Rev. Proc. 73-14

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 (hereafter collectively referred to as payers) can file annual information returns on disk pack 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 Annuities, Pensions or Retired pay;

(c) Forms 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 1099L, U.S. Information Return for Distributions in Liquidation during Calendar Year.

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

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

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

(m) Form 1087-MED, Statement for Recipients of Medical and Health Care payments;

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

(o) Agriculture subsidy payment report.

.02 The 1099-DIV also satisfies the filing requirements for Form 1099-M, U.S. Information Return, Regulated Investment Company Distributions. Thus, regulated investment companies can file required statements on magnetic disk with Internal Revenue Service in accordance with the specifications enumerated in Part "B" of this procedure.

Sec. 2. Application for Disk Pack Reporting.

.01 The above listed statements may be filed on disk by payers or by agents acting for a single payer or group of payers. Except as covered in Part "A," Sec. 2.06, for Form 1099-MED filers, disk reporting is not restricted to payers submitting only a portion of their information on disk; a combination of disk records and paper documents is acceptable so long as there is no duplication or omission of documents.

.02 Payers or agents who desire to file statements on disk must first file a letter of application. This letter should be addressed to the Service Center where the payer or agent normally files statements. Addresses of the Internal Revenue Service Centers are listed in Part "A," Section 9 of this Revenue Procedure.

The letter of request 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 disk 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 disk files; i.e., manufacturer and model of main frame and disk drives. Identify which of the three sets in Part "B"--Disk Pack Specifications of this procedure, described your equipment.

(e) Internal Revenue office where paper forms were filed last year.

(f) List of payers to be included in the file(s) if the requester is an agent.

(g) Signature of official responsible for the presentation of tax reports or his authorized agent.

.03 The Service will act on applications 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 their application for disk reporting will be approved. Compatible disk characteristics are shown in Part "B," Section 1.01.

.05 In general, once authorization to file on disk has been granted to a payer, such approval will continue in effect in succeeding years, providing that the requirements of this Revenue Procedure are met and there are no equipment changes by the payer. However, new applications are required if users change equipment, or if they discontinue disk reporting for one or more years then decide to resume this method of reporting.

.06 Medical payments may be reported on separate disk pack submissions rather than aggregated into a single disk submission, so long as all of the reports from a carrier are in magnetic disk form. For these purposes, the headquarters office will be considered as an "agent," 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 covering all of the individual disk files to be submitted should be submitted to only one Service Center.

Sec. 3. Filing of Disk Reports.

.01 Packaging, shipping, and mailing instructions will be provided in the authorizing letter issued by the Service in response to an application for disk reporting.

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

.03 A single 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 required from each payer to cover the payer's entire shipment of statements including those on paper and on disk pack. For agents filing statements for several payers, the appropriate transmittal documents, Form 1096 or W-3, must be filed for each payer whose payments are included in the transmittal. The required Form 1096 or W-3 should be filed separately from the shipment of disk pack. If only a portion of the statements are submitted on disk, the paper documents should be submitted with the Form 1096 or W-3, along with a notification that remaining statements are to be submitted in the form of disk pack. Where a payer reports information returns entirely on disk pack, the statement "Disk Pack Reporting" on Form 1096 or W-3 will suffice (i.e. no volumes need be listed). If a payer reports a portion of the information returns on disk and a portion on paper documents, the statement "Disk Pack Reporting" will be adequate for those returns filed on disk; however, normal Form 1096 or W-3 instructions apply for those information returns reported on paper documents. This latitude in reporting does not extend to Schedule A (Form 1096) or Form W-3P. Note on the address side of the disk pack shipments, "DELIVER UNOPENED TO THE TAPE LIBRARY."

Form W-3P, Annual Report by Certain Payers of Annuities and Lump-Sum Distributions, is to be filed, along with Form W-3, by Federal, State, and local government agencies or retirement systems (who make payments reportable on Forms W-2P and 1099R) and life insurance companies maintaining pension plan reserves described in Internal Revenue Code section 805(d)(1).

.04 The dates prescribed for filing paper documents with the Service will also apply to disk pack filing. Requests for extensions of time for filing and related matters should be made to 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 1096 or W-3.

.05 The specifications in Part "B" of this procedure describe in detail the requirements for reporting on disk.

.06 All disk files submitted by 1099-MED filers per Part "A," Section 2.06, should be assembled by the carrier and mailed in one shipment to the Service Center that received the application.

Sec. 4. Processing of Disk Statements.

.01 The Service will copy the information from the disk pack(s). Normally, the disk packs received by the Service will be returned to the payers or agents by August 15 of the year in which submitted.

