Rev. Proc. 73-13

Part "A" -- General

Section 1. Purpose.

.01 The purpose of this Revenue Procedure is to state the requirements and conditions under which payers, employers and nominees (hereafter collectively referred to as payers) can file annual information returns on magnetic tape instead of paper documents. The paper documents affected are:

(a) Form W-2, Wage and Tax Statement

(b) Form W-2P, Statement for Recipients of Annuities, Pensions or Retired Pay

(c) Form 1099-R, Statement for Recipients of Lump-Sum Distributions from Profit-Sharing and Retirement Plans

(d) Form 1099-DIV, Statement for Recipients of Dividends and Distributions

(e) Form 1099-INT, Statement for Recipients of Interest Income

(f) Form 1099-MISC, Statement for Recipients of Miscellaneous Income

(g) Form 1099-MED, Statement for Recipients of Medical and Health Care Payments

(h) Form 1099-OID, Statement for Recipients of Original Issue Discount

(i) Form 1099-L, U.S. Information Return for Distributions in Liquidations During Calendar Year.

(j) Form 1087-DIV, Statement for Recipients of Dividends and Distributions

(k) Form 1087-INT, Statement for Recipients of Interest Income

(l) Form 1087-MISC, Statement for Recipients of Miscellaneous Income

(m) Form 1087-MED, Statement for Recipients of Medical and Health Care Payments

(n) Form 1087-OID, Statement for Recipients of Original Issue Discount

(o) Agriculture subsidy payment report

.02 This procedure replaces Revenue Procedure 71-20, 1971-2 C.B. 528, and Revenue Procedure 72-35, 1972-2 C.B. 769.

.03 A series of new forms (e.g., 1087-DIV, 1087-INT, 1087-MISC and 1087-MED) to replace Form 1087, the revision of Form W-2P, and the new Form 1099-R has necessitated certain changes in the magnetic tape specifications for reporting wage and statement amounts.

.04 The 1099-DIV is also applicable to those previously filing Form 1099-M U.S. Information Return, Regulated Investment Company Distributions. Thus, regulated investment companies can file required statements with IRS on magnetic tape, in accordance with the specifications outlined in Part "B" of this procedure.

.05 Employers or agents filing W-2's in the form of magnetic tape should also be aware of Revenue Procedure 71-18, 1971-1 C.B. 684. A Payer/Transmitter may report Forms W-2 (copy A) and Forms 941, Schedule-A (Quarterly Report of Wages Taxable under the Federal Insurance Contributions Act) in a unified magnetic tape format under Revenue Procedure 71-18. Optionally, the same format may be used for reporting to certain State agencies. Copies of Revenue Procedure 71-18 are available from any Internal Revenue Service Center or the Social Security Administration (Bureau of Data Processing), Baltimore, Maryland.

Sec. 2 Application for Tape Reporting

.01 The above listed statements may be filed on magnetic tape by payers or by agents acting for a single payer or a group of payers. Except as covered in Part "A", Sec. 2.07, for Form 1099-MED filers, tape reporting is not restricted to payers submitting only a portion of their information on magnetic tape; a combination of tape records and paper documents is acceptable so long as there is no duplication or omission of documents.

.02 Payers or agents who desire to file statements in the form of magnetic tape must first file a letter of application. This letter should be addressed to the Director, Internal Revenue Service Center, where the payer or agent normally file statements. Addresses of the Internal Revenue Service Centers are shown in Section 9 of this Revenue Procedure.

The letter of request must contain the following:

(a) Name, address and Employer Identification Number of person, organization or firm making the request.

(b) Name, title and telephone number of person to contact regarding the request.

(c) An estimate, by type of form, of the number of statements to be reported in tape format, and the number, by type of form, to be reported on paper forms.

(d) Type and nature of equipment to be used to prepare tape files; i.e., manufacturer and model of main frame and tape drives, tape width (1/2", 3/4", etc.), density (characters per inch) and recording code (BCD, Excess 3, Octal, etc.).

(e) Internal Revenue office where paper forms were filed last year.

(f) List of payers to be included in the file(s) if the requester is an agent.

