Rev. Proc. 91-33

NOTE: This revenue procedure may be used to prepare tax year 1991 information returns for submission to Internal Revenue Service (IRS) using any of the following:

--Magnetic Tape

--Tape Cartridge

--5 1/4-inch Diskette

--3 1/2-inch Diskette

--Electronic Filing

--(Asynchronous)

--(Bisynchronous)

--8-inch Diskette

An updated copy is published each year. Please read this publication carefully. Persons required to file may be subject to penalties for failure to file or failure to include correct information if they do not follow the instructions in this revenue procedure.

                          TABLE OF CONTENTS

SECTION 1. PURPOSE

.01 The purpose of this revenue procedure is to provide the specifications for filing Forms 1098, 1099, 5498, and W-2G electronically or on magnetic media which includes 1/2-inch magnetic tape; IBM 3480 compatible tape cartridges; or 5 1/4-, 3 1/2-, and 8-inch diskettes, with IRS. THIS REVENUE PROCEDURE MUST BE USED FOR THE PREPARATION OF 1991 INFORMATION RETURNS ONLY. Specifications for filing the following forms are contained in this procedure:

(a) Form 1098, Mortgage Interest Statement.

(b) Form 1099-A, Acquisition or Abandonment of Secured Property.

(c) Form 1099-B, Proceeds From Broker and Barter Exchange Transactions.

(d) Form 1099-DIV, Dividends and Distributions.

(e) Form 1099-G, Certain Government Payments.

(f) Form 1099-INT, Interest Income.

(g) Form 1099-MISC, Miscellaneous Income.

(h) Form 1099-OID, Original Issue Discount.

(i) Form 1099-PATR, Taxable Distributions Received From Cooperatives.

(j) Form 1099-R (Replaces Form W-2P), Distributions From Pensions, Annuities, Retirement or Profit Sharing Plans, IRAs, Insurance Contracts, etc.

(k) Form 1099-S, Proceeds From Real Estate Transactions.

(l) Form 5498, Individual Retirement Arrangement Information.

(m) Form W-2G, Certain Gambling Winnings.

.02 Specifications for filing Forms 1042S and 8027 are contained in separate IRS publications. Specifications for filing Forms W-2 on magnetic media are available from the Social Security Administration (SSA) ONLY.

.03 In most cases, the box numbers on the paper forms correspond with the amount codes used to file magnetically/electronically; however, if discrepancies occur, the instructions in this revenue procedure govern.

.04 The Internal Revenue Service Martinsburg Computing Center (IRS/MCC) has the responsibility for processing information returns filed on magnetic media or by electronic filing. These information returns include Forms 1098, 1099, 5498, and W-2G.

IRS/MCC does NOT process Forms W-2; these forms, whether you file paper OR magnetic media returns, must be sent to SSA.

IRS/MCC does, however, process magnetic media waiver requests and extension of time requests for filing Forms W-2.

Therefore, you should only contact IRS/MCC with questions concerning Forms W-2 IF THE QUESTIONS PERTAIN TO AN EXTENSION OF TIME TO FILE ON PAPER OR MAGNETIC MEDIA OR TO A MAGNETIC MEDIA WAIVER REQUEST. Questions pertaining to magnetic media filing of Forms W-2 MUST be directed to SSA. TAX LAW QUESTIONS PERTAINING TO FORMS W-2 SHOULD BE DIRECTED TO IRS TAXPAYER SERVICE at 1-800-829-1040 or to your local IRS office.

If you contact IRS/MCC with questions not pertaining to extensions of time or waivers for Forms W-2, we will direct you to either SSA or IRS Taxpayer Service.

.05 Personnel at IRS/MCC are equipped to answer any questions you may have concerning the magnetic media or electronic filing of Forms 1098, 1099, 5498, and W-2G. Tax law related questions should be directed to IRS Taxpayer Service at 1-800-829-1040.

.06 This revenue procedure also provides the requirements and specifications for magnetic media or electronic filing under the Combined Federal/State Filing Program.

.07 The following revenue procedures and publications provide more detailed filing procedures for certain information returns:

(a) 1991 "Instructions for Forms 1099, 1098, 5498, and W-2G" provides specific instructions on completing and submitting information returns to IRS. IRS/MCC includes this publication in the magnetic media reporting packages that are mailed to the transmitters who participate in the Magnetic Media Reporting Program (MMRP). These instructions are also available at IRS offices and can be obtained by contacting your local office, or by calling 1-800-829-FORM.

(b) Rev. Proc. 84-33, 1984-1 C.B. 502, or other current revenue procedures, regarding the optional method for agents to report and deposit backup withholding.

(c) Publication 1179, Specifications for Paper Document Reporting and Paper Substitutes for Forms 1096, 1098, 1099, 5498, and W-2G.

(d) Publication 1239, Requirements and Conditions for Submitting Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips, on Magnetic Tape.

(e) Publication 1187, Specifications for Filing Form 1042S, Foreign Person's U.S. Source Income Subject to Withholding, on Magnetic Tape.

(f) Publication 1245, Magnetic Tape Reporting for Forms W-4.

.08 This revenue procedure supersedes the following: Rev. Proc. 90-41 published as Publication 1220 (Rev. 7-90), Specifications for Filing Forms 1098, 1099 Series, 5498 and W-2G Electronically or on Magnetic Tape, Tape Cartridge, 5 1/4- and 3 1/2-Inch Magnetic Diskettes.

.09 This revenue procedure obsoletes the following:

(a) Rev. Proc. 86-31, which provides guidance to filers of certain information returns about the procedures for requesting approval for filing such information returns on a particular form of magnetic medium, or for requesting a waiver of the magnetic media filing requirements.

(b) Rev. Proc. 90-43 published in Publication 1255 (Rev. 8-90), Requirements and Conditions for Filing Forms 1098, 1099 Series, 5498 and W-2G on 8 inch Diskette.

(c) Publication 1527 (7-90), "What is the Information Returns Program Bulletin Board System?"

The information in each of these revenue procedures and in Publication 1527 is now included in this revenue procedure.

.10 Refer to Part A, Sec. 18 for definitions of terms used in this publication.

SEC. 2. NATURE OF CHANGES--CURRENT YEAR (TAX YEAR 1991)

.01 PROGRAMMING CHANGES

Payer/Transmitter "A" Record:

(a) Field Positions 2-3 (pos. 3-4 for 8 inch diskette) "Payment Year"--must be incremented by one year (from 90 to 91).

(b) Field Position 32 (pos. 33 for 8 inch diskette)--"Test/Correction Indicator"--An indicator was added to indicate if file is a test or correction.

(c) Field Positions 23-31 (pos. 24-32 for 8 inch diskette) "Amount Indicators"-- Amount Code "2" was added to Form 1098 to report points paid directly by payer(s)/borrower(s) on purchase of principal residence.

(d) Field Position 33 (pos. 34 for 8 inch diskette)--"Service Bureau Indicator"--An indicator was added for filers who use a service bureau to develop their files.

Payee "B" Record:

(a) Field Positions 2-3 (pos. 3-4 for 8 inch diskette) "Payment Year"--must be incremented by one year (from 90 to 91).

(b) Field Positions 4-5 (pos. 5-6 for 8 inch diskette) "Document Specific Code" for Form 1099-MISC is now being used to report Excess Golden Parachute Payments in addition to Nonemployee Compensation and Crop Insurance Proceeds. A "2" in position 4 (pos. 5 for 8 inch diskette) indicates that an Excess Golden Parachute Payment was made. Position 5 (6 for 8 inch diskette) will be blank.

(c) Field Position 6--(pos. 7 for 8 inch diskette) "2nd TIN Notice"--For Forms 1099-INT, DIV, OID, PATR, MISC and B only. You now may indicate if IRS has notified you twice within 3 calendar years that the payee provided an incorrect taxpayer identification number.

(d) Field Position 47 (pos. 48 for 8 inch diskette)--"Total Distribution Indicator"--For Form 1099-R only. This field is used to indicate if a Gross Distribution is a Total Distribution.

(e) Field Position 48 (pos. 49 for 8 inch diskette)--"Taxable Amount Not Determined Indicator"--For Form 1099-R, use this field only if you cannot compute the taxable amount of the gross distribution.

End of Payer "C" Record--No changes.

State Totals "K" Record--No changes.

End of Transmission "F" Record--No changes.

.02 EDITORIAL CHANGES--"GENERAL"

.01 There have been numerous editorial changes. IRS recommends that you read this publication in its entirety to ensure that you report properly. The changes are as follows:

(a) The title of Publication 1220 has changed from "Requirements and Conditions for Filing Forms 1098, 1099 Series, 5498, and W-2G on Magnetic Tape, 5 1/4 and 3 1/2 Inch Magnetic Diskettes" to "Specifications for Filing Form 1098, 1099, 5498, and W-2G Electronically or on Magnetic Tape, Tape Cartridge, and 5 1/4-, 3 1/2- and 8-Inch Magnetic Diskettes" to include the 8-inch diskette specifications. This revenue procedure now contains specifications for reporting electronically and all types of magnetic media that IRS accepts. All references to Publication 1255 have been removed.

(b) As a result of the combination of Publications 1220 and 1255 (8 inch diskette), Parts D and E have been added. Part D contains specifications for single density 8 inch diskettes. Part E contains specifications for double density 8 inch diskettes. Part A gives general information for all filing. Part B contains specifications for magnetic tape, magnetic tape cartridge, 5 1/4- and 3 1/2-inch diskettes.

(c) Information Reporting Program Bulletin Board System (IRP-BBS) is now available to all filers. Part C contains information on how to contact the bulletin board system and what services are provided.

(d) Starting this year, IRS/MCC will accept information returns, both original and corrections, using asynchronous protocols through IRP-BBS.

(e) The telephone number for the IRS/MCC fax machine is now provided in Part A, Sec. 3.04.

(f) Part F, "Miscellaneous Information," now includes instructions and record format for transmitters to use if they are requesting extensions of time for 50 or more payers.

(g) Some of the titles of the information returns forms changed; therefore, they were changed in this publication to concur with paper documents.

(h) All references to Form W-2P have been removed. Payers who filed Form W-2P, "Statement for Recipients of Annuities, Pensions, Retired Pay or IRA Payments," with SSA in the past now must file Form 1099-R with IRS. Form W-2P has been eliminated.

(i) Note was added to Part A, Sec. 5 regarding waivers. Waiver requests due to IRS/MCC changed from 90 days prior to the due date to 45 days.

(j) Note was added to Part A, Sec. 5 regarding waivers for Desert Storm participants who make IRA contributions after the normal contribution date.

(k) Note was added to Part A, Sec. 11 regarding extensions of time. MCC will grant an extension of time for 60 days rather than in increments of 30 days.

(l) Filers will no longer be required to include a copy of their approval letter for an extension of time with their shipments. This includes paper and magnetic media filing.

(m) The forms provided for filers use (4419, 4804, 4802, 8508, Notice 210) have been moved from the center of the publication to the back. Some of the form titles have changed.

(n) Note was added that when IRS/MCC returns problem media, where possible, we will only send back the media that needs replacing -- not the complete shipment.

(o) Added a note to Part A, Sec. 8, explaining which records should be included in a test submission.

(p) Added several new definitions to Part A, Sec 18, Definition of Terms.

(q) Added Part A, Sec 13 -- "Penalties".

(r) In Part A, Sec. 20, "Major Problems Encountered" two new problems were added and several were deleted.

(s) Added note to Part A, Sec 14, "How to File Corrected Returns" about filing corrections for prior year.

(t) In Part A, Sec. 16, Table 2, "Dollar Criteria for State Reporting," there is no longer a filing requirement for Form 1099-PATR for the state of Wisconsin.

(u) Added statement to Part A, Sec. 9.11 regarding retention requirements for information returns whenever backup withholding is imposed.

