3.0.101. Schedule K-1 Processing

(1) Paper returns and schedules are sent to the IRS by filers to fulfill their requirement to file a paper return and provide their taxpayer identification number (TIN). IRS must convert these returns to an electronic data record for use. Validation of the paper return information and conversion to electronic data is required.

(1) The following provides authority for the procedures in this IRM to be performed in support of completing compliance functions to make credits or refunds of any internal revenue tax, processing of non-revenue forms, and administrative support forms.

1. Title 26 of the United States Code (USC) or more commonly known as the Internal Revenue Code (IRC).

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

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

• Congressional Acts which outline additional authorities and responsibilities like the Travel and Transportation Reform Act of 1998 or the Tax Reform Act of 1986.

• Policy statements that provide authority for the work being done.

(1) The Operation manager secures, assigns, and provides training for the staff needed to perform the duties presented in this IRM.

(2) The Planning and Analysis staff provides feedback and support to local management to monitor and achieve scheduled goals.

(3) The team manager assigns, monitors, and controls the workflow to accomplish timely completion of the duties presented in this IRM.

(4) The employee applies the instruction for the duties presented in this IRM on the SCRIPS system to accurately convert paper data to an electronic data record for proper posting for use by the IRS.

(1) Program Reports: The reports listed below show receipts, production, and inventory for conversion of paper returns to electronic data. Management uses these reports to monitor the daily and weekly status of the program through completion.

• IPS0083, Workstation Operator Statistics Program and Function Summary Report

• IPS10610, Run Balancing Report

• IPS06440, Throughput Statistics Report

• PCC 2240, Daily Production Report - Program Sequence

• PCC 6040, SC WP&C Performance and Cost Report

• PCC 6240, SC WP&C Program Analysis Report

• PCB 0440, Daily Workload and Staff Hours Schedule

• PCB 0540, Weekly Workload and Staffing Schedule

(2) Program Effectiveness: Management measures weekly goals using the above reports for each function compared to the established completion schedule. Each function is expected to complete the inventory on or before the program completion date, and to retain or exceed schedule prior to the program completion date as stated in IRM 3.30.123, Work Planning and Control Processing Timeliness: Cycles, Criteria, and Critical Dates.

(3) Annual Review: Management reviews the processes in this manual annually to ensure accuracy and promote consistent tax administration.

(1) Local reports may be used to establish additional information for maintaining daily program control. Local reports do not replace the established official reports and required production reporting.

(1) The following list of acronyms are used in this IRM. Definition of data entry prompts are in the charts.

(2) Listed below are terms and their definitions related to SCRIPS processing.

(1) The following table lists the IRM primary sources of guidance for processing paper filed Schedules K-1.

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

(1) When documents are severely torn, cut or separated, the ink is to light, or for any other reason can’t pass through the scanner they will need to be processed as OE Paper.

(2) Instructions for batching "OE Paper" returns:

1. Place approximately 25-80 returns into a gusset folder.

2. Place gusset folders containing returns on a batch cart.

3. Establish batches on BBTS using the Document Locator Number (DLN) Reference Number specifically set up for SCRIPS OE Paper.

4. Clearly mark the Batch Transmittal "OE Paper."

5. Line through the SCRIPS DLN on the Batch Transmittal.

6. Manually generate DLNs in BBTS using the Off-Line DLN Generation Screen and stamp the DLN on the returns.

(1) The criteria for unprocessable Schedules K-1 are as follows:

• The tax period is more than two-years prior to current year.

• The payer information shows a different entity than the parent entity.

• The form is a 1065-B Schedule K-1 or Schedule K-1 is attached to a Form 1065-B.

• Schedule K-1 attached to Form 1041 for Non-Taxable Grantor Trust.

• The form is blank (no entity information and no line entries).

  Note: When the form is completely blank (no entity information and no line entries) the form can be put in classified waste.

(2) Discontinue processing any Schedules K-1 if income reported is for a different tax year than the form.

(3) When processing is discontinued attach the unprocessable form(s) to the parent return.

(1) To be processable, the Schedules K-1 must meet all the following requirements:

• Must be for the parent return it is attached to, e.g., if attached to Form 1065 the Schedule K-1 must be a Form 1065 Schedule K-1.

• Schedules K-1 must contain the payer and payee’s name, address, and SSN/EIN.

• Each taxpayer’s information must be on a separate Schedule K-1 form.

Exception: Don’t correspond if a married couple (same last name) are filing a Schedule K-1 as one Beneficiary, Partner or Shareholder in a "Trust, Partnership or Corporation."

• The amount of each partner, shareholder or beneficiary share cannot be combined as one total.

(2) If the Schedules K-1 don’t meet the requirements listed above, research the return and attachments, if information isn’t found, research Integrated Data Retrieval System (IDRS). If unable to find the missing information, and the payee is not a foreign entity correspond to request a valid Schedule K-1 using:

• Letter 177-C for Form 1041 Schedule K-1

• Letter 1355-C for Form 1065 Schedule K-1

• Letter 118-C for Form 1120-S Schedule K-1

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(4) See Exhibit 3.0.101-1, Form 1041 Schedule K-1, Exhibit 3.0.101-2, Form 1065 Schedule K-1, and/or Exhibit 3.0.101-3, Form 1120-S Schedule K-1, for examples of standard Schedules K-1.

