Rev. Proc. 86-26

SECTION 1. PURPOSE

.01 The purpose of this revenue procedure is to set forth requirements and conditions under which reporting agents preparing Form 940, Employer's Federal Unemployment Tax Return, for groups of taxpayers can furnish the required information in the form of magnetic tape instead of paper documents.

.02 If a reporting agent is unable to comply with the changes in specifications, he / she should contact the local Magnetic Tape Coordinator for Business Tax Returns for further instructions.

.03 The procedures for filing Form 940 on magnetic tape differ from the procedures for filing Forms 941 and 941E on magnetic tape, principally in the Tax Data Records. Whereas in reporting Form 941, there is one Tax Data "B" Record, in reporting Form 940 there are three types of Tax Data "B" Records, "B1," "B2" and "B3".

The need for three different records was established when the return was analyzed. Form 940 is complex with five different parts. Questions A and B at the top of the form determine which parts are required. In addition, in at least two places the return allows for multiple repeating lists: 1) multiple reasons for exempt payments, and 2) multiple entries of state codes and experience rates in Part 5.

To deal with the multiple list problem without paper attachments or tying up large pieces of record formats with seldom used fields, the specifications allow some record types ("B2" and "B3") to be repeated to take care of virtually all taxpayers.

Furthermore, because information as the states to which credit reduction will apply is not available until November of each year, all states and applicable territories are treated as potential credit reduction states.

In addition, many intermediate fields (i.e. fields resulting from the addition, subtraction and multiplication of primary data fields) have been omitted from the "B" Record specification. The test of the final result field, "Total FUTA Tax," against the generated results of the primary fields (i.e. fields only available from taxpayer records) will be used to determine the accuracy of the calculation of the correct tax by the reporting agent.

If an agent chooses not to develop software for exceptional cases, he / she may choose to file those returns on paper.

SEC. 2. APPLICATION FOR TAPE REPORTING

.01 Agents who desire to file authorized federal tax returns on magnetic tape must first file a letter of application or submit Form 4995, Application for Magnetic Tape Filing of Federal Business Tax Returns (previously known as Application for Magnetic Tape Filing of Form 941, Employer's Quarterly Federal Tax Return). A separate application must be submitted for each type of tax return filed (e.g. 941, 941E, 940). A separate revenue procedure applies to filing Forms 941 or 941E on magnetic tape. The letter of application should be addressed to the Director, Internal Revenue Service Center, Attention: Magnetic Tape Coordinator for Business Tax Returns, of the service center that serves the primary business address of the reporting agent. Addresses of the Internal Revenue Service Centers are shown in Section 9 of this revenue procedure. The letter of application must contain the following:

1. Name, address and EIN (Employer Identification Number) of the person, organization, or firm making the application.

2. Name, title, and telephone number of the person to contact regarding the application.

3. Type and nature of equipment to be used to prepare the tape file, i.e., manufacturer and model of main frame and tape drives, tape width, density (characters per inch), and recording mode (e.g. BCD, EBCDIC and ASCII).

4. List of the taxpayers to be included on the initial establishment of the Magnetic Tape Filing system. The list must be in triplicate with the data shown in the exact order as Exhibit 1. Show each taxpayer's name, complete address (including Zip Code), and EIN. Sort into EIN sequence. See section 6.03 for additional details.

5. The service center where paper tax returns were last filed.

6. Signature of the agent or agent's employee authorized to prepare federal tax returns for taxpayers.

7. An agreement by the reporting agent to keep copies of the Powers of Attorney (POA) on file at the agent's principal place of business for examination by the Service upon request. Such copies must be retained until the statute of limitations for the last return filed under its authority expires.

8. An agreement to fully pay the tax by Federal Tax Deposits.

NOTE: This revenue procedure does not restrict a non-financial organization who performs a payroll or tax service from being a reporting agent. See Rev. Proc. 80-31, 1980-2 C.B. 760, concerning the requirements under which FTDs can be made by the reporting agent.

9. An agreement to fully pay contributions to state unemployment funds on time and to timely file related state unemployment tax returns.

10. The first tax period for which the agent plans to file returns on magnetic tape.

11. The estimated volume of returns the agent plans to file by type of return (e.g. 941, 941E or 940).

SEC. 3. POWER OF ATTORNEY

.01 A POA must be submitted for each filer on the list attached to Form 4995 or the letter of application. The POA may be submitted on Form 2848, Power of Attorney and Declaration of Representative, which is available on request; or any other instrument which clearly states that the reporting agent is granted the authority to file and sign the return. The POA filed under this revenue procedure is not subject to the rules contained in the Conference and Practice Requirements (Treasury Regulation 601.502). The POA may cover the filing of both Forms 940 and 941 if desired.

