Rev. Proc. 79-30

Part A -- General

Section 1. Purpose.

.01 The purpose of this Revenue Procedure is to state the requirements and conditions under which payers and nominees (hereinafter collectively referred to as payers) and agents thereof (hereinafter referred to as transmitters) can file annual information returns on diskette instead of paper documents. The paper documents affected are:

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

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

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

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

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

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

(g) Form 1099L, U.S. Information Return for Distributions in Liquidation During Calendar Year.

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

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

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

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

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

(m) Agriculture Subsidy Payment Report.

.02 This Procedure supersedes Rev. Proc. 77-34, 1977-2 C.B. 542.

.03 Forms W-2 and W-2P will no longer be filed with the Internal Revenue Service (IRS) directly. The forms will be submitted to the Social Security Administration (SSA) commencing with tax year 1978. Income tax information will be forwarded to the IRS by SSA.

Sec. 2. Wage and Pension Information.

.01 Section 8(b) of Public Law 94-202, 1976-1 C.B. 530, enacted in January 1976, authorizes the combined reporting of FICA detailed information (previously reported quarterly on Form 941, Schedule A) and annual W-2 (Copy A), Wage and Tax Statement, information in one consolidated annual W-2 (Copy A) to the Federal Government. By agreement between the Internal Revenue Service and the Social Security Administration, one consolidated W-2 (Copy A) for each employee is to be submitted to SSA by February 28 of the year following to satisfy the reporting requirements of the agencies beginning with tax year 1978 reports.

.02 Form W-2 will provide SSA with FICA information needed to credit employees' accounts.

.03 Form W-2P will also be filed with SSA instead of with IRS.

.04 Income tax information from both W-2s and W-2Ps will be forwarded to the IRS by SSA.

.05 The Social Security Administration will accept magnetic media for filing Forms W-2 and W-2P and has issued TIB-4a, Magnetic Tape Reporting, Submitting Wage and Tax Data to Federal and State Agencies, TIB-4b, Magnetic Tape Reporting, Submitting Annuity, Pension, Retired Pay, or IRA Payment to the Federal Government on Magnetic Tape, and TIB-4c, Diskette and Disk Cartridge Reporting, Submitting Wage and Tax Data to the Federal Government on Diskette and Disk Cartridge, for this purpose.

.06 Payers or transmitters who desire to file Forms W-2 and W-2P on magnetic media must submit an application for authorization. An application form appears in the above mentioned TIBs-4a, 4b, and 4c. Previous approval for magnetic media reporting from the IRS will not constitute authorization for magnetic media reporting to SSA.

.07 Copies of Social Security Administration publications TIB-4a, 4b and 4c are available from any Internal Revenue Service Center or local Social Security Administration office. Be sure to obtain the latest versions of the SSA TIBs, as they are subject to change.

Sec. 3. Application for Magnetic Media Reporting.

.01 The above listed statements may be filed on magnetic media by payers or by transmitters acting for a single payer or group of payers. Payers may submit all or part of their information on magnetic media; a combination of magnetic media records and paper documents is acceptable providing there is no duplication or omission of documents.

.02 Payers or transmitters who desire to file statements in the form of magnetic media must file a Form 4419, Application for Magnetic Media Reporting of Information Returns, for approval. Ample application is included in the back of this Procedure.

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

.04 An approved filer will be assigned a Transmitter Control Code which will aid the Service in the identification of payers to appropriate transmitters. This code must be entered on all transmittals and in each Payer/Transmitter "A" Record described in part B of this Procedure.

.05 Upon approval, filers will receive a Magnetic Media Reporting Package which will include all filing instructions, forms, and labels.

.06 The Service will assist new filers with their initial magnetic media submission by encouraging the submission of test diskettes for review in advance of the filing period.

.07 Generally, organizations using equipment compatible with the Service's equipment can presume that the application will be approved. Compatible diskette characteristics are shown in Part B, Sec. 1. If transmitters have the capability to prepare several types of diskettes, the Service prefers that compatible tapes be prepared.

.08 Once authorization to file on magnetic media has been granted to a payer, such approval will continue in effect in succeeding years, provided that the requirements of this Rev. Proc. are met and there are no equipment changes by the transmitter. The service center magnetic media coordinator must be notified before December 31 of the year ending if there has been or will be any change in equipment, if tape reporting is being discontinued, or if there is a deletion or an addition to the list of payers. If tape filing is discontinued, a new application must be filed before it may be resumed.

.09 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 media. 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. Thus, a single application form is to be submitted to one of the service centers covering all of the individual diskette filers, or departments, to be submitted.

Sec. 4. Filing of Diskette Reports.

.01 Transmittal instructions will be provided in the authorizing letter issued by the Service in response to an application for diskette reporting.

.02 Payers submitting a portion of their statements on diskette and the remainder on paper forms, should file magnetic diskette records and paper documents at the same location, but in separate shipments. Form 1096 should accompany paper submissions and Form 4804 should accompany magnetic media submissions.

