recorded the other changes you reported on your Form [specify Form]. For more information on Employee Retention Credit (ERC) eligibility requirements and how to respond to this letter if you disagree, please see IRS.gov/erc106c." 3) The Form 94XX reports other tax or credit changes in addition to ERC changes The other changes do meet CAT-A criteria when considered separately from the ERC changes reported Complete the CAT-A referral as usual. Take action to complete processing of the Form 94XX based on instructions received from Exam Classification when the case is returned including (as appropriate): . • Completing an adjustment as per guidance in other rows of this table to record a full or partial disallowance. • Issuing an appropriate 105C or 106C full/partial disallowance letter with text as per guidance in other rows of this table or as instructed by Exam Classification. 4) The CII case notes indicate multiple RAAS disallowance filters were met Each failed filter must be considered: As appropriate, consider handling guidance provided in this subsection as well as any applicable guidance in other subsections based on the identified failed filters. If the Form 94XX is deemed processable after all applicable guidance has been considered (i.e., did not meet rejection or "no consideration" criteria), then take action as appropriate to fully or partially disallow the Form 94XX. When issuing the appropriate 105C or 106C disallowance letter, insert text into the letter as described in the previous rows of this table as well as any text provided in other subsections applicable to the other failed filter(s). For accounts with no posted TC 150 original return: After applying the guidance in (5) above, continue handling otherwise processable Forms 94XX identified to AM by RAAS as having been filed by a dormant entity as follows: If Then 1) The Form 94XX reports only changes to ERC Disallow the claim: Input a TC 971 AC 002 to release the E- freeze if a TC 971 AC 010 was previously input. Send Letter 105C as per instructions in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures and insert the following text in two open paragraphs: "Based on a review of IRS records, we have determined you aren't an Eligible Employer for purposes of the Employee Retention Credit (ERC) because you weren't operating a trade or business during the period(s) shown above. Only employers operating a trade or business (including tax-exempt organizations and certain government entities operating in 2021) are eligible for ERC." "For more information on Employee Retention Credit (ERC) eligibility requirements and how to respond to this letter if you disagree, please see IRS.gov/erc105c." 2) The Form 94XX reports other tax or credit changes in addition to ERC changes Follow guidance in IRM 21.7.2.4.4.6, Adjusted Employer's Tax Return or Claim for Refund Return Filed — No TC 150 Posted If an original return is secured, complete processing of the Form 941-X as per guidance in (6) above after the original return is posted. 3) The CII case notes indicate multiple RAAS disallowance filters were met Each failed filter must be considered: As appropriate, consider handling guidance provided in this subsection as well as any applicable guidance in other subsections based on the identified failed filters. If the Form 94XX is deemed processable after all applicable guidance has been considered (i.e., did not meet rejection or "no consideration" criteria), then take action as appropriate to fully or partially disallow the Form 94XX. When issuing the appropriate 105C or 106C disallowance letter, insert text into the letter as described in the previous rows of this table as well as any text provided in other subsections applicable to the other failed filter(s).

# Disallowance of RAAS-Identified Fourth Quarter 2021 Form 94XX Claims for ERC by Non-Recovery Startup Businesses

21.7.2.7.8.8 (04-28-2025) Disallowance of RAAS-Identified Fourth Quarter 2021 Form 94XX Claims for ERC by Non-Recovery Startup Businesses Certain Form 94XX cases reporting Employee Retention Credit (ERC) adjustment requests are being released to be worked by AM after having been analyzed by Research, Applied Analytics & Statistics (RAAS). These cases will be delivered to AM with instructions on how the ERC portion of the claim or adjustment is to be handled (i.e., additional handling required, assessment to be made, claim is allowable, disallowance criteria, or partial disallowance criteria). Caution: RAAS analysis for these cases generally does not include consideration of non-ERC related tax items that may be reported on a Form 94XX, including those with a mix of ERC and non-ERC change items. This subsection provides handling guidance for fourth quarter 2021 Forms 94XX reporting ERC amounts which were identified by RAAS as having been filed by an employer that was not a Recovery Startup Business (RSB). Only Recovery Startup Businesses (RSBs) were eligible to claim ERC for the fourth quarter of 2021. And, RSBs reporting ERC amounts on Forms 941-X for the fourth quarter of 2021 were required to mark box 31b of Form 941-X even if corresponding Line 18 was marked on the original Form 941 filed. Accordingly, Forms 941-X filed claiming ERC for the fourth quarter of 2021 without Line 31b being checked are disallowance criteria. Cases identified by RAAS for disallowance handling per guidance in this subsection will be identified to AM as follows: IDRS Number: 0230281088 CII case notation: "RiskedERC-Disallow" and "Not RSB in 202112" Note: CII case notes for these cases will also indicate the EIN and tax period that was identified during data transcription for RAAS analysis. This information is a factor in processing validation described in (5) below. Note: CII case notes for these cases may indicate multiple filtering criteria as having been met. If so, the first case notation is deemed the primary indicator and controls handling. Additional filtering notes are deemed secondary indicators and are potentially a factor in handling as discussed in the last row of the table in (6) below. All other Form 94XX processing guidelines and requirements also apply to fourth quarter 2021 Forms 94XX reporting changes to ERC that have been identified to AM by RAAS as having been filed by a non-RSB employer. Forms 94XX so identified by RAAS have generally not been reviewed for completeness (e.g., presence of signature, certification block(s) marked, etc.) and processability (e.g., prior figures match, mathematically correct, etc.). As such, all preliminary reviews to ensure the Form 94XX is complete for processing must be conducted before taking action to disallow a fourth quarter 2021 Form 94XX on the basis of it having been filed by a non-RSB employer. As usual: Review the Form 94XX for completeness and processability (e.g., for a Form 941-X claim, see (2) and (3) in IRM 21.7.2.4.5.6.2, Form 941-X Tax Decrease — Claim). Perfect or reject any unprocessable Forms 94XX as appropriate. Exception: If there is no posted original return, do not follow guidance in IRM 21.7.2.4.4.6, Adjusted Employer's Tax Return or Claim for Refund Return Filed — No TC 150 Posted unless directed to do so per instructions in (7) below and do not follow procedures in IRM 21.7.2.7.8.4, Form 94XX ERC Claims Meeting RAAS Filtering Criteria for Missing Original Returns (No TC 150). Continue processing as per guidance in this paragraph and then follow guidance in (7) below instead of (6). Caution: The missing TC 150 condition will generally be identified by RAAS in the CII case notes. However, AM employees are responsible for reviewing the account for the presence of an original return when processing the released Form 941-X regardless of whether such a note is present and for applying (6) or (7) guidance below as appropriate. Review for account conditions that require special handling (i.e., open CAT-A or AIMS status, RICS/RIVO/IDT, etc.) which must be addressed prior to taking further action on the Form 94XX. Suspend, route, or otherwise address the account condition encountered as appropriate. In addition, if a Form 94X-X is received that is a duplicate of a previously processed ERC claim, do not rework the original claim based on any subsequent RAAS analysis. In addition, compare the EIN and tax period entered on the Form 941-X to the EIN and tax period specified in CII case notes releasing the case to be worked. In addition, review the Form 941-X to verify whether Line 31b was marked. Caution: If the tax period or EIN shown on the form do not match CII case controls or the tax period or EIN specified in CII case notes releasing the case to be worked do not match CII case controls, the case must be returned to RAAS for additional analysis. Take the following actions to refer such a case for further RAAS consideration: 1) Correct case controls as necessary and appropriate. 2) Enter/update the case with Priority Code 6. 3) Enter the appropriate case note as follows: "EIN mismatch" or "Tax Period mismatch" or "EIN and Tax Period mismatch" or "Line 31b marked" 4) For EIN or tax period mismatch cases, reassign the case to IDRS number 0230281416. For cases where Line 31b was marked, reassign the case to IDRS number 0430482128. Note: Procedures found in (6) below do not apply to Form 94XX cases rejected or "no-considered" as the result of following guidance in (5) above and such cases do not require further RAAS consideration. Reminder: The ASED has expired on Form 94XX for 2020 and 2021 except for certain ERC credits for 2021. See IRM 25.6.1.9.5.10, COVID-19 Related Employment Tax Credits for information regarding 2021 tax periods with an extended ASED. The suspended inventory was reviewed for statute imminent 2020 and 2021 account situations prior to normal ASED expirations of April 15, 2024 and April 15, 2025. There is still heightened risk of encountering statute barred assessments in this work. Consider guidance in (2) of IRM 25.6.1.13.2.6, Routing and Controlling Form 9355, if such cases are identified. For accounts with a posted TC 150 original return: After applying the guidance in (5) above, continue handling processable fourth quarter 2021 Forms 94XX identified to AM by RAAS as having been filed by a non-RSB employer as follows: If And Then 1) The Form 94XX reports only changes to ERC Disallow the claim: Complete a TC 290 .00 adjustment in Blocking Series 98 or 99 as appropriate (see (1) in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures) to record a full disallowance of the claim. Send Letter 105C as per instructions in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures and insert the following text in two open paragraphs: "Only employers which are recovery startup businesses are eligible for the Employee Retention Credit for wages paid in the fourth quarter of 2021. Your Form 941-X did not indicate on Line 31b that you were a recovery startup business." "For more information on Employee Retention Credit (ERC) eligibility requirements and how to respond to this letter if you disagree, please see IRS.gov/erc105c." 2) The Form 94XX reports other tax or credit changes in addition to ERC changes The other changes do not meet CAT-A criteria when considered separately from the ERC changes reported Partially disallow the claim: Complete a TC 29X adjustment in Blocking Series 18 or 00 as appropriate (see (2) in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures) with appropriate IRNs/CRNs to record the allowable portion of the correction requested on the Form 94XX. Send Letter 106C as per instructions in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures and insert the following text in two open paragraphs: "We recorded the other changes reported on your Form [specify form]. However, only employers which are recovery startup businesses are eligible for the Employee Retention Credit for wages paid in the fourth quarter of 2021. Your Form 941-X did not indicate on Line 31b that you were a recovery startup business." "For more information on Employee Retention Credit (ERC) eligibility requirements and how to respond to this letter if you disagree, please see IRS.gov/erc106c." 3) The Form 94XX reports other tax or credit changes in addition to ERC changes The other changes do meet CAT-A criteria when considered separately from the ERC changes reported Complete the CAT-A referral as usual. Take action to complete processing of the Form 94XX based on instructions received from Exam Classification when the case is returned including (as appropriate): • Completing an adjustment as per guidance in other rows of this table to record a full or partial disallowance. • Issuing an appropriate 105C or 106C full/partial disallowance letter with text as per guidance in other rows of this table or as instructed by Exam Classification. 4) The CII case notes indicate multiple RAAS disallowance filters were met Each failed filter must be considered: As appropriate, consider handling guidance provided in this subsection as well as any applicable guidance in other subsections based on the identified failed filters. If the Form 94XX is deemed processable after all applicable guidance has been considered (i.e., did not meet rejection or "no consideration" criteria), then take action as appropriate to fully or partially disallow the Form 94XX. When issuing the appropriate 105C or 106C disallowance letter, insert text into the letter as described in the previous rows of this table as well as any text provided in other subsections applicable to the other failed filter(s). For accounts with no posted TC 150 original return: After applying the guidance in (6) above, continue handling otherwise processable fourth quarter 2021 Forms 94XX identified to AM by RAAS as having been filed by a non-RSB employer as follows: If Then 1) The Form 94XX reports only changes to ERC Disallow the claim: Input a TC 971 AC 002 to release the E- freeze if a TC 971 AC 010 was previously input. Send Letter 105C as per instructions in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures and insert the following text in two open paragraphs: "Only employers which are recovery startup businesses are eligible for the Employee Retention Credit for wages paid in the fourth quarter of 2021. Your Form 941-X did not indicate on Line 31b that you were a recovery startup business." "For more information on Employee Retention Credit (ERC) eligibility requirements and how to respond to this letter if you disagree, please see IRS.gov/erc105c." 2) The Form 94XX reports other tax or credit changes in addition to ERC changes Follow guidance in IRM 21.7.2.4.4.6, Adjusted Employer's Tax Return or Claim for Refund Return Filed — No TC 150 Posted If an original return is secured, complete processing of the Form 941-X as per guidance in (6) above after the original return is posted. 3) The CII case notes indicate multiple RAAS disallowance filters were met Each failed filter must be considered: As appropriate, consider handling guidance provided in this subsection as well as any applicable guidance in other subsections based on the identified failed filters. If the Form 94XX is deemed processable after all applicable guidance has been considered (i.e., did not meet rejection or "no consideration" criteria), then take action as appropriate to fully or partially disallow the Form 94XX. When issuing the appropriate 105C or 106C disallowance letter, insert text into the letter as described in the previous rows of this table as well as any text provided in other subsections applicable to the other failed filter(s).

# Disallowance of Form 94XX ERC Claims for the Third Quarter of 2021 Meeting RAAS Filtering Criteria for Gross Receipts

21.7.2.7.8.9 (04-28-2025) Disallowance of Form 94XX ERC Claims for the Third Quarter of 2021 Meeting RAAS Filtering Criteria for Gross Receipts Certain Form 94XX cases reporting Employee Retention Credit (ERC) adjustment requests are being released to be worked by AM after having been analyzed by Research, Applied Analytics & Statistics (RAAS). These cases will be delivered to AM with instructions on how the ERC portion of the claim or adjustment is to be handled (i.e., additional handling required, assessment to be made, claim is allowable, disallowance criteria, or partial disallowance criteria). Caution: RAAS analysis for these cases generally does not include consideration of non-ERC related tax items that may be reported on a Form 94XX, including those with a mix of ERC and non-ERC change items. This subsection provides handling guidance for Forms 94XX reporting ERC amounts which were identified by RAAS as having been filed by employers who were not eligible for ERC based on an analysis of their gross receipts. The IRS has determined that third quarter 2021 Forms 94XX reporting new or increased ERC amounts (only) filed by employers who were not eligible for ERC based on an analysis of their gross receipts will be formally disallowed. Cases identified by RAAS for disallowance handling per guidance in this subsection will be identified to AM as follows: IDRS Number: 0230281088 CII case notation: "RiskedERC-Disallow" and "202109 Gross Receipts" Note: CII case notes for these cases will also indicate the EIN and tax period that was identified during data transcription for RAAS analysis. This information is a factor in processing validation described in (5) below. Note: CII case notes for these cases may indicate multiple filtering criteria as having been met. If so, the first case notation is deemed the primary indicator and controls handling. Additional filtering notes are deemed secondary indicators and are potentially a factor in handling as discussed in the last row of the table in (6) below. All other Form 94XX processing guidelines and requirements also apply to Forms 94XX reporting changes to ERC that have been identified to AM by RAAS as having been filed by ineligible employers. Forms 94XX so identified by RAAS have generally not been reviewed for completeness (e.g., presence of signature, certification block(s) marked, etc.) and processability (e.g., prior figures match, mathematically correct, etc.). As such, all preliminary reviews to ensure the Form 94XX is complete for processing must be conducted before taking action to disallow the Form 94XX on the basis of it having failed filtering analysis for gross receipts. As usual: Review the Form 94XX for completeness and processability (e.g., for a Form 941-X claim, see (2) and (3) in IRM 21.7.2.4.5.6.2, Form 941-X Tax Decrease — Claim). Perfect or reject any unprocessable Forms 94XX as appropriate. Exception: If there is no posted original return, do not follow guidance in IRM 21.7.2.4.4.6, Adjusted Employer's Tax Return or Claim for Refund Return Filed — No TC 150 Posted unless directed to do so per instructions in (7) below and do not follow procedures in IRM 21.7.2.7.8.4, Form 94XX ERC Claims Meeting RAAS Filtering Criteria for Missing Original Returns (No TC 150). Continue processing as per guidance in this paragraph and then follow guidance in (7) below instead of (6). Caution: The missing TC 150 condition will generally be identified by RAAS in the CII case notes. However, AM employees are responsible for reviewing the account for the presence of an original return when processing the released Form 941-X regardless of whether such a note is present and for applying (6) or (7) guidance below as appropriate. Review for account conditions that require special handling (i.e., open CAT-A or AIMS status, RICS/RIVO/IDT, etc.) which must be addressed prior to taking further action on the Form 94XX. Suspend, route, or otherwise address the account condition encountered as appropriate. In addition, if a Form 94X-X is received that is a duplicate of a previously processed ERC claim, do not rework the original claim based on any subsequent RAAS analysis. In addition, compare the EIN and tax period entered on the Form 941-X to the EIN and tax period specified in CII case notes releasing the case to be worked. In addition, review the Form 941-X to verify whether Line 31b was marked. Caution: If the tax period or EIN shown on the form do not match CII case controls or the tax period or EIN specified in CII case notes releasing the case to be worked do not match CII case controls, the case must be returned to RAAS for additional analysis. Take the following actions to refer such a case for further RAAS consideration: 1) Correct case controls as necessary and appropriate. 2) Enter/update the case with Priority Code 6. 3) Enter the appropriate case note as follows: "EIN mismatch" or "Tax Period mismatch" or "EIN and Tax Period mismatch" or "Line 31b marked" 4) For EIN or tax period mismatch cases, reassign the case to IDRS number 0230281416. Note: Procedures found in (6) below do not apply to Form 94XX cases rejected or "no-considered" as the result of following guidance in (5) above and such cases do not require further RAAS consideration. Reminder: The ASED has expired on Form 94XX for 2020 and 2021 except for certain ERC credits for 2021. See IRM 25.6.1.9.5.10,COVID-19 Related Employment Tax Credits for information regarding 2021 tax periods with an extended ASED. The suspended inventory was reviewed for statute imminent 2020 and 2021 account situations prior to normal ASED expirations of April 15, 2024 and April 15, 2025. There is still heightened risk of encountering statute barred assessments in this work. Consider guidance in (2) of IRM 25.6.1.13.2.6, Routing and Controlling Form 9355, if such cases are identified. For accounts with a posted TC 150 original return: After applying the guidance in (5) above, continue handling processable Forms 94XX identified to AM by RAAS as having been filed by an employer who was not eligible to claim ERC based on an analysis of their gross receipts as follows: If And Then 1) The Form 94XX reports only changes to ERC Disallow the claim: Complete a TC 290 .00 adjustment in Blocking Series 98 or 99 as appropriate (see (1) in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures) to record a full disallowance of the claim. Send Letter 105C as per instructions in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures and insert the following text in three open paragraphs: "Based on a review of IRS records, we have determined you are not an Eligible Employer for purposes of the Employee Retention Credit (ERC) during the period(s) shown above. Only employers that experienced a full or partial suspension of operations due to a government order related to COVID-19 or who experienced the required decline in gross receipts are Eligible Employers." "Our records indicate there were no government orders related to COVID-19 in effect during the quarter(s) you claimed ERC which could have fully or partially suspended your trade or business. Our records also show you do not meet the required decline in gross receipts." "For more information on Employee Retention Credit (ERC) eligibility requirements and how to respond to this letter if you disagree, please see IRS.gov/erc105c." 2) The Form 94XX reports other tax or credit changes in addition to ERC changes The other changes do not meet CAT-A criteria when considered separately from the ERC changes reported Partially disallow the claim: Complete a TC 29X adjustment in Blocking Series 18 or 00 as appropriate (see (2) in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures) with appropriate IRNs/CRNs to record the allowable portion of the correction requested on the Form 94XX. Send Letter 106C as per instructions in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures and insert the following text in three open paragraphs: "we determined you are not an Eligible Employer for the Employee Retention Credit (ERC) during the period(s) shown above. Only employers that experienced a full or partial suspension of operations due to a government order related to COVID-19 or who experienced the required decline in gross receipts are Eligible Employers." "Our records indicate there were no government orders related to COVID-19 in effect during the quarter(s) you claimed ERC which could have fully or partially suspended your trade or business. Our records also show you do not meet the required decline in gross receipts." "For more information on Employee Retention Credit (ERC) eligibility requirements and how to respond to this letter if you disagree, please see IRS.gov/erc106c." 3) The Form 94XX reports other tax or credit changes in addition to ERC changes The other changes do meet CAT-A criteria when considered separately from the ERC changes reported Complete the CAT-A referral as usual. Take action to complete processing of the Form 94XX based on instructions received from Exam Classification when the case is returned including (as appropriate): • Completing an adjustment as per guidance in other rows of this table to record a full or partial disallowance. • Issuing an appropriate 105C or 106C full/partial disallowance letter with text as per guidance in other rows of this table or as instructed by Exam Classification. 4) The CII case notes indicate multiple RAAS disallowance filters were met Each failed filter must be considered: As appropriate, consider handling guidance provided in this subsection as well as any applicable guidance in other subsections based on the identified failed filters. If the Form 94XX is deemed processable after all applicable guidance has been considered (i.e., did not meet rejection or "no consideration" criteria), then take action as appropriate to fully or partially disallow the Form 94XX. When issuing the appropriate 105C or 106C disallowance letter, insert text into the letter as described in the previous rows of this table as well as any text provided in other subsections applicable to the other failed filter(s). For accounts with no posted TC 150 original return: After applying the guidance in (5) above, continue handling otherwise processable Forms 94XX identified to AM by RAAS as having been filed by an employer who was not eligible to claim ERC based on an analysis of their gross receipts as follows: If Then 1) The Form 94XX reports only changes to ERC Disallow the claim: Input a TC 971 AC 002 to release the E- freeze if a TC 971 AC 010 was previously input. Send Letter 105C as per instructions in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures and insert the following text in three open paragraphs: "Based on a review of IRS records, we have determined you are not an Eligible Employer for purposes of the Employee Retention Credit (ERC) during the period(s) shown above. Only employers that experienced a full or partial suspension of operations due to a government order related to COVID-19 or who experienced the required decline in gross receipts are Eligible Employers." "Our records indicate there were no government orders related to COVID-19 in effect during the quarter(s) you claimed ERC which could have fully or partially suspended your trade or business. Our records also show you do not meet the required decline in gross receipts." "For more information on Employee Retention Credit (ERC eligibility requirements and how to respond to this letter if you disagree, please see irs.gov/erc105c.") 2) The Form 94XX reports other tax or credit changes in addition to ERC changes Follow guidance in IRM 21.7.2.4.4.6, Adjusted Employer's Tax Return or Claim for Refund Return Filed — No TC 150 Posted If an original return is secured, complete processing of the Form 941-X as per guidance in (6) above after the original return is posted. 3) The CII case notes indicate multiple RAAS disallowance filters were met Each failed filter must be considered: As appropriate, consider handling guidance provided in this subsection as well as any applicable guidance in other subsections based on the identified failed filters. If the Form 94XX is deemed processable after all applicable guidance has been considered (i.e., did not meet rejection or "no consideration" criteria), then take action as appropriate to fully or partially disallow the Form 94XX. When issuing the appropriate 105C or 106C disallowance letter, insert text into the letter as described in the previous rows of this table as well as any text provided in other subsections applicable to the other failed filter(s).

# Disallowance of Form 94XX ERC Claims Meeting RAAS Filtering Criteria for Related Individuals

21.7.2.7.8.10 (04-28-2025) Disallowance of Form 94XX ERC Claims Meeting RAAS Filtering Criteria for Related Individuals Certain Form 94XX cases reflecting Employee Retention Credit (ERC) adjustment requests are being released to be worked by AM after having been analyzed by Research, Applied Analytics & Statistics (RAAS). These cases will be delivered to AM with instructions on how the ERC portion of the claim or adjustment is to be handled (i.e., additional handling required, assessment to be made, claim is allowable, disallowance criteria, or partial disallowance criteria). Caution: RAAS analysis for these cases generally does not include consideration of non-ERC related tax items that may be reported on a Form 94XX, including those with a mix of ERC and non-ERC change items. This subsection provides handling guidance for Forms 94XX reporting ERC amounts which were identified by RAAS as being filed by employers who are claiming ERC credit for related individuals. The IRS has determined that Forms 94XX reporting new or increased ERC amounts (only) filed for accounts meeting the specified filtering criteria for related individuals will be formally disallowed. Cases identified by RAAS for disallowance handling per guidance in this subsection will be identified to AM as follows: IDRS Number: 0230281088 CII case notation: "RiskedERC-Disallow" and "Related-Individuals" Note: CII case notes for these cases will also indicate the EIN and tax period that was identified during data transcription for RAAS analysis. This information is a factor in processing validation described in (5) below. Note: CII case notes for these cases may indicate multiple filtering criteria as having been met. If so, the first case notation is deemed the primary indicator and controls handling. Additional filtering notes are deemed secondary indicators and are potentially a factor in handling as discussed in the last row of the table in (6) below. All other Form 94XX processing guidelines and requirements also apply to Forms 94XX reporting changes to ERC that have been identified to AM by RAAS as having been filed for accounts meeting the specified filtering criteria for related individuals. Forms 94XX so identified by RAAS have generally not been reviewed for completeness (e.g., presence of signature, certification block(s) marked, etc.) and processability (e.g., prior figures match, mathematically correct, etc.). As such, all preliminary reviews to ensure the Form 94XX is complete for processing must be conducted before taking action to disallow the Form 94XX on the basis of it having failed filtering analysis for related individuals. As usual: Review the Form 94XX for completeness and processability (e.g., for a Form 941-X claim, see (2) and (3) in IRM 21.7.2.4.5.6.2, Form 941-X Tax Decrease — Claim). Perfect or reject any unprocessable Forms 94XX as appropriate. Exception: If there is no posted original return, do not follow guidance in IRM 21.7.2.4.4.6, Adjusted Employer's Tax Return or Claim for Refund Return Filed — No TC 150 Posted unless directed to do so per instructions in (7) below and do not follow procedures in IRM 21.7.2.7.8.4, Form 94XX ERC Claims Meeting RAAS Filtering Criteria for Missing Original Returns (No TC 150). Continue processing as per guidance in this paragraph and then follow guidance in (7) below instead of (6). Caution: The missing TC 150 condition will generally be identified by RAAS in the CII case notes. However, AM employees are responsible for reviewing the account for the presence of an original return when processing the released Form 941-X regardless of whether such a note is present and for applying (6) or (7) guidance below as appropriate. Review for account conditions that require special handling (i.e., open CAT-A or AIMS status, RICS/RIVO/IDT, etc.) which must be addressed prior to taking further action on the Form 94XX. Suspend, route, or otherwise address the account condition encountered as appropriate. In addition, if a Form 94X-X is received that is a duplicate of a previously processed ERC claim, do not rework the original claim based on any subsequent RAAS analysis. In addition, compare the EIN and tax period entered on the Form 941-X to the EIN and tax period specified in CII case notes releasing the case to be worked. Caution: If the tax period or EIN shown on the form do not match CII case controls or the tax period or EIN specified in CII case notes releasing the case to be worked do not match CII case controls, the case must be returned to RAAS for additional analysis. Take the following actions to refer such a case for further RAAS consideration: 1) Correct case controls as necessary and appropriate. 2) Enter/update the case with Priority Code 6. 3) Enter the appropriate case note as follows: "EIN mismatch" or "Tax Period mismatch" or "EIN and Tax Period mismatch" 4) Reassign the case to IDRS number 0230281416. Note: Procedures found in (6) below do not apply to Form 94XX cases rejected or "no-considered" as the result of following guidance in (5) above and such cases do not require further RAAS consideration. Reminder: The ASED has expired on Form 94XX for 2020 and 2021 except for certain ERC credits for 2021. See IRM 25.6.1.9.5.10,COVID-19 Related Employment Tax Credits for information regarding 2021 tax periods with an extended ASED. The suspended inventory was reviewed for statute imminent 2020 and 2021 account situations prior to normal ASED expirations of April 15, 2024 and April 15, 2025. There is still heightened risk of encountering statute barred assessments in this work. Consider guidance in (2) of IRM 25.6.1.13.2.6, Routing and Controlling Form 9355, if such cases are identified. For accounts with a posted TC 150 original return: After applying the guidance in (5) above, continue handling processable Forms 94XX identified to AM by RAAS as having been filed for accounts meeting the specified filtering criteria related individuals as follows: If And Then 1) The Form 94XX reports only changes to ERC Disallow the claim: Complete a TC 290 .00 adjustment in Blocking Series 98 or 99 as appropriate (see (1) in IRM 21.5.3.4.6.1 ,Disallowance and Partial Disallowance Procedures) to record a full disallowance of the claim. Send Letter 105C as per instructions in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures and insert the following text in two open paragraphs: "Wages paid to related individuals are not qualified wages for purposes of computing the ERC. Related individuals include, among other categories, a corporation's majority owner or constructive majority owner, and their spouse, children, siblings, or other specified relatives." "For more information on Employee Retention Credit (ERC) eligibility requirements and how to respond to this letter if you disagree, please see irs.gov/erc105c." 2) The Form 94XX reports other tax or credit changes in addition to ERC changes The other changes do not meet CAT-A criteria when considered separately from the ERC changes reported Partially disallow the claim: Complete a TC 29X adjustment in Blocking Series 18 or 00 as appropriate (see (2) in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures) with appropriate IRNs/CRNs to record the allowable portion of the correction requested on the Form 94XX. Send Letter 106C as per instructions in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures and insert the following text in two open paragraphs: "Wages paid to related individuals aren't qualified wages for the ERC. Related individuals include, among other categories, a corporation's majority owner, and their spouse, parents, children, siblings, or other relatives as described in the FAQs about ERC on irs.gov." "For more information on Employee Retention Credit (ERC) eligibility requirements and how to respond to this letter if you disagree, please see irs.gov/erc106c". 3) The Form 94XX reports other tax or credit changes in addition to ERC changes The other changes do meet CAT-A criteria when considered separately from the ERC changes reported Complete the CAT-A referral as usual. Take action to complete processing of the Form 94XX based on instructions received from Exam Classification when the case is returned including (as appropriate): • Completing an adjustment as per guidance in other rows of this table to record a full or partial disallowance. • Issuing an appropriate 105C or 106C full/partial disallowance letter with text as per guidance in other rows of this table or as instructed by Exam Classification. 4) The CII case notes indicate multiple RAAS disallowance filters were met Each failed filter must be considered: As appropriate, consider handling guidance provided in this subsection as well as any applicable guidance in other subsections based on the identified failed filters. If the Form 94XX is deemed processable after all applicable guidance has been considered (i.e., did not meet rejection or "no consideration" criteria), then take action as appropriate to fully or partially disallow the Form 94XX. When issuing the appropriate 105C or 106C disallowance letter, insert text into the letter as described in the previous rows of this table as well as any text provided in other subsections applicable to the other failed filter(s). For accounts with no posted TC 150 original return: After applying the guidance in (5) above, continue handling otherwise processable Forms 94XX identified to AM by RAAS as having been filed for accounts meeting the specified filtering criteria for related individuals as follows: If Then 1) The Form 94XX reports only changes to ERC Disallow the claim: Input a TC 971 AC 002 to release the E- freeze if a TC 971 AC 010 was previously input. Send Letter 105C as per instructions in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures and insert the following text in two open paragraphs: "Wages paid to related individuals aren't qualified wages for the ERC. Related individuals include, among other categories, a corporation's majority owner, and their spouse, parents, children, siblings, or other relatives as described in the FAQs about ERC on irs.gov." "For more information on Employee Retention Credit (ERC) eligibility requirements and how to respond to this letter if you disagree, please see IRS.gov/erc105c." 2) The Form 94XX reports other tax or credit changes in addition to ERC changes Follow guidance in IRM 21.7.2.4.4.6, Adjusted Employer's Tax Return or Claim for Refund Return Filed — No TC 150 Posted If an original return is secured, complete processing of the Form 941-X as per guidance in (6) above after the original return is posted. 3) The CII case notes indicate multiple RAAS disallowance filters were met Each failed filter must be considered: As appropriate, consider handling guidance provided in this subsection as well as any applicable guidance in other subsections based on the identified failed filters. If the Form 94XX is deemed processable after all applicable guidance has been considered (i.e., did not meet rejection or "no consideration" criteria), then take action as appropriate to fully or partially disallow the Form 94XX. When issuing the appropriate 105C or 106C disallowance letter, insert text into the letter as described in the previous rows of this table as well as any text provided in other subsections applicable to the other failed filter(s).

# Disallowance of Form 94XX ERC Claims Meeting RAAS Filtering Criteria for Overclaimed Paycheck Protection Program (PPP) Loan and Employee Retention Credit (ERC)

21.7.2.7.8.11 (04-28-2025) Disallowance of Form 94XX ERC Claims Meeting RAAS Filtering Criteria for Overclaimed Paycheck Protection Program (PPP) Loan and Employee Retention Credit (ERC) Certain Form 94XX cases reflecting Employee Retention Credit (ERC) adjustment requests are being released to be worked by AM after having been analyzed by Research, Applied Analytics & Statistics (RAAS). These cases will be delivered to AM with instructions on how the ERC portion of the claim or adjustment is to be handled (i.e., additional handling required, assessment to be made, claim is allowable, disallowance criteria, or partial disallowance criteria). Caution: RAAS analysis for these cases generally does not include consideration of non-ERC related tax items that may be reported on a Form 94XX, including those with a mix of ERC and non-ERC change items. This subsection provides handling guidance for Forms 94XX reporting ERC amounts which were identified by RAAS as being filed by employers who are claiming ERC credit for claiming both Paycheck Protection Program (PPP) Loan and Employee Retention Credit (ERC) for the same tax period resulting in more financial assistance than what was reported as wages. The IRS has determined that Forms 94XX reporting new or increased ERC amounts (only) filed for accounts meeting the specified filtering criteria for Overclaimed Paycheck Protection Program (PPP) and Employee Retention Credit (ERC) will be formally disallowed. Cases identified by RAAS for disallowance handling per guidance in this subsection will be identified to AM as follows: IDRS Number: 0230281088 CII case notation: "RiskedERC-Disallow" and "Overclaimed-PPP" Note: CII case notes for these cases will also indicate the EIN and tax period that was identified during data transcription for RAAS analysis. This information is a factor in processing validation described in (5) below. Note: CII case notes for these cases may indicate multiple filtering criteria as having been met. If so, the first case notation is deemed the primary indicator and controls handling. Additional filtering notes are deemed secondary indicators and are potentially a factor in handling as discussed in the last row of the table in (6) below. All other Form 94XX processing guidelines and requirements also apply to Forms 94XX reporting changes to ERC that have been identified to AM by RAAS as having been filed for accounts meeting the specified filtering criteria for Overclaimed PPP Loan. Forms 94XX so identified by RAAS have generally not been reviewed for completeness (e.g., presence of signature, certification block(s) marked, etc.) and processability (e.g., prior figures match, mathematically correct, etc.). As such, all preliminary reviews to ensure the Form 94XX is complete for processing must be conducted before taking action to disallow the Form 94XX on the basis of it having failed filtering analysis for Overclaimed PPP Loan. As usual: Review the Form 94XX for completeness and processability (e.g., for a Form 941-X claim, see (2) and (3) in IRM 21.7.2.4.5.6.2, Form 941-X Tax Decrease — Claim). Perfect or reject any unprocessable Forms 94XX as appropriate. Exception: If there is no posted original return, do not follow guidance in IRM 21.7.2.4.4.6, Adjusted Employer's Tax Return or Claim for Refund Return Filed — No TC 150 Posted unless directed to do so per instructions in (7) below and do not follow procedures in IRM 21.7.2.7.8.4, Form 94XX ERC Claims Meeting RAAS Filtering Criteria for Missing Original Returns (No TC 150). Continue processing as per guidance in this paragraph and then follow guidance in (7) below instead of (6). Caution: The missing TC 150 condition will generally be identified by RAAS in the CII case notes. However, AM employees are responsible for reviewing the account for the presence of an original return when processing the released Form 941-X regardless of whether such a note is present and for applying (6) or (7) guidance below as appropriate. Review for account conditions that require special handling (i.e., open CAT-A or AIMS status, RICS/RIVO/IDT, etc.) which must be addressed prior to taking further action on the Form 94XX. Suspend, route, or otherwise address the account condition encountered as appropriate. In addition, if a Form 94X-X is received that is a duplicate of a previously processed ERC claim, do not rework the original claim based on any subsequent RAAS analysis. In addition, compare the EIN and tax period entered on the Form 941-X to the EIN and tax period specified in CII case notes releasing the case to be worked. Caution: If the tax period or EIN shown on the form do not match CII case controls or the tax period or EIN specified in CII case notes releasing the case to be worked do not match CII case controls, the case must be returned to RAAS for additional analysis. Take the following actions to refer such a case for further RAAS consideration: 1) Correct case controls as necessary and appropriate. 2) Enter/update the case with Priority Code 6. 3) Enter the appropriate case note as follows: "EIN mismatch" or "Tax Period mismatch" or "EIN and Tax Period mismatch" 4) Reassign the case to IDRS number 0230281416. Note: Procedures found in (6) below do not apply to Form 94XX cases rejected or "no-considered" as the result of following guidance in (5) above and such cases do not require further RAAS consideration. Reminder: The ASED has expired on Form 94XX for 2020 and 2021 except for certain ERC credits for 2021. See IRM 25.6.1.9.5.10,COVID-19 Related Employment Tax Credits for information regarding 2021 tax periods with an extended ASED. The suspended inventory was reviewed for statute imminent 2020 and 2021 account situations prior to normal ASED expirations of April 15, 2024 and April 15, 2025. There is still heightened risk of encountering statute barred assessments in this work. Consider guidance in (2) of IRM 25.6.1.13.2.6, Routing and Controlling Form 9355, if such cases are identified. For accounts with a posted TC 150 original return: After applying the guidance in (5) above, continue handling processable Forms 94XX identified to AM by RAAS as having been filed for accounts meeting the specified filtering criteria Overclaimed Paycheck Protection Program (PPP) and Employee Retention Credit (ERC) as follows: If And Then 1) The Form 94XX reports only changes to ERC Disallow the claim: Complete a TC 290 .00 adjustment in Blocking Series 98 or 99 as appropriate (see (1) in IRM 21.5.3.4.6.1 ,Disallowance and Partial Disallowance Procedures) to record a full disallowance of the claim. Send Letter 105C as per instructions in IRM 21.5.3.4.6.1, "Disallowance and Partial Disallowance Procedures" and insert the following text in two open paragraphs: "The amount of qualified wages you used to calculate your Employee Retention Credit uses the same wages used as payroll costs Paycheck Protection Program (PPP) loan forgiveness. You can't claim the ERC on wages that were reported as payroll costs to obtain PPP loan forgiveness." "For more information on Employee Retention Credit (ERC) eligibility requirements and how to respond to this letter if you disagree, please see irs.gov/erc105c."" 2) The Form 94XX reports other tax or credit changes in addition to ERC changes The other changes do not meet CAT-A criteria when considered separately from the ERC changes reported Partially disallow the claim: Complete a TC 29X adjustment in Blocking Series 18 or 00 as appropriate (see (2) in IRM 21.5.3.4.6.1, "Disallowance and Partial Disallowance Procedures" ) with appropriate IRNs/CRNs to record the allowable portion of the correction requested on the Form 94XX. Send Letter 106C as per instructions in IRM 21.5.3.4.6.1, "Disallowance and Partial Disallowance Procedures" and insert the following text in two open paragraphs: "The amount of qualified wages you used to calculate your Employee Retention Credit uses the same wages used as payroll costs Paycheck Protection Program (PPP) loan forgiveness. You can't claim the ERC on wages that were reported as payroll costs to obtain PPP loan forgiveness." "For more information on Employee Retention Credit (ERC) eligibility requirements and how to respond to this letter if you disagree, please see irs.gov/erc106c." 3) The Form 94XX reports other tax or credit changes in addition to ERC changes The other changes do meet CAT-A criteria when considered separately from the ERC changes reported Complete the CAT-A referral as usual. Take action to complete processing of the Form 94XX based on instructions received from Exam Classification when the case is returned including (as appropriate): • Completing an adjustment as per guidance in other rows of this table to record a full or partial disallowance. • Issuing an appropriate 105C or 106C full/partial disallowance letter with text as per guidance in other rows of this table or as instructed by Exam Classification. 4) The CII case notes indicate multiple RAAS disallowance filters were met Each failed filter must be considered: As appropriate, consider handling guidance provided in this subsection as well as any applicable guidance in other subsections based on the identified failed filters. If the Form 94XX is deemed processable after all applicable guidance has been considered (i.e., did not meet rejection or "no consideration" criteria), then take action as appropriate to fully or partially disallow the Form 94XX. When issuing the appropriate 105C or 106C disallowance letter, insert text into the letter as described in the previous rows of this table as well as any text provided in other subsections applicable to the other failed filter(s). For accounts with no posted TC 150 original return: After applying the guidance in (5) above, continue handling otherwise processable Forms 94XX identified to AM by RAAS as having been filed for accounts meeting the specified filtering criteria for Overclaimed Paycheck Protection Program (PPP) and Employee Retention Credit (ERC) as follows: If Then 1) The Form 94XX reports only changes to ERC Disallow the claim: Input a TC 971 AC 002 to release the E- freeze if a TC 971 AC 010 was previously input. Send Letter 105C as per instructions in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures and insert the following text in two open paragraphs: "The amount of qualified wages you used to calculate your Employee Retention Credit uses the same wages used as payroll costs Paycheck Protection Program (PPP) loan forgiveness. You can't claim the ERC on wages that were reported as payroll costs to obtain PPP loan forgiveness." "For more information on Employee Retention Credit (ERC) eligibility requirements and how to respond to this letter if you disagree, please see IRS.gov/erc105c." 2) The Form 94XX reports other tax or credit changes in addition to ERC changes Follow guidance in IRM 21.7.2.4.4.6, Adjusted Employer's Tax Return or Claim for Refund Return Filed — No TC 150 Posted If an original return is secured, complete processing of the Form 941-X as per guidance in (6) above after the original return is posted. 3) The CII case notes indicate multiple RAAS disallowance filters were met Each failed filter must be considered: As appropriate, consider handling guidance provided in this subsection as well as any applicable guidance in other subsections based on the identified failed filters. If the Form 94XX is deemed processable after all applicable guidance has been considered (i.e., did not meet rejection or "no consideration" criteria), then take action as appropriate to fully or partially disallow the Form 94XX. When issuing the appropriate 105C or 106C disallowance letter, insert text into the letter as described in the previous rows of this table as well as any text provided in other subsections applicable to the other failed filter(s).