.02 Both the taxpayer, or his authorized representative, and the reporting agent must sign the POA. The signed document will remain in effect until such time as it is revoked by the taxpayer, terminated by written notification from the reporting agent, or expires under its own terms.

1. The following persons may execute a POA on behalf of a corporation or other business taxpayer:

(a) The individual, if the person required to make the return is an individual;

(b) The president, vice president, or other principal officer, if the person required to make the return is a corporation;

(c) A responsible and duly authorized member or officer having knowledge of its affairs, if the person required to make the return is a partnership or other unincorporated organization.

(d) The fiduciary, if the person required to make the return is a trust or estate; or

(e) An agent who is duly authorized in accordance with section 31.6011(a) 7 of the Employment Tax Regulations.

.03 The scope of the POA for magnetic tape filing will be governed according to the following:

1. POA will delegate to the reporting agent the power to sign and file appropriate federal tax returns.

2. The POA becomes effective for the tax period the agent notifies the Service that the employer or filer is being added to the Magnetic Tape Filing system and remains in effect for subsequent periods until revoked, terminated or expired.

3. The POA is automatically revoked when the reporting agent notifies the Service that a taxpayer is no longer included in the Magnetic Tape Filing system.

4. The receipt of a POA for magnetic tape filing has no effect on prior Powers of Attorney on file for other purposes for a given taxpayer.

5. The POA for magnetic tape filing is a limited power of attorney, i.e., notices, refunds and other output resulting from filing on magnetic tape will be mailed to the taxpayer.

6. Requests from a reporting agent for information or adjustments on an account for which the taxpayer has authorized magnetic tape filing will be honored by the service center.

7. Requests for address changes may not be made by the reporting agent. Requests for address changes for taxpayers that are reported under magnetic tape filing will be processed only if they originate with one of the following:

(a) The taxpayer,

(b) An employee of the Service, or

(c) An attorney-in-fact if the attorney has a full POA for all tax matters concerning a taxpayer, and has filed a copy of the POA with the Service.

SEC. 4. APPROVAL OF AGENTS APPLICATION

.01 The Service will act on applications and notify applicants of authorization or disapproval within 30 days of receipt of Form 4995 or a letter of application as defined in Section 2.

.02 Generally, reporting agents using equipment compatible with the Service's can presume that tape filing will be approved. Compatible tape characteristics are shown in Section 11. If the reporting agent has the capability to prepare several types of tapes, the Service prefers that compatible tapes be prepared.

.03 If the reporting agents propose to submit convertible tapes, i.e., tapes requiring translation, the Service will either translate these tapes or provide translation through other government agencies. Magnetic tape filing will be disapproved when the Service is unable to obtain facilities to translate a reporting agent's file to a compatible form. (See Sections 10 and 11 for specifications.)

.04 Once authorization to file tax data on magnetic tape has been granted to a reporting agent, such approval will continue to effect in succeeding tax periods as long as the requirements of this revenue procedure are met, and there are no equipment changes by the reporting agent. However, new applications are required if users change from compatible tapes to equipment producing tapes that require translation, or if they discontinue magnetic tape filing for one or more periods, then decide to resume this method of reporting.

SEC. 5. EFFECT ON PAPER DOCUMENTS

.01 Authorization to file on magnetic tape does not prohibit the filing on paper tax returns, but merely permits filing of such returns on the Magnetic Tape Filing system. If for some reason (e.g. late receipt of records), an agent prefers to file a paper return for a given taxpayer, the agent may do so even after having been given authorization to file that taxpayer's returns on magnetic tape.

.02 The initial filing of tax returns on magnetic tape will be on trial tapes. Each taxpayer included on the magnetic tape must also be on the paper form until authorized by the Service to discontinue filing returns on paper. The paper returns must be arranged in the same order as the returns reported on the magnetic tape and in the same shipment. In general, the Service will notify the reporting agent to discontinue filing paper returns within 90 days after the initial filing of magnetic tape. The notification will depend upon the feasibility of processing the magnetic tape submitted.

.03 Paper and magnetic tape returns for the same tax period must never be filed by a reporting agent at the same time for the same taxpayer unless the returns are filed during the trial period for the reporting agent described in section 5.02.