.03 Form 4804, Annual Summary and Transmittal of Income, Tax and Information Statements on Reported Magnetic Media, will be required with each magnetic media shipment submitted. The affidavit provided on Form 4804 must be signed by the payer. The transmitter, service bureau, paying agent, or disbursing agent may sign on behalf of the payer, however, only if all of the following conditions are met:

(a) the transmitter, service bureau, paying agent, or disbursing officer possesses the authority to sign the affidavit under an agency agreement (either oral, written, or implied) that is valid under state law; and

(b) the transmitter, service bureau, paying agent, or disbursing agent has the responsibility (either oral, written, or implied) conferred upon it by the payer to request the taxpayer identification numbers of payees whose information documents are reported on magnetic media or paper documents; and

(c) the authorized transmitter, service bureau, paying agent, or disbursing agent signs the affidavit and appends the caption:

"For: [name of payer]".

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

.05 These affidavit requirements also apply to paper filers submitting Form 1096, Annual Summary and Transmittal of U.S. Information Returns. Paper filers are responsible for the filing of correct, complete, and timely Form 1096. The failure of duly authorized "agents" of paper filers to comply with the filing requirements of Form 1096 and attachments does not relieve the payers of any penalties that may arise as a result of such failure to comply.

.06 If only a portion of the returns are submitted on paper documents, include a statement (that the remaining returns are being filed in the form of magnetic media) with the Form 1096. Please note that Form 1096 instructions normally apply to the filing of information returns on paper; however, filers of magnetic media must review the Form 1096 instructions and file Schedule A (Form 1096) if appropriate.

.07 Health care carriers, or their agents, filing Form 1099-MED per Section 3.09 above, may submit part of their returns on paper documents and part on magnetic media if the records of some 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 $100, and Department C pays $300, 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.

.08 If an extension is granted by the Service, a copy of the letter granting the extension should be attached to the Form 4804.

Sec. 5. Processing of Diskette Statements.

.01 The Service will extract tax information from the diskettes. Normally, the original diskettes received by the Service will be returned to the payers or transmitters by August 15 of the year in which submitted.

.02 If diskettes submitted are unprocessable, they will be returned for correction. The payer will then make the necessary corrections and resubmit acceptable diskettes to the Service as soon as possible. Acceptable diskettes will then be returned by the Service within six months of receipt.

Sec. 6. Corrected Statements.

.01 If a large volume of corrected statements is necessary and the payer or transmitter possesses the capability to provide such corrections on diskette, they should contact the magnetic media coordinator of the service center to which the diskette statements were or are to be submitted. A corrected Form 4804 must be filed whenever corrections on diskette are submitted. Be sure to contact the magnetic media coordinator for format of corrected statements.

.02 If corrections are not submitted on diskette, the official paper Form 1099 or 1087 must be used if it is necessary to correct Payee "B" Records in the diskette files. Paper corrections for diskette files should be marked "MAGNETIC MEDIA CORRECTION" on the upper portion of the forms. Rev. Procs. containing specifications for paper documents may be obtained from most Internal Revenue Service Offices.

.03 Form 1096 instructions are to be followed when paper documents are filed to correct statements submitted on diskette.

Sec. 7. Effect on Paper Documents.

.01 Diskette reporting of the information documents listed in Section 1 above applies only to the original (Copy A). By filing with the Service on diskette, payers are permitted considerable flexibility in designing the copy of the information return to be furnished to the payee. The payer may combine the information return data with other reports or financial or commercial notices, or expand them to include other information of interest to a depositor, patron, or shareholder. This is permissible so long as all required information present on the official form is included and the payees' copies are conducive to proper reporting on their tax returns. Payers should also include the message "This information is being furnished on Forms 1099 or 1087 to the Internal Revenue Service" on the payees' copies.

.02 If only a portion of the statements is reported on magnetic media and the remainder is reported on paper forms, those statements not submitted on diskette must be filed on the officially prescribed forms, or on paper substitutes meeting the specifications in the appropriate Rev. Proc. on the reproduction of Forms 1099 and 1087 series.

Sec. 8. Filing Dates.

.01 Diskette reporting to the Service for all types of Forms 1099 and 1087 must be on a calendar year basis.

.02 The dates prescribed for filing paper documents with the Service will also apply to diskette filing. Diskettes must be submitted to the service center by February 28. Payee copies must be furnished by January 31.

Sec. 9. Additional Information.

Requests for additional copies of this Rev. Proc., or requests for additional information on tape reporting, should be addressed to the attention of the Magnetic Media Coordinator of one of the following:

     (a) Internal Revenue Service

.01 Under section 6109 of the Internal Revenue Code, recipients of dividends, interest, or other payments are required to furnish taxpayer identification numbers to payers who must report such payments to the Internal Revenue Service. 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 Service expects that payers will keep to a minimum those statements submitted without taxpayer identification numbers. If, for legitimate cause, the taxpayer identification number (TIN) of a payee has not been furnished to the payer, the specifications of Part B of this Procedure allow for its omission.

