SERVICE PROVIDES GUIDANCE FOR FILING 1989 FORMS ON MAGNETIC TAPE.

Rev. Proc. 89-43

NOTE: THIS REVENUE PROCEDURE MAY ONLY BE USED TO PREPARE MAGNETIC MEDIA SUBMISSIONS FOR TAX YEAR 1989 RETURNS. UPDATED COPIES ARE PUBLISHED EACH YEAR. PLEASE READ THIS PUBLICATION CAREFULLY. PERSONS REQUIRED TO FILE MAY BE SUBJECT TO PENALTIES FOR FAILURE TO FOLLOW THE INSTRUCTIONS IN THIS REVENUE PROCEDURE OR FOR FAILURE TO INCLUDE CORRECT INFORMATION ON A RETURN. A $5 PER RETURN PENALTY MAY BE IMPOSED FOR THE OMISSION OF INFORMATION OR THE INCLUSION OF INCORRECT INFORMATION. THE MAXIMUM PENALTY IS $20,000. (THERE IS NO MAXIMUM FOR CERTAIN INTEREST OR DIVIDEND RETURNS OR STATEMENTS.) THIS PENALTY DOES NOT APPLY TO FORMS 1099-R OR 5498. YOU MAY ALSO BE SUBJECT TO PENALTIES OF $50 PER RETURN FOR EACH RETURN SUBMITTED WITHOUT A TAXPAYER IDENTIFICATION NUMBER (TIN) OR WITH AN INCORRECT TIN. AN ADDITIONAL $50 PENALTY PER RETURN MAY BE IMPOSED FOR EACH RETURN NOT SUBMITTED ON MAGNETIC MEDIA IF YOU ARE REQUIRED TO FILE THIS WAY OR IF YOU FILE LATE. THE MAXIMUM PENALTY IS $100,000 PER CALENDAR YEAR. (THERE IS NO MAXIMUM FOR CERTAIN INTEREST OR DIVIDEND RETURNS OR FORM 5498). IF A $50 PENALTY IS IMPOSED FOR FAILURE TO FURNISH A CURRENT TIN, THE $5 PENALTY WILL NOT BE APPLIED FOR THE SAME RETURN. FOR INTENTIONAL DISREGARD FOR THE FILING AND CORRECT INFORMATION REQUIREMENTS, HIGHER PENALTIES MAY BE IMPOSED. IRS STRONGLY ENCOURAGES FILERS TO REVIEW THEIR DATA FOR ACCURACY BEFORE SUBMISSION TO PREVENT ERRONEOUS NOTICES BEING MAILED TO PERSONS FOR WHOM REPORTS ARE FILED.

PART A. GENERAL

SECTION 1. PURPOSE

.01 The purpose of this revenue procedure is to provide the requirements and conditions for filing Forms 1098, 1099, 5498, and W-2G on magnetic tape, 5-1/4 inch, and 3-1/2 inch magnetic diskettes. Publication 1255 provides instructions for filing on 8 inch magnetic diskette. THIS REVENUE PROCEDURE IS TO BE USED FOR THE PREPARATION OF 1989 INFORMATION RETURNS ONLY. THIS PROCEDURE IS UPDATED YEARLY TO REFLECT NECESSARY CHANGES. PLEASE READ THIS PUBLICATION CAREFULLY. Specifications for filing the following forms are contained in this procedure:

(a) Form 1098, Mortgage Interest Statement.

(b) Form 1099-A, Information Return for Acquisition or Abandonment of Secured Property.

(c) Form 1099-B, Statement for Recipients of Proceeds From Broker and Barter Exchange Transactions.

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

(e) Form 1099-G, Statement for Recipients of Certain Government Payments.

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

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

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

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

(j) Form 1099-R, Statement for Recipients of Total Distributions From Profit-Sharing, Retirement Plans, Individual Retirement Arrangements, Insurance Contracts, Etc.

(k) Form 1099-S, Statement for Recipients of Proceeds From Real Estate Transactions.

(l) Form 5498, Individual Retirement Arrangement Information.

(m) Form W-2G, Statement for Recipients of Certain Gambling Winnings.

.02 Specifications for filing Forms 1042S and 8027 are contained in separate Internal Revenue Service publications. Specifications for filing Forms W-2 and W-2P are available from the Social Security Administration.

.03 In most cases, the box numbers on the paper forms correspond with the amount codes used to file on magnetic media; however, if discrepancies occur, the instructions in this Revenue Procedure govern.

.04 Contact the Internal Revenue Service (IRS) Martinsburg Computing Center (MCC) WITH QUESTIONS CONCERNING FORMS W-2 AND W-2P ONLY IF THE QUESTIONS PERTAIN TO AN EXTENSION OF TIME TO FILE OR MAGNETIC MEDIA WAIVER REQUESTS. QUESTIONS PERTAINING TO MAGNETIC MEDIA FILING OF FORMS W-2 OR W-2P SHOULD BE DIRECTED TO Social Security Administration (SSA). TAX LAW QUESTIONS PERTAINING TO FORMS W-2 OR W-2P SHOULD BE DIRECTED TO IRS TAXPAYER SERVICE.

.05 Personnel at the IRS/MCC are equipped to answer any questions you may have concerning the magnetic media filing of information returns (Forms 1098, 1099, 5498, W-2G, 1042S, and 8027). Tax law related questions should be directed to IRS Taxpayer Service.

.06 This procedure also provides the requirements and specifications for magnetic media filing under the Combined Federal/State Filing Program. (Refer to Part A, Sec. 14.)

.07 The following revenue procedures and publications provide more detailed filing procedures for certain information returns:

(a) 1989 "Instructions for Forms 1099, 1098, 5498, 1096, and W-2G," provide further information on filing returns with IRS. These instructions are available at IRS offices and are included in magnetic media reporting packages mailed to filers on this program each year.

(b) Rev. Proc. 84-33, 1984-1 C.B. 502, or other current revenue procedure, regarding the optional method for agents to report and deposit backup withholding.

(c) Publication 1179, Specifications for Paper Document Reporting and Paper Substitutes for Forms 1096, 1098, 1099 Series, 5498 and W2-G.

(d) Publication 1239, Requirements and Conditions for Submitting Form 8027 Employer's Annual Information Return of Tip Income and Allocated Tips on Magnetic Tape.

(e) Publication 1187, Requirements and Conditions for Filing Form 1042S, Foreign Persons U.S. Source Income Subject to Withholding on Magnetic Tape.

(f) Publication 1245, Magnetic Tape Reporting for Forms W-4.

(g) Rev. Proc. 84-24, 1984-1 C.B. 465, regarding preparation of transmittal documents for information returns.

.08 This procedure supersedes the following revenue procedures: Rev. Proc. 88-36, 1988-1 C.B. 838, also published in Publication 1220 (Rev. 6-88), Requirements and Conditions for Filing Information Returns on Forms 1098, 1099, 5498, and W-2G on Magnetic Tape, 5-1/4 and 3-1/2 Inch Magnetic Diskettes.

.09 Refer to Part A, Sec. 15 for definitions of terms used in this publication.

SECTION 2. NATURE OF CHANGES -- CURRENT YEAR (TAX YEAR 1989)

.01 Numerous editorial changes have been made to the publication. IRS recommends that this revenue procedure be read in its entirety to ensure proper reporting. The following changes must be incorporated into your programs for tax year 1989.

(a) Name of National Computer Center was changed to Martinsburg Computing Center.

(b) Added statement to Note on the cover that the $5 penalty does not apply to Forms 1099-R or 5498.

(c) Added a Section on "Filing Requirements"--Part A, Section 3.

(d) Added a Section on "Test" Files--Part A, Section 5.

(e) Added a Section on "Major Problems Encountered"--Part A, Section 17.

(f) Added a statement to Part A, Section 5 Test Files, Section 9 Processing of Magnetic Media, Section 10 How to File Corrected Returns, and Section 14 Combined Federal/State Filing Program that media will be returned to filers ONLY UPON WRITTEN REQUEST. For Sections 5, 10, and 14, the written request should accompany the file. For Section 9, the written request must not be received at IRS/MCC before June 1 but no later than July 31. Media will be returned to one location only.

