MAGNETIC TAPE FILING GUIDELINES PROVIDED FOR FIDUCIARIES WHO ARE FEDERAL TAX DEPOSITARIES AND MAKE ESTIMATED TAX PAYMENTS FOR TRUSTS.

Rev. Proc. 87-64

SECTION 1. PURPOSE

01 The purpose of this revenue procedure is to outline the requirements and instructions for certain banks and financial institutions, acting as fiduciaries with respect to taxable trusts, and who are authorized depositaries for Federal taxes, to submit quarterly estimated income tax payments through the Federal Tax Deposit System on magnetic tape. The requirements are promulgated by the regulations issued under the authority of section 6302(c) of the Internal Revenue Code of 1986. All Federal Tax Deposit payments are required to be deposited through a qualified federal tax depositary, as defined in 31 CFR Part 203.

02 Under the provisions of this revenue procedure, those fiduciaries that have a Treasury Tax and Loan (TT&L) account for deposited federal taxes ("TT&L fiduciaries") and that administer at least 200 "taxable" trusts will be required to make estimated tax payments on magnetic tape.

03 Authorizations will also be extended to those fiduciaries which do not have TT&L accounts ("Non-TT&L fiduciaries") but have at least 50 "taxable" trusts and wish to make a single estimated tax payment for a large number of trusts. However, once authorized into the magnetic tape program such fiduciary must continue to submit federal tax deposits under the provisions of this revenue procedure. Requests for discontinuing the submission of federal tax deposits under the guidelines of this revenue procedures will be disallowed.

SEC. 2. BACKGROUND

01 The provisions of this revenue procedure are in accordance with the amendment to the Income Tax Regulations under section 6302(c) of the Internal Revenue Code of 1986. The amendment pertains to deposits of certain quarterly estimated income tax payments required to be made by trusts under section 6654(1) of the Internal Revenue Code of 1986.

SEC. 3. FTD PAYMENTS SUBMITTED BY FIDUCIARIES

01 All FTD payments prepared by an authorized fiduciary must be submitted through a qualified federal tax depositary or Federal Reserve Bank. Form 2284, Advice of Credit (AOC), facsimile must be transmitted to the Federal Reserve Bank of jurisdiction. The only acceptable fiduciary-prepared deposit tapes are those relating to Form 1041-ES Estimated Tax Vouchers. All FTD tapes prepared by an authorized fiduciary must be submitted to the service center which has an established working relationship with the depositary or Federal Reserve Bank that has agreed to allow such fiduciary to utilize its Treasury Tax and Loan (TT&L) account.

02 Deposits for taxable trusts that have not been accepted and validated by the IRS for this program must be made to the IRS by means of the Form 1041-ES Estimated Tax Voucher.

SEC. 4. ITEMS REQUIRED FOR ACCEPTANCE INTO THE FTD MAGNETIC TAPE PROGRAM

01 TT&L fiduciaries who are required by regulations under section 6302(c) to make FTD payments and submit FTD information on magnetic tape must first file a letter of notification with the Director of the Internal Revenue Service Center where the deposits will be processed. (Non-TT&L fiduciaries who wish to enter into the FTD magnetic tape program must also adhere to the instructions and procedures set forth in this Revenue Procedure.) In most cases this will be the same service center that processes the related tax forms. The IRS will process each letter of notification within thirty calendar days of receipt. See Section 9 for a list of service centers and their addresses. The letter of notification should include all the following information:

1. The full name, address and employer identification number of the fiduciary preparing the letter of notification. If the fiduciary will prepare tapes at more than one branch or location, each location must be identified in the letter of notification.

2. The name, title and telephone number of a person the service center can contact regarding the letter of notification. In most cases, any problem with the letter of notification can be resolved by telephone.

02 The fiduciary must have a written agreement with a depositary that the depositary will allow the fiduciary to utilize its Treasury Tax and Loan Account (TT&L). A copy of the agreement should accompany the letter of notification. See Exhibit 10 for a sample format of the agreement letter from the depositary. The name, address, Federal Reserve Bank Code, bank identification number/check digit code and branch code of the federal tax depositary must be listed in the agreement letter.