(g) Signature of official responsible for the preparation of tax reports or his authorized agent.

.03 The Service will act on applications and notify applicants of authorization or disapproval within 30 days of receipt of applications.

.04 Generally, payers using equipment compatible with the Service's can presume that tape reporting will be approved. Compatible tape characteristics are shown in PART "B", Section 1.01. If payers or agents have the capability to prepare several types of tapes, the Service prefers that compatible tapes be prepared.

.05 If payers or agents propose to submit convertible tapes, the Service will attempt to find conversion facilities. Generally, magnetic tape reporting will be disapproved only when the Service is unable to obtain facilities to convert a payer's file to a compatible form.

.06 In general, once authorization to file magnetic tape has been granted to a payer, such approval will continue in effect in succeeding years, providing that the requirements of this Revenue Procedure are met, and there are no equipment changes by the payer. However, new applications are required if users change from compatible tapes to equipment producing convertible tapes, or tapes not listed as either compatible or convertible, or if they discontinue tape reporting for one or more years, then decide to resume this method of reporting.

.07 In accordance with section 1.6041-7 of the Income Tax Regulations, medical payments may be reported on separate magnetic tape submissions rather than aggregated into a single tape submission, so long as all of the reports from a carrier are in magnetic tape form. For these purposes, the headquarters office will be considered as an "agent", per Section 2.02 above, and the individual segments of the company filing reports will be considered to be payers. Thus, a single application form is to be submitted to one of the Service Centers, covering all of the individual tape files to be submitted.

Sec. 3. Filing of Tape Reports.

.01 Packaging, shipping and mailing instructions will be provided in the authorizing letter issued by the Service in response to an application for tape reporting.

.02 Payers submitting a portion of their statements on magnetic tape and the remainder on paper forms, should file magnetic tape records and paper documents at the same location, but in separate shipments.

.03 A single Form 1096, Annual Summary and Transmittal of U.S. Information Returns, or Form W-3, Transmittal of Wage and Tax Statements, as appropriate, will be required from each payer to cover the payer's entire shipment of statements, including those on paper and on magnetic tape. For agents filing statements for several payers, the appropriate transmittal documents, Forms 1096 or W-3, must be filed for each payer whose payments are included in the transmittal. The required Form 1096 or W-3 should be filed separately from the shipment of magnetic tape. If only a portion of the statements are submitted on magnetic tape, the paper documents should be submitted with the Form 1096 or W-3, along with notification that remaining statements are to be submitted in the form of magnetic tape. Where a payer reports information returns entirely on magnetic tape, the statement "Magnetic Tape Reporting" on Form 1096 or W-3 will suffice (i.e. no volumes need be listed). If a payer reports a portion of the information returns on tape and a portion on paper documents, the statement "Magnetic Tape Reporting" will be adequate for those returns filed on tape; however, normal Form 1096 or W-3 instructions apply for those information returns reported on paper documents. This latitude in reporting does not extend to Schedule A (Form 1096) or Form W-3P. Note on the address side of the magnetic tape shipments, "DELIVER UNOPENED TO THE TAPE LIBRARY."

Form W-3P, Annual Report by Certain Payers of Annuities and Lump-Sum Distribution, is to be filed, along with Form W-3, by Federal, State, and local government agencies or retirement systems (who make payments reportable on Forms W-2P and 1099R) and life insurance companies maintaining pension plan reserves described in Internal Revenue Code section 805(d)(1).

.04 The dates prescribed for filing paper documents with the Service will also apply to magnetic tape filing. Requests for extensions of time for filing and related matters should be made to the Service Center that issued the authorizing letter.

If an extension is granted by the Service, a copy of the letter granting the extension should be attached to the Form 1096 or W-3.

.05 The magnetic tape specifications contained in Part "B" of this Revenue Procedure must be adhered to unless deviations have been specifically granted by the Service.

.06 Service programs may be able to accommodate some minor deviations. Hence, payers who can substantially conform to these specifications but require such minor deviations are encouraged to contact one of the Service Centers (see Part "A", Sec. 9 below for addresses). However, under no circumstances may tapes deviating from the specifications in Part "B" be submitted without prior approval of the Service.