.03 The Service associates and verifies payments to payees with corresponding amounts on tax returns, principally through TINs. It is particularly important that correct social security and employer identification numbers for payees be provided on paper forms or magnetic media submitted to the Service. For each omission of a required TIN, section 6676 of the Internal Revenue Code provides that the Service may charge a $5 penalty, unless the payer or payee responsible for furnishing the number supplies an explanation, upon request from the Service, that establishes reasonable cause for not having done so.

.04 The taxpayer identifying number to be furnished the Service depends primarily upon the manner in which the account is maintained or set up on the records of the payer. The number to be provided must be that of the owner of the record. If the account is recorded in more than one name, furnish the taxpayer identifying number and name of one of the holders of the record. The number provided must be associated with the name of the holder provided in the first name line of the Payee "B" Record of Part B of this procedure. For those engaged in a trade or business (including employee trusts, retirement systems, etc.) the TIN is the employer identification number, EIN (00-0000000). For individuals, it is a social security number, SSN (000-00-0000).

DO NOT ENTER HYPHENS OR ALPHA CHARACTERS when entering either number on magnetic media. If a taxpayer identifying number is unavailable, enter blanks--DO NOT ENTER ALL ZEROES.

.05 Sole proprietors who are payers should show their employer identification numbers in the Payer/Transmitter "A" Record. However, the payer should use the social security number of a sole proprietor in the Payee "B" Record. The table below will help you determine the number to be furnished to the Service.

            Chart 1. Guidelines for Social Security Numbers

Part B -- Diskette Specifications

SECTION 1. GENERAL.

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

(a) 8 inches in diameter

(b) recorded in basic data exchange mode

(c) contain 77 tracks of which:

(1) Track 0 is the index track

(2) Tracks 1 through 73 are data

(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 recorded on only one side of the diskette

(g) An IBM 3741 compatible diskette would meet the above specifications. Other types of diskettes would have to be tested to determine acceptability.

SEC. 2. DEFINITIONS.

 Element              Description

Identifies the payer and transmitter of the diskette 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 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 within a diskette file 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 either a single diskette or a multivolume file; however, each separate payer's Payee "B" Records must be preceded by a Payer/Transmitter "A" Record. Where a single diskette contains different types of statements (e.g., 1099-INT and 1099-DIV statements), the statements may not be intermingled. A separate Payer/Transmitter "A" Record is required for each type of statement being reported on the diskette.

     Diskette

      Diskette

.01 The Payee Record contains the payment record from individual statements. When filing information documents on diskette(s) the format for the Payee Record ("B" Record) will vary in relation to the number of payment fields being reported as indicated by the Amount Indicators in positions 19 through 25 of the PAYER/TRANSMITTER ("A" Record). Each Service Payee Record ("B" Record) will be composed of two sectors on the diskette with positions 1 through 41 of the first sector being a constant format and the variance occurring in positions 42 through 128 of the first sector and the entire second sector.

.02 All payee records must contain correct payee name and address information entered in the fields prescribed in this Part.

.03 The Service must be able to identify the surname associated with the taxpayer identifying 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 payee 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.

.04 If payers are unable to provide the first four characters of the surname, the specifications permit the submission of statements on magnetic media 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 of the payee, whose taxpayer identifying 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 identifying number (SSN or EIN) is shown in the Payee "B" Record, must be present in the first name line. Surnames of any other payees in the record must be entered in the second name line.

.05 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 tape to state or local, as well as the Federal Government.

                               B RECORD

                  B RECORD (USING ONE PAYMENT FIELD)

.01 Write this record after the last payee "B" Record following the last preceding Payer/Transmitter "A" Record. A diskette will contain more than one (1) End of Payer "C" Record if the last Payee "B" Record for more than one payer is reported on the same diskette.

.02 Each End of Payer "C" Record must contain a count of the number of Payee "B" Records immediately preceding the End of Payer "C" Record and following the preceding Payer/Transmitter "A" Record under which a Payer is reporting payments for a type of document.

To illustrate:

(a) Single diskette;

Where all the records of a Payer for a particular type of document are reported on a single diskette, the last preceding Payer/Transmitter "A" Record would be the "A" Record immediately preceding the Payer's Payee "B" Records for which the End of Payer "C" Record has been written.

(b) Multiple diskettes;

Where the reporting of a Payer for a particular type of document begins on one diskette and ends on another diskette, the last preceding Payer/Transmitter "A" Record would be the "A" Record immediately preceding all the Payee "B" Records on the disk pack on which the Payer "C" Record has been written.

.03 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.

 Diskette

SEC. 6. END OF TRANSMISSION "F" RECORD

Write this record after the last End of Payer "C" Record in the file.

 Diskette

[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. 8. EFFECT ON OTHER DOCUMENTS.

This Revenue Procedure supersedes Rev. Proc. 77-34, 1977-2 C.B. 542.

 Form 4419                                               IRS Use Only