The Internal Revenue Manual (IRM) contains the procedures for all areas the IRS administers. It includes matters such as policies for information technology, submission processing, Examination and Collection processes, Appeals, Criminal Investigation, and the Taxpayer Advocate Service. The manual is available on irs.gov.
Information-processing procedures are found in Part 3 of the IRM. Among other materials, the section provides instructions for coding and editing tax returns for computer processing. Special codes are used in performing specific functions.
An individual master file (IMF) is used to record transaction and financial entries for individual tax returns. Its counterpart is the business master file (BMF) for business returns.
The IRS maintains a transcript of account for each filed tax form. A transcript shows most entries on a tax return. It includes data on an amended tax return, payments, penalties, and other processing activities.
A transcript may be obtained online at the IRS website by first registering at Get Transcript Online and then ordering the document for the appropriate taxpayer. If a person does not want to get an online transcript, a call may be made to 800-908-9946 to request that one be mailed. A person who has a power of attorney may call the Practitioner Priority Service at 866-860-4259.
Often, an authorized tax practitioner will request a transcript for a client to find what information was reported on a prior-year return, to respond to an IRS notice, to find what action was taken on an amended return, or to check the status of a claim for refund or status of the processing of Form 1045, Application for Tentative Refund.
When a transcript is obtained, it is important to know the meaning of transaction codes shown on the form. Document 11734, Transaction Codes Pocket Guide, which is issued by the Service, should be read for an abbreviated listing of the commonly used codes. A complete listing of the codes is in Document 6209, IRS Processing Codes and Information; however, some information in that publication is redacted.
The chart below contains a list of common codes and their titles.
By knowing the applicable codes, practitioners should more easily be able to determine if the IRS has correctly processed returns and has taken the correct actions on events subsequent to the filing of returns. Thus, practitioners will be providing quality service to clients.
Valrie Chambers is an associate professor of accounting at Stetson University in Celebration, Fla. Joe Marchbein is with Rice Sullivan LLC in Ellisville, Mo. Mr. Marchbein is a member of the AICPA Tax Practice and Procedures Committee. For more information about this column, contact email@example.com.