.07 All tape files submitted by 1099-MED filers per Section 2.07 above, should be assembled by the carrier and mailed in one shipment to the Service Center that received the application.

Sec. 4. Processing of Tape Statements.

.01 The Service will copy the information from the tapes. Normally, the original tapes received by the Service will be returned to the payers or agents by August 15 of the year in which submitted.

.02 However, if the tapes submitted to the Service are unprocessable, and must be returned for correction prior to processing, they will be returned within six months of receipt of acceptable tapes.

Sec. 5. Corrected Statements.

.01 If a large volume of corrected statements is necessary and the payer or agent possesses the capability to provide such corrections on tape, he should contact the Service Center to which the tape statements were or are to be submitted.

.02 If corrections are not submitted on tape, the appropriate paper form will be used if it is necessary to correct Payee "B" records in the magnetic tape files. Each such form must be annotated in the manner specified for corrected statements in Circular E or Revenue Procedure 73-12, page 768 this Bulletin, as appropriate. Corrected documents should contain all relevant information so that they completely supersede the statements recorded on tape.

.03 Statements correcting paper documents should be bundled separately from other paper documents. When correcting documents are shipped separately, a corrected Form 1096 and/or W-3 must also be filed.

Sec. 6. Effect on Paper Documents.

.01 Reports on magnetic tape for reporting to Internal Revenue Service can be substituted for only the original copy (Copy A) of statements. When magnetic tape statements are filed in lieu of statements other than Form W-2 or W-2P, payers must supply their payees with the information required to be shown on the paper forms, in a manner conducive to proper reporting on their tax returns. Payers filing magnetic tape statements in lieu of Form W-2 or W-2P must furnish their payees with appropriate information or with paper substitutes which meet the requirements and specifications in Revenue Procedure 73-12. That procedure outlines more relaxed rules for reporting this information to the payee than prescribed in previous years.

.02 If only a portion of the statements is reported on magnetic tape and the remainder is reported on paper forms, those statements not submitted on magnetic tape must be filed on the appropriate prescribed forms, or on paper substitutes meeting the format requirements and paper specifications in Revenue Procedures 73-11 and 73-12.

Sec. 7. Calendar Year Basis.

Magnetic tape reporting to Internal Revenue Service for all types of Forms 1099, 1087, W-2 and W-2P must be on the calendar year basis.

Sec. 8. Data Entries.

.01 The Service expects that payers will make every effort to keep to a minimum those statements submitted without taxpayer identifying numbers, through continued compliance with the requirements set forth in section 1.6109-1 of the Income Tax Regulations and section 31.6109-1 of the Employment Tax Regulations. If, for legitimate cause, the taxpayer identification number of a payee has not been furnished to the payer, the specifications in Part "B" of this procedure permit its omission.

.02 The Service must be able to identify the surname associated with the taxpayer identifying number furnished on a statement. When statements are received in the form of paper documents, this is accomplished through a manual editing process. However, manual editing is precluded when statements are received on magnetic tape. Hence, the specifications in Part "B" of this procedure include a data field in the payee records called "Name Control", in which the first four alphabetic characters of the payee surname are to be entered by payers. In addition, a blank should precede the identifying surname in the first name line of all Payee "B" Records unless the surname begins in the first position of the field.

.03 If payers are unable to provide the first four characters of the payee surname, the specifications permit the submission of statements on magnetic tape with the Name Control Field left blank. However, compliance with the following will facilitate the Service computer programs required to generate the Name Control.

(a) The surname should be recorded on the first name line.

(b) In the case of a single payee, a blank space should precede the surname unless the surname begins in the first position of the field.

(c) In cases of multiple payees, the required connection should be provided by recording a blank immediately preceding the surname of the person whose identifying number has been provided, and placing the surname of the connected payee before all other surnames.

.04 Sometimes, the payee identification recorded on the payer's records is lengthy, and exceeds the 80 characters allotted on the magnetic tape records. This is most common in the case of trusts or other types of fiduciary accounts. The first 80 characters of the payee identification normally provide sufficient descriptive data for Service purposes. Although it is preferred that payers would truncate or abbreviate lengthy payee descriptions, provision is made in the specifications for additional payee descriptions.