(g) Added a statement to Part A, Sec. 4A.02 that two different Transmitter Control Codes cannot be used on the same media.

(h) Part A, Section 10 on How to File Corrected Returns has been clarified and revised. Please read entire section carefully. Added a statement to this section (10.06) regarding reporting of prior years' corrections.

(i) New Form 8809 is available for requesting extensions of time to file. You must allow a minimum of 30 days for a response. If you originally requested a 30-day extension and need an additional 30 days, a copy of the first approved extension must accompany your second request. See Part A, Sec. 8.

(j) The following changes have been made to Form 8508 Request for Waiver from Filing Information Returns on Magnetic Media:

(1) Added a note on "Purpose of 8508."

(2) Added a new Block 1 "Type of Submission." Subsequently, all other blocks have been renumbered and clarified.

(3) The information previously requested in Block 7 has been split into separate questions and renumbered Blocks 9 and 10.

(4) Block 8b has been eliminated.

(5) The information previously requested in Blocks 8, 8b, and 8c is now combined and reported in Block 11.

(6) Read the instructions on the reverse of Form 8508. There have been editorial changes.

(7) If a request is not received 90 days before the due date of the return, it will not be honored.

(k) The following changes have been made to the Form 4804 Transmittal of Information Returns on Magnetic Media:

(1) Removed "Characteristics of Media Transmitted in This Shipment" Block 7. As a result all blocks have been renumbered.

(2) Deleted request for address previously reported in Block 4 and Block 5.

(3) Please be sure that Block 7 is accurately completed. Files needing replacement will be returned to this address.

(4) Removed the last sentence from the Affidavit having to do with obtaining a TIN from recipient.

(5) The criteria for signing Form 4804 has changed. See Part A, Sec. 6.07.

(6) Various editorial changes were made to the instructions on the reverse of the Form 4804.

(7) Added MCC mailing address to the Instructions.

(8) All of these changes should be reflected on your computer generated Form 4804.

(l) The following changes have been made to the Form 4419 Application for Filing Information Returns on Magnetic Media:

(1) Block 7 is renamed "Magnetic Tape Parameters", Block 8 is "Diskette Parameters".

(2) Read instructions on reverse of Form 4419. There have been editorial changes.

(3) Added instructions at the top of the form telling filers to Type or Print when completing the Form.

(4) Block 6 was changed to expedite processing of the Form 4419.

(m) The block size has been increased to a maximum of 25,200.

(n) Added a section on how to report an APO/FPO address in Part A, Section 16.

(o) Abbreviations for American Samoa, Guam, Mariana Islands, Puerto Rico and Virgin Islands have been added to Part A, Sec. 16.

(p) Eliminated need for Forms 4804/4802 to report State totals in the "K" Record.

(q) The following changes have been made to Part A, Sec. 14, Table 2:

(1) Deleted the States of Arizona and Oregon from the table because their reporting requirements are now the same as Federal reporting requirements.

(2) The State of Mississippi has its own reporting requirements and these have been added to the table.

.02 The following changes have been made to the Payer "A" Record:

(a) Added clarification to Payer Name Control (Field Position 16-19) to distinguish Package 1099 from the Magnetic Tape Reporting (MTR) Package.

(b) Form 1099-DIV has changed. Ordinary dividends are now reported in Amount Code 2, Amount Code 4 is now Nontaxable Distributions, Amount Code 5 is now Investment Expenses Included in Amount Code 1, Amount Code 6 is now Federal Income Tax Withheld (had been reported in Amount Code 4), Amount Code 7 is now Foreign Tax Paid (had been reported in Amount Code 6).

(c) Form 1099-DIV, Amount Code 1 should be the sum of Amount Codes 2, 3, 4, and 5.

(d) Added a note to Part B, Sec. 4 on "Amount Indicators" for reporting of negative amounts on Form 1099-R.

(e) The Title of Amount Codes on Form 1099-A has changed: Amount Code 2 "Amount of Debt Outstanding" is now "Balance of Principal Outstanding." Amount Code 3 "Amount of Debt Satisfied" is now "Gross Foreclosure Proceeds." Amount Code 4 "Fair Market Value of Property at Acquisition or Abandonment" is now "Appraisal Value."

(f) On Form 1098 have eliminated the field for reporting that a mortgage was incurred after 1987 for the purpose other than the purchase of a personal residence. It is not required to be reported.

.03 The following changes have been made to the Payee "B" Record:

(a) Deleted indicator in Document Specific Code for Form 1098 to report mortgages incurred after 1987 for a purpose other than purchase of a personal residence.

(b) On Form 1099-R, under the Document Specific Code, Category of Distribution, added "D" Excess contributions plus earnings/excess deferrals taxable in 1987.

(c) Percentage of Total Distribution reduced from 3 to 2 positions (positions 45-46). As a result, have added a blank position, position 44.

(d) Added clarification to Payee "B" Record Payment Amount Fields on how to report money amounts over 9999999999.

(e) The Payer's Account Number for Payee should be left-justified.

SECTION 3. FILING REQUIREMENTS

.01 All filing requirements that follow apply individually to each reporting entity as defined by its separate Taxpayer Identification Number (TIN) (Social Security Number (SSN) or Employer Identification Number (EIN)). For example, if you are a corporation with several branches or locations and each uses the same EIN, you must aggregate the total volume of returns to be filed for that EIN and apply the filing requirements to each type of return accordingly.

.02 The following requirements apply separately to both originals and corrections filed on magnetic media:

 FORM           MAGNETIC MEDIA FILING THRESHOLD

.04 MAGNETIC MEDIA REPORTING IS REQUIRED FOR TAX YEAR 1989 INFORMATION RETURNS FILED IN CALENDAR YEAR 1990 IF YOU WERE REQUIRED TO FILE ON MAGNETIC MEDIA FOR TAX YEAR 1988. However, this requirement shall not apply if you did not meet any of the specified filing requirements but voluntarily filed on magnetic media AND provided you still do not meet any of the specified filing requirements for Tax Year 1989 (i.e., you only had 235 Forms 1099-S for tax year 1988 but chose to file these on magnetic media. For tax year 1989, this number has dropped to 225, you need not file magnetically because you have not reached the 250 or more threshold).

SECTION 4. APPLICATION FOR MAGNETIC MEDIA REPORTING AND REQUESTS FOR UNDUE HARDSHIP WAIVERS

A. FORM 4419 APPLICATION FOR FILING INFORMATION RETURNS ON MAGNETIC MEDIA:

.01 For purposes of this revenue procedure, the PAYER includes the person making payments, a recipient of mortgage interest payments, a broker, a barter exchange, a person reporting a real estate transaction, a trustee or issuer of an IRA or SEP, or a lender who acquires an interest in secured property or who has reason to know that the property has been abandoned. The TRANSMITTER is the organization submitting the magnetic media file. The payer and transmitter may be the same organization.

Payers or their transmitters are required to complete Form 4419, Application for Filing Information Returns on Magnetic Media to ensure equipment compatibility. A single Form 4419 should be filed no matter how many types of returns the payer or transmitter will be submitting on magnetic media. For example, if you plan to file Forms 1099-INT and Forms 1099-DIV on magnetic media, submit one Form 4419. If you later wish to file another type of return on magnetic media in the Form 1099, 1098, 5498, or W-2G series, it is not necessary to submit a new Form 4419.

Copies of Form 4419, for your use, are included in this publication. Please read the instructions on the back of the form very carefully. This form may be reproduced. Requests for additional forms or other information related to magnetic media processing should be addressed to the IRS/MCC. (See Part A, Sec. 13 for address.)

.02 IRS will act on an application and notify the applicant in writing of authorization to file. A five character alpha/numeric Transmitter Control Code (TCC) will be assigned and included in an approval letter. If you have more than one TCC, you must use more than one tape or diskette; i.e., you cannot use two TCCs on the same media. They must be reported separately.

IRS encourages filers who file for multiple payers, to submit one application and to use one Transmitter Control Code for all payers. Include a list of all payers and their TINs with the Form 4419. If you file for additional payers in later years, notify IRS in writing providing the additional names and TINs. Do not submit a new application for these additional payers.