SEC. 6. FILING TAPE RETURNS

.01 Packaging, shipping, and mailing instructions will be provided in the letter granting initial approval issued by the Service in response to the letter of application for magnetic tape filing.

.02 The Service will allow a tape return to be submitted for those individually approved magnetic tape filers until the reporting agent formally notifies the Service that specific employers are being deleted from their current magnetic tape filing inventory.

.03 Section 6091(b) of the Internal Revenue Code requires that tax returns be filed at the Internal Revenue district (or service center serving that district) that services the legal residence or principal business address of the taxpayer. Thus, reporting agents must normally file taxpayer's returns at the appropriate service center as described above even if it means submitting magnetic tapes to more than one service center. This rule may not be violated unless a reporting agent has applied for and received permission from the Service to do so. Contact your Magnetic Tape Coordinator for Business Tax Returns for details.

.04 Approval by the Service of Form 4995 or a letter of application allows a reporting agent to file at any Internal Revenue service center that services his / her clients. If a reporting agent wishes to file at additional service centers, he / she should notify the Magnetic Tape Coordinator for Business Tax Returns of the service center where he / she originally applied at least 90 days prior to the initial transmittal to the new service center.

.05 The reporting agent will be provided with a validated copy of the agent's listing for taxpayers authorized to file on magnetic tape. This authorization will contain each taxpayer's EIN, four position alpha Name Control, and the District Office Code. This authorization will be the source of the EIN and Name Control to be used on magnetic tape by the reporting agent as an identification of each taxpayer.

It is imperative that this Name Control be retained in the agent's records and be used in each taxpayer's Tax Data "B1" Record (positions 73-76). It is used by the Service to ensure the correct recording of the taxpayer's return. Failure to use the correct Name Control can result in delays in processing the return and notices of delinquent filing being sent to the taxpayer.

.06 Enclose the following in the first box of the tape shipment to the service center:

1. Form 4996, Magnetic Tape Filing Transmittal for Federal Business Returns (previously known as Magnetic Tape Filing Transmittal for Form 941, Employer's Quarterly Federal Tax Return) or a letter of transmittal containing the information described below. File the Form 4996 or the letter of transmittal in duplicate.

2. The letter of transmittal should include:

a. Name and address of reporting agent

b. Type of tax return filed on the magnetic tape

c. Tax period

d. Number of tax returns filed on accompanying tape

e. Total taxes reported

f. Total taxes deposited

g. Service center in which the POA for filing returns on magnetic tape is located

h. Signature of transmitter, title and date.

3. A control listing identifying actual taxpayers previously approved by the Service for magnetic tape filing that are contained on the current tape file being submitted. List the taxpayers in EIN sequence with each taxpayer's name and address.

4. Only Form 940 data may be present on this magnetic tape. Any Form 941 or 941E data must be on separate tapes.

5. The reporting agent should notify the Magnetic Tape Coordinator for Business Tax Returns if the agent does not receive notification of receipt of the transmittal within 15 days from the date he / she sent the transmittal.

SEC. 7. ADDING AND DELETING FILTERS FROM MAGNETIC TAPE FILING SYSTEM

.01 When adding or deleting filers, the Service must receive (in triplicate and in the same format as shown on Exhibit 1) a listing which contains the complete names, addresses and EIN's of the taxpayers the reporting agent wants added or deleted from the Magnetic Tape Filing system. The word "ADDITIONS" or "DELETIONS" should be entered after the title, "Agent's Listing," and the effective date.

.02 The Service will provide a validated copy of the updated agent's listing to the reporting agent. Under no circumstances is a new filer to be included on the Magnetic Tape Filing system until the validated copy is received from the Service.

.03 A POA authorization must be included for each taxpayer to be added to the Magnetic Tape Filing system.

.04 The reporting agent should indicate on the last magnetic tape return submitted for a filer that it is either the "Final Return" or a "Discontinued Filer" in the Tax Data "B" Record.

.05 The reporting agent may not always know that the final magnetic tape return for a particular taxpayer is being submitted at the time the tape is being sent in. When the reporting agent determines that the previous tape contained the last return to be prepared for the individual filer, action should be taken to notify the service center which authorized the magnetic tape filing of one of the following conditions:

1. The taxpayer is out of business (state the effective date) and will no longer be liable for filing returns (Final Return), or

2. The reporting agent will no longer be submitting returns on magnetic tape for the taxpayer who is still in business and is still liable for such returns (Discontinued Filer).