.02 However, if disk packs submitted to the Service are unprocessable and must be returned for correction prior to processing, they will be returned within 6 months of receipt of acceptable disk packs.

Sec. 5. Corrected Statements.

.01 If a large volume of corrected statements is necessary and the payer or agent possesses the capability to provide such corrections on disk, he should contact the Service Center to which the disk statements were or are to be submitted.

.02 If corrections are not submitted on disk, the appropriate paper form will be used if it is necessary to correct Payee "B" records in the disk pack files. Each such form must be annotated in the manner specified for corrected statements in Circular E or Rev. Proc. 73-11 or 73-12, pages 763, 768, as appropriate. Corrected documents should contain all relevant information so that they completely supersede the same statements recorded on disk.

.03 Statements correcting paper documents should be bundled separately from other paper documents. When correcting documents are shipped separately, a corrected Form 1096 and/or W-3 must also be filed.

Sec. 6. Effect of Paper Documents.

.01 Reports on disk pack for reporting to Internal Revenue Service can be substituted for only the original copy (copy A) of statements. When disk pack statements are filed in lieu of statements other than Forms W-2 or W-2P, payers must supply their payees with the information required to be shown on the paper forms in a manner conductive to proper reporting on their tax returns. Payers filing disk pack statements in lieu of Forms W-2 or W-2P, must furnish their payees with appropriate information or with paper substitutes which meet the requirements and specifications in Rev. Proc. 73-12. That procedure outlines more relaxed rules for reporting this information to the payee than prescribed in previous years.

.02 If only a portion of the statements is reported on disk pack and the remainder is reported on paper forms, those statements not submitted on disk must be filed on the appropriate prescribed forms, or on paper substitutes meeting the format requirements and paper specifications in Rev. Procs. 73-11 and 73-12.

Sec. 7. Calendar Year Basis.

Magnetic Disk Pack reporting to Internal Revenue Service for all types of Forms 1099, 1087, W-2 and W-2P must be on a 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 1.6109-1 of the Income Tax Regulations and Section 31.6109-1 of the Employment Tax Regulations. If, for legitimate cause, the taxpayer identification number of a payee has not been furnished to the payer, the specifications in Part "B" of this procedure permit its omission.

.02 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 disk. 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 should 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.

.03 If payers are unable to provide the first four characters of the payee surname, the specifications permit the submission of statements on disk 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 should be recorded on the first name line.

(b) In the case of a single payee, a blank should precede the surname unless the surname begins in the first position of the field.

(c) In cases of multiple payees, the required connection should be provided by recording a blank immediately preceding the surname of the person whose identifying number has been provided, and placing the surname of the connected payee before all other surnames.

.04 Sometimes the payee identification recorded on the payer's records is lengthy and exceeds the 80 characters allotted on the disk pack records. This is most common in the case of trusts or other types of fiduciary accounts. The first 80 characters of the payee identification normally provide sufficient descriptive data for the Service purposes. Although it is preferred that payers would truncate or abbreviate lengthy payee descriptions, provision is made in the specifications for additional payee descriptions.

.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 disk if acceptable to State or local governments, as well as to the Federal Government.

Sec. 9. Additional Information.

Request for additional copies of this Revenue Procedure, or request for additional information on disk reporting, should be addressed to one of the following:

     (a) Internal Revenue Service

SECTION 1. GENERAL.

.01 These specifications prescribed the required format and content of the records to be included in the file. Usually the Service will be able to process any compatible disk file. To be compatible, a disk file must meet any set of the following specifications in total:

                      SET 1 -- SPECIFICATIONS /*/

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

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

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

Note: There should also be an End of Disk Pack "D" Record for each pack other than the last pack when the Payee "B" Records of a Payer begin on one pack and end on another pack.

(4) And End of Transmission "F" Record. This includes transmitter files containing multiple payers within a file.

² For a given "A" Record, all succeeding "B" Records must be the same length.

/*/ Where a Payer/Transmitter's Disk Pack File consists of more than one pack, each additional pack must be identified using these specifications.

SET 2 -- SPECIFICATIONS /*/

Job Control Statement for Honeywell Disk Pack

 Item                        Description

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

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

(3) An End of Payer "C" Record

Note: There should also be an End of Disk Pack "D" Record for each pack other than the last pack when the Payee "B" Records of a Payer begin on one pack and end on another pack.

(4) An End of Transmission "F" Record. This includes transmitter files containing multiple payers within a file.

/*/ Where a Payer/Transmitter's Disk Pack File consists of more than one pack, each additional pack must be identified using these specifications.

