SPECIFICATIONS FOR PRIVATE PRINTING OF SUBSTITUTE FORMS W-2, W-2P, AND W-3 WITHOUT PRIOR IRS APPROVAL

Rev. Proc. 86-24

SECTION 1. PURPOSE

01 The purpose of this revenue procedure is to state the requirements of the Internal Revenue Service (IRS) and the Social Security Administration (SSA) relating to substitutes for Form W-2, Wage and Tax Statement, Form W-2P, Statement for Recipients of Annuities, Pensions, Retired Pay or IRA Payments, and Form W-3, Transmittal of Income and Tax Statements. This revenue procedure also contains general rules for filing Forms W-2, W-2P, and W-3. The IRS provides a six-part Form W-2 and W-2P set. The official Form W-3 is provided as a two-part set.

02 This revenue procedure supersedes Rev. Proc. 85-20, 1985-1 C.B. 521.

SEC. 2. GENERAL RULES FOR FILING FORMS W-2 AND W-2P

01 EMPLOYERS AND PAYERS (hereafter and where applicable collectively referred to as payers) must use magnetic media for filing tax year (TY) 1986 Forms W-2 (Copy A) and W-2P (Copy A) data with the SSA if the payer files 500 or more of these forms (for TY 1987 magnetic media filing will be required for payers who file 250 or more forms). Requests for additional information concerning magnetic media filing should be directed to the appropriate Regional SSA Magnetic Media Coordinator. Exhibit N contains the addresses and telephone numbers of these coordinators. If filing on magnetic media will result in an undue hardship a waiver of the requirement for one year may be requested from the IRS. Waiver requests for TY 86 should be addressed to: Magnetic Media Reporting, National Computer Center, P.O. Box 1359, Martinsburg, WV 25401-1359. Requests must be submitted by June 30, 1986. Payers who do not comply with the magnetic media requirements and who are not granted a waiver will be subject to a failure to file penalty of $50 per Form W-2/W-2P up to a maximum of $50,000 per calendar year. Since many states and localities accept Forms W-2 and W-2P data on magnetic media, savings may be obtained if magnetic media is used for filing with both the SSA and state or local agencies. Magnetic media users can design their own statements to give to employees, pensioners, annuitants, recipients of retired pay, recipients of IRS (Individual Retirement Account) payments, and recipients of disability income (hereafter and where applicable collectively referred to as payees). Statements designed by payers MUST comply with the requirements of Sections 5, 7, 8 and 9 shown below.

02 The following Technical Information Bulletins (TIB) contain the specifications and procedures for filing Forms W-2 (Copy A) and W-2P (Copy A) data on magnetic media directly with SSA.

1 TIB-4a--"Magnetic Tape Reporting, Submitting FICA Wage and Tax Data to the Social Security Administration" Form W-2 (Copy A);

2 TIB-4b--"Magnetic Tape Reporting, Submitting Annuity, Pension, Retired Pay or IRA Payments to the Social Security Administration" Form W-2P (Copy A);

3 TIB-4c--"Diskette Reporting, Submitting FICA and Tax Data to the Social Security Administration" Form W-2 (Copy A).

Copies of these publications are available by writing any IRS Service Center; IRS District Office; and SSA, (Reports Preparation Section, P.O. Box 2317, Baltimore, Maryland 21203); or by contacting the Regional SSA Magnetic Media Coordinator.

03 Payers not using magnetic media must file Copy A of Form W-2 or Copy A of Form W-2P with SSA on either an official form or a privately printed substitute paper form meeting the specifications shown below.

04 Payers using magnetic media are cautioned to obtain the most recent Technical Information Bulletins and supplements due to possible changes in the specifications and procedures.

SEC. 3. GENERAL RULES FOR FILING FORM W-3

01 Employer and payers (hereafter and where applicable collectively referred to as payers) required to file Forms W-2 or W- 2P must transmit Forms W-2 or W-2P with Form W-3.