(1) Schedules K-1 can be submitted in substitute format (e.g., 2D Bar Code).

(2) Edit Section 16 to tell clerks where to put payer information.

(3) To be processable, substitute Schedules K-1 must meet all the following requirements:

• Schedules K-1 must contain the payer and payee’s name, address, and SSN/EIN.

• Each taxpayer's information must be on a separate Schedule K-1 form.

Exception: Don’t correspond if a married couple (same last name) are filing a Schedule K-1 as one Beneficiary, Partner or Shareholder in a "Trust, Partnership or Corporation."

• The amount of each partner, shareholder or beneficiary share cannot be combined as one total.

(4) If the substitute Schedules K-1 don’t meet the requirements listed above, research the return and attachments, if information isn’t found research IDRS. If unable to find the missing information, and the payee is not a foreign entity correspond to request a valid Schedule K-1 using:

• Letter 177-C for Form 1041 Schedule K-1

• Letter 1355-C for Form 1065 Schedule K-1

• Letter 118-C for Form 1120-S Schedule K-1

(5) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(1) Schedules K-1 can be submitted in non-standard format. A non-standard Schedule K-1 has missing lines.

(2) Edit Section 16 to tell clerks where to put payer information.

(3) For all processable non-standard Schedules K-1, DO NOT black out the Forms Identification Number found in the upper right corner of the Schedule K-1.

(4) To be processable, non-standard Schedules K-1 must meet all the following requirements:

• Schedules K-1 must contain the payer and payee’s name, address, and SSN/EIN.

• Line items may be missing, however, line items that are present must be in the same order as those on the official form.

• Each taxpayer's information must be on a separate Schedule K-1 form.

Exception: Don’t correspond if a married couple (same last name) are filing a Schedule K-1 as one Beneficiary, Partner or Shareholder in a "Trust, Partnership or Corporation."

• The amount of each partner, shareholders or beneficiary share cannot be combined as one total.

(5) If the non-standard Schedules K-1 don’t meet the requirements listed above, research the return and attachments, if information isn’t found research IDRS. If unable to find the missing information, and the payee is not a foreign entity, correspond to request a valid Schedule K-1 using:

• Letter 177-C for Form 1041 Schedule K-1

• Letter 1355-C for Form 1065 Schedule K-1

• Letter 118-C for Form 1120-S Schedule K-1

(6) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(1) When a loose Schedule K-1 is received from Code and Edit, research to determine if the Schedule K-1 is filed electronically with the parent return.

(1) Schedules K-1 are form specific and should not be converted to match the parent return (i.e., Form 1065 must have a Form 1065 Schedule K-1, Form 1041 must have a Form 1041 Schedule K-1, or Form 1120-S must have a Form 1120-S Schedule K-1). If the Schedule does not match the parent form, don’t send the Schedules K-1 for processing. Take the necessary steps to have them attached to the parent return.

(2) For all others do the following when correspondence is received in Error Resolution.

1. Separate the Schedules K-1 from the rest of the correspondence.

2. Write or verify the parent return DLN is stamped in the upper left corner of the first Schedule K-1.

3. Place the Schedules K-1 in a gusset folder and label the folder "Loose Schedule K-1."

4. Forward the folder, with the Schedules K-1, to Numbering/Batching to continue processing.

5. If there are attachments (other than the actual Schedules K-1), attach them to the parent return.

6. If there are attachments (other than the actual Schedules K-1) and you don’t have the parent return, prepare an "attachment slip" requesting the documents be stapled to the parent return.

7. If the Schedules are for other than the above returns (i.e., Form 1065-B, Form 8865), leave attached to the parent return.

8. If the Schedules are for other than the above returns (i.e., Form 1065-B, Form 8865) and you don’t have the parent return, prepare an "attachment slip" requesting the document be attached to the parent return.

(1) All current year, one-year prior to current year and two-years prior to current year Schedules K-1 on a prior year form must be reformatted to current year format. See Exhibit 3.0.101-8, Conversion Chart.

(2) If there is a bar code present on the prior year revision (2012 and prior for Form 1120-S Schedule K-1, Form 1065 Schedule K-1 and Form 1041 Schedule K-1), using a marker, black out the straight lines on both sides of the bar code. See Figure 3.0.101-1, Black Out Bar Code on Prior Year Documents.

(1) Batching keeps loose Schedules K-1 in a colored folder, and notates "Re-file" on the outside, routes to the Pre-Doc Prep Unit.

(1) Loose Schedules K-1 are received from Batching in a colored folder.

(2) Sort by document type, then sort each document type by future year, current year, one-year prior to current year and two-years prior to current year.

• Batch

• Follow all Pre-Doc Prep Procedures in IRM 3.0.101.13

• Place in blue gusset folder and label the box as "RE-FILE"

(3) After preparing Schedules K-1, route to SCRIPS.

