Rev. Proc. 84-63

                              CONTENTS

SECTION 1. PURPOSE

01 The purpose of this revenue procedure is to provide the requirements and conditions for filing information returns in the Form 1099 series, the Form 5498 series and the Form W2-G series, on magnetic disk instead of paper returns. Specifications for filing the following forms are contained in this procedure.

(a) Form 1099-ASC, Statement for Recipients of Interest on All-Savers Certificates.

(b) Form 1099-B, Statement for Recipients of Proceeds from Broker and Barter Exchange Transactions.

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

(d) Form 1099-G, Statement for Recipients of Certain Government Payments.

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

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

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

(h) Form 1099-PATR, Statement for Recipients of Taxable Distributions Received From Cooperatives.

(i) Form 1099-R, Statement for Recipients of Total Distributions from Profit-Sharing, Retirement Plans, Individual Retirement Arrangements, etc.

(j) Form 5498, Individual Retirement Arrangement Information.

(k) Form W2-G, Statement for Recipients of Certain Gambling Winnings.

02 This procedure also provides the requirements and specifications for magnetic disk filing under the Combined Federal/State Filing Program.

03 The following revenue procedures and publication provide more detailed filing procedures for information return payer identification, transfer agents and paper substitute specifications, respectively.

(a) Rev. Proc. 84-24, 1984-12 I.R.B. 11, dated March 19, 1984, regarding preparation of transmittal documents for information returns.

(b) Rev. Proc. 84-33, 1984-16 I.R.B. 16, dated April 16, 1984, regarding the optional method for agents to report and deposit backup withholding.

(c) Publication 1179, Requirements for Reproducing Paper Substitutes of Forms 1099, 5498 and W2-G.

04 Form 1096, Annual Summary and Transmittal of U.S. Information Returns, includes the requirements on who must file and when to file the various information returns (Forms 1099 and 5498)

05 This procedure supersedes the following revenue procedure: Rev. Proc. 83-48, 1983-2 C.B. 420, Publication 1220, Requirements and Conditions for Filing Information Returns in the 1099 Series on Magnetic Media.

SECTION 2. BACKGROUND

01 The following section contains a REVIEW of the changes which were described in the revenue procedure last year. Please insure that the necessary re-programming was accomplished in order to comply.

02 There were numerous changes documented in Revenue Procedure 83-48 (Publication 1220) for Tax Year 1983 (processing year 1984). Some of the major changes were:

(a) An effort to consolidate the number of information returns, as well as the incorporation of the Tax Equity and Fiscal Responsibility Act of 1982, Pub. L. 97-248, 1982-2 C.B. 462, caused the meaning of many of the `Amount Indicators` in the Payer/Transmitter `A` Record to change. PLEASE VERIFY THAT THESE CHANGES WERE MADE THROUGHOUT YOUR PROGRAMS.

(b) The `Amount Indicator` field in the Payer/Transmitter `A` Record was increased from seven to nine positions. Because of this change, the `Savings and Loan Code` field has been replaced by position eight of Amount Indicators. The `Savings and Loan Code` is no longer used.

(c) Payment Amount `8` and Payment Amount `9` were added to the following records:

(1) Payee `B` Record; and

(2) End of Payer `C` Record; and

(3) State Totals `K` Record.

(d) The usage of the `Document Specific Code` in the Payee `B` Record was expanded to include codes specific to Forms 1099-R, 1099-MISC and 1099-G.

(e) The End of Reel Record (`D` Record) has been deleted from the Revenue Procedure and Service programs. All filers using `D` Records must update their programs to reflect this change.

PLEASE SEE SECTION 3, NATURE OF CHANGES, FOR A LIST OF THE CHANGES CONTAINED IN THIS EDITION OF THE REVENUE PROCEDURE.

SECTION 3. NATURE OF CHANGES

01 The following section contains the changes that must be incorporated into your magnetic media programs for Tax Year 1984 (processing year 1985).