02 Form W-3 must be the same width (i.e. 7 inches, 7.5 inches, or 8 inches) as the Forms W-2 or W-2P filed.

03 Payers using magnetic media must transmit W-2 or W-2P data with Form 6559, Transmitter Report of Magnetic Media Filing, along with either Form 6560, Employer Summary of Form W-2 Magnetic Media Wage Information, or Form 6561, Payer Summary of Form W-2 Magnetic Media Pension Information. SSA will provide these forms to all approved magnetic media filers. Do not transmit W-2 or W-2P magnetic media with a Form W-3.

SEC. 4. PAPER SUBSTITUTES FOR FORMS W-2 (COPY A), W-2P (COPY A), AND W-3

01 Paper substitutes CONFORMING to the specifications contained in this revenue procedure should be privately printed without the prior approval of the IRS. Proposed substitutes NOT CONFORMING TOTALLY to these specifications are not acceptable.

02 Forms W-2, W-2P, and W-3 are subject to annual review and possible change. Payers are cautioned against overstocking supplies of privately printed substitutes.

03 Copies of the official form for the reporting year may be obtained from any IRS office. The IRS provides only cut sheet sets with no carbon interleaves for Forms W-2, W-2P, and W-3.

04 Substitute Forms W-2, W-2P, and W-3 transmitted to the SSA should generally contain only data provided to payees and summary data as requested by the form's instructions.

05 Substitute Forms W-2, W-2P, and W-3 may be redesigned as to the spacing for state and local tax data AS LONG as the vertical and horizontal spacing for all federal payment and data boxes are in compliance with the specifications contained herein.

06 All ballot boxes on Forms W-2 (Copy A), W-2P (Copy A), and W- 3 must be 8-point boxes.

NOTE: More than 50% of the application ballot box must be covered by an "X".

SEC. 5. REQUIREMENTS FOR SUBSTITUTE FORMS FURNISHED TO PAYEES (COPIES B, C, AND 2 OF FORMS W-2 AND W-2P)

01 All payers, including those filing Copy A using magnetic media, must furnish payees with at least two statements. The dimensions of these copies may be expanded from the dimensions of the official form to allow space for conveying additional information such as withholding from pay for health insurance, union dues, bonds, charity, etc. This may permit the payer to eliminate other statements or notices which would otherwise be furnished to payees. The maximum allowable dimensions are:

1 depth should be no more than five inches;

2 width no more the eight inches.

02 The paper for all copies should be white. The substitute Copy B (or its equal), that payees are instructed to attach to their Federal income tax return, must be at least 24-pound paper (basis 17 x 22-500), while the other copies furnished the payee should be at least 18-pound paper (basis 17 x 22-500).

03 Chemical transfer paper is PERMITTED only if the following standards are met:

1 All copies must be clearly legible;

2 All copies must have the capability to be photocopied;

3 Fading must not be of such a degree as to preclude legibility and the ability to photocopy.

In general, black chemical transfer inks are preferred; other colors are permitted only if the above standards are met. "Spot carbons" are NOT PERMITTED.

04 Interleaved carbon must meet the requirements specified in 03 above.

NOTE: chemical transfer paper is permitted for additional payee copies.

05 Substitute forms for payees need contain only the payment boxes and captions that are applicable (in any desired sequence). Other boxes contained on the official form may be omitted, except that in all cases the payee name, address, social security number and the year must be present. Payment boxes and captions that are applicable must be clearly identified, using where possible the same wording as on the official form. On Form W-2, Copy B, payers ARE REQUIRED to identify the amount of Federal income tax withheld as "Box 9" and the amount of Wages, tips, other compensation as "Box 10." On Form W-2P, Copy B, payers ARE REQUIRED to identify the taxable amount as "Box 10" and the amount of Federal income tax withheld as "Box 11." These payment boxes on Copy B ARE REQUIRED to be outlined in bold 2-point rule (see Exhibit M) or identified in some manner to distinguish these boxes from the rest of the form. If the form contains additional data (e.g., savings bonds withholding, retirement withholding, payroll savings, etc.), there should be a special highlighting of the areas pertaining to (1) Federal income tax withheld, (2) Wages, tips, and other compensation, and (3) Advance EIC payment.