(1) Duplex (Carbon Copy) Schedules K-1, cannot be processed through SCRIPS. When you receive a duplex take the following actions:

1. Photocopy the duplex Schedules K-1.

2. Staple the duplex forms together by parent EIN.

3. Place stapled duplex forms in a folder and place in front of the block.

4. Place photocopied forms in the block to be processed through SCRIPS.

(1) Two-sided Schedules K-1 (two different Schedules K-1 on the front and back of a page) cannot be processed through SCRIPS. When you receive a two-sided Schedule K-1, take the following actions:

1. Copy the back side of the Schedule K-1.

2. Slash or put an "X" on the side that was copied.

3. Put the copied Schedule K-1 behind the original Schedule K-1.

(1) Use the program codes listed below when entering Schedules K-1 through SCRIPS.

(1) The scanner prints a one-character reject code to the left of the DLN area on any form that is routed to the Reject Bin. The rejected form then is sent back to Batching.

(1) Loose Schedules K-1 are received in a colored folder.

(2) After scanning, the SCRIPS operators place the loose Schedules K-1 back in blue gusset folders labeled "RE-FILE" and sends to Post-Doc Prep.

(1) Refer to IRM 3.41.274, General Instructions for Processing via Service Center Recognition/Image Processing System, for a description of these and other items:

• Keyboard Layout

• Login/Logoff

• Operator Statistics

• Post-to-Close

• Interrupt/Resume

• Suspend/Resume

• Status Line

(2) Whenever IRM 3.41.274, General Instructions for Processing via Service Center Recognition/Image Processing System, and this IRM conflict, this IRM takes precedence.

(1) The scanner doesn’t recognize all documents. These documents are called non-conforming forms. They range from photocopies of official documents, that might be official forms but for some reason don’t meet the official specification for measurement, homemade documents of varying formats, to non-Schedule K-1 forms. The Form Identification (FI) function allows the workstation operator to identify the form to avoid rework at the scanner. The FI screen has an image on the left and an entry template on the right. The entry template permits the operator to select what form type the image is, or to delete a single image or an entire submission from further processing. The menus shown on the screen vary depending on how your supervisor profiled you. For instance, if you are not profiled for the FI function, this option isn’t present on the OE Function Menu.

3.0.101.14.5.1 (01-01-2021)

Form Identification (FI) QUICK START

(1) From the Workstation Main Menu, select the numeric code for Original Entry (OE).

(2) From the Original Entry (OE) Image Selection Menu, select the numeric code for Forms Identification (FI) Selection Menu. See Figure 3.0.101-3.

(3) From the Forms Identification (FI) Selection Menu, Select 1041 K-1 Forms Identification, 1065 K-1 Forms Identification or 1120-S K-1 Forms Identification.

(4) The first group of images from a unit-of-work (UW) requiring identification opens.

(5) If an incorrect option is selected from the Forms Identification (FI) Selection Menu, press the <Ctrl>-P key combination to set (post-to-close) and press <F9> to suspend, before entering any data, to return to the Forms Identification (FI) Selection Menu.

(6) If you need to stop FI:

• Press the <Ctrl>-P key combination (post-to-close) to end FI after completing the current UW.

• Press the <Ctrl>-P key combination (post-to-close) followed by <F9> to suspend the block immediately.

Note: For a complete list of key functions, see Exhibit 3.0.101-10, Key Function Table.

(7) The system returns you to the Schedule K-1 Forms Identification (FI) Selection Menu when you complete the last image in the UW.

(1) The Original Entry (OE) function is used to manually enter data from both scanned images and from paper documents. The menus shown on the screen vary depending on your operator profile. For instance, if you are not profiled for the OE function, this option isn’t listed, or is grayed on the Workstation Main Menu.

3.0.101.14.6.2 (01-01-2018)

Original Entry (OE) Image Processing

(1) The Status Line at the bottom of the screen displays the following information:

1. The Program field shows one of the following: 44386, 44387 or 44388 for Schedule K-1 documents.

2. The DLN field shows the DLN of the document being displayed.

3. The Document field shows the relative count of the document. For example, if it is the first document in a UW that has 80 documents, the Document field shows a count of "1 of 80."

4. The Num field shows either "NU" or blank, indicates a numeric field, or if the shift key is pressed in an alpha/numeric field. See Figure 3.0.101-4, Num Field Location.

(2) In OE Image, you manually enter information into the template using a scanned image of the return as the source.

(1) The DV function is used to manually correct data from scanned images. Menu options vary depending on your profile set by your supervisor. For instance, if you are not profiled for the DV function, this option isn’t listed or is grayed on the Workstation Main Menu.

(2) The Status Line at the bottom of the screen displays the following information:

1. The DLN field shows the DLN of the document being displayed.

2. The SUB field shows the relative count of the document.

   Example: If it is the first document in a UW containing 80 documents, the SUB field shows a count of "1 of 80."

3. The Pg field shows the relative count of the page of the document.

4. The Status Line shows "AUTO" when the automatic mode is on, "INS" when the insert mode is on, and "NUB" when the numeric mode is on.