02 The following are general changes.

(a) An explanation of applying for waivers for undue hardship has been added to PART A, SEC. 5.

(b) An explanation of penalties has been added to PART A, SEC. 6.

(c) Reports from different branches for one payer must be consolidated under one Payer/Transmitter `A` Record for each type of information return. For example, all like Form 1099-INT documents must be sorted together under one Payer/Transmitter `A` Record, followed by Payee `B` Records and one End of Payer `C` Record. See PART A, SEC. 6.13.

(d) The explanation of Taxpayer Identification Numbers in PART A, SEC. 11 has been rewritten to clarify changes concerning backup withholding and due diligence requirements.

(e) PART A, SEC. 12 has been rewritten to include the changes made to the requirements concerning the paper copy of the information return furnished to the payee.

(f) A definition for `Transfer Agent` has been added to PART A, SEC. 15.

(g) A list of valid U.S. Postal Service State Abbreviations has been added to aid in developing the State Code portion of Name Line fields. See PART A, SEC. 16.

(h) The size of the block which Service programs can accept has been increased to 10,000.

(i) Records may not span blocks.

03 The following changes have been made to the Payer/Transmitter `A` Record.

(a) Header label UHL1 has been added as one of the standard labels Service programs can process. See PART B, SEC. 3.

(b) Trailer labels EOV1 and EOV2 have been added as standard trailer labels Service programs can process. See PART B, SEC. 3.

(c) Amount Indicator `4` is no longer valid for Form 1099-ASC.

(d) Amount Indicator `2` has been added for Form 5498.

(e) `Type of Return` and `Amount Indicators` have been added for Form W2-G.

(f) The codes for `Type of Payer` and `Payee 'B' Record Surname Indicator` fields should be deleted from your programs. However, the positions in the record SHOULD NOT be deleted: Fill these positions with blanks.

(g) The `Second Payer Name` field has been shortened from 40 characters to 39 characters. The contents of the `Second Payer Name` field, as well as the contents of the `Payer Shipping Address` and the `Payer City, State and Zip Code` fields, is now dependent upon the value in the `Transfer Agent Indicator`.

(h) A `Transfer Agent Indicator` has been added following the `Second Payer Name` field. The contents of this field will let the Service programs know if the information in `Second Payer Name`, `Payer Shipping Address` and `Payer City, State and Zip Code` pertains to the Payer or to the Transfer Agent. (See Rev. Proc. 84-33, 1984-16 I.R.B. 16 dated April 16, 1984, for information regarding the optional method for agents to report and deposit backup withholding.)

(i) The name of `Payer Mailing Address` has been changed to `Payer Shipping Address`. Beginning in Tax Year 1984, the Service will notify payers of any information returns not containing valid Taxpayer Identification Numbers (TINs). This notification will include a payee notice for each such information return. Therefore, we must have an address capable of accepting volume mail.

04 The following changes have been made to the Payee `B` Record.

(a) The meaning of the `Document Specific Code` for Form 1099-G has been expanded.

(b) The use of the `Document Specific Code` has been increased to include Type of Wager for Form W2-G.

(c) PLEASE NOTE: If any one Payment Amount Field exceeds `9999999999` (dollars and cents), as many SEPARATE Payee `B` Records as necessary to contain the total MUST be submitted for the Payee. Example: the total money amount to be reported for Payee ABC is $250,371,491.87. Three Payee `B` Records will have to be submitted for Payee ABC to contain the entire total amount. (DO NOT enter dollar signs, commas, decimal points in the Payment Amount fields.)

(d) There are new field definitions specific to Form W2-G for positions 293-360.