06 For substitute forms for payees (Copies B, C, and 2 of Forms W-2 and Copies B, C, and 2 of Forms W-2P), the following requirements must be met:

1 All copies of Forms W-2 and W-2P must show both the form number, form title and the year. The title of Form W-2 is "Wage and Tax Statement." The title of Form W-2P is "Statement for Recipients of Annuities, Pensions, Retired Pay, or IRA Payments."

2 If the substitute forms are NOT LABELLED as to the disposition of the copies, then written notification must be provided to each payee as specified below:

(a) The first copy of the form should be filed with the employee's (or recipient's) Federal tax return.

(b) The second copy of the form should be for the employee's (or recipient's) records.

(c) If applicable, the third copy of the form should be filed with the employee's state, city, or local income tax return.

3 If the substitute forms are LABELLED, then the forms must contain the applicable description.

(a) "Copy B, to be filed with employee's Federal tax return", "Copy C, for employee's records", and the designation "Form W-2 Department of the Treasury--Internal Revenue Service", or

(b) "Copy B, file with recipient's Federal tax return", "Copy C, for recipient's records", and the designation "Form W-2P Department of the Treasury--Internal Revenue Service".

(c) The reference to the Department of the Treasury--Internal Revenue Service should be omitted from other copies provided in the set.

4 Instructions similar to those contained on the back of Copy C of the official form should be provided to each employee (recipient). For Form W-2, the Social Security (FICA) rates applicable for the current tax year must:

(a) appear either on the front or the back of the copy (Copy C) retained by the employee; or

(b) be communicated to the employee via a separate statement.

NOTE: If you are a Federal employer, you must provide the current rate for hospital insurance benefits (Medicare) for Federal employees.

5 Such substitutes are acceptable and payees should be advised that substitute wage and tax statements are acceptable for filing with their Federal income tax returns.

SEC. 6 REQUIREMENTS FOR SUBSTITUTE "PRIVATELY PRINTED" FORMS W-2 (COPY A), FORMS W-2P (COPY A), AND FORMS W-3 THAT PAYERS SUBMIT TO THE SSA

01 Payers may file privately printed substitute Forms W-2 and W- 2P with the SSA (hereafter referred to as a substitute Copy A). Payers may file privately printed substitute Forms W-3 with the SSA (hereafter referred to as a substitute W-3). The substitute form must be an exact replica of the official repro-proof with respect to layout and contents because it will be read by machines. Spot carbons are NOT PERMITTED for Copy A or for Form W-3 filed with SSA. The dimensions of a substitute form may differ as far as width (see Section 6.05 below) and the printing of the Government Printing Office (GPO) symbol must be deleted (see Section 6.12 below). The specifications and allowable tolerances for the Copy A of substitute Forms W-2 and W-2P are provided in Exhibits A, B, D, E, F, and G respectively. The specifications and allowable tolerances for Forms W-3 are provided in Exhibits C, H, and I.

NOTE: PRINTERS OF FORMS W-2 OR W-2P THAT ARE WIDER THAN 7 INCHES MUST PROVIDE FORMS W-3 THAT ARE OF THE SAME WIDTH AS THE FORMS W-2 OR W-2P (i.e., 7-1/2" WIDTH FORMS W-3 WITH 7-1/2" WIDTH FORMS W-2 OR W- 2P; 8" WIDTH FORMS W-3 WITH 8" WIDTH FORMS W-2 OR W-2P).

02 Color and quality of paper. Paper for Copy A and for Form W- 3, (cut sheets and continuous pinfeed forms), to be filed with SSA, as specified by JCP 0-25, dated November 29, 1978, must be: White 100% bleached chemical wood, optical character recognition (OCR) bond produced in accordance with the following specifications:

NOTE: Reclaimed fiber in any percentage is permitted, provided the requirements of this standard are met.