.05 Provision is also made in these specifications for data entries not required for Federal tax purposes, but which may be required by State or Local governments. This should minimize the Payer/Transmitter's programming burden should payers desire to report on tape to State or Local, as well as to the Federal, Government.

Sec. 9. Additional Information.

Requests for additional copies of this Revenue Procedure, or requests for additional information on tape reporting, should be addressed to one of the following:

     (a) Internal Revenue Service

SEC. 1. GENERAL.

.01 These specifications prescribe the required format and content of the records to be included in the file, but not the methods or equipment to be used in their preparation. Usually, the Service will be able to process, without translation, any compatible tape file. To be compatible, a tape file must meet all of the following:

 Type of tape                     1/2 inch Mylar base, oxide coated.

(a) 9 channel EBCDIC (Extended Binary Coded Decimal Interchange Code);

(1) Odd Parity;

(2) 800, 1600 Densities

(b) 9 channel ASCII (American Standard Coded Information Interchange)

(1) Odd Parity;

(2) 800, 1600 Densities

(c) 200 Density

The Service will attempt to find conversion facilities for any other characteristics listed on the Magnetic Tape Application Form that differ from the above specifications.

.03 An acceptable tape file for each payer will contain the following:

(a) Single Reel:

(1) A Payer/Transmitter "A" Record,

(2) A series of Payee "B" Records,

(3) An End of Payer "C" Record, and

(4) An End of Transmission "F" Record.

(b) Multiple Reels:

(1) A Payer/Transmitter "A" Record,

(2) A series of Payee "B" Records,

(3) An End of Payer "C" Record,

(4) An End of Reel "D" Record for each reel (except the last reel) under Option 1 only, and

(5) An End of Transmission "F" Record.

NOTE: See Sections 9 and 10 (Tape Layouts) of this Procedure. All records, including headers and trailers, must be written at the same density.

SEC. 2. CONVENTIONS AND DEFINITIONS.

.01 Certain conventions may be required by the programming system or equipment used by the payer with respect to header and trailer labels, record marks and tape marks. Their use must adhere to the following:

 Header Label            1. First four characters must be 1HDR or

     Element                              Description

SEC. 3. RECORD LENGTH.

.01 The tape records prescribed in the specifications may be blocked or unblocked, subject to the following:

(a) A block may not exceed 4,000 tape positions.

(b) If the use of blocked records would result in a short block, all remaining positions of the block may be filled with 9's, or a short block may be written.

(c) All records may be blocked, except Header and Trailer Labels.

.02 Provision has been made for special data entries filed in the Payee "B" Record. These entries are optional. If the field is utilized, it must be present on all Payee "B" Records of a Payer. The field is intended to serve one or both of these purposes:

(a) Carry information required by state or local governments in connection with income reporting on magnetic tape to those jurisdictions when authorized.

(b) Carry additional payee description if the eighty characters provided in the Payee "B" Record are insufficient. However, it would be preferable to the Service if such lengthy Payee Records were truncated or otherwise shortened. (Contact the Service Center for detailed instructions if additional Payee description will be required.)

SEC. 4. PAYER/TRANSMITTER "A" RECORD.

Identifies the payer and transmitter of the tape files and provides parameters for the succeeding Payee "B" Records. The Service relies in its computer programs on the absolute relationship between the parameters in the Payer/Transmitter "A" Record and the data fields in the Payee "B" Records to which they apply. The number of Payer/Transmitter "A" Records appearing on one tape reel will depend on the number of payers and types of statements being reported. A transmitter may include Payee "B" Records for more than one payer on a tape reel; however, each separate Payer's Payee "B" Records must be preceded by a Payer/Transmitter "A" Record. There are two optional ways the Payer/Transmitter "A" Record may be used.

Option 1: When multiple reels are required for a single file, the correct Payer/Transmitter "A" Record must be repeated as the first record (second record if Header Labels are used) on every succeeding reel in the file to which it applies, and the reel sequence number must be incremented by 1 on each tape reel after the first reel.