05 There are various editorial changes.

SECTION 4. WAGE AND PENSION INFORMATION

01 Section 8(b), Pub. L. 94-202, 1976-1 C.B. 503, enacted in January 1976, authorized the combined reporting of FICA detailed information in one consolidated annual W-2 (Copy A) to the Federal government. As a result, Forms W-2 and W-2P are to be filed with the Social Security Administration (SSA)

02 SSA will accept magnetic media filing of Forms W-2 and W2P and has issued the following concerning this: TIB-4a, `MAGNETIC TAPE REPORTING, Submitting FICA wage and tax data to the Social Security Administration`, TIB-4b, `MAGNETIC TAPE REPORTING, Submitting Annuity, Pension, Retired Pay or IRA Payment to the Social Security Administration`, and TIB-4c, `DISKETTE AND DISK CARTRIDGE REPORTING, Submitting FICA wage and tax data to the Social Security Administration`. Applications for Filing Forms W-2 and W-2P on magnetic media appear in TIBs-4a, 4b, and 4c.

03 Copies of Social Security Administration publications TIB-4a, 5b, and 4c are available from any local Social Security Administration office.

SECTION 5. APPLICATION FOR MAGNETIC MEDIA REPORTING

01 For the purposes of this revenue procedure, the payer is the organization making the payments and the transmitter is the organization preparing the magnetic disk file. The payer and transmitter may be the same organization. Payers or their transmitters are required to complete Form 4419, Application for Magnetic Media Reporting for Information Returns. Requests for copies of this form or for additional information on magnetic disk reporting should be addressed to the attention of the Magnetic Media Coordinator at one of the Service Centers listed in Sec. 13 of this revenue procedure.

02 The Service will act on an application and notify the applicant of authorization to file, in writing, within 30 days of receipt of the application. Magnetic disk returns may not be filed with the Service until the application has been approved.

03 The Service will assist new filers with their initial magnetic disk submission by requiring the submission of test files for review in advance of the filing season. Approved payers or transmitters who wish to submit a test file should contact the Magnetic Media Coordinator at the Service Center where the application was filed.

04 If there are hardware or software changes that would affect the characteristics of the magnetic disk submission, the payer (or its transmitter) is required to submit a new Form 4419.

05 In accordance with section 1.6041-7 of the Income Tax Regulations, medical payments from separate departments of a health care carrier may be reported as separate returns on magnetic disk. In this case, the headquarters office will be considered to be the transmitter and the individual departments of the company filing reports will be considered to be payers. A single application form covering all the departments which will be filing on magnetic disk should be submitted.

06 Section 1.6045-1(l) of the Income Tax Regulations requires magnetic media filing of ALL information returns for broker and barter exchanges (Forms 1099-B) as of January 1, 1984. However, the Secretary is granted authority to relieve filers on a case-by-case basis if the requirement would cause undue hardship.

07 Requests for undue hardship exemptions must be submitted by existing brokers and barter exchanges at least 90 days before the due date of the return; new brokers and barter exchanges by the end of the second month following the month in which the person becomes a broker or barter exchange, but no later than 90 days before the due date of the return.

08 Section 6011(e) of the Internal Revenue Code, as amended by the interest and Dividend Tax Compliance Act of 1983, Pub. L. 96-67, 1983-2 C.B. 352, requires any person, including individuals, estates and trusts, required to file more than 50 information returns in the aggregate for payments of interest (Forms 1099-INT and 1099-OID), dividends (Form 1099-DIV) or patronage dividends (Form 1099-PATR) for any calendar year, must file such returns on magnetic media. The Secretary is granted authority to relieve filers on a case-by-case basis if imposition of the requirements would cause undue hardship.

09 Filers must submit a written statement requesting an undue hardship waiver from magnetic media filing for a specific period of time, not to exceed one tax year. If the filer requires a waiver for a longer period of time, the filer may reapply at the appropriate time. Filers may not apply for a waiver for more than one tax year at a time. The written statement must contain the following identifying information:

(a) The filer's name;

(b) The filer's address;

(c) The filer's Employer Identification Number (EIN);

(d) The date to which the waiver is requested;

(e) The name and telephone number of a person to contact regarding the information contained in the waiver;

(f) A statement regarding the cost which is causing the undue hardship condition; and

(g) A statement explaining any other reasonable attempts the filer has made to comply with this magnetic media filing requirement.