.03 EDITORIAL CHANGES--"MAGNETIC MEDIA SPECIFICATIONS"

.01 The following editorial changes were made to Part B, and, as a result of the Publication 1220 and 1255 being combined, some changes may also apply to Parts D and E:

(a) IRS/MCC no longer accepts 7 track tapes; therefore, all references to 7 track specifications have been removed.

(b) Part B, Sec. 2 specifications were clarified for tape cartridges.

(c) Information was added to Part B, Sec. 3 for 1.44 mb capacity; now includes 135 tpi.

(d) Information was added to Part B, Sec. 3 about accepting EBC-DIC for 5 1/4-inch diskette if created on IBM System 36.

(e) Part B, Sec. 4, "Payer/Transmitter 'A' Record" the following changes were made to the Amount Indicator fields:

(1) For Form 1099-G, Amount Code 2, title changed to "State or local income tax refunds, credits or offsets."

(2) For Form 1099-INT, Amount Code 1, title changed to "Interest income not included in Amount Code 3."

(3) For Form 1099-MISC, Amount Code 7, title changed to "Nonemployee Compensation, Crop Insurance Proceeds or Excess Golden Parachute Payments."

(4) A note was added to Amount Code 2, "Royalties," that timber royalties under a "pay-as-cut" contract are not to be reported on Form 1099-MISC, but on Form 1099-S.

(5) Note was added to Form 1099-R that additional information may be required in the "B" Record for some filers.

(6) Note was added to Form 1099-R, Amount Code 1, that if a payment is a total distribution, an indicator must be used in the "B" Record.

(7) Note was added to Form 1099-R, Amount Code 2, "Taxable Amount," that if taxable amount cannot be determined, an indicator must be used in the "B" Record.

(8) Note was added to Form 1099-S, Amount Code 2, "Gross Proceeds," that if timber royalties under a "pay-as-cut" contract are being reported, the word "TIMBER" must be added to the description field of the "B" record.

(f) Field Position 4-5 (5-6 for 8 inch diskette), Document Specific Code, was reworded and rearranged to help clarify the information needed to be reported in these fields.

(1) Form 1099-G was changed to include credits and offsets.

(2) Form 1099-MISC was changed to include instructions on reporting Excess Golden Parachute Payments.

(3) Form 1099-R clarification was added when using Distribution Codes A, B or C.

(g) Note was added to Name Control field explaining that IRS/MCC may drop the extraneous words and characters when processing data.

(h) Note was added to First Payee Name Line about inherited IRA reporting.

(i) For Form 1099-B, "Description" includes additional instructions for reporting.

(j) Descriptive information was added and record layout was revised to add the "2nd TIN Notice" field, where applicable.

(k) Descriptive information was added and record layout was revised to add the "Total Distribution Indicator" for Form 1099-R.

(l) Descriptive information was added and record layout was revised to add the "Taxable Amount Not Determined Indicator" for Form 1099-R.

SEC. 3. HOW TO CONTACT THE IRS MARTINSBURG COMPUTING CENTER

.01 Magnetic media processing for all service centers is centralized at IRS/MCC. Your magnetic media files containing information returns covered by this revenue procedure, and all requests for IRS magnetic media-related publications, information, undue hardship waivers, requests for extensions of time to file, or magnetic media-related forms are to be sent to the following addresses:

     If by Postal Service:

.03 IRS/MCC has installed Telecommunication Devices for the Deaf (TDD). The number is (304) 267-3367.

.04 The telephone number for the IRS/MCC fax machine is (304) 267-3366.

.05 Requests for 1099 paper returns, publications or forms not related to magnetic media processing, or paper Forms W-2, MUST be requested by calling the "Forms Only Number" listed in the local telephone directory, or by calling the IRS toll-free number 1-800-829-FORM.

.06 Do NOT contact IRS/MCC if:

(a) You have a question concerning filing Forms W-2, either on paper or magnetic media, with SSA. You MUST contact your local SSA office for this information. IRS/MCC will only refer you to SSA.

(b) You want to order paper forms for information return filing, including paper Forms W-2. IRS/MCC does NOT stock any paper forms for information return or wage reporting. Call the IRS toll-free number for forms (1-800-829-FORM), or call your local IRS office to order paper forms.

(c) You have a question concerning the completion of the information return. (For example, "How do I report a premature distribution on Form 1099-R?"). Call the IRS toll-free number (1-800-829-1040) for such information.

(d) You have received a penalty notice and you need additional information, or you are requesting an abatement of the penalty. Penalty notices contain an IRS representative's name and/or phone number to contact with questions. This person will be most familiar with your particular case. The notice may instruct you to respond in writing within a certain timeframe. IRS/MCC does NOT issue penalty notices and does NOT have the authority to abate penalties.

SEC. 4. FILING REQUIREMENTS

.01 Under section 6011(e)(2)(A) of the Internal Revenue Code any person, including corporations, partnerships, individuals, estates, and trusts, who is required to file 250 or more information returns must file such returns on magnetic media. The 250-or-more requirement applies separately for each type of form.

.02 All filing requirements that follow apply individually to each reporting entity as defined by its separate Taxpayer Identification Number (TIN), (Social Security Number (SSN), or Employer Identification Number (EIN)). For example, if you are a corporation with several branches or locations and each uses the same EIN, you must aggregate the total volume of returns to be filed for that EIN and apply the filing requirements to each type of return accordingly.

.03 The following requirements apply separately to both originals and corrections filed on magnetic media:

 1098          250 OR MORE OF ANY of these forms require magnetic

.05 Filers who are required to submit their information returns on magnetic media may choose to submit their documents by electronic filing instead. Filers who submit their information returns electronically are considered to have satisfied the magnetic media filing requirements.

SEC. 5. FORM 8508, REQUEST FOR WAIVER FROM FILING INFORMATION RETURNS ON MAGNETIC MEDIA

.01 If you are required to file on magnetic media but fail to do so (or to file electronically in lieu of magnetic media filing), and you do not have an approved waiver on record, you may be subject to a failure-to-file penalty of $50 per return. The penalty applies separately to original returns and corrected returns.

.02 If you are required to file original or corrected returns on magnetic media but such filing would create an undue hardship, you may request a waiver from these filing requirements by submitting Form 8508, Request for Waiver From Filing Information Returns on Magnetic Media, to IRS/MCC.

.03 If a waiver for original documents is approved, any corrections for the same types of returns will be covered under this waiver request. However, if you submit your original returns on magnetic media but not your corrections, then a waiver must be requested for corrections only if they exceed the filing threshold of 250 returns.

.04 Generally, only the Payer may sign the Form 8508; however, the transmitter may sign if it has a power-of-attorney from the payer. A copy of the power-of-attorney should be attached to the Form 8508.

.05 A separate Form 8508 must be submitted for each payer. Do not submit a list of payers. All information requested on the Form 8508 must be provided to IRS for the request to be processed.

.06 The waiver, if approved, will provide exemption from magnetic media filing for the current tax year only. Filers may not apply for a waiver for more than one tax year at a time; application must be made each year a waiver is necessary.

.07 Copies of the Form 8508 are included in the back of this publication. You may obtain additional copies from other IRS offices. Form 8508 may be computer generated as long as it contains all the information requested on the original form, or it may be photocopied.

.08 All requests for magnetic media-related undue hardship exemptions must be submitted to IRS/MCC at least 45 days before the due date of the returns. IF A REQUEST IS NOT POSTMARKED AT LEAST 45 DAYS BEFORE THE DUE DATE OF THE RETURNS, IT WILL NOT BE CONSIDERED. Therefore, for Forms 1098, 1099, and W-2G, the waiver request must be submitted to IRS/MCC with a postmark date of no later than January 15. For Forms 5498, the waiver request must be submitted to IRS/MCC with a postmark date of no later than April 17. Any waiver requests received with postmarks after the deadline(s) will be automatically denied.

.09 All magnetic media-related undue hardship requests for Forms W-2 are to be filed with IRS/MCC, NOT SSA, and must be postmarked at least 45 days before the due date of the return. Forms W-2 are due to SSA by February 28. The waiver request must be submitted to IRS/MCC with a postmark date of no later than January 15.

.10 Waivers are granted on a case-by-case basis and are approved or denied by IRS/MCC based on administrative criteria and guidelines. You must allow a minimum of 30 days for IRS/MCC to respond to a waiver request.

.11 If your waiver request is approved, keep the approval letter for your records. DO NOT send a copy of the approved waiver to the service center where you file your paper returns.

.12 An approved waiver from filing information returns on magnetic media does not provide exemption from all filing; you must still timely file your information returns on acceptable paper forms with the appropriate service center.

.13 IRS has issued guidance on the reporting requirements for Desert Storm participants who make IRA contributions for 1990 after April 15, 1991. These contributions may be reported on the 1991 Form 5498 and sent to IRS on PAPER forms. Upon request, IRS/MCC will grant a waiver to file these documents on paper. Submit the Form 8508, "Request for Waiver from Filing Information Returns on Magnetic Media," specify Form 5498, and write "Desert Storm" beside the Form 5498 indicator. Under this circumstance it is not necessary to provide the cost estimates requested by the form. If the total number of Forms 5498 you will file on paper is less than 250, a waiver request would not be necessary. The notice giving complete details was not available when this revenue procedure was published.

SEC. 6. VENDOR LIST

.01 Upon request, IRS/MCC will provide you with a list of vendors who support magnetic media or electronic filing. This list contains the names of service bureaus that will produce your files for you on the prescribed types of magnetic media or via electronic filing. It also contains the names of vendors who can provide software packages for filers who wish to produce magnetic media or electronic files on their own computer systems or personal computers. This list is for filer information only and in no way implies IRS approval or endorsement of their products or services.

.02 IRS/MCC will provide the vendor list to those filers who contact IRS/MCC at the address and phone number shown in Part A, Sec. 3. IRS/MCC WILL NOT PROVIDE ANY VENDOR NAMES OVER THE TELEPHONE.

.03 If you are a vendor who offers a software package, has the ability to produce magnetic media for your customers, or has the capability to electronically file information returns, and you would like to be included on the list, you MUST submit a written request. The written request must include:

(a) The company name,

(b) Address (include the city, state, and ZIP code),

(c) Telephone number (include area code),

(d) Contact person,

(e) Type of service provided (for example, service bureau and/or software), and

(f) Type(s) of magnetic media offered (for example, 1/2 inch magnetic tape; tape cartridge; 8-inch, 5 1/4-inch, and/or 3 1/2-inch magnetic diskettes; electronic filing).

.04 You may submit your request to be added to the vendor list at any time. Send the written request to IRS/MCC. IRS/MCC WILL NOT ACCEPT ANY VENDOR NAMES OVER THE TELEPHONE. The vendor list will be updated once a year, in March, to include new vendors. At this time, IRS/MCC will send a letter to anyone on the current vendor list to ensure we have current and correct information on file.

SEC. 7. FORM 4419, APPLICATION FOR FILING INFORMATION RETURNS MAGNETICALLY/ELECTRONICALLY

.01 For purposes of this revenue procedure, the PAYER may be the person or organization making payments; a recipient of mortgage interest payments; a broker; a barter exchange; a person reporting a real estate transaction; a trustee or issuer of an IRA or SEP; or a lender who acquires an interest in secured property or who has reason to know that the property has been abandoned. The TRANSMITTER is the person or organization submitting the magnetic media file. The payer and transmitter may be the same person or organization.

Payers or transmitters are required to complete Form 4419, "Application for Filing Information Returns Magnetically/Electronically," to ensure equipment compatibility. A single Form 4419 should be filed no matter how many types of returns the payer or transmitter will be submitting on magnetic media or by electronic filing. For example, if you plan to file Forms 1099-INT and Forms 1099-DIV on magnetic media, submit one Form 4419. If you later wish to file another type of Form 1099, 1098, 5498, or W-2G on magnetic media, it is not necessary to submit a new Form 4419. If you wish to file both electronically and magnetically, you need only submit one Form 4419.