Magnetic tape and diskette returns may not be filed with IRS until the application has been approved and a TCC assigned. This TCC will be entered in the "A" Record of the Transmitter Control Code field--do not enter blanks because your media will be returned.

.03 Once approved to file on magnetic media, you do not need to reapply each year unless:

(a) You change from diskette to tape filing, or vice versa, or report using more than one type of magnetic media, a new TCC is necessary.

(b) You discontinue filing on magnetic media for a year, your TCC may have been reassigned.

(c) Your magnetic media files were transmitted in the past by a service agency. However, you now have computer equipment compatible with that of IRS and wish to prepare your own files, you must request your own TCC by filing an application Form 4419.

.04 If any of these conditions apply to you, contact IRS/MCC for clarification. Also, notify MCC if you had hardware or software changes that would affect the characteristics of the magnetic media submission. Be sure to refer to your current TCC in all correspondence with MCC.

.05 If you file on two types of magnetic media (e.g., tape and diskette) only one Form 4419 should be submitted. IRS assigns different TCCs to each type of magnetic media which ensures the proper revenue procedure being sent to filers each year. Be sure the TCC used is the one issued for that particular type of media; i.e., don't use mag tape TCC with 5 1/4" diskette and vice versa.

.06 If you are an approved filer on magnetic media and the name, EIN, or address of your organization or contact person changes, please notify IRS/MCC in writing so that your file may be updated to reflect the current information.

.07 In accordance with section 1.6041-7(b) of the Income Tax Regulations, payments by separate departments of a health care carrier to providers of medical and health care services may be reported on separate returns on magnetic media. In this case, the headquarters will be considered the transmitter, and the individual departments of the company filing reports will be considered payers. A single Form 4419 covering all departments filing on magnetic media should be submitted. One TCC may be used for all departments.

.08 Approval to file on magnetic media does not imply endorsement by the IRS of the computer software or quality of tax preparation services provided.

B. FORM 8508 REQUEST FOR WAIVER FROM FILING INFORMATION RETURNS ON MAGNETIC MEDIA:

.01 Any person required to file original or corrected returns on magnetic media may request a waiver from these filing requirements if such filing would create an undue hardship by submitting Form 8508, Request for Waiver From Filing Information Returns on Magnetic Media, with IRS Martinsburg Computing Center.

.02 If a waiver for original documents is approved, a waiver for corrections to these documents will be automatically approved. However, if you submit your original returns on magnetic media but not your corrections, then a waiver must be requested for corrections only.

.03 Generally, only the Payer may sign the Form 8508. However, the transmitter may sign if they have a Power-of-Attorney and a letter is attached to the Form 8508 stating this fact.

.04 A separate Form 8508 must be submitted for each payer. Do not submit a list of payers. Specify the type of returns for which the waiver is being requested on the Form 8508 (i.e., 1099-DIV, 1099-A, etc.).

.05 The waiver, if approved, will provide exemption from magnetic media filing for one tax year only. Filers may not apply for a waiver for more than one tax year at a time; application must be made each year a waiver is necessary.

.06 Copies of the Form 8508 are included in this publication and also may be obtained from the IRS/MCC (see Part A, Sec. 13, for the address) or from other IRS offices. Form 8508 may be computer generated as long as it contains all the information requested on the official form.

.07 NEW brokers and NEW barter exchanges filing Form 1099-B may request an undue hardship exemption by filing a request for waiver on Form 8508 by the end of the second month following the month they became a broker or barter exchange.

.08 All requests for magnetic media related undue hardship exemptions must be submitted to the IRS/MCC at least 90 days before the due date of the return except as stated in .07. IN THE PAST, WE HAVE ACCEPTED WAIVER REQUESTS UP TO THE DUE DATE OF THE RETURN. HOWEVER, THIS IS NO LONGER ACCEPTABLE. IF A REQUEST IS NOT RECEIVED 90 DAYS BEFORE THE DUE DATE OF THE RETURN, IT WILL NOT BE HONORED.

.09 All magnetic media related undue hardship requests for Forms W-2/W-2P are to be filed with the IRS/MCC, not SSA, and must be filed 90 days before the due date of the return.

.10 Waivers are granted on a case-by-case basis and are approved at the discretion of the IRS/MCC. You must allow a minimum of 30 days for IRS/MCC to respond to a waiver request.

.11 If you are required to file on magnetic media but fail to do so, and you do not have an approved waiver on record, you may be subject to a failure to file penalty.

.12 If your waiver request is approved, keep it for your records. DO NOT send a copy of the approved waiver to the service center where you file your paper returns.

.13 AN APPROVED WAIVER FROM FILING INFORMATION RETURNS ON MAGNETIC MEDIA DOES NOT PROVIDE EXEMPTION FROM ALL FILING; YOU MUST STILL FILE YOUR INFORMATION RETURNS ON ACCEPTABLE PAPER FORMS WITH THE APPROPRIATE SERVICE CENTER.

SECTION 5. TEST FILES

.01 IRS will assist first-time magnetic media filers with their initial magnetic tape or diskette submission by reviewing "TEST" files submitted in advance of the filing season. Also, current filers who have had software or hardware changes may wish to submit a "TEST FILE."

.02 If you are a new filer, you must submit a Form 4419 before you send in a "TEST" file. If approved, you will be assigned a five character Alpha/Numeric Transmitter Control Code (TCC). This TCC must be entered in the TCC field of your "A" Record.

.03 All "TEST" files must be submitted between October 1 and December 15 of each year. Do not submit "TEST" files after December 15. Only a sample hardcopy printout that shows a sample of each type of record used (A,B,C, and F) may be submitted after December 15 and it must be postmarked before January 15.

.04 The information in the "A" Record must be ACTUAL information--NOT FICTITIOUS. Clearly mark the hardcopy print as "TEST" data and include identifying information such as name, telephone number, and address of a person who can be contacted to discuss its acceptability. If your test file is acceptable, we will send you an approval letter only, unless you specifically request RETURN OF THE MEDIA, IN WRITING. This request MUST accompany your "TEST" file.

.05 With all "TEST" data submit a Form 4804, 4802, or computer generated substitute, marked "TEST DATA", which includes your TCC, money amounts, and total records. Be sure "TEST" in Block 1 of the Form 4804 is checked. The "TEST DATA" must be programmed according to the current revenue procedure.

.06 You must submit a test file between October 1 and December 15 for the first year you wish to participate in the Combined/Federal State Filing Program. A hardcopy print is NOT an acceptable test file for this program.

.07 Approved payers or transmitters should send the "TEST" file to the IRS/MCC (see Part A, Sec. 13 for the address).

SECTION 6. FILING OF MAGNETIC MEDIA REPORTS AND RETENTION REQUIREMENTS

.01 If you do not file your returns on time, you may be subject to a $50 per return late filing penalty. You may be subject to a $50 per return penalty for not following the instructions in this revenue procedure, or for not filing on magnetic media if you are required to file this way. The maximum penalty is $100,000 per calendar year. There is no maximum penalty for reporting certain interest or dividend payments or Form 5498. However, if the failure to file is due to intentional disregard of the filing and correct information requirements, higher penalties may be imposed.

.02 Generally, you are subject to a $50 penalty for EACH failure to include the payee's correct TIN on an information return unless the failure is due to reasonable cause, or in some cases if the payer can demonstrate fulfillment of the due diligence requirements. (Refer to Part A, Sec. 15 for the definition of Payer.)

.03 Form 4804, Transmittal of Information Returns Reported on Magnetic Media, must accompany magnetic media submissions. If you file for multiple payers and have the authority to sign the affidavit on Form 4804, you should also submit Form 4802, Transmittal for Multiple Magnetic Media Reporting. Form 4804 has been revised for tax year 1989. The revised form must be used.

.04 IRS encourages the use of a computer generated Form 4804 that includes all necessary information requested on the current form.

.05 Be sure to include Form 4804, 4802 or computer generated substitute with your magnetic media shipment. DO NOT MAIL THE MAGNETIC MEDIA AND THE TRANSMITTAL DOCUMENTS SEPARATELY. Magnetic media files covered by this revenue procedure are to be sent to the IRS/MCC. (See Part A, Sec. 13 for the address.)