# Disallowance of Form 94XX ERC Claims Meeting RAAS Filtering Criteria for Overclaimed Qualified Sick and Family Leave (QSFL) and Employee Retention Credit (ERC)

21.7.2.7.8.12 (04-28-2025) Disallowance of Form 94XX ERC Claims Meeting RAAS Filtering Criteria for Overclaimed Qualified Sick and Family Leave (QSFL) and Employee Retention Credit (ERC) Certain Form 94XX cases reflecting Employee Retention Credit (ERC) adjustment requests are being released to be worked by AM after having been analyzed by Research, Applied Analytics & Statistics (RAAS). These cases will be delivered to AM with instructions on how the ERC portion of the claim or adjustment is to be handled (i.e., additional handling required, assessment to be made, claim is allowable, disallowance criteria, or partial disallowance criteria). Caution: RAAS analysis for these cases generally does not include consideration of non-ERC related tax items that may be reported on a Form 94XX, including those with a mix of ERC and non-ERC change items. This subsection provides handling guidance for Forms 94XX reporting ERC amounts which were identified by RAAS as being filed by employers who are claiming ERC credit for using the same wages to justify claims for both Sick and Family Leave (SFL) and Employee Retention Credit (ERC). The IRS has determined that Forms 94XX reporting new or increased ERC amounts (only) filed for accounts meeting the specified filtering criteria for overclaimed qualified sick leave will be formally disallowed. Cases identified by RAAS for disallowance handling per guidance in this subsection will be identified to AM as follows: IDRS Number: 0230281088 CII case notation: "RiskedERC-Disallow" and "Overclaim-SFL" Note: CII case notes for these cases will also indicate the EIN and tax period that was identified during data transcription for RAAS analysis. This information is a factor in processing validation described in (5) below. Note: CII case notes for these cases may indicate multiple filtering criteria as having been met. If so, the first case notation is deemed the primary indicator and controls handling. Additional filtering notes are deemed secondary indicators and are potentially a factor in handling as discussed in the last row of the table in (6) below. All other Form 94XX processing guidelines and requirements also apply to Forms 94XX reporting changes to ERC that have been identified to AM by RAAS as having been filed for accounts meeting the specified filtering criteria for overclaimed qualified sick and family leave. Forms 94XX so identified by RAAS have generally not been reviewed for completeness (e.g., presence of signature, certification block(s) marked, etc.) and processability (e.g., prior figures match, mathematically correct, etc.). As such, all preliminary reviews to ensure the Form 94XX is complete for processing must be conducted before taking action to disallow the Form 94XX on the basis of it having failed filtering analysis for overclaimed qualified sick and family leave. As usual: Review the Form 94XX for completeness and processability (e.g., for a Form 941-X claim, see (2) and (3) in IRM 21.7.2.4.5.6.2, Form 941-X Tax Decrease — Claim). Perfect or reject any unprocessable Forms 94XX as appropriate. Exception: If there is no posted original return, do not follow guidance in IRM 21.7.2.4.4.6, Adjusted Employer's Tax Return or Claim for Refund Return Filed — No TC 150 Posted unless directed to do so per instructions in (7) below and do not follow procedures in IRM 21.7.2.7.8.4, Form 94XX ERC Claims Meeting RAAS Filtering Criteria for Missing Original Returns (No TC 150). Continue processing as per guidance in this paragraph and then follow guidance in (7) below instead of (6). Caution: The missing TC 150 condition will generally be identified by RAAS in the CII case notes. However, AM employees are responsible for reviewing the account for the presence of an original return when processing the released Form 941-X regardless of whether such a note is present and for applying (6) or (7) guidance below as appropriate. Review for account conditions that require special handling (i.e., open CAT-A or AIMS status, RICS/RIVO/IDT, etc.) which must be addressed prior to taking further action on the Form 94XX. Suspend, route, or otherwise address the account condition encountered as appropriate. In addition, if a Form 94X-X is received that is a duplicate of a previously processed ERC claim, do not rework the original claim based on any subsequent RAAS analysis. In addition, compare the EIN and tax period entered on the Form 941-X to the EIN and tax period specified in CII case notes releasing the case to be worked. Caution: If the tax period or EIN shown on the form do not match CII case controls or the tax period or EIN specified in CII case notes releasing the case to be worked do not match CII case controls, the case must be returned to RAAS for additional analysis. Take the following actions to refer such a case for further RAAS consideration: 1) Correct case controls as necessary and appropriate. 2) Enter/update the case with Priority Code 6. 3) Enter the appropriate case note as follows: "EIN mismatch" or "Tax Period mismatch" or "EIN and Tax Period mismatch" 4) Reassign the case to IDRS number 0230281416. Note: Procedures found in (6) below do not apply to Form 94XX cases rejected or "no-considered" as the result of following guidance in (5) above and such cases do not require further RAAS consideration. Reminder: The ASED has expired on Form 94XX for 2020 and 2021 except for certain ERC credits for 2021. See IRM 25.6.1.9.5.10,COVID-19 Related Employment Tax Credits for information regarding 2021 tax periods with an extended ASED. The suspended inventory was reviewed for statute imminent 2020 and 2021 account situations prior to normal ASED expirations of April 15, 2024 and April 15, 2025. There is still heightened risk of encountering statute barred assessments in this work. Consider guidance in (2) of IRM 25.6.1.13.2.6, Routing and Controlling Form 9355, if such cases are identified. For accounts with a posted TC 150 original return: After applying the guidance in (5) above, continue handling processable Forms 94XX identified to AM by RAAS as having been filed for accounts meeting the specified filtering criteria overclaimed qualified sick and family leave as follows: If And Then 1) The Form 94XX reports only changes to ERC Disallow the claim: Complete a TC 290 .00 adjustment in Blocking Series 98 or 99 as appropriate (see (1) in IRM 21.5.3.4.6.1 ,Disallowance and Partial Disallowance Procedures) to record a full disallowance of the claim. Send Letter 105C as per instructions in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures and insert the following text in two open paragraphs: " "The amount of qualified wages you used to calculate your Employee Retention Credit uses the same wages you previously used to claim the Sick and Family Leave credit. You can't claim ERC on wages previously used to claim the Sick and Family Credit." "For more information on Employee Retention Credit (ERC) eligibility requirements and how to respond to this letter if you disagree, please see irs.gov/erc105c." 2) The Form 94XX reports other tax or credit changes in addition to ERC changes The other changes do not meet CAT-A criteria when considered separately from the ERC changes reported Partially disallow the claim: Complete a TC 29X adjustment in Blocking Series 18 or 00 as appropriate (see (2) in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures) with appropriate IRNs/CRNs to record the allowable portion of the correction requested on the Form 94XX. Send Letter 106C as per instructions in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures and insert the following text in two open paragraphs: "The amount of qualified wages you used to calculate your Employee Retention Credit uses the same wages you previously used to claim the Sick and Family Leave credit. You can't claim ERC on wages previously used to claim the Sick and Family Credit." "For more information on Employee Retention Credit (ERC) eligibility requirements and how to respond to this letter if you disagree, please see irs.gov/erc106c." 3) The Form 94XX reports other tax or credit changes in addition to ERC changes The other changes do meet CAT-A criteria when considered separately from the ERC changes reported Complete the CAT-A referral as usual. Take action to complete processing of the Form 94XX based on instructions received from Exam Classification when the case is returned including (as appropriate): • Completing an adjustment as per guidance in other rows of this table to record a full or partial disallowance. • Issuing an appropriate 105C or 106C full/partial disallowance letter with text as per guidance in other rows of this table or as instructed by Exam Classification. 4) The CII case notes indicate multiple RAAS disallowance filters were met Each failed filter must be considered: As appropriate, consider handling guidance provided in this subsection as well as any applicable guidance in other subsections based on the identified failed filters. If the Form 94XX is deemed processable after all applicable guidance has been considered (i.e., did not meet rejection or "no consideration" criteria), then take action as appropriate to fully or partially disallow the Form 94XX. When issuing the appropriate 105C or 106C disallowance letter, insert text into the letter as described in the previous rows of this table as well as any text provided in other subsections applicable to the other failed filter(s). For accounts with no posted TC 150 original return: After applying the guidance in (5) above, continue handling otherwise processable Forms 94XX identified to AM by RAAS as having been filed for accounts meeting the specified filtering criteria for Overclaimed Qualified Sick Leave (SFL) and Employee Retention Credit (ERC) as follows: If Then 1) The Form 94XX reports only changes to ERC Disallow the claim: Input a TC 971 AC 002 to release the E- freeze if a TC 971 AC 010 was previously input. Send Letter 105C as per instructions in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures and insert the following text in two open paragraphs: "The amount of qualified wages you used to calculate your Employee Retention Credit uses the same wages you previously used to claim the Sick and Family Leave credit. You can't claim ERC on wages previously used to claim the Sick and Family Credit." "For more information on Employee Retention Credit (ERC) eligibility requirements and how to respond to this letter if you disagree, please see IRS.gov/erc105c." 2) The Form 94XX reports other tax or credit changes in addition to ERC changes Follow guidance in IRM 21.7.2.4.4.6, Adjusted Employer's Tax Return or Claim for Refund Return Filed — No TC 150 Posted If an original return is secured, complete processing of the Form 941-X as per guidance in (6) above after the original return is posted. 3) The CII case notes indicate multiple RAAS disallowance filters were met Each failed filter must be considered: As appropriate, consider handling guidance provided in this subsection as well as any applicable guidance in other subsections based on the identified failed filters. If the Form 94XX is deemed processable after all applicable guidance has been considered (i.e., did not meet rejection or "no consideration" criteria), then take action as appropriate to fully or partially disallow the Form 94XX. When issuing the appropriate 105C or 106C disallowance letter, insert text into the letter as described in the previous rows of this table as well as any text provided in other subsections applicable to the other failed filter(s).

# Handling of Form 94XX ERC Claims Meeting RAAS Filtering Criteria for Risked ERC-Exam Potential

21.7.2.7.8.13 (04-28-2025) Handling of Form 94XX ERC Claims Meeting RAAS Filtering Criteria for Risked ERC-Exam Potential Certain Form 94XX cases reflecting Employee Retention Credit (ERC) adjustment requests are being released to be worked by AM after having been analyzed by Research, Applied Analytics & Statistics (RAAS). These cases will be delivered to AM with instructions on how the ERC portion of the claim or adjustment is to be handled (i.e., additional handling required, claim is allowable, or partial disallowance criteria). Caution: RAAS analysis for these cases generally does not include consideration of non-ERC related tax items that may be reported on a Form 94XX, including those with a mix of ERC and non-ERC change items. This subsection provides handling guidance for Forms 94XX reporting ERC amounts which were identified by RAAS as needing further review. The IRS has determined that Forms 94XX reporting new or increased ERC amounts meet the specified filtering criteria for needing further review will show risked ERC-exam potential. Cases identified by RAAS for handling per guidance in this subsection will be identified to AM as follows: IDRS Number: 0230488068 CII case notation: "RiskedERC-Review" and "Risked ERC-Exam Potential" Note: CII case notes for these cases will also indicate the EIN and tax period that was identified during data transcription for RAAS analysis. This information is a factor in processing validation described in (5) below. All other Form 94XX processing guidelines and requirements also apply to Forms 94XX reporting changes to ERC that have been identified to AM by RAAS as having been filed for accounts meeting the specified filtering criteria for risked ERC-exam potential. Forms 94XX so identified by RAAS have generally not been reviewed for completeness (e.g., presence of signature, certification block(s) marked, etc.) and processability (e.g., prior figures match, mathematically correct, etc.). As such, all preliminary reviews to ensure the Form 94XX is complete for processing must be conducted before taking action on the Form 94XX on the basis of RAAS determination risked ERC-exam potential. As usual: Review the Form 94XX for completeness and processability (e.g., for a Form 941-X claim, see (2) and (3) in IRM 21.7.2.4.5.6.2, Form 941-X Tax Decrease — Claim). Perfect or reject any unprocessable Forms 94XX as appropriate. AM employees must review the account for the presence of an original return when processing the released Form 941-X. If there is no posted original return, follow guidance in IRM 21.7.2.4.4.6, Adjusted Employer's Tax Return or Claim for Refund Return Filed — No TC 150 Posted, per instructions in (7) below Review for account conditions that require special handling (i.e., open CAT-A or AIMS status, RICS/RIVO/IDT, etc.) which must be addressed prior to taking further action on the Form 94XX. Suspend, route, or otherwise address the account condition encountered as appropriate. In addition,If a Form 94X-X is received is a duplicate of a previously processed ERC claim, do not rework the original claim based on any subsequent RAAS analysis. Compare the EIN and tax period match on the Form 941-X to the EIN and tax period specified in RAAS CII case notes releasing the case to be worked. Caution: If the tax period or EIN shown on the form do not match CII case controls or the tax period or EIN specified in CII case notes releasing the case to be worked do not match CII case controls, the case must be returned to RAAS for additional analysis. Take the following actions to refer such a case for further RAAS consideration: 1) Correct case controls as necessary and appropriate. 2) Enter/update the case with Priority Code 6. 3) Enter the appropriate case note as follows: "EIN mismatch" or "Tax Period mismatch" or "EIN and Tax Period mismatch" 4) Reassign the case to IDRS number 0230281416. Reminder: The ASED has expired on Form 94XX for 2020 and 2021 except for certain ERC credits for 2021 IRM 25.6.1.9.5.10. COVID-19 Related Employment Tax Credits. The suspended inventory was reviewed for statute imminent 2020 and 2021 account situations prior to normal ASED expirations of April 15, 2024 and April 15, 2025. There is still heightened risk of encountering statute barred assessments in this work. Consider guidance in (2) of IRM 25.6.1.13.2.6, Routing and Controlling Form 9355, if such cases are identified. Note: Procedures found in (6) below do not apply to Form 94XX cases rejected or "no-considered" as the result of following guidance in (5) above and such cases do not require further RAAS consideration. For accounts with a posted TC 150 original return: After applying the guidance in (5) above, continue handling processable Forms 94XX identified to AM by RAAS as having been filed for accounts meeting the specified filtering criteria risked ERC-exam potential as follows: If And Then 1) The Form 94XX reports only changes to ERC and/or the Form 94XX reports other tax or credit changes in addition to ERC changes ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ See IRM 21.7.2.7.6.3, Form 94XX — Employee Retention Credit (ERC) — Claims and Adjustments Cleared for Processing (Accepted) by RAAS and Forms 94XX Reporting Tax Increases or Credit Decreases To execute the worksheet using normal guidance. 2) The Form 94XX reports only changes to ERC or the Form 94XX reports other tax and/or credit changes in addition to ERC changes ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ 3) The Form 94XX reports other tax or credit changes in addition to ERC changes The other changes do meet CAT-A criteria when considered separately from the ERC changes reported and ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Complete the CAT-A referral per IRM 21.5.3-2, Examination Criteria (CAT-A) - General. 4) The Form 94XX reports other tax or credit changes in addition to ERC changes The other changes do meet CAT-A criteria when considered separately from the ERC changes reported and ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Reminder: The ASED has expired on Form 94XX for 2020 and 2021 with the exception of certain ERC credits for 2021 outlined in IRM 25.6.1.9.5.10, COVID-19 Related Employment Tax Credits. For accounts with no posted TC 150 original return: After applying the guidance in (5) above, continue handling otherwise processable Forms 94XX identified to AM by RAAS as having been filed for accounts meeting the specified filtering criteria for risked ERC-exam potential as follows: If Then The Form 94XX reports other tax or credit changes in addition to ERC changes or ERC only Follow guidance in IRM 21.7.2.4.4.6, Adjusted Employer's Tax Return or Claim for Refund Return Filed — No TC 150 Posted If an original return is secured, complete processing of the Form 94X-X as per guidance in (6) above after the original return is posted.

# ERC Voluntary Disclosure Programs (ERC VDP)

21.7.2.7.9 (09-04-2024) ERC Voluntary Disclosure Programs (ERC VDP) As part of an initiative aimed at combating dubious and inaccurate Employee Retention Credit (ERC) claims, the IRS announced two separate ERC Voluntary Disclosure Program (ERC VDP). These programs were created to help businesses who wanted to pay back the money they received after filing incorrect ERC claims. The first ERC Voluntary Disclosure Program (ERC VDP) was open for taxpayer applications from the date of announcement on December 21, 2023 through March 22, 2024. Employers meeting requirements for the first ERC VDP: Were generally required to repay 80 percent of the erroneous ERC amount claimed. Were not required to repay associated overpayment interest allowed when erroneously claimed ERC was recorded by the IRS. Were not charged penalties and interest otherwise associated with the erroneous ERC claimed if the required amount is paid in full when due. For the first ERC VDP, employers could request consideration for ERC claimed on employment tax returns filed for tax periods 202006 through 202112. The first ERC VDP announcement can be found at the following link: Announcement 2024-03 Additional information for the first ERC VDP can be found by searching for "IR-2023-247" on the IRS website or via the following link:IRS: New Voluntary Disclosure Program lets employers who received questionable Employee Retention Credits pay them back at discounted rate; interested taxpayers must apply by March 22 The second ERC Voluntary Disclosure Program (ERC VDP) was open for taxpayer applications from the date of the announcement on August 15, 2024 through November 22, 2024. Employers meeting requirements for the second ERC VDP: Were generally required to repay 85 percent of the erroneous ERC amount claimed. Were not be required to repay associated overpayment interest allowed when erroneously claimed ERC was recorded by the IRS. Were not be charged penalties and interest otherwise associated with the erroneous ERC claimed if the required amount is paid in full when due. For the second ERC VDP, employers could request consideration for ERC claimed on employment tax returns filed for tax periods 202103 through 202112 (but not for tax periods 202006 through 202012). The program announcement for the second ERC VDP can be found at the following link: Announcement 2024-30 Additional information for the second ERC VDP can be found by searching for "IR-2024-213" on the IRS website or via the following link: IRS provides details of second Employee Retention Credit Voluntary Disclosure Program; program for improper claims open through Nov. 22 To apply for ERC VDP consideration, employers were required to file Form 15434, Application for Employee Retention Credit Voluntary Disclosure Program, via the Document Upload Tool (DUT). Note: The form was updated in August 2024 to correspond with the second ERC VDP. Note: Paper receipts of Form 15434 were expected to be exceedingly rare. However, if a paper Form 15434 is received in AM inventory, fax the Form 15434 along with any directly associated attachments or correspondence to Erik W. Anderson at e-fax 877-455-6833. As appropriate, close any case opened in association with receipt of the Form 15434. AM telephone assistors should not attempt to assist callers with questions regarding the ERC VDP programs. Instead, direct any caller making inquiries regarding the ERC VDP to the appropriate IRS website information as identified above in (3) or (4) depending on whether the inquiry relates to either the first or second ERC VDP. Note: Callers can also be informed of the option to leave a voice message with questions via the ERC-VDP hotline (not toll-free) identified in the Form 15434 instructions. Accepted ERC VDP requests were recorded via a tax adjustment on the associated tax account in the amount of either 80 percent (applications received for the first ERC VDP) or 85 percent (applications received for the second ERC VDP) of the previous erroneous ERC amount claimed. Payments made for ERC VDP applications are posted to the associated tax account(s) for which erroneous ERC claims were filed and processed. Documentation of final actions for applications under ERC VDP include input of TC 971 transactions with Action Code (AC) 804: TC 971 with AC 804 and a MISC field entry of "C ERC-VDP ACCEPT" indicates an accepted application. The TC 804 transaction date is the execution date of the associated closing agreement. TC 971 with AC 804 and a MISC field entry of "C ERC-VDP REJECT" indicates a rejected application. The TC 804 date is generally the date the application was closed in the ERC-VDP group.

# Letter Replies for Non-examined COVID-19 Related Credit Reversal Compliance Projects

21.7.2.7.10 (04-24-2025) Letter Replies for Non-examined COVID-19 Related Credit Reversal Compliance Projects SBSE operates a number of filters designed to identify accounts warranting additional scrutiny after COVID-19 related employment tax credits were allowed. For cases so identified, the IRS generally issues a "soft" contact letter requesting additional information to substantiate the previously allowed credit(s). Generally, the letters indicate the IRS may disallow/reverse the credits if sufficient supporting information is not received. Taxpayers receiving the letters from Ogden Campus Exam/AUR (OCEA) should respond to the fax or phone number provided in the letter. Letter Fax Number Phone Number Hours of Operation 6327, 6328, 6348, 6378, 6379, 6362, 6362-A, 6507, 6530, 6531, 6552, 6554 855-246-4884 Voice mail box 801-612-4558 The taxpayer calling this number will receive a returned call within 5 business days. 6577, 6577C 855-246-4884 Ogden Campus Exam/AUR (OCEA) 844-854-0075 Monday through Friday 12:00 PM to 4:00 PM ET. The subsections which follow provide information for handling responses/inquiries received in AM for the following letters associated with these compliance workstreams: Letter TXMOD May Reflect Activity Code Letter 6327 "TUCMPLT" Letter 6328 "COVIDTU" Letter 6348 "COVIDTU" Letter 6378 "WF4LTR6378" , or "WF5LTR6378" , or "WF6LTR6378" Letter 6379 "WF4LTR6379" , or "WF5LTR6379" , or "WF6LTR6379" Letter 6362, or Letter 6362-A "CVDGEMMDD" Letter 6507 "WF7SFL1I" Letter 6530 "18BRSBQ4" Letter 6531 "18BRSBQ2" Letter 6552 "ZEROFTDCVD" Letter 6554 "SFLCRDT22" Letter 6577 "ERCRCPTR" Letter 6577C "ERCRCPTR" Note: The letter issued is also generally recorded on ENMOD. . Reversals of credits pursuant to these workstreams are completed with TC 29X adjustments via ADJ54. IDRS prefix numbers associated with the input of these adjustments may include "04606" , "04636" , "04634" , "04693" ,"04835" , and "04697" . IDRS command code BMFOLA can be used to research the IDRS number of the employee who input the adjustment. Note: SBSE initiated a programming request for validation of TC 971 closing code 804 for use in identifying adjustments they made/make pursuant to these workstreams. Tentatively, SBSE expects to initiate a recovery effort to enter the TC 971 transactions on all previously processed adjustment cases once functionality is delivered (currently expected to be operational in early July of 2024). This IRM will be updated with more information on this topic once the TC 971 closing code functionality has been delivered by IT. Transaction code (TC) 971 AC 804 is input to identify adjustments made pursuant to these workstreams. Programming for the TC 971 AC 804 was implemented in September of 2024. Adjustments input on accounts prior to this date may not be coded with a TC 971 AC 804. SBSE has initiated a recovery effort to enter the TC 971 transactions on all previously processed adjustment cases. The MISC field of the TC 971 AC 804 will show "LXXXX Y MMYYYY" defined below: LXXXX – The letter or C letter sent to the taxpayer for the account. Y- If a Letter 6577 or Letter 6577C was issued, the paragraph or selective paragraph that was included in the letter or C letter. MMYYYY- The month and year the letter was issued to the taxpayer. Use the following table when working CII cases on accounts with prior non-examined adjustment input by Ogden Campus Exam/AUR (OCEA): If And Then 1) The case is correspondence only disputing the prior adjustment input by OCEA Reroute the case to OCEA by sending an email to *SBSE OCEA CARES Referral Include EIN, MFT, tax period, CII case ID number, IRS received date of CII case, and any other pertinent case information in the email. CC your manager and lead. Close the CII case. 2) A Form 94XX is received No adjustments to ERC, QSFL, or COBRA are requested Follow normal procedures. 3) A Form 94XX is received The adjustment includes ERC, QSFL, or COBRA Guidance is needed from Ogden Campus Exam/AUR (OCEA) prior to adjusting the account. Send an email to *SBSE OCEA CARES Referral, requesting guidance on actions to resolve the Form 94XX. Include the following information in the email: EIN, MFT, tax period, CII case ID number, IRS received date of CII case, and any other pertinent case information. On the subject line include the appropriate COVID Credit type (CARES or ERC), BOD and CII case ID number. See note below for examples. CC your manager and lead. Open an OCEA IDRS control to0463491457 with activity code "OCEAREF", status "A", category code "IRRQ". Input a STAUP if appropriate. Suspend the case for 30 days and update your activity code to "OCEAREFMMDD". When the reply is received take actions according to the reply. Attach a copy of the reply to the CII case. Note: If a reply is not received within 30 days elevate the request through your P&A analyst. 4) All other cases not meeting the criteria in the rows above (i.e., credit transfer request, correspondence agreeing with the adjustment but providing missing Form W-2, etc) Follow normal procedures. Note: OCEA has AMS access and can view CII documents. Note: Examples for subject line of e-mail: Replies to 6577 and 6577C - Subject: ERC Referral Accounts Management, LB, CISXXXXXX. Replies to all other letters issued by OCEA - Subject: CARES Referral Accounts Management, SB, CISXXXXXX.

# Letter 6327, Letter 6328, Letter 6348, Letter 6378, and Letter 6379 Replies

21.7.2.7.10.1 (04-26-2024) Letter 6327, Letter 6328, Letter 6348, Letter 6378, and Letter 6379 Replies Workstream name: True-Up Workstreams Letter 6327, Letter 6328, Letter 6348, Letter 6378, or Letter 6379 is sent to employers who received an advanced payment of COVID related employment tax credit(s) as requested on Form 7200 but who did not properly reconcile the advance payment amount(s) received when they subsequently filed the related Form 941. Filing scenarios where these letters may be issued include: Letter 6327: Issued as a closing letter on accounts for which Letter 6348 (discussed below) was issued. (TXMOD may reflect activity code "TUCMPLT" .) Letter 6328: Third Party Payer (TPP) advance payment recipient (i.e., aggregate employment tax return filer) filed their corresponding employment tax return but did not attach Schedule R as required. (TXMOD may reflect activity code "COVIDTU" .) Letter 6348: Employer advance payment recipient or Third Party Payer (TPP) advance payment recipient (i.e., aggregate employment tax return filer) filed their corresponding employment tax return but the COVID related credit advance does not reconcile. (TXMOD may reflect activity code "COVIDTU" .) Letter 6378: Employer advance payment recipient has not filed the corresponding employment tax return. (TXMOD may reflect activity code "WF4LTR6378" , "WF5LTR6378" , or "WF6LTR6378" ) Letter 6379: Third Party Payer (TPP) advance payment recipient (i.e., a client firm) indicated that their wages were reported on an employment tax return filed by the TPP (i.e., aggregate employment tax return filer) but the taxpayer is not listed on the associated Schedule R. (TXMOD may reflect activity code "WF4LTR6379" , "WF5LTR6379" , or "WF6LTR6379" .) Note: Incorrect credits claimed could include non-refundable and/or refundable portions of ERC, COBRA Premium Assistance Credit, and/or Credit for Qualified Sick and Family Leave Wages. Note: Additional information on reconciliation of advance payments of employment tax credits can be found in (6) and (7) of IRM 21.7.2.7.5, Form 7200, Advance Payment of Employer Credits due to COVID-19, and in IRM 21.7.2.7.5.4, Reconciliation of Advance Payment Amounts for Aggregate Employment Tax Return Filers The following table provides guidance on handling common Letter 6327, Letter 6328, Letter 6348, Letter 6378, and Letter 6379 response inquiries: If Then 1) Taxpayer is referring to a Letter 6327, Letter 6328, Letter 6348, Letter 6378, or Letter 6379 they received (either before or after a credit reversal was completed on the tax account) Refer the taxpayer to the letter they received for information on the change made to their account and how to resolve any concerns. As appropriate, share information provided in (2) above to explain the change made to their account. 2) If the taxpayer is referring to a notice of adjustment or balance due notice Advise the taxpayer that they should have received a Letter 6327, Letter 6328, Letter 6348, Letter 6378, or Letter 6379 explaining the change made to their account. Refer the taxpayer to the letter for information on the change made to their account and how to resolve any concerns. As appropriate, share information provided in (2) above to explain the change made to their account. 3) If the taxpayer disagrees with the letter or notice after the reason for the change to their account is explained Advise the taxpayer to respond as per the instructions in the letter or notice they received. The taxpayer can also be referred to Publication 594, The IRS Collection Process. Advise the taxpayer they can also fully pay the account and file a claim for refund. Reminder: Response handling will generally benefit from accessing the appropriate letter template (i.e., Letter 6327, Letter 6328, Letter 6348, Letter 6378, or Letter 6379) for reference purposes. Note: Inquiries where the taxpayer agrees with a credit reversal (proposed or posted) but has questions or concerns with paying amounts due are to be addressed, as appropriate, per usual handling guidance.

# Letter 6362 and Letter 6362-A Replies

21.7.2.7.10.2 (04-26-2024) Letter 6362 and Letter 6362-A Replies Workstream name: Government Entity (GE) Letter 6362 or Letter 6362-A is sent to a government entity to advise of credit disallowance due to ineligibility for Employee Retention Credit (ERC) and/or Credit for Qualified Sick and Family Leave Wages. Employers receiving Letter 6362 or Letter 6362-A are government entity employers who were not eligible for the COVID related employment tax credits they claimed on an original or amended employment tax return. The incorrect credits claimed could include non-refundable and/or refundable portions of Employee Retention Credit (ERC) and/or Credit for Qualified Sick and Family Leave Wages. The employer's government entity status is verified with the Federal, State & Local Government (FSLG) operation before Letter 6362 or Letter 6362-A is sent. Generally, any additional information the taxpayer provided in response to the letter was considered in determining the change made to their tax account. The following table provides guidance on handling common Letter 6362 and Letter 6362-A response inquiries: If Then 1) Taxpayer is referring to a Letter 6362 or Letter 6362-A they received (either before or after a credit reversal was completed on the tax account) Refer the taxpayer to the Letter 6362 or Letter 6362-A for information on the change made to their account and how to resolve any concerns. As appropriate, share information provided in (2) above to explain the change made to their account. 2) If the taxpayer is referring to a notice of adjustment or balance due notice Advise the taxpayer that they should have received Letter 6362 or Letter 6362-A explaining the change made to their account and refer the taxpayer to the letter for information on the change made to their account and how to resolve any concerns. As appropriate, share information provided in (2) above to explain the change made to their account. 3) If the taxpayer disagrees with the letter or notice after the reason for the change to their account is explained Advise the taxpayer to respond as per the instructions in the Letter 6362 or Letter 6362-A or notice they received. The taxpayer can also be referred to Publication 594, The IRS Collection Process. Advise the taxpayer they can also fully pay the account and file a claim for refund. Reminder: Response handling will generally benefit from accessing the Letter 6362 or Letter 6362-A template for reference purposes. Note: Inquiries where the taxpayer agrees with a credit reversal (proposed or posted) but has questions or concerns with paying amounts due are to be addressed, as appropriate, per usual handling guidance.

# Letter 6507 Replies

21.7.2.7.10.3 (04-26-2024) Letter 6507 Replies Workstream name: Sick & Family Leave >500 Letter 6507 is sent to employers with more than 500 employees who claimed Credit for Qualified Sick and Family Leave Wages in error. Employers receiving Letter 6507 were not eligible for the Credit for Qualified Sick and Family Leave Wages they claimed on an original or amended employment tax return because they had more than 500 employees for the period(s) they claimed the credit. The incorrect credits claimed could include non-refundable and/or refundable portions of Credit for Qualified Sick and Family Leave Wages. Generally, any additional information the taxpayer provided in response to the letter was considered in determining the change made to their tax account. Note: TXMOD may reflect Activity Code "WF7SFL1I" . The following table provides guidance on handling common Letter 6507 response inquiries: If Then 1) Taxpayer is referring to a Letter 6507 they received (either before or after a credit reversal was completed on the tax account) Refer the taxpayer to the Letter 6507 for information on the change made to their account and how to resolve any concerns. As appropriate, share information provided in (2) above to explain the change made to their account. 2) If the taxpayer is referring to a notice of adjustment or balance due notice Advise the taxpayer that they should have received Letter 6507 explaining the change made to their account and refer the taxpayer to the letter for information on the change made to their account and how to resolve any concerns. As appropriate, share information provided in (2) above to explain the change made to their account. 3) If the taxpayer disagrees with the letter or notice after the reason for the change to their account is explained Advise the taxpayer to respond as per the instructions in the Letter 6507 or notice they received. The taxpayer can also be referred to Publication 594, The IRS Collection Process. Advise the taxpayer they can also fully pay the account and file a claim for refund. Reminder: Response handling will generally benefit from accessing the Letter 6507 template for reference purposes. Note: Inquiries where the taxpayer agrees with a credit reversal (proposed or posted) but has questions or concerns with paying amounts due are to be addressed, as appropriate, per usual handling guidance.

# Letter 6530 Replies

21.7.2.7.10.4 (04-26-2024) Letter 6530 Replies Workstream name: Recovery Startup Business Q4 Letter 6530 is sent to employers who claimed Employee Retention Credit (ERC) in the fourth quarter of 2021 (tax period 202112) but did not identify themselves as an Recovery Startup Business (RSB). The only employers who were eligible to claim ERC in the 4th quarter of 2021 were RSBs. The incorrect credits claimed could include non-refundable and/or refundable portions of ERC. Generally, any additional information the taxpayer provided in response to the letter was considered in determining the change made to their tax account. Note: TXMOD may reflect Activity Code "18BRSBQ4" . Note: Additional information on Recovery Startup Businesses (RSBs) can be found in (4) of IRM 21.7.2.7.2.3, Employee Retention Credit (ERC) — The American Rescue Plan Act of 2021 (the ARP) Provisions, and in (2) of IRM 21.7.2.7.2.4, Employee Retention Credit (ERC) — Infrastructure Investment and Jobs Act (Infrastructure Act) Provisions. The following table provides guidance on handling common Letter 6530 response inquiries: If Then 1) Taxpayer is referring to a Letter 6530 they received (either before or after a credit reversal was completed on the tax account) Refer the taxpayer to the Letter 6530 for information on the change made to their account and how to resolve any concerns. As appropriate, share information provided in (2) above to explain the change made to their account. 2) If the taxpayer is referring to a notice of adjustment or balance due notice Advise the taxpayer that they should have received Letter 6530 explaining the change made to their account and refer the taxpayer to the letter for information on the change made to their account and how to resolve any concerns. As appropriate, share information provided in (2) above to explain the change made to their account. 3) If the taxpayer disagrees with the letter or notice after the reason for the change to their account is explained Advise the taxpayer to respond as per the instructions in the Letter 6530 or notice they received. The taxpayer can also be referred to Publication 594, The IRS Collection Process. Advise the taxpayer they can also fully pay the account and file a claim for refund. Reminder: Response handling will generally benefit from accessing the Letter 6530 template for reference purposes. Note: Inquiries where the taxpayer agrees with a credit reversal (proposed or posted) but has questions or concerns with paying amounts due are to be addressed, as appropriate, per usual handling guidance.

# Letter 6531 Replies

21.7.2.7.10.5 (04-26-2024) Letter 6531 Replies Workstream name: Recovery Startup Business Q2 Letter 6531 is sent to employers who claimed Employee Retention Credit (ERC) as a Recovery Startup Business (RSB) for the second quarter of 2021. No employers were eligible to claim ERC on the basis of being an RSB prior to the third quarter of 2021. The incorrect credits claimed could include non-refundable and/or refundable portions of ERC. Generally, any additional information the taxpayer provided in response to the letter was considered in determining the change made to their tax account. Note: TXMOD may reflect Activity Code "18BRSBQ2" . Note: Additional information on Recovery Startup Businesses (RSBs) can be found in (4) of IRM 21.7.2.7.2.3, Employee Retention Credit (ERC) — The American Rescue Plan Act of 2021 (the ARP) Provisions, and in (2) of IRM 21.7.2.7.2.4, Employee Retention Credit (ERC) — Infrastructure Investment and Jobs Act (Infrastructure Act) Provisions. The following table provides guidance on handling common Letter 6531 response inquiries: If Then 1) Taxpayer is referring to a Letter 6531 they received (either before or after a credit reversal was completed on the tax account) Refer the taxpayer to the Letter 6531 for information on the change made to their account and how to resolve any concerns. As appropriate, share information provided in (2) above to explain the change made to their account. 2) If the taxpayer is referring to a notice of adjustment or balance due notice Advise the taxpayer that they should have received Letter 6531 explaining the change made to their account and refer the taxpayer to the letter for information on the change made to their account and how to resolve any concerns. As appropriate, share information provided in (2) above to explain the change made to their account. 3) If the taxpayer disagrees with the letter or notice after the reason for the change to their account is explained Advise the taxpayer to respond as per the instructions in the Letter 6531 or notice they received. The taxpayer can also be referred to Publication 594, The IRS Collection Process. Advise the taxpayer they can also fully pay the account and file a claim for refund. Reminder: Response handling will generally benefit from accessing the Letter 6531 template for reference purposes. Note: Inquiries where the taxpayer agrees with a credit reversal (proposed or posted) but has questions or concerns with paying amounts due are to be addressed, as appropriate, per usual handling guidance.

# Letter 6552 Replies

21.7.2.7.10.6 (04-26-2024) Letter 6552 Replies Workstream name: *New – FTD Zero Letter 6552 is sent to employers who made Federal Tax Deposits (FTDs) and claimed refundable Employee Retention Credit (ERC), COBRA Premium Assistance Credit, and/or Credit for Qualified Sick and Family Leave Wages but did not report any FTDs on their associated employment tax return. The incorrect credits claimed could include refundable portions of ERC, COBRA Premium Assistance Credit, and/or Credit for Qualified Sick and Family Leave Wages. Generally, any additional information the taxpayer provided in response to the letter was considered in determining the change made to their tax account. Note: TXMOD may reflect Activity Code "ZEROFTDCVD" . The following table provides guidance on handling common Letter 6552 response inquiries: If Then 1) Taxpayer is referring to a Letter 6552 they received (either before or after a credit reversal was completed on the tax account) Refer the taxpayer to the Letter 6552 for information on the change made to their account and how to resolve any concerns. As appropriate, share information provided in (2) above to explain the change made to their account. 2) If the taxpayer is referring to a notice of adjustment or balance due notice Advise the taxpayer that they should have received Letter 6552 explaining the change made to their account and refer the taxpayer to the letter for information on the change made to their account and how to resolve any concerns. As appropriate, share information provided in (2) above to explain the change made to their account. 3) If the taxpayer disagrees with the letter or notice after the reason for the change to their account is explained Advise the taxpayer to respond as per the instructions in the Letter 6552 or notice they received. The taxpayer can also be referred to Publication 594, The IRS Collection Process. Advise the taxpayer they can also fully pay the account and file a claim for refund. Reminder: Response handling will generally benefit from accessing the Letter 6552 template for reference purposes. Note: Inquiries where the taxpayer agrees with a credit reversal (proposed or posted) but has questions or concerns with paying amounts due are to be addressed, as appropriate, per usual handling guidance.