Copies of Form 4419, for your use, are included in the back of this publication. Please read the instructions on the back of the form carefully. This form may be photocopied. Requests for additional forms or other information related to magnetic media processing should be addressed to IRS/MCC.

.02 Form 4419 can be submitted at any time during the year. However, Form 4419 should be submitted to IRS/MCC at least 30 days before the due date of the return(s) you wish to file. For documents to be filed electronically using IBM 3780 bisynchronous protocols, Form 4419 should be submitted as soon as possible, but at least 45 days prior to the due date of the return (see Part C, Sec. 2). This will allow IRS/MCC the minimum amount of time necessary to process your application and send a response back to you. Otherwise, you may not receive your Transmitter Control Code (TCC) in time to code it in your Payer/Transmitter "A" Record. In the event your computer equipment or software is not compatible with IRS equipment, a waiver may be requested to file your returns on paper documents for that tax year.

A five character alpha/numeric Transmitter Control Code (TCC) will be assigned and included in an approval letter. If you have more than one TCC, they must be reported on separate media or in separate transmissions if filing electronically. You cannot use two TCCs on the same medium.

IRS encourages transmitters who file for multiple payers to submit one application and to use their TCC for all payers. Include a list of all payers and their TINs with the Form 4419. If you file for additional payers in later years, notify IRS in writing providing the additional names and TINs. Do not submit a new application for these additional payers.

Magnetic tape, diskette, and electronically filed returns may not be submitted to IRS until the application has been approved and a TCC assigned. This TCC must be entered in the TCC field of the "A" Record--DO NOT enter blanks because your media will be returned.

.03 Upon approval, a magnetic media reporting package containing the current revenue procedures and necessary transmittals, forms, labels, and instructions will be sent to the attention of the contact person indicated on Form 4419. Thereafter, IRS/MCC will send the transmitter a package containing the updated revenue procedure and forms each year. This package will continue to be sent to the contact person indicated on the Form 4419 unless IRS/MCC has been notified of any changes or updates.

.04 If you are an approved filer on magnetic media and the name, EIN, or address of your organization or contact person changes, please notify IRS/MCC in writing so that your file may be updated to reflect the current information.

.05 If you have your files prepared by a service bureau, you may not need to submit an application to obtain a TCC. Some service bureaus will produce your file for you, code their own TCC on the media, and send it to IRS/MCC.

Other service bureaus will prepare your magnetic media files and send them back to you to submit to IRS/MCC. These service bureaus may require you to obtain your own TCC to be coded in the "A" Record. Contact your service bureau for further information.

.06 Once approved to file magnetically/electronically, you do not need to reapply each year unless:

(a) You discontinue filing magnetically/electronically for a year; your TCC may have been reassigned by IRS/MCC.

(b) Your magnetic media files were transmitted in the past by a service bureau using the service bureau's TCC. However, you now have computer equipment compatible with that of IRS and wish to prepare your own files. You must request your own TCC by filing an application Form 4419.

.07 Notify IRS/MCC if you had hardware or software changes that would affect the characteristics of the magnetic media or electronic submission. Be sure to refer to your current TCC in all correspondence with IRS/MCC.

.08 If you file on several different types of magnetic media (e.g., tape, 8-inch diskette, and 5 1/4-inch floppy disk) or by electronic filing, you need only submit one Form 4419. In the past, IRS/MCC required filers submitting different types of media to obtain different TCCs. This is no longer necessary. You may use the same TCC on all of your media. For example, if you submit a magnetic tape, an 8-inch diskette, and a 5 1/4-inch floppy disk, and an electronic file, you may use the same TCC. If you already have different TCCs assigned to you, you may choose any of the TCCs to be coded into the "A" Record. It doesn't matter which one you use; however, remember to code only one TCC per medium. Please contact IRS/MCC and indicate which TCC(s) you will not be using so that we can remove them from our files.

.09 In accordance with section 1.6041-7(b) of the Income Tax Regulations, payments by separate departments of a health care carrier to providers of medical and health care services may be reported on separate returns on magnetic media. In this case, the headquarters will be considered the transmitter, and the individual departments of the company filing reports will be considered payers. A single Form 4419 covering all departments filing on magnetic media should be submitted. One TCC may be used for all departments.

.10 Granting approval to file on magnetic media or by electronic filing does not imply endorsement by IRS of the computer software or quality of tax preparation services provided.

SEC. 8. TEST FILES

.01 IRS/MCC does not require magnetic media or electronic filers to submit test files, except for those filers who wish to participate in the Combined Federal/State Filing Program (see Part A, Sec. 17 for further information concerning combined federal/state filing).

IRS encourages first time magnetic media or electronic filers to submit a test file for review prior to the filing season. The test file should consist of a sample for each type of record, i.e., a Payer/Transmitter "A" record, multiple Payee "B" records, an End of Payer "C" record, an End of Transmission "F" record, and if participating in the Combined/Federal State Filing Program, a State Totals "K" record. It is not necessary to send a voluminous file; you may choose to submit a single file or multiple files for your test.

The information in the "A" Record must be ACTUAL information--NOT FICTITIOUS. An indicator has been added to the Payer/Transmitter "A" Record to indicate that you are submitting a test file.

IRS will determine whether or not your file is formatted correctly, and will check the content of the records to ensure it meets the specifications of this revenue procedure.

For filers who currently submit magnetically/electronically, sending a test file will provide the opportunity to ensure that their software reflects the annual programming changes.

.02 If you are a new filer, you must submit a Form 4419 before you send in a test file. If approved, you will be assigned a five character alpha/numeric Transmitter Control Code (TCC). This TCC must be entered in the TCC field of your "A" Record.

.03 All tape and diskette test files must be submitted between October 1 and December 15 of each year. Do not submit tape or diskette test files after December 15. Electronically filed tests must be submitted between October 1 and January 15.

After December 15, only a hardcopy printout of the tape or diskette that shows a sample of each record type (A, B, C and F) may be submitted. The printout must be postmarked on or before January 15. Clearly mark the hardcopy print as "TEST" data and include identifying information such as name, telephone number, and address of a person who can be contacted to discuss its acceptability.

.04 Form 4804, Transmittal of Information Returns Reported on Magnetic Media, must accompany your test magnetic media file. Indicate that the file contains test data by marking the "TEST" checkbox in block 1 on Form 4804. Also, write "TEST" on the external media label, Form 5064.

.05 The first year you wish to participate in the Combined/Federal State Filing Program, magnetic media filers must submit a test file between October 1 and December 15. For electronic filers, the time frame will be between October 1 and January 15. A hardcopy print is NOT an acceptable test file for this program.

.06 Approved payers or transmitters should send the test file to IRS/MCC (see Part C, Sec. 3 for instructions on submitting electronic test files).

.07 IRS/MCC will send an acknowledgement in writing to indicate whether your test file was good or bad. If it was bad, we will also outline the problems and return your file for replacement. The test may be resubmitted, but postmarked by the December 15 deadline in order to be processed. IRS/MCC will not return your media after successful processing.

SEC. 9. FILING OF INFORMATION RETURNS MAGNETICALLY/ELECTRONICALLY AND RETENTION REQUIREMENTS

.01 Form 4804, Transmittal of Information Returns Reported Magnetically/Electronically, must accompany ALL magnetic media and electronic submissions.

.02 In many cases, you can program your computer to generate a substitute Form 4804/4802. IRS encourages you to computer generate your transmittal forms, as long as you include all the information contained on the most current revision of the form. You may also photocopy this form. If you file for multiple payers and have the authority to sign the affidavit on Form 4804, you should also submit Form 4802, "Transmittal of Information Returns Reported Magnetically/Electronically (Continuation)".

.03 For magnetic media/electronic filing, the transmitter may code any combination of payers and/or documents on their media. For example, if you are reporting Forms 1099-INT for Bank A, Forms 1099-DIV for Bank B, and Forms 1098 for Bank C, you need not create 3 separate tapes or diskettes. All 3 banks and all types of documents can be coded on one tape or diskette as long as you have separate payer/transmitter "A" Records. If you do create multiple tapes or diskettes, they can all be sent in one package; you need not send a separate package containing each tape or diskette. Be sure to include Form 4804, 4802, or computer-generated substitute with your magnetic media shipment. DO NOT MAIL THE MAGNETIC MEDIA AND THE TRANSMITTAL DOCUMENTS SEPARATELY. Magnetic media files covered by this revenue procedure are to be sent to IRS/MCC.

.04 Since IRS/MCC only processes returns filed magnetically or electronically, paper information returns must be submitted to the appropriate service center accompanied by Form 1096, "Annual Summary and Transmittal of U.S. Information Returns". DO NOT send information returns filed on paper forms to IRS/MCC.

.05 Do not report duplicate information; i.e., if you submit part of your returns on paper and part on magnetic media (or via electronic filing), be sure the same information is not included in both submissions. This may result in erroneous penalty notices being sent to the payees.

.06 Form 4804 contains an affidavit that MUST be signed by the payer; however, the transmitter, service bureau, paying agent, or disbursing agent (all hereafter referred to as agent), may sign the affidavit on behalf of the person required to file or the payer if the agent has the authority to sign the affidavit under an agency agreement (either oral, written, or implied) that is valid under state law and adds the caption "FOR: (name of payer)."

NOTE: Failure to sign the affidavit on Form 4804 may delay processing or will result in your file being returned to you unprocessed.

.07 Although a duly authorized agent may sign the affidavit, the payer is responsible for the accuracy of the Form 4804 and the returns filed. The payer will be liable for penalties for failure to comply with filing requirements.

.08 If returns from different branches or locations for one payer are submitted on the same file, consolidate each type of information return under one "A" Record. For example, all Forms 1099-INT for the same payer on a single file must be sorted together under one "A" Record followed by the appropriate Payee "B" Records and one End of Payer "C" Record.

.09 Before shipping magnetic media files, include the following:

(a) A signed Form 4804 (or computer-generated substitute).

(b) A Form 4802 if you transmit for multiple payers and have the authority to sign the affidavit on Form 4804.

(c) The magnetic media with an external identifying label (Form 5064) as described in Part B, Sec. 1.02 and Part D, Sec. 1.04. Be sure to include the proper sequence on this label.

(d) On the outside of the shipping container, include a Form 4801 or a substitute for the form which reads "DELIVER UNOPENED TO TAPE LIBRARY--MAGNETIC MEDIA REPORTING--BOX ____ of ____." If there is only one container, mark the outside as Box 1 of 1. For multiple containers, include the sequence (for example, Box 1 of 3, 2 of 3, 3 of 3)

NOTE: See Part C, Secs. 4 and 5 for electronic filing submission requirements.

.10 IRS will not pay for or accept "Cash-on-Delivery" or "Charge to IRS" shipments of tax information that an individual or organization is legally required to submit.

.11 Payers are required to retain a copy of the information returns filed with IRS or to have the ability to reconstruct the data for at least three years from the reporting due date. Whenever backup withholding is imposed, a four-year retention is required.

SEC. 10. FILING DATES

.01 The dates prescribed for filing paper returns with IRS also apply to magnetic media or electronic filing. Magnetic media or electronic filing with IRS for Forms 1098, 1099, and W-2G must be on a calendar year basis. Form 5498 is used to report amounts contributed during or after the calendar year but not later than April 15.

.02 Information returns filed on magnetic media for Forms 1098, all types of Forms 1099, and Forms W-2G must be submitted to IRS/MCC postmarked no later than February 28. The due date for furnishing the required copy or statement to the payee is January 31.

.03 Information returns filed on magnetic media for Form 5498 must be submitted to IRS/MCC and postmarked no later than May 31. Trustees or issuers of IRAs or SEPs must provide participants with a statement of the value of the participant's account by January 31, in any written format. Statements are due to the participants by May 31 for contributions made to IRAs for the prior calendar year. Form 5498 is filed for contributions to be applied to 1991 that are made between January 1, 1991, and April 15, 1992.