03 Each letter of notification must include a listing of each taxable trust who will have their FTDs prepared by the fiduciary. The Listing of Trusts must contain the following information:

1. A list of each trust name, federal employer identification number (EIN) of the trust and a fiduciary assigned customer identification number.

2. For each trust, the listing must specify the type of tax that will be prepared. (e.g. 1041)

3. The listing must be double spaced to allow room for notations by the service center. The trusts must be listed in EIN number sequence.

4. A duplicate listing must be submitted so that the Service can maintain a file of the trusts accepted under this program. See Section 6 for updates to the initial Listing of Trusts. See Exhibit 1 for an example of the format of the listing.

04 The initial letter of notification submitted by a "TT&L" fiduciary must contain a list of 200 trusts.

05 Each "Non-TT&L" fiduciary applying for acceptance into the FTD Magnetic Tape Program must submit a list of no less than 50 trusts and must also attach a signed agreement that it agrees to be bound by and subject to all the provisions of section 1.6302-3 of the Income Tax Regulations as if it were a fiduciary described in paragraph (b) of that section. See Exhibit 2 of this Revenue Procedure for a sample format of the fiduciary's agreement.

SEC. 5. ACCEPTANCE OF FIDUCIARY'S APPLICATION

01 Approximately 30 calendar days after the submission of the fiduciary's letter of notification, one copy of the Listing of Trusts will be returned with a letter from the IRS granting the fiduciary the authority to submit Federal Tax Deposits on magnetic tape for the designated trusts. Each taxpayer on the Listing of Trusts will be assigned a business name control currently on file with the IRS. If no name control had been established at the time of the submission of the Listing of Trusts, the IRS will assign a name control. If there was a discrepancy between the trust EIN and business name, the IRS will also provide the business name control as it is maintained on record with the IRS. Corrections will be indicated by a line through the fiduciary's information with the corrected information written above. If for any reason a particular taxpayer whose name is listed on the Listing of Trusts is not accepted by the IRS under this program, the name of the trust or estate will be circled out and the reason for non-acceptance will be given.

02 A fiduciary must not change the validated employer identification number, name control or service center code except when notified to do so by the Internal Revenue Service.

03 The name control must appear in tape positions 14-17 on the FTD records. A service center code will be provided to the fiduciary for each trust and must appear in tape positions 18-19 of the FTD record. See Exhibit 4 for the Federal Tax Deposit Record Layout.

04 Once the authorization letter is issued to the fiduciary, it can begin the submission of the test data to the IRS. Listed is the information needed for the testing phase:

1. A tape of test data using the fiduciary validated information should be submitted. The tape must be in the tape format as shown in Exhibits 3 and 4 and must be 9 Track, ASCII, 1600 BPI, Odd Parity. See Section 7 for instructions on preparation of the magnetic tape data. The test tape will be verified and returned.

2. A microfiche copy of the AOC transmittal. See Section 8.05 for detailed information regarding this microfiche. Also see Exhibit 6.

3. A microfiche copy of the FTD PROOF LIST. See Section 8.04 for detailed information regarding this microfiche. Also see Exhibit 7.

05 Upon successful completion of the test data, the IRS will provide the fiduciary a four digit identifying number. If the fiduciary will prepare tapes at more than one location or branch, each location or branch will be assigned a separate identifying number. After a fiduciary has been assigned an identifying number, all communications regarding the preparation of FTD tapes should include this number. Updates to the fiduciary's Listing of Trusts must always contain the identifying number of the location or branch handling the particular trust record. The fiduciary identifying number must be in tape positions 56-57-58-59, on both the AOC and FTD records. See Exhibits 3 and 4 for AOC and FTD record layouts.

06 Fiduciaries who submit data on magnetic tape and are located in IRS regions having more than one IRS center will have the option to consolidate and file FTDs at only one service center. Only those fiduciaries using magnetic tape are allowed this option. If a fiduciary deals with more than one service center and wishes to consolidate, the fiduciary must write to the Director of the IRS center where they wish to consolidate and obtain approval prior to filing at that service center.