   Note: AUTO Indicator is a toggle which turns the AUTO Mode on and off. When AUTO is on, the cursor automatically moves from the current field to the next field requiring perfection. When AUTO is off, the cursor manually moves through every field using the cursor movement keys. A Select Block or Suspended Block in DV requires the operator to restore the AUTO on mode using <Ctrl>-<Shift>-<A>.

(1) Use these procedures as a guide during the Original Entry (OE) and Data Validation (DV) functions. Not all the items are always applied to specific situations in either function. If the scanned information is correct, no action is necessary. If the scanner reads the information and it is incorrect, or if scanned information is put into the wrong field, remove from incorrect field and input the information in the correct field.

(2) If you reach the maximum field length while entering data, the cursor, in most cases, automatically moves to the next field. Therefore, incorrect characters can be inadvertently entered into the next field. Remove or correct these characters. Use standard abbreviations as shown in Exhibit 3.0.101-4, Standard Abbreviations, and Exhibit 3.0.101-5, Street Address Abbreviations, to avoid this situation.

(3) Error Messages - Error messages with information are often helpful to correct the error and may be found in the Status Line. Most error messages are two lines with the first line being the error message and the second line containing information that may help resolve the error condition.

(4) While working in OE Image or DV Image, if you can’t determine the data for any field (except the street address or city fields) from the image because it is illegible or the image is incomplete, suspend the UW and pull the paper document for verification.

(5) In certain situations, the scanner may read a name or address or even a city without spaces. If the name and/or address can be determined, leave as is.

(6) When validating an address change, ensure the system read the correct ZIP Code. If the address, city, and state on the template doesn’t match the information on the image and a correct ZIP Code isn’t present on the template, correct the information to match what is on the image.

(7) If a document is received and appears totally blank (no payer/payee entity or tax data), suspend UW and pull the paper document for verification.

(8) While working in OE Image or DV Image, don’t enter data marked out or crossed through by the filer.

(9) The <Ctrl>-<F7> combination provides the operator the ability to access the last edited field or the last flagged field of the previous document.

(10) After DV is complete the system runs a verification of parent DLNs. If the parent DLN is missing from any of the documents within the UW the error message, "Blank Parent DLN still exists after DV. Press <Enter> to review possible parent matched." Another window appears stating "Possible Parent Match 1 of (however many) is this the same payer?" If the operator selects "YES," SCRIPS populates the payer information. If the operator selects "NO," the system continues to ask until it has gone through all payers in the UW.

• The valid parent return File Location Codes (FLC) for Ogden are 29, 60, 78, 81, 82, 83, 85, 87, or 88.

• The valid parent return File Location Codes (FLC) for Kansas City are 09, 36, 39, 41, or 43.

(11) For additional information on Function Keys refer to the table in Exhibit 3.0.101-13, Key Function Table or IRM 3.41.274, Optical Character Recognition Scanning Operations, General Instructions for Processing via Service Center Recognition/Image Processing System, Exhibit 3.41.274-1, Function Key Use and Description by Form Type.

(1) Tax Year and Tax Period dates must meet the following criteria:

• Current timely filed calendar year

• One-Year Prior to current calendar year

• Two-Years Prior to current calendar year

• The beginning and ending tax year on all Schedules K-1 must list the same tax year. If not, they fall out to ERS if not edited correctly.

(1) Name and Address Block Reader is referred to as NABR. NABR is used to improve the accuracy of addresses captured by the scanner from Schedule K-1 documents. The NABR accomplishes this improvement by comparing the address captured by the scanner with a database of addresses used by the United States Postal Service. SCRIPS processes the NABR through a Postal Database.

(2) When validating a NABR change, ensure the system read the correct ZIP Code. If address, city, and state changes are made and a correct ZIP Code is not present in the data field, correct the information to match what is on the image.

(3) The system prompts an operator to "Please verify" the following conditions:

• State is determined by the system from the city present

• State is determined from the ZIP Code present

• City is updated by the system to a phonetic match

• City is determined from the ZIP Code

• Acceptable city name used

(1) Enter the information as shown on the document with as many characters as permitted in the provided name line, except as instructed below. Refer to Exhibit 3.0.101-4, Standard Abbreviations and Exhibit 3.0.101-5, Street Address Abbreviations for a list of valid abbreviations. If the scanned information is correct, no action is necessary.

1. If a Partner Number or SSN number is shown in the name line, do not enter.

2. If an account number is shown above or to the right of the first name line, enter it on the first name line. (See example above.)

3. Do not enter periods and don’t space for them. Only enter a space in an internet name, for example, "Flower.com" should be entered as "FLOWER (space) COM".

4. If the name appears with the last name first and the first name last, and the system read it correctly, leave as is.

   Note: If during sight verification a correction needs to be made, or if in OE Image/OE Paper, enter the first name first and last name last.

5. Enter Name Line 2 as shown. If a foreign address is present in entity information, use Name Line 2 for foreign information only. For further guidance on entering foreign addresses please refer to IRM 3.0.101.14.11.1.1, Foreign Address.