.06 Paper information returns must be transmitted to the appropriate service center using Form 1096, Annual Summary and Transmittal of U.S. Information Returns. DO NOT send information returns filed on paper forms to the IRS/MCC.

.07 The affidavit for Form 4804 should be signed by the payer; however, the transmitter, service bureau, paying agent, or disbursing agent (all hereafter referred to as agent), may sign the affidavit on behalf of the payer if the agent has the authority to sign the affidavit under an agency agreement (either oral, written, or implied) that is valid under state law and adds the caption "FOR: (name of payer)."

.08 Although a duly authorized agent signs the affidavit, the payer is responsible for the accuracy of the Form 4804 and the returns filed, and the payer will be liable for penalties for failure to comply with filing requirements.

.09 DO NOT REPORT DUPLICATE INFORMATION; I.E., IF YOU REPORT PART OF YOUR RETURNS ON PAPER AND PART ON MAGNETIC MEDIA, BE SURE THE SAME INFORMATION IS NOT INCLUDED IN BOTH. This does not mean that corrected documents are not to be filed. If a return has been prepared and submitted improperly, you must file a corrected return as soon as possible. (Refer to Part A, Sec. 10 for requirements and instructions on filing corrected returns.)

.10 If reports from different branches or locations for one payer are submitted on the same file, consolidate each type of information return under one Payer/Transmitter "A" Record. For example, all Forms 1099-INT for the same payer on a single file must be sorted together under one Payer/Transmitter "A" Record followed by the appropriate "B" Records and one "C" Record.

.11 Before submitting magnetic media files, include the following:

(a) A signed Form 4804 or computer generated substitute.

(b) A Form 4802 if you transmit for multiple payers and have the authority to sign the affidavit on Form 4804.

(c) The magnetic media with an external identifying label as described in Part B, Section 1.02. Be sure to include the proper sequence on this label.

(d) On the outside of the shipping container, include a Form 4801 or a substitute for the form which reads "DELIVER UNOPENED TO TAPE LIBRARY -- MAGNETIC MEDIA REPORTING -- BOX __ of __." If there is only one container, mark the outside as Box 1 of 1. For multiple containers, include the sequence (e.g., Box 1 of 33, 2 of 33, etc.).

(e) If you were granted an extension, include a copy of the approval letter with the magnetic media shipment. (See Part A, Sec. 8 for information on how to apply for an extension of time to file.)

.12 IRS will not pay for or accept "Cash-on-Delivery" or "Charge to IRS" shipments of reportable tax information that an individual or organization is legally required to submit.

.13 Files may be returned to you due to coding or format errors. These files are to be corrected and returned to IRS within 45 days from the date of notice or the payer may be subject to a failure to file penalty. A copy of page 2 of the letter sent by IRS must be returned with the replacement file.

.14 A Magnetic Media Reporting Package which includes all the necessary transmittals, labels, and instructions will be mailed each year to the last known contact person and address of all approved filers.

.15 Payers are required to retain a copy of the information returns filed with IRS or to have the ability to reconstruct the data for at least three years.

SECTION 7. FILING DATES

.01 The dates prescribed for filing paper returns with IRS also apply to magnetic media filing. Magnetic media reporting to IRS for Forms 1098, 1099, and W-2G must be on a calendar year basis. Form 5498 is used to report amounts contributed during or after the calendar year but not later than April 16.

.02 Information returns filed on magnetic media for Forms 1098, all types of Forms 1099, and W-2G must be submitted to IRS and postmarked by February 28 but not before January 1. The due date for furnishing the required copy or statement to the payee is January 31.

.03 Information returns filed on magnetic media for Form 5498 must be submitted to IRS and postmarked by May 31. Trustees or issuers of IRAs or SEPs must provide participants with a statement of the value of the participant's account by January 31, in any written format. Statements are due to the participants by May 31 for contributions made to IRAs for the prior calendar year. Form 5498 is filed for contributions to be applied to 1989 that are made between January 1, 1989, and April 16, 1990.

.04 If any due date falls on a Saturday, Sunday, or legal holiday, the due date is extended to the next day that is not a Saturday, Sunday, or legal holiday.

SECTION 8. EXTENSIONS OF TIME TO FILE

.01 If a payer or transmitter of returns to be filed on magnetic media or paper forms with IRS or SSA is unable to submit its information returns by the dates prescribed in Part A, Sec. 7, submit a Form 8809, Request for Extension of Time To File Information Returns.

.02 Request an extension of time in increments of 30 days, not to exceed a maximum of 60 days, AS SOON AS YOU ARE AWARE an extension is necessary but no later than the due date of the return. The request must be sent to IRS/MCC. (See Part A, Sec. 13 for the address.) You must allow a minimum of 30 days for IRS/MCC to respond to an extension request.

.03 If you file for multiple payers, you must attach a list of their names, addresses, and TINs.

.04 In order to be considered, the request MUST be filed (postmarked) by the due date of the return; otherwise you will be subject to a late filing penalty of $50 per return. For example, if you are filing 1099-INT, the request must be filed by February 28; if you are filing Form 5498, the request must be filed by May 31. Extension requests will no longer be granted automatically. Approval or denial is based on administrative criteria and guidelines. You will be notified in writing by IRS of approval or denial. An approved extension for magnetic media filing does not provide additional time for supplying the required statement to the payee.

.05 If the extension request is granted, a copy of the approved letter MUST be included with the transmittal Form 1096 or Form 4804, or computer generated substitute when the file is submitted. Also, if you originally requested a 30-day extension and then find you need an additional 30 days, a copy of the first approved extension must accompany your second request.

.06 You can request an extension for only one tax year.

.07 The extension request must be signed by the payer or a duly authorized representative.

.08 Failure to properly complete and sign the Form 8809 may cause delays in processing the request or result in a denial of your request. Please read the instructions on the back of the Form 8809 very carefully.

.09 Copies of the Form 8809 may be obtained from IRS/MCC (see Part A, Sec. 13 for the address) or from other IRS offices. Form 8809 may be computer generated as long as it contains all the information requested on the official form.

SECTION 9. PROCESSING OF MAGNETIC MEDIA RETURNS

.01 All data received at the IRS Martinsburg Computing Center for processing will be given the same protection as individual returns (Form 1040), and will be returned to the originator ONLY UPON WRITTEN REQUEST after successful processing. This request MUST NOT be submitted before June 1 and no later than July 31, and must contain a complete name and address because the media will be returned to ONE LOCATION ONLY. In some cases, files are returned due to errors that must be corrected and returned to IRS/MCC within 45 days from date of notice or you may be subject to a failure to file penalty. Please open all files immediately.

.02 Do not use special shipping containers for transmitting data to the MCC. Because of the high volume of data received and shipping costs involved, they will not be returned.

.03 Please be sure that your format and coding comply with this revenue procedure which is to be used for the preparation of tax year 1989 information returns only. These procedures are updated to reflect legislative and form changes that occur each year affecting information returns. PLEASE READ THIS PUBLICATION CAREFULLY.

.04 To distinguish between a correction and a replacement:

A correction is media submitted by the payer to correct records that were successfully processed by IRS, but contained erroneous information.

A replacement is media that IRS has returned to the payer or transmitter due to format errors encountered during processing. After necessary changes have been made, the media must be returned to IRS/MCC for re-input.

SECTION 10. HOW TO FILE CORRECTED RETURNS

.01 The filing requirement thresholds listed in Part A, Sec. 3 apply separately to both original and corrected returns.

EXAMPLE: If you have 100 Forms 1099-A to be corrected, they can be filed on paper since they fall under the 250 threshold. However, if you have 300 Forms 1099-A to be corrected, they must be filed on magnetic media since they meet the 250 threshold. If for some reason you cannot file these corrections on magnetic media, you must request a waiver (see Part A, Sec. 4) before filing on paper or you may be subject to a penalty. No waiver is required for corrections that fall under the required threshold.

.02 Corrections for the current year should be aggregated and filed no later than October 1 of each year. ALL FIELDS MUST BE COMPLETED WITH THE CORRECT INFORMATION, NOT JUST THE DATA FIELDS NEEDING CORRECTION. Submit corrections only for the returns filed in error, not the entire file. If your entire file is in error, contact the IRS/MCC immediately. If you file corrected returns on paper forms, submit Copy A to the appropriate service center.