# Letter 6554 Replies

21.7.2.7.10.7 (04-26-2024) Letter 6554 Replies Workstream name: TY22 Sick & Family Leave Letter 6554 is sent to employers who claimed Credit for Qualified Sick and Family Leave Wages on a 2022 or 2023 original or amended employment tax return and claimed the same credit on a 2020 or 2021 tax return. Credit for Qualified Sick and Family Leave Wages is only allowable in association with payments for leave taken after March 31, 1, 2020 and before October 1, 2021. Letter 6554 instructs the employer to review their records to ensure they were entitled to the credits claimed based on qualified wages paid for leave taken in 2020 and/or 2021 but claimed on a 2022 or 2023 return. The incorrect credits claimed could include non-refundable and/or refundable portions of Credit for Qualified Sick and Family Leave Wages. The credit(s) on the account are only reversed if the employer responds to the letter and agrees they were not eligible for the amount(s) claimed. Letter 6554 includes a page showing amounts claimed along with signature lines to obtain consent for reversal of credit(s). Note: TXMOD may reflect Activity Code "SFLCRDT22" . Note: Additional information on timeframes for claiming Credit for Qualified Sick and Family Leave Wages can be found in IRM 21.7.2.7.1.4, Timing Considerations Applicable to Reporting Qualified Sick and Family Leave Wages, Tax, and Associated Credits. The following table provides guidance on handling common Letter 6531 response inquiries: If And Then 1) Taxpayer is referring to a Letter 6554 they received (either before or after a credit reversal was completed on the tax account) Refer the taxpayer to the Letter 6554 for information on the change made to their account and how to resolve any concerns. As appropriate, share information provided in (2) above to explain the change made to their account. 2) If the taxpayer is referring to a notice of adjustment or balance due notice Advise the taxpayer that they should have received Letter 6554 explaining the change made to their account and refer the taxpayer to the letter for information on the change made to their account and how to resolve any concerns. As appropriate, share information provided in (2) above to explain the change made to their account. 3) If the taxpayer disagrees with the letter or notice after the reason for the change to their account is explained A credit reversal transaction has not been posted to the account Advise the taxpayer that as per the instructions in the Letter 6554 they are not required to respond to the letter if the credit amount(s) they claimed were correct. If the taxpayer wishes to respond, direct the taxpayer to submit their response via the fax line identified in the letter. 4) If the taxpayer disagrees with the letter or notice after the reason for the change to their account is explained A credit reversal transaction is pending or has posted to the account Advise the taxpayer to respond as per the instructions in the Letter 6554 or notice they received. The taxpayer can also be referred to Publication 594, The IRS Collection Process. Advise the taxpayer they can also fully pay the account and file a claim for refund. Reminder: Response handling will generally benefit from accessing the Letter 6554 template for reference purposes. Note: Inquiries where the taxpayer agrees with a credit reversal (proposed or posted) but has questions or concerns with paying amounts due are to be addressed, as appropriate, per usual handling guidance.

# Letter 6577 Replies

21.7.2.7.10.8 (04-26-2024) Letter 6577 Replies Letter 6577 is issued for three workstreams. The Letter 6577 template includes three selective paragraphs which correspond to the three workstreams. Workstream name: 2020 ERC Exceeds Computed ERC - based on W2 Counts Letter 6577 with selective paragraph 1 is sent to employers who claimed too much Employee Retention Credit (ERC) based on the count of 2020 Forms W-2 filed. Employers receiving Letter 6577 with selective paragraph 1 claimed ERC on a 2020 original or amended employment tax return but the amount of ERC claimed exceeded the $5,000 per employee limitation for the year. The incorrect credits claimed could include non-refundable and/or refundable portions of ERC. Generally, any additional information the taxpayer provided in response to the letter was considered in determining the change made to their tax account. Note: TXMOD may reflect Activity Code "ERCRCPTR" . Workstream name: 2020 ERC Exceeds Computed ERC – based on 50% (reported ERC wages + ERC health care expenses) Letter 6577 with selective paragraph 2 is sent to employers who claimed too much Employee Retention Credit (ERC) based on 50 percent of (reported ERC wages + ERC health care expenses). Employers receiving Letter 6577 with selective paragraph 2 claimed the ERC on a 2020 original or amended employment tax return but the amount of ERC claimed exceeded 50 percent of reported ERC wages and ERC health care expenses. The incorrect credits claimed could include non-refundable and/or refundable portions of ERC. Generally, any additional information the taxpayer provided in response to the letter was considered in determining the change made to their tax account. Note: TXMOD may reflect Activity Code "ERCRCPTR" . Workstream name: 2020 ERC Wages + Sick & Family Leave wages exceed total compensation for 2020. ERC wages reduced which results in ERC reduction Letter 6577 with selective paragraph 3 is sent to employers who claimed too much ERC based on the amount of total compensation they reported. Employers receiving Letter 6577 with selective paragraph 3 claimed ERC on a 2020 original or amended employment tax return but the ERC wages plus sick and family leave wages exceeds total compensation. ERC wages were reduced which results in a reduction to allowable credit amounts. The incorrect credits claimed could include non-refundable and/or refundable portions of ERC. Generally, any additional information the taxpayer provided in response to the letter was considered in determining the change made to their tax account. Note: TXMOD may reflect Activity Code "ERCRCPTR" . The following table provides guidance on handling common Letter 6577 response inquiries: If Then 1) Taxpayer is referring to a Letter 6577 they received (either before or after a credit reversal was completed on the tax account) Refer the taxpayer to the Letter 6577 for information on the change made to their account and how to resolve any concerns. As appropriate, share information provided in (2), (3), or (4) above to explain the change made to their account. 2) If the taxpayer is referring to a notice of adjustment or balance due notice Advise the taxpayer that they should have received Letter 6577 explaining the change made to their account and refer the taxpayer to the letter for information on the change made to their account and how to resolve any concerns. As appropriate, share information provided in (2), (3), or (4) above to explain the change made to their account. 3) If the taxpayer disagrees with the letter or notice after the reason for the change to their account is explained Advise the taxpayer to respond as per the instructions in the Letter 6577 or notice they received. Advise the taxpayer the IRS will consider late submissions of information supporting the amounts claimed. Additional information should be submitted via the fax line identified in the letter. The taxpayer can also be referred to Publication 594, The IRS Collection Process. Advise the taxpayer they can also fully pay the account and file a claim for refund. Reminder: Response handling will generally benefit from accessing the Letter 6577 template for reference purposes, keeping in mind the use of the three separate selective paragraphs for the related three workstreams. Note: Inquiries where the taxpayer agrees with a credit reversal (proposed or posted) but has questions or concerns with paying amounts due are to be addressed, as appropriate, per usual handling guidance.

# Letter 6577C Replies

21.7.2.7.10.9 (04-24-2025) Letter 6577C Replies Letter 6577C is issued for six workstreams. The Letter 6577C template includes six selective paragraphs which correspond with the workstreams. Workstream name: 2021 ERC Ineligibility – 2021 Tax Period Exceeds the Form W-2 for Tax Year 2021. Letter 6577C with selective paragraph B is sent to employers who claimed too much Employee Retention Credit (ERC) based on Form W-2 filed in 2021. Employers receiving Letter 6577C with paragraph B claimed ERC on a 2021 original or amended employment tax return but the amount of the ERC claimed exceeded the $7,000 per employee limitation per employee per quarter. The incorrect credits claimed could include non-refundable and/or refundable portions of ERC. Generally, any additional information the taxpayer provided in response to the letter is considered in determining the change made to their tax account. Note: TXMOD may reflect Activity Code "ERC RCPTR". Workstream name: 2021 ERC Ineligibility - Exceeds Computed ERC – Based on Employee Count Letter 6577C with paragraph C is sent to employers who claimed more than the maximum allowable ERC credit per employee for 2021. Letter 6577C with paragraph C is sent to employers who claimed too much Employee Retention Credit (ERC) based on the number of employees reported on Line 1 of their employment tax return for 2021. The incorrect credits claimed could include non-refundable and/or refundable portions of ERC. Generally, any additional information the taxpayer provided in response to the letter is considered in determining the change made to their tax account. Note: TXMOD may reflect Activity Code "ERC RCPTR". Workstream name: 2021 ERC Ineligibility - No Forms W-2 filed Letter 6577C with paragraph H is sent to employers who claimed Employee Retention Credit (ERC) and/or Qualified Sick and Family Leave (QSFL) credit but no Form W-2 were issued. Employers receiving Letter 6577C with paragraph H for this workstream were deemed ineligible for the ERC credit and/or Qualified Sick and Family Leave (QSFL) credit because there were no Form W-2 issued for the tax periods the ERC was claimed. The incorrect credits claimed could include non-refundable and/or refundable portions of ERC. Generally, any additional information the taxpayer provided in response to the letter is considered in determining the change made to their tax account. Note: TXMOD may reflect Activity Code "ERC RCPTR". Workstream name: 2021 ERC ineligibility – Business Established After the Period ERC Credits Claimed Letter 6577C with paragraph I is sent to employers who claimed Employee Retention Credit (ERC) and/or Qualified Sick and Family Leave (QSFL) credit for a tax period prior to the date their business was established per our records. Employers receiving Letter 6577C with paragraph I claimed ERC and/or Qualified Sick and Family Leave (QSFL) credit prior to the business establishment date. The incorrect credits claimed could include non-refundable and/or refundable portions of ERC. Generally, any additional information the taxpayer provided in response to the letter is considered in determining the change made to their tax account. Note: TXMOD may reflect Activity Code "ERC RCPTR". Workstream name: 2021 ERC ineligibility – No Net Payment Activity 2019-2022 Letter 6577C with paragraph O is sent to employers who claimed Employee Retention Credit (ERC) but did not have payment activity in 2019 to 2022. Employers receiving Letter 6577C with paragraph O is issued to taxpayers who claimed Employee Retention Credit (ERC) but did not have payment activity in 2019 to 2022. The incorrect credits claimed could include non-refundable and/or refundable portions of ERC. Generally, any additional information the taxpayer provided in response to the letter is considered in determining the change made to their tax account. Note: TXMOD may reflect Activity Code "ERC RCPTR". Workstream name: 2021 ERC ineligibility – Fourth quarter 2021 over $50,000 limit of ERC for a Recovery Startup Business (RSB) Letter 6577C with paragraph R is sent to a recovery startup business (RSB) employer who claimed Employee Retention Credit (ERC) which exceeded the $50,000 limit for the fourth quarter of 2021. Employers receiving Letter 6577C claimed ERC for a recovery startup business (RSB) who claimed Employee Retention Credit (ERC) over the $50,000 limit for the fourth quarter of 2021. The incorrect credits claimed could include non-refundable and/or refundable portions of ERC. Generally, any additional information the taxpayer provided in response to the letter is considered in determining the change made to their tax account. Note: TXMOD may reflect Activity Code "ERC RCPTR". The following table provides guidance on handling common Letter 6577C response inquiries: If Then 1) Taxpayer is referring to a Letter 6577C they received (either before or after a credit reversal was completed on the tax account) Refer the taxpayer to the Letter 6577C for information on the change made to their account and how to resolve any concerns. As appropriate, share information provided in the applicable paragraph above to explain the change made to their account. 2) If the taxpayer is referring to a notice of adjustment or balance due notice Advise the taxpayer that they should have received Letter 6577C explaining the change made to their account and refer the taxpayer to the letter for information on the change made to their account and how to resolve any concerns. As appropriate, share information provided in the applicable paragraph above to explain the change made to their account. 3) If the taxpayer disagrees with the letter or notice after the reason for the change to their account is explained Advise the taxpayer to respond as per the instructions in the Letter 6577C or notice they received. Advise the taxpayer the IRS will consider late submissions of information supporting the amounts claimed. Additional information should be submitted via the fax line identified in the letter. The taxpayer can also be referred to Publication 594, The IRS Collection Process. Advise the taxpayer they can also fully pay the account and file a claim for refund. Reminder: Response handling will generally benefit from accessing the Letter 6577C template for reference purposes, keeping in mind the use of the separate selective paragraphs for the related six workstreams. Note: Inquiries where the taxpayer agrees with a credit reversal (proposed or posted) but has questions or concerns with paying amounts due are to be addressed, as appropriate, per usual handling guidance.

# Replies to 105C Disallowance and 106C Partial Disallowance Letters issued disallowing ERC claims

21.7.2.7.11 (04-28-2025) Replies to 105C Disallowance and 106C Partial Disallowance Letters issued disallowing ERC claims The guidance in this subsection is intended to be applied by AM employees specifically designated to process replies to ERC claim disallowance letters. A response to Letter 105C or Letter 106C is treated as a new case using the guidelines in this subsection. AM assistors receiving calls from taxpayers regarding Letter 105C should direct callers to webpage Understanding Letter 105-C, Disallowance of the Employee Retention Credit, using friendly URLIRS.gov/erc105c. AM assistors receiving calls from taxpayers regarding Letter 106C should direct callers to webpage If you receive Letter 106-C about the Employee Retention Credit, using friendly URL IRS.gov/erc106c. The web pages provides the taxpayers with the steps to take in determining if they may be eligible, the time line for replying, what steps to take if they are disputing the disallowance and what they should include in the reply. It also instructs taxpayers on what will happen once their responses are received. The Letter 105C and Letter 106C also instruct taxpayers on what to submit if they disagree with the determination to disallow the ERC claim. Use the table below for Letter 105C or Letter 106C replies regarding ERC claims. If And Then 1) The taxpayer submits a copy of the Letter 105C or Letter 106C they received. No additional information is included and there is no indication the taxpayer is appealing the determination. Close the case as a "no consideration." Follow the procedures in IRM 21.5.3.4.6.3, No Consideration Procedures. 2) The taxpayer submits a reply to the Letter 105C or Letter 106C and additional information regarding the ERC claim. The disallowance was NOT a result of RAAS analysis, or provided by CAT-A AND CSR can review the prior ERC claim and the additional information to determine the taxpayer is eligible. Follow normal adjustment procedures. 3) The taxpayer submits a reply to the Letter 105C or Letter 106C and additional information regarding the ERC claim. The disallowance was NOT a result of RAAS analysis, or provided by CAT-A AND determination cannot be made to allow the claim. Link the prior CII case where the disallowance letter was sent. Follow the procedures in IRM 21.5.3.4.6.3, No Consideration Procedures, and explain what additional information is needed to make a determination. 4) The taxpayer submits a reply to the Letter 105C or Letter 106C and additional information regarding the ERC claim. The prior determination to disallow the claim was provided by CAT-A OR based on RAAS analysis. Link the prior CII case where the disallowance letter was sent. Attach any needed documentation listed in paragraph 4 below, Forward the case to CAT-A using HQ Reserved 9. 5) Taxpayer resubmits the same claim or resubmits a claim without new or additional information and a determination cannot be made to allow the claim. The taxpayer submits a statement requesting an appeal, where no prior Appeals consideration was made and was not previously closed with finality. See IRM 8.7.7.2.2, Liability Issues Previously Closed with Finality. Link the prior CII case where the claim was disallowed. Attach any needed documentation listed in paragraph 4 below, Forward the case to CAT-A using HQ Reserved 9. Ensure the following documents are attached to the CII case or link the CII case where the document is located before sending the case to CAT-A using HQ Reserved 9. Taxpayer's original disallowed claim. Copy of the Letter 105C or Letter 106C Taxpayer's request for an appeal (if the taxpayer submitted one.) Any additional documentation the taxpayer provided that may enable the ERC claim to be processed. Link any CII cases that contain original or amended returns to the CII case being forwarded for review. When the case is returned from Examination, follow IRM 21.7.2.7.11.1 , Previously Disallowed 105C and 106C replies of ERC Claims returned from Exam HQ Reserved 9.

# Previously Disallowed 105C and 106C replies of ERC Claims returned from Exam HQ Reserved 9

21.7.2.7.11.1 (03-17-2025) Previously Disallowed 105C and 106C replies of ERC Claims returned from Exam HQ Reserved 9 The guidance in this subsection is intended to be applied by AM employees specifically designated to process responses to ERC claim disallowance Letter 105C and Letter 106C that have been sent to CAT-A HQ Reserved 9. CAT-A will provide a case note in CII. Cases meeting Appeals criteria will be sent directly to Appeals by compliance. AM will be responsible for sending the Letter 86C. Follow the table below based on case note left by compliance in CII. Case note Actions Accepted - Allow in full Process the Form 94XX based on the figures on the Form per existing IRM guidance. Note: The ERC Math Verification Worksheet found in IRM 21.7.2.7.6.3 will NOT be used. Accepted - Allow in part Process the Form 94XX allowing the credits based on the figures provided in the CII case note. Send the Letter 106C. Use the notes in CII to provide the reason for the disallowance. Note: More information on the disallowance can be found in each applicable subsection of IRM 21.7.2.7.8, Additional Case Processing Actions and/or Disallowance Actions for Forms 94XX Meeting ERC - related Filtering Criteria. Note: The ERC Math Verification Worksheet found in IRM 21.7.2.7.6.3 will NOT be used. Routed to Appeals Exam will send case directly to appeals. AM will issue the Letter 86C In an open paragraph include the following text, "Your claim has been sent to the Independent Office of Appeals. Please allow 120 days for them to contact you regarding your claim." Provide the Appeals Customer Service telephone number 855-865-3401. Note: If cases sent to CAT-A HQ Reserved 9 need more information, compliance will obtain the information from the taxpayer.

# Deferred Payment of Social Security Taxes for 2020

21.7.2.8 (12-10-2024) Deferred Payment of Social Security Taxes for 2020 Two COVID-related relief provisions allowed certain employers to defer some deposits and payments of social security and Tier 1 railroad retirement taxes otherwise due for 2020: Section 2302 of P.L. 116-136, Coronavirus Aid, Relief, and Economic Security (CARES) Act, allowed all employers to defer the deposit and payment of the employer's share of social security taxes and certain railroad retirement taxes. See IRM 21.7.2.8.1, Deferred Payment of Employer's Share of Social Security Taxes for 2020, for more information. Guidance provided in Notice 2020-65, issued after a related Presidential Memorandum was signed by the President on August 8, 2020, allowed employers to defer the withholding and payment of employee's share of social security taxes for certain employees. Subsequently, Section 274 of the COVID-related Tax Relief Act of 2020, (enacted as Subtitle B of the Consolidated Appropriations Act, 2021 (P.L. 116-260)) further extended the due date for payment of these deferred amounts. See IRM 21.7.2.8.2, Notice 2020-65 and Notice 2021-11 — Deferred Payment of Employee's Share of Social Security Taxes for 2020, for more information. The subsections which follow provide additional background and handling guidance for processing taxpayer paper and phone inquiries related to deferred payment of social security taxes including Forms 94XX requesting changes to deferred social security tax amounts or for accounts on which a reversed or unreversed CRN 280 amount is present. Specialization of BMF deferred payment of social security tax inquiries and cases within AM. BMF deferred payment of social security tax inquiries and cases received within AM will be handled by designated employees (only) who have received training on the IRM procedures which follow. This includes inquiries and cases for which deferred payment of social security taxes is the specific issue to be addressed and for other inquiries and cases regarding accounts reflecting a reversed or unreversed CRN 280 amount. BMF phone inquiries received in AM: Previously, BMF phone inquiries received in AM regarding deferred payment of social security taxes for 2020, or for 2020 tax accounts reflecting a reversed or unreversed CRN 280 amount, were addressed on App 40. Due to decreasing call volumes, App 40 was discontinued beginning on December 20, 2024. As directed in subsequent subsections applicable to particular inquiry topics, certain BMF phone inquiries received in AM not requiring specialized training and handling will be worked as usual by the AM employee receiving the call while phone inquiries requiring specialized training and handling will be addressed by completing an in-house Form 4442 to be worked by designated AM employees or, in some cases, by directing the taxpayer to write in with a full explanation of their concerns. Note: Phone inquiries should generally be handled as per guidance in IRM 21.7.2.8.6, Deferred Payment of Social Security Taxes for 2020 — Handling Guidance for Common Correspondence and Phone Inquiries. Caution: If the taxpayer's inquiry involves misapplied payments, any associated Form 4442 generated from the call must include information for the date and amount of each payment made for deferred social security taxes (misapplied or not), including the breakout (amounts and tax periods) for any payment the taxpayer intended to be applied to multiple accounts. BMF paper cases (including Forms 4442 generated as indicated in the preceding bullet) received in AM by employees not designated and trained to work deferred payment of social security tax issues, including accounts reflecting a reversed or unreversed CRN 280 amount, are to be recontrolled with activity code "ET-DEFPAYT" and reassigned to either IDRS number 0230265068 (CAMC) or 0430477615 (OAMC) as appropriate. Note: Employees who are designated to work cases described above are not required to update the cases with the specified activity codes and are not required to generate Form 4442 when working phone inquiries related to deferred social security tax. Reminder: See (11) in IRM 21.7.2.7, COVID-19 Related Employment Tax Relief, for instructions on controlling paper cases involving COVID-related credits (Employee Retention Credit (ERC), Credit for Qualified Sick and Family Leave Wages, and COBRA Premium Assistance Credits).

# Deferred Payment of Employer's Share of Social Security Taxes for 2020

21.7.2.8.1 (12-10-2024) Deferred Payment of Employer's Share of Social Security Taxes for 2020 Section 2302 of P.L. 116-136, Coronavirus Aid, Relief, and Economic Security (CARES) Act, allowed all employers to defer the deposit and payment of the employer's share of social security taxes and certain railroad retirement taxes. Note: Under the CARES Act, employers that received a Paycheck Protection Program (PPP) loan were prohibited from deferring deposit and payment of the employer's share of social security tax after the receipt of the lender's decision forgiving all or a portion of the loan. However, the relevant CARES Act provision was repealed with enactment of the Paycheck Protection Program Flexibility Act of 2020 (PPP Flexibility Act) on June 5, 2020. Accordingly, the impacted employers were subsequently permitted to defer applicable social security taxes. Note: Self-employed individuals could defer the payment of 50 percent of the social security tax on net earnings from self-employment income. The deferral applied to deposits and payments of the employer's share of social security tax that were otherwise due on or after March 27, 2020, and before January 1, 2021 (i.e., the "payroll tax deferral period" ), as well as deposits and payments due after December 31, 2020 that were required for wages paid during the quarter ending on December 31, 2020. Employment tax forms were revised to administer the deferred payment of employer's share of social security tax: Form 941 was revised beginning with the second quarter of 2020. The amount of the employer's share of social security tax that the taxpayer is deferring for the quarter is entered on Line 13b of Form 941 (and posts as a TC 766 with CRN 280). Caution: Deferrals of employee's share of social security taxes under Notice 2020-65 provisions were also being reported on Line 13b of Form 941. The amount reported on Line 13b represented the total of the deferrals of both the employer's share and the employee's share of social security taxes. See IRM 21.7.2.8.2, Notice 2020-65 and Notice 2021-11 — Deferred Payment of Employee's Share of Social Security Taxes for 2020 and IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195, for more information. Due to timing matters, the first quarter 2020 Form 941 could not be revised to include a line for reporting amounts due on or after March 27, 2020 for which payment could be deferred. See IRM 21.7.2.8.11, First Quarter 2020 Form 941 — Deferred Payment of Social Security Taxes and Notice 1447, for guidance on handling taxpayer inquiries with regards to that topic. Annual employment tax forms and instructions were also revised to enable reporting deferred payment amounts. Note: Employers reporting employment taxes on Schedule H with Form 1041 (MFT 05) were permitted to defer payment of employer's share of social security taxes. See the third and fourth rows of the table in (3) of IRM 21.7.2.8.6, Deferred Payment of Social Security Taxes for 2020 — Handling Guidance for Common Correspondence and Phone Inquiries, for MFT 05 deferral handling. Caution: Employers were not required to make a special election to defer deposits and payments of these employment taxes. Form 94XX adjusted returns included lines for making corrections but a Form 94XX is not required to make a social security tax deferral request that was omitted from an original return. For purposes of completing original employment tax returns, form instructions indicated the maximum amount of employer's share of social security taxes that could be deferred each quarter was the lesser of: The employer's share of social security tax; or, Total taxes after adjustments (from Line 10 of Form 941) less any amount of QSB Research Credit (from Line 11a of Form 941) and less total deposits made for the quarter (from Line 13a of Form 941). Reminder: Qualified sick and family leave wages paid for periods of leave taken after March 31, 2020 and before April 1, 2021 weren't subject to the employer share of social security tax (or the equivalent portion of the Tier 1 RRTA tax) Therefore, employers could not include the employee social security taxes reported on lines 5a(i) and 5a(ii) on 2020 employment tax returns in determining amounts for which payment could be deferred. Note: Employers do not reduce the maximum amount for which payment can be deferred by any amounts of non-refundable credits reported on Line 11a, Line 11b, or Line 11c of Form 941. Generally, the employer's share of social security tax is 50 percent of column 2, Line 5a of Form 941 plus 50 percent of column 2, Line 5b of Form 941. However, the maximum amount that can be deferred is modified for certain third-party payers of sick pay and employers reporting Section 3121(q) Notice and Demand amounts: Third-party payers of sick pay who aren't an agent (e.g., an insurance company) must reduce the amount of the employer's share of social security tax reported on line 5a by any adjustment taken on Form 941, Line 8 for the employer share of social security tax transferred to their client to determine the maximum amount of tax for which payment can be deferred. Employers who receive a Section 3121(q) Notice and Demand for tax due on unreported tips (Letter 3263 or Letter 4520) must report the amount for the employer share of social security tax and Medicare tax on Form 941, Line 5f. The employer's share of social security tax is shown on an attachment to Letter 3263 or Letter 4520 and payment for that amount can be deferred. An employer that is eligible to claim the refundable Credit for Qualified Sick and Family Leave Wages (see IRM 21.7.2.7.1, Credit for Qualified Sick and Family Leave Wages) or the Employee Retention Credit (see IRM 21.7.2.7.2, Employee Retention Credit (ERC)) can defer its deposit and payment of the employer's share of social security tax prior to determining the amount of employment tax deposits that it may retain in anticipation of these credits, the amount of any advance payments of these credits, or the amount of any refunds with respect to these credits. Note: The ability to defer deposits of the employer's share of social security tax is in addition to the relief provided in Notice 2020-22. (Notice 2020-22 provides relief from the failure to deposit penalty for not making deposits of employment taxes, including taxes withheld from employees, in anticipation of the Credit for Qualified Sick and Family Leave Wages and the Employee Retention Credit.) The deferred amount of the employer's share of social security tax was a deferral of deposits and payments, not a deferral of liability. Accordingly, employers could not retroactively defer payment of taxes in order to receive a refund or credit of any amount of the employer's share of social security tax that was already deposited or paid for a quarter (unless such refund was with respect to the nonrefundable portion of the credit for qualified sick and family leave wages reported on line 11(b) or the employee retention credit reported on line 11(c)). However, employers who deferred payment of taxes and subsequently paid all or part of those taxes (either before or after the return filing date), but failed to properly report the amount of deferred social security taxes on their employment tax return may request that the deferred social security tax amounts be recorded on their tax account in order to receive appropriate consideration for penalty and interest purposes. In those cases, the amount of the deferred social security taxes (up to the maximum deferrable amount) will be recorded but the account will also be systemically or manually updated to ensure no refund is issued (and no offsets generated) for the previous payment(s) of deferred taxes. The Service administers deferred payments of employer's share of social security taxes for 2020, as well as deferrals of employee's share of social security taxes under Notice 2020-65 provisions (see IRM 21.7.2.8.2, Notice 2020-65 and Notice 2021-11 — Deferred Payment of Employee's Share of Social Security Taxes for 2020) by posting CRN 280 "credit" transactions to impacted employment tax accounts and then reversing them, in part or in full, as of appropriate effective dates. See IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195, for more information. Caution: Although a CRN is used for this purpose, amounts posted with CRN 280 do NOT represent a refundable credit. Rather, CRN 280 amounts are a "false" credit solely used for the tax administrative purpose of "masking" balances owing specifically attributable to deferred payment amounts until the earlier of payment being made or the due dates for payment. Amounts of employer's share of social security taxes eligible to be deferred were required to be paid by the following dates (i.e. "applicable dates") in order to avoid late payment or federal tax deposit penalties: 50 percent of the maximum amount of taxes that could be deferred for each calendar quarter was due on or by December 31, 2021. The remaining 50 percent of the maximum amount of taxes that could be deferred for each calendar quarter was due on or by December 31, 2022. Note: Due to the timing of holidays and weekend days, payments made by January 3, 2022 are considered timely for the December 31, 2021 payment due date and payments made by January 3, 2023 are considered timely for the December 31, 2022 payment due date. With regards to required payment(s) of deferred social security tax amounts: As a courtesy, the IRS issued CP 256V (and Spanish version CP 956V) reminder notices for BMF accounts reflecting deferred social security tax amounts remaining due shortly before the December 31, 2021 and December 31, 2022 due dates. For information on how amounts due for the respective due dates are computed and for information on responding to taxpayer inquiries on that topic, see IRM 21.7.2.8.4, Deferred Social Security Tax Amounts Due on Respective Payment Due Dates and Command Code BMFOLM. For information on how payments of deferred social security tax were to be made by employers, see IRM 21.7.2.8.5, Deferred Social Security Tax Amount — Guidance on Making Payments. For information on how the computer treats overpayments on tax modules with recorded social security tax deferral amounts, see IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195. For information on handling common phone and correspondence contacts relating to deferral of social security taxes, see IRM 21.7.2.8.6, Deferred Payment of Social Security Taxes for 2020 — Handling Guidance for Common Correspondence and Phone Inquiries. For information on handling Forms 94XX requesting changes to deferred social security tax amounts or for accounts on which a reversed or unreversed CRN 280 amount is present, see IRM 21.7.2.8.12, Form 94XX — Adjusting Accounts with a Posted CRN 280 and/or Corrections to Deferred Social Security Tax Payment Amounts.

# Notice 2020-65 and Notice 2021-11 — Deferred Payment of Employee's Share of Social Security Taxes for 2020

21.7.2.8.2 (12-10-2024) Notice 2020-65 and Notice 2021-11 — Deferred Payment of Employee's Share of Social Security Taxes for 2020 This subsection provides information specific to the administration of deferrals of employee's share of social security taxes for 2020. This relief was in addition to deferral of employer's share of social security taxes. Accordingly, addressing employee's share social security tax deferral inquiries/issues will usually require familiarity with the general information found in IRM 21.7.2.8, Deferred Payment of Social Security Taxes for 2020, and IRM 21.7.2.8.1, Deferred Payment of Employer's Share of Social Security Taxes for 2020, together with the specific handling guidance found throughout the subsections which follow. On August 8, 2020, the President issued a Presidential Memorandum directing the Secretary of the Treasury to use his authority pursuant to Section 7508A of the Internal Revenue Code to defer the withholding, deposit, and payment of certain payroll tax obligations. As specified in Notice 2020-65, the Secretary determined that employers required to withhold social security taxes or the equivalent portion of Tier 1 railroad retirement taxes (RRTA) from wages paid to employees were affected taxpayers for purposes of the relief described in the Presidential Memorandum and in Notice 2020-65. As provided for in Notice 2020-65, if an employee's wages paid during the period beginning on September 1, 2020 and ending on December 31, 2020 were less than $4,000 in any bi-weekly pay period (or the equivalent threshold amount for other pay period intervals), the due date for withholding and payment of the employee's share of social security or the equivalent portion of Tier 1 railroad retirement taxes (RRTA) on applicable wages was postponed until the period beginning on January 1, 2021 and ending on April 30, 2021. The social security tax deferral eligibility determination for an employee was made on a pay period-by-pay period basis for wages paid during the period beginning on September 1, 2020 and ending on December 31, 2020. Subsequently, Section 274 of the COVID-related Tax Relief Act of 2020, (enacted as Subtitle B of the Consolidated Appropriations Act, 2021 (P.L. 116-260)) extended the due date for payment of these deferred amounts to December 31, 2021. The IRS issued Notice 2021-11 providing further guidance on this topic. Employers must withhold the total taxes deferred under Notice 2020-65 ratably from wages and compensation paid between January 1, 2021 and December 31, 2021. If necessary (e.g., employment ends for an effected individual), the employer may make arrangements to otherwise collect the total applicable taxes from the employee. If the employer does not fully pay taxes that were deferred by December 31, 2021, applicable interest, penalties, and additions to tax will begin to accrue on the unpaid amounts on January 1, 2022. Note: Due to the timing of holidays and weekend days, payments made by January 3, 2022 are considered timely for the December 31, 2021 payment due date. As a courtesy, the IRS issued CP 256V (and Spanish version CP 956V) reminder notices for BMF accounts reflecting deferred social security tax amounts remaining due shortly before the December 31, 2021 and December 31, 2022 due dates. Amounts of any unpaid deferred employee's share of social security taxes were not shown separately on the first reminder notice but were instead included in the total amount showing as due along with any amounts of unpaid deferred employer's share social security taxes. Note: A second reminder notice was not issued if the amount of deferred payments recorded on an account consists entirely of employee's share of social security taxes. The Service is administering deferred payments of employee's share of social security taxes for 2020, as well as deferrals of employer's share of social security taxes under Section 2302 of the CARES Act (see IRM 21.7.2.8.1, Deferred Payment of Employer's Share of Social Security Taxes for 2020) by posting CRN 280 "credit" transactions to impacted employment tax accounts and then reversing them, in part or in full, as of appropriate effective dates. See IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195, for more information. Caution: Although a CRN is being used for this purpose, amounts posted with CRN 280 do NOT represent a refundable credit. Rather, CRN 280 amounts are a "false" credit solely used for the tax administrative purpose of "masking" balances owing specifically attributable to deferred payment amounts until the earlier of payment being made or the due dates for payment. Form 941 was revised for third and fourth quarters of 2020 to enable employers to report deferred amounts of employee's share of social security taxes. Taxpayers were instructed to include deferred amounts of employee's share of social security taxes on Line 13b combined with any amount for deferred payment of employer's share of social security taxes (i.e., a single CRN 280 amount will be posted for both amounts). Taxpayers were also instructed to enter the amount of deferred employee's share of social security taxes on Line 24 of Form 941. The figure entered by the taxpayer on Line 24 was used by the IRS in combination with the Line 13b entry to determine the amounts due on the respective due dates for employee's share deferral amounts (December 31, 2021) and employer's share deferral amounts (December 31, 2021 and December 31, 2022) reported as a total figure on Line 13b. Due to timing issues, field displays on TXMOD and BMFOL could not be updated to reflect the re-purposing of Line 24 of Form 941 as described above until January of 2021 (i.e., 2020 end of year conversion). (See IRM 21.7.2.7.6, COVID-19 Related Employment Tax Relief and Forms 94XX, for discussion of TC 970 transactions and new data field displays.) IRS employees must take care to correctly interpret field names and values when analyzing tax accounts, making adjustments, and interacting with callers. The following table illustrates how figures from Line 24 of Form 941 correlate to field name displays on TXMOD and BMFOL before and after 2020 end of year conversion: Tax Period Form 941, Line 24 Description TC 970 Field Name (through December of 2020) TXMOD Posted Return Information Display (beginning January 2021) BMFOLR Display (beginning January 2021) 202006 Qualified wages paid March 13 through March 31, 2020, for the employee retention credit QLFY-EMPL-MARCH-WG-PD-AMT EMP-MARCHWG-PD QLF EMP MARCH WG 202009 - 202012 Deferred amount of the employee share of social security tax included on line 13b QLFY-EMPL-MARCH-WG-PD-AMT (202009 only, TC 970 was not used for 202012 field/value recordation) N/A If reported, constitutes a portion of the CRN 280 transaction amount(s) reflected on TXMOD (and BMFOLT). If an adjustment for this item is necessary, see BMFOLR for the separately recorded amount. DEFR EE FICA AMT Note: IRN 208 is used to adjust the fields described above for all three referenced tax periods. Programming "points" any IRN 208 change to the correct field based on the tax period associated with input and alters the field value appropriately. See the table in (2) of IRM 21.7.2.7.6, COVID-19 Related Employment Tax Relief and Forms 94XX, for more information on IRN usage for 2020 Form 941. The table that follows provides guidance for handling some common inquiries related to deferral of employee's share of social security taxes for 2020: If Then 1) A taxpayer contacts the Service with questions regarding the Presidential Memorandum, Notice 2020-65, or deferral of employee social security taxes (or Tier 1 railroad retirement taxes) Refer the caller to Notice 2020-65 and advise them to monitor the irs.gov website at Coronavirus Tax Relief for Businesses and Tax-Exempt Entities for any additional guidance. 2) If a taxpayer asks if the relief provided in Notice 2020-65 was optional Advise the taxpayer as follows: Notice 2020-65 provides employers with relief under section 7508A of the Internal Revenue Code. The relief allowed employers to postpone the due date for the withholding and payment of the employee share of social security tax (or the equivalent portion of the Tier 1 RRTA tax) on certain wages. Like all relief provided under section 7508A, the relief for employers under Notice 2020-65 was optional. Employers were not required to utilize the relief. 3) A taxpayer asks if they could permit employees to opt-out or opt-in Advise the taxpayer as follows: Notice 2020-65 does not address how an employer chooses to implement the relief in Notice 2020-65. Accordingly, nothing precluded the employer from obtaining employee input on whether to apply the relief to postpone the due date for the withholding and payment of the employee share of social security tax on certain wages or compensation paid to the employee. 4) A taxpayer asks who (employer or employee) pays taxes that were deferred under Notice 2020-65 Advise the taxpayer as follows: Under Notice 2020-65, as modified by the COVID-related Tax Relief Act of 2020, if an employer deferred employee social security taxes (or Tier 1 railroad retirement taxes), the employer was required to withhold and pay the taxes that were deferred ratably from wages or compensation paid between January 1, 2021 and December 31, 2021. If the employer was unable to withhold the employee social security taxes (or Tier 1 railroad retirement taxes) that were deferred from the employee's wages or compensation because an employee terminated employment before December 31, 2021, or for another reason, the employer may make other arrangements to collect the deferred taxes from the employee. The employer is liable to pay the deferred taxes to the IRS and was required to do so by December 31, 2021 to avoid being charged penalties, interest, or other additions to tax on those amounts. Note: For more information on making payments of deferred social security taxes, see IRM 21.7.2.8.4, Deferred Social Security Tax Amounts Due on Respective Payment Due Dates and Command Code BMFOLM, and IRM 21.7.2.8.5, Deferred Social Security Tax Amount — Guidance on Making Payments. Reminder: See IRM 21.7.2.8.1, Deferred Payment of Employer's Share of Social Security Taxes for 2020, for general information on administration of deferred payment of social security taxes. In particular, see (10), (11), and (12) in that subsection for cross-references to IRM guidance for handling common taxpayer inquiries.

# Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195

21.7.2.8.3 (12-10-2024) Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195 See IRM 21.7.2.8.1, Deferred Payment of Employer's Share of Social Security Taxes for 2020, and IRM 21.7.2.8.2, Notice 2020-65 and Notice 2021-11 — Deferred Payment of Employee's Share of Social Security Taxes for 2020, for discussion of 2020 social security taxes for which payment can be deferred and associated due dates for payment. The Service administers deferred payments of social security taxes for 2020 by posting CRN 280 / TC 76X "credit" transactions to impacted employment tax accounts and then reversing them, in part or in full, as of appropriate effective dates. The figure reported by a taxpayer on Line 13b of Form 941 (or equivalent line on annual employment tax returns) was transcribed (up to the maximum calculated deferral amount) and posted with the original return as a CRN 280 /TC 766 "credit" for the same amount. The recorded amount is adjustable via ADJ54 with an appropriate CRN 280 entry. Although a CRN is being used for this purpose, the amounts posted with CRN 280 DO NOT represent a refundable credit. Rather, CRN 280 amounts are a "false" credit solely used for the tax administrative purpose of "masking" balances owing specifically attributable to deferred payment amounts until the earlier of payment being made or the due dates for payment (December 31, 2021 and December 31, 2022 as applicable). The posting of CRN 280 and subsequent reversals as of appropriate effective dates ensures that penalty and interest calculations associated with 2020 deferred payment amounts are accurately computed and posted by Masterfile. For penalty and interest purposes (including for FTD penalties): A systemically generated TC 766 with CRN 280 (including amounts subsequently reversed with a systemic TC 767) is treated as a deposit made on the first day of the tax period to which it is posted. A TC 766 with CRN 280 that is manually entered with a TC 290 transaction (or a TC, 291/300/301) is also treated as a deposit made on the first day of the tax period to which it is posted. A TC 766 with CRN 280 that is manually entered with a TC 298 or TC 299 adjustment is treated as a deposit made on the interest computation date entered with the transaction. A systemically generated TC 767 with CRN 280 is treated as a reversal of the "false credit" as of the 23c date of the posted transaction. A TC 767 with CRN 280 that is manually entered with a TC 298 or TC 299 adjustment is treated as a reversal of the "false credit" as of the interest computation date entered with the transaction. Note: Command Code AMCLS, used by Exam to record adjustments, is programmed to accept TC 300 and TC 301 transactions accompanied by CRN 280 adjustments but not TC 308 or TC 309 transactions with CRN 280 amounts. Assessed Module Balance (AMB) analysis on original return settlement: When original return posting analysis is conducted, assessed module balance computations are completed by the computer to ensure that a CRN 280 amount being posted with an original return does not trigger an overpayment condition wherein all or a portion of the CRN 280 deferral "false credit" would incorrectly refund or offset. Although the CRN 280 "false credit" amount posted to record and "mask" amounts of deferred social security taxes is not itself refundable, it can "free up" or "release" other credits that are then available for refund or offset. Specifically, net overpayments attributable to the refundable and otherwise non-refundable portions of Employee Retention Credit (ERC) and Credit for Qualified Sick and Family Leave Wages can be refunded or offset on accounts for which deferred social security tax amounts have been recorded with CRN 280 transactions. To the extent that all or a portion of a CRN 280 amount would otherwise be incorrectly included in the overpayment figure upon settlement, BMF Masterfile will simultaneously post a CRN 280 reversal transaction such that any remaining overpayment upon posting will consist solely of amounts permitted to offset or refund. For Form 941, if the assessed module balance (AMB) upon return settlement (not including any unassessed penalty and/or interest accruals) is more than the sum of the posted (unreversed) CRN 296 credit amount, and the CRN 299 credit amount, and the computed Line 11b amount, and the computed Line 11c amount, then a CRN 280 reversal (TC 767) will be systemically posted for the excess amount (AMB minus sum of specified items) up to, but not more than, the amount of any posted CRN 280 transaction amount(s). Example: Original Form 941 for second quarter of 2020 posted and reflected an overpayment of $1,000, a deferred social security tax amount of $3,000 and no COVID-related tax credits. In the posting cycle of the TC 150, a TC 766 with CRN 280 was posted for $3,000- and a TC 767 with CRN 280 posted in the same cycle for $1,000 bringing the module balance to zero. Example: Original Form 941 for third quarter of 2020 posted and reflected an overpayment of $5,000, a deferred social security tax amount of $2,000 and a non-refundable ERC credit for $10,000. In the posting cycle of the TC 150, a TC 766 with CRN 280 was posted for $2,000- and the entire overpayment of $5,000 was available for refund or offset. No TC 767 with CRN 280 would be posted in this scenario because the amount of the overpayment was less than the amount of COVID-related tax credits. Example: Original Form 941 for fourth quarter of 2020 posted and reflected an overpayment of $4,600, a deferred social security tax amount of $4,000 and a non-refundable Credit for Qualified Sick and Family Leave Wages $1,600. In the posting cycle of the TC 150, a TC 766 with CRN 280 was posted for $4,000-, a TC 767 with CRN 280 was posted in the same cycle for $3,000, and the remaining overpayment of $1,600 was available for refund or offset since it was attributable to the COVID credit. Assessed Module Balance (AMB) analysis on subsequently overpaid tax modules: After the posting of an original return with a CRN 280 amount, or the posting of a CRN 280 amount via ADJ54 or an Exam adjustment, the posting of any manual or systemic transaction in a subsequent cycle (i.e., tax adjustment, penalty adjustment, payment application, etc.) which results in the tax module being overpaid will trigger a computer assessed module balance (AMB) analysis to determine if all or part of the overpayment should be applied against the recorded deferred social security tax amount. Such applications of overpayments against recorded deferral amounts will be reflected by the systemic posting of a CRN 280 / TC 767 reversal transaction in the same cycle as the triggering event and will carry the 23c date of that cycle as the transaction date of the CRN 280 reversal. Overpayments on the account will generally be applied to deferred payment amounts prior to being considered available for refund or offset. However, similar to the analysis routine applied to original returns (as described in the first bullet in (7) above), refundable and otherwise non-refundable COVID-related credits posting in the same cycle as the transaction generating the overpayment (and thus triggering AMB analysis) are refundable to the extent they do not exceed the net overpayment (i.e., the CRN 280 "false credit" is not itself refundable but can "free up" or "release" other credits that are then available for refund or offset). For Form 941, if the assessed module balance (AMB) after posting transactions (not including any unassessed penalty and/or interest accruals) is more than the sum of CRN 296, CRN 299, IRN 202, and IRN 203 credit amounts posting in the same cycle, a CRN 280 reversal (TC 767) will be posted for the excess amount (AMB minus sum of specified items) up to, but not more than, the amount of any posted CRN 280. Exception: A TC 290 transaction with a CRN 280 amount (only) and first position Reason Code (RC) 195 will bypass the described AMB analysis. See discussion of RC 195 in (11) below. Example: A payment of $350 is applied to an account, currently in debit balance of $500, with a posted CRN 280 for $10,000. After application of the payment, the module will still be in debit balance status and thus will not trigger AMB analysis for purposes of possible CRN 280 reversal. Example: A payment of $275 is applied to an account, currently in zero balance, with a posted CRN 280 for $5,000. Application of the payment will cause the module to be in overpaid status and will trigger AMB analysis for purposes of possible CRN 280 reversal. In the same cycle the payment posts, a CRN 280 / TC 767 reversal will post for $275 with the 23c date of the posting cycle as the transaction date of the CRN 280 reversal. Example: A payment of $878 is applied to an account, currently in debit balance of $328, with a posted CRN 280 for $32,000. When the payment is posted, $328 will be absorbed by the outstanding balance showing due leaving the account overpaid by $550 ($878 less $328). The overpayment condition will trigger AMB analysis for purposes of possible CRN 280 reversal. In the same cycle as the payment posting, a CRN 280 / TC 767 reversal will post for $550 with the 23c date of the posting cycle as the transaction date of the CRN 280 reversal. Caution: See IRM 21.7.2.8.6.1, Payments for Balance Due Modules with Recorded Deferral Amounts and Unassessed Accruals of Penalties or Interest, for a description of a problem with how the computer treats unassessed accrued penalties and interest on accounts with CRN 280 deferral amounts when posting payments and for correction procedures. Example: A payment of $8,000 is applied to an account, currently in zero balance, with a posted CRN 280 for $6,000. Application of the payment will cause the module to be in overpaid status and will trigger AMB analysis for purposes of possible CRN 280 reversal. In the same cycle as the payment posting, a CRN 280 / TC 767 reversal will post for $6,000 with the 23c date of the posting cycle as the transaction date of the CRN 280 reversal. The remaining $2,000 overpayment will be available for refund or offset. Example: A TC 650 federal tax deposit for $2,000 attempts to post to a tax account, currently in zero balance, with a posted CRN 280 for $120,000. Before the deposit is posted, FTD rollover analysis is applied which results in the posting of a TC 650 .00 transaction to the module in question and resequencing of the TC 650 to the next succeeding tax module a cycle later. In this instance, the deposit was not posted to the account and thus did not trigger AMB analysis for purposes of possible CRN 280 reversal. If the deposit in question was intended to be a payment towards the recorded deferred social security taxes, it will be necessary to wait until the TC 650 posts to a succeeding tax period and then reapply the deposit/payment manually via a credit transfer. Example: A TC 291 tax adjustment for $250 is input to an account, currently in zero balance, with a posted CRN 280 for $18,000. The tax adjustment consists solely of a withholding tax decrease (for an administrative error) with an IRN 111 in the same amount. Posting of the tax adjustment will cause the module to be in overpaid status and will trigger AMB analysis for purposes of possible CRN 280 reversal. In the same cycle as the adjustment posting, a CRN 280 / TC 767 reversal will post for $250 with the 23c date of the posting cycle as the transaction date of the CRN 280 reversal. Example: A TC 291 tax adjustment for $5,000 is input to an account, currently in zero balance, with a posted CRN 280 for $82,000. The tax adjustment consists of a $3000 social security tax decrease (IRN 112), an increase to the ERC non-refundable credit in the amount of $800 (IRN 203), and an increase to the ERC refundable credit in the amount of $1,200 (CRN 296). Posting of the tax adjustment will cause the module to be in overpaid status and will trigger AMB analysis for purposes of possible CRN 280 reversal. In the same cycle as the adjustment posting, a CRN 280 / TC 767 reversal will post for $3,000 ($5,000 aggregate tax change less COVID-related non-refundable credit of $800 and less COVID-related refundable credit of $1,200) with the 23c date of the posting cycle as the transaction date of the CRN 280 reversal. The remaining $2,000 overpayment attributable to the COVID credits posting in the same cycle ($800 plus $1,200) will be available for refund or offset. Example: A TC 181 penalty adjustment for $730 is input to an account, currently in zero balance, with a posted CRN 280 for $5,700. Posting of the penalty adjustment will cause the module to be in overpaid status and will trigger AMB analysis for purposes of possible CRN 280 reversal. In the same cycle as the adjustment posting, a CRN 280 / TC 767 reversal will post for $730 with the 23c date of the posting cycle as the transaction date of the CRN 280 reversal. Example: A CRN 280 for $500 is input to an account in zero balance (with or without a previously posted CRN 280 amount). The posting of the CRN 280 will cause the module to be in overpaid status and will trigger AMB analysis for purposes of possible CRN 280 reversal. In the same cycle as the adjustment posting, a CRN 280 / TC 767 reversal will post for $500 with the 23c date of the adjustment as the transaction date of the CRN 280 reversal. See (9) below for why this action may be required and represent a correct outcome. Also, see discussion of RC 195 in (13) below. Caution: If an overpayment consisting in part or whole of COVID-related credits is held beyond the cycle of its posting (e.g., Hold Code 1, 2, or 4 is used) and released for refund or offset in a later cycle, the AMB analysis described above will be triggered in that later cycle but will not be able to identify that the overpayment consisted in part or whole of COVID-related credits. Accordingly, in such cases, the entire overpayment will (incorrectly) be considered by the computer as being available to be applied against recorded deferred social security tax amounts. To ensure correct systemic penalty and interest computations, it will sometimes be necessary to manually record a deferred social security tax amount with a CRN 280 even when it is known that the computer will systemically reverse the transaction. Example: Taxpayer filed their third quarter 2020 Form 941 reflecting unpaid tax of $500,000 but did not report a deferred social security tax amount on Line 13b. Subsequently, the taxpayer makes payments of $50,000 and $100,000 towards the balance due. Later, they contact the IRS and establish that the entire $500,000 was eligible to be deferred. A CRN 280 / TC 766 will be recorded on the account via ADJ54 for the entire $500,000 deferred social security tax amount. In the same posting cycle, the computer will systemically post a CRN 280 / TC 767 reversal for $150,000 equal to the amounts paid ($50,000 plus $100,000) with the appropriate reversal effective date. Recording a deferral of $350,000 ($500,000 owed less payments of $150,000) would be an incorrect resolution for the inquiry because it would result in incorrect systemic penalty and interest assessments. Deferred tax amounts recorded with unreversed CRN 280 / TC 766 transaction are not subject to systemic offset: The computer is not programmed to apply overpayments arising on other tax forms and tax periods against deferred social security taxes. Manual offsets of overpayments on other tax forms and tax periods are not to be completed by AM employees unless the taxpayer specifically requests such an overpayment to be applied against deferred social security tax amounts. Incorrect systemic and manual offsets into modules which erroneously reflected balances due as the result of IRS failure to correctly record deferred social security tax amounts will generally require reversal action when the deferral is subsequently recorded unless the taxpayer specifically requests such application of credits against the deferred social security tax amounts to be maintained. Note: Once deferred tax amounts are reversed (e.g., a reversal for non-payment when due as discussed in (14) below), normal systemic and manual offset processing for any resulting/remaining balance due applies. All reinstatements of CRN 280 deferral amounts must be input manually: The computer is not capable of determining when a systemic CRN 280 reversal was in error and it is not programmed to restore or reinstate a reversed deferral amount even when the specific transaction that triggered a reversal is reversed. See IRM 21.7.2.8.10, Restoring or Reinstating Incorrectly Reversed Social Security Tax Deferral Amounts for more information. Computer maximum deferral figure and UPC 306-3: The computer is programmed to calculate a maximum deferral figure for tax periods 202006, 202009, and 202012 on Form 941 accounts and for 202012 on annual Form 943, Form 944, and Form CT-1 accounts. This figure is used to prevent inadvertently excessive deferred social security tax amounts from being recorded and to assist in systemic determinations of amounts due to be paid as of respective due dates. The computer maximum deferral figure is equal to the taxable social security wage figure (Line 5a, Column 1 of Form 941 or as adjusted) plus the taxable social security tips figure (Line 5b, Column 1 of Form 941 or as adjusted) multiplied by 6.2% (.062). The computer maximum deferral figure was initially not displayed for Form 941, Form 943, Form 944, and Form CT-1 accounts. Command Code BMFOL with definer M was later modified to display the literal MAXIMUM EMPLOYER DEFERRAL ALLOWABLE along with the field value. Note: This field appears for all MFT 01 tax periods. For tax periods 202003 and earlier, the field displays as a zero value or null value. For tax periods 202103 and subsequent, the value is calculated and displayed but is not used for any purpose. The computer maximum deferral figure is not an adjustable field via ADJ54 for Form 941, Form 943, Form 944, and Form CT-1 accounts (MFT 01/11/14/09). However, the field systemically updates when changes to taxable social security wages and taxable social security tips are recorded with IRN 004 and IRN 005 (respectively). The computer maximum deferral figure is adjustable for MFT 05 (only) with IRN 211. See the third and fourth rows of the table in (3) of IRM 21.7.2.8.6, Deferred Payment of Social Security Taxes for 2020 — Handling Guidance for Common Correspondence and Phone Inquiries, for MFT 05 deferral handling. CRN 280 amounts recorded from original returns which exceed the calculated maximum deferral amount ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ are rejected for correction in ERS. Adjustments to CRN 280 amounts which exceed the calculated maximum deferral amount ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ will unpost with UPC 306-3 unless Reason Code (RC) 195 is present in the first reason code position (see discussion of RC 195 in (13) below). Caution: See (5) in IRM 21.7.2.8.1, Deferred Payment of Employer's Share of Social Security Taxes for 2020. The actual amount of social security taxes an employer is eligible to defer is modified when certain third-party sick pay situations apply and when Section 3121(q) Notice and Demand amounts are reported. The computer maximum deferral figure does not account for such modifications. Caution: See IRM 21.7.2.8.2, Notice 2020-65 and Notice 2021-11 — Deferred Payment of Employee's Share of Social Security Taxes for 2020. Although CRN 280 is used for administering both employer and employee share social security tax deferrals, the computer maximum deferral figure does not include deferred amounts of employee's share social security taxes. Note: Transactions unposted with UPC 306-3 will usually require reinput with first position RC 195. See (13) below. First position Reason Code (RC) 195 with CRN 280 adjustments: First position Reason Code 195 was validated for use with CRN 280 adjustments (only) on ADJ54 (and AMCLS for use by Exam operations) and has two critical associated functionality features: Use of first position RC 195 with a CRN 280 bypasses the UPC 306-3 unpostable check described in (12) above. Use of first position RC 195 with a CRN 280 bypasses the AMB analysis for purposes of possible systemic CRN 280 reversal described in (8) above for the posting cycle in which the CRN 280 / RC 195 transaction posts (only). Unless a suitable hold code is used with the adjustment to freeze the account, the overpayment will be treated by the computer as being available for refund or offset to other tax modules with open balance due amounts. Note: There will be occasions when it is necessary to bypass the unpostable condition and occasions when it is necessary to bypass AMB analysis to achieve the correct outcome on the account. Guidance on use of RC 195 with CRN 280 adjustments is found throughout the specific handling procedures which follow. However, the impact of using RC 195 with a CRN 280 transaction must be carefully considered. RC 195 should generally only be used when there are specific instructions in the IRM to do so or when analysis of the account indicates it use is required. Caution: Incorrect usage of RC 195 with CRN 280 transactions can trigger erroneous offsets/refunds of overpayments that should be applied against recorded social security tax deferral amounts. Example: A CRN 280 for $500 is input to an account in zero balance (with or without a previously posted CRN 280 amount) with first position RC 195 and Hold Code 0 or Hold Code 3. The posting of the CRN 280 will cause the module to be in overpaid status. Ordinarily, the overpayment condition would trigger AMB analysis for purposes of possible CRN 280 reversal. However, the RC 195 with the adjustment will result in the computer bypassing CRN 280 AMB reversal analysis. Accordingly, the resulting $500 overpayment will be available for refund or offset. Example: A CRN 280 for $400 is input to an account in zero balance (with or without a previously posted CRN 280 amount) with first position RC 195 and Hold Code 1, 2, or 4. The posting of the CRN 280 will cause the module to be in overpaid status. However, the RC 195 with the adjustment will bypass AMB analysis for purposes of possible CRN 280 reversal. And, because the Hold Code used sets a -K freeze, the $400 overpayment will remain frozen on the account until some action is taken to release the freeze or otherwise apply the overpayment. Example: A CRN 280 for $1,200 is input to an account in zero balance (with or without a previously posted CRN 280 amount) with first position RC 195 and Hold Code 1, 2, or 4. The posting of the CRN 280 will cause the module to reflect an overpayment of $1,200. However, the RC 195 with the adjustment will bypass AMB analysis for purposes of possible CRN 280 reversal. And, because the Hold Code used sets a -K freeze, the credit will remain frozen as an overpayment on the account. One cycle later, a TC 290 .00 is input to release the -K freeze. Because the account is overpaid, AMB analysis for purposes of possible CRN 280 reversal is triggered with this subsequent adjustment action. A CRN 280 / TC 767 reversal will post for $1,200 with the 23c date of the adjustment as the transaction date of the CRN 280 reversal. Example: A CRN 280 for $18,000 is input to an account in zero balance (with or without a previously posted CRN 280 amount) with first position RC 195 and Hold Code 1, 2, or 4. The posting of the CRN 280 will cause the module to be in overpaid status. However, the RC 195 with the adjustment will bypass AMB analysis for purposes of possible CRN 280 reversal. And, because the Hold Code used sets a -K freeze, the credit will remain frozen as an overpayment on the account. One cycle later, a $12,000 misapplied payment is transferred from the account to another tax period. Because the account is overpaid after the debit credit transfer transaction is posted, AMB analysis for purposes of possible CRN 280 reversal is triggered with this subsequent account action. A CRN 280 / TC 767 reversal will post for $6,000 with the 23c date of the debit credit transfer transaction as the transaction date of the CRN 280 reversal. CRN 280 reversals for amounts not paid when due. See IRM 20.1.4.28 , CARES Act Section 2302 Deferrals. The IRS conducted analysis on BMF accounts for which deferred social security amounts had been recorded to verify payments were made by the required payment due dates: At intervals after the first required payment due date of December 31, 2021, the IRS executed filters to identify BMF accounts with unreversed CRN 280 amounts. Mathematical analysis was conducted to determine if the deferred employer and employee shares of social security taxes due on or by December 31, 2021 had been received. A batch tool was then operated to initiate Command Code ADJ54 transactions to reverse recorded CRN 280 amounts to the extent they exceeded amounts which remained eligible to be paid on or by the second due date of December 31, 2022. Similarly, at intervals after the second required payment due date of December 31, 2022, filters were operated to identify BMF accounts with unreversed CRN 280 amounts and ADJ54 transactions were initiated to reverse any remaining recorded CRN 280 amounts on accounts so identified. The IRS continues to identify BMF accounts with unreversed CRN 280 amounts via filtering and completes ADJ54 transactions to reverse recorded CRN 280 amounts after manual account analysis. The CRN 280 / TC 767 reversal transactions posted in these instances appear as TC 298 transactions with blocking series 20 and an interest computation date of either December 31, 2021 or December 31, 2022 as appropriate. Generally, an FTD penalty equal to 10% of the unpaid deferred social security taxes will be assessed along with the posting of such CRN 280 / TC 767 reversals for non-payment. Other applicable penalties and interest charges will begin to accrue from the applicable payment due date as recorded by the interest computation date entered with the reversal transaction. An adjustment notice reflecting the account changes is issued to the employer when the reversal transaction and any penalty/interest assessments are posted. If payment is not timely made for the tax amounts showing due on the adjustment notice, the FTD penalty will be subject to the 15% fourth FTD penalty tier (i.e., additional 5% penalty rate). Reminder: As a courtesy, the IRS issued CP 256V (or Spanish version CP 956V) reminder notices for BMF accounts reflecting deferred social security tax amounts remaining due shortly before the December 31, 2021 and December 31, 2022 due dates.

# Deferred Social Security Tax Amounts Due on Respective Payment Due Dates and Command Code BMFOLM

21.7.2.8.4 (12-10-2024) Deferred Social Security Tax Amounts Due on Respective Payment Due Dates and Command Code BMFOLM Amounts of employer's share of social security taxes eligible to be deferred were required to be paid by the following dates (i.e. "applicable dates") in order to avoid late payment or federal tax deposit penalties: 50 percent of the maximum amount of taxes that could be deferred for each calendar quarter was due on or by December 31, 2021. The remaining 50 percent of the maximum amount of taxes that could be deferred for each calendar quarter was due on or by December 31, 2022. Example: The employer's share of social security tax for the third quarter of 2020 was $100,000. The employer deferred payment for the full amount and reported $100,000 on Line 13b of the associated Form 941. The amount due by December 31, 2021 was $50,000 and the amount due by December 31, 2022 was the remaining $50,000. Example: The employer's share of social security tax for the fourth quarter of 2020 was $160,000. However, the employer timely deposited $40,000 of employer's share social security taxes during the quarter, only deferred payment for $120,000, and therefore reported $120,000 on Line 13b of the associated Form 941. The amount due by December 31, 2022 was $80,000 (50 percent of the maximum deferral). The amount due by December 31, 2021 was $40,000 ($160,000 maximum deferral amount less the $80,000 due on December 31, 2022 or, from an alternate view point, the $80,000 otherwise due by that date less the $40,000 previously deposited). Example: The employer's share of social security tax for the second quarter of 2020 was $360,000. However, the employer timely deposited $300,000 of employer's share social security taxes during the quarter, only deferred payment for $60,000, and therefore reported $60,000 on Line 13b of the associated Form 941. No amount remained due to be paid by December 31, 2021 because the amount already deposited exceeded the 50 percent due by that date. The amount due by December 31, 2022 was $60,000. Reminder: Due to the timing of holidays and weekend days, payments made by January 3, 2022 are considered timely for the December 31, 2021 payment due date and payments made by January 3, 2023 are considered timely for the December 31, 2022 payment due date. Employers who deferred payment of employee's share of social security taxes were required to withhold (and pay) those deferred taxes ratably from wages and compensation paid to the impacted employees between January 1, 2021 and December 31, 2021. Amounts of deferred employee social security taxes were required to be paid in full by December 31, 2021 to avoid late payment or federal tax deposit penalties. Example: The employer deferred no employer's share social security taxes for the fourth quarter of 2020 but did defer $30,000 in employee's share social security taxes. The employer reported the total deferred social security tax amount of $30,000 on Line13b of the associated Form 941 (and $30,000 on Line 24). Payment for the entire $30,000 amount of deferred tax was due by December 31, 2021. Example: The employer's share of social security tax for the third quarter of 2020 was $120,000. The employer deferred payment for the full amount and also deferred payment of $40,000 of employee's share social security taxes. The employer reported the total deferred social security tax amount of $160,000 ($120,000 plus $40,000) on Line13b of the associated Form 941 (and $40,000 on Line 24). The amount due by December 31, 2021 was $100,000 ($40,000 employee's share deferred taxes plus $60,000 of the employer's share deferred taxes) and the amount due by December 31, 2022 was the remaining $60,000 employer's share deferred taxes. Reminder: Due to the timing of holidays and weekend days, payments made by January 3, 2022 are considered timely for the December 31, 2021 payment due date. As a courtesy, the IRS issued CP 256V (and Spanish version CP 956V) reminder notices for BMF accounts reflecting deferred social security tax amounts remaining due shortly before the December 31, 2021 and December 31, 2022 due dates. Amounts of any unpaid deferred employee's share of social security taxes were not shown separately on the first reminder notice but were instead included in the total amount showing as due along with any amounts of unpaid deferred employer's share social security taxes. For additional background information and information on how the IRS is administering deferred payments of social security taxes: See IRM 21.7.2.8.1, Deferred Payment of Employer's Share of Social Security Taxes for 2020, for more information on deferral of employer's share of social security taxes. See IRM 21.7.2.8.2, Notice 2020-65 and Notice 2021-11 — Deferred Payment of Employee's Share of Social Security Taxes for 2020, for more information on deferral of employee's share of social security taxes. See (7), (8), and (14) in IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195, for information on the IRS posting of CRN 280 reversals for overpayment conditions when original returns were posted, when payments/overpayments post to accounts with recorded deferred social security tax amounts after original return processing, and when deferred tax amounts were not paid when due. Any payment the employer made before December 31, 2021, including payments or deposits made before the return was due to be filed and any overpayments (except for amounts attributable to COVID-related credits) that becomes available on the account is first applied against the deferred amount due on December 31, 2021 (employee share deferred social security tax amounts first and then employer share deferred social security tax amounts) and then applied against the deferred amount due on December 31, 2022. Example: See first example in (1) above. The amount due by December 31, 2021 was $50,000 and the amount due by December 31, 2022 was the remaining $50,000. On July 7, 2021, the employer paid $30,000 towards the deferred taxes. After the payment was applied, the remaining amount due by December 31, 2021 was $20,000 and the remaining amount due by December 31, 2022 was $50,000. Example: See second example in (1) above. The amount due by December 31, 2021 was $40,000 and the amount due by December 31, 2022 was $80,000. On August 19, 2021, the employer made a payment of $75,000 towards the deferred taxes. After the payment was applied, no amount remained due by December 31, 2021 and $45,000 remained due as of December 31, 2022. Example: See second example in (2) above. The amount due by December 31, 2021 was $100,000 ($40,000 employee's share deferred taxes plus $60,000 of the employer's share deferred taxes) and the amount due by December 31, 2022 was the remaining $60,000 employer's share deferred taxes. On September 18, 2021, the employer paid $18,000 towards the deferred taxes. After the payment was applied, the remaining amount due by December 31, 2021 was $82,000 ($22,000 employee's share deferred taxes plus $60,000 of the employer's share deferred taxes) and $60,000 remained due by December 31, 2022. Command Code BMFOL with definer "M" currently displays two field values with regards to unpaid amounts of deferred social security taxes: "UNPAID DEFERRED SOCIAL SECURITY TAX DUE BY 12/31/2021" "UNPAID DEFERRED SOCIAL SECURITY TAX DUE BY 12/31/2022" Reminder: All employee share deferred social security taxes are due to be paid by December 31, 2021. Caution: BMFOLM does not account for any pending transactions or for modifications to amounts which can be deferred based on the applicability of Section 3121(q) assessments or for certain third-party sick payers (see (5) in IRM 21.7.2.8.1, Deferred Payment of Employer's Share of Social Security Taxes for 2020, for more information). See IRM 21.7.2.8.6, Deferred Payment of Social Security Taxes for 2020 — Handling Guidance for Common Correspondence and Phone Inquiries, for guidance on handling phone and paper inquiries with regards to deferred social security tax amounts remaining due or amounts that were due as of respective due dates.

# Deferred Social Security Tax Amount — Guidance on Making Payments

21.7.2.8.5 (12-10-2024) Deferred Social Security Tax Amount — Guidance on Making Payments Although most employers have paid previously recorded deferred social security tax amounts, some employers may still contact the IRS with questions about making related payments, including payments for accounts reflecting CRN 280 / TC 767 reversal transactions. This subsection contains general guidance which will assist in responding to such inquiries. Employers may use the following methods to pay deferred amounts of social security taxes: Electronically using EFTPS. This is the preferred payment method. When using EFTPS to pay deferred social security tax amounts, the employer should select the appropriate employment tax form filed (e.g., Form 941), the appropriate 2020 tax period for which the payment is being made, and indicate it is a payment for "Deferred Social Security Tax" . By credit or debit card. Employers wishing to make payment by this method may be referred to Pay Your Taxes by Debit or Credit Card on the IRS.gov website for more information. Advise employers that payments made by this method are subject to convenience fees charged by the service providers (see IRM 21.2.1.48.4, Payment by Credit Card, Debit Card or Digital Wallet (General), for more information). By check or money order. Refer the employer to "How to pay the deferred amount of the employer and employee share of social security tax" in the form instructions for the appropriate employment tax return for mailing addresses and instructions on the preparation of a corresponding payment voucher to ensure proper application of the payment. When providing information to employers on how to make payments of deferred social security taxes, advise the employer that: Payments of deferred social security taxes must be made separately from other tax payments to ensure they are applied to the correct deferred social security tax balance. Payments for deferred social security taxes on multiple tax periods can't be combined. A separate payment must be submitted for each tax period for which payment of deferred social security taxes is being made. IRS systems generally will not properly apply payments made for multiple tax periods or which combine amounts for deferred social security taxes with other tax payment amounts. The "Federal Tax Deposit" option should not be selected if the employer is using EFTPS to pay deferred social security tax amounts because doing so may prevent computer application of the payment to the proper tax account. The following information applies to payments made for deferred social security taxes reported by aggregate employment tax return filers (Section 3504 Agents, CPEOs, and PEOs): Aggregate employment tax return filers that reported deferred employer's share of social security taxes for 2020 were required to report the amounts attributable to respective client companies on Schedule R attached to their aggregate employment tax returns filed in 2020. The employer is solely liable for payment of deferred employer's share of social security taxes. Aggregate employment tax return filers and client companies should coordinate payment of deferred social security taxes to ensure proper application to the appropriate tax form and tax period under the EIN of the aggregate return filer. Note: In certain cases of non-payment, the IRS may transfer liability for deferred social security taxes from the tax account of the aggregate employment tax filer to the tax account of the client company. For more information on making payments of deferred social security tax amounts, employers may be referred to: "How to pay the deferred amount of the employer and employee share of social security tax" in the form instructions for the appropriate employment tax return. The topic What employers need to know about repayment of deferred payroll taxes on the IRS.gov website. The topic Making payments for deferred tax reported by third party payers on the IRS.gov website. The topic How self-employed individuals and household employers repay deferred Social Security tax on the IRS.gov website. Reminder: As a courtesy, the IRS issued CP 256V (and Spanish version CP 956V) reminder notices for BMF accounts reflecting deferred social security tax amounts remaining due shortly before the December 31, 2021 and December 31, 2022 due dates. Note: For deferred payment administration purposes, deposits and payments are generally considered as being applied first to outstanding balances of non-deferred taxes, outstanding amounts of penalties and interest, then to deferred employee's share of social security tax, and then to deferred employer's share of social security taxes, in that order. For information on other deferred social security tax payment related topics: For information on amounts due at respective due dates, see IRM 21.7.2.8.4, Deferred Social Security Tax Amounts Due on Respective Payment Due Dates and Command Code BMFOLM. For information on how CRN 280 / TC 767 reversal transactions are generated when payments are applied, see IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195. For information on certain problems with posting accruals of penalties and interest on accounts with recorded social security tax deferral amounts, see IRM 21.7.2.8.6.1, Payments for Balance Due Modules with Recorded Deferral Amounts and Unassessed Accruals of Penalties or Interest. For information on resolving common inquiries related to deferred social security tax amounts, see IRM 21.7.2.8.6, Deferred Payment of Social Security Taxes for 2020 — Handling Guidance for Common Correspondence and Phone Inquiries.