10 Waivers are granted on a case-by-case basis and may be approved at the discretion of the Service Center Magnetic Media Coordinator.

11 Any filer who files paper forms without an approved waiver from magnetic media reporting on record may be subject to failure to file penalty.

SECTION 6. FILING OF MAGNETIC MEDIA REPORTS

01 Payers must use magnetic media to file information returns reporting payments of interest, dividends or patronage dividends made after December 31, 1983, to more than 50 payees. The returns affected are Forms 1099-INT and 1099-OID for interest, Form 1099-DIV for dividends and Form 1099-PATR for patronage dividends.

02 The penalty for both the failure to timely file MOST information returns and failure to file returns as prescribed by the Service is now $50 a return up to a maximum of $50,000 a year. However, there is not a maximum penalty for returns of interest, dividends or patronage dividends. If the failure to file is due to intentional disregard of the filing requirements, the penalty may be greater than $50 a return and there is no maximum penalty.

03 Payers are now subject to a $50 penalty for EACH failure to include the payee's correct Taxpayer Identification Number (TIN) on an information return unless the payer has exercised due diligence.

04 Rev. Proc. 84-24, 1984-12 I.R.B. 11, which gives detailed information on preparing the transmittal documents for information returns (Forms 1099, 5498 and W2-G) is available at your Internal Revenue Service office. Specific guidelines are given on how to report the payers' names, addresses and TINs on transmittal documents and information returns. Instructions for multiple transmittals and the submission of transmittals by service bureaus or agents are also covered.

05 Any person who is required to file information returns because of payments of dividends, patronage dividends or interest to more than 50 payees (in the aggregate) for any calendar year after 1983, must file the returns with the Service on magnetic media. This requirement shall not apply to any person for any period if such person establishes that this requirements would result in undue hardship. Request for relief because of undue hardship should be sent to your attention of the Magnetic Media Coordinator of the Service Center for your area (see Sec. 13).

06 Brokers and barter exchanges are required to use magnetic media in reporting Form 1099-B data to the Service. New brokers and barter exchanges may request an undue hardship exception by filing an application with their Service Center Magnetic Media Coordinator by the end of the second month following the month in which they became a broker or barter exchange.

07 A magnetic disk reporting package, which includes all the necessary transmittals, labels, and instructions will be mailed to all approved filers between October and December of each year.

08 With the Service's concurrence, payers can, IN MOST CASES, submit a portion of their returns on magnetic media and the remainder on paper Forms 1099 (or paper Forms 5498 or paper Forms W2-G). HOWEVER, there are two exceptions. Per the Tax Equity and Fiscal Responsibility Act of 1982, ALL Forms 1099-B must be filed on magnetic media unless a waiver has been approved. Also, per the Interest and Dividend Tax Compliance Act of 1983, the same requirement applies if more than 50 information returns are filed in the aggregate for Forms 1099-DIV, 1099-INT, 1099-OID and 1099-PATR.

09 The magnetic disk records and paper forms must be filed at the same location but in separate shipments. A Form 1096, Annual Summary and Transmittal of U.S. Information Returns, must accompany paper submissions and a Form 4804, Transmittal of Information Returns Reported on Magnetic Media, MUST ACCOMPANY magnetic disk submissions.

10 The affidavit which appears on Forms 1096 and 4804 should be signed by the payer. A transmitter, service bureau, or disbursing agent may, however, sign the affidavit on behalf of the payer if all of these conditions are met:

(a) It has the authority to sign the affidavit under an agency agreement (either oral, written, or implied) that is valid under the State law.