6. If Name 1 or Name 2 entry is too long for the field, shorten it using the abbreviations listed in Exhibit 3.0.101-4, Standard Abbreviations.

   Note: If either Name Line 1 or Name Line 2 is too long after applying abbreviations mentioned above, then enter as many characters as possible. Do not continue the entry on Name Line 2. Don’t abbreviate entries used for the Name Control.

7. Omit a slash (/), if shown, between two names (e.g., John Pine/Mary Birch). Leave a space.

   Exception: If a date is present in the name lines replace the slash (/) with a hyphen (-). Convert dates to MM-DD-YY format. Do not enter date/dated/dtd or the alpha month.

(2) Enter a space before and after an ampersand (&). In the payer’s name line enter "and" or "&" as shown.

(3) Omit punctuation, except for hyphens (-). Do not enter a space before or after hyphens. The hyphen is keyed using the MINUS (-).

(4) Space within a true last name if shown.

(5) In the second name line change "and" to "&."

1. If ″In Care Of″ or "%" is found in the middle of Name Line 1, move the information to the Name Line 2 field.

Example: Roger Banana c/o Anaconda Trucking and Moving Corporation

Enter name	In Prompt
ROGER BANANA	Name 1
% ANACONDA TRUCKING & MOVING CORP	Name 2

2. If an "In-Care-Of" name is present, enter "%," space, and the name. If information is already present on Name Line 2, include as much as possible after the "In-Care-Of" information is input.

   Note: If two or more "In-Care-Of" name lines are present, enter the first "In-Care-Of" name.

(6) If there are two or more names in Name 2, separate them with the word "OR", unless "and" (&) or "C/O" (%) are present. Enter "&C" when edited as the last two characters of Name 2 data (no space between the two characters) when the taxpayer entry is too long for the field.

Enter name	In Prompt
WOOD N WILLOW	Name 1
TULIP R SPANIEL OR ROSE E LOCUST &C	Name 2

Example: Robert Woodpecker OR Eleanor Woodpecker or Gloria Robin

Enter name	In Prompt
ROBERT WOODPECKER	Name 1
ELEANOR WOODPECKER OR GLORIA ROBIN	Name 2

Example: Albert Palm, Jr. OR Rose Holly or Robert Coffee

Enter name	In Prompt
ALBERT PALM JR	Name 1
ROSE HOLLY OR ROBERT COFFEE	Name 2

Example: Arthur AND Roberta Poplar or Stephen Poplar

Enter name	In Prompt
ARTHUR POPLAR	Name 1
ROBERTA POPLAR OR STEPHEN POPLAR	Name 2

(7) Second Name Line data, such as DBA, C/O, or % should be entered on the second line if placed on the address line, and clerk intervention is required.

(8) If the payer’s name line is illegible, suspend for "Poor Quality Image."

(9) If payer name is missing, leave blank.

(10) If payer or payee Name Line 2 is illegible or not present, leave blank.

(11) If payee name is missing or illegible, enter a "Z" in the payee’s name line field.

(12) IMF Only - Do not enter titles such as Mr., Mrs., Capt., Dr., Rev., etc., in any individual's name (except for Form 1096, Annual Summary and Transmittal of U.S. Information Returns).

Example: Mr. OR Mrs. Joe Walnut - and/or ampersand included.

Enter name	In Prompt
JOE WALNUT	Name 1
MRS JOE WALNUT	Name 2

(13) BMF Only

1. Abbreviate corporate name information only when it is abbreviated on the document or the name line exceeds the allowable space. Never abbreviate the first four characters containing the Name Control.

   Exception: The following always are abbreviated for corporate entries:
   ASSN for Association
   CO for Company
   CORP for Corporation
   FDN for Foundation
   INC for Incorporated
   LLC for Limited Liability Company
   PA for Professional Association
   PC for Professional Corporation
   PS for Professional Service
   SC for Small Corporation

2. Use the following when you see one of these symbols:
   • #, enter NO,
   • ¢, enter CENT,
   • +, enter PLUS,
   • @, enter AT,
   • $, enter DOLLAR.

3. Special characters not outlined above and/or symbols are omitted and a blank space entered in its position in the name line.

   Note: The ampersand (&) is not considered a symbol for name line.

4. Omit the designation only such as TA, DBA, AKA, Owner, Proprietor when entering data.

   Note: Do not enter DBA or TA. If scanner reads DBA or TA correctly and no other corrections are needed, leave as is.
   Do not enter the designations or data for FKA, formerly DBA or any data that follows these designations.

5. If a city or state is shown as part of the first name line, enter the complete name of the city or state. NO abbreviations.

6. If the name begins with the word "The" and has more than one word following "The" DO NOT enter "The".

7. If the name begins with the word "The" and has only one word following "The" enter "The" as the first word on the name line.

8. If there are initials in a person's name or a company name with abbreviations such as LLC, MD, PC, etc., do not space for periods. If scanner picks up spaces, leave as is.

9. If there is a business name in the name line such as ″Rug Doctor″ or ″Mister Clean″ and the system drops the Doctor or Mister, re-enter the name as submitted.