      1 Acidity: pH value, average,

                                        Red Ink

04 Typography--Type must be substantially identical in size and shape with corresponding type on the official form. NOTE: The form identifying number must be in OCR A Font.

1 On Copy A of Forms W-2 and W-2P and for Form W-3, all the perimeter rules must be 1-point (0.014 inch), while all other rules must be one-half point (0.007 inch).

2 Vertical rules must be parallel to the left edge of the document; horizontal rules parallel to the top edge.

05 Dimension--Three official Forms W-2, W-2P (Copy A) or one official Form W-3 are contained on a single page which is 7 inches wide (exclusive of any snap-stubs) by 11 inches deep. The width of privately printed substitute pages must be 7 inches, 7-1/2 inches, or 8 inches, exclusive of any left or right snap-stubs, or pin-feed holes, although adherence to the size of the official page is preferred. If a 7 inch form is produced, the image must be an exact copy of the official repro-proof. If the width of the substitute page is increased, the width of specified fields on the substitute page must be increased in accordance with Exhibits D, E, F, G, H, and I. The top margins and the right margin must be 1/4 inch plus or minus .0313 inch and must be free of all printing. For Forms W-2, W- 2P and W-3 the combination width of Box 1, "Control number", and the box containing the form identifying number must always be 2.2 inches.

1 When the width of Copy A is increased to 8 inches, exclusive of any left or right snap-stubs or pin-feed holes, the form identifying number must be shown as 222 for Form W-2, 555 for Form W- 2P, or 333 for Form W-3. This number tells the scan equipment used by SSA which information document it is reading, the width size and the position of individual data fields (see Exhibits D, F, and H).

2 When the width of Copy A is increased to 7-1/2 inches, exclusive of any left or right snap-stubs or pin-feed holes, the form identifying number must be shown as 2222 for Form W-2, 5555 for Form W-2P, or 3333 for Form W-3. This number tells the scan equipment used by SSA which information document it is reading, the width size and the position of individual data fields (see Exhibits E, G, and I).

06 The depth of the individual image on a page (for Form W-2 and W-2P) must be the same (3-2/3 inches) as that of the official repro-proof. The depth of the Form W-3 on a page must be 3.37 inches.

07 The words "Do Not Cut or Separate Forms on This Page" must be printed in red OCR dropout ink between the three forms W-2 or W-2P (Copy A) (see Exhibits A and B) and must also be present on 7-1/2 inch and 8 inch wide substitute Forms W-2 or W-2P. Perforations are required on all copies (except Copy A) to enable the separation of individual forms.

08 The words "For Paperwork Reduction Act Notice, see back of Copy D" MUST be printed on the Forms W-2 or W-2P (Copy A) (see Exhibits A and B for format and location) and MUST also be present on 7-1/2 inch and 8 inch wide substitute Forms W-2 or W-2P.

09 the OMB Number MUST be printed on EACH ply of Form W-2, W-2P, and W-3 (see Exhibits A, B, and C for format and location) and MUST also be present on 7-1/2 inch and 8 inch wide substitutes Forms W-2, W-2P, or W-3.

10 The words "Please return this entire page to the Social Security Administration address for your State as listed below" as well as the list of SSA addresses MUST be printed on all Forms W-3 (see Exhibit C) whether Forms W-3 are 7 inches wide, 7-1/2 inches wide, or 8 inches wide.

11 The Paperwork Reduction Act Notice must be printed on Form W- 3 (see Exhibit C for format and location) whether Forms W-3 are 7 inches wide, 7-1/2 inches wide, or 8 inches wide.

12 PRIVATELY PRINTED CONTINUOUS SUBSTITUTE FORMS W-2 AND W-2P (COPY A) MUST BE PERFORATED AT EACH 11" (3-ON) PAGE DEPTH. NO PERFORATIONS ARE ALLOWED BETWEEN THE 3-2/3" FORMS ON A SINGLE COPY PAGE OF COPY A.