(b) it has the responsibility (either oral, written, or implied) conferred on it by the payer to request the taxpayer identifying numbers of payees reported on magnetic media or paper returns.

(c) it signs the affidavit and adds the caption `For: (name of payer)`.

11 Although a duly authorized agent signs the affidavit, the payer is held responsible for the accuracy of the Form 4804 and will be liable for penalties for failure to comply with filing requirements.

12 If a portion of the returns are submitted on paper documents, include a statement on the Form 1096 that the remaining returns are being filed on magnetic disk.

13 Reports from different branches for one payer MUST be consolidated under one Payer/Transmitter `A` Record for each type of information return. For example, all Forms 1099-INT documents must be sorted together under one Payer/Transmitter `A` Record followed by the appropriate `B` Records and one `C` Record.

14 Health care carriers, or their agents, filing Form 1099-MISC per SEC. 5.05 above, may submit part of their returns on paper documents and part on magnetic disk if the records of departments are not maintained on computer files. However, an information return is required if the aggregate amount paid to a health care service provider from all departments equals $600 or more. For example, Department A pays $200, Department B pays $300, and Department C pays $100 to the same health care service provider. The aggregate amount paid from all departments equals $600. The health care carrier or agent must submit either one information return for the aggregate amount of $600 or three separate returns, one from each department, indicating the amount paid by each department.

SEC. 7. FILING DATES

01 Magnetic disk reporting to the Service for all types of Form 1099, From 5498 and Form W2-G must be on a calendar year basis.

02 The dates prescribed for filing paper returns with the Service will also apply to magnetic disk filing. Files must be submitted to the Service Center by FEBRUARY 28. The copies of this information required to be furnished to recipients must be furnished by JANUARY 31.

SEC. 8. EXTENSIONS TO FILE

01 If a payer or transmitter is unable to submit its magnetic disk file by the date prescribed in Sec. 7.02 above, a letter requesting an extension must be filed before February 28. The letter should be sent to the attention of the Magnetic Media Coordinator at the Service Center which will receive the magnetic disk file. The request should include the estimated number of returns which will be filed late and the reason for the delay.

02 If an extension is granted by the Service, a copy of the letter granting the extension must be attached to the transmittal Form 4804 when the file is submitted.

SEC. 9 PROCESSING OF MAGNETIC MEDIA RETURNS

01 The Service will process tax information from magnetic disk files. Files which are received timely by the Service will be returned to the filers, by August 15 of the year in which submitted.

02 All files submitted must conform totally to this revenue procedure. IF FILES ARE UNPROCESSABLE, THEY WILL BE RETURNED TO THE FILER FOR CORRECTION. Corrected files must be filed with the Service Center within 15 days from receipt. Corrected files will be returned by the Service within six months of receipt.

SEC. 10. CORRECTED RETURNS

01 If returns must be corrected, approved magnetic disk filers are encouraged to file such corrections on magnetic disk. The filer must contact the Magnetic Media Coordinator for format and shipping instructions. A corrected Form 4804 must accompany the shipment and be marked `MAGNETIC MEDIA CORRECTION` on the upper portion of the form.

02 If, upon approval from the Service Center Magnetic Media Coordinator, corrections are not submitted on magnetic disk, payers must submit them on official Form 1099 (Copy A), Form 5498 (Copy A) or Form W2-G (Copy A) or on paper substitutions approved for submission to the Internal Revenue Service. Some paper substitutes approved for submission to payees as originals are not acceptable for submission to the Internal Revenue Service as corrections. Revenue procedures containing specifications for paper returns are available from most Internal Revenue Service offices.

03 Form 1096 instructions are to be followed when paper returns are filed to correct returns previously submitted on magnetic disk. An `X` must be entered in the box in the left top corner and the caption `MAGNETIC MEDIA CORRECTION` must appear on the bottom of Form 1096 below the instructions. Corrections MUST be sent to the attention of the Magnetic Media Coordinator where the original file was filed.