# Deferred Payment of Social Security Taxes for 2020 — Handling Guidance for Common Correspondence and Phone Inquiries

21.7.2.8.6 (12-10-2024) Deferred Payment of Social Security Taxes for 2020 — Handling Guidance for Common Correspondence and Phone Inquiries Employers may contact the IRS with regards to amounts of deferred social security taxes either previously reported or omitted on original (or amended) employment tax returns. Oral Statements: AM BMF employees trained and designated to work deferred social security tax inquires may make changes to deferrals (increases and decreases) on 2020 employment tax accounts based on oral statements unless the employer is also requesting changes to the tax account which would otherwise require the filing of a Form 94XX (e.g., changes to wages, tax, or credits previously reported on an employment tax return) or written correspondence. AM BMF employees who are not trained on deferred social security tax procedures will answer general questions, create Form 4442 inquiry referrals, or direct callers to write in as indicated in the table in (3) below or as per cross-referenced guidance. Reminder: In no case will employers be required to make a special election to be able to defer deposits and payments of these employment taxes. The following table provides guidance on handling common inquiries relating to deferred social security taxes: If And Contact is via phone Contact is via paper case (including generated Form 4442 inquiry referrals) 1) The employer is asking for general information with regards to deferral of employer's share of social security taxes Refer the employer to guidance on the irs.gov website at Deferral of employment tax deposits and payments through December 31, 2020. See IRM 21.7.2.8.1, Deferred Payment of Employer's Share of Social Security Taxes for 2020, and appropriate form instructions for general information which may assist in answering the employer's questions. For out of scope inquiries, refer the employer to guidance on the irs.gov website at Deferral of employment tax deposits and payments through December 31, 2020. 2) The employer is asking for general information with regards to deferral of employee's share of social security taxes Refer the employer to Notice 2020-65and Notice 2021-11. See IRM 21.7.2.8.2, Notice 2020-65 and Notice 2021-11 — Deferred Payment of Employee's Share of Social Security Taxes for 2020, (in particular (7) in the referenced IRM section) and appropriate form instructions for general information which may assist in answering the employer's questions. 3) The inquiry is with regards to deferral of social security taxes reported on a Schedule H with Form 1041 (i.e., MFT 05) Is a general question about deferral of social security taxes Handle as per guidance in the preceding table rows Handle as per guidance in the preceding table rows. 4) The inquiry is with regards to deferral of social security taxes reported on a Schedule H with Form 1041 (i.e., MFT 05) Is not a general question which can be addressed per guidance in the preceding rows of this table (e.g., a request to record a new or revised deferral amount) Advise the employer that we are unable to assist them at this time and to write in with a complete explanation of their concerns, including amounts of social security tax they deferred and the dates and amounts of any payments made, and any accounts actions they are requesting to be taken. Input STAUPS on the account for 9 weeks if the account reflects a balance due. Contact the IRM author through your management chain and the site P&A Staff for guidance on handling the case. 5) The employer requests information with regards to amounts remaining due for unpaid deferred social security taxes, including amounts due at the respective payment due dates No CRN 280 amount was ever recorded on the account Advise the employer that no deferred social security tax amounts have been recorded on their account. Advise the employer that any deferred tax amounts are now due but that we need the amounts of social security taxes they intended to defer in order for us to make any necessary corrections to penalties and interest. Continue to address the phone inquiry as per guidance in (3) of IRM 21.7.2.8.9, Processing New or Revised Social Security Tax Deferral Requests for 2020, for handling guidance, including generation of a Form 4442 in-house referral. If a telephone number is available, make two attempts to contact the employer. If contact is made, follow the handling guidance in the preceding column for phone inquires except do not prepare Form 4442. Instead, continue handling as per paper case handling guidance in IRM 21.7.2.8.9, Processing New or Revised Social Security Tax Deferral Requests for 2020, to record the proper social security tax deferral amount and then address the employer's balance due inquiry as appropriate. If no telephone number is available (or a telephone number was available but contact was unsuccessful), issue a closing letter and: 1) Advise the employer no deferred social security tax amounts have been recorded on their account. 2) Advise the employer that any deferred tax amounts are now due but that we need them to provide us with the amounts of social security taxes they intended to defer in order for us to make any necessary corrections to penalties and interest. 3) If the account is in balance due status, input STAUPS for nine (9) cycles as appropriate. Exception: Do not contact the employer as indicated above if the correspondence or other written case documentation includes sufficient information to determine the amount(s) the employer intended to defer. 6) The employer requests information with regards to amounts remaining due for unpaid deferred social security taxes There is an unreversed CRN 280 amount present on the account Prepare Form 4442 as per instructions in IRM 21.3.5, Taxpayer Inquiry Referrals Form 4442, using in-house referral, Other – Employment Taxes – BMF. Ask the employer if they made any payments towards the deferred tax amount(s) and document the amount(s) and date(s) of any payments on Form 4442. Advise the employer they will receive a response via phone or letter as appropriate. If the account is in balance due status, input STAUPS for nine (9) cycles as appropriate. Provide the employer with the amount of deferred social security tax remaining due (see IRM 21.7.2.8.4, Deferred Social Security Tax Amounts Due on Respective Payment Due Dates and Command Code BMFOLM, for more information). Advise the employer that the due dates for payment of all eligible deferred social security tax amounts are past and that any balance remaining on their tax account is due now. 7) The employer requests information with regards to amounts due at the respective payment due dates There is an unreversed CRN 280 amount present on the account Prepare Form 4442 as per instructions in IRM 21.3.5, Taxpayer Inquiry Referrals Form 4442, using in-house referral, Other – Employment Taxes – BMF. Ask the employer if they made any payments towards the deferred tax amount(s) and document the amount(s) and date(s) of any payments on Form 4442. Advise the employer they will receive a response via phone or letter as appropriate. If the account is in balance due status, input STAUPS for nine (9) cycles as appropriate. See IRM 21.7.2.8.4, Deferred Social Security Tax Amounts Due on Respective Payment Due Dates and Command Code BMFOLM, for guidance on calculating the amounts that were due on the respective due dates and include this information in the closing letter. If there is still a balance due on the account, advise the employer in the closing letter that the remaining balance, including any amounts for which payment was previously deferred, is now due. If it appears the employer is experiencing difficulty in reconciling payments made to previously deferred tax amounts, address the issue as appropriate (including providing a transcript of the account if necessary) in the closing letter. 8) The employer requests information with regards to amounts remaining due for unpaid deferred social security taxes A CRN 280 amount was previously recorded on the account and was subsequently fully reversed with one or more CRN 280 / TC 767 transactions Advise the employer that the due dates for payment of all eligible deferred social security tax amounts are past and that any balance remaining on their tax account is due now. Advise the employer in a closing letter that the due dates for payment of all eligible deferred social security tax amounts are past and that any balance remaining on their tax account is due now. 9) The employer requests information with regards to amounts that were due at the respective payment due dates A CRN 280 amount was previously recorded on the account and was subsequently fully reversed with one or more CRN 280 / TC 767 transactions Prepare Form 4442 as per instructions in IRM 21.3.5, Taxpayer Inquiry Referrals Form 4442, using in-house referral, Other – Employment Taxes – BMF and indicate on the Form 4442 that the employer is requesting the amounts that were due as of the respective due dates. Ask the employer if they made any payments towards the deferred tax amount(s) and document the amount(s) and date(s) of any payments on Form 4442. Advise the employer they will receive a response via phone or letter as appropriate. If the account is in balance due status, input STAUPS for nine (9) cycles as appropriate. See IRM 21.7.2.8.4, Deferred Social Security Tax Amounts Due on Respective Payment Due Dates and Command Code BMFOLM, for guidance on calculating the amounts that were due on the respective due dates and include this information in the closing letter. If there is still a balance due on the account, advise the employer in the closing letter that the remaining balance, including any amounts for which payment was previously deferred, is now due. If it appears the employer is experiencing difficulty in reconciling payments made to previously deferred tax amounts, address the issue as appropriate (including providing a transcript of the account if necessary) in the closing letter. 10) The employer requests information on how to make a payment of deferred social security taxes See IRM 21.7.2.8.5, Deferred Social Security Tax Amount — Guidance on Making Payments. See IRM 21.7.2.8.5, Deferred Social Security Tax Amount — Guidance on Making Payments. 11) A payment intended for an account with recorded deferred social security amounts (i.e., posted CRN 280 amount) was misapplied to another tax form or tax period Prepare Form 4442 as per instructions in IRM 21.3.5, Taxpayer Inquiry Referrals Form 4442, using in-house referral, Other – Employment Taxes – BMF. Ask the employer for the date and amount of the misapplied payment and the dates/amounts of any other payments made towards the deferred tax amount(s). Document the amount(s) and date(s) of any payments on Form 4442. Advise the employer they will receive a response via phone or letter as appropriate. If the account is in balance due status, input STAUPS for nine (9) cycles as appropriate. The outcome of transferring the credit(s) into the tax module with the recorded deferral must be carefully considered, including whether reapplication of the credit should trigger a full or partial CRN 280 reversal. See IRM 21.7.2.8.7, Deferred Payment Modules — Misapplied Payments and Credit Transfers, for handling guidance. 12) A payment intended for another tax period or tax form was misapplied to account with recorded deferred social security amounts (i.e., posted CRN 280 amount) Prepare Form 4442 as per instructions in IRM 21.3.5, Taxpayer Inquiry Referrals Form 4442, using in-house referral, Other – Employment Taxes – BMF. Ask the employer for the date and amount of the misapplied payment and the dates/amounts of any other payments made towards the deferred tax amount(s). Document the amount(s) and date(s) of any payments on Form 4442. Advise the employer they will receive a response via phone or letter as appropriate. If the account is in balance due status, input STAUPS for nine (9) cycles as appropriate. The outcome of transferring the credit(s) out of the tax module with the recorded deferral must be carefully considered, including whether the misapplication of the credit(s) triggered an erroneous full or partial CRN 280 reversal which must now be reinstated. See IRM 21.7.2.8.7, Deferred Payment Modules — Misapplied Payments and Credit Transfers, for handling guidance. 13) A payment by a client company for deferred social security taxes reported by an associated aggregate employment tax filer (Section 3504 Agents, CPEOs, and PEOs) was applied to an account under the client company's EIN instead of to the appropriate tax account under the associated aggregate return filer's EIN Prepare Form 4442 as per instructions in IRM 21.3.5, Taxpayer Inquiry Referrals Form 4442, using in-house referral, Other – Employment Taxes – BMF. Ask the employer for the date and amount of the misapplied payment and the dates/amounts of any other payments made towards the deferred tax amount(s). Document the amount(s) and date(s) of any payments on Form 4442. Advise the employer they will receive a response via phone or letter as appropriate. If the account is in balance due status, input STAUPS for nine (9) cycles as appropriate. See (4) in IRM 21.7.2.8.5, Deferred Social Security Tax Amount — Guidance on Making Payments. Follow procedures in IRM 21.7.2.8.7, Deferred Payment Modules — Misapplied Payments and Credit Transfers, to reapply the payment to the aggregate return filer's tax account on which the deferred social security taxes were recorded. As appropriate, delete any employment tax filing requirements incorrectly opened on the client company's tax account when the misapplied payment was posted. 14) The employer is responding to a balance due of accrued unassessed penalties or interest after making payment towards an amount due on an account with recorded deferred social security amounts (i.e., posted CRN 280 amount) The application of the payment triggered a CRN 280 / TC 767 reversal transaction instead of credit being first applied against the accruals Prepare Form 4442 as per instructions in IRM 21.3.5, Taxpayer Inquiry Referrals Form 4442, using in-house referral, Other – Employment Taxes – BMF. Ask the employer for the date and amount of the payment made for the balance due and the dates/amounts of any other payments made towards the deferred tax amount(s). Document the amount(s) and date(s) of any payments on Form 4442. Advise the employer they will receive a response via phone or letter as appropriate. If the account is in balance due status, input STAUPS for nine (9) cycles as appropriate. See IRM 21.7.2.8.6.1, Payments for Balance Due Modules with Recorded Deferral Amounts and Unassessed Accruals of Penalties or Interest. 15) The employer is requesting abatement of penalties associated with a reversal of recorded deferred social security amounts (i.e., CRN 280 / TC 767 reversal) due to not paying deferred amounts by respective due dates Reminder: See (14) in IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195, for more information. See (4) and (5) in IRM 20.1.4.28, CARES Act Section 2302 Deferrals. Work the employer's penalty abatement request as per standard handling guidance. See (4) and (5) in IRM 20.1.4.28, CARES Act Section 2302 Deferrals. Work the employer's penalty abatement request as per standard handling guidance. 16) The employer is requesting penalty abatement for an account with recorded deferred social security amounts (i.e., posted CRN 280 amount) There is an unreversed CRN 280 amount present on the account Advise the employer that we are unable to assist them at this time and to write in with a complete explanation of their concerns and any accounts actions they are requesting to be taken. Input STAUPS on the account for 9 weeks if the account reflects a balance due. The outcome of any manual penalty adjustment on the tax module with the recorded deferral must be carefully considered, including whether a resulting overpayment condition will trigger a full or partial CRN 280 reversal. See IRM 21.7.2.8.8, Deferred Payment Modules — Manual Penalty Adjustments, for handling guidance. 17) The employer is requesting penalty abatement for an account with recorded deferred social security amounts (i.e., posted CRN 280 amount) A CRN 280 amount was previously recorded on the account and was subsequently fully reversed with one or more CRN 280 / TC 767 transactions Work the employer's penalty abatement request as per standard handling guidance. Work the employer's penalty abatement request as per standard handling guidance. 18) The employer is responding to a balance due or adjustment notice resulting from systemic or manual reversal of a CRN 280 / TC 766 transaction Disagrees with the reversal Advise the employer that we are unable to assist them at this time and to write in with a complete explanation of their concerns and any accounts actions they are requesting to be taken. Input STAUPS on the account for 9 weeks if the account reflects a balance due. Analyze the account to determine the reason for the reversal transaction(s). (See IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195, for information which will assist in analyzing the account.) If the reversal action was incorrect, take appropriate action to resolve the issue that caused the incorrect reversal (e.g., correct misapplied payments) and follow procedures in IRM 21.7.2.8.10, Restoring or Reinstating Incorrectly Reversed Social Security Tax Deferral Amounts, to correct the recorded deferred social security tax amount. If the reversal action was correct, explain the reason for the reversal to the employer and advise them to make payment for any amounts currently showing due. 19) The employer is making a new or corrected request for deferred payment of social security taxes The request is not for a 2020 tax period Advise the employer that deferred payment of social security taxes applies only to calendar year 2020 employment tax returns. Address any balance due on the account for which the employer is inquiring as appropriate. Advise the employer that deferred payment of social security taxes applies only to calendar year 2020 employment tax returns. Address any balance due on the account for which the employer is inquiring as appropriate. 20) The employer is making a new or corrected request (including reinstatement requests) for deferred payment of social security taxes The request is for Form 941, tax period 202003 Address the phone inquiry as per guidance in (4) of IRM 21.7.2.8.11, First Quarter 2020 Form 941 — Deferred Payment of Social Security Taxes and Notice 1447, for handling guidance, including generation of a Form 4442 in-house referral. See IRM 21.7.2.8.11, First Quarter 2020 Form 941 — Deferred Payment of Social Security Taxes and Notice 1447, for handling guidance. 21) The employer is making a new or corrected request (including reinstatement requests) for deferred payment of social security taxes Is also making other tax reporting changes that require the filing of a Form 94XX. Advise the employer we are unable to take any action on their account at this time and to submit their request in writing with their calculation of the deferred social security tax amount along with a Form 94XX (specify form to be filed) reporting the other changes to their tax account. Input STAUPS on the account for 9 weeks if the account reflects a balance due. Advise the employer we are unable to take any action on their account at this time and to submit their request in writing with their calculation of the deferred social security tax amount along with a Form 94XX (specify form to be filed) reporting the other changes to their tax account. Input STAUPS on the account for 9 weeks if the account reflects a balance due. 22) The employer is making a new or corrected request (including reinstatement requests) for deferred payment of social security taxes There are one or more misapplied credits Address the phone inquiry as per guidance in (3) of IRM 21.7.2.8.9, Processing New or Revised Social Security Tax Deferral Requests for 2020, for handling guidance, including generation of a Form 4442 in-house referral. Correct ordering of transactions is critical for achieving the correct outcome on the account: For information on transferring credits, see IRM 21.7.2.8.7, Deferred Payment Modules — Misapplied Payments and Credit Transfers. For information on processing new or corrected requests for deferred payment of social security taxes, see IRM 21.7.2.8.9, Processing New or Revised Social Security Tax Deferral Requests for 2020. 23) The employer is making a new or corrected request (including reinstatement requests) for deferred payment of social security taxes Is also requesting penalty abatement Advise the employer that we are unable to assist them at this time and to write in with a complete explanation of their concerns and any accounts actions they are requesting to be taken. Input STAUPS on the account for 9 weeks if the account reflects a balance due. Correct ordering of transactions is critical for achieving the correct outcome on the account: For information on adjusting the penalty, see IRM 21.7.2.8.8, Deferred Payment Modules — Manual Penalty Adjustments. For information on processing new or corrected requests for deferred payment of social security taxes, see IRM 21.7.2.8.9, Processing New or Revised Social Security Tax Deferral Requests for 2020. 24) The employer has filed a Form 94XX amended/adjusted employment tax return The tax module reflects recorded deferred social security amounts (i.e., posted CRN 280 amount) or the Form 94XX reflects a new/revised social security tax deferral request As usual, provide the processing status of the Form 94XX and address any related questions/concerns as appropriate. If the employer is also making an inquiry relative to deferred social security amounts, address the deferred social security tax issue as per the appropriate row of this table. See IRM 21.7.2.8.12, Form 94XX — Adjusting Accounts with a Posted CRN 280 and/or Corrections to Deferred Social Security Tax Payment Amounts. 25) The employer is making a new or corrected request for deferred payment of social security taxes None of the preceding rows apply. Address the phone inquiry as per guidance in (3) of IRM 21.7.2.8.9, Processing New or Revised Social Security Tax Deferral Requests for 2020, for handling guidance, including generation of a Form 4442 in-house referral. See IRM 21.7.2.8.9, Processing New or Revised Social Security Tax Deferral Requests for 2020.

# Payments for Balance Due Modules with Recorded Deferral Amounts and Unassessed Accruals of Penalties or Interest

21.7.2.8.6.1 (12-10-2024) Payments for Balance Due Modules with Recorded Deferral Amounts and Unassessed Accruals of Penalties or Interest The computer is not programmed to post accruals of penalties and interest when systemic posting analysis for payments is conducted on tax modules containing unreversed CRN 280 transactions recording unpaid deferred social security tax amounts. As a result, any overpayment exceeding the current module balance will be applied to recorded, unreversed social security tax deferral amounts instead of being correctly applied to the accrued penalty or interest charges. Example: The taxpayer had a recorded social security tax deferral (CRN 280) of $10,000 on a Form 941 account for the third quarter of 2020. The taxpayer subsequently filed a Form 941-X reporting an additional $2,000 in taxes due but failed to make the associated required $2,000 payment and did not pay when the adjustment notice was issued. Failure to Pay penalty and interest charges accrued and the taxpayer later received a bill for $2,500 ($2,000 tax plus $500 in accrued penalty and interest). The taxpayer submitted payment of $2,500. When the payment was posted, $2,000 was applied to satisfy the amount of tax assessed and showing due (i.e., the current module balance then showing on TXMOD). The remaining $500 showing as overpaid was treated by the computer (incorrectly) as available to be applied to the deferred social security taxes. Instead of posting the $500 in accrued penalty and interest, the computer instead (incorrectly) posted a CRN 280 / CRN 767 reversal for $500. Example: Same situation as in the preceding example except that after the CRN 280 reversal the taxpayer received a bill for $520 consisting of the $500 in previous accruals plus $20 in additional accruals. The taxpayer submitted payment of $520. When the payment was posted, the $520 payment triggered another CRN 280 / TC 767 reversal, this time for $520, instead of posting the accrued penalties and interest. For paper inquiries (including generated Form 4442 referrals) in regards to an account for which the situation described applies, resolve the account issue as follows: Input a TC 290 00, Priority Code (PC) 5 adjustment to the account to post the accrued penalty and interest. Follow procedures in IRM 21.7.2.8.10, Restoring or Reinstating Incorrectly Reversed Social Security Tax Deferral Amounts, to reinstate the amount of the CRN 280 reversed in error due to accruals not being posted when payment was applied . Use a suitable post delay code to ensure the CRN 280 transaction posts one cycle after the PC 5 adjustment force-posting the accruals. Apologize to the employer (verbally or in writing) for the problem and advise them of the amount of social security tax deferral that was reinstated and that any penalties and/or interest charges will be corrected accordingly. Also, if there will be a balance on the account after the correction (either for the reinstated amount or otherwise), advise the employer that the full amount is now due. Note: In some cases, it may be necessary to monitor the account until transactions are posted in order to provide the employer with a complete and accurate letter describing the actions taken and to provide an accurate balance due amount. Caution: Careful consideration and ordering of corrective transactions will be necessary if other account actions are also required to resolve the taxpayer inquiry. Reminder: Phone inquiries regarding unassessed accruals of penalties or interest on accounts with recorded deferred social security tax amounts are addressed per guidance in IRM 21.7.2.8.6, Deferred Payment of Social Security Taxes for 2020 — Handling Guidance for Common Correspondence and Phone Inquiries.

# Deferred Payment Modules — Misapplied Payments and Credit Transfers

21.7.2.8.7 (12-10-2024) Deferred Payment Modules — Misapplied Payments and Credit Transfers As is discussed in greater detail in IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195: CRN 280 / TC 766 transactions are used to "mask" balances of social security taxes for which payment can deferred. The computer is generally programmed to analyze and reverse portions of posted CRN 280 amounts (recorded either with the return or subsequently) in any posting cycle in which the module would end in credit balance. Use of Hold Codes, freeze conditions, TC 570 transactions, etc., will not prevent this from occurring. The only exception is a CRN 280 transaction posting with first position RC 195 and only for the specific posting cycle of that transaction. The computer is not capable of determining when a systemic CRN 280 reversal was in error and it is not programmed to restore or reinstate a reversed social security tax deferral amount even when the specific transaction that triggered a reversal is reversed. Accordingly, resolving misapplied payment situations on accounts with posted CRN 280 transactions, or on accounts on which a new/revised CRN 280 amount is to be input, requires careful consideration and ordering of corrective transactions. For paper inquiries (including generated Form 4442 referrals), take the following preliminary actions prior to initiating credit transfers into or out of modules reflecting posted CRN 280 transactions or on which a CRN 280 transaction will be input as part or resolving the account: Determine the correct application of payments. Determine the expected account outcome in terms of final module balance (i.e., zero balance, debit balance or overpayment) after the posting of any credit transfers (including impact on penalties/interest) and, if overpaid, whether the overpayment should be applied against the recorded social security tax deferral amount or is refundable/available for offset. Determine the impact of any credit transfer actions on the previously recorded CRN 280 deferral or any new/revised CRN 280 to be recorded (i.e., whether the reapplication of credits will trigger systemic CRN 280 / TC 767 reversal). Determine the general action required to address the taxpayer's previous or new social security tax deferral request (i.e., reinstatement of a previous CRN 280, input of a new CRN 280, or allowing a full or partial systemic reversal of a previous CRN 280 amount). Note: Completing the four steps described above requires analyzing the taxpayer request and the tax accounts to be addressed as well as a familiarity with social security tax deferral guidance found throughout IRM 21.7.2.8, Deferred Payment of Social Security Taxes for 2020, and its subsections. Reminder: Phone inquiries regarding misapplied payments on accounts with recorded deferred social security tax amounts are addressed per guidance in IRM 21.7.2.8.6, Deferred Payment of Social Security Taxes for 2020 — Handling Guidance for Common Correspondence and Phone Inquiries. After completing the preliminary steps described above, continue processing as per guidance in the appropriate subsection referenced below: IRM 21.7.2.8.7.1, Moving Credits Into Modules with Recorded CRN 280 Amounts IRM 21.7.2.8.7.2, Moving Credits Out of Modules with Recorded CRN 280 Amounts IRM 21.7.2.8.7.3, Moving Credits Into/Out of Modules with New or Revised Deferral Requests

# Moving Credits Into Modules with Recorded CRN 280 Amounts

21.7.2.8.7.1 (12-10-2024) Moving Credits Into Modules with Recorded CRN 280 Amounts This subsection provides handling guidance for completing credit transfers on paper inquiries (including generated Form 4442 referrals) when moving credits into a tax module with a previously posted CRN 280 (reversed or unreversed). Note: If the taxpayer is making a new or revised social security tax deferral request (not a reinstatement) and credits transfers are required, see IRM 21.7.2.8.7.3, Moving Credits Into/Out of Modules with New or Revised Deferral Requests. Reminder: Phone inquiries regarding misapplied payments on accounts with recorded deferred social security tax amounts are addressed per guidance in IRM 21.7.2.8.6, Deferred Payment of Social Security Taxes for 2020 — Handling Guidance for Common Correspondence and Phone Inquiries. See (3) in IRM 21.7.2.8.7, Deferred Payment Modules — Misapplied Payments and Credit Transfers, for required preliminary research steps. After completing preliminary research, continue processing as follows: If And Then 1) A manual penalty adjustment is also required See handling guidance in IRM 21.7.2.8.8, Deferred Payment Modules — Manual Penalty Adjustments, in particular the guidance on ordering of transactions. Complete the credit transfer(s) as per guidance in the following table rows using, as appropriate, posting delay codes to ensure transactions post in the correct sequence. 2) The credit transfer is related to the processing of a Form 94XX adjusted return Follow guidance IRM 21.7.2.8.12, Form 94XX — Adjusting Accounts with a Posted CRN 280 and/or Corrections to Deferred Social Security Tax Payment Amounts, for processing Forms 94XX with deferred social security tax implications, including those involving credit transfers. Handling requirements for credit transfers associated with Forms 94XX are incorporated in the cross-referenced guidance. 3) The corrective action requires moving credits both into and out of the tax module with the previously posted CRN 280. Unless some handling factor clearly points to a different ordering of transactions: First complete the credit transfer(s) out of the module as per guidance in IRM 21.7.2.8.7.2, Moving Credits Out of Modules with Recorded CRN 280 Amounts. Then complete the credit transfer(s) into the module as per guidance in the following table rows with a suitable post delay code to ensure the credit transactions post after the debit transactions. Take any other actions to resolve the account, including any CRN 280 transactions, using appropriate post delay codes to ensure they post after the credit transfer actions (unless specific instructions state to post in a different order). 4) The tax module will be in zero or debit balance after posting credit transfer(s) Complete the credit transfer(s) as normal. No special handling is required for the recorded social security tax deferral since the application of the credit(s) will not trigger AMB analysis for purposes of possible systemic CRN 280 reversal. 5) The tax module will be in credit balance after posting credit transfer(s) The credit(s) should be applied to the recorded social security tax deferral amount Complete the credit transfer(s) as normal. No special handling for the recorded social security tax deferral is required. The posting of the credit(s) will trigger AMB analysis for purposes of possible systemic CRN 280 reversal. 6) The tax module will be in credit balance after posting credit transfers The credit(s) should not be applied to the recorded social security tax deferral amount This credit transfer scenario should rarely be encountered since overpayments on the account are generally required to be applied against the recorded social security tax deferral. However, if necessary and appropriate (e.g., correcting a previous processing error), handle as follows: Complete the credit transfer(s) as normal. This action will trigger a systemic CRN 280 reversal. Determine the 23c date for the posting of the payment/credit/CRN 280 reversal. Follow procedures in IRM 21.7.2.8.10, Restoring or Reinstating Incorrectly Reversed Social Security Tax Deferral Amounts, to reinstate the incorrect CRN 280 reversal and allow the resulting overpayment to refund. Reminder: The computer is generally programmed to analyze and reverse portions of posted CRN 280 amounts (recorded either with the return or subsequently) in any posting cycle in which the module would end in credit balance. Use of Hold Codes, freeze conditions, TC 570 transactions, etc., will not prevent this from occurring. The only exception is a CRN 280 transaction posting with first position RC 195 and only for the specific posting cycle of that transaction. See IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195, for more information. Notification requirements for credit transfer cases involving deferred social security tax issues are generally the same as they would be for the related deferred social security tax issue (e.g., a credit transfer case also requiring a reinstatement of deferred social security tax would require communications to the taxpayer as per guidance in IRM 21.7.2.8.10, Restoring or Reinstating Incorrectly Reversed Social Security Tax Deferral Amounts). Exception: If the adjustment actions taken will generate a correct notice containing all necessary information with regards to the recording of deferred social security tax amounts (e.g., systemic posting of CRN 280 / TC 767 transaction), a letter duplicating that information is not required. Note: In some cases, it may be necessary to monitor the account until transactions are posted in order to provide the taxpayer with a complete and accurate letter describing the actions taken and to provide an accurate balance due amount.

# Moving Credits Out of Modules with Recorded CRN 280 Amounts

21.7.2.8.7.2 (12-10-2024) Moving Credits Out of Modules with Recorded CRN 280 Amounts This subsection provides handling guidance for completing credit transfers on paper inquiries (including generated Form 4442 referrals) when moving credits out of a tax module with a previously posted CRN 280 (reversed or unreversed). Note: If the taxpayer is making a new or revised social security tax deferral request (not a reinstatement) and credits transfers are required, see IRM 21.7.2.8.7.3, Moving Credits Into/Out of Modules with New or Revised Deferral Requests. Reminder: Phone inquiries regarding misapplied payments on accounts with recorded deferred social security tax amounts are addressed per guidance in IRM 21.7.2.8.6, Deferred Payment of Social Security Taxes for 2020 — Handling Guidance for Common Correspondence and Phone Inquiries. See (3) in IRM 21.7.2.8.7, Deferred Payment Modules — Misapplied Payments and Credit Transfers, for required preliminary research steps. After completing preliminary research, continue processing as follows: If And Then 1) A manual penalty adjustment is also required See handling guidance in IRM 21.7.2.8.8, Deferred Payment Modules — Manual Penalty Adjustments, in particular the guidance on ordering of transactions. Complete the credit transfer(s) as per guidance in the following table rows using, as appropriate, posting delay codes to ensure transactions post in the correct sequence. 2) The credit transfer is related to the processing of a Form 94XX adjusted return Follow guidance IRM 21.7.2.8.12, Form 94XX — Adjusting Accounts with a Posted CRN 280 and/or Corrections to Deferred Social Security Tax Payment Amounts, for processing Forms 94XX with social security tax deferral implications, including those involving credit transfers. Handling requirements for credit transfers associated with Forms 94XX are incorporated in the cross-referenced guidance. 3) The corrective action requires moving credits both into and out of the tax module with the previously posted CRN 280. Unless some handling factor clearly points to a different ordering of transactions: First complete the credit transfer(s) out of the module as per guidance in the following table rows. Then complete the credit transfer(s) into the module as per guidance in IRM 21.7.2.8.7.1, Moving Credits Into Modules with Recorded CRN 280 Amounts, with a suitable post delay code to ensure the credit transactions post after the debit transactions. Take any other actions to resolve the account, including any CRN 280 transactions, using appropriate post delay codes to ensure they post after the credit transfer actions (unless specific instructions state to post in a different order). 4) The tax module will be in zero or debit balance after posting credit transfer(s) A CRN 280 reversal was not posted when the credit(s) originally posted to the incorrect module Complete the credit transfer(s) as normal. No special handling for the recorded social security tax deferral is required since the removal of the credit(s) from the module will not trigger AMB analysis for purposes of possible systemic CRN 280 reversal. 5) The tax module will be in zero or debit balance after posting credit transfer(s) A CRN 280 reversal was posted when the credit(s) originally posted to the incorrect module Complete the credit transfer(s) as normal. Follow procedures in IRM 21.7.2.8.10, Restoring or Reinstating Incorrectly Reversed Social Security Tax Deferral Amounts, to reinstate the amount of the CRN 280 incorrectly reversed due to the misapplied credit. 6) The tax module will be in credit balance after posting credit transfers A CRN 280 reversal was not posted when the credit(s) originally posted to the incorrect module Complete the credit transfer(s) as normal. Take appropriate action to address the remaining overpayment on the account. Note: This should only occur in instances where the social security tax deferral amount was previously paid in full or otherwise fully reversed. As such, no special handing for the recorded social security tax deferral is required unless the taxpayer is requesting a revision to the previously requested deferral amount. 7) The tax module will be in credit balance after posting credit transfers A CRN 280 reversal was posted when the credit(s) originally posted to the incorrect module Contact the IRM author through your management chain and the site P&A Staff for guidance on handling the case. Reminder: The computer is generally programmed to analyze and reverse portions of posted CRN 280 amounts (recorded either with the return or subsequently) in any posting cycle in which the module would end in credit balance. Use of Hold Codes, freeze conditions, TC 570 transactions, etc., will not prevent this from occurring. The only exception is a CRN 280 transaction posting with first position RC 195 and only for the specific posting cycle of that transaction. See IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195, for more information. Notification requirements for credit transfer cases involving deferred social security tax issues are generally the same as they would be for the related deferred social security tax issue (e.g., a credit transfer case also requiring a reinstatement of deferred social security tax would require communications to the taxpayer as per guidance in IRM 21.7.2.8.10, Restoring or Reinstating Incorrectly Reversed Social Security Tax Deferral Amounts). Exception: If the adjustment actions taken will generate a correct notice containing all necessary information with regards to the recording of deferred social security tax amounts (e.g., systemic posting of CRN 280 / TC 767 transaction), a letter duplicating that information is not required. Note: In some cases, it may be necessary to monitor the account until transactions are posted in order to provide the taxpayer with a complete and accurate letter describing the actions taken and to provide an accurate balance due amount.

# Moving Credits Into/Out of Modules with New or Revised Deferral Requests

21.7.2.8.7.3 (12-10-2024) Moving Credits Into/Out of Modules with New or Revised Deferral Requests This subsection provides handling guidance for completing credit transfers on paper inquiries (including generated Form 4442 referrals) when moving credits into or out of a tax module and the taxpayer is either making a new social security tax deferral request (i.e., there is no previously posted reversed or unreversed CRN 280 transaction on the tax module) or the taxpayer is requesting to revise a previously recorded (i.e. posted CRN 280) deferral amount. Reminder: Phone inquiries regarding misapplied payments on accounts with recorded deferred social security tax amounts are addressed per guidance in IRM 21.7.2.8.6, Deferred Payment of Social Security Taxes for 2020 — Handling Guidance for Common Correspondence and Phone Inquiries. See (3) in IRM 21.7.2.8.7, Deferred Payment Modules — Misapplied Payments and Credit Transfers, for required preliminary research steps. Also, see general information in IRM 21.7.2.8.9, Processing New or Revised Social Security Tax Deferral Requests for 2020. After completing preliminary research, continue processing as follows: If And Then 1) A manual penalty adjustment is also required See handling guidance in IRM 21.7.2.8.8, Deferred Payment Modules — Manual Penalty Adjustments, in particular the guidance on ordering of transactions. Complete the credit transfer(s) as per guidance in the following table rows using, as appropriate, posting delay codes to ensure transactions post in the correct sequence. 2) A new or revised social security tax deferral request is being made (i.e., there is no posted unreversed CRN 280/ TC 766 amounts) A Form 94XX adjusted return is also being processed Follow guidance IRM 21.7.2.8.12, Form 94XX — Adjusting Accounts with a Posted CRN 280 and/or Corrections to Deferred Social Security Tax Payment Amounts, for processing Forms 94XX with deferred social security tax implications, including those involving credit transfers. Handling requirements for credit transfers associated with Forms 94XX are incorporated in the cross-referenced guidance. 3) A new social security tax deferral request is being made (i.e., there is no posted unreversed CRN 280/ TC 766 amounts on the tax module) First, complete all required credit transfer(s) into and out of the tax module as normal. Complete the processing of the new social security tax deferral request as per guidance in IRM 21.7.2.8.9, Processing New or Revised Social Security Tax Deferral Requests for 2020, but use a suitable post delay code to ensure the actions to record the deferred taxes post after the credit transfer(s). Note: No special handling for the credit transfers or the social security tax deferral amount to be recorded is required (other than appropriate post delay codes) if the credit transfer transactions are posted to the account before the deferral is recorded with a CRN 280 transaction. And, moving the credits first will ensure that the module balance situation is known prior to applying the procedures for recording the deferred social security taxes (making it easier to apply those procedures since they are based in part on module balance conditions). 4) A revised social security tax deferral request is being made (i.e., there is one or more previously posted unreversed CRN 280/ TC 766 amounts on the tax module) The required action requires moving credit(s) out of (but not into) the tax module First, complete all required credit transfer(s) out of the tax module as normal. Complete the processing of the revised social security tax deferral request as per guidance in IRM 21.7.2.8.9, Processing New or Revised Social Security Tax Deferral Requests for 2020, but use a suitable post delay code to ensure the actions taken to record the deferred social security taxes post after the credit transfer(s). As appropriate, follow procedures in IRM 21.7.2.8.10, Restoring or Reinstating Incorrectly Reversed Social Security Tax Deferral Amounts, to reinstate any portion of the deferral recorded prior to the current revision request that was incorrectly reversed due to the previous misapplication of credit(s) to the account. Note: Moving the credits out of the account first will ensure that the module balance situation is known prior to applying the procedures for recording the revised deferred social security taxes (making it easier to apply those procedures since they are based in part on module balance conditions). Also, action to reinstate any incorrectly reversed CRN 280 amount should generally be the last action taken to resolve an account with a recorded deferral amount. 5) A revised social security tax deferral request is being made (i.e., there is one or more previously posted unreversed CRN 280/ TC 766 amounts on the tax module) The required action requires moving credit(s) into (but not out of) the tax module First, process the request for the revised social security tax deferral as per guidance in IRM 21.7.2.8.9, Processing New or Revised Social Security Tax Deferral Requests for 2020. Complete all required credit transfer(s) into the tax module as normal but use a suitable post delay code with the credit transfer(s) to ensure posting after the actions taken to record the revised deferred social security tax amount. Note: Completing the credit transfer(s) into the module after processing the revised social security tax deferral request will ensure that the AMB analysis described in (8) of IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195 will be triggered, when appropriate, for potential systemic reversal of all or a portion of the posted CRN 280 / TC 766 amount. 6) A revised social security tax deferral request is being made (i.e., there is one or more previously posted unreversed CRN 280/ TC 766 amounts on the tax module) The required action requires moving credit(s) both into and out of the tax module Correct ordering of transactions is critical for achieving the correct outcome on the account. Handle as follows: First, complete all required credit transfer(s) out of the tax module as normal. Complete the processing of the revised social security tax deferral request as per guidance in IRM 21.7.2.8.9, Processing New or Revised Social Security Tax Deferral Requests for 2020, but use a suitable post delay code to ensure the subsequent actions to record the deferred taxes post after the credit transfer(s) out of the module. Complete all required credit transfer(s) into the tax module as normal but use a suitable post delay code with the credit transfer(s) to ensure posting after the actions taken to record the revised deferred social security tax amount. As appropriate, follow procedures in IRM 21.7.2.8.10, Restoring or Reinstating Incorrectly Reversed Social Security Tax Deferral Amounts, to reinstate any portion of the deferral recorded prior to the current revision request that was incorrectly reversed due to the previous misapplication of credit(s) to the account. Note: Moving the credits out of the account first will ensure that the module balance situation is known prior to applying the procedures for recording the revised deferred social security taxes (making it easier to apply those procedures since they are based in part on module balance conditions). And, completing the credit transfer(s) into the module after processing the revised social security tax deferral request will ensure that the AMB analysis described in (8) of IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195 will be triggered, when appropriate, for potential systemic reversal of all or a portion of the posted CRN 280 / TC 766 amount. Also, action to reinstate any incorrectly reversed CRN 280 amount should generally be the last action taken to resolve an account with a recorded deferral amount. Reminder: The computer is generally programmed to analyze and reverse portions of posted CRN 280 amounts (recorded either with the return or subsequently) in any posting cycle in which the module would end in credit balance. Use of Hold Codes, freeze conditions, TC 570 transactions, etc., will not prevent this from occurring. The only exception is a CRN 280 transaction posting with first position RC 195 and only for the specific posting cycle of that transaction. See IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195, for more information. Notification requirements for credit transfer cases involving deferred social security tax issues are generally the same as they would be for the related deferred social security tax issue (e.g., a credit transfer case also requiring a reinstatement of deferred social security tax would require communications to the taxpayer as per guidance in IRM 21.7.2.8.10, Restoring or Reinstating Incorrectly Reversed Social Security Tax Deferral Amounts). Exception: If the adjustment actions taken will generate a correct notice containing all necessary information with regards to the recording of deferred social security tax amounts (e.g., systemic posting of CRN 280 / TC 767 transaction), a letter duplicating that information is not required. Note: In some cases, it may be necessary to monitor the account until transactions are posted in order to provide the taxpayer with a complete and accurate letter describing the actions taken and to provide an accurate balance due amount.

# Deferred Payment Modules — Manual Penalty Adjustments

21.7.2.8.8 (12-10-2024) Deferred Payment Modules — Manual Penalty Adjustments This subsection provides guidance for completing manual penalty adjustments on paper inquiries (including generated Form 4442 referrals) on modules with posted social security tax deferral amounts (TC 766 CRN 280 transactions) and modules for which new/revised/reinstatement deferral requests are also under consideration. Note: This subsection does not address restricted interest modules. However, the same general principles discussed here (i.e., ordering of transactions, etc.) for manual penalty adjustments would usually apply to manual interest adjustments. Note: This subsection does not address matters related to systemic recomputation of penalties (or interest). However, systemic recomputation of penalties (and interest) is a factor requiring careful consideration when taking actions (e.g., credit transfers) on accounts with deferred social security tax issues. Reminder: Phone inquiries regarding manual penalty adjustments on accounts with recorded deferred social security tax amounts are addressed per guidance in IRM 21.7.2.8.6, Deferred Payment of Social Security Taxes for 2020 — Handling Guidance for Common Correspondence and Phone Inquiries. As is discussed in greater detail in IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195: CRN 280 / TC 766 transactions are used to "mask" balances of social security taxes for which payment can deferred. The computer is generally programmed to analyze and reverse portions of posted CRN 280 amounts (recorded either with the return or subsequently) in any posting cycle in which the module would end in credit balance. Use of Hold Codes, freeze conditions, TC 570 transactions, etc., will not prevent this from occurring. The only exception is a CRN 280 transaction posting with first position RC 195 and only for the specific posting cycle of that transaction. The computer is not capable of determining when a systemic CRN 280 reversal was in error and it is not programmed to restore or reinstate a reversed social security tax deferral amount even when the specific transaction that triggered a reversal is reversed. Accordingly, completing manual penalty adjustments on accounts with posted CRN 280 transactions, or on accounts on which a new/revised CRN 280 amount is to be input, requires careful consideration and ordering of corrective transactions. Take the following preliminary actions prior to initiating a manual penalty adjustment on a tax module reflecting posted CRN 280 transactions or on which a CRN 280 transaction will be input as part or resolving the account: Determine the manual penalty adjustment required. Caution: Since the penalty will be restricted and will not afterwards systemically recompute, the impact of any posted CRN 280 amount and/or changes to the recorded CRN 280 amount must be considered when determining the correct penalty change amount. Reminder: FTP penalty adjustments for reasonable cause do not prevent (i.e., do not restrict) systemic recomputations of FTP. See (7) in IRM 20.1.2.2.4.1, Penalty Abatements and Re-assessments. Determine the expected account outcome in terms of final module balance (i.e., zero balance, debit balance or overpayment) after the posting of the manual penalty adjustment and, if overpaid, whether the overpayment should be applied against the amount deferred or is refundable/available for offset. Determine the impact of the manual penalty adjustment on the previously recorded CRN 280 deferral or any new/revised CRN 280 to be recorded (i.e., whether the manual penalty adjustment will trigger systemic CRN 280 / TC 767 reversal). Determine the general action required to address the taxpayer's previous or new social security tax deferral request (i.e., reinstatement of a previous CRN 280, input of a new CRN 280, or allowing a full or partial systemic reversal of a previous CRN 280 amount). Note: Completing the four steps described above requires analyzing the taxpayer request and the tax accounts to be addressed as well as a familiarity with social security tax deferral guidance found throughout IRM 21.7.2.8, Deferred Payment of Social Security Taxes for 2020, and its subsections. After completing the preliminary steps described above, continue processing manual penalty increases or decreases on tax modules with previously posted CRN 280 deferral transactions and tax modules for which new or revised social security tax deferral requests are being considered as follows: If And Then 1) A previous CRN 280 / TC 767 reversal was incorrect and must be reinstated Generally, the reinstatement action should be the last action taken on the account. See IRM 21.7.2.8.10, Restoring or Reinstating Incorrectly Reversed Social Security Tax Deferral Amounts, for additional handling guidance. 2) The taxpayer is also making a new social security tax deferral request or revising (not reinstating) a previous deferral request Correct ordering of transactions is critical for achieving the correct outcome on the account: If the manual penalty adjustment will result in a net debit balance on the tax account (e.g., penalty assessment), the manual penalty adjustment should generally be completed before recording the new or revised social security tax deferral amount. If the manual penalty adjustment would result in a net credit balance on the tax account (e.g., penalty abatement), the manual penalty adjustment should generally be completed after recording the new or revised social security tax deferral amount. See IRM 21.7.2.8.9, Processing New or Revised Social Security Tax Deferral Requests for 2020, for additional handling guidance. 3) There are one or more misapplied credits Correct ordering of transactions is critical for achieving the correct outcome on the account: If correcting the account requires moving credits out of the tax module (i.e., debit transactions), credits transfers should generally be completed before any transaction that would create a credit on the account (e.g., manual penalty abatement). If correcting the account requires moving credits into the tax module (i.e., credit transactions), the credit transfers should generally be completed after any transaction that would create a debit on the account (e.g., manual penalty assessment). See IRM 21.7.2.8.7, Deferred Payment Modules — Misapplied Payments and Credit Transfers, for additional handling guidance. 4) The employer is requesting abatement of penalties associated with a reversal of recorded deferred social security amounts (i.e., CRN 280 / TC 767 reversal) due to not paying deferred amounts by respective due dates Reminder: See (14) in IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195, for more information. See (4) and (5) in IRM 20.1.4.28 , CARES Act Section 2302 Deferrals. The penalty abatement request is worked as per standard handling guidance. 5) A Form 94XX adjusted return is also being processed Follow guidance IRM 21.7.2.8.12, Form 94XX — Adjusting Accounts with a Posted CRN 280 and/or Corrections to Deferred Social Security Tax Payment Amounts, for processing Forms 94XX with deferred social security tax implications, including those involving manual penalty adjustments. Handling requirements for manual penalty adjustments associated with Forms 94XX are incorporated in the cross-referenced guidance. 6) The account will be in zero or debit balance when the manual penalty adjustment posts Input the penalty adjustment as normal. The penalty adjustment action will not trigger AMB analysis for systemic reversal of the recorded social security tax deferral amount (i.e., no CRN 280 / TC 767 reversal will be posted). 7) The account will be in credit balance after the manual penalty adjustment The overpayment should be applied against the recorded deferred social security tax amount Input the adjustment as normal. The overpayment condition created by the penalty adjustment action will trigger AMB analysis for systemic reversal (i.e., CRN 280 / TC 767) of the appropriate amount of the recorded social security tax deferral. 8) The account will be in credit balance after the manual penalty adjustment The overpayment should not be against the recorded deferred social security tax amount (i.e., it should refund or offset) This penalty adjustment scenario should rarely be encountered since overpayments on the account are generally required to be applied against the recorded deferred social security taxes. However, if necessary and appropriate (e.g., correcting a previous processing error), handle as follows: Input the adjustment as normal. The overpayment created by the penalty adjustment action will trigger AMB analysis for systemic reversal (i.e., CRN 280 / TC 767) of the appropriate amount of the recorded social security tax deferral. Follow procedures in IRM 21.7.2.8.10, Restoring or Reinstating Incorrectly Reversed Social Security Tax Deferral Amounts, to reinstate the systemically generated deferral reversal amount and allow the resulting overpayment to refund/offset. Notification requirements for manual penalty adjustment cases involving deferred social security tax issues are generally the same as they would be for the related deferred social security tax issue (e.g., a manual penalty adjustment case also requiring a reinstatement of deferred social security tax would require communications to the taxpayer as per guidance in IRM 21.7.2.8.10, Restoring or Reinstating Incorrectly Reversed Social Security Tax Deferral Amounts). Exception: If the adjustment actions taken will generate a correct notice containing all necessary information with regards to the recording of deferred social security tax amounts (e.g., systemic posting of CRN 280 / TC 767 transaction), a letter duplicating that information is not required. Note: In some cases, it may be necessary to monitor the account until transactions are posted in order to provide the taxpayer with a complete and accurate letter describing the actions taken and to provide an accurate balance due amount.