NOTE: Perforations are required between all the other individual copies (Copy 1, B, C, 2, and D) included in the set.

13 The back of a substitute Copy A must be free of all printing.

14 Spot carbons are NOT PERMITTED for Copy A of Forms W-2 or W- 2P or for Form W-3. Interleaved carbon must be of good quality to assure legibility of information on all parts to preclude smudging, and should be black (see Section 5.04).

15 The use of "chemical transfer paper" on Copy A may be approved after review by IRS and SSA. Submit all requests with a minimum sample of 100 sheets of at least 20-lb. paper (17x22-500) to: Internal Revenue Service, Attention: D:R:R:IM, 1111 Constitution Avenue, N.W., Washington, D.C. 20224. The paper will be tested and the results reported to the requestor.

16 Printer's symbol--The GPO symbol must not be placed on substitute Copy A of Forms W-2 and W-2P. In the place of the GPO symbol, the Employer Identification Number (EIN) of the forms printer must be printed in the bottom margin on the face of each individual sheet of Copy A. In addition, the EIN of the forms printer must be printed on the fact of the Form W-3 which is file with SSA.

SEC. 7. ADDITIONAL INSTRUCTIONS

01 Arrangement of assembly--Except as provided below, if magnetic media is not used for filing with SSA, the substitute copies of Forms W-2 and W-2P assembly should be arranged in the same order as the official Forms W-2 and W-2P. Copy A should be first, followed sequentially by perforated sets (Copies 1, B, C, 2, and D). The substitute form to be filed with SSA by the payer must carry the designation Copy A.

1 Copy D for Employer or Payer. It is not required that privately printed substitute forms contain a copy to be retained by payers although payers must be prepared to verify or duplicate this information if it is requested by the IRS or SSA.

(a) If Copy D IS PROVIDED for the employer or payer, instructions contained on the back of Copy D of the official form MUST appear on the back of the substitute form Copy D.

(b) If Copy D IS NOT PROVIDED for the employer or payer, instructions contained on the back of Copy D of the official form MUST be furnished on a separate statement to the employer or payer.

2 Additional Copies. Except as provided in the arrangement of the official assemblies, additional copies which may be prepared by papers shall not be placed ahead of the copy "For employee's records," Copy C (Form W-2) or "For Recipient's Records," Copy C (Form W-2P).

3 Notice to Employees. Instructions similar to those contained on the back of Copy C of the official form should be provided to each employee (recipient). For Form W-2, the social security (FICA) rates applicable for the current tax year must:

(a) appear either on the front or the back of the copy (Copy C) retained by the employee; or

(b) be communicated to the employee via a separate statement.

Note: If you are a Federal employer, you must provide the current rate for hospital insurance benefits (Medicare) for Federal Employees. The IRS recommends that the other text on the back of the official form Copy C be provided to the employee.

02 All privately printed Forms W-2 and W-2P (Copy A) must have the tax year printed on the bottom face of each, using identical type to that of the official format.

03 The substitute Copy B (or its equal), which the payee is instructed to attach to his/her Federal income tax return, must be at least 24-pound paper (basis 17 x 22-500), while the other copies furnished the payee should be at least 18-pound paper (basis 17 x 22- 500).

04 The OCR bond Form W-3 that is filed with SSA must have no printing on the reverse side.

05 Instructions for Form W-3--Instructions similar to those provided as part of the official form must be provided as part of any substitute Form W-3.

06 All privately printed Forms W-3 must have the tax year printed on the bottom face of each Form W-3, using identical type to that of the official format.

07 The copy of the substitute Form W-3 which contains the instructions and is to be retained by the employer should be at least 18-pound paper (basis 17 x 22-500).

SEC. 8. INSTRUCTIONS FOR PAYERS

01 Only originals or ribbon copies of Copy A of Forms W-2 and W- 2P and of Form W-3 may be filed. Carbon copies and photocopies are not acceptable.