.04 If any due date falls on a Saturday, Sunday, or legal holiday, the return is considered timely if it is filed on the next day that is not a Saturday, Sunday, or legal holiday.

SEC. 11. EXTENSIONS OF TIME TO FILE

.01 A payer may request an extension of time to file information returns by submitting Form 8809, Request for Extension of Time To File Information Returns, to IRS/MCC. This form may be used to request an extension of time for information returns submitted on paper; magnetic media; electronically; or for all three types of submissions.

.02 A transmitter may request extensions of time for multiple payers by submitting Form 8809 attaching a list of their names, addresses, and TINs. Form 8809 may be computer generated or photocopied. Be sure that all the pertinent information is included.

.03 If you are requesting extensions of time for more than 50 payers, we strongly encourage you to submit the list of payers, addresses, and EINs on tape or diskette. The record format is included in Part F, Sec. 3 of this publication. Transmitters who submit the extension of time requests for multiple payers will receive one approval letter from IRS/MCC with an attached listing of the payers with approved extensions.

.04 Request an extension of time for 60 days AS SOON AS YOU ARE AWARE that an extension is necessary but no later than the due date of the return. The request must be sent to IRS/MCC. It will take a minimum of 30 days for IRS/MCC to respond to an extension request.

.05 Form 8809 must be postmarked no later than the due date of the return for which you are requesting an extension of time. If you are requesting an extension of time to file several types of forms, you may use one Form 8809, but you must submit Form 8809 to IRS/MCC postmarked no later than the earliest due date. For example, if you are requesting an extension of time to file both Forms 1099-INT and 5498, you must submit Form 8809 postmarked on or before February 28. You may complete more than one Form 8809 to avoid this problem.

.06 IRS/MCC will process your Form 8809 and respond in writing.

.07 IRS/MCC will not grant more than one 60-day extension of time.

.08 You can request an extension for only one tax year.

.09 The extension request must be signed by the payer or a duly authorized representative.

.10 Failure to properly complete and sign the Form 8809 may cause delays in processing the request or result in a denial of your request. Please read the instructions on the back of the Form 8809 very carefully.

.11 Copies of the Form 8809 may be obtained from IRS/MCC or from other IRS offices.

SEC. 12. PROCESSING OF INFORMATION RETURNS MAGNETICALLY/ELECTRONICALLY

.01 All data received at IRS/MCC for processing will be given the same protection as individual returns (Forms 1040). IRS/MCC will process your magnetic media files and check that the records were formatted and coded according to this revenue procedure, which is to be used for the preparation of Tax Year 1991 information returns only.

.02 Revenue procedures are revised annually to reflect legislative and form changes to the information returns. Comments concerning this revenue procedure or suggestions for making it more helpful, can be addressed to the IRS/MCC, P. O. Box 1208, Martinsburg, WV 25401 ATTN: IRB Technical Section.

.03 If your data is formatted incorrectly, or if the file contains information that will cause invalid conditions in the IRS processing, we will return your file for replacement.

.04 To help distinguish between a correction and a replacement, the following definitions have been provided:

A correction is media submitted by the payer to correct records that were successfully processed by IRS, but contained erroneous information.

A replacement is media that IRS has returned to the payer or transmitter due to format errors encountered during processing. After necessary changes have been made, the media must be returned to IRS/MCC for processing.

.05 IRS/MCC no longer returns files after successful processing. If your files are returned to you, it is because a replacement is needed. Open all packages immediately. Files returned due to format or coding errors must be corrected and returned to IRS/MCC within 45 days from the date of the notice to avoid a failure to file penalty. Where possible, IRS/MCC may only return the portion of your file that needs replacement.

IRS/MCC will work with magnetic media filers as much as possible to assist with processing problems. If IRS/MCC calls your office, please respond promptly since we may have information that you need to correct your file.

.06 Do not use special shipping containers for transmitting data to IRS/MCC. Because of the high volume received and shipping costs involved, they will not be returned.

.07 When submitting your file to IRS/MCC, please keep in mind that:

(a) You may include any of the information returns covered by this revenue procedure on one tape, tape cartridge, diskette, or electronic submission. You do not have to separate the different types of returns on different media. For example, one tape or diskette could contain Forms 1098, 1099-INT, 1099-DIV, and 5498 for different payers. You need only identify the different forms and payers with different Payer/Transmitter "A" Records which are coded on the magnetic media.

(b) You may submit multiple types of media in your shipment. However, submit a separate Form 4804 for each type of media.

(c) Enclose your transmittal Form 4804 with your shipment; do not send it separately. If your shipment is packed in several packages, use label Form 4801 to indicate the number of packages, and put the transmittal in the first package.

(d) IRS/MCC will NOT return your magnetic media to you after successful processing. Therefore, if you want proof that IRS/MCC received your shipment, you may either choose to send your submission using a service with tracing capabilities or one that will provide proof of delivery.

SEC. 13. PENALTIES

.01 The Revenue Reconciliation Act of 1989 changed the penalty provisions for any documents including corrections, which are filed after the original filing date for the return. The penalty for failure to file correct information returns is "time sensitive," in that prompt correction of failures to file, or prompt correction of errors on returns that were filed, can lead to reduced penalties.

--The penalty generally is $50 for each information return that is not filed, or is not filed correctly, by the prescribed filing date, with a maximum penalty of $250,000 per year ($100,000 for certain small businesses with average annual gross receipts, over the most recent 3-year period, not in excess of $5,000,000). The penalty generally is reduced to:

--$30 for each failure to comply if the failure is corrected more than 30 days after the return was due, but on or before August 1 of the calendar year in which the return was due, with a maximum penalty of $150,000 per year ($50,000 for certain small businesses with average annual gross receipts, over the most recent 3-year period, not in excess of $5,000,000).

--$15 for each failure to comply if the failure is corrected within 30 days after the date the return was due, with a maximum penalty of $75,000 per year ($25,000 for certain small businesses with average annual gross receipts, over the most recent 3-year period, not in excess of $5,000,000).

.02 Penalties can be waived if failures were due to reasonable cause and not to willful neglect. In addition, section 6721(c) provides a de minimis rule that if:

(a) information returns have been filed but were filed with incomplete or incorrect information, and

(b) the failures are corrected on or before August 1 of the calendar year in which the returns were due, then the penalty for filing incorrect returns (but not the penalty for filing late) will not apply to the greater of 10 returns or one-half of 1 percent of the total number of information returns you are required to file for the calendar year.

.03 Intentional Disregard of Filing Requirements-- If any failure to file a correct information return is due to intentional disregard of the filing and correct information requirements, the penalty is at least $100 per information return with no maximum penalty.

.04 Forms 1099-R-- The penalty under section 6721 does not apply to Form 1099-R, which is filed under section 6047. The penalty for failure to timely file Form 1099-R is $25 per day with a maximum of $15,000 per year. See section 6652(e) of the Internal Revenue Code.

.05 Forms 5498-- The penalty under section 6721 does not apply to Form 5498, which is filed under section 408(i). The penalty for failure to timely file Form 5498 is $50 per return with no maximum. See section 6693 of the Internal Revenue Code.

SEC. 14. CORRECTED RETURNS

.01 The filing requirement thresholds listed in Part A, Sec. 4 apply separately to both original and corrected returns.

EXAMPLE: If you have 100 Forms 1099-A to be corrected, they can be filed on paper since they fall under the 250 threshold; you are permitted to file them on magnetic media. However, if you have 300 Forms 1099-A to be corrected, they must be filed on magnetic media since they meet the 250 threshold. If for some reason you cannot file the 300 corrections on magnetic media, you must request a waiver (see Part A, Sec. 5) before filing on paper, or you may be subject to a penalty. No waiver is required for corrections that fall under the required threshold.

.02 Corrections for the current year should be aggregated and filed as soon as possible, but no later than August 1, in order to avoid the maximum penalty. However, if you discover errors after August 1, you are still required to file corrections so that you will not be subject to a penalty for intentional disregard of the filing requirements. Failure to correct information returns submitted with erroneous information may result in penalties for failure to provide correct information. ALL FIELDS MUST BE COMPLETED WITH THE CORRECT INFORMATION, NOT JUST THE DATA FIELDS NEEDING CORRECTION. Submit corrections only for the returns filed in error, not the entire file. If your entire file is in error, contact IRS/MCC immediately. If you file corrected returns on paper forms, submit Copy A to the appropriate service center. Furnish corrected statements to recipients as soon as possible.

.03 Part A, Sec. 13, Penalties, contains specific information concerning the impact of the Revenue Reconciliation Act of 1989 on the penalty provisions for ANY documents, including corrections, which are filed after the original filing due date for the information return. Additional information concerning the due dates for filing information returns and any penalties that may apply to returns considered to be filed late or incorrectly are included in the 1991 "Instructions for Forms 1099, 1098, 5498, and W-2G." A copy of these instructions is included in your MMR (Magnetic Media Reporting) package each year.

.04 There are numerous types of errors. More than one transaction may be required to properly correct the initial error. A "G" in magnetic media position 7 (or sector 1, position 8 for 8" diskettes) of the "B" Record is used to indicate a corrected return. Also, a "C" in magnetic media position 32 (or sector 1, position 33 for 8" diskettes) of the "A" Record is used to indicate a corrected return. You are strongly encouraged to read this ENTIRE section before attempting to make ANY correction.

.05 Corrected returns submitted to IRS on magnetic media (or filed electronically), using a "G" coded Payee "B" Record, may be included on the same medium as those corrections without the "G" code; however, separate payer/transmitter "A" Records are required. The "A" Record should indicate this is a corrected file as explained in the previous paragraph. Corrected returns are to be identified as corrections on the Form 4804 by marking the appropriate checkbox, and also on the EXTERNAL label of the file.

NOTE: If you discover that you omitted certain information returns on you original file, do not submit those documents as corrections.

.06 The instructions that follow will provide information on how to file corrected returns on magnetic media or by electronic filing for the current tax year.

.07 If a payer discovers errors for prior year submissions that affect a large number of payees, a letter containing the following information should be sent to IRS/MCC:

(a) Name and address of payer

(b) Type of error. (Please explain clearly.)

(c) Tax year

(d) EIN

(e) TCC

(f) Number of Payees

This information will be forwarded to the appropriate office in an attempt to prevent erroneous notices from being sent to the payee. It is also required that you furnish a corrected return to both the payee and IRS. In order for IRS to correct a return, the correction must be submitted on an actual information return document or filed magnetically/electronically.

Clearly mark on the top of the Form 4804 that this is prior year data; indicate the year for which you are making the correction. Prior year corrections may not be included on the same media as current year data. If filing electronically, a separate transmission must be made for each tax year. If you submit prior year corrections on magnetic media, you must use the magnetic media format for that prior year.

.08 If you are not required to file your corrections on magnetic media and you file them on paper forms, do not submit the paper returns to IRS/MCC. All paper returns, whether original or corrected, must be filed with the appropriate service center. Corrected returns filed on magnetic media must be filed with IRS/MCC. CORRECTED TAPES, TAPE CARTRIDGES, AND/OR DISKETTES WILL NOT BE RETURNED AFTER PROCESSING.

.09 Corrected statements to payees should be clearly identified as "CORRECTED" and should be provided to them as soon as possible.

.10 A transmittal Form 4804 (or computer-generated substitute) must be used to transmit corrected magnetic media and electronic files. Use Form 4802, which is a continuation sheet for Form 4804, if you file for multiple payers or submit multiple types of information returns, and you are an authorized agent for the payers.

