REVISED GUIDELINES FOR ELECTRONIC REPORTING OF FOREIGN PERSONS' U.S.-SOURCE INCOME.

Rev. Proc. 93-16

NOTE: This revenue procedure may be used to prepare Tax Year 1992 Forms 1042S for submission to Internal Revenue Service (IRS) using any of the following:

Magnetic Tape

5 1/4-inch Diskette

3 1/2-inch Diskette

Electronic Filing (Via the Information Reporting Program Bulletin Board System (IRP-BBS))

This revenue procedure is normally updated for each tax year. Please read this publication carefully. Persons required to file may be subject to penalties for failure to file or failure to include correct information if they do not adhere to these instructions.

Table of Contents

SECTION 1. PURPOSE

.01 The purpose of this revenue procedure is to provide the specifications under which withholding agents may file Form 1042S, Foreign Person's U.S. Source Income Subject to Withholding, magnetically or electronically.

.02 This revenue procedure supersedes the following: Rev. Proc. 91-60, 1991-2 C.B. 844, published as Pub. 1187 (11-91), Specifications for Filing Form 1042S, Foreign Person's U.S. Source Income Subject to Withholding, Electronically or on Magnetic Tape, and 5 1/4-, or 3 1/2-Inch Magnetic Diskettes.

SEC. 2. NATURE OF CHANGES--CURRENT YEAR (TAX YEAR 1992)

.01 EDITORIAL CHANGES. Numerous editorial changes have been made to the publication. IRS recommends that filers read this publication in its entirety to ensure proper reporting. The following changes have been made to the revenue procedure:

a) The title of Part A, Sec. 3 has changed to "Where to File and How to Contact the IRS Martinsburg Computing Center IRS/MCC" to better reflect the contents of this section.

b) A new number is provided for the IRS/MCC fax machine in Part A, Sec. 3.05.

c) The Information Reporting Program Centralized Call Site is introduced and explained in Part A, Sec. 3.07.

d) An extension of time to file Forms 1042S magnetically or electronically will be granted for 90 days. Specific instructions for requesting an extension of time to file are provided in Part A, Sec. 10.

e) Withholding agents may request an extension of time to file Form 1042. An extension of time to file Form 1042S does not automatically provide an extension of time to file Form 1042. Refer to Part A, Sec. 10.08 for further information.

f) Information concerning computer viruses is provided in Part B, Sec. 1.03. It is unlawful to intentionally submit a computer virus to the IRS. Violators may be subject to fine and/or imprisonment.

g) Positions 6-14 of the Transmitter "T" record have been renamed to "Transmitter's Taxpayer Identification Number (TIN)" to accurately define the use of this field.

h) Positions 2-10 of the recipient "Q" record have been renamed to "Withholding Agent's Taxpayer Identification Number (TIN)" to accurately define the use of this field.

i) Positions 113-121 of the recipient "Q" record have been renamed to "Recipient's U.S. Taxpayer Identification Number (TIN)" to accurately define the use of this field.

j) Positions 122-136 of the recipient "Q" record have been renamed to "Account Number" to be consistent with paper Forms 1042S.

k) Positions 139-173 of the recipient "Q" record have been renamed to "Recipient Name Line One" to accurately define the use of this field.

l) Positions 174-208 of the recipient "Q" record have been renamed to "Recipient Name Line Two" to accurately define the use of this field.

m) Positions 209-243 of the recipient "Q" record have been renamed to "Recipient Name Line Three" to accurately define the use of this field.

n) Positions 357-358 of the recipient "Q" record have been renamed to "Recipient Code" to be consistent with paper Forms 1042S.

o) Positions 372-373 of the recipient "Q" record have been renamed to "Tax Rate" to be consistent with paper Forms 1042S.

p) Positions 374-384 of the recipient "Q" record have been renamed to "U.S. Federal Tax Withheld" to accurately define the use of this field.

q) Positions 420-428 of the recipient "Q" record have been renamed to "Payer's TIN" to be consistent with paper Forms 1042S.

.02 PROGRAMMING CHANGES.

a) The Country Codes (Pos. 137-138 of the recipient "Q" record) have been updated to reflect global political changes.

b) Guidance was provided in the Recipient Name Line One field (Pos. 139-173 of recipient "Q" record) stating that data reported in this field is required.

c) Guidance was provided in the Street Address field (Pos. 244-283 of recipient "Q" record) for reporting street address data in Recipient Name Line Two or Three fields when appropriate.

d) Guidance was added in the City field (Pos. 284-308 of recipient "Q" record) specifying what address parts must be reported for United States (U.S.) addresses and non U.S. addresses.

e) Note was added in the Postal Code field (Pos. 324-332 of recipient "Q" record) stating postal codes for United States, Canadian, and Australian addresses must be reported and formatted correctly.

f) Guidance was provided in the Country Name field (Pos. 335-354 of recipient "Q" record) stating a recipient's country of residence for address purposes must be reported.

g) Guidance was provided in the Income Code field (Pos. 355-356 of recipient "Q" record) stating an income code must be provided.

h) Note was added in Type of Recipient field (Pos. 357-358 of recipient "Q" record) to inform withholding agents a Recipient Code "01" must be entered when Income Code "21", "22", or "23" is entered.

i) Information was added in the Gross Income Paid field (Pos. 359-369 of recipient "Q" record) that a nonzero amount must be entered.

SEC. 3. WHERE TO FILE AND HOW TO CONTACT THE IRS MARTINSBURG COMPUTING CENTER (IRS/MCC)

.01 All Forms 1042S filed magnetically or electronically are processed at IRS/MCC. Inquiries concerning application procedures, extension of time to file, request for a waiver from the magnetic media filing requirements, or filing procedures specified in this revenue procedure should be directed to IRS/MCC. Filers may contact IRS/MCC by telephone at (304) 263-8700 (not a toll free number). The hours of operation are 8:30 a.m. to 6:00 p.m., Eastern Time.

.02 Send magnetic media files, and any correspondence to MCC at the following addresses:

          If by U.S. Postal Service:

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

.05 The telephone number for the IRS/MCC fax machine is (304) 264-5196.

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

.07 INFORMATION REPORTING PROGRAM CENTRALIZED CALL SITE

In 1991, IRS instituted a centralized call site to answer tax law questions related to information returns (Forms 1096, 1098, 1099, 1042S, 5498, 8027, W-2, W-2G, W-3, and W-4.) The Call Site is located at IRS/MCC and operates in conjunction with the Information Reporting Program. The Call Site provides service to financial institutions, employers, and other payers who file information returns. It is being phased in over a two-year period.

The Call Site is currently functioning as a pilot operation accepting inquiries from payers/employers calling from Maine, Vermont, New Hampshire, Massachusetts, Rhode Island, Connecticut, New York, Ohio, Indiana, Michigan, West Virginia, and Kentucky. The numbers to call are (304) 263-8700 or TDD (304) 267-3367. This is a toll call.

Payers/employers in other areas of the country should continue to call 1-800-829-1040. If the pilot operation is successful, the remaining states will be phased in October 1, 1993, when the Call Site will be available nationwide. Hours of operation for the Call Site during the pilot operation are 8:30 a.m. to 6:00 p.m. Eastern Time.

.08 Requests for paper returns, publications and forms not related to magnetic media processing MUST be requested by calling the IRS toll free number 1-800-829-3676.

SEC. 4. FILING REQUIREMENTS

.01 Withholding agents who are required to file 250 or more Forms 1042S with IRS must submit these forms on magnetic media. Even though the withholding agent is not required to file magnetically/electronically, IRS encourages withholding agents to do so.

.02 Filers who are required to submit their Forms 1042S on magnetic media may choose to submit their documents electronically instead. Filers who transmit their information electronically are considered to have satisfied the magnetic media filing requirements.

.03 The filing requirement applies individually to each reporting entity as defined by its separate Taxpayer Identification Number (TIN) (Social Security Number (SSN) or Employer Identification Number (EIN)). For example, if filing for a corporation with several branches or locations and each uses the same name and EIN, the filer must aggregate the total volume of returns to be filed for that EIN and apply the filing requirement accordingly.

.04 This requirement applies separately to original and corrected documents. For example, 300 original documents are filed magnetically or electronically. If 200 documents were filed with erroneous information, corrections may be submitted on paper forms.

.05 These requirements shall not apply if the withholding agent submits an application for and is granted an undue hardship waiver. (See Part A, Sec. 5.)

.06 For additional information on filing requirements, please refer to 1992 Instructions for Forms 1042 and 1042S.

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

.01 Withholding agents required to file Form 1042S magnetically or electronically may receive a waiver if the requirement would create an undue hardship. The withholding agent may request a waiver by submitting Form 8508, Request for Waiver From Filing Information Returns on Magnetic Media, to IRS/MCC.

.02 A separate Form 8508 must be submitted by each withholding agent.

.03 All waiver requests MUST be submitted at least 45 days before the due date of the return. Otherwise, the request will automatically be denied.

.04 In approximately 30 days the filer will receive confirmation of approval or denial of the waiver request. IRS recommends filers maintain a copy of the waiver request and the response for their records.

.05 Failure to provide all of the information requested on the Form 8508 and/or the cost estimates if applicable, will result in an automatic denial of the waiver request.

.06 An approved waiver will only provide exemption from magnetic or electronic filing for one tax year. A waiver may not be requested for more than one tax year at a time. If needed, the withholding agent must apply each year for a waiver.

.07 A copy of Form 8508 may be obtained from IRS/MCC or by calling 1-800-829-3676. Form 8508 may be photocopied, or computer-generated as long as it contains all the information requested on the original form.

.08 An approved waiver from filing information returns magnetically or electronically does not provide exemption from filing; the withholding agent must still file information returns on acceptable paper forms with the Philadelphia Service Center. Do not include a copy of the approved waiver with the paper forms.

SEC. 6. FORM 4419, APPLICATION FOR FILING INFORMATION RETURNS MAGNETICALLY/ELECTRONICALLY

.01 Withholding agents or their agents must complete and submit Form 4419, Application for Filing Information Returns Magnetically/Electronically, before they may file Forms 1042S magnetically or electronically. Applications may be submitted at any time. However, the Form 4419 should be filed at least 30 days before March 15 in order to allow time to receive a response from IRS/MCC and timely file the returns.

.02 A copy of Form 4419 may be obtained from IRS/MCC. Instructions on the back of this form should be read carefully. This form may be photocopied.

.03 The filer will receive an approval letter that will contain a five-digit Transmitter Control Code (TCC) beginning with the digits 22. DO NOT SUBMIT FORMS 1042S USING A TCC ASSIGNED FOR THE PURPOSE OF FILING OTHER RETURNS. Forms 1042S may not be filed electronically or magnetically until an application has been approved and a TCC assigned.

.04 Once a TCC has been assigned, it is not necessary to reapply each year. If the information provided on Form 4419 changes, (for example, the organization's name or the contact person) notify IRS/MCC in writing so the appropriate files can be updated. In ALL correspondence with IRS/MCC, include the TCC in order to assist IRS personnel in locating the correct files.

.05 If a service bureau prepared files in the past, but the withholding agent now wishes to prepare their files, it will be necessary to request a TCC by filing the application Form 4419.

.06 If a filer has been assigned a TCC to file magnetically and now choose to file electronically, it is not necessary to apply for another TCC.

.07 Filers must have a TCC to transmit data electronically. When initial contact is made with the IRP-BBS, filers will be instructed to assign their own password and do not need prior approval.

SEC. 7. TEST FILES

.01 IRS/MCC will assist new filers with their initial submission by reviewing test files. The records will be checked to determine if the files are formatted according to the specifications in the current revenue procedure.

.02 IRS does not require filers to submit test files; however, first time filers are encouraged to submit a test for review prior to the filing season.

.03 Application Form 4419 must be filed with IRS/MCC and a TCC must be assigned before test files are submitted.

.04 Approved withholding agents or their agents may submit test files to IRS/MCC. IRS/MCC requires that all test files be submitted between December 1 and February 15.

.05 Include a completed Form 4804, 4802, or computer-generated substitute. Clearly mark the "Test" box on Form 4804 and media label Form 5064. On Form 4804 in the block marked "Combined total number of Payee records reported" provide the total number of recipient "Q" records.

.06 If a test is submitted electronically, the filer will receive a prompt asking if this is a test file. The Forms 4804 and 4802 marked as "Test" must be submitted to MCC. Transmittals may be faxed to (304) 264-5196. Although faxed transmittals are acceptable, completed Forms 4804 and 4802 or computer-generated substitutes marked as "Test" must be sent to IRS/MCC within 2 days of the submission of the test file. Faxing the transmittal forms to IRS/MCC will allow processing of the data in advance of receipt of the actual transmittal forms.

.07 IRS/MCC will send an acknowledgement to indicate the test results. Unacceptable magnetic media files, along with documentation identifying the errors, will be returned to the filer for replacement. Resubmission of replacement magnetic media test files must be postmarked no later than February 15. Electronic filers will also receive documentation identifying errors. Electronically filed tests must be resubmitted on or before February 15.

.08 IRS/MCC will no longer return media once it has been successfully processed.

SEC. 8. FILING FORMS 1042S MAGNETICALLY OR ELECTRONICALLY

.01 When submitting files, include the following:

(a) A signed Form 4804, Transmittal of Information Returns Reported Magnetically/Electronically, or a computer-generated substitute. Form 4804 contains an affidavit that must be signed by the withholding agent, or an agent who has the authority to sign on behalf of the withholding agent. If a duly authorized agent signs Form 4804, the affidavit must contain the caption "For: (name of withholding agent)." Failure to sign the affidavit on Form 4804 will result in the file being returned as unprocessed. Although a duly authorized agent signs the affidavit, the withholding agent is held responsible for the accuracy of the Form 4804, and the withholding agent will be liable for penalties for failure to comply with filing requirements.

(b) A Form 4802, Transmittal of Information Returns Reported Magnetically/Electronically (Continuation), or computer-generated substitute, if the filer transmits for multiple withholding agents and has the authority to sign the affidavit on Form 4804.

(c) The magnetic media with an external identifying label Form 5064. Mark the appropriate type of file checkbox (e.g., original) on Form 5064. Provide the Form 1042S TCC, tax year, transmitter's name, and number of Recipient "Q" records on Form 5064.

(d) A Form 4801, or a substitute, on the outside of the container which reads "DELIVER UNOPENED TO TAPE LIBRARY--MAGNETIC MEDIA REPORTING--BOX __ OF __." If there is only one container, mark the outside as Box 1 of 1. For multiple containers, use the sequence Box 1 of 3, 2 of 3, 3 of 3.

.02 Mail the magnetic media and transmittal Forms 4804 and 4802 together.

.03 The transmittal documents for Forms 1042S filed via IRP-BBS may be faxed to IRS/MCC at (304) 264-5196. However, the actual Form 4804, 4802 or computer-generated substitutes must be sent to IRS/MCC within 2 days of the date of submission or the due date of the return, whichever comes first.

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

.05 IRS/MCC will not return filers' magnetic media after it has been successfully processed. Should filers wish to know if their media was received by IRS/MCC, a delivery service that provides certification of delivery is recommended.

.06 Do NOT report duplicate information. If Forms 1042S are filed on paper and magnetically/electronically, be sure that the same information is not included on both. This does NOT mean that corrected documents are not to be filed. If a return has been prepared and submitted improperly, a corrected return must be filed when the error is discovered.

.07 IRS will prepare the appropriate statements for transmittal to treaty countries.

SEC. 9. FILING DUE DATES

.01 Magnetic media and electronic reporting to IRS for Forms 1042S is on a calendar year basis. The date for filing paper documents will apply to magnetic media or electronic filing. Files must be submitted to IRS/MCC postmarked no later than March 15.

.02 Copies of Form 1042S information must also be furnished to the income recipient by March 15.

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

.04 If the date to furnish the statement to recipient falls on a Saturday, Sunday, or a legal holiday, the statement is considered timely if it is furnished on the next day that is not a Saturday, Sunday, or a legal holiday.

SEC. 10. EXTENSIONS OF TIME TO FILE

.01 If a withholding agent is required to submit Forms 1042S magnetically/electronically to IRS/MCC, and is unable to do so by March 15, an extension of time to file may be requested. Submit a letter or Form 2758, Application for Extension of Time To File Certain Excise, Income, Information, and Other Returns, to request an extension of time. If approved, an extension will be granted for 90 days.

.02 In order to be considered for an extension of time, the letter or Form 2758 MUST be postmarked by the due date of the return. If requesting an extension of time for magnetic or electronic filing of Forms 1042S, the request must be sent to IRS/MCC. If submitting a letter, the request must include:

(a) The withholding agent's (or transmitter's, if filing for multiple withholding agents) name and address.

(b) The withholding agent's Taxpayer Identification Number (TIN).

(c) The tax year for which the extension of time is requested (i.e., 1992).

(d) The name and telephone number of a person to contact who is familiar with the request.

(e) The specific type of returns (i.e., Forms 1042S).

(f) The Transmitter Control Code (TCC) assigned to the organization or individual requesting the extension. (Please be sure to use the TCC assigned for Forms 1042S processing ONLY.)

(g) The reason for the delay and the date by which files will be submitted.

(h) If filing for multiple withholding agents, attach a list of all withholding agents and their TINs (EIN or SSN).

.03 Failure to provide a letter including all of the information requested above or a fully completed Form 2758, may result in an automatic denial of the request.

.04 Ordinarily, an extension of more than 90 days will not be granted, unless sufficient need is clearly shown. Under no circumstances will IRS/MCC grant an extension for more than six months to an applicant living in the United States. A request for additional time beyond 90 days must be submitted before the original extension of time has expired.

.05 An approved extension of time for magnetic and electronic filing does not provide additional time for supplying the statement to recipient. Requests for an extension of time to provide the recipient copy must be sent to the Director of the IRS District in which the filer resides or in which the business is located.

.06 A filer may only request an extension of time for the tax year of the returns that are due to be filed with IRS.

.07 If an extension of time to file magnetically or electronically is granted, do not include a copy of the letter granting the extension with Form 4804 or computer-generated substitute.

.08 Upon request, IRS/MCC will grant an extension of time to file Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons, when also granting an extension of time to file Forms 1042S magnetically/electronically. Request an extension of time to file Form 1042 by submitting a separate Form 2758 or letter to IRS/MCC.

.09 If an extension of time to file Form 1042 only or paper Forms 1042S is being requested, file Form 2758 with the Internal Revenue Service Center, Philadelphia, PA 19255.

.10 An approved extension grants additional time to file the Forms 1042S with IRS, only; any tax due must still be paid timely.

SEC. 11. REPLACEMENT FILES

.01 Files are returned because of coding or format errors. These files are to be returned to IRS/MCC within 45 days from the date of notice or the withholding agent may be subject to a failure to file penalty. Therefore, returned files should receive prompt attention.

.02 When the magnetic media is returned to the transmitter for replacement, a listing identifying the type of errors and frequency of such errors will be provided. The transmitter must correct the problems and submit a replacement file to IRS/MCC.

.03 Some problems may not require corrective action. For example, certain recipients should have had tax withheld at a particular rate, but the withholding agent withheld at a different tax rate. The transmitter should verify that the tax rates in question are in fact the rates at which tax was withheld. Once verified, a letter must accompany the replacement file stipulating that the tax rates are accurate.

SEC. 12. HOW TO FILE CORRECTED RETURNS

.01 Forms 1042S are required to be filed magnetically or electronically if 250 or more returns are filed. This requirement applies separately to both original and corrected returns.

.02 The following definitions have been provided to help distinguish between a correction and a replacement:

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

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

.03 If Forms 1042S are filed magnetically or electronically, and later the filer determines that corrections are necessary, the corrections may be filed on paper if the 250 documents threshold has not been met.

.04 If the withholding agent has 250 or more corrections, they MUST be submitted to IRS/MCC magnetically or electronically unless a waiver has been granted. If a waiver was granted for original Forms 1042S, this waiver applies to the corrections as well.

.05 Corrected returns MUST NOT be included on the same media or sent in the same electronic transmission with original returns.

.06 Since corrected statements supersede information previously supplied, all required data fields must be completed. If corrections are submitted magnetically or electronically, code an "A" in Position 371 of the Recipient "Q" Record.

.07 If corrections are filed on paper documents, write "Correction" at the top. If the original Forms 1042S were filed magnetically or electronically, corrections filed on paper Forms 1042S must be marked "Correction to Magnetic Tape" at the top of each paper Form 1042S. Corrected documents must be a separate submission from original documents.

.08 For information on when an amended Form 1042 is required, refer to Pub. 515, Withholding of Tax on Nonresident Aliens and Foreign Corporations.

SEC. 13. MAJOR PROBLEMS ENCOUNTERED

.01 Before submitting files, IRS/MCC encourages filers to verify the format and content of each type of record to ensure the accuracy of the data submission. This preliminary review may eliminate the need for IRS/MCC to return the file for replacement, and therefore reduce the likelihood of a penalty assessment for incorrect submissions. If due to unavoidable circumstances the data would be unacceptable to IRS/MCC, (e.g., math or tax rate errors), include a letter of explanation with each submission.

.02 Failure to format records correctly will result in files being returned for replacement.

.03 Filers MUST use the unique Transmitter Control Code (TCC) assigned for Form 1042S reporting. Application procedures are provided in Part A, Sec. 6 of this revenue procedure.

.04 Form 4804, Transmittal of Information Returns Reported Magnetically/Electronically, must accompany each magnetic media shipment or electronic transmission. Forms 1042S filed magnetically or electronically are not considered complete until a signed Form 4804 is received by IRS/MCC.

.05 Recipient surnames are used to sort the recipient "Q" records. The recipient's surname should be reported first, followed by given names. However, if the recipient's surname is not entered first, the filer has the option to code an asterisk that immediately precedes the recipient's surname. If the surname is reported first, the asterisk MUST be omitted, since an asterisk is not valid in the first position of Recipient Name Line One.

.06 To be acceptable, records must be in a specific sequence. If this sequence is not followed, the file will be returned for replacement. (Refer to Part B, Sec. 5)

SEC. 14. EFFECT ON PAPER DOCUMENTS

.01 Magnetic or electronic reporting eliminates the need to submit paper Forms 1042S to IRS.

.02 The address for filing paper Forms 1042S, 1042 or 8233 (Exemption from Withholding on Compensation for Independent Personal Services of a Nonresident Alien Individual) is:

          Internal Revenue Service Center

.03 Form 1042 (Annual Withholding Tax Return for U.S. Source Income of Foreign Persons) is used to verify the number of Forms 1042S filed on paper or magnetically/electronically. In certain cases, a withholding agent may be required to attach a remittance to Form 1042.

SEC. 15. DEFINITION OF TERMS

 Element                              Description

SECTION 1. GENERAL

.01 These specifications prescribe the required format and content of the records to be included in the file. Usually, IRS/MCC will be able to process, without translation, any compatible file. Deviations cannot and will not be permitted in any of the data fields.

.02 An external label, Form 5064, must appear on each tape and diskette submitted. The following information is needed on the label:

(a) Type of filing (i.e., Original).

(b) The tax year of the data (i.e., 1992).

(c) The transmitter's name.

(d) The five digit Transmitter Control Code (TCC).

(e) Operating system software and hardware used to create the file (i.e., MS-DOS, IBM PS/1).

(f) The total number of "Q" records in the file.

(g) Transmitter's media number. The number assigned to the media by the transmitter.

(h) The sequence of each tape or diskette (i.e., 001 of 008, 002 of 008, ..., 008 of 008).

Information provided on the Form 5064 will assist IRS in identifying information that is reported and in locating a specific file if it is necessary to return the file to the transmitter.

.03 Filers are REQUIRED to submit virus-free data to IRS/MCC for processing. Any media containing a computer virus will be returned for replacement. Anyone intentionally transmitting a computer virus to IRS may be subject to fine and/or imprisonment.

.04 IRS advises that special shipping containers not be used since they will not be returned to the filer.

.05 Regardless of the type of media used or if returns are filed via the IRP-BBS, the record length must be 500 positions.

SEC. 2. TAPE SPECIFICATIONS

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

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

(1) Odd parity

(2) Recording density--1600 or 6250 BPI

(3) If using UNISYS Series 1100, an interchange tape must be submitted.

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

(1) Odd Parity

(2) Recording density--1600 or 6250 BPI

.02 All tape files must have the following characteristics:

(a) 0.5-inch (12.7 mm) wide computer grade magnetic tape,

(b) Tape thickness: 1.0 or 1.5 mils,

(c) Reel diameter: 10.5 inch (26.67 cm), 8.5 inch (21.59 cm), or 7 inch (17.78 cm) and

(d) Tape reels of up to 2400 feet (731.52 m).

.03 The tape records may be blocked or unblocked, subject to the following:

(a) Records must be a fixed length of 500 positions.

(b) Records may be blocked or unblocked, except header and trailer labels which must be unblocked.

(c) A block may not exceed 15,000 characters, although shorter blocks may be written as desired. If records are being blocked, but sufficient records are not available to fill a complete block, the block may either be "padded" with 9s to fill all unused positions or truncated after the last data record to create a "short block". Do NOT pad the block with blanks or create blank records (for example, Q followed by 499 blanks, etc.).

(d) Records may not span blocks.

(e) Two forms of blocking are acceptable:

(1) Only "Q" Records are blocked; all other records are unblocked.

(2) Header and trailer labels, if used, are unblocked.

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

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

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

(b) Data must be recorded in standard ASCII code.

(c) Records must be a fixed length of 500 bytes per record.

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

(e) Positions 499 and 500 of each record have been reserved for carriage return/line feed (cr/lf) characters.

(f) Filename of 1042TAX must be used. Do not enter any other data in this field. If a file will consist of more than one diskette, the filename 1042TAX will contain a 3 digit extension. This extension will indicate the sequence of the diskettes within the file. For example, the first diskette will be named 1042TAX.001, the second diskette will be 1042TAX.002, etc.

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

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

       Capacity      Tracks      Sides/Density      Sector Size

SEC. 4. ELECTRONIC FILING SPECIFICATIONS

.01 Electronic filing is being offered as an alternative to magnetic media or paper filing, but is not a requirement. Electronic filing will fulfill the magnetic media requirements for filers who are required to file magnetically.

.02 All inquiries concerning the electronic filing of Forms 1042S should be directed to IRS/MCC.

.03 Filers participating in the electronic filing program will submit their returns to IRS/MCC by way of modems, in lieu of magnetic media or paper filing. The Forms 1042S will be transmitted through the Information Reporting Program Bulletin Board System (IRP-BBS) using asynchronous protocols.

.04 Form 4804 may be faxed to (304) 264-5196 if returns are being submitted electronically. However, the original Forms 4804 and 4802 must be filed within 2 days of the transmission or before the due date of the return whichever comes first.

.05 The format of the "T," "Q," "W," and "Y" records are the same for electronically filed records as it is for 5 1/4- and 3 1/2-inch diskettes. When filing electronically, each transmission is considered a separate file; therefore, each transmission MUST adhere to the data sequence guidelines provided in Part B, Sec. 5.

.06 The IRP-BBS can be accessed at speeds up to 14,400 bps. The modulation speed is automatically negotiated so that users with slower modems should encounter no problems connecting with the IRP-BBS. The communication standards supported include 212A, V.22bis, and V.32. Point-to-point error control is supported using the V.42 standard backward compatibility with MNP class 2-4 modems.

.07 Data compression is encouraged for filers who submit information returns using the IRP-BBS. Data compression is supported using V.42bis with MNP class 5 compatibility. Data compression will result in throughput speeds up to 38,400 bps. IRS/MCC has the ability to decompress files created using several software compression programs. Data compression can be done alone or in conjunction with V.42bis hardware compression. The size of files transmitted electronically can be reduced by as much as 80 percent when data compression is used. Therefore, data compression is highly recommended.

.08 The setup parameters for IRP-BBS are: 8 data bits, no parity, 1 stop bit and full duplex mode.

.09 Filers using IRP-BBS will be required to assign their own password. Users should take the necessary precautions to assure that their password is not compromised. If a password is compromised, contact the Systems Operator (SYSOP) or the Electronic Filing Coordinator at IRS/MCC immediately.

.10 The IRP-BBS is available 24 hours a day, 7 days a week and may be accessed by dialing (304) 263-2749.

SEC. 5. DATA SEQUENCE SPECIFICATIONS

.01 The first position of each record indicates the record type:

           Transmitter                        T

(a) Single tape or diskette:

(1) A Transmitter "T" Record; then

(2) one or more Recipient "Q" Records followed by a corresponding Withholding Agent "W" Record then;

(3) additional "Q" and "W" Record sequences for other withholding agents as needed; then

(4) an End of Transmission "Y" Record.

(b) Multiple tapes: (see NOTE)

(1) A Transmitter "T" Record at the beginning of each tape; then

(2) sequences of Recipient "Q" Records followed by corresponding Withholding Agent "W" Records; then

(3) a sequence of Recipient "Q" Records may be continued from one tape to the next if they apply to the same withholding agent, without the necessity of repeating the "W" Record. The sequence might be, for example, QQQQ (end of one tape); TQQQQW (beginning of next tape); then

(4) an End of Transmission "Y" Record ending the last tape.

(c) Multiple diskettes: (see NOTE)

(1) A Transmitter "T" Record; then

(2) one or more Recipient "Q" Records followed by a corresponding Withholding Agent "W" Record; then

(3) additional "Q" and "W" Record sequences for other withholding agents as needed; then

(4) a sequence of Recipient "Q" Records may be continued from one diskette to the next if they apply to the same withholding agent, without the necessity of repeating the "W" Record. The sequence might be, for example, QQQQ (end of one diskette); QQQQW (beginning of next diskette); then

(5) an End of Transmission "Y" Record ending the last diskette.

NOTE: Due to differences in the processing of 1042S information filed on tapes and diskettes, it is required that there be a "T" record at the beginning of each tape, but not at the beginning of each diskette in a shipment.

.03 Tape header and trailer labels, record marks, and tape marks are all optional. If used, they must conform to the following standards:

(a) Header labels must begin with VOL1, VOL2, HDR1, HDR2, or 1HDR. They must be the first record(s) on the reel immediately before the Transmitter "T" Record. Header labels may not exceed 80 characters in length.

(b) Trailer labels must begin 1EOR, 1EOF, EOF1, or EOR1. They must be the last record(s) on the reel, after the "Y" record and tape mark (if a tape mark is used). Trailer labels may not exceed 80 characters in length.

(c) Tape marks must be IBM 001111 (Octal 17) in even parity. They always appear immediately after the "Y" record. If both header and trailer labels are used, the tape mark must follow the header label and must precede and/or follow the trailer label(s).

.04 The minimum file transmitted must consist of a Transmitter "T" Record, a Recipient "Q" Record, and Withholding Agent "W" Record, and an End of Transmission "Y" Record.

SEC. 6. THE TRANSMITTER "T" RECORD

.01 This record identifies the entity preparing and transmitting the file. The Transmitter and the withholding agent may be the same, but they need not be. The first record of a file MUST be a Transmitter "T" record, otherwise the file will be returned for replacement. The Transmitter "T" Record MUST be the first record on a tape (preceded only by header labels, if any) and MUST appear on each tape in the file. FOR TAPE FILES ONLY, the Sequence Number, position 4-5 of the "T" record must be increased by 1 (one) for each tape. The "T" Record is a fixed length of 500 positions.

NOTE: If the field is not applicable, allow for the field by entering blanks or zeros as instructed.

                  RECORD NAME: TRANSMITTER "T" RECORD

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

SEC. 7. RECIPIENT "Q" RECORD

.01 The "Q" Record contains complete name and address information for both Withholding Agent and Recipient of Income, together with all the particulars of the income paid and tax withheld. Complete Withholding Agent data is required because each Recipient "Q" Record is treated as if it were a separate Form 1042S, and is processed independently of other records.

.02 Since the "Q" Record is restricted to one type of income, and one tax rate, under certain circumstances it would be necessary to write more than one "Q" Record. Following are some of the circumstances when more than one "Q" record for a payee would be required:

(a) Different sources of income. For example, Recipient X derived income from Capital Gains (Income Code 09) and Industrial Royalties (Income Code 10). A separate "Q" record must be reported for each income code; providing Gross Income Paid and U.S. Federal Tax Withheld pertaining to the corresponding code.

(b) Change in Country Code during the year. For example, the withholding agent received notification via Form 1001 that the recipient changed from country X to country Y. A separate "Q" record must be reported for each country code; providing Gross Income Paid, Tax Rate and U.S. Federal Tax Withheld. The amounts reported must be based on each country code and the period of time under that country code.

(c) Change in a country's tax treaty rate during the year. For example, effective April 1, country X changes its tax treaty rate from 10% to 20%. A separate "Q" record must be reported for each of the tax rates. Provide the Gross Income Paid, Tax Rate, and U.S. Federal Tax Withheld for the period of time under that tax rate.

(d) Gross Income Paid of more than one billion dollars. Report a Gross Income Paid of 99999999999 (dollars and cents) in the first Recipient "Q" record. The second Recipient "Q" record will contain the remaining money amount.

.03 Failure to provide multiple recipient "Q" records when necessary will generate math computation errors during processing and therefore, result in the file being returned for replacement.

.04 All recipient "Q" Records for a particular Withholding Agent must be written before the corresponding Withholding Agent "W" Record, and before "Q" Records for another Withholding Agent may begin.

NOTE: If the field is not applicable, allow for the field by entering blanks or zeros as instructed.

                   RECORD NAME: RECIPIENT "Q" RECORD

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

SEC. 8. WITHHOLDING AGENT "W" RECORD

.01 Enter a "W" Record after the last "Q" Record submitted for a particular Withholding Agent. The "W" Record serves as a summary of the preceding "Q" Record data, and enables IRS to cross check the correctness of information received.

.02 Several "W" Records for different withholding agents may appear on the same Transmitter's file. Also, the "W" Record may refer to "Q" Records on more than one reel, provided all of the preceding "Q" Records are for the same withholding agent.

.03 A "W" Record may only be followed by new Recipient "Q" Records for the next Withholding Agent, if any, or by a tape mark and/or trailer label when more reels follow this reel, or by an End of Transmission "Y" Record, when this is the last reel of the file. The "W" Record cannot be the last record on the file.

.04 Each "W" Record has a fixed length of 500 positions.

NOTE: If the field is not applicable, allow for the field by entering blanks or zeros as instructed.

               RECORD NAME: WITHHOLDING AGENT "W" RECORD

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

SEC. 9. END OF TRANSMISSION "Y" RECORD

.01 The "Y" Record is a fixed record length of 500 positions and all positions listed are required. The "Y" Record is a summary of the number of withholding agents and total number of tape reels in the entire file.

.02 This record will be written after the last "W" Record of the entire file. End the last reel ONLY of a file with an End of Transmission "Y" Record. The "Y" Record may only be preceded by a "W" Record. It may only be followed by a tape mark, or a tape mark and a trailer label (if trailer labels are used), or a trailer label.

.03 Please note that if submitting a multi-reel file, there will only be one End of Transmission "Y" record. The End of Transmission "Y" record will be the last record in the final block on the last reel in the file.

              RECORD NAME: END OF TRANSMISSION "Y" RECORD

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