04 Combined Federal/State Filers who submit paper corrections must file directly with the affected state. The Service WILL NOT transship paper corrections to the states.

SEC. 11. TAXPAYER IDENTIFICATION NUMBERS

01 Under section 6109 of the Internal Revenue Code, recipients of all reportable payments on information returns are required to furnish Taxpayer Identification Numbers (TINs) to the payer. 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 recipients' TINs are used to associate and verify amounts reported to the Service 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 the Service.

03 For each failure to furnish a TIN to another person who is required to file an information return or for each failure by such person to include a TIN on the information return, section 6676 of the Internal Revenue Code provides for a $50 PENALTY unless the payer or payee of non-interest and dividend payments responsible for furnishing a correct TIN supplies an explanation, upon request from the Service, that establishes reasonable cause for not having done so.

04 With respect to all payers of interest and dividends, section 6676 of the Internal Revenue Code provides that the payer must self-assess a $50 PENALTY for each failure to include a payee's TIN or each inclusion of an incorrect TIN on an information return, unless the payer can demonstrate that the payer met the due diligence requirements in attempting to acquire correct TINs for payees. Payees of interest and dividends are subject to a $50 PENALTY for failing to furnish their correct TINs to payers unless the payee supplies an explanation, upon request from the Service, that establishes reasonable cause for not having done so.

05 For any reportable amount, if the payee fails to provide a TIN to the payer or if the Service shows that the TIN provided is incorrect, then backup withholding must be instituted for that payee. In the case of notice of an incorrect TIN by the Service, the payer must begin withholding 30 days after the day on which the notice is received. If the payer receives certified information from the payee within 30 days of notice from the Service, no withholding is required.

06 The TIN to be furnished to the Service depends primarily upon the manner in which the account is maintained or set up on the payer's record. The TIN to be provided must be that of the owner of the account. If the account is recorded in more than one name, furnish the TIN and name 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 those individuals operating a business, the payee TIN is the payee's Social Security Number. For other entities, the payee TIN is the payee's Employer Identification Number.)

07 Sole proprietors who are payers should show their Employer Identification Number in the Payer/Transmitter `A` Record. However, sole proprietors that are not required to have an Employer Identification Number should use their Social Security Number.

08 Sole proprietors' Social Security Numbers must be used in the Payee `B` Record.

09 The charts below will help you determine the number to be furnished to the Service for recipients of reportable payments (payees).

            CHART 1. Guidelines for Social Security Numbers

01 Magnetic disk reporting of the information returns listed in Sec. 1 above applies only to the original (Copy A).

0-2 For payments of dividends or interest (reported on Forms 1099-DIV, 1099-PATR, 1099-INT or 1099-OID) made in 1984 and subsequent years, the payer is required to furnish an official Form 1099 to a payee either in a separate mailing or in person. These forms may not be combined or mailed with other information furnished to the recipient with the exception of the Form W-9 and/or Form W-8 solicitation. The payer may use substitute Forms 1099 if they are substantially similar to the official forms and only if the payer complies with all revenue procedures relating to substitute Forms 1099 in effect at the time (See Publication 1179, Requirements for Reproducing Paper Substitutes of Forms 1099, 5498 and W2-G). Copy B (For Recipient) of the substitute forms must contain the statement `This is important tax information and is being furnished to the Internal Revenue Service. If you are required to file a return, a negligence penalty will be imposed on you if this income is taxable and the Service determines that it has not been reported.`

03 Statements to recipients for Forms 1099-B, 1099-G, 1099-MISC, l099-R, 5498 or W2-G need not be a copy of the paper form filed with the Service. It is important that income items be properly classified for Federal tax purposes on the statement the payer gives to recipients. The message `This information is being furnished to the Internal Revenue Service` must appear on the statements. The payer may combine the statement with other reports or financial or commercial notices, or expand them to include other information of interest to the recipient. Also, be sure that all copies of the forms are legible and provide the recipient with any instructions that appear on the back of the recipient's copy of the official Internal Revenue Service form so that the information may properly be used by the recipient in meeting his or her tax obligations.