.03 The 1989 "Instructions for Forms 1099, 1098, 5498, and W-2G" provide more specific instructions for filing corrections on paper and a copy is included in your MTR (Magnetic Tape Reporting) package each year.

.04 There are numerous types of errors. More than one transaction may be required to properly correct the initial error. A "G" in magnetic media position 7 of the "B" Record is used to indicate a corrected return. You are strongly encouraged to read this ENTIRE section before attempting to make ANY correction (if the initial return was filed as an aggregate, you must consider this in filing the corrected return).

.05 Corrected returns submitted to IRS on magnetic media, using a "G" coded Payee "B" Record, may be included on the same tape as those corrections without the "G" code; however, separate "A" Records are required. Corrected returns are to be identified as corrections on the transmittal document by marking the appropriate checkbox, and also on the EXTERNAL label of the file.

.06 The instructions that follow will provide information on how to file corrected returns on magnetic media for the current tax year. However, if you discover errors in previous years' files, please send us a letter with the following information:

(a) Type of error. (Please explain clearly.)

(b) Tax year

(c) EIN

(d) TCC

(e) Number of Payees

This information will be forwarded to the appropriate office and may prevent erroneous notices from being generated against payee accounts.

.07 If you are not required to file your corrections on magnetic media and you file them on paper forms, do not submit the paper returns to the IRS/MCC. All paper returns, whether original or corrected, must be filed with the appropriate service center. Corrected returns filed on magnetic media must be filed with the IRS/MCC. (Refer to Part A, Sec. 13 for the address.) CORRECTED TAPES OR DISKETTES WILL NOT BE RETURNED UNLESS YOU SPECIFICALLY REQUEST THEIR RETURN, IN WRITING. This request MUST accompany your corrected media.

.08 Statements to payees should be clearly identified as "CORRECTED" and should be provided to them as soon as possible.

.09 Use the same name and TIN (SSN or EIN) for the payer on Form 4804/4802 and all related "A" Records.

.10 A transmittal Form 4804 or computer generated substitute is used to transmit magnetic media. A Form 4802 is a continuation sheet for a Form 4804 and is to be used if you file for multiple payers and are an authorized agent for the payers. (See Part A, Sec. 6.07.)

.11 On magnetic media files, the Payee "B" Record provides space to enter a Payer's Account Number for the Payee. This same account number may be provided on paper forms. This number will help identify the appropriate incorrect return if more than one return is filed for a particular payee. DO NOT ENTER A TIN (SSN OR EIN). A PAYER'S ACCOUNT NUMBER FOR THE PAYEE MAY BE A CHECKING ACCOUNT NUMBER, SAVINGS ACCOUNT NUMBER, SERIAL NUMBER OR ANY OTHER NUMBER ASSIGNED TO THE PAYEE BY THE PAYER THAT WILL DISTINGUISH THE SPECIFIC ACCOUNT. THIS NUMBER MUST APPEAR ON THE INITIAL RETURN AND ON THE CORRECTED RETURN IN ORDER TO IDENTIFY AND PROCESS THE CORRECTION PROPERLY. THIS NUMBER IS ALSO PROVIDED WITH YOUR INVALID/NO-TIN NOTIFICATION BY THE IRS AND WILL HELP YOU DETERMINE THE BRANCH OR SUBSIDIARY REPORTING THE TRANSACTION.

.12 REVIEW THE CHART THAT FOLLOWS. The types of errors made normally fall under one of the two categories listed. Next to each type of error made, you will find a list of instructions on how to properly file the corrected return for that type of error. READ ALL OF THE INSTRUCTIONS LISTED AND FOLLOW CAREFULLY FOR THE TYPE OF ERROR MADE ON THE INITIAL RETURN. IN SOME CASES TWO TRANSACTIONS ARE REQUIRED TO PROPERLY FILE CORRECTIONS. IF THE ORIGINAL RETURN WAS FILED AS AN AGGREGATE, YOU MUST CONSIDER THIS IN FILING CORRECTED RETURNS.

       Guidelines for Filing Corrected Returns On Magnetic Media

.01 Section 6109 of the Internal Revenue Code, and the regulations thereunder, requires a person whose Taxpayer Identification Number (TIN) must be shown on an information return to furnish his or her TIN to the person required to file the information return. The number must be furnished to the payer whether or not the payee is required to file a tax return or is covered by social security. (Refer to Part A, Sec. 15, for a definition of taxpayer identification number (TIN).)

.02 The payee's TIN is used to associate and verify amounts reported to IRS with corresponding amounts on tax returns. Therefore, it is particularly important that correct social security and employer identification numbers for payees be provided on magnetic media or paper forms submitted to IRS. DO NOT ENTER HYPHENS, ALPHA CHARACTERS, ALL 9s OR ALL ZEROS. IRS validates the SSN by using the Name Control of the surname of the individual who has been assigned this number. For this reason, provide the surname in the First Payee Name Line and/or the Name Control in positions 8-11 of the "B" Record. Failure to provide this information may make it impossible for IRS to validate the SSN.

.03 Under section 6676 of the Internal Revenue Code, a $50 penalty applies for each failure to furnish a TIN to another person who is required to file an information return, and for each failure to include a TIN on an information return. Except for interest and dividends, the penalty applies unless the failure to comply is due to reasonable cause and not willful neglect. (The maximum penalty for other than interest and dividends is $100,000 for the failure to furnish the recipient's TIN on an information return. For mortgages in existence before 1985, you will not be subject to the penalty for failure to provide the TIN of the payer of record on Form 1098 if you followed the rules for requesting TINs contained in Temporary Regulations section 1.6050H-1T, and you properly and promptly processed the responses.)

.04 In general, with respect to all payers of interest and dividends, section 6676 of the Internal Revenue Code provides that the payer must self-assess a $50 penalty for each failure to include a payee's TIN or each inclusion of an incorrect TIN on an information return, unless the payer can demonstrate that the payer met the due diligence requirements in attempting to acquire correct TINs for payees. Use Form 8210, Self-Assessed Penalties Return for this purpose.

.05 A penalty of $5 per failure applies to each failure by a payer to include his or her own TIN in any return, statement, or document.

.06 For certain reportable payments, if the payee fails to provide a TIN to the payer in the manner required, backup withholding must be instituted for that payee. For more information on backup withholding, see Publication 916, Information Returns Regulations, sections 35a.9999 and 35a.3406-1 and 2. If the payee has applied for a TIN, the payee may certify to this on Form W-9 by noting "Applied For" in the TIN block and by signing the form. This form then becomes an "awaiting-TIN certificate," and backup withholding may be required within seven (7) business days on an account for which a payer received an "awaiting-TIN certificate" on or before January 1, 1988.

.07 The TIN to be furnished to IRS depends primarily upon the manner in which the account is maintained or set up on the payer's record. The payer and payee names and TINs should be consistent with the names and numbers used on other tax returns. The name and TIN must be those of the owner of the account. If the account is recorded in more than one name, furnish the TIN and name of one of the owners of the account. The TIN provided must be associated with the name of the payee provided in the first name line of the Payee "B" Record. For individuals, including sole proprietors, the payee TIN is the payee's social security number. For other entities, the payee TIN is the payee's employer identification number.

.08 Sole proprietors who are payers should show their employer identification number in the Payer/Transmitter "A" Record. However, sole proprietors who are not otherwise required to have an employer identification number should use their social security number. A sole proprietor is not required to have an EIN unless he or she must file excise or employment tax returns. (See Pub. 583, Information for Business Taxpayers.)

.09 The following charts will help you determine the TIN to be furnished to IRS for those persons for whom you are reporting information (payees).

            CHART 1. Guidelines for Social Security Numbers

.01 Magnetic media reporting of the information returns listed in Part A, Sec. 3 applies only to the original (Copy A).

.02 Payers are responsible for providing Statements to the payees as outlined in the General Instructions of the 1989 "Instructions for Forms 1099, 1098, 5498, 1096 and W-2G."

.03 Refer to 1989 "Instructions for Forms 1099, 1098, 5498, 1096 and W-2G" for instructions and changes to reporting information returns on paper.