# Processing New or Revised Social Security Tax Deferral Requests for 2020

21.7.2.8.9 (12-10-2024) Processing New or Revised Social Security Tax Deferral Requests for 2020 The procedures that follow are for new or revised social security tax deferral requests for Form 941 tax periods 202006, 202009, and 202012 and for Form 943, Form 944, and Form CT-1 for tax period 202012. See IRM 21.7.2.8, Deferred Payment of Social Security Taxes for 2020, for general information on deferred payment provisions. See IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195, for information on CRN 280 use and functionality. Note: Any reference to employer and employee shares of social security tax in this subsection also applies to equivalent Tier 1 taxes for Form CT-1. Reminder: For Form 941 tax period 202003 requests, see IRM 21.7.2.8.11, First Quarter 2020 Form 941 — Deferred Payment of Social Security Taxes and Notice 1447. Note: Employers reporting employment taxes on Schedule H with Form 1041 (MFT 05) were permitted to defer payment of employer's share of social security taxes. See the fourth row of the table in (3) of IRM 21.7.2.8.6, Deferred Payment of Social Security Taxes for 2020 — Handling Guidance for Common Correspondence and Phone Inquiries, for MFT 05 deferral handling. Generally, handling of these inquiries consists of the following steps (described in detail below and in cross-referenced IRM subsections): Determining the amount of the employer's social security tax deferral request, including the respective amounts of employer's share and/or employee's share of social security taxes for which the request is being made. Determining the maximum computer deferral figure (which may be less than what can actually be recorded). Determining the amount of the social security tax deferral request which can be recorded. Recording the social security tax deferral amount (new or as revised) with one or more CRN 280 transactions along with (as appropriate) any other required coding or transaction(s) necessary to properly resolve the account. Communicating the outcome of the actions taken on the account to the employer. Note: The procedures in the following paragraphs are intended to be followed in sequential order with either (2) or (3) as the starting point for handling depending on whether the inquiry is being worked on the phone or is a paper case. Caution: In no case will employers be required to make a special election to be able to defer deposits and payments of employment taxes. Form 94XX adjusted returns include lines for making corrections to social security deferrals for 2020 but a Form 94XX will not be required by AM to make a social security tax deferral request that was omitted from an original return. Note: Guidance for handing reinstatements of incorrectly reversed CRN 280 social security tax deferral amounts are addressed in IRM 21.7.2.8.10, Restoring or Reinstating Incorrectly Reversed Social Security Tax Deferral Amounts. If the taxpayer is revising their social security tax deferral request and a reinstatement is also required, the reinstatement issue must generally be addressed first. For phone inquiries, see handling guidance in in IRM 21.7.2.8.6, Deferred Payment of Social Security Taxes for 2020 — Handling Guidance for Common Correspondence and Phone Inquiries, and then continue processing as follows: Advise the employer that the amount of social security tax that could be deferred was generally limited to: a) The employer's share of social security tax (or equivalent Tier 1 taxes for Form CT-1) due with deposits and payments that would otherwise have been required to be made during the period beginning on March 27, 2020 and ending December 31, 2020; and, b) The employer's share of social security tax (or equivalent Tier 1 taxes for Form CT-1) due with deposits and payments that were required after December 31, 2020 for wages paid during the final quarter of calendar year 2020 (for Form 941) or during calendar year 2020 (for Form 943, Form 944, and Form CT-1); and, c) Must be modified for certain filers reporting third party sick pay amounts or amounts due as the result of receiving a Letter 3263 or Letter 4520 Section 3121(q) Notice and Demand for tax due on unreported tips (see (5) in IRM 21.7.2.8.1, Deferred Payment of Employer's Share of Social Security Taxes for 2020); and, d)If the employer implemented deferral of employee social security taxes under Notice 2020-65, the amounts of employee social security not deducted from employees' wages of less than $4,000 in any bi-weekly pay period (or the equivalent threshold amount for other pay period intervals) paid during the period beginning on September 1, 2020 and ending on December 31, 2020. Ask the employer for: a) The amount of employer's share of social security tax they deferred for the specific tax form and tax period of the request. b) The amount of employee's share of social security tax they deferred for the specific tax form and tax period of the request (not applicable to requests for Form 941 tax period 202006). c) The total social security tax they deferred for the specific tax form and tax period of the request. (This figure must equal the amounts provided in a) and b) directly above.) If the employer is able to provide the figure(s) for amounts of deferred social security taxes: a) Prepare Form 4442 as per instructions in IRM 21.3.5, Taxpayer Inquiry Referrals Form 4442, using in-house referral, Other – Employment Taxes – BMF and include the amount of employer's share, employee's share, and total social security tax the taxpayer deferred for the quarter. b) Ask the taxpayer for the dates and amounts of any payments made towards deferred tax amounts and include this information on the Form 4442. c) Advise the taxpayer they will receive a response via phone or letter as appropriate. d) If the account is in balance due status, input STAUPS for nine (9) cycles as appropriate. If the employer is unable to provide the figure(s) for the amounts of deferred social security taxes, advise the employer that we are unable to assist them without that information and to write in when they can provide it. Input STAUPS on the account for 9 weeks if the account reflects a balance due. Note: If the social security tax deferral request is being made for a tax form or tax period for which deferral relief was not available, advise the employer their request for deferral of social security taxes cannot be considered and take any other appropriate actions needed to resolve the employer's inquiry. For paper inquiries (including Forms 4442 generated per instructions in (3) above), handle as follows: If And Then 1) The request is for a tax period/tax form for which social security tax deferral does not apply (see Step 1 in (3) above for valid forms/tax periods) Send a letter to the employer informing them we cannot consider their request since deferred payment of social security taxes was not available for the tax form and tax period [specify] for which their request was made. Take any other appropriate account actions, and close the case. 2) The employer's correspondence does not provide a figure for the amount of deferred social security taxes A telephone number is available Make two attempts to contact the employer by phone to determine the amount of social security tax they deferred. If contact is successful, follow the phone inquiry Steps 1 through 3 in (3) above to obtain information required to address the request (but do not generate a Form 4442). Otherwise, proceed to the next row of this table. 3) The employer's correspondence does not provide a figure for the amount of deferred social security taxes A telephone number is not available or attempts to obtain the information via telephone were unsuccessful Send a letter to the employer informing them we cannot consider their request since they did not provide a figure for the amount of social security tax they deferred. Advise the employer in the letter to respond in writing. If the tax form/period of the request is not Form 941 for 202006, also advise the taxpayer to provide separate and total figures for deferral of employer's and employee's share of social security taxes. Take any other appropriate account actions, and close the case. 4) The employer's correspondence indicates that a portion (but not all) of the deferral figure provided is for employee share of social security taxes but does not provide a breakdown of the respective amounts A telephone number is available The separate figures for deferred employer's share and employee's share of social security taxes must be determined in order to process the request. Make two attempts to contact the employer by phone to determine the amount of social security tax they are requesting to be deferred. If contact is successful, follow the phone inquiry Steps 1 through 3 in (3) above to obtain information required to address the request (but do not generate a Form 4442). Otherwise, proceed to the next row of this table. 5) The employer's correspondence indicates that a portion (but not all) of the deferral figure provided is for employee share of social security taxes but does not provide a breakdown of the respective amounts A telephone number is not available or attempts to obtain the information via telephone were unsuccessful The separate figures for deferred employer's share and employee's share of social security taxes must be determined in order to process the request. Send a letter to the employer informing them we cannot consider their request because they did not provide separate figures for the amounts of employer's share of social security taxes and employee's share of social security taxes they are requesting to be deferred. Advise the taxpayer in the letter that they can provide the separate employer's share/employee's share social security tax deferral figures by phone or in writing. Take any other appropriate account actions, and close the case. 6) The taxpayer's correspondence provided a figure for the social security tax deferral amount or it was obtained via phone contact No other row of this table applies Follow the guidance provided in table found in (5) below. Note: If a written social security tax deferral request does not indicate all or a portion of the request is for deferral of employee's share social security taxes, the request will be treated and processed as a request to record a deferral of employer's share social security taxes (only). For paper inquiries (including Forms 4442 generated per instruction in (3) above) for which the amount of the requested social security tax deferral has been provided, determine the amount of deferral which can be recorded, comprising either employer's share, employee's share, or both, as follows: If Then 1) For all social security tax deferral requests Determine the maximum computer deferral figure (see (12) in IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195) The computer maximum deferral figure is equal to the taxable social security wage figure (Line 5a, Column 1 of Form 941 or as adjusted) plus the taxable social security tips figure (Line 5b, Column 1 of Form 941 or as adjusted) multiplied by 6.2% (.062). Note this figure as it will be used in multiple succeeding handling steps. Reminder: The figure for computer maximum deferral displayed on Command Code BMFOL with definer "M" can be used for this purpose unless there are pending adjustments to wage figures. 2) All of the deferral amount requested to be recorded is for employer's share of social security taxes ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The employer's share social security tax deferral amount to be recorded is the lesser of the amount computed in Step 1 or the amount provided by the employer. Continue handling per instructions provided in (6) below. 3) All of the deferral amount requested to be recorded is for employee's share of social security taxes Determine the amount of employee's share of social security taxes reported for the tax period: • Add the taxable social security wage figure (Line 5a, Column 1 of Form 941 or as adjusted) plus qualified sick leave wages (Line 5a(i), Column 1 of Form 941 or as adjusted) plus qualified family leave wages (Line 5a(ii), Column 1 of Form 941 or as adjusted) plus the taxable social security tips figure (Line 5b, Column 1 of Form 941 or as adjusted) and multiply the result by 6.2% (.062). ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The employee's share social security tax deferral amount to be recorded is the lesser of the amount computed in Step 2 or the amount provided by the taxpayer. Continue handling per instructions provided in (6) below. 4) The deferral amount requested to be recorded consists of both employer's share and employee's share social security taxes ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Determine the amount of employee's share of social security taxes reported for the tax period: Add the taxable social security wage figure (Line 5a, Column 1 of Form 941 or as adjusted) plus qualified sick leave wages (Line 5a(i), Column 1 of Form 941 or as adjusted) plus qualified family leave wages (Line 5a(ii), Column 1 of Form 941 or as adjusted) plus the taxable social security tips figure (Line 5b, Column 1 of Form 941 or as adjusted) and multiply the result by 6.2% (.062). Add the amounts determined in Step 1 and Step 2 together. The social security tax deferral amount to be recorded is the lesser of the amount computed in Step 3 or the amount provided by the taxpayer. Continue handling per instructions provided in (6) below. Reminder: To ensure correct systemic penalty and interest computations, a social security tax deferral will be recorded for the allowable amount even if it is expected the computer will reverse part of all the deferral being recorded. Reminder: The amount of any previously recorded deferral of employee's share of social security taxes is displayed on BMFOL definer "R" but not on TXMOD. For inquiries for which a social security tax deferral amount to be recorded was determined per guidance (5), analyze the account for conditions described in the table below and continue processing as appropriate: If And Then 1) There are any erroneous offsets into the module or misapplied payments Correct ordering of transactions is critical for achieving the correct outcome on the account. See IRM 21.7.2.8.7, Deferred Payment Modules — Misapplied Payments and Credit Transfers, for more information. After considering and applying the guidance in the cross-referenced subsection, including determining whether any deferral reinstatement is required, continue processing the social security tax deferral request as per succeeding rows of this table, but use a suitable post delay code with ADJ54 when completing any CRN 280 adjustment to ensure it posts in the correct sequence. 2) Penalties must be manually adjusted Correct ordering of transactions is critical for achieving the correct outcome on the account. The penalty adjustment must post separately from the CRN 280 adjustment (i.e., cannot be combined with the CRN 280 change). For guidance on ordering the transactions, see IRM 21.7.2.8.8, Deferred Payment Modules — Manual Penalty Adjustments. After considering and applying the guidance in the cross-referenced subsection, including determining whether any deferral reinstatement is required, continue processing the social security tax deferral request as per succeeding rows of this table, but use a suitable post delay code with ADJ54, if necessary, when completing any CRN 280 adjustment to ensure it posts in the correct sequence. 3) A Form 94XX adjusted return is also being processed The Form 94XX reports a tax decrease (or credit increase) The new or revised social security tax deferral request should generally be processed before the Form 94XX adjustment is made to ensure any overpayment triggers AMB analysis for systemic reversal of the appropriate amount of the social security tax deferral recorded. Continue processing the new or revised deferral request as per guidance in the preceding and succeeding table rows. Complete processing the Form 94XX. See IRM 21.7.2.8.12, Form 94XX — Adjusting Accounts with a Posted CRN 280 and/or Corrections to Deferred Social Security Tax Payment Amounts, for more information. 4) A Form 94XX adjusted return is also being processed The Form 94XX reports a tax increase (or credit decrease) or reflects no net change to tax or credits The new or revised social security tax deferral request should generally be processed after the Form 94XX adjustment is made. Complete processing the Form 94XX. See IRM 21.7.2.8.12, Form 94XX — Adjusting Accounts with a Posted CRN 280 and/or Corrections to Deferred Social Security Tax Payment Amounts, for more information. Continue processing the new or revised deferral request as per guidance in the preceding and succeeding table rows. 5) There are no previous CRN 280 transactions (unreversed or reversed) posted to the account (i.e., the case being worked is a new social security tax deferral request) The account will be in zero or debit balance after posting of the CRN 280 amount. Complete processing as per guidance in IRM 21.7.2.8.9.1, New Social Security Tax Deferral Request — Account Will be in Zero or Debit Balance When CRN 280 is Posted. 6) There are no previous CRN 280 transactions (unreversed or reversed) posted to the account (i.e., the case being worked is a new social security tax deferral request) The account will be in credit balance after posting of the CRN 280 amount Complete processing as per guidance in IRM 21.7.2.8.9.2, New Social Security Tax Deferral Request — Account Will be in Credit Balance When CRN 280 is Posted. 7) The account reflects one or more previous CRN 280 transactions (unreversed or reversed) posted to the account (i.e., the case being worked is a revised or corrected social security tax deferral request) The account will be in zero or debit balance after posting of the CRN 280 amount. Complete processing as per guidance in IRM 21.7.2.8.9.3, Revised Social Security Tax Deferral Request — Account Will be in Zero or Debit Balance When CRN 280 is Posted. 8) The account reflects one or more previous CRN 280 transactions (unreversed or reversed) posted to the account (i.e., the case being worked is a revised or corrected social security tax deferral request) The account will be in credit balance after posting of the CRN 280 amount Complete processing as per guidance in IRM 21.7.2.8.9.4, Revised Social Security Tax Deferral Request — Account Will be in Credit Balance When CRN 280 is Posted.

# New Social Security Tax Deferral Request — Account Will be in Zero or Debit Balance When CRN 280 is Posted

21.7.2.8.9.1 (12-10-2024) New Social Security Tax Deferral Request — Account Will be in Zero or Debit Balance When CRN 280 is Posted The procedures that follow in this subsection are for new social security tax deferral requests (i.e., no previous unreversed or reversed CRN 280 transactions) on paper inquiries (including generated Form 4442 referrals) for Form 941 tax periods 202006, 202009, and 202012 and for Form 943, Form 944, and Form CT-1 for tax period 202012, when there will be a zero balance or debit balance (i.e., balance due) on the account in the posting cycle in which the deferral request is recorded. Reminder: Phone inquiries regarding new social security tax deferral requests are addressed per guidance in IRM 21.7.2.8.6, Deferred Payment of Social Security Taxes for 2020 — Handling Guidance for Common Correspondence and Phone Inquiries and (3) in IRM 21.7.2.8.9, Processing New or Revised Social Security Tax Deferral Requests for 2020. Caution: Procedures in IRM 21.7.2.8.9, Processing New or Revised Social Security Tax Deferral Requests for 2020, including cross-referenced sections for determining correct ordering of transactions (i.e., credit transfers, manual penalty adjustments, and processing Forms 94XX) must be followed before applying the guidance that follows. Reminder: For Form 941 tax period 202003 requests, see IRM 21.7.2.8.11, First Quarter 2020 Form 941 — Deferred Payment of Social Security Taxes and Notice 1447. For inquiries for which a deferred social security tax amount to be recorded was determined per guidance in IRM 21.7.2.8.9, Processing New or Revised Social Security Tax Deferral Requests for 2020, continue processing as follows: If And Then 1) The amount of the social security tax deferral to be recorded is more than the maximum computer deferral figure Input a TC 290 .00 and a CRN 280 for the amount determined as per guidance in IRM 21.7.2.8.9, Processing New or Revised Social Security Tax Deferral Requests for 2020. • Enter RC 195 in the first reason code position • Enter Hold Code 0 • Enter an appropriate post delay code if corrections to credits, penalties, or for a Form 94XX were made. • Also enter the amount of any deferred employee share of social security (if any) with IRN 208 (see note after this table). Send a closing letter to the employer advising them of the amount of social security tax deferral that was recorded and that any penalties and/or interest charges will be corrected accordingly. Also, if there will be a balance on the account after the correction (either for the recorded deferral amount or otherwise), advise the employer that the full amount is now due. Note: In some cases, it may be necessary to monitor the account until transactions are posted in order to provide the taxpayer with a complete and accurate letter describing the actions taken and to provide an accurate balance due amount. 2) The amount of the social security tax deferral to be recorded is less than or equal to the maximum computer deferral figure Input a TC 290 .00 and a CRN 280 for the amount determined as per guidance in IRM 21.7.2.8.9, Processing New or Revised Social Security Tax Deferral Requests for 2020. • Enter Hold Code 0 • Enter an appropriate post delay code if corrections to credits, penalties, or for a Form 94XX were made • Also enter the amount of any deferred employee share of social security (if any) with IRN 208 (see note after this table). Send a closing letter to the employer advising them of the amount of social security tax deferral that was recorded and that any penalties and/or interest charges will be corrected accordingly. Also, if there will be a balance on the account after the correction (either for the recorded deferral amount or otherwise), advise the employer that the full amount is now due. Note: In some cases, it may be necessary to monitor the account until transactions are posted in order to provide the taxpayer with a complete and accurate letter describing the actions taken and to provide an accurate balance due amount. Caution: Use of first position RC 195 is required with any CRN 280 adjustment which results in the recording of a net social security tax deferral amount in excess of the computer maximum deferral figure to avoid unpostables with UPC 306-3. However, as is discussed in IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195, use of RC 195 also causes the computer to bypass AMB analysis for purposes of possible systemic CRN 280 reversal. The instructions for input of transactions provided in the table guidance above are intended to mitigate the potential for erroneous refund or offset of amounts which should instead be applied against deferred social security tax amounts. If account circumstances require a different sequencing of transactions to achieve a correct result, the impact of using RC 195 must be carefully considered as well as the potential for systemic reversal of CRN 280 amounts in any posting cycle in which an account ends in a credit balance. Note: IRN 208 must be used to record any changes to deferred employee share social security tax in addition to being recorded as part of the CRN 280 amount. See (4) and (5) in IRM 21.7.2.8.2, Notice 2020-65 and Notice 2021-11 — Deferred Payment of Employee's Share of Social Security Taxes for 2020, for more information on how deferral of employee share social security taxes is recorded and adjusted on employment tax accounts.

# New Social Security Tax Deferral Request — Account Will be in Credit Balance When CRN 280 is Posted

21.7.2.8.9.2 (12-10-2024) New Social Security Tax Deferral Request — Account Will be in Credit Balance When CRN 280 is Posted The procedures that follow in this subsection are for new social security tax deferral requests (i.e., no previous unreversed or reversed CRN 280 transactions) on paper inquiries (including generated Form 4442 referrals) for Form 941 tax periods 202006, 202009, and 202012 and for Form 943, Form 944, and Form CT-1 for tax period 202012, when there will be a credit balance (i.e., overpayment) on the account in the posting cycle in which the deferral request is recorded. Reminder: Phone inquiries regarding new social security tax deferral requests are addressed per guidance in IRM 21.7.2.8.6, Deferred Payment of Social Security Taxes for 2020 — Handling Guidance for Common Correspondence and Phone Inquiries and (3) in IRM 21.7.2.8.9, Processing New or Revised Social Security Tax Deferral Requests for 2020. Caution: Procedures in IRM 21.7.2.8.9, Processing New or Revised Social Security Tax Deferral Requests for 2020, including cross-referenced sections for determining correct ordering of transactions (i.e., credit transfers, manual penalty adjustments, and processing Forms 94XX) must be followed before applying the guidance that follows. Reminder: For Form 941 tax period 202003 requests, see IRM 21.7.2.8.11, First Quarter 2020 Form 941 — Deferred Payment of Social Security Taxes and Notice 1447. For inquiries for which a deferred social security tax amount to be recorded was determined per guidance in IRM 21.7.2.8.9, Processing New or Revised Social Security Tax Deferral Requests for 2020, continue processing as follows: If And Then 1) The entire amount of the overpayment on the account after recording the CRN 280 amount is to be allowed to systemically refund or offset Caution: This adjustment scenario should rarely be encountered since overpayments on the account are generally required to be applied against any recorded deferred social security taxes unless the overpayment consists of COVID related credits. See IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195, for more information. Input a TC 290 .00 and a CRN 280 for the amount determined as per guidance in IRM 21.7.2.8.9, Processing New or Revised Social Security Tax Deferral Requests for 2020. • Enter RC 195 in the first reason code position • Enter Hold Code 0 • Enter an appropriate post delay code if corrections to credits, penalties, or for a Form 94XX were made • Also enter the amount of any deferred employee share of social security (if any) with IRN 208 (see note after this table). Send a closing letter to the employer advising them of the amount of social security tax deferral that was recorded and that any penalties and/or interest charges will be corrected accordingly. Also, if there will be a balance on the account after the correction (either for the recorded deferral amount or otherwise), advise the employer that the full amount is now due. Note: In some cases, it may be necessary to monitor the account until transactions are posted in order to provide the taxpayer with a complete and accurate letter describing the actions taken and to provide an accurate balance due amount. Note: Use of RC 195 is required with this adjustment situation to bypass the AMB analysis described in (8) of IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195 and allow systemic refund or offset to occur as discussed in (13) of the same cross-referenced subsection. 2) The entire amount of the overpayment on the account after recording the CRN 280 amount is to be applied as payment towards deferred social security tax amounts The amount of the deferral to be recorded is less than or equal to the maximum computer deferral figure Input a TC 290 .00 and a CRN 280 for the amount determined as per guidance in IRM 21.7.2.8.9, Processing New or Revised Social Security Tax Deferral Requests for 2020. • Enter Hold Code 0 • Enter an appropriate post delay code if corrections to credits, penalties, or for a Form 94XX were made • Also enter the amount of any deferred employee share of social security (if any) with IRN 208 (see note after this table). Send a closing letter to the employer advising them of the amount of social security tax deferral that was recorded and that any penalties and/or interest charges will be corrected accordingly. Also, if there will be a balance on the account after the correction (either for the recorded deferral amount or otherwise), advise the employer that the full amount is now due. Note: In some cases, it may be necessary to monitor the account until transactions are posted in order to provide the taxpayer with a complete and accurate letter describing the actions taken and to provide an accurate balance due amount. Note: Do not use RC 195 for this adjustment. When the CRN 280 adjustment posts and the account goes to credit balance, AMB analysis as described in (8) of IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195, will be triggered and a full or partial CRN 280 reversal up to the amount of the overpayment will be systemically posted in the same posting cycle. 3) The entire amount of the overpayment on the account after recording the CRN 280 amount is to be applied as payment towards deferred social security tax amounts The amount of the deferral to be recorded is more than the maximum computer deferral figure Input a TC 290 .00 and a CRN 280 for the amount determined as per guidance in IRM 21.7.2.8.9, Processing New or Revised Social Security Tax Deferral Requests for 2020. • Enter RC 195 in the first reason code position • Enter Hold Code 1 • Enter an appropriate post delay code if corrections to credits, penalties, or for a Form 94XX were made • Also enter the amount of any deferred employee share of social security (if any) with IRN 208 (see note after this table). Input a TC 290 .00 with Hold Code 0 with a post delay code such that this transaction would post one cycle after the CRN 280 transaction described in Step 1. Send a closing letter to the employer advising them of the amount of social security tax deferral that was recorded and that any penalties and/or interest charges will be corrected accordingly. Also, if there will be a balance on the account after the correction (either for the recorded deferral amount or otherwise), advise the employer that the full amount is now due. Note: In some cases, it may be necessary to monitor the account until transactions are posted in order to provide the taxpayer with a complete and accurate letter describing the actions taken and to provide an accurate balance due amount. Note: RC 195 is required with this CRN 280 transaction to avoid UPC 306-3 but would erroneously cause the overpayment to refund absent Hold Code 1 due to RC 195 use also bypassing AMB analysis for the cycle in which it posts as discussed in (8) of IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195. When the TC 290 .00 Hold Code 0 transaction posts a cycle later and releases the overpayment, AMB analysis will be triggered and a full or partial CRN 280 reversal up to the amount of the overpayment will be posted by the computer in the same posting cycle as the TC 290 .00 Hold Code 0 transaction. 4) Part of the overpayment after recording the CRN 280 amount is to be applied as payment towards the deferred social security taxes and part is to be allowed to systemically refund or offset Contact the IRM author through your management chain and the site P&A Staff for guidance on handling the case. Caution: Use of first position RC 195 is required with any CRN 280 adjustment which results in the recording of a net social security tax deferral amount in excess of the computer maximum deferral figure to avoid unpostables with UPC 306-3. However, as is discussed in IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195, use of RC 195 also causes the computer to bypass AMB analysis for purposes of possible systemic CRN 280 reversal. The instructions for input of transactions provided in the table guidance above are intended to mitigate the potential for erroneous refund or offset of amounts which should instead be applied against deferred social security tax amounts. If account circumstances require a different sequencing of transactions to achieve a correct result, the impact of using RC 195 must be carefully considered as well as the potential for systemic reversal of CRN 280 amounts in any posting cycle in which an account ends in a credit balance. Note: IRN 208 must be used to record any changes to deferred employee share social security tax in addition to being recorded as part of the CRN 280 amount. See (4) and (5) in IRM 21.7.2.8.2, Notice 2020-65 and Notice 2021-11 — Deferred Payment of Employee's Share of Social Security Taxes for 2020, for more information on how deferral of employee share social security taxes is recorded and adjusted on employment tax accounts.

# Revised Social Security Tax Deferral Request — Account Will be in Zero or Debit Balance When CRN 280 is Posted

21.7.2.8.9.3 (12-10-2024) Revised Social Security Tax Deferral Request — Account Will be in Zero or Debit Balance When CRN 280 is Posted The procedures that follow in this subsection are for revised social security tax deferral requests (i.e., the tax module reflects previous unreversed or reversed CRN 280 transactions) on paper inquiries (including generated Form 4442 referrals) for Form 941 tax periods 202006, 202009, and 202012 and for Form 943, Form 944, and Form CT-1 for tax period 202012, when there will be a zero balance or debit balance (i.e., balance due) on the account in the posting cycle in which the deferral request is recorded. Reminder: Phone inquiries regarding revised social security tax deferral requests are addressed per guidance in IRM 21.7.2.8.6, Deferred Payment of Social Security Taxes for 2020 — Handling Guidance for Common Correspondence and Phone Inquiries and (3) in IRM 21.7.2.8.9, Processing New or Revised Social Security Tax Deferral Requests for 2020. Caution: Procedures in IRM 21.7.2.8.9, Processing New or Revised Social Security Tax Deferral Requests for 2020, including cross-referenced sections for determining correct ordering of transactions (i.e., credit transfers, manual penalty adjustments, and processing Forms 94XX) must be followed before applying the guidance that follows. Reminder: For Form 941 tax period 202003 requests, see IRM 21.7.2.8.11, First Quarter 2020 Form 941 — Deferred Payment of Social Security Taxes and Notice 1447. For revised social security tax deferral requests, the deferral amount to be recorded as determined per guidance in IRM 21.7.2.8.9, Processing New or Revised Social Security Tax Deferral Requests for 2020, must be modified to account for previously recorded amounts, including amounts of deferred employee share of social security taxes. Take the following steps to determine the correct CRN 280 and IRN 208 (if any) adjustment amounts: Add all the TC 766 CRN 280 amounts pending or posted to the account with transaction dates equal (only) to the first day of the tax period, including all reversed TC 766 CRN 280 amounts (i.e., "766R" transactions, not 767 transactions) with transaction dates equal (only) to the first day of the tax period, and any TC 766 CRN 280 amount posted via a TC 298 with an interest computation date equal (only) to the first day of the tax period. From that amount, subtract any TC 767 CRN 280 amounts posted via a TC 298 with an interest computation date equal (only) to the first day of the tax period. Subtract the amount determined in Step 1) above from the amount of the deferral to be recorded as determined per guidance in IRM 21.7.2.8.9, Processing New or Revised Social Security Tax Deferral Requests for 2020. • If the resulting amount is zero, no change to the total deferral is indicated and no CRN 280 adjustment should be input. However, an IRN 208 adjustment may be needed as per Step 3) below if the taxpayer is recharacterizing all or part of a previously recorded deferral amount between employer and employee shares of social security taxes. Continue processing as per Step 3) below and see the first or second row of the table in (3) below as appropriate for required account actions. • If the resulting amount is positive, this is the amount that will be entered as a CRN 280 adjustment per guidance which follows below to increase the amount of the recorded deferral. • If the resulting amount is negative, this is the amount that will be entered as a CRN 280 adjustment per guidance which follows below to decrease the amount of the recorded deferral unless doing so would reverse more than the current unreversed CRN 280 amount. If the current recorded CRN 280 amount is zero, make no change. If the current unreversed CRN 280 is positive but less than the amount determined for the decrease, only enter a decrease equal to the current CRN 280 amount (i.e., reduce to zero but not below zero). If the revised request includes a change to deferral of employee share social security taxes, subtract the current posted employee deferral amount displayed on BMFOLR (field is not displayed on TXMOD) from the revised employee deferral amount. • This is the amount that will be entered as an IRN 208 adjustment per guidance which follows below. • This amount can be positive (indicating an increase to the recorded employee deferral amount) or a negative (indicating a decrease to the recorded employee deferral amount). • If the amount is zero, no change to the recorded employee deferral amount is indicated and no IRN 208 adjustment should be input. Continue processing per guidance in (3) below. Note: IRN 208 must be used to record any changes to deferred employee share social security tax in addition to being recorded as part of the CRN 280 amount. See (4) and (5) in IRM 21.7.2.8.2, Notice 2020-65 and Notice 2021-11 — Deferred Payment of Employee's Share of Social Security Taxes for 2020, for more information on how deferral of employee share social security taxes is recorded and adjusted on employment tax accounts. After following the guidance in (2) above, continue processing as follows: If And Then 1) No change is required to the CRN 280 figure as per Step 2 of (2) above A change to the amount of deferred employee share social security taxes with IRN 208 is not required per Step 3 of (2) above Send a closing letter with the following text in open paragraphs: We previously recorded deferred social security tax in the amount of $[specify amount] for your Form [specify form] account for tax period ending [specify tax period]. Since the social security tax deferral amount you reported on [specify date of requested being worked] was less than the amount we previously recorded on your tax account, no action to the currently recorded deferred tax amount is necessary at this time. All unpaid social security tax amounts for which you deferred payment, along with any other unpaid tax, penalties, and interest charges, are now due. 2) No change is required to the CRN 280 figure as per Step 2 of (2) above A change to the amount of deferred employee share social security taxes with IRN 208 is required per Step 3 of (2) above Input a TC 290 .00 and an IRN 208 for the amount determined in Step 3 of (2) above. • Enter Hold Code 3 • Enter an appropriate post delay code if corrections to credits, penalties, or for a Form 94XX were made Send a closing letter as indicated in the row above. 3) The amount of the social security tax deferral to be recorded is more than the maximum computer deferral figure Input a TC 290 .00 and a CRN 280 for the amount determined as per guidance in Step 2 of (2) above. • Enter RC 195 in the first reason code position • Enter Hold Code 0 • Enter an appropriate post delay code if corrections to credits, penalties, or for a Form 94XX were made • Also enter the amount of any deferred employee share of social security (if any) determined in Step 3 of (2) above with IRN 208. Send a closing letter to the employer advising them of the amount of social security tax deferral that was recorded and that any penalties and/or interest charges will be corrected accordingly. Also, if there will be a balance on the account after the correction (either for the recorded deferral amount or otherwise), advise the employer that the full amount is now due. Note: In some cases, it may be necessary to monitor the account until transactions are posted in order to provide the taxpayer with a complete and accurate letter describing the actions taken and to provide an accurate balance due amount. 4) The amount of the social security tax deferral to be recorded is less than or equal to the maximum computer deferral figure Input a TC 290 .00 and a CRN 280 for the amount determined as per guidance in Step 2 of (2) above. • Enter Hold Code 0 • Enter an appropriate post delay code if corrections to credits, penalties, or for a Form 94XX were made • Also enter the amount of any deferred employee share of social security (if any) determined in Step 3 of (2) above with IRN 208. • Do not use RC 195 for this adjustment. Send a closing letter to the employer advising them of the amount of social security tax deferral that was recorded and that any penalties and/or interest charges will be corrected accordingly. Also, if there will be a balance on the account after the correction (either for the recorded deferral amount or otherwise), advise the employer that the full amount is now due. Note: In some cases, it may be necessary to monitor the account until transactions are posted in order to provide the taxpayer with a complete and accurate letter describing the actions taken and to provide an accurate balance due amount. Caution: Use of first position RC 195 is required with any CRN 280 adjustment which results in the recording of a net social security tax deferral amount in excess of the computer maximum deferral figure to avoid unpostables with UPC 306-3. However, as is discussed in IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195, use of RC 195 also causes the computer to bypass AMB analysis for purposes of possible systemic CRN 280 reversal. The instructions for input of transactions provided in the table guidance above are intended to mitigate the potential for erroneous refund or offset of amounts which should instead be applied against deferred social security tax amounts. If account circumstances require a different sequencing of transactions to achieve a correct result, the impact of using RC 195 must be carefully considered as well as the potential for systemic reversal of CRN 280 amounts in any posting cycle in which an account ends in a credit balance.

# Revised Social Security Tax Deferral Request — Account Will be in Credit Balance When CRN 280 is Posted

21.7.2.8.9.4 (12-10-2024) Revised Social Security Tax Deferral Request — Account Will be in Credit Balance When CRN 280 is Posted The procedures that follow in this subsection are for revised social security tax deferral requests (i.e., the tax module reflects previous unreversed or reversed CRN 280 transactions) on paper inquiries (including generated Form 4442 referrals) for Form 941 tax periods 202006, 202009, and 202012 and for Form 943, Form 944, and Form CT-1 for tax period 202012, when there will be a credit balance (i.e., overpayment) on the account in the posting cycle in which the deferral request is recorded. Reminder: Phone inquiries regarding revised social security tax deferral requests are addressed per guidance in IRM 21.7.2.8.6, Deferred Payment of Social Security Taxes for 2020 — Handling Guidance for Common Correspondence and Phone Inquiries and (3) in IRM 21.7.2.8.9, Processing New or Revised Social Security Tax Deferral Requests for 2020. Caution: Procedures in IRM 21.7.2.8.9, Processing New or Revised Social Security Tax Deferral Requests for 2020, including cross-referenced sections for determining correct ordering of transactions (i.e., credit transfers, manual penalty adjustments, and processing Forms 94XX) must be followed before applying the guidance that follows. Reminder: For Form 941 tax period 202003 requests, see IRM 21.7.2.8.11, First Quarter 2020 Form 941 — Deferred Payment of Social Security Taxes and Notice 1447. For revised social security tax deferral requests, the deferral amount to be recorded as determined per guidance in IRM 21.7.2.8.9, Processing New or Revised Social Security Tax Deferral Requests for 2020, must be modified to account for previously recorded amounts, including amounts of deferred employee share of social security taxes. Take the following steps to determine the correct CRN 280 and IRN 208 (if any) adjustment amounts: Add all the TC 766 CRN 280 amounts pending or posted to the account with transaction dates equal (only) to the first day of the tax period, including all reversed TC 766 CRN 280 amounts (i.e., "766R" transactions, not 767 transactions) with transaction dates equal (only) to the first day of the tax period, and any TC 766 CRN 280 amount posted via a TC 298 with an interest computation date equal (only) to the first day of the tax period. From that amount, subtract any TC 767 CRN 280 amounts posted via a TC 298 with an interest computation date equal (only) to the first day of the tax period. Subtract the amount determined in Step 1) above from the amount of the deferral to be recorded as determined per guidance in IRM 21.7.2.8.9, Processing New or Revised Social Security Tax Deferral Requests for 2020. • If the resulting amount is zero, no change to the total deferral is indicated and no CRN 280 adjustment should be input. However, an IRN 208 adjustment may be needed as per Step 3) below if the taxpayer is recharacterizing all or part of a previously recorded deferral amount between employer and employee shares of social security taxes. Continue processing as per Step 3) below and see the first or second row of the table in (3) below as appropriate for required account actions. • If the resulting amount is positive, this is the amount that will be entered as a CRN 280 adjustment per guidance which follows below to increase the amount of the recorded deferral. • If the resulting amount is negative, this is the amount that will be entered as a CRN 280 adjustment per guidance which follows below to decrease the amount of the recorded deferral unless doing so would reverse more than the current unreversed CRN 280 amount. If the current recorded CRN 280 amount is zero, make no change. If the current unreversed CRN 280 is positive but less than the amount determined for the decrease, only enter a decrease equal to the current CRN 280 amount (i.e., reduce to zero but not below zero). If the revised request includes a change to deferral of employee share social security taxes, subtract the current posted employee deferral amount displayed on BMFOLR (field is not displayed on TXMOD) from the revised employee deferral amount. • This is the amount that will be entered as an IRN 208 adjustment per guidance which follows below. • This amount can be positive (indicating an increase to the recorded employee deferral amount) or a negative (indicating a decrease to the recorded employee deferral amount). • If the amount is zero, no change to the recorded employee deferral amount is indicated and no IRN 208 adjustment should be input. Continue processing per guidance in (3) below. Note: IRN 208 must be used to record any changes to deferred employee share social security tax in addition to being recorded as part of the CRN 280 amount. See (4) and (5) in IRM 21.7.2.8.2, Notice 2020-65 and Notice 2021-11 — Deferred Payment of Employee's Share of Social Security Taxes for 2020, for more information on how deferral of employee share social security taxes is recorded and adjusted on employment tax accounts. After following the guidance in (2) above, continue processing as follows: If And Then 1) No change is required to the CRN 280 figure as per Step 2 of (2) above A change to the amount of deferred employee share social security taxes with IRN 208 is not required per Step 3 of (2) above Send a closing letter with the following text in open paragraphs: We previously recorded deferred social security tax in the amount of $[specify amount] for your Form [specify form] account for tax period ending [specify tax period]. Since the social security tax deferral amount you reported on [specify date of requested being worked] was less than the amount we previously recorded on your tax account, no action to the currently recorded deferred tax amount is necessary at this time. All unpaid social security tax amounts for which you deferred payment, along with any other unpaid tax, penalties, and interest charges, are now due. 2) No change is required to the CRN 280 figure as per Step 2 of (2) above A change to the amount of deferred employee share social security taxes with IRN 208 is required per Step 3 of (2) above Input a TC 290 .00 and an IRN 208 for the amount determined in Step 3 of (2) above. • Enter Hold Code 4 if the overpayment on the account needs to be held pending further action or enter Hold Code 3 if the overpayment on the account needs to be released for refund/offset/application to the recorded deferral amount. • Enter an appropriate post delay code if corrections to credits, penalties, or for a Form 94XX were made Send a closing letter as indicated in the row above. 3) The entire amount of the overpayment on the account after recording the CRN 280 amount is to be allowed to systemically refund or offset Caution: This adjustment scenario should rarely be encountered since overpayments on the account are generally required to be applied against the recorded deferred social security taxes. Input a TC 290 .00 and a CRN 280 for the amount determined as per guidance in Step 2 of (2) above. • Enter RC 195 in the first reason code position • Enter Hold Code 0 • Enter an appropriate post delay code if corrections to credits, penalties, or for a Form 94XX were made • Also enter the amount of any deferred employee share of social security (if any) determined in Step 3 of (2) above with IRN 208. Send a closing letter to the employer advising them of the amount of social security tax deferral that was recorded and that any penalties and/or interest charges will be corrected accordingly. Also, if there will be a balance on the account after the correction (either for the recorded deferral amount or otherwise), advise the employer that the full amount is now due. Note: In some cases, it may be necessary to monitor the account until transactions are posted in order to provide the taxpayer with a complete and accurate letter describing the actions taken and to provide an accurate balance due amount. Note: Use of RC 195 is required with this adjustment situation to bypass the AMB analysis described in (8) of IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195 and allow systemic refund or offset to occur as discussed in (13) of the same cross-referenced subsection. 4) The entire amount of the overpayment on the account after recording the CRN 280 amount is to be applied as payment towards deferred social security tax amounts The amount of the social security tax deferral to be recorded is less than or equal to the maximum computer deferral figure Input a TC 290 .00 and a CRN 280 for the amount determined as per guidance in Step 2 of (2) above. • Enter Hold Code 0 • Enter an appropriate post delay code if corrections to credits, penalties, or for a Form 94XX were made • Also enter the amount of any deferred employee share of social security (if any) determined in Step 3 of (2) above with IRN 208. Send a closing letter to the employer advising them of the amount of social security tax deferral that was recorded and that any penalties and/or interest charges will be corrected accordingly. Also, if there will be a balance on the account after the correction (either for the recorded deferral amount or otherwise), advise the employer that the full amount is now due. Note: In some cases, it may be necessary to monitor the account until transactions are posted in order to provide the taxpayer with a complete and accurate letter describing the actions taken and to provide an accurate balance due amount. Note: Do not use RC 195 for this adjustment. When the CRN 280 adjustment posts and the account goes to credit balance, AMB analysis as described in (8) of IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195, will be triggered and a full or partial CRN 280 reversal up to the amount of the overpayment will be systemically posted in the same posting cycle. 5) The entire amount of the overpayment on the account after recording the CRN 280 amount is to be applied as payment towards deferred social security tax amounts The amount of the social security tax deferral to be recorded is more than the maximum computer deferral figure Input a TC 290 .00 and a CRN 280 for the amount determined as per guidance in Step 2 of (2) above. • Enter RC 195 in the first reason code position • Enter Hold Code 1 • Enter an appropriate post delay code if corrections to credits, penalties, or for a Form 94XX were made • Also enter the amount of any deferred employee share of social security (if any) determined in Step 3 of (2) above with IRN 208. Input a TC 290 .00 with Hold Code 0 with a post delay code such that this transaction would post one cycle after the CRN 280 transaction described in Step 1. Send a closing letter to the employer advising them of the amount of social security tax deferral that was recorded and that any penalties and/or interest charges will be corrected accordingly. Also, if there will be a balance on the account after the correction (either for the recorded deferral amount or otherwise), advise the employer that the full amount is now due. Note: In some cases, it may be necessary to monitor the account until transactions are posted in order to provide the taxpayer with a complete and accurate letter describing the actions taken and to provide an accurate balance due amount. Note: RC 195 is required with this CRN 280 transaction to avoid UPC 306-3 but would erroneously cause the overpayment to refund absent Hold Code 1 due to RC 195 use also bypassing AMB analysis for the cycle in which it posts as discussed in (8) of IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195. When the TC 290 .00 Hold Code 0 transaction posts a cycle later and releases the overpayment, AMB analysis will be triggered and a full or partial CRN 280 reversal up to the amount of the overpayment will be posted by the computer in the same posting cycle as the TC 290 .00 Hold Code 0 transaction. 6) Part of the overpayment after recording the CRN 280 amount is to be applied as payment towards the deferred social security taxes and part is to be allowed to systemically refund or offset Contact the IRM author through your management chain and the site P&A Staff for guidance on handling the case. Caution: Use of first position RC 195 is required with any CRN 280 adjustment which results in the recording of a net social security tax deferral amount in excess of the computer maximum deferral figure to avoid unpostables with UPC 306-3. However, as is discussed in IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195, use of RC 195 also causes the computer to bypass AMB analysis for purposes of possible systemic CRN 280 reversal. The instructions for input of transactions provided in the table guidance above are intended to mitigate the potential for erroneous refund or offset of amounts which should instead be applied against deferred social security tax amounts. If account circumstances require a different sequencing of transactions to achieve a correct result, the impact of using RC 195 must be carefully considered as well as the potential for systemic reversal of CRN 280 amounts in any posting cycle in which an account ends in a credit balance.