02 The Service requests the cooperation of the payers in typing or machine printing whenever possible and in providing good quality data entries on the forms, i.e., using black ribbon, inserting data in the middle of blocks, well separated from other printing and guidelines, and taking any other measures that will guarantee clear, sharp images. However, payers are not required to acquire equipment solely for the purpose of preparing these forms.

03 The Employer Identification Number (EIN) may be entered anywhere in Box 2 along with the Payer's name and address on Copy A of Forms W-2 and W-2P. (If this is done, the EIN need not be entered in Box 3 of either Form W-2 or W-2P.) For Forms W-3, the EIN must be entered where prescribed by the Form W-3 Instructions.

04 The payer's name, address and EIN may be pre-printed.

05 State agencies--The amounts of wages paid and employee contributions withheld under a State-Federal Agreement, entered into pursuant to Section 218 of the Social Security Act, may be shown in the space on Form W-2 for Social Security Act Wages and Employee Tax. In such cases, the identification number assigned by the Social Security Administration to the state (prefixed by 69) should be shown in the employer name and address area block on Form W-2. This "69" number may be pre-printed.

06 The optional employer's state number may be pre-printed in the employer's (payer's) name, address, and ZIP code box. If this is done, Box 4 of Forms W-2 and W-2P need not be completed, so long as the applicable state taxing authority does not object.

07 The preparation and filing instructions for Forms W-2 and W- 2P are contained in the 1986 Instructions for Forms W-2 and W-2P. The preparation and filing instructions for Form W-3 are contained as part of the 1986 Form W-3 snap set assembly

08 To avoid confusion and questions by payees, payers are encouraged to delete the following items from copies of Forms W-2 and W-2P provided to payees:

(1) Form identifying number (e.g., 22222, 55555);

(2) The words "subtotal" and "void" and their boxes;

(3) Any other captions or box number that would not be of any informational use to payees.

09 Payers are encouraged to use IRS-supplied labels for affixing to all Forms W-3 filed with SSA.

SEC. 9. OMB REQUIREMENTS

Office of Management and Budget (OMB) Requirements for Substitute Forms

Public Law 96-511 requires: (1) OMB approval of IRS tax forms, (2) that each form (all copies) show the OMB approval number and when appropriate, the form's expiration date, and (3) that the form (or its instructions) state why IRS is collecting the information, how we will use it and whether it must be given to us. The official IRS forms will contain this information.

As it applies to substitute IRS forms this means:

1. All substitute forms (all copies) MUST show the OMB number and any expiration date as they appear on the official IRS form (see Exhibits A, B, and C).

2. The OMB number must be in one or the following formats:

OMB No. 1545-0008 (preferred)

or

OMB #1545-0008

3. You must inform the users of your substitute forms of the reasons for IRS collection, use and requirements, as stated in the instructions for the IRS form.

SEC. 10 REPRODUCTION PROOFS

01 Order blanks for reproduction proofs are mailed annually to requestors of record, and on request to other users. Reproduction copies of Forms W-2 (Copy A), W-2P (Copy A), and W-3 (Page 1) each consists of two parts. Part 1 is line art, i.e., type and ink. Part 2 is a black solid which should be photographically screened by the user to allow a 10%-20% dot pattern when printed in red OCR dropout ink. In some cases where the production method requires the use of something other than a standard dot patter, the printed value of part 2 must still be 10%-20%. Printers and others wishing to obtain reproduction proofs may send their requests to Internal Revenue Service, Attn: Distribution Manager, PM:S:FM:P--Room 1528, 1111 Constitution Avenue, N.W., Washington, D.C., 20224.

02 A charge of $1 per page will be made for each reproduction proof regardless of page size. Invoices will be mailed after orders have been filled.

SEC. 11. EFFECT ON OTHER PROCEDURES

Rev. Proc. 85-20, 1985-1 C.B. 521 is superseded.