.11 On magnetic media and electronic files, the Payee "B" Record provides a 20-position field to enter a Payer's Account Number for the Payee. This same account number may be provided on paper forms. This number will help identify the appropriate incorrect return if more than one return is filed for a particular payee. Do not enter a TIN (SSN or EIN) in this field. A payer's account number for the payee may be a checking account number; savings account number; serial number; or any other number assigned to the payee by the payer that will distinguish the specific account. This number should appear on the initial return and on the corrected return in order to identify and process the correction properly. This number also will be provided by the IRS with your Backup Withholding notification and may help you determine the branch or subsidiary reporting the transaction.

.12 Review the chart that follows. The types of errors made normally fall under one of the two categories listed. Next to each type of error made, you will find a list of instructions on how to properly file the corrected return for that type of error. Read all of the instructions listed and follow carefully for the type of error made on the initial return. In some cases, two transactions are required to properly file corrections. If the original return was filed as an aggregate, you must consider this in filing corrected returns.

  Guidelines for Filing Corrected Returns Magnetically/Electronically

.01 Section 6109 of the Internal Revenue Code, and the regulations thereunder, require a person whose taxpayer identification number (TIN) must be shown on an information return to furnish his or her TIN to the person required to file the information return. The number must be furnished to the payer whether or not the payee is required to file a tax return or is covered by social security.

.02 The payee's TIN is used to associate and verify amounts reported to IRS with corresponding amounts on tax returns. Therefore, it is particularly important that CORRECT social security and employer identification numbers for payees be provided on magnetic media or paper forms submitted to IRS. DO NOT ENTER HYPHENS, ALPHA CHARACTERS OR ANY OTHER NUMERIC COMBINATIONS THAT ARE OBVIOUSLY INCORRECT, I.E. 123456789, ALL 9s OR ALL ZEROS. IRS validates the SSN by using the Name Control of the surname (last name) of the individual who has been assigned this number. For this reason, provide the surname in the First Payee Name Line and the Name Control (if available) in positions 8-11 (positions 9-12 for 8" diskettes) of the Payee "B" Record. Failure to provide this information may make it impossible for IRS to match our master files.

.03 The TIN to be furnished to IRS depends primarily upon the manner in which the account is maintained or set up on the payer's record. The payer and payee names with associated TINs should be consistent with the names and TINs used on other tax returns.

Also, the name and TIN provided must belong to the owner of the account. If the account is recorded in more than one name, furnish the name and TIN of one of the owners of the account. The TIN provided MUST be associated with the name of the payee provided in the first name line of the Payee "B" Record. For individuals, including sole proprietors, the payee TIN is the payee's social security number. For other entities, the payee TIN is the payee's employer identification number.

.04 Failure to provide the correct name with the payee TIN, or failure to provide a valid TIN, could result in a backup withholding notice (sometimes referred to as a "B" notice) being generated for that TIN.

.05 The following charts will help you determine the TIN to be furnished to IRS for those persons for whom you are reporting information (payees).

            CHART 1. Guidelines for Social Security Numbers

.01 Magnetic media reporting of the information returns listed in Part A, Sec. 4 applies only to the Copy A information submitted to IRS.

.02 Payers are responsible for providing statements to the payees as outlined in the 1991 "Instructions for Forms 1099, 1098, 5498 and W-2G." Refer to these instructions for filing information returns on paper with IRS and furnishing statements to payees.

.03 Send the IRS copy of all information returns filed on paper to the appropriate service center, not to IRS/MCC.

.04 If you file your information returns on magnetic media, DO NOT file the same returns on paper, since that will result in duplicate filing. Filing on magnetic media or by electronic filing takes the place of submitting the documents on paper. In some cases, you may want to file your original documents on magnetic media or electronically, but submit your corrections on paper documents. This is allowable as long as your corrections do not exceed the magnetic media filing threshold; if the volume of corrections does exceed the threshold, you MUST either file magnetically/electronically or have an approved waiver to submit your corrections on paper.

SEC. 17. COMBINED FEDERAL/STATE FILING PROGRAM

.01 The Combined Federal/State Program was established to simplify information returns filing for the taxpayer by providing the tax information to participating states free of charge. IRS/MCC will forward this information to participating states for approved filers so separate reporting to those states is not necessary. FORMS 1098, 1099-A, 1099-B, 1099-S, and W-2G cannot be filed under this program.

.02 To request approval to participate, a test file coded for this program MUST be submitted by the transmitter to IRS/MCC between October 1 and December 15 for magnetic media and between October 1 and January 15 for electronic files using this revenue procedure.

.03 Attach a letter to the Form 4804 submitted with the test file which indicates that you wish to participate in this program.

.04 A test file is only required for the first year. Once you are approved, you need not resubmit tests each year except when notified by IRS (see Part A, Sec. 8 for general guidelines on submission of test files). Each record, both in the "TEST" file and the "ACTUAL" data file, must conform exactly to this revenue procedure.

.05 If your test file is acceptable, we will send you an approval letter, and a Form 6847, "Consent for Internal Revenue Service to Release Tax Information", which the payer MUST complete, sign, and return to IRS/MCC before any tax information can be released to the state. Be sure to write your TCC on Form 6847. If your test file is not acceptable, we will return your media with a letter indicating what the problems were, and your replacement test file must be returned to IRS/MCC postmarked on or before December 15 (or sent electronically by January 15).

.06 A separate Form 6847 is required for each payer. A transmitter may not combine payers on one Form 6847 even though acting as Attorney-in-Fact for several payers. Form 6847 may be computer generated as long as it includes all information that is on the original form or it may be photocopied. If the Form 6847 is signed by an Attorney-in-Fact, the written consent from the payer must clearly indicate that the Attorney-in-Fact is empowered to authorize release of the information.

.07 If you file for multiple payers, code the records only for participating states for those payers who have properly submitted Form 6847. Do not submit "ACTUAL" data records coded for the Combined Federal/State Program WITHOUT PRIOR APPROVAL from IRS.

.08 If you had applied to participate in this program in the past but did not meet the requirements, you must resubmit the Form 6847 with the proper signatures as specified.

.09 Some participating states require separate notification that you are filing in this manner. Since IRS acts as a forwarding agent only, it is your responsibility to contact the appropriate states for further information.

.10 Approval to participate in the Combined Federal/State Program will be revoked if files submitted do not totally conform to the specifications in this revenue procedure.

.11 It is the filer's responsibility to transmit corrected returns to the states.

.12 Participating states and corresponding valid state codes are listed in TABLE 1 of this section. The appropriate state code MUST be entered for those documents which meet the state's filing requirements. Do not use state abbreviations. It is the filer's responsibility to determine the state code to be used and to be aware of the filing requirements for the appropriate state(s).

.13 To simplify filing, several of the participating states have provided lists of their information return reporting requirements (see TABLE 2). It is your responsibility to contact the participating states to verify the criteria provided in this table.

.14 If you have met ALL the above conditions:

(a) You must submit all records coded exactly as required by this revenue procedure.

(b) The "C" Record must be followed by a state total "K" Record for each state. The "K" Record indicates the number of payees being reported to each particular state.

(c) Payment amount totals and the valid participating state code must be included in the State Totals "K" Record.

(d) The last "K" Record is followed by a Payer/ Transmitter "A" Record or End of Transmission "F" Record (if this is the last record of the entire file).

             TABLE 1. PARTICIPATING STATES AND THEIR CODES

 Element                  Description

.01 You MUST use the following state abbreviations when developing the state code portion of address fields. (This table provides state abbreviations only and does not represent those states participating in the Combined Federal/State Filing Program. For a list of states that participate in the Combined Federal/State Filing Program, refer to Part A, Sec. 17, Table 1.)

 State                                                           Code

.03 For Foreign Country addresses you may use a 40-position free format which should include city, province or state, postal code, and name of country (preferably in this order). This is only allowable if a "1" appears in the Foreign Country Indicator Field of the "B" Record.

.04 When reporting APO/FPO addresses in Payee documents, the following format should be used:

EXAMPLE: Payee Name PVT Willard J. Doe

After preparing your files, we encourage you to verify the format and content of each type of record to ensure the accuracy of your data submission. This may eliminate the need for IRS/MCC to return your file for replacement, and therefore reduce the likelihood of a penalty assessment for incorrect submissions. We strongly urge you to print and review your data before shipping to make sure you have good data in your records according to the format found in this revenue procedure. This is especially true for those filers who have either had their files prepared by a third party service bureau, or who have purchased pre-programmed software packages. If you purchased your software package for a previous year, it may no longer be valid for reporting your tax year 1991 information returns because of programming changes.

Following are some of the most frequently encountered problems with magnetic media files submitted to IRS/MCC, which result in files being returned to the filer. Please be sure you do not make these errors.

 1. The Payment Amount Fields in the "B" Record do not correspond to

SECTION 1. GENERAL

.01 The specifications contained in this part of the revenue procedure define the required format and contents of the records to be included in the magnetic media file. These specifications must be adhered to unless deviations have been specifically granted by IRS.

.02 An external label, Form 5064, must appear on each tape and diskette submitted for processing. If diskettes are used and the operating system is not MS/DOS compatible, the operating system and hardware information MUST be provided. Failure to provide this information will result in the diskette being returned to the filer. The following information is needed on the label:

(a) The transmitter's name.

(b) The five character alpha/numeric Transmitter Control Code.

(c) The tax year of the data (i.e., 1991).

(d) Operating system software and hardware used to create the file (e.g., Apple MacIntosh/MacWrite V2.2).

(e) Document types (e.g., 1098, 5498, INT, DIV, MISC, etc.).

(f) The total number of Payee "B" Records on the media.

(g) An in-house volume serial number which may be assigned by the transmitter to the magnetic media (this is optional for those organizations which assign their own numbers to their media). If you do not assign media numbers, leave this blank.

(h) The sequence of each tape or diskette (e.g., 001 of 008, 002 of 008, etc.). However, if your file is complete on one tape or diskette, then the sequence will be 001 of 001.

The information on the external media label, Form 5064, will assist IRS in processing or in locating a file, should the transmitter request that it be returned due to errors.

.03 A provision is made in the Payee "B" Records for Special Data Entries. These entries are optional. If the field is not utilized, enter blanks to maintain a fixed record length of 420 positions. The field is intended to serve one or both of these purposes:

(a) Contain information required by state or local governments. Filers who wish to use this option for satisfying state or local reporting requirements should contact their state or local department of revenue for filing instructions. (Also refer to Part A, Sec. 17.)

(b) This field is also reserved for the filer's own personal use and may be used at the discretion of the filer to include information related to each individual return. IRS will not use the information supplied in this field. The length of this field will vary depending on the type of return.

.04 Use "K" Records only if you are an approved Combined Federal/State filer.

SECTION 2. TAPE SPECIFICATIONS

.01 In most instances, IRS can process any compatible magnetic tape files. Tape files must be EBCDIC or ASCII and must meet the following criteria:

(a) 9 track EBCDIC (Extended Binary Coded Decimal Interchange Code) with:

(1) Odd Parity

(2) A density of 800, 1600, or 6250 BPI.

(3) If you use UNISYS Series 1100, you must submit an interchange tape.

(b) 9 track ASCII (American Standard Coded Information Interchange) with:

(1) Odd Parity

(2) A density of 800, 1600, or 6250 BPI.

Please be consistent in the use of recording codes and density on your files. If files are generated in more than one recording code and/or density, multiple shipments would be appreciated.

.02 All compatible tape files must have the following characteristics: Type of tape - 0.5 inch (12.7 mm) wide, computer grade magnetic tape on reels of up to 2400 feet (731.52 m) within the following specifications:

(a) Tape thickness: 1.0 or 1.5 mils and

(b) Reel diameter: 10.5 inch (26.67 cm), 8.5 inch (21.59 cm), or 7 inch (17.78 cm).

.03 IRS/MCC also accepts IBM 3480 compatible tape cartridges.

THE TAPE CARTRIDGE SPECIFICATIONS WILL BE AS FOLLOWS:

(a) The tape transports that will be processing the tape cartridges will be IBM 3480 compatible. Therefore, the tape cartridges must be IBM 3480 compatible.