# Restoring or Reinstating Incorrectly Reversed Social Security Tax Deferral Amounts

21.7.2.8.10 (12-10-2024) Restoring or Reinstating Incorrectly Reversed Social Security Tax Deferral Amounts This subsection provides guidance on paper inquiries (including generated Form 4442 referrals) for manually restoring or reinstating incorrectly reversed social security tax deferral transaction amounts. Reminder: Phone inquiries regarding restoring or reinstating incorrectly reversed social security tax deferral amounts are addressed per guidance in IRM 21.7.2.8.6, Deferred Payment of Social Security Taxes for 2020 — Handling Guidance for Common Correspondence and Phone Inquiries. As is discussed in (7) and (8) in IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195, the computer is programmed to apply two different Assessed Module Balance (AMB) analysis routines (one analysis routine when posting original employment tax returns, a different analysis for subsequent posting cycles) when there is an overpayment on an employment tax account with one or more unreversed CRN 280 amounts recorded. These AMB analysis routines are designed to determine whether any portion of the overpayment present on the account should be applied against the deferred payment of social security tax. If an amount of overpayment should be so applied, the computer will post a CRN 280 / TC 767 reversal transaction with the 23c date of the posting cycle as the reversal effective date. Reminder: The AMB analysis routines can only be bypassed via the posting of a CRN 280 transaction with Reason Code (RC) 195 and only for the cycle in which such transaction posts. Caution: The AMB analysis routines are not executed at the close of every posting cycle. Rather, they are triggered by module conditions. As such, the fact that a reversal has not yet transpired on an account with a posted overpayment (e.g., credit held with a hold code on an adjustment for which RC 195 was used to bypass AMB analysis) is not necessarily an indication that it will never systemically occur; a subsequent change in module conditions can trigger the AMB analysis and a systemic CRN 280 reversal in a later cycle. There are occasions when the computer programming described above has resulted in incorrect systemic CRN 280 deferral reversals. These situations could include, but are not limited to: Misapplied payment situations. Payment was made with a Form 94XX adjusted returns reporting a tax increase. Instances where erroneous CRN 280 reversals were generated due to incorrect account actions, including incorrect sequencing of transactions. Situations in which an overpayment on an original return that should have refunded based on return posting AMB analysis was instead held and released in a later cycle triggering inappropriate subsequent cycle AMB analysis. Complex case handling situations wherein the computer must be allowed to generate incorrect CRN 280 reversals in order to complete other actions required to fully resolve an account issue (should be rare). Caution: The procedures provided below and in the two succeeding subsections do not apply to instances wherein the taxpayer asks for reinstatement of deferral amounts that were correctly reversed. The account must be analyzed to verify the reversal was incorrect before applying the procedures which follow. See the appropriate row of the table in (3) of IRM 21.7.2.8.6, Deferred Payment of Social Security Taxes for 2020 — Handling Guidance for Common Correspondence and Phone Inquiries, for additional information on handling taxpayer inquiries about deferral reversals. There may also be occasions when incorrect manual CRN 280 deferral reversals were completed. The computer is not capable of determining when a systemic CRN 280 reversal was in error and it is not programmed to restore or reinstate a reversed deferral amount even when the specific transaction that triggered a reversal is reversed. All reinstatements of CRN 280 deferral amount must be input manually. Example: A payment of $500 was applied to a third quarter 2020 Form 941 account on which a CRN 280 deferral was recorded and created an overpayment of $500. In the same posting cycle, the computer generated a CRN 280 / TC 767 reversal for $500. Later, the employer informs the IRS that the payment was intended for another tax period and a credit transfer is initiated to correct the error. In this scenario, the computer will not systemically reinstate the reversed deferral amount. If incorrect penalty and/or interest was (or will be) charged to the account due to the incorrect CRN 280 / TC 767 reversal, a CRN 280 for $500 must be input via ADJ54 to manually reinstate the reversed deferral amount one cycle after the debit side of the credit transfer posts. Caution: Because credit balance outcomes at the end of any posting cycle have high potential for triggering a systemic CRN 280 reversal as discussed in (2) above, the ADJ54 transaction to reinstate an incorrect CRN 280 reversal should generally be the last action taken to resolve an account when more than one corrective action (e.g., credit transfers) is required unless procedures which follow direct a different ordering of transactions or a careful consideration of required actions indicates a different processing order must be followed. For purposes of applying these procedures, a reinstatement of a CRN 280 deferral means correcting an account to reflect a net social security tax deferral amount not exceeding the total amount of previously recorded CRN 280 deferrals, including systemically or manually reversed CRN 280 deferral transactions. If a taxpayer is requesting an allowable increase for more than what had been previously recorded for deferred social security taxes, the amount of previous reversals will be addressed as per the reinstatement procedures that follow, but the amount in excess of the previous reversals must be processed and recorded as per guidance in IRM 21.7.2.8.9, Processing New or Revised Social Security Tax Deferral Requests for 2020. Similarly, the procedures in this subsection do not apply to requests for corrections of issues where the IRS did not record the proper amount of deferred social security taxes during original return processing or in working a subsequent social security tax deferral request (e.g., ERS reduction to a deferral amount requested on an original employment tax return). Those requests must also be processed and recorded as per guidance in IRM 21.7.2.8.9, Processing New or Revised Social Security Tax Deferral Requests for 2020. Example: A payment of $750 was applied to a fourth quarter 2020 Form 941 account on which a CRN 280 deferral for $12,000 was recorded and created an overpayment of $750. In the same posting cycle, the computer generated a CRN 280 / TC 767 reversal for $750. Later, the taxpayer informs the IRS that the payment was misapplied and that the correct deferred social security tax amount for the quarter was $14,000. As necessary, the $750 reversal will be reinstated when the misapplied payment is resolved. However, the $2000 increase to the net recorded deferral (i.e., increase from the $12000 previously recorded to new requested amount of $14,000) must be handled separately as a revised deferral request. Example: The taxpayer reported a social security tax deferral of $350,000 on their Form 941 for the third quarter of 2020 but the return errored out to ERS for correction. In completing their handling, ERS reduced the deferral amount and a CRN 280 for $225,000 was posted with the original return. If the taxpayer supplies information to substantiate the original deferral figure reported, that issue must be addressed as a revised deferral request. Reinstatement procedures do not apply because the amount at issue was not initially posted to the account and was not subsequently reversed. Analyze tax accounts requiring reinstatement of reversed social security tax deferral amounts for the following conditions prior to taking deferral reinstatement actions: If And Then 1) There are one or more misapplied credits Resolve the misapplied credits before addressing the reinstatement transaction. See handling guidance in IRM 21.7.2.8.7, Deferred Payment Modules — Misapplied Payments and Credit Transfers. Once the misapplied credits are resolved, continue processing per guidance in (8) below. 2) Manual penalty adjustments are required Whenever possible, address the penalty adjustments before addressing the reinstatement transaction. See handling guidance in IRM 21.7.2.8.8, Deferred Payment Modules — Manual Penalty Adjustments. Once the penalty adjustment issue is resolved, continue processing per guidance in (8) below. 3) A Form 94XX adjusted return is also being processed Generally, the reinstatement action should be the last action taken on the account. Process the Form 94XX as per guidance IRM 21.7.2.8.12, Form 94XX — Adjusting Accounts with a Posted CRN 280 and/or Corrections to Deferred Social Security Tax Payment Amounts. Once the Form 94XX adjustment issue is resolved, continue processing per guidance in (8) below. 4) The taxpayer is requesting an increase to the recorded social security tax deferral amount in addition to the reinstatement action under consideration Continue processing the reinstatement portion of the deferral action requested as per guidance in (8) below. After the reinstatement issue is resolved, follow guidance in IRM 21.7.2.8.9, Processing New or Revised Social Security Tax Deferral Requests for 2020, to address the amount of the deferral request in excess of previously recorded deferral amounts. Caution: Due to penalty and interest considerations, the corrections for reinstatement and for any additional deferred social security tax amounts to be recorded cannot be combined in a single adjustment transaction. Take the following preliminary actions prior to recording deferral reinstatement transactions: Determine the computer maximum deferral figure (see (12) in IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195). • The computer maximum deferral figure is equal to the taxable social security wage figure (Line 5a, Column 1 of Form 941 or as adjusted) plus the taxable social security tips figure (Line 5b, Column 1 of Form 941 or as adjusted) multiplied by 6.2% (.062). Reminder: The figure for computer maximum deferral displayed on Command Code BMFOL with definer "M" can be used for this purpose unless there are pending adjustments to wage figures. Caution: The amount of deferred social security taxes to be recorded as a reinstatement should generally not be greater than the computer maximum deferral figure unless all or part of the amount to be recorded consists of deferred employee share social security taxes. Determine the total amount of deferred taxes for which one or more incorrect reversals were recorded. • The amount of incorrectly reversed deferred taxes will generally be equal to one or more posted TC 767 amounts with CRN 280 and will usually be equal to a payment or other overpayment amount that triggered the computer reversal actions. Determine the amount of reinstatement to be entered. • The total amount(s) of the reinstatement(s) to be entered is the lesser (smaller) of the amounts determined in Step 1 or in Step 2. Caution: If any of the amount under consideration for reinstatement consists of deferred employee's share of social security tax, contact the IRM author through the campus P&A Staff for guidance on resolving the case. Determine the specific amount(s) and transaction date(s) for the reinstatement(s) to be input via Command Code (CC) ADJ54. (a) Reinstatement Amount(s): If there are between one and three incorrect deferral reversal transactions (TC 767 with CRN 280) to be addressed, a separate reinstatement transaction is required to be input for each incorrect reversal (see the Exception below if there are four or more incorrect deferral reversal transactions). Determine the specific amounts for the transactions by working backward from the most recent incorrect reversal to the earliest until the full amount to be reinstated (as determined in Step 3(b) above) has been accounted for (i.e., absorbed). (b)Transaction Date(s): The transaction date for the reinstatement transaction(s) will be the same date as the incorrect TC 767 CRN 280 transaction(s) determined in Step 4(a) and will generally be the same as the 23c date (posting date) of the transaction that triggered the incorrect deferral reversal. Exception: If there are more than three (i.e., four or more) incorrect reversal transactions (TC 767 with CRN 280), complete one reinstatement transaction for the aggregate amount determined in Step 3(b) above using the date of the earliest incorrect deferral reversal as determined in Step 4(b). Determine the expected account outcome in terms of final module balance (i.e., zero balance, debit balance or overpayment) and, if overpaid, whether the overpayment should be applied against the social security tax amount deferred or is refundable/available for offset. • In most cases, the reinstatement action would be expected to return the module to a zero balance (e.g., a misapplied payment triggered an incorrect CRN 280 / TC 767 reversal, the credit is reapplied and the deferral is reinstated to bring module back to zero balance) unless the taxpayer has paid all or part of the amounts deferred. • If the outcome is a balance due, a notice of adjustment must be allowed to generate. • If the account will be overpaid and the overpayment is to be applied to the deferral, amount, record the reinstatement and allow the computer to generate the correct reversal transaction. • If the account will be overpaid and the overpayment is to be allowed to refund or offset, record the reinstatement and allow the computer to generate the correct refund or offset transactions. Determine the sequence of corrective transactions. • Careful ordering of corrective transactions is critical to achieving the correct outcome on the tax account. • Consider all IRM guidance on account corrections with social security tax deferral issues to determine the correct order of transactions to be entered before taking action (e.g., credit transfers for misapplied payments must be completed before reinstatement transactions). Continue processing the deferral reinstatement as per the MFT and tax period specific procedures found in (9), (10), and (11) below. MFT 01, tax period 202003 accounts: After considering guidance in (1) through (8) above, follow the handling instructions in the table below to record the social security tax deferral reinstatement: If And Then 1) The account will be in zero or debit balance when the social security tax deferral is reinstated Input one or more corrective transaction(s) via CC ADJ54 as follows: • TC 298 .00 • CRN 280 for amount of reinstatement as determined in Step 4(a) in (8) above. • First position RC 195 • Appropriate Post Delay Code (PDC) to ensure the reinstatement transaction posts 1 cycle after any other corrective transactions (i.e., credit transfers, penalty adjustment, etc.) • Hold Code 0 • Blocking Series 20 • Interest Computation Date (ICD) using the date determined in Step 4(b) in (8) above. • Appropriate remarks Send a closing letter to the employer advising them of the amount of social security tax deferral that was reinstated and that any penalties and/or interest charges will be corrected accordingly. Also, if there will be a balance on the account after the correction (either for the reinstated deferral amount or otherwise), advise the employer that the full amount is now due. Note: In some cases, it may be necessary to monitor the account until transactions are posted in order to provide the taxpayer with a complete and accurate letter describing the actions taken and to provide an accurate balance due amount. 2) The account will be in credit balance when the social security tax deferral is reinstated The overpayment should be allowed to refund or offset in full Input one or more corrective transaction(s) via CC ADJ54 as follows: • TC 298 .00 • CRN 280 for amount of reinstatement as determined in Step 4(a) in (8) above. • First position RC 195 • Appropriate Post Delay Code (PDC) to ensure the reinstatement transaction posts 1 cycle after any other corrective transactions (i.e., credit transfers, penalty adjustment, etc.) • Hold Code 0 • Blocking Series 20 • Interest Computation Date (ICD) using the date determined in Step 4(b) in (8) above. • Appropriate remarks Send a closing letter to the employer advising them of the amount of social security tax deferral that was reinstated and that any penalties and/or interest charges will be corrected accordingly. Also, if there will be a balance on the account after the correction (either for the reinstated deferral amount or otherwise), advise the employer that the full amount is now due. Note: In some cases, it may be necessary to monitor the account until transactions are posted in order to provide the taxpayer with a complete and accurate letter describing the actions taken and to provide an accurate balance due amount. Note: The use of RC 195 with the adjustment will bypass AMB analysis for reversal of the deferred social security tax amount and trigger the appropriate systemic refund/offset action. 3) The account will be in credit balance when the social security tax deferral is reinstated The overpayment should be applied in full to the deferred social security tax amount Two (or more) adjustments are required. First, one or more adjustment(s) are required to record the reinstatement but hold the overpayment. The final adjustment is to release the overpayment and trigger AMB analysis for systemic reversal of the appropriate amount of the deferral recorded. Input one or more corrective transaction(s) via CC ADJ54 as follows: • TC 298 .00 • CRN 280 for amount of reinstatement as determined in Step 4(a) in (8) above. • First position RC 195 • Appropriate Post Delay Code (PDC) to ensure the reinstatement transaction posts 1 cycle after any other corrective transactions (i.e., credit transfers, penalty adjustment, etc.) • Hold Code 1 • Blocking Series 20 • Interest Computation Date (ICD) using the date determined in Step 4(b) in (8) above. • Appropriate remarks Input a final adjustment via CC ADJ54 as follows: • TC 290 .00 • Appropriate Post Delay Code (PDC) to ensure this transaction posts 1 cycle after the reinstatement transaction. • Hold Code 0 • Blocking Series 20 • Appropriate remarks Send a closing letter to the employer advising them of the amount of social security tax deferral that was reinstated and that any penalties and/or interest charges will be corrected accordingly. Also, if there will be a balance on the account after the correction (either for the reinstated deferral amount or otherwise), advise the employer that the full amount is now due. Note: In some cases, it may be necessary to monitor the account until transactions are posted in order to provide the taxpayer with a complete and accurate letter describing the actions taken and to provide an accurate balance due amount. 4) The account will be in credit balance when the social security tax deferral is reinstated The overpayment should be applied in part to the deferral amount and in part refund/offset Contact the IRM author through your management chain and the site P&A Staff for guidance on handling the case. Reminder: First position Reason Code 195 is required for all CRN 280 adjustments on MFT 01 for tax period 202003. MFT 01 tax period 202006/202009/202012 accounts and MFT 11/14/09 tax period 202012 accounts: After considering guidance in (1) through (8) above, take the following actions to record a social security tax deferral reinstatement: If And Then 1) The account will be in zero or debit balance when the social security tax deferral is reinstated The amount to be reinstated plus all other unreversed TC 766 CRN 280 transactions is less than or equal to the computer maximum deferral figure determined in Step 1 in (8) above Input one or more corrective transaction(s) via CC ADJ54 as follows: • TC 298 .00 • CRN 280 for amount of reinstatement as determined in Step 4(a) in (8) above. • Appropriate Post Delay Code (PDC) to ensure the reinstatement transaction posts 1 cycle after any other corrective transactions (i.e., credit transfers, penalty adjustment, etc.) • Hold Code 0 • Blocking Series 20 • Interest Computation Date (ICD) using the date determined in Step 4(b) in (8) above. • Appropriate remarks • Do not use first position RC 195 for this adjustment. Send a closing letter to the employer advising them of the amount of social security tax deferral that was reinstated and that any penalties and/or interest charges will be corrected accordingly. Also, if there will be a balance on the account after the correction (either for the reinstated deferral amount or otherwise), advise the employer that the full amount is now due. Note: In some cases, it may be necessary to monitor the account until transactions are posted in order to provide the taxpayer with a complete and accurate letter describing the actions taken and to provide an accurate balance due amount. 2) The account will be in zero or debit balance when the social security tax deferral is reinstated The amount to be reinstated plus all other unreversed TC 766 CRN 280 transactions is more than the computer maximum deferral figure determined in Step 1 in (7) above Input one or more corrective transaction(s) via CC ADJ54 as follows: • TC 298 .00 • CRN 280 for amount of reinstatement as determined in Step 4(a) in (8) above. • First position RC 195 • Appropriate Post Delay Code (PDC) to ensure the reinstatement transaction posts 1 cycle after any other corrective transactions (i.e., credit transfers, penalty adjustment, etc.) • Hold Code 0 • Blocking Series 20 • Interest Computation Date (ICD) using the date determined in Step 4(b) in (8) above. • Appropriate remarks Send a closing letter to the employer advising them of the amount of social security tax deferral that was reinstated and that any penalties and/or interest charges will be corrected accordingly. Also, if there will be a balance on the account after the correction (either for the reinstated deferral amount or otherwise), advise the employer that the full amount is now due. Note: In some cases, it may be necessary to monitor the account until transactions are posted in order to provide the taxpayer with a complete and accurate letter describing the actions taken and to provide an accurate balance due amount. 3) The account will be in credit balance when the social security tax deferral is reinstated The overpayment should be allowed to refund or offset in full Input one or more corrective transaction(s) via CC ADJ54 as follows: • TC 298 .00 • CRN 280 for amount of reinstatement as determined in Step 4(a) in (8) above. • First position RC 195 • Appropriate Post Delay Code (PDC) to ensure the reinstatement transaction posts 1 cycle after any other corrective transactions (i.e., credit transfers, penalty adjustment, etc.) • Hold Code 0 • Blocking Series 20 • Interest Computation Date (ICD) using the date determined in Step 4(b) in (8) above. • Appropriate remarks Send a closing letter to the employer advising them of the amount of social security tax deferral that was reinstated and that any penalties and/or interest charges will be corrected accordingly. Also, if there will be a balance on the account after the correction (either for the reinstated deferral amount or otherwise), advise the employer that the full amount is now due. Note: In some cases, it may be necessary to monitor the account until transactions are posted in order to provide the taxpayer with a complete and accurate letter describing the actions taken and to provide an accurate balance due amount. Note: The use of RC 195 with the adjustment will bypass AMB analysis for reversal of the deferred social security tax amount and trigger the appropriate systemic refund/offset action. 4) The account will be in credit balance when the social security tax deferral is reinstated The overpayment should be applied in full to the deferral amount and the amount to be reinstated plus all other unreversed TC 766 CRN 280 transactions is less than or equal to the computer maximum deferral figure determined in Step 1 in (7) above Input one or more corrective transaction(s) via CC ADJ54 as follows: • TC 298 .00 • CRN 280 for amount of reinstatement as determined in Step 4(a) in (8) above. • Appropriate Post Delay Code (PDC) to ensure the reinstatement transaction posts 1 cycle after any other corrective transactions (i.e., credit transfers, penalty adjustment, etc.) • Hold Code 0 • Blocking Series 20 • Interest Computation Date (ICD) using the date determined in Step 4(b) in (8) above. • Appropriate remarks Send a closing letter to the employer advising them of the amount of social security tax deferral that was reinstated and that any penalties and/or interest charges will be corrected accordingly. Also, if there will be a balance on the account after the correction (either for the reinstated deferral amount or otherwise), advise the employer that the full amount is now due. Note: In some cases, it may be necessary to monitor the account until transactions are posted in order to provide the taxpayer with a complete and accurate letter describing the actions taken and to provide an accurate balance due amount. Caution: Do not use first position RC 195 for this adjustment. The absence of RC 195 together with the overpaid account status will trigger AMB analysis for systemic reversal of the appropriate amount of the social security tax deferral recorded. 5) The account will be in credit balance when the social security tax deferral is reinstated The overpayment should be applied in full to the deferral amount and the amount to be reinstated plus all other unreversed TC 766 CRN 280 transactions is more than the computer maximum deferral figure determined in Step 1 in (7) above Two (or more) adjustments are required. First, one or more adjustment(s) are required to record the reinstatement but hold the overpayment. The final adjustment is to release the overpayment and trigger AMB analysis for systemic reversal of the appropriate amount of the social security tax deferral recorded. Input one or more corrective transaction(s) via CC ADJ54 as follows: • TC 298 .00 • CRN 280 for amount of reinstatement as determined in Step 4(a) in (8) above. • First position RC 195 • Appropriate Post Delay Code (PDC) to ensure the reinstatement transaction posts 1 cycle after any other corrective transactions (i.e., credit transfers, penalty adjustment, etc.) • Hold Code 1 • Blocking Series 20 • Interest Computation Date (ICD) using the date determined in Step 4(b) in (8) above. • Appropriate remarks Input a final adjustment via CC ADJ54 as follows: • TC 290 .00 • Appropriate Post Delay Code (PDC) to ensure this transaction posts 1 cycle after the reinstatement transaction. • Hold Code 0 • Blocking Series 20 • Appropriate remarks Send a closing letter to the employer advising them of the amount of social security tax deferral that was reinstated and that any penalties and/or interest charges will be corrected accordingly. Also, if there will be a balance on the account after the correction (either for the reinstated deferral amount or otherwise), advise the employer that the full amount is now due. Note: In some cases, it may be necessary to monitor the account until transactions are posted in order to provide the taxpayer with a complete and accurate letter describing the actions taken and to provide an accurate balance due amount. 6) The account will be in credit balance when the social security tax deferral is reinstated The overpayment should be applied in part to the deferral amount and in part refund/offset Contact the IRM author through your management chain and the site P&A Staff for guidance on handling the case. MFT 05, tax period 202003 through 202111 accounts: Contact the IRM author through your management chain and the site P&A Staff for guidance on handling the case.

# First Quarter 2020 Form 941 — Deferred Payment of Social Security Taxes and Notice 1447

21.7.2.8.11 (12-10-2024) First Quarter 2020 Form 941 — Deferred Payment of Social Security Taxes and Notice 1447 Due to timing matters, Form 941 for the first quarter of 2020 could not be revised before the filing due date to account for deferred payment social security tax provisions. Accordingly, there was no line on the form for the taxpayer to report any deferred social security payment amounts which might apply. And, because deferred payment provisions applied to only a portion of the tax period (deposits and payments otherwise due on or after March 27, 2020), the computer is not capable of determining the correct amount of social security taxes that could be deferred for first quarter 2020 Form 941 accounts. To address this circumstance, the IRS developed Notice 1447 to be mailed with initial balance due notices issued for first quarter 2020 Form 941 accounts. The notice directed taxpayers who had a balance as a result of not being able to report deferred amounts to contact the Service for assistance either in writing or by phone. Note: Some taxpayers received Notice 1447 in error with initial balance due notices for tax periods other than the first quarter of 2020. See SERP Alert 20A0283 dated July 6, 2020 for more information. Process inquiries regarding deferred social security tax payment amounts for first quarter 2020 Form 941 accounts, including responses to Notice 1447, and any Forms 4442 previously created per temporary instructions pending development of handling guidance (treated as a paper case for resolution purposes), as per the guidance found in (4), (5), (6), (7), and (8) below. See IRM 21.7.2.8, Deferred Payment of Social Security Taxes for 2020, IRM 21.7.2.8.1, Deferred Payment of Employer's Share of Social Security Taxes for 2020, and IRM 21.7.2.8.2, Notice 2020-65 and Notice 2021-11 — Deferred Payment of Employee's Share of Social Security Taxes for 2020, for general information on deferred payment of social security tax provisions. See IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195, for information on CRN 280 use and functionality. Note: These procedures are intended to be followed in sequential order with either (4) or (5) as the starting point for handling depending on whether the inquiry is being worked on the phone or is a paper case. For phone inquiries, handle as follows: Advise the taxpayer that the social security tax amount that could be deferred for first quarter 2020 was generally limited to: a) The employer's share of social security tax due with deposits and payments that would otherwise have been required to be made during the period beginning on March 27, 2020 and ending March 31, 2020; and, b) The employer's share of social security tax due with deposits and payments required to be made after March 31, 2020 for wages paid during the quarter ending on March 31, 2020; and c) Must be modified for certain filers reporting third party sick pay amounts or amounts due as the result of receiving a Letter 3263 or Letter 4520 Section 3121(q) Notice and Demand for tax due on unreported tips (see (5) in IRM 21.7.2.8.1, Deferred Payment of Employer's Share of Social Security Taxes for 2020). Ask the taxpayer for the amount of employer's share of social security tax they deferred for the first quarter of 2020. If the taxpayer is able to provide the figure for the deferred social security tax amount: a) Prepare Form 4442 as per instructions in IRM 21.3.5, Taxpayer Inquiry Referrals Form 4442, using in-house referral, Other – Employment Taxes – BMF and include the amount of employer's share of social security tax the taxpayer deferred for the quarter. b) Ask the taxpayer for the dates and amounts of any payments made towards deferred tax amounts and include this information on the Form 4442. c) Advise the taxpayer they will receive a response via phone or letter as appropriate. d) If the account is in balance due status, input STAUPS for nine (9) cycles as appropriate. Exception: If the taxpayer indicates a portion of the balance due on the first quarter 2020 Form 941 account is/was due to reducing deposits for Employee Retention Credit (ERC) subsequently claimed on their Form 941 for the second quarter of 2020, advise the taxpayer we are unable to take any action on their account at this time and to submit their request in writing with their calculation of the deferred social security tax amount and the amount by which they reduced deposits on the first quarter for ERC. Input STAUPS on the account for 9 weeks if the account reflects a balance due. If the taxpayer is unable to provide the figure for the deferred social security tax amount, advise the taxpayer that we are unable to assist them without that information and to write in when they can provide it. Input STAUPS on the account for 9 weeks if the account reflects a balance due. For paper responses (including Forms 4442 generated per instructions in (4) above), handle as follows: If And Then 1) The taxpayer's correspondence does not provide a figure for the deferred social security tax amount A telephone number is available Make two attempts to contact the taxpayer by phone to determine the amount of employer's share of social security tax they deferred for the first quarter of 2020. If contact is successful, follow the phone inquiry Steps 1 through 3 in (4) above to obtain information required to address the request (but do not generate a Form 4442). Otherwise, proceed to the next row of this table. 2) The taxpayer's correspondence does not provide a figure for the deferred social security tax amount A telephone number is not available or attempts to obtain the information via telephone were unsuccessful Send a letter to the taxpayer informing them we cannot consider their request since they did not provide a figure for the amount of employer's share of social security tax they deferred for first quarter and advise them to provide the figure by phone or in writing. Close the case. 3) The taxpayer's correspondence provided a figure for the deferred social security tax amount or it was obtained via phone contact The correspondence indicates a portion of a balance due on the first quarter 2020 Form 941 account is/was due to reducing deposits for Employee Retention Credit (ERC) subsequently claimed on their Form 941 for the second quarter of 2020 Contact the IRM author through your management chain and the site P&A Staff for guidance on handling the case. 4) The taxpayer's correspondence provided a figure for the deferred social security tax amount or it was obtained via phone contact There is a previous CRN 280 posted to the account and the taxpayer indicates it was recorded for less than the amount they requested (including responses to letters issued as discussed in (7) below) Exception: The handling in this table row does not apply to paper cases where the IRS honored a previous social security tax deferral request in full and the taxpayer now needs to correct the previous request figure (e.g., taxpayer discovers a calculation error on their part and requests a correction to their account). Contact the IRM author through your management chain and the site P&A Staff for guidance on handling the case. 5) The taxpayer's correspondence provided a figure for the deferred social security tax amount or it was obtained via phone contact The preceding two rows of this table do not apply Continue processing the request as per the guidance provided in table found in (6) below. For paper inquiries (including Forms 4442 generated per instruction in (4) above) for which the amount of the requested first quarter social security tax deferral has been provided, determine the amount of deferral which can be recorded as follows: If And Then 1) The taxpayer's first quarter tax is $2,500 or less ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Multiply the sum determined in Step 1 by 6.2% (.062). ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The social security tax deferral amount to be recorded is the lesser of the amount computed in Step 3 or the amount provided by the taxpayer. Continue handling per instructions provided in (7) below. 2) If the taxpayer's return reports more than $2,500 in tax SIC code 1 is present on the module Advise the taxpayer we are unable to take any action on their account at this time and to submit their request in writing with their calculation of the deferred social security tax amount and a valid Record of Federal Tax Liability (ROFTL). Input STAUPS on the account for 9 weeks if the account reflects a balance due. 3) The taxpayer's return reports more than $2,500 in tax The taxpayer's return contains a valid Monthly Schedule of Federal Tax Liability (MSOFTL) record ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The social security tax deferral amount to be recorded is the lesser of the amount determined in Step 1 or the amount provided by the taxpayer. Continue handling per instructions provided in (7) below. 4) The taxpayer's return reports more than $2,500 in tax The taxpayer's return contains a valid Schedule B record ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The social security tax deferral amount to be recorded is the lesser of the amount computed in Step 1 or the amount provided by the taxpayer. Continue handling per instructions provided in (7) below. For inquiries for which a social security tax deferral amount to be recorded was determined per guidance (6), continue processing as follows: If And Then 1) There are any erroneous offsets into the module or misapplied payments Correct ordering of transactions is critical for achieving the correct outcome on the account. See IRM 21.7.2.8.7, Deferred Payment Modules — Misapplied Payments and Credit Transfers, for more information. After considering and applying the guidance in the cross-referenced subsection, continue processing the social security tax deferral request as per succeeding rows of this table, but use a suitable post delay code with ADJ54 when completing any CRN 280 adjustment to ensure it posts in the correct sequence. 2) A manual penalty adjustment is also required The penalty adjustment must post separately from the CRN 280 adjustment (i.e., cannot be combined with the CRN 280 change). Correct ordering of transactions is critical for achieving the correct outcome on the account. See IRM 21.7.2.8.8, Deferred Payment Modules — Manual Penalty Adjustments, for more information. After considering and applying the guidance in the cross-referenced subsection, continue processing the social security tax deferral request as per succeeding rows of this table, but use a suitable post delay code with ADJ54 when completing any CRN 280 adjustment to ensure it posts in the correct sequence. 3) There is no previous CRN 280 recorded on the tax module The account will be in zero or debit balance after posting of the CRN 280 amount. Input a TC 290 .00 and a CRN 280 for the amount determined as per guidance in (6) above. Use RC 195 in the first reason code position and Hold Code 0 with the adjustment. Also, use the appropriate post delay code if corrections to credits or penalties were made as discussed in the first two rows of this table. Send a closing letter to the employer advising them of the amount of social security tax deferral that was recorded and that any penalties and/or interest charges will be corrected accordingly. Also, if there will be a balance on the account after the correction (either for the recorded deferral amount or otherwise), advise the employer that the full amount is now due. Note: In some cases, it may be necessary to monitor the account until transactions are posted in order to provide the taxpayer with a complete and accurate letter describing the actions taken and to provide an accurate balance due amount. 4) There is no previous CRN 280 recorded on the tax module The account will be in credit balance after posting of the CRN 280 amount To ensure correct systemic, penalty and interest calculations, the social security tax deferral amount must be recorded in full and then the computer will be triggered to systemically reverse all or part of the deferral as appropriate a cycle later. Resolve any misapplied credit issues as discussed in the first row of this table before proceeding to Step 2. Input a TC 290 .00 and a CRN 280 for the amount determined as per guidance in (6) above. Use RC 195 in the first reason code position and Hold Code 1 with the adjustment. Also, use the appropriate post delay code if corrections to credits or penalties were made as discussed in the first two rows of this table. Input a TC 290 .00 with Hold Code 0 with a post delay code such that this transaction would post one cycle after the CRN 280 transaction. Send a closing letter to the employer advising them of the amount of social security tax deferral that was recorded and that any penalties and/or interest charges will be corrected accordingly. Also, if there will be a balance on the account after the correction (either for the recorded deferral amount or otherwise), advise the employer that the full amount is now due. Note: In some cases, it may be necessary to monitor the account until transactions are posted in order to provide the taxpayer with a complete and accurate letter describing the actions taken and to provide an accurate balance due amount. 5) There is a previous CRN 280 recorded on the tax module Determine the amount of the CRN 280 adjustment to be made as follows: Add up all posted CRN 280 amounts on the tax module, including CRN 280 amounts that have been previously reversed. Subtract the amount computed in Step 1 above from the amount to be recorded as determined per guidance in (6) above. Treat a negative result as zero. If the result in Step 2 was zero (or a negative treated as zero), make no change to the account. Send a closing letter with the following text in open paragraphs: We previously recorded deferred social security tax in the amount of $[specify amount] for your Form [specify form] account for tax period ending [specify tax period]. Since the social security tax deferral amount you reported on [specify date of requested being worked] was less than the amount we previously recorded on your tax account, no action to the currently recorded deferred tax amount is necessary at this time. All unpaid social security tax amounts for which you deferred payment, along with any other unpaid tax, penalties, and interest charges, are now due. If the result in Step 2 was greater than zero, proceed to the appropriate table row which follows based on whether the CRN 280 change will result in a debit, zero, or credit balance after input. 6) There is a previous CRN 280 recorded on the tax module The account will be in zero or debit balance after posting of the CRN 280 amount determined per guidance in the table row immediately above. Input a TC 290 .00 and a CRN 280 for the amount determined as per guidance in the preceding table row immediately above. Use RC 195 in the first reason code position and Hold Code 0 with the adjustment. Also, use the appropriate post delay code if corrections to credits or penalties were made as discussed in the first two rows of this table. Send a closing letter to the employer advising them of the amount of social security tax deferral that was recorded and that any penalties and/or interest charges will be corrected accordingly. Also, if there will be a balance on the account after the correction (either for the recorded deferral amount or otherwise), advise the employer that the full amount is now due. Note: In some cases, it may be necessary to monitor the account until transactions are posted in order to provide the taxpayer with a complete and accurate letter describing the actions taken and to provide an accurate balance due amount. 7) There is a previous CRN 280 recorded on the tax module The account will be in credit balance after posting of the CRN 280 amount determined per guidance in the second preceding table row above. To ensure correct systemic, penalty and interest calculations, the social security tax deferral amount must be recorded in full and then the computer will be triggered to systemically reverse all or part of the deferral as appropriate a cycle later. Resolve any misapplied credit issues as discussed in the first row of this table before proceeding to Step 2. Input a TC 290 .00 and a CRN 280 for the amount determined as per guidance in the second preceding table row above. Use RC 195 in the first reason code position and Hold Code 1 with the adjustment. Also, use the appropriate post delay code if corrections to credits or penalties were made as discussed in the first two rows of this table. Input a TC 290 .00 with Hold Code 0 with a post delay code such that this transaction would post one cycle after the CRN 280 transaction. Send a closing letter to the employer advising them of the amount of social security tax deferral that was recorded and that any penalties and/or interest charges will be corrected accordingly. Also, if there will be a balance on the account after the correction (either for the recorded deferral amount or otherwise), advise the employer that the full amount is now due. Note: In some cases, it may be necessary to monitor the account until transactions are posted in order to provide the taxpayer with a complete and accurate letter describing the actions taken and to provide an accurate balance due amount. Caution: Due to a systemic limitation, first position RC 195 is required with all CRN 280 adjustments for first quarter 2020 Form 941 accounts to avoid unpostables with UPC 306-3. However, as is discussed in IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195, use of RC 195 also causes the computer to bypass AMB analysis for purposes of possible systemic CRN 280 reversal. The instructions for input of transactions provided in the table guidance above are intended to mitigate the potential for erroneous refund or offset of amounts which should instead be applied against deferred social security tax amounts. If account circumstances require a different sequencing of transactions to achieve a correct result, the impact of using RC 195 must be carefully considered as well as the potential for systemic reversal of CRN 280 amounts in any posting cycle in which an account ends in a credit balance.