SET 3 -- SPECIFICATIONS /*/

Job Control Statement for GE-4020 Disk Pack

 Externally identify the following:

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

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

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

Note: There should also be an End of Disk Pack "D" Record for each pack other than the last pack when the Payee "B" Records of a Payer begin on one pack and end on another pack.

(4) An End of Transmission "F" Record. This includes transmitter files containing multiple payers within a file.

² For a given "A" Record, all succeeding "B" Records must be the same length.

/*/ Where a Payer/Transmitter's Disk Pack File consists of more than one pack, each additional pack must be identified using these specifications.

SEC. 2. DEFINITIONS AND CONVERSIONS.

.01 Definitions

      Element                             Description

SEC. 3. RECORD LENGTH.

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

(a) If the use of blocked records would result in a short block at the end of the file representing all payments made by the payer, all remaining positions of the block must be filled with 9's. However, filling with 9's is allowable only in the last block of returns for a payer.

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

.02 Provision has been made for a special data entries field in the Payee "B" Record. These entries are optional. If the field is utilized, it must be present 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 reporting on disk pack to those jurisdictions when authorized by them.

(b) Carry additional payee description if the eighty characters provided in the Payee "B" Record are insufficient. However, it would be preferable to the Service if such lengthy Payee records were truncated or otherwise shortened. (Contact the Service Center for detailed instructions if additional Payee description will be required.)

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

Identifies the payer and transmitter of the disk files and provides parameters for the succeeding Payee "B" Records. The Service relies on its computer programs for 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 disk pack will depend on the number of payers being reported. A transmitter may include Payee "B" Records for more than one payer on a disk pack; however, each separate Payer's Payee "B" Records must be preceded by a Payer/Transmitter "A" Record. Separate disk files on separate disk packs must be submitted if the payer is reporting payments data for more than one type of statement (Forms 1099-DIV and W-2, for instance). When multiple disk packs are required for a single file, the correct Payer/Transmitter "A" Record must be repeated as the first record on every succeeding disk pack in the file to which it applies, and the pack sequence number must be incremented by 1 on each pack after the first disk pack.

 Tape Position       Element Name         Entry or Definition

² Both Forms 1099-DIV and 1099-INT are classified under Statement Code 1; however, each should be reported as a separate file.

³ This coding range is only available for Department of Agriculture in reporting Subsidy Payments.

                                   The amount codes for the respective

The following items are required if the Payer and Transmitter are not the same, or the transmitter includes files for more than one payer:

 201 through 240 1st Name Line--   Enter 1st name line of Transmitter.

Contains payment record from individual statements. A block may not exceed one track.

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

/**/ Payment amount 8 may be present only for Form 1099R.

SEC. 6. END OF PAYER "C" RECORD.

.01 Write this record after the last payee "B" Record following the last preceding Payer/Transmitter "A" Record. A disk pack 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 disk pack.

.02 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 preceding Payer/Transmitter "A" Record under which a Payer is reporting payments for a type of document.

To illustrate:

(a) Single disk pack;

Where all the records of a Payer for a particular type of document are reported on a single disk pack, 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 disk packs;

Where the reporting of a Payer for a particular type of document begins on one disk pack and ends on another disk pack, the last preceding Payer/Transmitter "A" Record would be the "A" Record immediately preceding all the Payee "B" Records on the disk pack 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, an End of Disk Pack "D" Record or an End of Transmission "F" Record.

 Tape Position       Element Name         Entry or Definition

¹ Set 2--Specifications (Honeywell), Part "B," Section 1.01 prohibits variable length records within a file. Part "B," Section 2.01 (see definition of a "File").

SEC. 7. END OF DISK PACK "D" RECORD.

Write this record when the end of the writing area of each pack has been reached, but all records in the file have not been written. This record indicates that there are additional packs in the file. Each End of Pack "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 pack.

 Tape Position       Element Name         Entry or Definition

¹ Set 2--Specifications (Honeywell), Part "B," Section 1.01 prohibits variable length records within a file. Part "B," Section 2.01 (see definition of a "File").

SEC. 8. END OF TRANSMISSION "F" RECORD.

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

 Tape Position       Element Name         Entry or Definition

¹ Set 2--Specifications (Honeywell), Part "B" Section 1.01 prohibits variable length records within a file. Part "B," Section 2.01 (see definition of a "File").

SEC. 9. DISK LAYOUTS.

The following chart shows by type of file, the record types to be used in the first two and the last three records written on a disk pack when a type of document (file) is reported on a pack or series of packs./*/

        Type of file               1st     2nd    2nd    Next   Last

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

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

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

SEC. 10. EFFECT ON OTHER DOCUMENTS.

This Revenue Procedure modifies Rev. Procs. 73-11, page 763, and 73-12, page 768.