(b) The tape cartridges must meet American National Standard Institute (ANSI) standards, and have the following characteristics:

(1) Tape cartridges will be 1/2 inch tape contained in plastic cartridges which are approximately 4 inches by 5 inches by 1 inch in dimension.

(2) Magnetic tape will be chromium dioxide particle based 1/2 inch tape.

(3) Cartridges will be 18-track parallel.

(4) Cartridges will contain 14,907 bytes/mm (37,871 bytes/in).

(5) Mode will be full function.

If your tape cartridge does not meet these specifications, submit it as a test file, and IRS/MCC will try to process it. Contact IRS/MCC for further information.

.04 Payers who can substantially conform to these specifications, but require some minor deviations, MUST contact IRS/MCC in writing. Tapes deviating from the specifications in this revenue procedure must not be submitted without prior approval from IRS. If you file on the Combined Federal/State Filing Program, your files must conform totally to this revenue procedure.

.05 The tape records defined in this revenue procedure may be blocked subject to the following:

(a) A block must not exceed 25,200 tape positions.

(b) If the use of blocked records would result in a short block, all remaining positions of the block must be filled with 9s; however, the last block of the file may be filled with 9s or truncated. Do not pad a block with blanks.

(c) All records, except the header and trailer labels, may be blocked.

(d) Records may not span blocks.

.06 Labeled or unlabeled tapes may be submitted.

.07 For the purposes of this revenue procedure the following must be used.

Tape Mark:

(a) Used to signify the physical end of the recording on tape.

(b) For even parity, use BCD configuration 0 0 1 1 1 1 ("8421").

(c) May follow the header label and precede and/or follow the trailer label.

SECTION 3. 5 1/4-INCH AND 3 1/2-INCH DISKETTE SPECIFICATIONS

.01 To be compatible, a diskette file must meet the following specifications:

(a) 5 1/4 or 3 1/2 inches in diameter.

(b) Data must be recorded in standard ASCII code. EBCDIC can be used but only if created on IBM System 36 and only for 5 1/4" diskettes.

(c) Records must be fixed length of 420 bytes per record.

(d) Delimiter character commas (,) must not be used.

(e) Positions 419 and 420 of each record have been reserved for carriage return/line feed (cr/lf) characters.

(f) Filename of IRSTAX must be used. Do not enter any other data in this field. If a file will consist of more than one diskette, the filename IRSTAX will contain a 3-digit extension. This extension will indicate the sequence of the diskettes within the file. For example, the first diskette will be named IRSTAX.001, the second diskette will be IRSTAX.002, etc.

(g) A diskette file may consist of multiple diskettes as long as the filename conventions are adhered to.

(h) Diskettes must meet one of the following specifications:

 Capacity          Tracks          Sides/Density          Sector Size

.03 Deviations from the prescribed formats will not be acceptable. Diskettes deviating from the specifications in this revenue procedure must not be submitted without prior approval from IRS.

SECTION 4. PAYER/TRANSMITTER "A" RECORD

.01 Identifies the payer and transmitter of the magnetic media file and provides parameters for the succeeding Payee "B" Records. IRS computer programs rely on the absolute relationship between the parameters and data fields in the "A" Record and the data fields in the "B" Records to which they apply.

.02 The number of "A" Records appearing on a tape or diskette will depend on the number of payers and the different types of returns being reported. The payment amounts for one payer for one type of return must be consolidated under one "A" Record if submitted on the same file.

.03 Do not submit separate "A" Records for each payment amount being reported. For example, if you are filing Form 1099-DIV to report Amount Codes 1, 2, and 3, all three amount codes must be reported under one "A" Record, not three separate "A" Records. For "B" Records which do not contain payment amounts for all three amount codes, enter zeros for those which have no payment to be reported.

.04 The first record appearing on the file must be an "A" Record. A transmitter may include "B" Records for more than one payer on a tape or diskette; however, each GROUP of "B" Records must be preceded by an "A" Record.

.05 ALL RECORDS MUST BE A FIXED LENGTH OF 420 POSITIONS.

.06 A single tape or diskette may also contain different types of returns but the types of returns MUST NOT be intermingled. A separate "A" Record is required for each payer and for each type of return being reported. However, once you have written the first "A" Record, you need not write another unless you report for another payer or another type of document, even if you have more than one tape or diskette. An "A" Record may be blocked with "B" Records; however, the initial record on a file must be an "A" Record. IRS will accept an "A" Record after a "C" Record.

.07 Do not begin any record at the end of a block or diskette and continue the same record into the next block.

.08 All alpha characters entered in the "A" Record should be uppercase.

.09 When reporting Form 1098, Mortgage Interest Statement, the "A" Record will reflect the name of the recipient of the interest (the filer). The "B" Record will reflect the individual paying the interest (borrower/payer of record) and the amount paid.

               RECORD NAME: PAYER/TRANSMITTER "A" RECORD

[Editor's note: These record layouts are graphic representations of the file specifications described above. They have been omitted because they provide no additional information and are not suitable for clear on-screen presentation.]

SECTION 6. PAYEE "B" RECORD ("B" Record) GENERAL FIELD DESCRIPTIONS AND RECORD LAYOUTS

.01 The Payee "B" Record contains the payment information from the individual returns. When filing information documents the format for the "B" Records will remain constant and is a fixed length of 420 positions. The record layout for positions 1 through 321 is the same for all "B" Records. Positions 322 through 420 vary slightly for Forms 1099-A, 1099-B, 1099-OID, 1099-S and W-2G to accommodate variations within these forms.

In the "A" Record, the Amount Indicators that appear in positions 23 through 31 will be left-justified and blank filled. In the "B" Record, you will allow for all nine payment amount fields. For those fields not used enter zeros (0). For example, if you are reporting on Form 1099-PATR, you will enter a "7" in tape position 22 of the "A" Record, Type of Return. If you are reporting payments for Amount Codes 2, 4 and 7, then media positions 23 through 31 of the "A" Record will be "247bbbbbb" (b = blanks). In the "B" Record:

Positions 51 through 60 for Payment Amount 1 will be zeros.

Positions 61-70 will reflect the actual payment amount to be reported for "Nonpatronage distributions."

Positions 71-80 for Payment Amount 3 will be zeros.

Positions 81-90 will reflect the actual payment amount to be reported for "Federal income tax withheld."

Positions 91-110 for Payment Amounts 5 and 6 will be zeros.

Positions 111-120 will reflect the actual payment amount to be reported for "Energy investment credit."

Positions 121-140 for Payment Amounts 8 and 9 will be zeros.

.02 The following specifications include a field in the payee records called "Name Control" in which the first four characters of the payee's surname or last name are to be entered by the payer.

.03 If payers are unable to determine the first four characters of the surname, the Name Control Field may be left blank; however, compliance with the following will facilitate IRS computer programs in generating the Name Control.

(a) The surname of the payee whose SSN is shown in the "B" Record should always appear first. If, however, your records have been developed using the first name first, you must leave a blank space between the first and last names.

(b) In the case of multiple payees, only the surname of the payee whose TIN (SSN or EIN) is shown in the "B" Record must be present in the First Payee Name Line. Surnames of any other payees in the record may be entered in the Second Payee Name field.

.04 See Part A, Sec. 15 for further information concerning Taxpayer Identification Numbers (TINs).

.05 A field is also provided in these specifications for Special Data Entries. This field may be used to record information required by state or local governments, or for the filer's own personal use. IRS does not use the data provided in the Special Data Entries field; therefore, the IRS program doesn't check the content or format of the data entered in this field. It is the filer's choice whether or not this field is used. If this field is coded, it will not affect the processing of the "B" Records.

.06 Those filers participating in the Combined Federal/State Filing Program must adhere to all of the specifications in Part A, Sec. 17 in order to participate in this program. FORMS 1098, 1099-A, 1099-B, 1099-S, AND W-2G CANNOT BE FILED UNDER THE COMBINED FEDERAL/STATE FILING PROGRAM.

.07 All alpha characters entered in the "B" Record should be uppercase.

.08 Do not use decimal points (.) to indicate dollars and cents on magnetic media, e.g. 0000001000 for $10.00.

.09 IRS strongly encourages filers to review their data for accuracy before submission to prevent issuance of erroneous notices to persons for whom reports are filed. Filers should be especially careful that their names, TINs, account numbers, types of income, and income amounts are correct.

.10 When reporting Form 1098, Mortgage Interest Statement, the "A" Record will reflect the name and EIN of the recipient of the interest (the filer). The "B" Record will reflect the individual paying the interest (Borrower/Payer of Record) and the amount paid. For Form 1099-S, the "A" Record will reflect the person responsible for reporting the transaction. The "B" Record will reflect the seller.

                     RECORD NAME: PAYEE "B" RECORD

NOTE: For detailed explanations of the distribution codes, see the 1991 "Instructions for Form 1099, 1098, 5498, and W-2G" included in your Magnetic Media Reporting Packages.

            Type of                     For Form W-2G, enter the

 The following examples may be helpful to you in developing the Name

 --------------------------------------------------------------------

.01 The End of Payer "C" RECORD IS A FIXED RECORD LENGTH OF 420 POSITIONS. The Control Total fields are each 15 positions in length.

.02 The "C" Record is a summary record for a type of return for a given payer.

.03 The "C" Record will contain the total number of payees and the totals of the payment amount fields filed by a given payer. The "C" Record MUST be written after the last "B" Record for each type of return for a given payer. For each "A" Record and group of "B" Records on the file, there must be a corresponding "C" Record.

.04 In developing the "C" Record, for example, if you used Amount Codes 1, 3 and 6 in the "A" Record, the totals from the "B" Records will appear in Control Totals 1, 3 and 6 of the "C" Record. In this example, positions 26-40, 56-85, and 101-145 would be zero filled. Positions 146-420 would be blank filled.

.05 Payers/Transmitters must verify the accuracy of the totals in the "C" Record.

.06 Missing or incorrect "C" Records will result in the media being returned for correction.

                 RECORD NAME: END OF PAYER "C" RECORD

.01 THE STATE TOTALS "K" RECORD IS A FIXED RECORD LENGTH OF 420 POSITIONS. The Control Total fields are each 15 positions in length.

.02 The "K" Record is a summary for a given payer and a given state in the Combined Federal/State Filing Program, used ONLY when state reporting approval has been granted.

.03 The "K" Record will contain the total number of payees and the totals of the payment amount fields filed by a given payer for a given state. The "K" Record(s) must be written after the "C" Record for the related "A" Record.

.04 In developing the "K" Record, for example, if you used Amount Codes 1, 3 and 6 in the "A" Record, the totals from the "B" Records coded for this state will appear in Control Totals 1, 3 and 6 of the "K" Record.

.05 There MUST be a separate "K" Record for each state being reported.

.06 Refer to Part A, Sec. 17 for the requirements and conditions that MUST be met to file on this program.

                 RECORD NAME: STATE TOTALS "K" RECORD

.01 THE END OF TRANSMISSION "F" RECORD IS A FIXED RECORD LENGTH OF 420 POSITIONS. The "F" Record is a summary of the number of payers in the entire file.

.02 This record should be written after the last "C" Record (or last "K" Record, when applicable) of the entire file.

              RECORD NAME: END OF TRANSMISSION "F" RECORD

SECTION 1. GENERAL

.01 Electronic filing of information returns is being offered by IRS/MCC as an alternative to magnetic media (tape or diskette) or paper filing, but is not a requirement. Electronic filing will fulfill the magnetic media requirements for those filers who are required to file magnetically. It may also be used by those payers who are under the filing threshold requirement, but would prefer to file their information returns this way. For Tax Year 1991, any Forms 1098, 1099, 5498, and W 2G, both originals and corrections, may be filed electronically.