10. If a foreign address is present, do not use the Name 2 field to enter names. Further instruction for entering foreign addresses can be found in IRM 3.0.101.14.11.1.1, Foreign Address.

(1) Should be input and validated as a seven-position field and must be in the format XXX.XXX.

(2) Must be positive only.

(3) Must be between 000 - 100.

(4) Percentage fields can be blank.

(5) If there are more than three numeric to the left of the decimal point enter 100. If there are more than three numeric to the right of the decimal point, enter the first three numeric closest to the decimal point. (See examples 6 and 7 below).

(6) If the decimal point is not present, enter the decimal point after the numeric presented (with decimal point no further then fourth position). For validation purposes, the decimal point must be entered so the system can zero fill the percentage correctly. (See examples 1 and 3 below).

(7) If the percentage has a fraction, ignore the fraction, and enter the number only. (See example 8 and 9 below).

(1) Enter all money amounts as DOLLARS ONLY.

(2) DO NOT enter money amounts from any form or document that is "X'd out."

(3) Enter negative amounts, where allowed, by leading the amount with a hyphen (-).

(4) If a negative money amount appears in a positive only field, press <F3>, to clear the field and press <Enter>. Negative amounts can be identified by a minus sign or being enclosed in parentheses or brackets.

(5) If the taxpayer enters a positive or negative $.49 or less, <F3>,to clear the field, then press <Enter>. If the taxpayer enters a positive or negative $.50 to $.99, enter $1 or -$1 respectively.

(6) If the taxpayer files a State Schedule K-1, and it has a column with the federal information, transcribe the information from the federal lines.

(7) The following lines are presented for verification:

• Form 1041 Schedule K-1 = Lines 1 and 2a

• Form 1065 Schedule K-1 = Lines 5, 6a, 6c and 7

• Form 1120-S Schedule K-1 = Lines 4, 5a and 6

(8) If two-dollar amounts are present on the same line, manually add together and enter total amount.

(9) Alpha Codes are used in Part III to identify certain types of income, deductions, or credits. Valid Alpha Code characters consist of A-ZZ and blank. Enter the amount that corresponds with the valid Alpha Code. Alpha Codes can be found on the following lines of Schedules K-1:

(1) Always delete a block if the tax year cannot be determined.

(1) If a prior year Schedule K-1 is processed by the scanner, SCRIPS operators:

1. Input the preprinted or edited year on the Schedules K-1.

2. Convert transcription lines using Exhibit 3.0.101-8, Conversion Chart.

3. Continue processing.

(1) If the payer EIN is the same as the previous document, the system copies the payer information into the document and then the next Schedule K-1 is presented.

(2) If the payer EIN is different, the payer Entity fields appear, and the operator is to enter the payer entity information.

(1) The following tables represent specific SCRIPS entry procedures.

(1) The following conditions may be present if normal SCRIPS validity checks have been bypassed:

• Terminus Errors

• Edit Errors

• Missing required sections

(2) Terminus Error - This error is caused by a section with variable length input fields containing an erroneous size field.

1. When displayed, this type of error shows all input fields of the terminus section. Transcribed data is present. Computer generated fields are not present.

2. All fields present for the section must be examined and the necessary correction(s) made to all the fields.

(3) Correction Procedures:

1. CC CRECT is displayed. If the section needs to be deleted, use CC DLSEC to delete the section.

2. If no corrections are needed, transmit from the bottom of the screen.

(1) Definition - Any field that does not meet the requirement(s) for that field is shown as a Priority III error. Consistency and or relationships with other fields are not a factor.

(2) Some reasons for this type of error are:

• Non-numeric character in a numeric field

• Non-alphabetical character in an alpha field

• Blank space in a numeric field

• Blank in the first position of an alpha field if followed by significant data

(3) Display - Every field displayed is in error.

1. All fields with a Priority III error are displayed in columnar format in the order encountered in the record.

2. An overflow field is identified by all question marks for a money field.

(4) Correction Procedures:

1. Correct every error field displayed using the specific instructions within each section for the field in error.

2. MeF - Check the information on the source document to determine if each displayed field has been correctly edited and transcribed.

3. Enter the correct data for each field displayed.

4. If no data is to be in a displayed field, blank the field.

5. Transmit.

(1) Definition - Any valid field used in any computation in which the result is inconsistent with (or contrary to) any other valid field has Error Code 001–999 assigned and is shown as a Priority IV Error.

(2) Display - These errors are displayed with the Error Code assigned to them for the specific error in ascending numerical order. The screen display shows the Error Code assigned and the fields needed to make the necessary correction.

1. The blank field "CL" is displayed for the entry of a Clear Code on records where the possibility exists that a change or correction may not be needed.

2. All errors must be resolved by either eliminating the error or entering a Clear Code.

(3) Correction Procedures:

1. MeF - Correct all coding and transcription errors.

2. If the data in the field is correct, enter a "C" in the Clear Code field.

(1) Section 01 contains the payee entity data and is required for every record.

(2) Listed below are the fields contained in Section 01 that applies to Schedules K-1 processing:

(1) There is no validity check of this field.