.06 List of proposed (Form 940) filer additions deletions, etc., must be received in the service center prior to the end of November. This will permit the Service to properly validate applications and to respond to the agent within 30 days of receipt of the lists. However, if at the time of filing the agent has not received a validated listing with the additions, he / she should not file a magnetic tape return for those taxpayers because he / she has not received a valid Name Control from the Service.

SEC. 8. DUE DATES

.01 The due dates prescribed for filing paper returns with the Service will also apply to magnetic tape filing of Forms 940.

.02 In no case should returns with more than one due date be included on one tape file.

SEC. 9. ADDITIONAL INFORMATION

Requests for additional copies of this revenue procedure, applications for magnetic tape filing, requests for copies of appropriate input record element specifications, and requests for tape filing information should be addressed to the Director, Internal Revenue Service Center, Attention: Magnetic Tape Coordinator of Business Tax Returns, at one of the following addresses:

     1. North-Atlantic Region

.01 Conventions

Certain conventions may be required by the programming system or equipment used by the reporting agent, with respect to header and trailer labels, record and tape marks. If present, the Service prefers that they adhere to American National Standards Institute (ANSI) X3.27 specifications. The Service will accept other specifications if facilities can be found to accommodate them. The Service reserves the right to reject tapes with other than ANSI X3.27 specifications. The tapes must adhere to the following at a minimum:

(a) Header Label

(1) The first record on a reel only.

(2) In accordance with ANSI X3.27, Volume Header Label (VOL1), First File Header Label (HDR1) and Second File Header Label (HDR2) are strongly preferred.

(b) Trailer Label

(1) The last record on a reel only.

(2) No restrictions apply as to number of characters or type of characters used.

(c) Record Mark

(1) No restrictions apply to record marks.

(d) Tape mark

The tape mark should only follow an End of Reel "F" Record or an End of File "E" Record.

.02 Definitions

 Element              Description

.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.

A compatible tape file must conform to all of the following:

 Type of tape                    1/2 inch Mylar base, oxide coated

1. An Agent "A" Record.

2. A series of Tax Data "B1," "B2" and "B3" Records,

3. A series of Checkpoint "C" Records, and

4. An End of File "E" Record.

5. Multiple reel files will have an End of Reel "F" Record.

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

.04 Affix an external label to each tape with the following information:

1. Name of reporting agent

2. Number of tax returns submitted on this reel of tape

3. Tax year YYMM (Year, Year, month, month) format

4. Density (800, 1600, 6250)

5. Channel (7 or 9)

6. Parity (odd or even)

7. Name of computer manufacturer

8. Computer Type (manufacturer's designation)

9. Tape Drive (manufacturer and type)

10. Sequence number of reel and total number of reels in file (for example, 1 of 3).

.05 Since the Service is not restricting magnetic tape filing to reporting agents with specific types of equipment, or prescribing the methods used to prepare the tape files, the Agent "A" Record, End of Reel "F" Record and End of File "E" Record perform the functions normally assigned to header and trailer labels and related conventions. The End of Reel "F" Record signals that no more Tax Data "B" Records are written on the reel, and the End of File "E" Record indicates that there is no further data to be processed. In addition to the functions stated above, the End of Reel "F" Record is used to balance each reel or each series of Tax Data "B" Records of the reporting agent on a reel.

.06 Record Length

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

(a) A block may not exceed 12,100 tape positions.

(b) If the use of blocked records would result in a short block at the end of a Tax Data "B" Record and the next record is too large to be included in the block, the remaining positions of the block should be filled with 9's or spaces. No other digits or characters other than 9's or spaces are specified or acceptable for filling (or padding) of any tape input data blocks.

(c) All records, except header and trailer labels, if used, are blocked.

.07 Data

Only character data may be used. This means numeric fields cannot use overpunched signs. Special characters should be limited to -, &, %or / and can only be used in the name line fields and the street address fields of Agent "A" Records and Tax Data "B" Records. Otherwise, characters must be numeric or alphabetic. All money fields should include 2 decimal positions on right.

.08 Agent "A" Record

Identifies the reporting agent who prepared and transmitted the tape file. When multiple reels are required for a single file, the Agent "A" Record must be repeated as the first record (second record if header labels are used) on every succeeding reel in the file, and the reel number must be incremented by 1 for each tape reel after the first reel. A reporting agent may include Tax Data "B" Records (of any type) prepared at more than one location on the same tape, but they must have the same DO Code; however, Tax Data "B" Records prepared at different locations with different DO Codes must be on separate files preceded by an Agent "A" Record. Contact the Magnetic Tape Coordinator for Business Tax Returns for additional details, if necessary.