04 For 1984, brokers reporting Form 1099-B information are asked to voluntarily provide information to their customers as to what amount was or will be reported to the Service, i.e., gross proceeds or gross proceeds less commissions and option premiums.

05 If a portion of the returns is reported on magnetic disk and the remainder is reported on paper forms, those returns not submitted on magnetic disk must be filed on official forms or on paper substitutes meeting specifications in the revenue procedure on the reproduction of Forms 1099, 5498 and W-2G.

SEC. 13 MAGNETIC MEDIA COORDINATOR CONTACTS

Requests for additional copies of this revenue procedure or for additional information on magnetic media reporting should be addressed to the attention of the Magnetic Media Coordinator of one of the following:

     (a) Internal Revenue Service

01 The Service will accept, upon prior approval, magnetic disk files containing State reporting information, for those states listed in .05 of this section. The Service will then forward the information to the state indicated at no charge to the filers. FORM 1099B AND FORM W2-G CANNOT BE FILED UNDER THE COMBINED FEDERAL/STATE FILING PROGRAM.

02 Those filers wishing to participate in this program MUST submit a Form 6847, Consent for Internal Revenue Service To Release Tax Information, to the Internal Revenue Service to release tax information. Requests for copies of this form or for additional information on magnetic disk reporting should be addressed to the attention of the Magnetic Media Coordinator of one of the Service Centers listed in Sec. 13 of this revenue procedure.

03 Those filers who are participating in the Combined Federal/State Filing Program MUST submit a test file prior to receiving permission to file their actual data. Additionally, each record in the file MUST be 360 positions in length. The file MUST conform exactly to the specifications detailed in this revenue procedure, and must meet the money criteria in .06 below. The Service will make no attempt to process files with any deviations and will revoke the filing authorization of any filer who submits files that do not totally conform.

04 The Service is acting as a forwarding agent to simplify information return filing. Some participating States may require separate notification that you are filing in this manner. You should contact the appropriate States for further information.

05 Those filers participating in the Combined Federal/State Filing Program must have 360 position records. Positions 359 and 360 in the Payee `B` Records must contain the state code (see the following table) if the state is to receive the information. DO NOT CODE this UNLESS prior approval to participate has been granted by the Internal Revenue Service.

 State       Code State        Code  State         Code

                     State Filing Requirements /*/

 Element                   Description

Use the following U. S. Postal Service state abbreviations when developing the state code portion of Name Line fields.

 State       Code  State         Code  State         Code

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 disk file. These specifications must be adhered to unless deviations have been specifically granted by the Service in writing.

02 To be compatible, a disk file must meet any set of the following specifications in total:

 SET 1-SPECIFICATIONS /*/

SECTION 2. RECORD LENGTH

01 The disk records prescribed in these specifications may be blocked or unblocked.

(a) If the use of blocked records would result in a short block at the end of the file representing all payments made by the payer, all remaining positions of the block must be filled with 9's. However, filling with 9's is allowable only in the last block of returns for a payer. Records may not span blocks.

(b) If payments from more than one payer are reported on the same disk pack, a Payer/Transmitter `A` Record cannot be in the middle of a block, but must be the first record in a block.

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

(a) Carry 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. 14.

(b) Facilitate making all records the same length.

SECTION 3. PAYER/TRANSMITTER `A` RECORD

01 Identifies the payer and transmitter of the disk file and provides parameters for the succeeding Payee `B` Records. The Service's computer programs rely on the absolute relationship between the parameters in the `A` Record and the 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 disk pack will depend on the number of payers and the different types of returns being reported. A transmitter may include Payee `B` Records for more than one payer on a disk pack, however, each payer's Payee `B` Record(s) must be preceded by an `A` Record. A single disk pack may also contain different types of returns, but the returns MUST not be intermingled. A separate `A` Record is required for each type of return being reported. An `A` Record may be blocked with `B` Records, however, the `A` Record MUST APPEAR AS THE FIRST RECORD IN THE BLOCK. Records may not span blocks.