SEC. 6. UPDATES TO THE FIDUCIARY'S LISTING OF TRUSTS

01 After acceptance of the fiduciary's initial Listing of Trusts, all additions and deletions must be reported to the service center. New trusts must not be included in the preparation of FTDs by a fiduciary until they are accepted and the entity information (EIN, name control, service center code, and filing requirements) is validated and provided to the fiduciary by the IRS. If the fiduciary chooses to make a deposit for a new trust prior to being accepted, the fiduciary must use Form 1041-ES Estimated Tax Voucher. NOTE: The addition or deletion list must not exceed 500 entities at any given time. It is requested that any additions be submitted to the service center no later than 30 calendar days before the beginning of a quarter.

02 The IRS will process updates to the fiduciary's addition listing within two weeks of receipt. The update listing should be in the same format as the initial listing. Two copies of this listing should be submitted. One listing will be returned to the fiduciary with the assigned name control. The second listing will be retained by the Service. The service center will process the additions on an expedited basis and in the same manner as the initial listing. The deletion list should be in the same format as the initial listing and sent to the service center annually in December.

03 The fiduciary must send a consolidated listing of their trusts currently accepted by the Service within 14 calendar days after the end of each quarter. This listing must not include current additions or deletions which must be sent separately. The consolidated listing is for information only and will not be returned to the fiduciary.

SEC. 7. PREPARATION OF THE MAGNETIC TAPE DATA

01 The magnetic tape specifications are listed below:

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

03 The Advice of Credit record layout is an 81 character record. See Exhibit 3 for the AOC Record Layout. The data elements include the following:

1. Problem code, 1 position, always zero

2. Service Center code, 2 positions, must be numeric and is assigned by the IRS.

3. Federal Reserve Bank code, 2 positions, must be numeric and is also assigned by the IRS.

4. Bank account number, 8 positions, is the routing and transmittal number authorized by the depositary bank.

5. Check digit, 1 position, and is for the routing and transmittal number.

6. Branch code, 3 positions, and represents the depositary branch code, under which the fiduciary is authorized to submit FTD data

7. Transmittal Serial number, 3 positions, must be numeric. Must be separate for each AOC and in incremental order, beginning with 001 and ending with 999. The number must not be duplicated within two calendar months.

8. Deposit date, 6 positions, in MMDDYY format. The deposit date must agree with the deposit date in the FTD data record.

9. Number of FTDs, 3 positions, numeric, in groups of 440. Zero fill, right justify. However, the last group can contain less than 440.

10. Amount, 11 positions, numeric, and must represent the total of the related FTDs. Do not use the signs "+" or "-" in the amount field.

11. Identifying code, 2 positions and are constant zeroes (00).

12. Fiduciary Identifying number, 6 positions. A 4 digit number will be assigned by IRS to identify the bank or fiduciary. This number must be preceded by two zeroes.

13. Record type ID code, 1 position, and is a constant 3.

04 The Federal Tax Deposit record is an 81 character record. See Exhibit 4 for the FTD Record Layout. The data elements include the following information:

1. Problem code, 1 position, always zero

2. The taxpayer trust identification number, name control, service center code, and fiduciary identifying code must be from the information provided and verified by the IRS. Modifications to these items should not be made unless the IRS has instructed the fiduciary to make a necessary change.

3. Name control, 4 positions, is provided by the IRS center on the approved Listing of Trusts.

4. Service Center code, 2 positions, must be numeric and is assigned by the IRS.

5. Tax class code, 1 position, must always be a "2" for Form 1041.

6. Tax period, 2 positions, Month/Year format. For the month, use character "3" for first quarter (January through March), use character "6" for second quarter (April - May), use character "9" for third quarter (June through August) or use character "&" for fourth quarter (September through December). For year, use the last digit of the year for which the deposit was made. (e.g. 1988 use "8")

7. Payment date, 4 positions in MMDD format, must be numeric. The payment date must agree with the deposit date in the related AOC.

8. Amount, 12 positions, zero fill, right justify and must be included in the total deposit amount of the corresponding AOC.

9. Fiduciary indicator, 1 position, must always be "9". This indicator identifies Form 1041 quarterly tax payments filed on magnetic tape.

10. AOC serial number, 3 positions (001-999).

11. Fiduciary ID number, number assigned the fiduciary by the IRS.

05 Affix an external label to each tape box. The label must state:

                              EXPEDITE

01 The magnetic tape containing federal tax deposit information must be prepared as specified in Section 7 of this Rev. Proc.

