Rev. Proc. 78-30

Section 1. Purpose

This Revenue Procedure restates the requirements of the Internal Revenue Service regarding the acceptance of computer-prepared Form 1040 and substitutes for the related forms and schedules. Revenue Procedure 77-43, 1977-2 C.B. 577, is superseded.

Sec. 2. Specifications

For filing purposes the Service will accept computer-prepared individual income tax returns, Form 1040, and substitutes for the related schedules, provided the forms meet the guidelines prescribed in Sections 3, 4, and 5 below.

Sec. 3. General Instructions

.01 A one-half inch margin must be maintained across the top, bottom, and both sides (exclusive of any pin-feed holes) of all computer-prepared substitute Forms 1040 and related schedules. See exceptions in Sections 3.06 and 5.01.

.02 Use the preaddressed label supplied with the taxpayer's tax package on all computer-prepared substitute forms that will be filed with the Internal Revenue Service. Use of the label avoids larger processing costs because it reduces the potential for error--the kind of error which can delay the receipt of refund and information needed by the taxpayer.

.03 When filing a computer-prepared substitute Form 1040 and related schedules, use the envelope enclosed with the taxpayer's tax package. This envelope is coded for sorting into several categories. Use of the coded envelope can help speed up the processing of the return and reduce processing costs. Do not use the Service provided tax package envelope for other correspondence with the Service as its misuse could delay the correspondence.

.04 Identify all computer-prepared substitutes clearly; print the Schedule designation one-half inch from the top margin and one and one-half inches from the left margin; print the title centered on the first line of print; and print the taxable year on the same line one-half to one inch from right margin.

.05 State tax information must not appear on the federal tax return which is filed with the Internal Revenue Service Center, except where amounts are claimed as a State tax deduction, e.g., line 11, Schedule A (Form 1040).

.06 The Service prefers original filled-in forms and related schedules. Carbon bonded paper is prohibited from use for forms and schedules filed with the Service. Chemical transfer paper may be used ONLY when the following specifications are met:

(a) Each ply within the chemical transfer set of forms or schedules must be labeled.

(b) Only the top ply (ply one), the one which contains chemical on the back only (coated back), may be filed with the Service. For example, a set containing three plies would be constructed as follows: Ply one (coated back), "Federal Return, File with IRS"; Ply two (coated front and back), "Taxpayer's copy"; and Ply three (coated front), "Preparer's copy."

(c) The file designation, "Federal Return, File with IRS", for ply one must be placed in the left-hand one-half inch margin area at least three inches from the top of each individual form or schedule. It is not mandatory, but recommended, that the file designation, "Federal Return, File with IRS", be printed using a contrasting ink to be clearly visible to the taxpayer.

.07 Attach all Forms W-2, Employee Wage and Tax Statements, Forms W-2G, Statement for Certain Gambling Winnings, and Forms W-2P, Statement for Recipients of Periodic Annuities, Pensions, Retired Pay, or IRA Payments to the front of Form 1040.

.08 Attach all schedules in alphabetical order and forms other than W-2, W-2G, and W-2P in numbered order to the back of Form 1040. Additional information required or voluntarily submitted should be on the same size paper as the official form and attached to the back of the form to which it relates.

.09 Attach all payments (check or money order, no cash) to the front of Form 1040.

.10 On Form 1040, the Paid Preparer's Information area may not be rearranged or relocated. An exact facsimile must appear on page 2 of Form 1040.

.11 Reproductions must have a high standard of legibility, both as to original form and as to fill-in matter. The Service reserves the right to reject any computer-prepared Form 1040 and substitutes for related schedules with poor legibility or that do not meet the specifications of this Revenue Procedure.

Sec. 4. Conditions

.01 Form 1040, pages 1 and 2.--The weight, size, margins, etc., of the computer-prepared form must meet the requirements specified in Revenue Procedure 78-29, page 25, this Bulletin. The format, only excepting minor format deviations, must follow the official return. To make the form suitable for computer preparation, minor format modifications such as eliminating the vertical lines from the area reserved for the social security number, changing the dimensions of the check boxes for filing status, etc., are permitted.

.02 Schedules A & B, C, D, etc., Forms 2440, 2441, etc.--Computer-prepared substitutes for these forms must be submitted on good quality, standard lined stock machine stationery.

(a) The format of each substitute schedule must follow the format of the official schedule so far as item caption, line references, sequence, etc., are concerned. With the exception noted below, all line numbers and items must be printed even though they may not have an amount entered.