               RECORD NAME: PAYER/TRANSMITTER `A` RECORD

01 Contains the payment record from individual statements. When filing information documents on disk(s), the format for the Payee `B` Records will vary in relation to the number of payment amount fields being reported as indicated by the Amount Indicators in positions 18-26 of the Payer/Transmitter `A` Record.

02 All records must be a fixed length. Records may be blocked or unblocked. Records may not span blocks. A block may not exceed 10,000 positions, DO NOT PAD A BLOCK WITH BLANKS..

03 All payee records MUST CONTAIN CORRECT PAYEE NAME AND ADDRESS INFORMATION entered in the fields prescribed in this section. Any records containing an invalid Taxpayer Identification Number (SSN or EIN) and having no address data present will be returned for correction.

04 The Service must be able to identify the surname associated with the Taxpayer Identification Number (SSN or EIN) furnished on a statement. The specifications below include a field in the payee records called `Name Control` in which the first four alphabetic characters of the payees surname are to be entered by the payers. In addition, a blank MUST 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.

05 If payers are unable to provide the first four characters of the surname, the Name Control Field may be left blank; however, compliance with the following will facilitate the Service's computer programs in generating the Name Control.

(a) The surname of the payee whose Taxpayer Identification Number (SSN or EIN) is shown in the Payee `B` Record, must be the only name in the first name line.

(b) A blank must precede the surname unless the surname begins in the first position of the field.

(c) In the case of multiple payees, only the surname of the payee whose Taxpayer Identification Number (SSN or EIN) is shown in the Payee `B` Record must be present in the First Payee Name Line. Surnames of any other payees in the record must be entered in the Second Payee Name Line.

06 Provision is also made in these specifications for data entries required by state or local governments. This should minimize the Payer/Transmitter's programming burden should payers desire to report on disk to state or local governments.

07 Those filers participating in the Combined Federal/State Filing Program must have 360 position records. Positions 359 and 360 in the Payee `B` Records must contain the state code for the state to receive the information, and meets the money criteria described in Part A, Sec. 14.06. Do not code for the states unless prior approval to participate has been granted by the Internal Revenue Service. See Part A. Sec. 14 for a list of the valid participating state codes. FORMS 1099-B AND W2-G CANNOT BE FILED UNDER THE COMBINED FEDERAL/STATE FILING PROGRAM.

                     RECORD NAME: PAYEE `B` RECORD

01 The End of Payer `C` Record is a summary record for a Type of Return for a given payer. It MUST be the same length as the `B` Records in the payer's file.

02 The `C` Record will contain the totals of the payment amount fields and the payees filed by a given payer. The `C` Record must be written after the last payee record for each Type of Return for a given payer. For each `A` Record on the file, there must be a corresponding `C` Record.

03 Payers/Transmitters must verify the accuracy of the totals in the `C` Record and must enter the totals on the transmittal, Form 4804, which will accompany the shipment.

                 RECORD NAME: END OF PAYER `C` RECORD

01 The State Totals `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. IT MUST BE 360 POSITIONS IN LENGTH.

02 The `K` Record will contain the totals of the payment amount fields and the payees 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.

03 There MUST be a separate `K` Record for EACH STATE being reported.

                 RECORD NAME: STATE TOTALS `K` RECORD

01 The `F` Record is a summary of the number of payers and disks in the entire file.

02 This record should be written after the last `C` Record (or `K` Record, when applicable).

03. Only a Tape Mark or a Tape Mark and Trailer Label may follow the `F` Record.

              RECORD NAME: END OF TRANSMISSION `F` RECORD