02 The funds must be deposited in the Treasury Tax and Loan (TT&L) account of an authorized depositary within twenty-four hours after the date of deposit. The transaction data contained on the magnetic tape must be received at the IRS service center within 5 workdays of the date of credit to the TT&L account of the authorized depositary. The 5 workday period is allowed the fiduciary to make any necessary corrections to the magnetic tape prior to its shipment to the IRS Service Center. If an adjustment is required which ultimately affects the total deposit amount for a particular block of work, the fiduciary must contact the FTD Interagency Coordinator at the IRS Service Center within 24 hours after the adjustment is found. However, the submission of magnetic tape must still be received at the IRS Service Center within 5 workdays as previously noted. If a fiduciary fails to meet the deposit criteria, a cautionary letter will be issued, explaining the problem in detail. The IRS will schedule the processing of the FTD data no later than 2 workdays from the date of service center receipt.

03 The magnetic tape data must be accompanied by a paper summary list of the Advice of Credit information. The list must be in transmittal order and must provide the following information:

1. Transmittal Number

2. Count of FTDs

3. Dollar amount of each Advice of Credit

04 A microfiche must be provided listing specific deposit information and should be titled FTD PROOF LIST. See Exhibit 7. Also refer to Section 8.06 for microfiche specifications. The FTD PROOF LIST microfiche must contain the following information:

1. Deposit date, 6 positions, MMDDYY format.

2. Advice of Credit (AOC) serial number, 3 positions. NOTE: The AOC serial number must appear on each page that has FTD client data for that AOC.

3. FTD sequence number, 3 positions (beginning with 001, not to exceed 440).

4. Federal Employer Number, 10 positions in the following format: NN-NNNNNNN

5. Name Control, 4 positions

6. Deposit type, 3 positions (Form number)

7. Deposit period, 5 positions, MM/YY

8. FTD Amount, 11 positions

05 A microfiche copy of the AOC transmittals used for that particular deposit day must also be provided to the Service. See Exhibit 6 for information that must be on the microfiche. Also refer to Section 8.06 for microfiche specifications. Each AOC microfiche page must have a heading listing the following information:

1. Fiduciary name and four digit identifying number assigned by the IRS

2. The beginning AOC transmittal serial number and the last transmittal number used on that deposit day

3. Deposit date, MMDDYY format

06 The microfiche recording process should reduce characters 48 times smaller than the original data. The reduction ratio should be set at 48X. The microfiche should include an eye-readable title line, up to 269 data frames at the 48X reduction ratio and must be on a dark blue background. All microfiche data must be received by the IRS within 14 calendar days after the deposit date.

07 Form 8482, Transmittal of Magnetic Tape of Federal Tax Deposits, will be used for transmitting tapes and microfiche data between the service center and the fiduciary. The initial supply of Forms 8482 will be provided upon receipt of the fiduciary's letter of notification to prepare deposit tapes. Additional forms can be obtained from the service center of jurisdiction. See Exhibit 8.

08 Each tape must be clearly identified by affixing a completed Form 3298, File Identity Label. See Exhibit 9. The initial supply will be provided by the service center. Each tape box must have an expedite label. The label must state:

                              EXPEDITE

10 Tapes will be retained at the IRS Service Center for 14 calendar days for verification purposes. The tapes will then be returned to the fiduciary.

11 Upon receipt of the deposit tapes, the IRS will send the fiduciary an acknowledgement of receipt. If no acknowledgement of receipt is received within seven calendar days, the fiduciary should contact the Interagency Coordinator immediately.

SEC. 9. TERMINATION OF THIS AUTHORIZATION

The service reserves the right to terminate this agreement with fiduciaries because of possible systemic changes which may preclude the use of magnetic tapes. Request for additional copies of this revenue procedure, applications to prepare FTDs, and update listings of authorized trusts, should be addressed to the Director, Internal Revenue Service Center, ATTN: FTD Coordinator, at one of the following addresses:

     Andover Service Center

     Andover Service Center

This revenue procedure is effective September 15, 1988.

SEC. 11. EFFECT ON OTHER DOCUMENTS

This revenue procedure closely parallels Rev. Proc. 86-33.

                               EXHIBIT 1