.04 Send all information returns filed on paper to the appropriate service center.

SECTION 13. HOW TO CONTACT THE IRS MARTINSBURG COMPUTING CENTER

.01 Magnetic media processing for all service centers is centralized at the IRS Martinsburg Computing Center. Magnetic media covered under this revenue procedure and all requests for IRS magnetic media related publications, information, undue hardship waivers, extensions of time or forms are to be directed to the following addresses:

         If by Postal Service:

.03 Requests for paper returns, publications or forms not related to magnetic media processing should be requested by calling the "Forms Only Number" listed in the local telephone directory.

SECTION 14. COMBINED FEDERAL/STATE FILING PROGRAM

.01 The Combined Federal/State Program was established to simplify information returns filing for the taxpayer by providing the tax information to participating states Free-of-Charge. FORMS 1098, 1099-A, 1099-B, 1099-S AND W-2G CANNOT BE FILED UNDER THIS PROGRAM.

.02 To request approval to participate, a "TEST" file coded for this program, MUST be submitted by the transmitter to the IRS/MCC between October 1 and December 15 using the revenue procedure that will be used for the actual data files.

.03 Attach a letter to the Form 4804 submitted with the "TEST" file which indicates that you wish to participate in this program.

.04 The "TEST" file is only required for the first year. Once you are approved, you need not resubmit "TESTS" each year except when notified by IRS. (See Part A, Sec. 5 for general guidelines on submission of test files.) Each record, both in the "TEST" file and the "ACTUAL" data file, must conform exactly to the revenue procedure for that tax year. Records must be coded using each state's dollar criteria from TABLE 2 of this section for each type of return.

.05 If your "TEST" file is acceptable, we will send you an approval letter only, UNLESS YOU SPECIFICALLY request RETURN OF THE MEDIA, IN WRITING. This request MUST accompany your "TEST" file. Along with this letter we will send you a Form 6847, Consent for Internal Revenue Service to Release Tax Information, which the payer MUST complete, sign, and return to IRS/MCC before any tax information can be released to the State. Be sure to include your TCC.

.06 A separate Form 6847 is required for each payer. A transmitter may not combine payers on one Form 6847 even though acting as Attorney-in-Fact for several payers. Form 6847 may be photocopied or computer generated as long as it includes all information that is on the official form. If the Form 6847 is signed by an Attorney-in-Fact, the written consent from the payer must clearly indicate that the Attorney-in-Fact is empowered to authorize release of the information.

.07 If you file for multiple payers, code the records only for participating states for those payers who have properly submitted Form 6847. Do not submit ACTUAL data records coded for this program WITHOUT PRIOR APPROVAL from IRS.

.08 If you had applied to file on this program in the past but did not meet the requirements, you must resubmit the Form 6847 with the proper signatures as specified.

.09 Some participating states require separate notification that you are filing in this manner. Since IRS acts as a forwarding agent only, IT IS YOUR RESPONSIBILITY TO CONTACT THE APPROPRIATE STATES FOR FURTHER INFORMATION.

.10 Approval to participate in the Combined Federal/State Program will be revoked if files submitted do not totally conform to the specifications in this revenue procedure.

.11 IT IS THE FILER'S RESPONSIBILITY TO TRANSMIT CORRECTED RETURNS TO THE STATES.

.12 Participating states and corresponding valid state codes are listed in TABLE 1 of this section. If the state that you wish information released to does not participate in the program, do not code your records for that state. However, it is the filer's responsibility to file information returns with those nonparticipating states.

.13 The appropriate State Code should be entered for those documents which meet the state's filing requirements (see TABLE 1). It is the filer's responsibility to determine the State Code to be used and to obtain the filing requirements from the appropriate state(s).

.14 To simplify filing, several of the participating states have provided lists of their information return reporting requirements (see TABLE 2).

.15 If you have met ALL of the above conditions:

(a) You must submit all records which indicate the appropriate coding related to this program.

(b) The "C" Record must be followed by a "K" Record for each state. The "K" Record indicates the number of payees being reported to each particular state.

(c) Payment amount totals and the valid participating state code must be included in the state totals "K" Record. (Refer to Part B, Sec. 8, for a description of the "K" Record.)

(d) The last "K" Record is followed by an "A" Record or End of Transmission "F" Record (if this is the last record of the entire file).

             TABLE 1. PARTICIPATING STATES AND THEIR CODES

 Element        Description

.01 You MUST use the following state abbreviations when developing the state code portion of address fields. (This table provides state abbreviations only and does not represent those states participating in the Combined Federal/State Program. For a list of states that participate in the Combined Federal/State Program, refer to Part A, Sec. 14, Table 1.)

 State                                                           Code

.03 For Foreign Country addresses you may use a 40 position free format in lieu of the 29-2-9 City, State, and ZIP Code format; however, this is only allowable if a "1" appears in the Foreign Country Indicator Field of the "B" Record. You may choose to spell out the name of the foreign country or use abbreviations.

.04 When reporting APO/FPO addresses in Payee documents, the following format should be used:

          Payee Name          PVT Willard J. Doe

Following are some of the most frequently encountered problems with magnetic media files submitted to MCC which result in files being returned to the filer:

1. The Payment Amount Fields in the Payee "B" Record do not correspond to the amount indicators in the Payer "A" Record.

If Amount Indicators 2, 4, and 7 appear in positions 23, 24, and 25 of the Payer "A" Record, then the Payee "B" Record must show Payment Amounts in Fields 2 (position 61-70), 4 (position 81-90), and 7 (position 111-120), right-justified and unused positions zero filled.

     EXAMPLE:       "A" RECORD     247bbbbbb -- (b = blank)

Money amounts must be right-justified and zero (0) filled. DO NOT USE BLANKS. Each Payment Amount must be entered in U.S. dollars and cents; however, do not use dollar signs, decimal points, or commas, as these characters are understood.

DO NOT ENTER NEGATIVE AMOUNTS EXCEPT for Amount Indicators 2, 6, 7, 8, or 9 of the Form 1099-B. A negative overpunch in the units position may be used instead of a minus sign to indicate negative amounts. If a plus or minus sign or negative overpunch is not used, the amount is assumed to be positive.

3. Data is in prior year's format.

Revenue procedures are updated each year and you must use the current revenue procedure to format your programs. DO NOT USE 1988 REVENUE PROCEDURES FOR 1989 FILING.

4. Discrepancy between IRS totals and totals in Payer "C" Records.

The Payer "C" Record is a summary record for a type of return for a given payer as reported in the Payee "B" Records. IRS computers automatically compute the total number of payees and total payment amounts in the Payee "B" Records and these totals are compared against the totals in the Payer "C" Records. These totals are also manually checked against the totals provided on Forms 4804/4802. Payers should verify the accuracy of the records because imbalances necessitate return of files for correction.

5. Incorrect/Invalid EIN in Payer "A" Record.

The Payer's Federal EIN reported in position 7-15 of the Payer "A" Record must be correct in order for IRS to process the media. Be sure the EIN reported on the Form 4804 and Form 4802, matches the EIN reported in the "A" Record. Do not enter blanks, hyphens, alphas, all 9's or all 0's. This field may be left blank for foreign corporations not required to have an EIN if the foreign indicator code is present in the "A" Record. Also, please double check for transposed numbers because an incorrect EIN will cause records to go unpostable; i.e., the records will not post to the Master File.

6. Bad Format.

We receive magnetic tape formatted using 8-inch diskette specifications and vice versa.

BE SURE TO USE THE PROPER REVENUE PROCEDURE FOR FORMATTING YOUR PROGRAMS. Use Revenue Procedure 1220 for formatting magnetic tape, 5 1/4 and 3 1/2 inch diskettes. Use Revenue Procedure 1255 for formatting 8-inch diskettes.

7. Reporting Payments on Form 1099-R, Payer "A" Record.

There is no provision for reporting Category of Distribution (Box 7 on the paper Form 1099-R) in the Payer "A" Record. This information is reported in the Document Specific Code of the Payee "B" Record. Therefore, the Amount Indicators in the Payer "A" Record should be reported as follows if you are reporting all 8 Amount Codes: 12345689b. Amounts are entered in ascending sequence, left-justified, and unused positions blank filled. The Amount Indicator may change from year to year. Please be sure your Payer "A" Record only contains the Amount Indicators specified in the Revenue Procedure.