EXCEPTION.--In the case of substitutes for Schedule A and/or E, detailed information for any deduction or income category may be omitted from the printout if the category total to be reported is zero. However, the substitute schedule must show the total (zero when applicable) for each category. With regard to Schedule A, lines 33-38 need not be shown on the printout, but the total of itemized deductions must be shown on line 39.

(b) When the official form uses a reference code, e.g., a number, that reference code must be used on a computer-printed substitute form. It must be printed to the left of the corresponding captioned line and also immediately preceding the data field--even if the data field does not have a reference code immediately preceding the data field on the official form. In addition, a period must follow each reference code, and there must be at least two blank spaces between the period and the first character of the data field. (See example below.)

(c) A decimal point is used for each money amount regardless of whether the amount is reported in dollars and cents or in whole dollars. The decimal points must be vertically aligned.

 Example

.01 Form 1040.--Internal control numbers and identifying symbols of the computer preparer may be shown on the facsimile if the use of such numbers or symbols is acceptable to the taxpayer and/or the representative. If shown, such information must not be printed in the top one-half inch clear area, from the center to the right edge, of Form 1040 and/or Schedules.

.02 Schedules A & B, C, D, E, F, G, R & RP, SE and TC.--Descriptions for captions, line, etc., required by the official schedules may be limited to one print line on the substitute by using abbreviations, contractions, and by omitting articles, prepositions, etc. However, sufficient key words must be retained to permit ready identification of the caption, line or item.

(a) Explanatory details, or intermediate calculations for derivation of final line totals, may be included on the substitute or submitted in the form of a supporting statement at the option of the preparer. If intermediate calculations are included on the substitute, the line(s) on which they appear may not be numbered so as to conflict with numbered item(s) of the official form; and printing of intermediate calculations may not appear in the right-hand column, which is reserved only for numbered line entries which correspond to entries on the official form or schedule. If a supporting statement is submitted, intermediate calculations or subtotals may be formatted at the preparer's option. All supporting statements submitted must be referenced to the schedule entry which it supports, and the entry on the schedule, in turn, must be cross-referenced to the supporting statement. However, all total lines on substitute forms must have a total printed. This total must be carried forward from any supporting statements. Substitutes for Schedule A must have a money entry for each numbered item on the official form. See exception in Section 4.02(a) above.

(b) Text prescribed for the official form, which is solely instructional in nature, e.g., "Attach this schedule to Form 1040," "See instructions," etc., may be omitted from the substitute schedule.

(c) Information for more than one schedule may not be shown on the same printout page. Any schedule may be continued on two or more pages if necessary. When a schedule is continued on two or more pages, clearly identify at the bottom of each page, including page 1, that it is continued, e.g., "page 1, Schedule C continued."

Sec. 6. Other Information

.01 Preparers who desire to file computer-prepared substitute Forms 1040 and related schedules must develop such substitutes using these guidelines and must obtain approval of the Service before filing substitutes. Proposed substitutes should be forwarded by letter to the Commissioner of Internal Revenue, Attention: TX:R:I, 1111 Constitution Avenue, N.W., Washington, D.C. 20224. They must be sent no later than December 1, 1978; those received postmarked after December 1, 1978, will be considered for approval but the Service cannot assure that a determination on the forms submitted for approval can be completed in time for use during the filing period. This requirement is to allow adequate time for analysis and response and to permit notice to our field offices (see subsection .02 below) before the January 1 beginning of the filing season. This December 1 cutoff date is also a requirement in Revenue Procedure 78-29 for reproductions and privately designed and printed Forms 1040 and related schedules. An approval letter from the Internal Revenue Service must be received before the computer-prepared substitutes may be used. When the sample is submitted, there must also be an accompanying statement that lists those items that deviate from the official form in position, arrangement, appearance, line numbers, additions, deletions, etc. Included with each of the items must be a detailed reason or justification for the change.

.02 Once an approval is granted for the use of computer-prepared substitute Forms 1040 and related schedules, fifty (50) copies of each approved form and/or related schedule must be assembled in sets and submitted to TX:R:I, so that we can notify our field offices. We reserve the right to reject sets which are not assembled in the order specified. A set constitutes a return with the related schedules and forms in order as they will be filed, i.e., Form 1040, Schedules A & B, C, D, etc., Forms 2440, 2441, etc.

Sec. 7. Effect on Other Documents

This Revenue Procedure supersedes Revenue Procedure 77-43.