(1) This field is always blank.

(1) Valid characters are alpha, hyphen (-), blank, numeric, and ampersand (&).

(2) Invalid Conditions:

1. Field is completely blank.

2. Field has characters other than alpha, hyphen (-), numeric, or ampersand (&).

3. A character follows two consecutive blanks.

4. The first position has a blank.

5. The number of character positions is more than 40.

(3) Correction Procedure:

1. MeF - Correct all coding and transcription errors. If name is not present, research using the TIN if present.

If	Then
There is a name entered in SEC01NM2	Move to SEC01NM1
TIN research matches name in 01ADD There is an address match on CC INOLE	Enter the name from CC INOLE as the Payee
There is no information or no information on CC INOLE	Enter "Z" and continue processing

(1) Valid characters are alpha, hyphen (-), blank, numeric, percent (%), and ampersand (&).

(2) Invalid Conditions:

1. Field has characters other than alpha, hyphen (-), numeric, percent (%) and ampersand (&).

2. The number of character positions is more than 40.

(3) Corrections Procedure:

1. MeF - Correct all coding and transcription errors.

2. For "In-Care-Of" names, enter the percent (%) sign, space, and then the name.

3. For foreign address, enter the street address, omit the existing Name Line 2.

(1) Description - Field 01ADD is in the Entity Section of the return.

1. Valid Characters are alpha, numeric, blank, hyphen (-), or slash (/).

(2) Invalid Condition - Field 01ADD generates as a field error when any of the following conditions are present:

1. Any character is present other than alpha, numeric, blank, hyphen (-), or slash (/).

2. The first position is blank.

3. Any character follows two consecutive blanks.

(3) Correction Procedures:

1. MeF - Correct all coding and transcription errors.

2. If address is not present, research using the TIN if present.

3. If unable to perfect, after research enter "ZZZ" as the street address.

4. Enter the foreign city, state, province if present.

(4)

(1) Description - Field 01CTY is in the Entity Section of the return.

• Valid characters are alpha and blank.

(2) Invalid Conditions - Field 01CTY displays as a field error when any of the following conditions are present:

1. The first position is blank.

2. Any character is present and the second and third characters are blank.

3. Any character follows two consecutive blanks.

4. The Major City Code does not match any of the valid codes in the Major City Code table.

(3) Correction Procedures:

1. MeF - Correct all coding and transcription errors.

   Note: For a listing of Major City Codes see Exhibit 3.0.101-6, State/Major City/ZIP Code/Major City Code.

(1) Description - Field 01ST is in the Entity section of the return.

1. Valid characters are alpha and blank.

(2) Invalid Condition - This field is invalid if it is not found in the State Code Table.

(3) Correction Procedures:

1. MeF - Correct all coding and transcription errors.

2. For a description of valid State Codes, see Document 7475, State Abbreviations, Major City Codes, and Address Abbreviations.

(4) Correction Procedures for APO/DPO/FPO

1. The U.S. Postal Service established new requirements for APO/DPO/FPO addresses.

2. If the old address appears (i.e., AP New York, NY 091XX), convert the address to the new state code abbreviation based on the ZIP Code.

(1) Description - Field 01ZIP is in the Entity Section of the return.

1. Valid characters are numeric and blank.

(2) Invalid Condition - Field 01ZIP generates as a field error when any of the following conditions are present:

1. Any character is other than numeric or blank.

2. An entry is other than five or nine positions.

3. The entry isn’t within the range of 00501 and 99999.

4. The first five positions are blank, and an entry is present in the last four positions.

(3) Correction Procedures:

• MeF - Correct all coding and transcription errors. Research any of the following for valid ZIP Code information: Document 7475, State Abbreviations, Major City Codes and Address Abbreviations, CC INOLE or NAME.

If	Then
01ZIP is blank	Search return and attachments for a valid ZIP Code, if found enter in 01ZIP.
A Major City Code is entered in field 01CTY	Determine the first three digits of the ZIP Code from Exhibit 3.0.101-6, State/Major City/ZIP Code/Major City Code. Enter "01" for the fourth and fifth digits.
There is not a Major City Code listed in field 01CTY	Enter the ZIP Code for the state from Exhibit 3.0.101-6 State/Major City/ZIP Code/Major City Code.

(1) Section 02 contains miscellaneous data fields.

(2) Listed below are the fields contained in Section 02 that applies to Schedules K-1 processing:

(1) Section 06 contains, date fields, money amounts, indicators, and descriptions.

(2) If invalid dates are listed in the 06BTP and 06ETP fields, these are typos from the taxpayer or the SCRIPS operators.

(3) ERS must use CC ENMOD and use the parent’s tax year, it is listed under "FYM."

(4) To correct errors in Fields 06BTP and 06ETP, enter a space after the P, enter seven zeros and then enter the four-digit year and the two-digit month.

(5) Below are the fields listed in Section 06 that apply to Schedules K-1 processing:

(6) Form 1041 Doc Code 66

(7) Form 1065 Doc Code 65

(8) Form 1120-S Doc Code 67

(1) Section 16 contains the payer entity data and is required for every record.