8. Block size exceeds 10,000 positions.

We hope to eliminate this problem by having increased the block size to 25,200 positions. Be sure your records do not span blocks.

9. Bad or incomplete address in the Payer "A" Record.

The Payer's address in Field Position 131-170 of the Payer "A" Record should be left-justified and blank filled, and must agree with the address provided on Forms 4804/4802. Payer's City, State and ZIP should appear in positions 171-210 and must be left-justified and blank filled.

10. Record length is invalid.

Beginning in Tax Year 1987, the record length was changed from 360 to 420 positions. Programs are being formatted using 360 positions.

RECORDS MUST BE A FIXED 420 POSITIONS.

PART B. MAGNETIC MEDIA SPECIFICATIONS

SECTION 1. GENERAL

.01 The specifications contained in this part of the revenue procedure define the required format and contents of the records to be included in the magnetic media file. These specifications must be adhered to unless deviations have been specifically granted by IRS.

.02 An external label, Form 5064, must appear on each tape and diskette submitted for processing. If diskettes are used and the operating system is not MS/DOS compatible, the operating system and hardware information MUST be provided. Failure to provide this information will result in the diskette being returned to the filer. The following information is needed:

(a) The transmitter's name.

(b) The five character alpha/numeric Transmitter Control Code.

(c) The tax year of the data (e.g., 1989).

(d) Operating system software and hardware used to create the file (e.g., Apple MacIntosh/MacWrite V2.2).

(e) Document types (e.g., 1099-INT).

(f) The total number of "B" Records after each "A" Record (this figure is taken from the "C" Records).

(g) An in-house number assigned by the transmitter to the magnetic media (if applicable).

(h) The sequence of each tape or diskette (e.g., 001 of 008, 002 of 008). However, if your file is complete on one tape or diskette, then the sequence will be 001 of 001.

The information on the external media label, Form 5064, will assist IRS in processing the file or in locating a file, should the transmitter request that it be returned due to errors. IRS advises that special shipping containers not be used for transmitting data since they will not be returned.

.03 A provision is made in the Payee "B" Records for Special Data Entries. These entries are optional. If the field is not utilized, enter blanks to maintain a fixed record length of 420 positions. The field is intended to serve one or both of these purposes:

(a) Contain information required by state or local governments. Filers who wish to use this option for satisfying state or local reporting requirements should contact their state or local department of revenue for filing instructions. (Also refer to Part A, Sec. 14.)

(b) This field is also reserved for the filer's own personal use and may be used at the discretion of the filer to include information related to each individual return. IRS will not use the information supplied in this field. The length of this field will vary depending on the type of return. For Forms 1098, 1099-DIV, 1099-G, 1099-INT, 1099-MISC, 1099-PATR, 1099-R, and 5498, there are 67 positions reserved for Special Data Entries. For Form 1099-A, there are 21 positions; for Form 1099-B, there are 10 positions; for Forms 1099-OID, there are 28 positions; and for Forms 1099-S, there are 23 positions. Form W-2G has no available space within the Payee "B" Record for Special Data Entries.

.04 All records must be a fixed length of 420 positions. Use "K" Records only if you are an approved Combined Federal/State filer.

SECTION 2. TAPE SPECIFICATIONS

.01 In most instances, IRS can process any compatible tape files. Tape files must be EBCDIC, ASCII or BCD and must meet the following criteria:

(a) 9 track EBCDIC (Extended Binary Coded Decimal Interchange Code) with:

(1) Odd Parity

(2) A density of 800, 1600, or 6250 BPI.

(3) If you use UNIVAC Series 1100, you must submit an interchange tape.

(b) 9 track ASCII (American Standard Coded Information Interchange) with:

(1) Odd Parity

(2) A density of 800, 1600, or 6250 BPI.

(c) 7 track BCD (Binary Coded Decimal) with:

(1) Either Even or Odd Parity

(2) A density of 556 or 800 BPI. (IRS will accept and process 7 track tapes; however, 9 track is preferred.)

Please be consistent in the use of recording codes and density on your files. If files are generated in more than one recording code and/or density, multiple shipments would be appreciated.

.02 All compatible tape files must have the following characteristics: Type of tape -- 0.5 inch (12.7 mm) wide, computer grade magnetic tape on reels of up to 2400 feet (731.52 m) within the following specifications:

(a) Tape thickness: 1.0 or 1.5 mils and

(b) Reel diameter: 10.5 inch (26.67 cm), 8.5 inch (21.59 cm), or 7 inch (17.78 cm).

(c) At this time, IRS cannot accept cartridge tape. However, we are exploring this possibility for the near future.

.03 Payers who can substantially conform to these specifications, but require some minor deviations, MUST contact the IRS/MCC. Tapes deviating from the specifications in this revenue procedure must not be submitted without prior approval from IRS. If you file on the Combined Federal/State Program, your files must conform totally to this revenue procedure.

.04 The tape records defined in this revenue procedure may be blocked subject to the following:

(a) A block must not exceed 25,200 tape positions.

(b) If the use of blocked records would result in a short block, all remaining positions of the block must be filled with 9's; however, the last block of the file may be filled with 9's or truncated. Do not pad a block with blanks.

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

(d) Records may not span blocks.

.05 Labeled or unlabeled tapes may be submitted.

.06 For the purposes of this revenue procedure the following must be used.

Tape Mark:

(a) Used to signify the physical end of the recording on tape.

(b) For even parity, use BCD configuration 001111 ("8421").

(c) May follow the header label and precede and/or follow the Trailer Label.

SECTION 3. 5 1/4 INCH AND 3 1/2 INCH DISKETTE SPECIFICATIONS

.01 To be compatible, a diskette file must meet the following specifications:

(a) 5 1/4 or 3 1/2 inches in diameter.

(b) Data must be recorded in standard ASCII code.

(c) Records must be fixed length of 420 bytes per record.

(d) Delimiter character commas (,) must not be used.

(e) Positions 419 and 420 of each record have been reserved for carriage return/line feed (cr/lf) characters.

(f) Filename of IRSTAX must be used. Do not enter any other data in this field. If a file will consist of more than one diskette, the filename IRSTAX will contain a 3 digit extension. This extension will indicate the sequence of the diskettes within the file. For example, the first diskette will be named IRSTAX.001, the second diskette will be IRSTAX.002, etc.

(g) A diskette file may consist of multiple diskettes as long as the filename conventions are adhered to.

(h) Diskettes must meet one of the following specifications:

        Capacity    Tracks    Sides/Density    Sector Size

.03 Deviations from the prescribed formats will not be acceptable. Diskettes deviating from the specifications in this revenue procedure must not be submitted without prior approval from IRS. If you file under the Combined Federal/State Program, your files must conform totally to this revenue procedure.

SECTION 4. PAYER/TRANSMITTER "A" RECORD

.01 Identifies the payer and transmitter of the magnetic media file and provides parameters for the succeeding Payee "B" Records. IRS computer programs rely on the absolute relationship between the parameters and data fields in the "A" Record and the data fields in the "B" Records to which they apply.

.02 The number of "A" Records appearing on a tape reel or diskette will depend on the number of payers and the different types of returns being reported. The payment amounts for one payer for one type of return must be consolidated under one "A" Record if submitted on the same file.

.03 Do not submit separate "A" Records for each payment amount being reported. For example, if you are filing Form 1099-DIV to report Amount Codes 1, 2, and 3, all three amount codes must be reported under one "A" Record, not three separate "A" Records. For Payee "B" Records which do not contain payment amounts for all three amount codes, enter zeros for those which have no payment to be reported.

.04 The first record appearing on the file must be an "A" Record. A transmitter may include Payee "B" Records for more than one payer on a tape or diskette; however, each GROUP of Payee "B" Records must be preceded by an "A" Record.

.05 ALL RECORDS MUST BE A FIXED LENGTH OF 420 POSITIONS.