Option 2: A Header Label must be present as the first record of every reel. The Payer/Transmitter "A" Record must appear as the second record of the first reel only and will not be repeated as the second record on subsequent reels. Enter an "X" in position 5 of the Payer/Transmitter "A" Record to indicate that the reel sequence number is in the Header Label. Enter the high order position of the 3 position reel sequence number on the Header Label in positions 3 and 4 of the Payer/Transmitter "A" Record. Additionally, a trailer label must be the last record on each reel.

Example 1: If the reel sequence number is in positions 20 through 22 on the Header Label, enter 20 in positions 3 and 4 of the Payer/Transmitter "A" Record and an "X" in position 5.

Example 2: If the reel sequence number is in positions 8 through 10 on the Header Label, enter 08 in positions 3 and 4 and an "X" in position 5.

This method is especially adaptable to users of COBOL.

 Tape Position   Element Name           Entry or Definition

Contains payment record from individual statements. Records may be blocked or unblocked. A block may not exceed 4,000 tape positions. All records must be fixed length.

 1               Record Type       Enter "B". Must be 1st character of

.01 Write this record after the last Payee "B" Record following the last preceding Payer/Transmitter "A" Record. A tape reel will contain more than one (1) End of Payer "C" Record if the last Payee "B" Record for more than one type of document or the last Payee "B" Record for more than one payer are reported on the same tape reel.

.02 Under Option 1 (see Part "B", Sec. 9., Tape Layouts--Option 1), each End of Payer "C" Record must contain a count of the number of Payee "B" Records, as well as a total of the payment amounts for all the Payee "B" Records immediately preceding the End of Payer "C" Record and following the last preceding Payer/Transmitter "A" Record. The End of Payer "C" Record must be followed by a new Payer/Transmitter "A" Record for the next Payer, if any, an End of Reel "D" Record or an End of Transmission "F" Record.

.03 Under Option 2 (see Part "B", Sec. 10, Tape Layouts--Option 2), each End of Payer "C" Record must contain a count of the number of Payee "B" Records, as well as a total of the payment amounts for all the Payee "B" Records immediately preceding the End of Payer "C" Record and following the last preceding Payer/Transmitter "A" Record, regardless of the number of tape reels involved. The End of Payer "C" Record must be followed by a new Payer/Transmitter "A" Record for the next Payer, if any, or an End of Transmission "F" Record.

.06 The End of Payer "C" Record cannot be followed by a Tape Mark.

 Tape Position   Element Name           Entry or Definition

SEC. 7. END OF REEL. "D" RECORD.

Write this record when the end of the normal writing area of each reel has been reached, but all records in the file have not been written. This record indicates that there are additional reels in the file. Each End of Reel "D" Record must contain a count of payees and totals of each payment amount reported for all Payee "B" Records not summarized in End of Payer "C" Records which may precede it on the reel. Only nines padding, Tape Mark, or Tape Mark and Trailer Label may follow an End of Reel "D" Record. (see Part "B", Sec. 2.01). The End of Reel "D" Record is present for Option 1 only.

 1               Record Type       Enter "D". Must be 1st character of

SEC. 8. END OF TRANSMISSION ("F" RECORD).

Write this record after the last End of Payer "C" Record. This record can be followed only by a Tape Mark or Tape Mark and Trailer Label (see Part "B", Sec. 2.01).

 1               Record Type       Enter "F". Must be 1st character of

The following charts show, by type of file, the record types to be used in the first two and the last three records written on a tape reel when only one type of document (file) is reported on a reel or series of reels./*/

                                                 2nd     Next

Where the Header Label is the first record, the following charts show, by type of file, the record types to be used in the 2nd and 3rd records and the last three records written on a tape reel prior to the Trailer label when only one type of document (file) is reported on a reel or series of reels./*/

                                1st     2nd

This Revenue Procedure modifies Revenue Procedures 73-11, page 763 this Bulletin; 73-12, page 768, this Bulletin; and supersedes Revenue Procedures 71-20, 1971-2 C.B. 528; and 72-35, 1972-2 C.B. 769.