.02 The electronic filing of information returns is not affiliated with the Form 1040 electronic filing program. These two programs are totally independent, and you must obtain separate approval to participate in each of them. All inquiries concerning the electronic filing of information returns should be directed to IRS/MCC. IRS/MCC personnel cannot answer questions or assist taxpayers in the filing of Form 1040 tax returns. Filers with questions of this nature will be directed to the Taxpayer Service toll-free number (1-800-829-1040) for assistance.

.03 There are two methods of filing information returns electronically. One method is to submit information returns through the Information Reporting Program Bulletin Board System (IRP-BBS) using asynchronous protocols. Another method of filing electronically is by using IBM 3780 bisynchronous protocols. Part A, Sec. 18 contains a definition of asynchronous and bisynchronous protocols. The specifications for both of these methods are given in this section. There are differences between these two methods of filing so please read this section carefully. Any questions on either of these filing methods can be directed to IRS/MCC.

.04 Filers participating in the electronic filing program for information returns will submit their returns to IRS/MCC by way of modems, and not through magnetic media or paper filing. After the file has been submitted electronically, Form 4804 must be sent within 2 days or by the due date of the return, whichever comes first.

.05 Filers who choose to file electronically will be granted, upon request, an extension of time to file for 60 days after the due date of the return being submitted. Part A, Sec. 11 explains procedures for requesting extensions of time. It is suggested, however, that filers transmit their data as soon as possible.

.06 The formats of the "A," "B," "C," "K," and "F" Records are the same for electronically filed records as they are for 5 1/4- and 3 1/2-inch diskettes. For electronically filed documents, each transmission is considered a separate file; therefore, each transmission MUST have an End of Transmission "F" Record.

SEC. 2. ELECTRONIC FILING APPROVAL PROCEDURE

.01 Filers who want to file electronically, but do not have a Transmitter Control Code (TCC) assigned to them, must submit Form 4419, Application for Filing Information Returns Magnetically/Electronically, prior to transmitting data.

.02 Filers who use IRP-BBS, and already have a TCC, assign their own passwords and do not need special approval.

.03 Filers using bisynchronous protocols must obtain an IRS/MCC-assigned password prior to submitting either test or actual data files. To obtain a password for bisynchronous filing, the following steps must be taken:

(a) Bisynchronous filers who already have a TCC must submit either Form 4419, or a letter, to indicate that they wish to file information returns electronically. Another TCC will NOT be assigned to current filers. If a letter is submitted, it must contain the following:

1) Name and address of transmitter.

2) Transmitter Control Code.

3) Name and phone number of a contact person within your organization to whom a password will be assigned.

(b) Within 30 days of receiving the application or letter, IRS/MCC will send Form 6086, TSO Password Assignment, to the filer which will contain the password to be used for electronic submissions.

(c) Upon receipt of Form 6086, the user (person who will actually transmit the data) will separate the acknowledgement from the password. Both the user and the user's manager MUST sign the acknowledgement and mail to:

     Chief, Security and Disclosure Branch

(e) For security reasons, in August of each year, all bisynchronous passwords will be obsolete and filers who filed using this method will automatically receive a new password via Form 6086. If bisynchronous filing is to be used again, the filer must respond to IRS/MCC as specified in Part C, Sec. 2.03(c). If you have any questions relating to the security procedures, and/or you need to report that your password was compromised, contact IRS/MCC as soon as possible.

.04 With all passwords, either for IRP-BBS or bisynchronous protocols, it is the user's responsibility to (1) remember the password, and (2) not allow the password to be compromised.

SEC. 3. TEST FILES

.01 Filers transmitting directly to IRS/MCC are not required to submit a test file. The purpose of test files is to resolve any data or communication problems prior to the filing season. If you wish to submit an electronic test file for Tax Year 1991, it MUST be submitted to IRS/MCC between October 15, 1991, and January 15, 1992.

.02 If problems are encountered while transmitting your electronic test file, contact IRS/MCC for assistance.

.03 Filers who transmit their data using IRP-BBS can verify the status of their transmitted test data by calling the IRP-BBS. This information will be available within 48 hours after their original transmission is received by IRS/MCC.

.04 If bisynchronous protocols are used, you MUST obtain a password before submitting an electronic test file. Bisynchronous electronic test files will be processed and filers will be notified as to the acceptability of their data within 10 workdays of the date the data is received by IRS/MCC.

SEC. 4. ELECTRONIC SUBMISSIONS

.01 Electronically filed information may be submitted to IRS/MCC 7 days a week. Technical assistance will be available at IRS/MCC Monday through Friday between 8:30 AM and 4:30 PM Eastern Time Zone.

.02 Long transmissions of data may be interrupted by line noise problems. For this reason, IRS/MCC recommends that transmissions be limited to not longer than 1 1/2 hour duration.

.03 Actual information return data may be electronically transmitted to IRS/MCC between January 22 and December 15, 1992 (for Tax Year 1991 submissions). However, the due date(s) for electronically filed returns are not extended.

SEC. 5. TRANSMITTAL REQUIREMENTS

.01 All electronic files must be verified by transmittal Form 4804. Form 4804 can be ordered from IRS/MCC or it may be computer generated. If you choose to computer generate Form 4804, all of the information contained on the original form, including the affidavit, must also be contained on the computer generated form.

.02 Form 4804 must be submitted to IRS/MCC postmarked on or before the due date of the return, or within two (2) workdays of the electronic transmission, whichever is earlier. No return is considered filed until a completed Form 4804 is received by IRS/MCC.

.03 The filer whose TCC is used in the Payer/Transmitter "A" Record is responsible for submitting the transmittal Form 4804.

.04 Completed transmittal Forms 4804 should be mailed to the following addresses:

          If by Postal Service:

SEC. 6. INFORMATION REPORTING PROGRAM BULLETIN BOARD SYSTEM (IRP-BBS) SPECIFICATIONS

.01 The IRP-BBS is an electronic bulletin board system available to filers of information returns. IRP-BBS provides many expanded capabilities over other forms of submitting information returns to IRS/MCC. Some of the advantages of IRP-BBS are as follows:

1) Ability to submit information returns to the IRS/MCC via personal computer using dial-up modems.

2) Filer will be notified through IRP-BBS within 2 days as to the acceptability of the data transmitted.

3) Immediate access to the latest changes and updates that affect the Information Reporting Program at IRS/MCC (program, legislative, etc.).

4) Access to publications such as the Publication 1220 as soon as they are finalized by IRS personnel.

5) Capability to communicate with IRS/MCC personnel via the IRP-BBS.

6) Ability to retrieve information and files applicable to the IRP-BBS.

.02 The IRP-BBS is available for public use and accessible using various personal computer communications equipment. The capability to file information returns electronically, however, is limited to approved filers of information returns. Approved filers are holders of current Transmitter Control Codes (TCC) with IRS/MCC. If you are required to file information returns with IRS/MCC and do not have a TCC, you may obtain one by filing a Form 4419 with IRS/MCC.

.03 Filers using IRP-BBS can determine the acceptability of all files submitted via the IRP-BBS by checking the file status area of the bulletin board. These reports are not immediately available upon successful transmission of the file, but they will be available within 48 hours.

.04 IRP-BBS is accessible by dialing (304) 263-2749. The setup parameters for IRP-BBS are: 8 data bits, no parity, 1 stop bit and full duplex mode.

.05 IRS publications such as Publication 1220 and the IRS/MCC Vendor List are available through the IRP-BBS as "downloadable" files. Using IRP-BBS as a means of obtaining information return related publications will provide faster access to these materials than waiting for materials to be mailed. Additionally, some publications such as Publication 1220 will be available from IRP-BBS much earlier than the printed version.

.06 Due to the large number of communications products available, it is impossible for IRS/MCC personnel to provide specific information on any given software package or hardware configuration. You may be able to receive assistance from your hardware or software provider.

.07 The IRP-BBS software provides a menu driven environment which allows filers to access different parts of IRP-BBS. Whenever possible, IRS/MCC personnel will provide assistance to filers in resolving any communication problems with IRP-BBS.

.08 IRP-BBS can be accessed at speeds up to 9600 bps. The modulation speed is automatically negotiated so that users with slower modems should encounter no problems connecting with IRP-BBS. The communication standards supported include 212A, V.22bis, and V.32. Point-to-point error control is supported using the V.42 standard with backward compatibility with MNP class 2-4 modems. Data compression is supported using V.42bis with MNP class 5 compatibility. Data compression will result in throughput speeds up to 38,400 bps.

.09 Data compression is encouraged for filers who are submitting their information returns by way of the IRP-BBS. Currently, IRS/MCC has the ability to decompress files created using several popular software compression programs. Software data compression can be done alone or in conjunction with V.42bis hardware compression. It has been shown that the size of files transmitted electronically can be reduced by as much as 80% when data compression is used. It is highly recommended that you use data compression when submitting information returns electronically.

SEC. 7. IBM 3780 BISYNCHRONOUS COMMUNICATION SPECIFICATIONS

.01 Transmissions using IBM 3780 bisynchronous (BSC) protocols must be in EBCDIC character code. Modems must be compatible with either Bell 208B for 4800 bps transmissions, or AT&T 2296A for 9600 bps transmissions. Both modems are dial-up type modems using the Public Switched Telephone Network. IBM 3780 data compression is acceptable for any bisynchronous transmission.

.02 IRS/MCC will accept information returns filed electronically over switched telecommunications network circuits. For 4800 bps, the circuit will be (304) 267-0807. For 9600 bps, the circuit will be (304) 267-9572. Both of these circuits are equipped for bisynchronous (BSC) transmission, using the IBM 3780 protocol.

.03 The 4800 bps line terminates at an AT&T 208BR modem. The AT&T 208BR modem uses phase-shift keying and 8-phase modulation to transmit binary serial data signals over the telephone line in half-duplex mode. The following options have been selected:

          -Transmit Level set to -4 dBm

          -Receiver Responds to Remote Loopback

.01 For bisynchronous filing there are two additional identifier records which must be used to transmit data. These records are 420 positions in length, and are the first ($$REQUEST) and second ($$ADD) records sent in an electronic transmission. The purpose of these records is to provide the password and identity of the transmitter. The $$REQUEST, $$ADD and the data file should be transmitted as one file. In some cases, filers have attempted to send the $$REQUEST and $$ADD as separate files. Doing this will result in a failed transmission. The format of each of these records is as follows:

                        RECORD NAME: $$REQUEST

.02 Upon making contact with IRS/MCC and furnishing a valid password in the $$ADD identifier record, a data transmission session will commence. The transmission will continue until an End of Transmission "F" Record is received. At the end of each transmission, the following message should be received electronically by the filer: "DATA RECEIVED AT MCC." If this message is not received, there may be a problem with your electronic submission, and you should contact IRS/MCC immediately. After this message is sent to the filer by IRS/MCC to indicate a successful transmission, the line will be disconnected.

.03 Upon receiving a data file and transmittal Form 4804, IRS/MCC will release the data for further processing. If the data is found to be unprocessable, the filer will be contacted by either letter or telephone and notified that the data must be re-transmitted. For re-transmitted files, the filer will be assigned a replacement file name to be used during the re-transmission. This file name will be provided by IRS/MCC either by letter or telephone, and is to be placed in positions 45-51 of the $$ADD record when the file is re-transmitted.

ELECTRONIC FILING IDENTIFIER $$ADD RECORD - RECORD LAYOUT

[Editor's note: These record layouts are graphic representations of the file specifications described above. They have been omitted because they provide no additional information and are not suitable for clear on-screen presentation.]

PART D. SINGLE DENSITY DISKETTE SPECIFICATIONS

SECTION 1. GENERAL

.01 The specifications contained in this part of the revenue procedure define the required format and contents of the records to be included in a single density diskette file and must be strictly adhered to unless deviations have been specifically granted by IRS.

.02 To be compatible, a single density diskette file must meet the following specifications in total:

(a) 8 inches in diameter.

(b) Recorded in EBCDIC.