.06 A single tape or diskette may also contain different types of returns but the types of returns must not be intermingled. A separate "A" Record is required for each payer and for each type of return being reported. An "A" Record may be blocked with "B" Records; however, the initial record on a file must be an "A" Record. IRS will accept an "A" Record after a "C" Record.

.07 Do not begin any record at the end of a block or diskette and continue the same record into the next block.

.08 All alpha characters entered in the "A" Record should be upper-case.

.09 WHEN REPORTING FORM 1098, MORTGAGE INTEREST STATEMENT, THE "A" RECORD WILL REFLECT THE NAME OF THE RECIPIENT OF THE INTEREST (THE FILER). THE "B" RECORD WILL REFLECT THE INDIVIDUAL PAYING THE INTEREST (BORROWER/PAYER OF RECORD) AND THE AMOUNT PAID.

               RECORD NAME: PAYER/TRANSMITTER "A" RECORD

[Editor's note: These record layouts are graphic representations of the file specifications described above. They have been omitted because they provide no additional information and are not suitable for clear on-screen presentation.]

SECTION 6. PAYEE "B" RECORD -- GENERAL FIELD DESCRIPTIONS AND RECORD LAYOUTS

.01 The Payee "B" Record contains the payment information from the individual returns. When filing information documents on magnetic media, the format for the Payee "B" Records will remain constant and is a fixed length of 420 positions. The record layout for positions 1 through 321 is the same for all "B" Records. Positions 322 through 420 vary slightly for Forms 1099-A, 1099-B, 1099-OID, 1099-S and W-2G to accommodate variations within these forms. The individual field definitions follow the Payee ZIP Code field in the "B" Record.

All records must be submitted with a fixed length of 420 positions. In the "A" Record, the Amount Indicator Codes that appear in tape or diskette positions 23 through 31 will be left-justified and blank filled. In the "B" Record, you will allow for all nine payment amount fields. For those fields not used enter zeros (0). For example, if you are reporting on Form 1099-PATR, you will enter a "7" in tape position 22 of the "A" Record, Type of Return Indicator field. If you are reporting payments for Amount Codes 2, 4, and 7, then tape positions 23 through 31 of the "A" Record will be "247bbbbbb" (b = blanks). In the Payee "B" Record:

Positions 51 through 60 for Payment Amount 1 will be zeros.

Positions 61-70 will reflect the actual payment amount to be reported for "Nonpatronage distributions."

Positions 71-80 for Payment Amount 3 will be zeros.

Positions 81-90 will reflect the actual payment amount to be reported for "Federal income tax withheld."

Positions 91-110 for Payment Amounts 5 and 6 will be zeros.

Positions 111-120 will reflect the actual payment amount to be reported for "Energy investment credit."

Positions 121-140 for Payment Amounts 8 and 9 will be zeros.

.02 IRS must be able to identify the surname associated with the TIN (SSN or EIN) furnished on a return. The specifications below include a field in the payee records called "Name Control" in which the first four characters of the payee's surname or last name are to be entered by the payer. The surname or last name should appear first in the First Payee Name Line of all Payee "B" Records; however, if your records have been developed using the first name first, a blank must appear between the first and last name.

.03 If payers are unable to determine the first four characters of the surname, the Name Control Field may be left blank; however, compliance with the following will facilitate IRS computer programs in generating the Name Control.

(a) The surname of the payee whose TIN (SSN or EIN) is shown in the Payee "B" Record should always appear first. If, however, you enter the first name first, you must leave a blank space between the first and last name.

(b) In the case of multiple payees, only the surname of the payee whose TIN (SSN or EIN) is shown in the Payee "B" Record must be present in the First Payee Name Line. Surnames of any other payees in the record must be entered in the Second Payee Name Line.

.04 A field is also provided in these specifications for Special Data Entries. This field may be used to record information required by state or local governments or for the filer's own personal use. IRS does not use the data provided in the Special Data Entries field.

.05 Those filers participating in the Combined Federal/State Filing Program must code their records appropriately for the state to receive the information. The state code appears in positions 417 and 418 of the "B" Record. The file should also meet the money criteria described in Part A, Sec. 14, Table 2.

.06 Do not code for the states unless prior approval to participate has been granted by IRS. See Part A, Sec. 14, Table 1 for a list of the valid participating state codes. FORMS 1098, 1099-A, 1099-B, 1099-S, AND W-2G CANNOT BE FILED UNDER THE COMBINED FEDERAL/STATE FILING PROGRAM. Your files must meet all of the requirements specified in Part A, Sec. 14 in order to participate in this program.

.07 All alpha characters entered in the "B" Record should be upper-case.

.08 Do not use decimal points (.) to indicate dollars and cents on magnetic media.

.09 IRS STRONGLY ENCOURAGES FILERS TO REVIEW THEIR DATA FOR ACCURACY BEFORE SUBMISSION TO PREVENT ISSUANCE OF ERRONEOUS NOTICES TO PERSONS FOR WHOM REPORTS ARE FILED. FILERS SHOULD BE ESPECIALLY CAREFUL THAT THEIR TAXPAYER NAMES, SOCIAL SECURITY NUMBERS (SSNs), ACCOUNT NUMBERS, TYPES OF INCOME, AND INCOME AMOUNTS ARE CORRECT.

.10 WHEN REPORTING FORM 1098, MORTGAGE INTEREST STATEMENT, THE "A" RECORD WILL REFLECT THE NAME AND EIN OF THE RECIPIENT OF THE INTEREST (THE FILER). THE "B" RECORD WILL REFLECT THE INDIVIDUAL PAYING THE INTEREST (THE BORROWER/PAYER OF RECORD) AND THE AMOUNT PAID. FOR FORM 1099-S, THE "A" RECORD WILL REFLECT THE PERSON RESPONSIBLE FOR REPORTING THE TRANSACTION. THE "B" RECORD WILL REFLECT THE SELLER.

                     RECORD NAME: PAYEE "B" RECORD

.01 THE "C" RECORD IS A FIXED RECORD LENGTH OF 420 POSITIONS. The Control Total fields are each 15 positions in length.

.02 The End of Payer "C" Record is a summary record for a type of return for a given payer.

.03 The "C" Record will contain the total number of payees and the totals of the payment amount fields filed by a given payer. The "C" Record MUST be written after the last Payee "B" Record for each type of return for a given payer. For each "A" Record and group of "B" Records on the file, there must be a corresponding "C" Record.

.04 In developing the "C" Record, if you used Amount Codes 1, 3 and 6 in the "A" Record, the totals from the "B" Records will appear in Control Totals 1, 3 and 6 of the "C" Record. In this example, positions 26-40, 56-85, and 101-145 would be zero filled. Positions 146-420 would be blank filled.

.05 Payers/Transmitters must verify the accuracy of the totals in the "C" Record and must enter the totals on Forms 4804, 4802 or computer generated substitute, which will accompany the shipment. The lines used on Forms 4804 and 4802 to record payment amounts correspond with the Amount Codes used in the "A" Record.

                 RECORD NAME: END OF PAYER "C" RECORD

.01 THE "K" RECORD IS A FIXED RECORD LENGTH OF 420 POSITIONS. The Control Total fields are each 15 positions in length.

.02 The State Totals "K" Record is a summary for a given payer and a given state in the Combined Federal/State Filing Program, used ONLY when state reporting approval has been granted.

.03 The "K" Record will contain the total number of payees and the totals of the payment amount fields filed by a given payer for a given state. The "K" Record(s) must be written after the "C" Record for the related "A" Record.

.04 In developing the "K" Record, if you used Amount Codes 1, 3 and 6 in the "A" Record, the totals from the "B" Records coded for this state will appear in Control Totals 1, 3 and 6 of the "K" Record.

.05 There MUST be a separate "K" Record for each state being reported.

.06 Refer to Part A, Sec. 14 for the requirements and conditions that MUST be met to file on this program.

                 RECORD NAME: STATE TOTALS "K" RECORD

.01 THE "F" RECORD IS A FIXED RECORD LENGTH OF 420 POSITIONS. The "F" Record is a summary of the number of payers in the entire file.

.02 This record should be written after the last "C" Record (or last "K" Record, when applicable) of the entire file.

 RECORD NAME: END OF TRANSMISSION "F" RECORD