(2) Listed below are the fields contained in Section 16 that applies to Schedules K-1 processing:

(1) Valid characters are alpha, hyphen (-), blank, numeric and ampersand (&).

(2) Invalid Conditions:

1. Field is completely blank.

2. Field has characters other than alpha, hyphen (-), blank, numeric, or ampersand (&).

3. A character follows two consecutive blanks.

4. The first position has a blank.

5. The number of character positions is more than 40.

(3) Correction Procedure:

1. MeF - Correct all coding and transcription entry errors. If name is not present, research using the TIN if present.

If	Then
There is a name entered in SEC16NM2	Move to SEC16NM1.
TIN research matches name in 16ADD	Enter name as payer and enter the street address (if City/ST match) from CC INOLE into SEC16ADD.
There is an address match on CC INOLE	Enter the name from CC INOLE as the payer.
There is no name match or information on CC INOLE	Enter "Z" and continue processing.

(1) Valid characters are alpha, hyphen (-), blank, numeric and ampersand (&).

(2) Invalid Conditions:

1. Field has characters other than alpha, hyphen (-), blank, numeric, or ampersand (&).

2. A character follows two consecutive blanks.

3. The first position has a blank.

4. The number of character positions is more than 40.

(3) Correction Procedure:

1. MeF - Correct all coding and transcription errors. If name is not present, research using the TIN if present.

If	Then
There is an address match on CC INOLE	Enter the name from CC INOLE as the payer.
There is no information	Enter "Z" and continue processing.

(1) Description - Field 16ADD is in the Entity Section of the return.

1. Valid Characters are alpha, numeric, blank, hyphen (-), or slash (/).

(2) Invalid Condition - Field 16ADD generates as a field error when any of the following conditions are present:

1. Any character is present other than alpha, numeric, blank, hyphen (-), or slash (/).

2. The first position is blank.

3. Any character follows two consecutive blanks.

(3) Correction Procedures:

1. MeF - Correct all coding and transcription errors.

2. If address is not present, research using the TIN if present.

3. If unable to perfect, after research enter "ZZZ" as the street address.

(4)

(1) Description - Field 16CTY is in the Entity Section of the return.

1. Valid characters are alpha and blank.

(2) Invalid Conditions - Field 16CTY generates as a field error when any of the following conditions are present:

1. The first position is blank.

2. Any character is present and the second and third characters are blank.

3. Any character follows two consecutive blanks.

4. The Major City Code does not match any of the valid codes in the Major City Code Table.

(3) Correction Procedures:

1. MeF - Correct all coding and transcription errors.

   Note: For a listing of Major City Codes, see Exhibit 3.0.101-6, State/Major City/Zip Code/Major City Code.

(1) Description - Field 16ST is in the Entity section of the return.

1. Valid characters are alpha and blank.

(2) Invalid Condition - This field is invalid if it is not found in the State Code Table.

(3) Correction Procedures:

1. MeF - Correct all coding and transcription errors.

2. For a description of valid State Codes, see Document 7475, State Abbreviations, Major City Codes, and Address Abbreviations.

(4) Correction Procedures for APO/DPO/FPO Addresses -

1. The U.S. Postal Service established new requirements for APO/DPO/FPO addresses.

2. If the old address appears (i.e., AP New York, NY 091XX), convert the address to the new state code abbreviation based on the ZIP Code:

(1) Description - Field 16ZIP is in the Entity Section of the return.

1. Valid characters are numeric and blank.

(2) Invalid Condition - Field 16ZIP generates as a field error when any of the following conditions are present:

1. Any character is other than numeric or blank.

2. An entry is other than five or nine positions.

3. The entry is not within the range of 00501 and 99999.

4. The first five positions are blank, and an entry is present in the last four positions.

(3) Correction Procedures:

1. MeF - Correct all coding and transcription errors. Research any of the following for valid ZIP Code information: Document 7475, State Abbreviations, Major City Codes, and Address Abbreviations, CCs INOLE or NAME.

If	Then
Field 16ZIP is transcribed incorrectly	Enter the correct ZIP Code from the return. Only the first five digits are required.
A valid ZIP Code is not available from the return or attachment	Determine the first three-digits of a valid ZIP Code for the Major City from Exhibit 3.0.101-6, State/Major City/Zip Code/Major City Code. Enter "01" for the fourth and fifth digits.
The Major City is not listed in Exhibit 3.0.101-6, State/Major City/Zip Code/Major City Code or the first three digits cannot be determined	Enter the ZIP Code of the state shown in the address from Exhibit 3.0.101-6, State/Major City/Zip Code/Major City Code.

(1) Description - Field 16TIN is in Part I of the return.

1. Valid characters are numeric.

(2) Invalid Condition - Field 16TIN generates as a field error when any of the following conditions are present:

1. It is not numeric.

2. It is less than nine characters.

(3) Correction Procedures:

1. MeF - Correct all coding and transcription errors. If TIN is not present, research using the name line.

(1) Error Code 014 displays as follows:

(1) Error Code 016 displays as follows: