Rev. Proc. 75-20

Part A -- General

Section 1. Purpose.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(p) Agriculture Subsidy Payment Report

.02 This Procedure supersedes Revenue Procedure 73-13, 1973-1 C.B. 776, and Revenue Procedure 74-46, 1974-2 C.B. 502.

.03 Revisions to Forms 1099-INT, 1087-INT and W-2 have necessitated certain changes in the magnetic tape specifications for reporting wage and statement amounts.

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

.05 Employers or transmitters filing W-2's in the form of magnetic tape should also be aware of the provisions of the Unified Reporting Plan contained in Social Security Administration Publication TIB-3. The Unified Reporting Plan permits a Payer/Transmitter to satisfy both the Social Security Administration and the Internal Revenue Service's filing requirements by reporting Forms W-2 (Copy A) and Forms 941, Schedule-A (Quarterly Report of Wages Taxable under the Federal Insurance Contribution Act) in a unified magnetic tape format. Optionally, the same format may be used for reporting to certain State agencies. Copies of Social Security Administration Publication TIB-3 are available from any Internal Revenue Service Center or local Social Security Administration office.

Sec. 2. Application For Tape Reporting.

.01 The above listed statements may be filed on magnetic tape by payers or by transmitters acting for a single payer or a group of payers. Except as covered in PART A, Sec. 2.07, for Form 1099-MED filers, payers may submit all or part of their information on magnetic tape; a combination of tape records and paper documents is acceptable so long as there is no duplication or omission of documents.

.02 Payers or transmitters who desire to file statements in the form of magnetic tape must first file a letter of application or submit Form 4419, Application for Magnetic Tape Reporting. This letter or application should be addressed to the Director, Internal Revenue Service Center, Attention: Magnetic Tape Coordinator, where the payer or transmitter normally files statements; Addresses of the Internal Revenue Service Centers are shown in Section 9 of this Revenue Procedure.

If the prospective filer submits a letter of request, it must contain the following:

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

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

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

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

(e) List of payers to be included in the file(s) if the requester is a transmitter;

(f) Signature of official responsible for the preparation of tax reports or the authorized transmitter.

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

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

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

.06 In general, once authorization to file magnetic tape has been granted to a payer, such approval will continue in effect in succeeding years, provided that the requirements of this Revenue Procedure are met, and there are no equipment changes by the payer. However, the Service Center magnetic tape coordinator must be notified before December 31 of the year ending if there has been or there will be any change in equipment or if tape reporting is being discontinued. New applications are required whenever tape reporting is to be resumed. Transmitters are required to notify the magnetic tape coordinator whenever there is a deletion or an addition to the list of payers for whom he is reporting.

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

Sec. 3. Filing of Tape Reports

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

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

.03 Form 4804, Annual Summary and Transmittal of Income, Tax and Information Statements Reported on Magnetic Tape or Disk Pack, will be required from each payer to cover each payer's portion of the tape file. Only the payer can sign the affidavit provided on Form 4804. It is unacceptable for a transmitter, service bureau or paying agent to sign on behalf of the payer. The required Form 4804 must be filed with the shipment of magnetic tape. If only a portion of the returns are submitted on magnetic tape, include a statement that the remaining returns are being submitted in the form of paper documents. Note on the address side of the magnetic tape shipments, "DELIVER UNOPENED TO THE TAPE LIBRARY."

Form 1096, Annual Summary and Transmittal of U.S. Information Returns, or Form W-3, Transmittal of Income and Tax Statements, as appropriate, will be included in the shipment of paper documents. Only the payer can sign the affidavit provided on Forms 1096 or W-3. It is unacceptable for a transmitter, service bureau or paying agent to sign on behalf of the payer. 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 tape) with the Form 1096 or W-3. Please note that Form 1096 or W-3 instructions normally apply to the filing of information returns on paper; however, filers of magnetic tape and disk must review the Form 1096 instructions and file Schedule A (Form 1096), if appropriate.

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

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

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

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

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

Sec. 4. Processing of Tape Statements

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

.02 However, if the tapes submitted are unprocessable, they will be returned for correction. Acceptable tapes will then be returned within six months of receipt.

Sec. 5. 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 tape, he should contact the magnetic tape coordinator of the Service Center to which the tape statements were or are to be submitted. A Corrected Form 4804 must be filed whenever corrections on tape are submitted.

.02 If corrections are not submitted on tape, the appropriate paper form (Form W-2, W-2P, 1099 or 1087) must be used if it is necessary to correct Payee "B" records in the magnetic tape files. Each such form must be annotated in the manner specified for corrected statements in the Instructions for Form 1096 or W-3, as appropriate. Corrected documents should contain all relevant information so that they completely supersede the statements recorded on tape.

.03 Form 1096 or W-3 instructions, as appropriate, are to be followed when paper documents are filed to correct statements submitted on tape.

Sec. 6. Effect on Paper Documents

.01 Magnetic tape reporting of the information documents listed in Section 1 above applies only to the original (Copy A). By filing with the Service on magnetic tape, payers are permitted considerable flexibility in designing the copy of the information return to be furnished to the employee/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, shareholder or employee. This is permissible so long as all required information present on the official form is included and the employee/payee's copy is conducive to proper reporting on his tax return. Payers should also include the message that "This information is being furnished on Forms 1099 (or 1087, W-2, W-2P) to the Internal Revenue Service" on the employee/payee's copy.

.02 If only a portion of the statements is reported on magnetic tape and the remainder is reported on paper forms, those statements not submitted on magnetic tape must be filed on the appropriate prescribed forms, or on paper substitutes meeting the format requirements and paper specifications in the appropriate Revenue Procedure on the reproduction of Forms W-2 and W-2P or the reproduction of Forms in the 1087 and 1099 Series.

Sec. 7. Calendar Year Basis

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

Sec. 8. Data Entries

.01 The Service expects that payers will make every effort to keep to a minimum those statements submitted without taxpayer identifying numbers, through continued compliance with the requirements set forth in section 301.6109-1 of the Income Tax Regulations on Procedures and Administration and section 31.6109-1 of the Employment Tax Regulations. If, for legitimate causes the taxpayer identifying number of a payee has not been furnished to the payer, the specifications in PART B of the procedure permit its omission.

.02 The Service associates and verifies payments to employees/payees with corresponding amounts on tax returns, principally through taxpayer identifying numbers. It is particularly important that correct social security and employer identification numbers for employees/payees be provided on the forms, magnetic tape or disk pack submitted to the Service.

For each omission of a required identifying number, the law provides that the Service may charge a $5.00 penalty, unless the payer or payee responsible for furnishing the number supplies an explanation that establishes reasonable cause for not having done so. For those engaged in a trade or business (including employee trusts, retirement systems, etc.) the taxpayer identifying number is the employer identification number (00-0000000). For individuals, it is the social security number (000-00-0000). When entering either number on magnetic tape records, please do not include the hyphens.

See Sec. 10. below, Guidelines for Determining Proper Taxpayer Identifying Number to be Furnished to the Service.

.03 The Service must be able to identify the surname associated with the taxpayer identifying number furnished on a statement. When statements are received in the form of paper documents, this is accomplished through a manual editing process. However, manual editing is precluded when statements are received on magnetic tape. Hence, the specifications in PART B of this procedure include a data field in the payee records called "Name Control," in which the first four alphabetic characters of the payee surname are to be entered by payers. In addition, a blank 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 payee surname, the specifications permit the submission of statements on magnetic tape with the Name Control Field left blank. However, compliance with the following all 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. The surnames of the other payees may be entered in the second name line.

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

Sec. 9. Additional Information

Requests for additional copies of this Revenue Procedure, or requests for additional information on tape reporting, should be addressed to the attention of the Magnetic Tape 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 identifying 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 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 record. If the account is recorded in more than one name, furnish the taxpayer identifying number and name of one of the holders of record. The number provided must be associated with the name of the holder provided in first line of the payee of the Payee "B" Record of PART B of this procedure.