(c) Contain 77 tracks of which:

(1) Track 0 is the index track (the operating system reserves track 0 for the directory information and writes the file name and location in the directory; data cannot be written in track 0).

(2) Tracks 1 through 73 are data tracks.

(3) Track 74 is unused.

(4) Tracks 75 and 76 are alternate data tracks.

(d) Each Track must contain 26 sectors.

(e) Each Sector must contain 128 bytes.

(f) Data must be recorded on only one side of the diskette.

(g) IRS can process single sided, single density, soft sectored diskettes as well as double sided, double density, soft sectored diskettes. Part E provides specifications for double density diskettes which have sectors of 256 bytes.

(h) An IBM 5360 compatible diskette would meet the above specifications.

(i) Hard sectored diskettes are not compatible.

(j) A diskette should be clearly marked as to type of data (single sided/single density), and the entire file should consist of all single sided/single density diskettes.

.03 Payers who can substantially conform to these specifications, but require some minor deviations, MUST contact IRS/MCC. Diskettes deviating from the specifications in this revenue procedure must not be submitted without prior approval from IRS.

.04 Form 5064, Media Label, must be affixed to each diskette submitted for processing. The following information is needed:

(a) The transmitter's name.

(b) The five character alpha/numeric Transmitter Control Code (TCC).

(c) The tax year of the data (i.e., 1991).

(d) Operating system/software and hardware.

(e) Document types (e.g., 1098, 5498, 1099-INT, 1099 DIV, 1099-MISC, etc.).

(f) The total number of "B" Records on the diskette.

(g) An in-house volume serial number assigned by the transmitter to the diskette, if applicable. (This is optional for those organizations which assign their own numbers to their media.) If you do not assign media numbers, leave this blank.

(h) The sequence of each diskette (e.g., 001 of 008; 002 of 008, etc.). However, if your file is complete on one diskette (ends with an "F" Record) the sequence will be 001 of 001. The information on the external label, Form 5064, will assist IRS in processing the file, or in locating a file if the transmitter requests its return due to errors.

SEC. 2. DISKETTE HEADER LABEL

The following header label format applies to both single and double density diskettes.

The header label on the diskette must be located in track 0, sector 8 and must be formatted as shown in the following layout. If your system automatically creates a header label, this is not necessary. If the file will consist of multiple diskettes, the Multi-Volume indicator in the diskette header label must contain a "C".

[Editor's note: Pictorial Record Layouts depicting specifications discussed in Part "D" have been omitted. These illustrations are not suitable for electronic reproduction.]

SEC. 3. PAYER/TRANSMITTER "A" RECORD

.01 The Payer/Transmitter "A" Record identifies the payer and transmitter of the diskette and provides parameters for the succeeding Payee "B" Records. IRS computer programs rely on the absolute relationship between the parameters and data fields in the "A" Record and the data fields in the "B" Records to which they apply.

.02 The number of "A" Records appearing on a diskette will depend on the number of payers and the different types of returns being reported. The payment amounts for one payer for one type of return must be consolidated under one "A" Record if submitted on the same file.

.03 Do not submit separate "A" Records for each payment amount being reported. For example, if you are filing Form 1099 DIV to report Amount Codes 1, 2, and 3, all three amount codes must be reported under one "A" Record, not three separate "A" Records. For "B" Records that do not contain payment amounts for all three amount codes, enter zeros for those which have no amount to be reported.

.04 After the header label on the diskette, the first record appearing in the file must be an "A" Record. When a single density diskette is used each "A" Record will consist of at least 2 sectors of 128 positions each; however, if you are transmitting for someone other than yourself, 4 sectors are required.

.05 A transmitter may include Payee "B" Records for more than one payer on a diskette; however, each GROUP of "B" Records must be preceded by an "A" Record.

.06 A single diskette may also contain different types of returns, but the returns MUST NOT be intermingled. A separate "A" Record is required for each payer and each type of return being reported. IRS will accept an "A" Record after a "C" Record.

.07 All alpha characters entered in the "A" Record should be uppercase.

.08 WHEN REPORTING FORM 1098, MORTGAGE INTEREST STATEMENT, THE "A" RECORD WILL REFLECT THE NAME OF THE RECIPIENT OF THE INTEREST (THE FILER). THE "B" RECORD WILL REFLECT THE INDIVIDUAL PAYING THE INTEREST (BORROWER/PAYER OF RECORD) AND THE AMOUNT PAID.

               RECORD NAME: PAYER/TRANSMITTER "A" RECORD

[Editor's note: These record layouts are graphic representations of the file specifications described above. They have been omitted because they provide no additional information and are not suitable for clear on-screen presentation.]

SEC. 5 PAYEE "B" RECORD - GENERAL INFORMATION FOR ALL FORMS

.01 This section contains the general information concerning the Payee "B" Record for all information returns filed on single sided/single density soft-sectored diskettes. For a detailed description of the record refer to the following in Part D:

(a) Sec. 6. PAYEE "B" RECORD - FIELD DESCRIPTIONS FOR SECTORS 1 THROUGH 4 OF FORMS 1098, 1099-DIV, 1099-G, 1099-INT, 1099-MISC, 1099-PATR, 1099-R, 5498 AND SECTORS 1 THROUGH 3 OF FORMS 1099-A, 1099-B, 1099-OID, 1099-S AND W-2G.

(b) Sec. 7. PAYEE "B" RECORD LAYOUTS FOR SECTORS 1 THROUGH 4 OF FORMS 1098, 1099-DIV, 1099-G, 1099-INT, 1099-MISC, 1099-PATR, 1099-R, 5498 AND SECTORS 1 THROUGH 3 OF FORMS 1099-A, 1099-B, 1099-OID, 1099-S AND W-2G.

(c) Sec. 8. PAYEE "B" RECORD - FIELD DESCRIPTIONS AND RECORD LAYOUT FOR SECTOR 4 OF FORM 1099-A.

(d) Sec. 9. PAYEE "B" RECORD - FIELD DESCRIPTIONS AND RECORD LAYOUT FOR SECTOR 4 OF FORM 1099-B.

(e) Sec. 10. PAYEE "B" RECORD - FIELD DESCRIPTIONS AND RECORD LAYOUT FOR SECTOR 4 OF FORM 1099-OID.

(f) Sec. 11. PAYEE "B" RECORD - FIELD DESCRIPTIONS AND RECORD LAYOUT FOR SECTOR 4 OF FORM 1099-S.

(g) Sec. 12. PAYEE "B" RECORD - FIELD DESCRIPTIONS AND RECORD LAYOUT FOR SECTOR 4 OF FORM W-2G.

For tax year 1991 data, all "B" Records will consist of at least 3 sectors of 128 positions each. If you are not a Combined Federal/State filer or if you are not utilizing the Special Data Entries field, Sector 4 can be eliminated for Forms 1098, 1099-DIV, 1099-G, 1099-INT, 1099-MISC, 1099-PATR, 1099-R, and 5498.

The "B" Record will always consist of 4 Sectors for Forms 1099-A, 1099-B, 1099-OID, 1099-S, and W-2G.

In the "A" Record, the Amount Indicators that appear in diskette positions 24 through 32 of Sector 1 will be left-justified and blank filled. In the "B" Record, allow for all nine payment amount fields. For those fields not used, enter zeros. For example, if you are reporting on Form 1099-PATR, enter a "7" in diskette position 23 of Sector 1 of the "A" Record, Type of Return field. If you are reporting payments for Amount Codes 2, 4, and 7, then diskette positions 24 through 32 of Sector 1 of the "A" Record will be "247bbbbbb" (b = blanks). In the "B" Record:

Positions 52 through 61 of Sector 1 for Payment Amount 1 will be zeros.

Positions 62-71 of Sector 1 will reflect the actual payment amount to be reported for "Non-patronage distributions."

Positions 72-81 of Sector 1 for Payment Amount 3 will be zeros.

Positions 82-91 of Sector 1 will reflect the actual payment amount to be reported for "Federal income tax withheld."

Positions 92-111 of Sector 1 for Payment Amounts 5 and 6 will be zeros.

Positions 112-121 of Sector 1 will reflect the actual payment amount to be reported for "Energy investment credit."

Positions 3-22 of Sector 2 for Payment Amounts 8 and 9 will be zeros.

.02 The record layout for Sectors 1, 2 and 3 will be the same for all "B" records. Sector 4, however, will be different for Forms 1099-A, 1099-B, 1099-OID, 1099-S and W-2G. Refer to Part D, Sec. 8, 9, 10, 11 or 12, respectively for the layout of Sector 4 of these records.

.03 The following specifications include a field in the payee records called "Name Control" in which the first four characters of the payee's surname or last name are to be entered by the payers.

.04 If payers are unable to determine the first four characters of the surname, the Name Control Field may be left blank; however, compliance with the following will facilitate IRS computer programs in generating the Name Control.

(a) The surname of the payee whose SSN is shown in the "B" Record should always appear first. If, however, you enter the first name first, you must leave a blank space between the first and last names.

(b) In the case of multiple payees, only the surname of the payee whose TIN (SSN or EIN) is shown in the "B" Record must be present in the First Payee Name field. Surnames of any other payees in the record may be entered in the Second Payee Name field.

.05 A field is also provided in these specifications for Special Data Entries. This field may be used to record information required by state or local governments or for the filer's own personal use. IRS does not use the data provided in the Special Data Entries field; therefore, the IRS program does not check the content or format of the data entered in this field. It is the filer's choice whether or not this field is used. If this field is coded, it will not affect the processing of the "B" Records.

.06 Those filers participating in the Combined Federal/State Filing Program must adhere to specifications in Part A, Sec. 17, in order to participate in this program. FORMS 1098, 1099-A, 1099-B, 1099-S AND W-2G CANNOT BE FILED UNDER THE COMBINED FEDERAL/STATE FILING PROGRAM.

.07 All alpha characters entered in the "B" Record should be uppercase.

.08 Do not use decimal points (.) to indicate dollars and cents, e.g., 0000001000 for $10.00.

.09 IRS STRONGLY ENCOURAGES FILERS TO REVIEW THEIR DATA FOR ACCURACY BEFORE SUBMISSION TO PREVENT ISSUANCE OF ERRONEOUS NOTICES TO PERSONS FOR WHOM REPORTS ARE FILED. FILERS SHOULD BE ESPECIALLY CAREFUL THAT THEIR NAMES, TINS, ACCOUNT NUMBERS, TYPES OF INCOME, AND INCOME AMOUNTS ARE CORRECT.

.10 When reporting Form 1098, Mortgage Interest Statement, the "A" Record will reflect the name and EIN of the recipient of the interest (the filer). The "B" Record will reflect the individual paying the interest (the borrower/payer of record) and the amount paid. For Forms 1099-S, the "A" Record will reflect the person responsible for reporting the transaction. The "B" Record will reflect the seller.

SEC. 6 PAYEE "B" RECORD - FIELD DESCRIPTIONS FOR SECTORS 1 THROUGH 4 OF FORMS 1098, 1099-DIV, 1099-G, 1099-INT, 1099-MISC, 1099-PATR, 1099-R, 5498 AND SECTORS 1 THROUGH 3 OF FORMS 1099-A, 1099-B, 1099-OID, 1099-S AND W-2G

For Forms 1099-A, 1099-B, 1099-OID, 1099-S, and W-2G, see Part D Sec. 8, 9, 10, 11 and 12, respectively for the field descriptions and record layouts for Sector 4 of these records.

NOTE: For all fields marked REQUIRED, you must provide the information described under Description and Remarks. For those fields not marked REQUIRED, you must allow for the field but may be instructed to enter blanks or zeros in the indicated position(s) and for the indicated length.

                     RECORD NAME: PAYEE "B" RECORD

NOTE: For detailed explanations of the distribution codes, see the 1991 "Instructions for Form 1099, 1098, 5498, and W-2G" included in your Magnetic Media Reporting Packages.

            Type of Wager               For Form W-2G, enter the