# Form 94XX — Adjusting Accounts with a Posted CRN 280 and/or Corrections to Deferred Social Security Tax Payment Amounts

21.7.2.8.12 (12-10-2024) Form 94XX — Adjusting Accounts with a Posted CRN 280 and/or Corrections to Deferred Social Security Tax Payment Amounts The procedures that follow are for completing Form 94XX adjustments on tax modules with posted, unreversed social security tax deferral amounts (TC 766 CRN 280 transactions) and on tax modules for which new/revised/reinstatement social security tax deferral requests are also under consideration. As is discussed in greater detail in IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195: CRN 280 / TC 766 transactions are used to "mask" balances of social security taxes for which payment can deferred. The computer is generally programmed to analyze and reverse portions of posted CRN 280 amounts (recorded either with the return or subsequently) in any posting cycle in which the module would end in credit balance. Use of Hold Codes, freeze conditions, TC 570 transactions, etc., will not prevent this from occurring. The only exception is a CRN 280 transaction posting with first position RC 195 and only for the specific posting cycle of that transaction. The computer is not capable of determining when a systemic CRN 280 reversal was in error and it is not programmed to restore or reinstate a reversed deferral amount even when the specific transaction that triggered a reversal is reversed. Note: See the table in (2) of IRM 21.7.2.7.6, COVID-19 Related Employment Tax Relief and Forms 94XX, for data field literals applicable to 2020 deferred social security taxes. Accordingly, completing adjustments for Forms 94XX on accounts with posted, unreversed CRN 280 transactions, or on accounts on which a new/revised CRN 280 amount is to be input, requires careful consideration and ordering of corrective transactions. Take the following preliminary actions prior to initiating an adjustment for a Form 94XX on a tax module reflecting posted, unreversed CRN 280 transactions or on which a CRN 280 transaction will be input as part of resolving the account: Determine the tax adjustment to be made based on the Form 94XX under consideration, including the tax change, any credit changes, the IRNs and CRNs to be used, and any penalty adjustments or credit transfers required, in the same manner as would be done for the Form 94XX were social security tax deferral not a consideration (e.g., Form 941-X claim filed, follow procedures in IRM 21.7.2.4.5.6.2, Form 941-X Tax Decrease — Claim). Determine the expected account outcome in terms of final module balance (i.e., zero balance, debit balance or overpayment) after the posting of the Form 94XX related adjustment and, if overpaid, whether the overpayment should be applied against the social security tax amount deferred or is refundable/available for offset. Determine the impact of the Form 94XX adjustment on the previously recorded CRN 280 deferral or any new/revised CRN 280 to be recorded (i.e., whether the manual penalty adjustment will trigger systemic CRN 280 / TC 767 reversal), including whether there are COVID-related credits which would be refundable when the AMB analysis described in (8) of IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195, is triggered. Determine the general action required to address the taxpayer's previous or new social security tax deferral request (i.e., reinstatement of a previous CRN 280, input of a new CRN 280, or allowing a full or partial systemic reversal of a previous CRN 280 amount). Note: Completing the four steps described above requires analyzing the taxpayer request and the tax accounts to be addressed as well as a familiarity with social security tax deferral guidance found throughout IRM 21.7.2.8, Deferred Payment of Social Security Taxes for 2020, and its subsections. After considering the preliminary steps described above, continue processing the Form 94XX based on the type of adjustment requested as follows: If And Then 1) The Form 94XX reports a tax decrease (or credit increase) Is marked as (or is being treated as) an adjusted employment tax return Complete processing as per guidance in IRM 21.7.2.8.12.1, Form 94XX Tax Decreases or Credit Increases — Adjusted Employment Tax Returns and Deferred Social Security Tax Payment Amounts. 2) The Form 94XX reports a tax decrease (or credit increase) Is marked as (or is being treated as) a claim Complete processing as per guidance in IRM 21.7.2.8.12.2, Form 94XX Tax Decreases or Credit Increases — Claims and Deferred Social Security Tax Payment Amounts. 3) The Form 94XX reports a tax increase (or credit decrease) Complete processing as per guidance in IRM 21.7.2.8.12.3, Form 94XX Tax Increases or Credit Decreases — Adjusted Employment Tax Returns and Deferred Social Security Tax Payment Amounts. 4) The Form 94XX reports no net tax or credit change Complete processing as per guidance in IRM 21.7.2.8.12.3, Form 94XX Tax Increases or Credit Decreases — Adjusted Employment Tax Returns and Deferred Social Security Tax Payment Amounts.

# Form 94XX Tax Decreases or Credit Increases — Adjusted Employment Tax Returns and Deferred Social Security Tax Payment Amounts

21.7.2.8.12.1 (12-10-2024) Form 94XX Tax Decreases or Credit Increases — Adjusted Employment Tax Returns and Deferred Social Security Tax Payment Amounts The procedures that follow in this subsection are for Forms 94XX that: Report tax decreases or credit increases on Form 941, Form 943, Form 944, and Form CT-1 tax modules for tax year 2020; and, Are marked as or are being treated as an adjusted employment tax return; and, The tax module reflects a previously posted (reversed or unreversed) CRN 280 deferred payment of social security amount or for which a new social security tax deferral request, revised deferral request, or reinstatement action must be considered. After considering the required preliminary processing steps described in IRM 21.7.2.8.12, Form 94XX — Adjusting Accounts with a Posted CRN 280 and/or Corrections to Deferred Social Security Tax Payment Amounts, analyze the Form 94XX filed and the tax account for conditions described in the table below and continue processing as appropriate: If And Then 1) A previous CRN 280 / TC 767 reversal was incorrect and must be reinstated Generally, the reinstatement action should be the last action taken on the account. Process the Form 94XX as per guidance which follows below. Once the Form 94XX adjustment issue is resolved, complete the reinstatement as per procedures in IRM 21.7.2.8.10, Restoring or Reinstating Incorrectly Reversed Social Security Tax Deferral Amounts. 2) There are any erroneous offsets into the module or misapplied payments Correct ordering of transactions is critical for achieving the correct outcome on the account. Generally, credit transfers to move credit out of a tax module should be done before completing the Form 94XX adjustment. Generally, credit transfers to move credit into a tax module that were made before the Form 94XX was filed or with the Form 94XX should be completed before completing the Form 94XX adjustment. Generally, credit transfers to move credit into a tax module that were made after the Form 94XX was filed should be completed after completing the Form 94XX adjustment. See IRM 21.7.2.8.7, Deferred Payment Modules — Misapplied Payments and Credit Transfers, for more information. After considering and applying the guidance above and in the cross-referenced subsection, continue processing the Form 94XX as per the preceding and succeeding rows of this table to ensure all account issues are considered before completing any adjustment for the Form 94XX, but use a suitable post delay code with ADJ54 and/or credit transfer(s) to ensure the transactions post in the correct sequence. 3) Penalties must be manually adjusted The penalty adjustment must post separately from any CRN 280 adjustment (i.e., cannot be combined with the CRN 280 change) but can, if appropriate, be combined with the adjustment made for the Form 94XX. If a manual penalty assessment (increase) is being made which cannot be combined with the tax decrease (or credit increase) reported on the Form 94XX, the manual penalty assessment (increase) should generally by competed immediately before the tax adjustment. If a manual penalty adjustment to abate (decrease) all or a portion of a penalty on the module is being made which cannot be combined with the tax decrease (or credit increase) reported on the Form 94XX, the manual penalty decrease should generally by competed immediately after the tax adjustment. See IRM 21.7.2.8.8, Deferred Payment Modules — Manual Penalty Adjustments, for more information on manual penalty adjustments on modules with deferred social security tax implications. After considering the guidance above, continue processing the Form 94XX as per the preceding and succeeding rows of this table to ensure all account issues are considered before completing any adjustment for the Form 94XX, but use a suitable post delay code with ADJ54 to ensure the tax adjustment posts in the correct sequence. 4) The taxpayer is also making a new social security tax deferral request for revising (not reinstating) a previous deferral request The new or revised social security tax deferral request should generally be processed before the Form 94XX adjustment is made. Continue processing the Form 94XX as per the preceding and succeeding rows of this table to ensure all account issues are considered before completing any adjustment for the Form 94XX. Complete the actions to record the new or revised deferral amount as per guidance in IRM 21.7.2.8.9, Processing New or Revised Social Security Tax Deferral Requests for 2020. Complete the Form 94XX adjustment as appropriate but use a suitable post delay code to ensure all transactions post in the correct order. 5) The Form 94XX reflects decreases to social security wages or social security tips Does not report a change to the previously recorded CRN 280 deferral amount Continue processing as otherwise appropriate. (No special action is required since the due dates for paying deferred social security taxes are past.) 6) The Form 94XX is not changing any of the following return items: Refundable or non-refundable portions of the Credit for Qualified Sick and Family Leave Wages Refundable or non-refundable portions of the Employee Retention Credit (ERC) If the account will be in zero or debit balance when the Form 94XX adjustment posts, no systemic CRN 280 / TC 767 reversal will post. Complete the Form 94XX adjustment as appropriate but use a suitable post delay code to ensure all transactions post in the correct order. If the account will be in credit balance (i.e., will be overpaid) when the Form 94XX adjustment posts and the amount of the overpayment is less than or equal to the current total unreversed TC 766 CRN 280 transactions, complete the Form 94XX adjustment as appropriate but use a suitable post delay code to ensure all transactions post in the correct order. The computer will apply the AMB analysis routine discussed in (8) of IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195, and post a systemic CRN 280 / TC 767 reversal for the amount of the current total unreversed TC 766 CRN 280 transactions on the module or the amount of the overpayment, whichever is less. If the account will be in credit balance (i.e., will be overpaid) when the Form 94XX adjustment posts and the amount of the overpayment is more than the current total unreversed TC 766 CRN 280 transactions, the overpayment amount not absorbed by the deferral must be applied forward to the tax period in which the Form 94XX was filed. Take the following actions: 1) Complete the Form 94XX adjustment as appropriate, use Hold Code 1, and use a suitable post delay code to ensure all transactions post in the correct order. The computer will apply the AMB analysis routine discussed in (8) of IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195, and post a systemic CRN 280 / TC 767 reversal for the amount of the current total unreversed TC 766 CRN 280 transactions on the module. 2) Optionally, if the amount of the overpayment that will be present on the account cannot be accurately determined beforehand, the case may be suspended until the Form 94XX adjustment posts before taking the next action. 3) Initiate a TC 830/710 credit transfer to apply the remaining overpayment to the tax period in which the Form 94XX was filed as per guidance for the specific form type filed (e.g., for Form 941-X, see Step 2 in (7) of IRM 21.7.2.4.5.6.1, Form 941-X Tax Decreases — Adjusted Employment Tax Return). 7) The Form 94XX includes changes to any of the following return items: Refundable or non-refundable portions of the Credit for Qualified Sick and Family Leave Wages Refundable or non-refundable portions of the Employee Retention Credit (ERC) There is no indication on the Form 94XX that the taxpayer intends those credit amounts to be applied to pay amounts of deferred social security taxes. If the account will be in zero or debit balance when the Form 94XX adjustment posts, no systemic CRN 280 / TC 767 reversal will post. Complete the Form 94XX adjustment as appropriate but use a suitable post delay code to ensure all transactions post in the correct order. If the account will be in credit balance (i.e., will be overpaid) when the Form 94XX adjustment posts, any non-COVID-related overpayment must be applied to the recorded deferral and the overpayment attributable to the COVID-related credits must be applied forward to the tax period in which the Form 94XX was filed. Take the following actions: 1) Complete the Form 94XX adjustment as appropriate, use Hold Code 1, and use a suitable post delay code to ensure all transactions post in the correct order. The computer will apply the AMB analysis routine discussed in (8) of IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195, and post a systemic CRN 280 / TC 767 reversal for the appropriate amount. 2) Suspend the case until the Form 94XX adjustment posts. 3) Initiate a TC 830/710 credit transfer to apply the remaining overpayment held on the account via the Hold Code 1 usage to the tax period in which the Form 94XX was filed as per guidance for the specific form type filed (e.g., for Form 941-X, see Step 2 in (7) of IRM 21.7.2.4.5.6.1, Form 941-X Tax Decreases — Adjusted Employment Tax Return). 4) Complete any other actions required to resolve the account. 8) The Form 94XX includes changes to any of the following return items: Refundable or non-refundable portions of the Credit for Qualified Sick and Family Leave Wages Refundable or non-refundable portions of the Employee Retention Credit (ERC) There is an indication on the Form 94XX that the taxpayer intends those credit amounts to be applied to pay amounts of deferred social security taxes. Treat the Form 94XX as a claim and complete processing as per the instructions in the last row of the table in (2) of IRM 21.7.2.8.12.2, Form 94XX Tax Decreases or Credit Increases — Claims and Deferred Social Security Tax Payment Amounts. Notification requirements for Form 94XX adjustment cases involving deferred social security tax issues are generally the same as they would be for the related deferred social security tax issue (e.g., a Form 94XX adjustment case also requiring a reinstatement of deferred social security tax would require communications to the taxpayer as per guidance in IRM 21.7.2.8.10, Restoring or Reinstating Incorrectly Reversed Social Security Tax Deferral Amounts). Exception: If the adjustment actions taken will generate a correct notice containing all necessary information with regards to the recording of deferred social security tax amounts (e.g., systemic posting of CRN 280 / TC 767 transaction), a letter duplicating that information is not required. Note: In some cases, it may be necessary to monitor the account until transactions are posted in order to provide the taxpayer with a complete and accurate letter describing the actions taken and to provide an accurate balance due amount.

# Form 94XX Tax Decreases or Credit Increases — Claims and Deferred Social Security Tax Payment Amounts

21.7.2.8.12.2 (12-10-2024) Form 94XX Tax Decreases or Credit Increases — Claims and Deferred Social Security Tax Payment Amounts The procedures that follow in this subsection are for Forms 94XX that: Report tax decreases or credit increases on Form 941, Form 943, Form 944, and Form CT-1 tax modules for tax year 2020; and, Are marked as or are being treated as a claim; and, The tax module reflects a previously posted (reversed or unreversed) CRN 280 deferred payment of social security amount or for which a new social security tax deferral request, revised deferral request, or reinstatement action must be considered. After considering the required preliminary processing steps described in IRM 21.7.2.8.12, Form 94XX — Adjusting Accounts with a Posted CRN 280 and/or Corrections to Deferred Social Security Tax Payment Amounts, analyze the Form 94XX filed and the tax account for conditions described in the table below and continue processing as appropriate: If And Then 1) A previous CRN 280 / TC 767 reversal was incorrect and must be reinstated Generally, the reinstatement action should be the last action taken on the account. Process the Form 94XX as per guidance which follows below. Once the Form 94XX adjustment issue is resolved, complete the reinstatement as per procedures in IRM 21.7.2.8.10, Restoring or Reinstating Incorrectly Reversed Social Security Tax Deferral Amounts. 2) There are any erroneous offsets into the module or misapplied payments Correct ordering of transactions is critical for achieving the correct outcome on the account. Generally, credit transfers to move credit out of a tax module should be done before completing the Form 94XX adjustment. Generally, credit transfers to move credit into a tax module that were made before the Form 94XX was filed or with the Form 94XX should be completed before completing the Form 94XX adjustment. Generally, credit transfers to move credit into a tax module that were made after the Form 94XX was filed should be completed after completing the Form 94XX adjustment. See IRM 21.7.2.8.7, Deferred Payment Modules — Misapplied Payments and Credit Transfers, for more information. After considering and applying the guidance above and in the cross-referenced subsection, continue processing the Form 94XX as per the preceding and succeeding rows of this table to ensure all account issues are considered before completing any adjustment for the Form 94XX, but use a suitable post delay code with ADJ54 and/or credit transfer(s) to ensure the transactions post in the correct sequence. 3) Penalties must be manually adjusted The penalty adjustment must post separately from any CRN 280 adjustment (i.e., cannot be combined with the CRN 280 change) but can, if appropriate, be combined with the adjustment made for the Form 94XX. If a manual penalty assessment (increase) is being made which cannot be combined with the tax decrease (or credit increase) reported on the Form 94XX, the manual penalty assessment (increase) should generally by competed immediately before the tax adjustment. If a manual penalty adjustment to abate (decrease) all or a portion of a penalty on the module is being made which cannot be combined with the tax decrease (or credit increase) reported on the Form 94XX, the manual penalty decrease should generally by competed immediately after the tax adjustment. See IRM 21.7.2.8.8, Deferred Payment Modules — Manual Penalty Adjustments, for more information on manual penalty adjustments on modules with deferred social security tax implications. After considering the guidance above, continue processing the Form 94XX as per the preceding and succeeding rows of this table to ensure all account issues are considered before completing any adjustment for the Form 94XX, but use a suitable post delay code with ADJ54 to ensure the tax adjustment posts in the correct sequence. 4) The taxpayer is also making a new social security tax deferral request for revising (not reinstating) a previous deferral request The new or revised social security tax deferral request should generally be processed before the Form 94XX adjustment is made. Continue processing the Form 94XX as per the preceding and succeeding rows of this table to ensure all account issues are considered before completing any adjustment for the Form 94XX. Complete the actions to record the new or revised deferred social security tax amount as per guidance in IRM 21.7.2.8.9, Processing New or Revised Social Security Tax Deferral Requests for 2020. Complete the Form 94XX adjustment as appropriate but use a suitable post delay code to ensure all transactions post in the correct order. 5) The Form 94XX reflects decreases to social security wages or social security tips Does not report a change to the previously recorded CRN 280 deferral amount Continue processing as otherwise appropriate. (No special action is required since the due dates for paying deferred social security taxes are past.) 6) The Form 94XX is not changing any of the following return items: Refundable or non-refundable portions of the Credit for Qualified Sick and Family Leave Wages Refundable or non-refundable portions of the Employee Retention Credit (ERC) Complete the Form 94XX adjustment as appropriate but use a suitable post delay code to ensure all transactions post in the correct order. If the account is in zero or debit balance when the Form 94XX adjustment posts, no systemic CRN 280 / TC 767 reversal will post. If the account is in credit balance (i.e., is overpaid) when the Form 94XX adjustment posts, the computer will apply the AMB analysis routine discussed in (8) of IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195, and post a systemic CRN 280 / TC 767 reversal for the amount of the current total unreversed TC 766 CRN 280 transactions on the module or the amount of the overpayment, whichever is less. Any overpayment remaining after the CRN 280 / TC 767 reversal is posted will be available for refund or offset as appropriate. 7) The Form 94XX includes changes to any of the following return items: Refundable or non-refundable portions of the Credit for Qualified Sick and Family Leave Wages Refundable or non-refundable portions of the Employee Retention Credit (ERC) There is no indication on the Form 94XX that the taxpayer intends those credit amounts to be applied to pay amounts of deferred social security taxes. Complete the Form 94XX adjustment as appropriate but use a suitable post delay code to ensure all transactions post in the correct order. If the account is in zero or debit balance when the Form 94XX adjustment posts, no systemic CRN 280 / TC 767 reversal will post. If the account is in credit balance (i.e., is overpaid) when the Form 94XX adjustment posts, the computer will apply the AMB analysis routine discussed in (8) of IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195. The computer will post a systemic CRN 280 / TC 767 reversal for the amount of the current total unreversed TC 766 CRN 280 transactions on the module or the amount of the overpayment not attributable to the specified refundable/non-refundable credits, whichever is less. Any overpayment attributable to the specified refundable/non-refundable credits will be available for refund or offset as appropriate, as will any remaining overpayment not attributable to those credits after the CRN 280 / TC 767 reversal is posted. 8) The Form 94XX includes changes to any of the following return items: Refundable or non-refundable portions of the Credit for Qualified Sick and Family Leave Wages Refundable or non-refundable portions of the Employee Retention Credit (ERC) There is an indication on the Form 94XX that the taxpayer intends those credit amounts to be applied to pay amounts of deferred social security taxes. If the account will be in zero or debit balance when the Form 94XX adjustment posts, no systemic CRN 280 / TC 767 reversal will post and no special action is required. Complete the Form 94XX adjustment as appropriate but use a suitable post delay code to ensure all transactions post in the correct order. If the account will be in credit balance (i.e., will be overpaid) when the Form 94XX adjustment posts, special action is required to work around computer programming and honor the taxpayer's request. Take the following actions: 1) Complete the Form 94XX adjustment as appropriate, use Hold Code 1, and use a suitable post delay code to ensure all transactions post in the correct order. 2) Input a TC 290 .00 transactions with Hold Code 0 and a post delay code to ensure this transactions posts one cycle after the tax adjustment. • When the first adjustment posts, the computer will apply the AMB analysis routine discussed in (8) of IRM 21.7.2.8.3, Credit Reference Number (CRN) 280, Computer Maximum Deferral Figure, UPC 306-3, and Reason Code 195. The computer will post a systemic CRN 280 / TC 767 reversal for the amount of the current total unreversed TC 766 CRN 280 transactions on the module or the amount of the overpayment not attributable to the specified refundable/non-refundable credits, whichever is less. Any overpayment attributable to the specified refundable/non-refundable credits will be held by the hold code used with the first adjustment. • When the second adjustment posts, the AMB analysis will again be triggered, but because no changes to the specified credits are being made in that cycle, a second CRN 280 / TC 767 reversal will post for the appropriate amount. Notification requirements for Form 94XX adjustment cases involving deferred social security tax issues are generally the same as they would be for the related deferred social security tax issue (e.g., a Form 94XX adjustment case also requiring a reinstatement of deferred social security tax would require communications to the taxpayer as per guidance in IRM 21.7.2.8.10, Restoring or Reinstating Incorrectly Reversed Social Security Tax Deferral Amounts). Exception: If the adjustment actions taken will generate a correct notice containing all necessary information with regards to the recording of deferred social security tax amounts (e.g., systemic posting of CRN 280 / TC 767 transaction), a letter duplicating that information is not required. Note: In some cases, it may be necessary to monitor the account until transactions are posted in order to provide the taxpayer with a complete and accurate letter describing the actions taken and to provide an accurate balance due amount.

# Form 94XX Tax Increases or Credit Decreases — Adjusted Employment Tax Returns and Deferred Social Security Tax Payment Amounts

21.7.2.8.12.3 (12-10-2024) Form 94XX Tax Increases or Credit Decreases — Adjusted Employment Tax Returns and Deferred Social Security Tax Payment Amounts The procedures that follow in this subsection are for Forms 94XX that: Report tax increases or credit decreases on Form 941, Form 943, Form 944, and Form CT-1 tax modules for tax year 2020; and, The tax module reflects a previously posted (reversed or unreversed) CRN 280 deferred payment of social security amount or for which a new social security tax deferral request, revised deferral request, or reinstatement action must also be considered. Caution: For interest free adjustment and FTD penalty purposes, an amount of social security tax reported as due with a Form 94XX but not paid with the Form 94XX because the tax was reported as being deferred is not considered late paid. No FTD penalty is to be charged on the portion of taxes reported as due on the Form 94XX but deferred. (The deferred tax amount will be subject to a 10% FTD penalty later if payment is not timely made by the associated required payment due dates.) Example: A Form 94XX is timely filed on September 7, 2021 for the third quarter of 2020, reports $10,000 in additional social security taxes comprising $5,000 in employer's share and $5,000 in employee's share, reports a social security tax deferral of $5,000, and a $5,000 payment was made with the Form 94XX. The $10,000 additional tax will be recorded as a TC 298 with an interest computation date of September 7, 2021, the $5,000 deferral will be recorded with CRN 280, and no FTD penalty will be charged on the $5,000 employer's social security tax reported but not paid because it was deferred. After considering the required preliminary processing steps described in IRM 21.7.2.8.12, Form 94XX — Adjusting Accounts with a Posted CRN 280 and/or Corrections to Deferred Social Security Tax Payment Amounts, analyze the Form 94XX filed and the tax account for conditions described in the table below and continue processing as appropriate: If And Then 1) A payment was made with the Form 94XX The application of the credit triggered an incorrect CRN 280 / TC 767 reversal of all or part of the recorded social security tax deferral Generally, the reinstatement action should be the last action taken on the account. Process the Form 94XX as per guidance which follows below. Once the Form 94XX adjustment issue is resolved, complete the reinstatement as per procedures in IRM 21.7.2.8.10, Restoring or Reinstating Incorrectly Reversed Social Security Tax Deferral Amounts. 2) There are any erroneous offsets into the module or misapplied payments Correct ordering of transactions is critical for achieving the correct outcome on the account. Generally, credit transfers to move credit out of a tax module should be done before completing the Form 94XX adjustment. Generally, credit transfers to move credit into a tax module that were made before the Form 94XX was filed should be completed before completing the Form 94XX adjustment. Generally, credit transfers to move credit into a tax module that were made with the Form 94XX or after the Form 94XX was filed should be completed after completing the Form 94XX adjustment. See IRM 21.7.2.8.7, Deferred Payment Modules — Misapplied Payments and Credit Transfers, for more information. After considering and applying the guidance above and in the cross-referenced subsection, continue processing the Form 94XX as per the preceding and succeeding rows of this table to ensure all account issues are considered before completing any adjustment for the Form 94XX, but use a suitable post delay code with ADJ54 and/or credit transfer(s) to ensure the transactions post in the correct sequence. 3) Penalties must be manually adjusted The penalty adjustment must post separately from any CRN 280 adjustment (i.e., cannot be combined with the CRN 280 change) but can, if appropriate, be combined with the adjustment made for the Form 94XX. If a manual penalty adjustment (increase or decrease) is being made which cannot be combined with the tax increase (or credit decrease) reported on the Form 94XX, the manual penalty assessment should generally by competed immediately after the tax adjustment. See IRM 21.7.2.8.8, Deferred Payment Modules — Manual Penalty Adjustments, for more information on manual penalty adjustments on modules with deferred social security tax implications. After considering the guidance above, continue processing the Form 94XX as per the preceding and succeeding rows of this table to ensure all account issues are considered before completing any adjustment for the Form 94XX, but use a suitable post delay code with ADJ54 to ensure the tax adjustment posts in the correct sequence. 4) The taxpayer is also making a new social security tax deferral request or revising (not reinstating) a previous deferral request The new or revised social security tax deferral request should generally be processed after the Form 94XX adjustment is made. Continue processing the Form 94XX as per the preceding and succeeding rows of this table to ensure all account issues are considered before completing any adjustment for the Form 94XX. Complete the Form 94XX adjustment as appropriate but use the appropriate post delay code to ensure all transactions post in the correct order. Complete the actions to record the new or revised social security tax deferral amount as per guidance in IRM 21.7.2.8.9, Processing New or Revised Social Security Tax Deferral Requests for 2020. 5) The Form 94XX reflects decreases to social security wages or social security tips Does not report a change to the previously recorded CRN 280 deferral amount Continue processing as otherwise appropriate. (No special action is required since the due dates for paying deferred social security taxes are past.) 6) None of the conditions described above apply or they were considered and are being addressed. Complete the Form 94XX adjustment as appropriate but use a suitable post delay code with ADJ54 to ensure the tax adjustment posts in the correct sequence if multiple account actions are being taken. The tax increase (or credit decrease) will not trigger a systemic CRN 280 / TC 767 reversal unless the posting of the adjustment would release an overpayment on the account. In most instances, such a systemic reversal would represent the correct account outcome if all payment and other considerations have been fully addressed per instructions in preceding table rows. Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Notification requirements for Form 94XX adjustment cases involving deferred social security tax issues are generally the same as they would be for the related deferred social security tax issue (e.g., a Form 94XX adjustment case also requiring a reinstatement of deferred social security tax would require communications to the taxpayer as per guidance in IRM 21.7.2.8.10, Restoring or Reinstating Incorrectly Reversed Social Security Tax Deferral Amounts). Exception: If the adjustment actions taken will generate a correct notice containing all necessary information with regards to the recording of deferred social security tax amounts (e.g., systemic posting of CRN 280 / TC 767 transaction), a letter duplicating that information is not required. Note: In some cases, it may be necessary to monitor the account until transactions are posted in order to provide the taxpayer with a complete and accurate letter describing the actions taken and to provide an accurate balance due amount.

# Acronyms and Abbreviations Used in This IRM

Exhibit 21.7.2-1 Acronyms and Abbreviations Used in This IRM Acronym Meaning ACH Automated Clearing House ACT Automated Computation Tool AM Accounts Management AMRH Accounts Maintenance Research Hold ARRA American Recovery and Reinvestment Act BMF Business Master File BS Blocking Series CC Command Code CCC Computer Condition Code CFOL Corporate Files On-Line CFR Code of Federal Regulations CII Correspondence Imaging Inventory CIS Correspondence Imaging System CP computer paragraph CSR Customer Service Representative DMI Decision Modeling, Inc. EC Employment Code EFT electronic funds transfer EFTPS Electronic Federal Tax Payment System E.g. exempli gratia EIN Employer Identification Number EQ Embedded Quality ES Estimated Tax Etc. et cetera EUP Employee User Portal FAD Federal Agency Delinquency FICA Federal Insurance Contribution Act FR filing requirement FTD Federal Tax Deposit FTP Failure to Pay FUTA Federal Unemployment Tax Act FY fiscal year HC Hold Code H.R. House of Representatives IAT Integrated Automation Technologies IDRS Integrated Data Retrieval System IPSO Identify Protection Strategy & Oversight IPU Interim Procedural Update IRB Internal Revenue Bulletin IRC Internal Revenue Code IRM Internal Revenue Manual IRS Internal Revenue Service KY Kentucky LB&I Large Business and International MeF Modernized e-File MF master file MFT Master File Tax MSC Missing Schedule Code OIC Offer in Compromise PA Pennsylvania PC Priority Code PII Personally Identifiable Information PPM Policy & Program Management Qtr. quarter RC Reason Code RDD return due date RICS Return Integrity and Compliance Services RITE Resources, Improvement, Training & Engagement R&JR Reports & Joint Operations Center Rep SBSE Small Business/Self Employed SC service center SERP Servicewide Electronic Research Program SP Submission Processing TAS Taxpayer Advocate Service TC Transaction Code TDA Taxpayer Delinquent Account TE tax examiner TS Taxpayer Services URF Unidentified Remittance File U.S. United States VRU voice response unit W&A Web & Automation W&I Wage and Investment XSF Excess Collection File

# Application of Credits by Tax Period: Credit for Qualified Sick and Family Leave Wages, Employee Retention Credit (ERC), and COBRA Premium Assistance credit

Exhibit 21.7.2-2 Application of Credits by Tax Period: Credit for Qualified Sick and Family Leave Wages, Employee Retention Credit (ERC), and COBRA Premium Assistance credit Tax Period(s) Credit Type How Credit is Taken 202006, 202009, and 202012 Non-refundable Credit for Qualified Sick and Family Leave Wages The credit is first applied, to the extent possible, as a non-refundable credit against amounts of otherwise due employer's share of social security taxes (or the equivalent portion of Tier 1 RRTA taxes) as previously reduced (in order) by credits for the "Qualified Small Business Payroll Tax Credit for Increasing Research Activities" (QSB Research Credit ) from Form 8974 (filed with Form 941 or other employment tax form), the "Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans" from Form 5884-C (filed after original employment tax forms are filed), and the "Employee Retention Credit for Certain Tax-Exempt Organizations Affected by Qualified Disasters" from Form 5884-D (filed after original employment tax forms are filed). 202006, 202009, and 202012 Refundable Credit for Qualified Sick and Family Leave Wages Any amount of Credit for Qualified Sick and Family Leave Wages for the tax period that cannot be applied as a non-refundable credit can instead be claimed as a refundable credit on the applicable employment tax return. 202103 Non-refundable Credit for Qualified Sick and Family Leave Wages The credit is first applied, to the extent possible, as a non-refundable credit against amounts of otherwise due employer's share of social security taxes (or the equivalent portion of Tier 1 RRTA taxes) as previously reduced (in order) by credits for the "Qualified Small Business Payroll Tax Credit for Increasing Research Activities" (QSB Research Credit ) from Form 8974 (filed with Form 941 or other employment tax form), the "Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans" from Form 5884-C (filed after original employment tax forms are filed), and the "Employee Retention Credit for Certain Tax-Exempt Organizations Affected by Qualified Disasters" from Form 5884-D (filed after original employment tax forms are filed). 202103 Refundable Credit for Qualified Sick and Family Leave Wages Any amount of Credit for Qualified Sick and Family Leave Wages for the tax period that cannot be applied as a non-refundable credit can instead be claimed as a refundable credit on the applicable employment tax return. 202106 and subsequent Non-refundable Credit for Qualified Sick and Family Leave Wages for leave taken before April 1, 2021 The credit is first applied, to the extent possible, as a non-refundable credit against amounts of otherwise due employer's share of social security taxes (or the equivalent portion of Tier 1 RRTA taxes) as previously reduced (in order) by credits for the "Qualified Small Business Payroll Tax Credit for Increasing Research Activities" (QSB Research Credit ) from Form 8974 (filed with Form 941 or other employment tax form), the "Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans" from Form 5884-C (filed after original employment tax forms are filed), and the "Employee Retention Credit for Certain Tax-Exempt Organizations Affected by Qualified Disasters" from Form 5884-D (filed after original employment tax forms are filed). 202106 and subsequent Refundable Credit for Qualified Sick and Family Leave Wages for leave taken before April 1, 2021 Any amount of Credit for Qualified Sick and Family Leave Wages for leave taken before April 1, 2021 that cannot be applied as a non-refundable credit can instead be claimed as a refundable credit on the applicable employment tax return. 202106 and subsequent Non-refundable Credit for Qualified Sick and Family Leave Wages for leave taken after March 31, 2021 The credit is first applied, to the extent possible, as a non-refundable credit against amounts of otherwise due employer's share of Medicare tax (or the equivalent portion of Tier 1 RRTA taxes). 202106 and subsequent Refundable Credit for Qualified Sick and Family Leave Wages for leave taken after March 31, 2021 Any amount of Credit for Qualified Sick and Family Leave Wages for leave taken after March 31, 2021 that cannot be applied as a non-refundable credit can instead be claimed as a refundable credit on the applicable employment tax return. 202006, 202009 and 202012 Non-refundable Employee Retention Credit (ERC) The credit is first applied, to the extent possible, as a non-refundable credit against amounts of otherwise due employer's share of social security taxes as previously reduced (in order) by credits for the "Qualified Small Business Payroll Tax Credit for Increasing Research Activities" (QSB Research Credit ) from Form 8974 (filed with Form 941 or other employment tax form), the "Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans" from Form 5884-C (filed after original employment tax forms are filed), the "Employee Retention Credit for Certain Tax-Exempt Organizations Affected by Qualified Disasters" from Form 5884-D (filed after original employment tax forms are filed) and any Credit for Qualified Sick and Family Leave Wages reported for the tax period. 202006, 202009 and 202012 Refundable Employee Retention Credit (ERC) Any amount of Employee Retention Credit for a tax period that cannot be applied as a non-refundable credit can instead be claimed as a refundable credit on the applicable employment tax return. 202103 Non-refundable Employee Retention Credit (ERC) The credit is first applied, to the extent possible, as a non-refundable credit against amounts of otherwise due employer's share of social security taxes (or the equivalent portion of Tier 1 RRTA taxes) as previously reduced (in order) by credits for the "Qualified Small Business Payroll Tax Credit for Increasing Research Activities" (QSB Research Credit ) from Form 8974 (filed with Form 941 or other employment tax form), the "Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans" from Form 5884-C (filed after original employment tax forms are filed), the "Employee Retention Credit for Certain Tax-Exempt Organizations Affected by Qualified Disasters" from Form 5884-D (filed after original employment tax forms are filed) and any Credit for Qualified Sick and Family Leave Wages reported for the tax period. 202106 Non-refundable Employee Retention Credit (ERC) The credit is first applied, to the extent possible, as a non-refundable credit against amounts of otherwise due employer's share of social security taxes (or the equivalent portion of Tier 1 RRTA taxes) as previously reduced (in order) by credits for the "Qualified Small Business Payroll Tax Credit for Increasing Research Activities" (QSB Research Credit ) from Form 8974 (filed with Form 941 or other employment tax form), the "Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans" from Form 5884-C (filed after original employment tax forms are filed), the "Employee Retention Credit for Certain Tax-Exempt Organizations Affected by Qualified Disasters" from Form 5884-D (filed after original employment tax forms are filed) and any Credit for Qualified Sick and Family Leave Wages for leave taken before April 1, 2021 (but is not reduced for Credit for Qualified Sick and Family Leave Wages for leave taken after March 31, 2021) reported for the tax period. 202103 and 2021006 Refundable Employee Retention Credit (ERC) Any amount of Employee Retention Credit for tax periods 202103 and 202106 that cannot be applied as a non-refundable credit can instead be claimed as a refundable credit on the applicable employment tax return. 202109 and 202112 Non-refundable Employee Retention Credit (ERC) The credit is first applied, to the extent possible, as a non-refundable credit against amounts of otherwise due employer's share of Medicare tax (or the equivalent portion of Tier 1 RRTA taxes) as previously reduced by non-refundable portion of Credit for Qualified Sick and Family Leave Wages for leave taken after March 31, 2021 (but is not reduced for Credit for Qualified Sick and Family Leave Wages for leave before April 1, 2021) reported for the tax period. 202109 and 202112 Refundable Employee Retention Credit (ERC) Any amount of Employee Retention Credit for tax periods 202109 and 202112 that cannot be applied as a non-refundable credit can instead be claimed as a refundable credit on the applicable employment tax return. 202106 Non-refundable COBRA premium assistance credit The credit is first applied, to the extent possible, as a non-refundable credit against amounts of otherwise due employer's share of Medicare tax (or the equivalent portion of Tier 1 RRTA taxes) as previously reduced by any non-refundable portion of Credit for Qualified Sick and Family Leave Wages reported for the tax period for leave taken after March 31, 2021 (but is not reduced for any non-refundable portion of Credit for Qualified Sick and Family Leave Wages reported for the tax period for leave taken before April 1, 2021 or any ERC credit reported for the tax period). 202109 and 202112 Non-refundable COBRA premium assistance credit The credit is first applied, to the extent possible, as a non-refundable credit against amounts of otherwise due employer's share of Medicare tax (or the equivalent portion of Tier 1 RRTA taxes) as previously reduced (in order) by non-refundable portion of Credit for Qualified Sick and Family Leave Wages for leave taken after March 31, 2021 and non-refundable portion of credit for Employee Retention (ERC) reported for the tax period (but is not reduced for any non-refundable portion of Credit for Qualified Sick and Family Leave Wages reported for the tax period for leave taken before April 1, 2021). 202203 Non-refundable COBRA premium assistance credit The credit is first applied, to the extent possible, as a non-refundable credit against amounts of otherwise due employer's share of Medicare tax (or the equivalent portion of Tier 1 RRTA taxes) as previously reduced by non-refundable portion of Credit for Qualified Sick and Family Leave Wages for leave taken after March 31, 2021 (but is not reduced for any non-refundable portion of Credit for Qualified Sick and Family Leave Wages reported for the tax period for leave taken before April 1, 2021). 202106, 202109, 202112 and 202203 Refundable COBRA premium assistance credit Any amount of COBRA premium assistance credit for a tax period that cannot be applied as a non-refundable credit can instead be claimed as a refundable credit on the applicable employment tax return. Caution: See IRM 21.7.2.7.1.4, Timing Considerations Applicable to Reporting Qualified Sick and Family Leave Wages, Tax, and Associated Credits, for information on Credit for Qualified Sick and Family Leave Wages claimed in tax periods later than that in which qualified leave was taken by an employee.