                       Form 940 AGENT "A" RECORD

1. Contains tax information for each filer reported by the reporting agent. The number of Tax Data "B" Records of any type appearing on one tape reel will depend on the number of taxpayers represented (only one tax return for each EIN).

2. Tax Data "B" Records may be blocked together with record types A, C, E or F or the Tax Data "B" Records may be blocked alone with record types A, C, E and F unblocked. Records should have a blocking factor for which blocks will not exceed 12,100 tape positions. All records must be fixed length and for the current tax period. All money amounts must contain dollars and cents, must be right justified with zero filling on left and must be zero filled if non-significant. Fields identified as indicators should always carry a value. Other non-money fields must be left justified and blank filled on right with blank filling of non-significant fields.

3. Directions for the use of the three types of "B" Records:

A. General Directors

1). A "B1" Record is required for all taxpayers. There can be only one per taxpayer.

2). If the taxpayer has employees in more than one state, then a "B3" Record is required. They must follow "B2" Records (if any are present) of the taxpayer.

3). Each "B3" Record will accommodate up to four additional states. Up to thirteen "B3" Records may be present. They must follow "B2" Records (if any are present) of the taxpayer.

4). A "B2" Record is used only if the taxpayer has more than ten separate reasons for exempting payments to employees from FUTA. The various reasons for exempting payments are defined in Section 13 of this revenue procedure. Up to four "B2" Records may follow a "B1" Record.

5). If any field is too small to accommodate the data, the return must be filed on paper.

6). The single state filing indicator (position 153 of "B1" Record) is a key to the use of the "B1" and "B3" Records.

If the single state filing indicator is equal to zero, then only a "B1" Record is required and positions 449-588 should be blank and zero filled as appropriate.

If the single state filing indicator is equal to one or three, then only a "B1" Record is required but positions 449-588 will require some significant data.

If the single state filing indicator is equal to two, then at least one "B3" Record is needed in addition to the "B1" Record.

The single state filing indicator has no bearing on "B2" Records.

B. Directors for use of "B1" Record:

1). Positions 1-155 of the "B1" Record must contain significant data for all taxpayers.

2). Positions 156-168 (State Contributions) and 169-183 (State Reporting Number) of the "B1" Record must contain significant data if the employer is required to contribute to state unemployment funds.

3). Positions 184-196 (Total Payments to Employees) of the "B1" Record require data from all taxpayers.

4). Positions 197-209 (Payments in Excess of Maximum Taxable Wages) contain significant information if any employee's wages exceeded the maximum for the year.

5). Positions 210-231 (Total FUTA and Total Taxes Deposited plus Overpayment Credit fields) of the "B1" Record require significant data from all taxpayers.

6). Positions 232-242 (Overpayment From Previous Year) may or may not contain significant data depending on whether the taxpayer requested transfer of the previous year's overpayment.

7). Positions 243-253 (Excess) contain significant data only if Total Taxes Deposited plus Overpayment from Previous Year exceeds Total FUTA Tax.

8). Position 254 (Credit Elect Indicator) enables the taxpayer to make a decision as to whether overpayment will be refunded or transferred to the following year's account.

9). Positions 255-265 (Total Taxes Deposited This Year) should also contain significant data.

10). Positions 266-305 should contain significant data if Total FUTA Tax exceeded $100.00.

11). Positions 306-435 contain ten combinations of a two position exemption code and an 11 position dollar and cents amount of wages exempted. The exemption codes and their meanings may be found in Section 13.

12). Positions 436-448 (Credit Reduction Wages for Unpaid Advances to the States) should have significant data only if the state identified in positions 154-155 is a credit reduction state for a given year.

13). Positions 449-588 are a series of repeating fields which only require entries if more than one state is being reported by the taxpayer or the taxpayer is not required to make contributions to the state unemployment fund of the state in which he / she has employees, or if any part of the taxpayer's total taxable wages is exempt from state unemployment taxes. There are four series of five fields.

The five fields are:

a) Taxable payroll

b) Date experience rate took effect

c) Date experience rate was changed

d) State experience rate

e) Contributions made to state.

At least one series of those fields must be used by those taxpayers who are reporting for more than one state or are not required to make contributions to the state unemployment fund, or if any part of the taxpayer's total taxable wages is exempt from state unemployment taxes. Only if the employer's experience rate changes are the other three series used. If an employer has had more than four experience rates in a given year, the return must be filed on paper.