Sole proprietors who are payers should show their employer identification numbers in the Payer/Transmitter "A" Record. However, payers 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.

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SEC. 1. GENERAL

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

(a) 7 channel binary coded decimal (BCD) with

(1) Either Even or Odd Parity and

(2) Either a Density of 556 or 800 BPI

(b) 9 channel EBCDIC (Extended Binary Coded Decimal Interchange Code) with

(1) Odd Parity and

(2) Either a Density of 800 or 1600 BPI

(c) 9 channel ASCII (American Standard Coded Information Interchange) with

(1) Odd Parity and

(2) Either a Density of 800 or 1600 BPI

In addition, all compatible tape files must have the following characteristics:

(a) Type of tape--1/2 inch Mylar base, oxide coated and;

(b) Interrecord Gap--3/4 inch

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

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

(a) Single Reel:

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

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

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

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

(b) Multiple Reels:

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

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

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

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

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

NOTE: See Sections 9 and 10 (Tape Layouts) and Section 11 (Record Layout).

All records, including headers and trailers, must be written at the same density.

SEC. 2. CONVENTIONS AND DEFINITIONS.

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

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

     Element                                 Description

SEC. 3. RECORD LENGTH

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

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

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

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

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

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

(b) Facilitate making all records the same length.

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

Identifies the payer and transmitter of the tape 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 on one tape reel will depend on the number of payers and types of statements being reported. A transmitter may include Payee "B" Records for more than one payer on a tape reel; however, each separate payer's Payee "B" Records must be preceded by a Payer/Transmitter "A" Record. A single tape reel may also contain different types of statements (e.g., 1099-INT and W-2 statements) but the statements may not be intermingled. A separate Payer/Transmitter "A" Record is required for each type of statement being reported on the tape reel. The following are two optional ways the Payer/Transmitter "A" Record may be used:

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

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

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

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

This method is especially adaptable to users of COBOL.

 Tape Position   Element Name             Entry or Definition

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

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

.01 Write this record after the last Payee "B" Record for each Payer/Transmitter "A" record. For every "A" record on a reel, there must be a corresponding End of Payer "C" Record or a single End of Reel "D" Record denoting a continuation of Payee "B" Records on the next tape reel of the file.

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

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

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

.05 Additionally, the "C" Record Length may be the same as the Payee "B" Record length for all forms. Fill positions beyond Control Total positions with blanks.

  Tape Position     Element Name          Entry or Definition

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

Additionally, the "D" Record length may be the same as the Payee "B" Record length for all forms. Fill positions beyond Control Total positions with blanks.

 Tape Position   Element Name             Entry or Definition

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

 Tape Position   Element Name             Entry or Definition

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

                                               2nd

² Must contain "Number of Payees" and "Control Totals" summarizing all Payee Records written on this reel.

³ "Number of Payees" and all "Control Totals" must be zero filled.

/*/When more than one type of document (file) is reported on a tape reel, there will be a corresponding increase in the series of "A", "B--B" and "C" records since, within a tape reel, a file is equivalent to an "A" record, a series of "B" records and a "C" record for a single payer.

SEC. 10. TAPE LAYOUTS--OPTION 2 (REEL SEQUENCE NUMBER IS IN THE HEADER LABEL).

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

                               1st     2nd

² Must contain "Number of Payees" and "Control Totals" summarizing all Payee "B" Records written for this Payer on this reel and on prior reel(s).

³ Must contain "Number of Payees" and "Control Totals" summarizing all Payee "B" Records written for this Payer on this reel and for this Payer on the prior reel(s).

/*/When more than one type of document (file) is reported on a tape reel, there will be a corresponding increase in the series of "A", "B--B" and "C" records since, within a tape reel, a file is equivalent to an "A" record, a series of "B" records and a "C" record for a single Payer.

SEC. 11. RECORD LAYOUTS.

[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. 12. EFFECT ON OTHER DOCUMENTS

This Revenue Procedure supersedes Rev. Proc. 73-13, 1973-1 C.B. 776 and Rev. Proc. 74-46, 1974-2 C.B. 502.