14). The experience rate group fields (positions 449-588) in the "B1" Record allow up to four different experience rates in a given year (i.e. initial rate and three changes).

15). If the employer was not required to pay contributions to the state unemployment fund of a particular state, only one experience rate group should contain significant data and it should be used in the following manner:

a) Taxable payroll - should have significant data

b) Date experience rate took effect - fill with 0101

c) Date experience rate was changed - fill with 1231

d) State experience rate - fill with five zeroes

e) Contributions paid to state - fill with ten zeroes.

C. Directions on use of "B2" Record:

1) Positions 1-13 must have significant data if a "B2" Record is used.

2) Positions 14-143 are ten groups of two fields. The two fields are exemption code and exemption amount. The exemption codes and their meanings can be found in Section 13 of this revenue procedure.

D. Directions on use of "B3" Record:

1) Positions 1-13 must have significant data if a "B3" Record is used.

2) Positions 14-693 contain four groups of fields. Each group is for a separate state code. Therefore each "B3" Record can accommodate reporting of an additional four states.

Positions 14-183 relate to the first state

Positions 184-353 relate to the second state

Positions 354-523 relate to the third state

Positions 524-693 relate to the fourth state.

3) Each state group in the "B3" Record is 170 positions. The state group is composed of the following fields:

a) State Code (2 positions)

b) Credit Reduction Wages (13 positions)

c) State Reporting Number (15 positions)

d) Four groups of experience rate fields.

The experience rate groups are composed as follows:

a) Taxable payroll (12 positions)

b) Date experience rate took effect (MMDD format)

c) Date experience rate was changed (MMDD format)

d) State experience rate (5 positions-all considered decimal)

e) Contributions paid to state (10 positions).

4) Credit Reduction Wages fields should only be significant if the state referenced in associated state code is a credit reduction state for the year in which the return is filed.

5) The experience rate group fields allow up to four different experience rates in a given year (i.e. an initial rate and three changes).

6) If the employer was not required to pay contributions to the state unemployment fund of a particular state, only one experience rate group should contain significant data and it should be used in the following manner:

a) Taxable payroll-should have significant data

b) Date experience rate took effect-fill with 0101

c) Date experience rate was changed-fill with 1231

d) State experience rate-fill with five zeroes

e) Contributions paid to state-fill with ten zeroes.

                     FORM 940 TAX DATA "B1" RECORD

1. Write this record after each 100 or fewer Tax Data "B" Records whether "B1," "B2" or "B3". Each Checkpoint Totals "C" Record must contain a count of each type of Tax Data "B" Record and the sum of Total Taxes on all "B1" Records to this point.

2. The checkpoint totals "C" Record must be followed by a Tax Data "B" Record except as follows: If the Checkpoint totals "C" Record is at the end of the reel, it will be followed by an End of Reel "F" Record. If the Checkpoint Totals "C" Record is at the end of the file, it is followed by an End of file "E" Record.

3. All Checkpoint Totals "C" Records must be fixed length. All money amount fields will contain dollars and cents. The Checkpoint Totals "C" Records cannot be followed by a Tape mark.

                       FORM 940 AGENT "C" RECORD

1. Write this record after the last Checkpoint totals "C" Record.

2. All money amounts will contain dollars and cents.

3. All End of File "E" Records must be fixed length.

4. This record can be followed only be a tape mark or tape mark and trailer label on a reel.

                       FORM 940 AGENT "E" RECORD

1. 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 records. Each End of Reel "F" Record must contain a count of each type of "B" Record and the sum of Total Taxes reported for all "B1" Records on that reel.

2. The End of Reel "F" Record cannot be followed by an Agent "A" Record, Tax Data "B" Record, Checkpoint Totals "C" Record or an End of File "E" Record. Only a tape mark or a tape mark and trailer label can follow this record.

3. Do not use this record on the final reel of the file being transmitted.

                       FORM 940 Agent "F" Record

Enter the official two position Post Office State Code abbreviations for States and Territories in the Agent "A" Records and Tax Data "B" Records according to the following:

 STATE                                                            CODE

The following exemption codes are used in the two position fields in the "B1" and "B2" Records.

The following exemption codes are group level exemption codes. If an asterisk is present before the exemption code then a lower level subclassification is present on a later page. If the filing agent cannot provide the subclassification, the higher level classification is sufficient.

 Exemption

This revenue procedure is effective January 1, 1986.

                               Exhibit 1