Rev. Proc. 93-31

NOTE: Use this revenue procedure to prepare tax year 1993 information returns for submission to Internal Revenue Service (IRS) using any of the following:

-- Magnetic Tape

-- Tape Cartridge

-- 5 1/4-inch Diskette

-- 3 1/2-inch Diskette

-- 8-inch Diskette

-- Electronic Filing

-- (Asynchronous)

-- (Bisynchronous)

Please read this publication carefully. Persons required to file information returns may be subject to penalties for failure to file or failure to include correct information if they do not follow the instructions in this revenue procedure.

TABLE OF CONTENTS

PART A. GENERAL

     SECTION 1. PURPOSE

     SECTION 1. GENERAL

     SECTION 1. GENERAL

     SECTION 1. GENERAL

     SECTION 1. GENERAL

     SECTION 1. GENERAL

SECTION 1. PURPOSE

.01 The purpose of this revenue procedure is to provide the specifications for filing Forms 1098, 1099, 5498, and W-2G electronically or on magnetic media which includes 1/2-inch magnetic tape; IBM 3480/3490 compatible tape cartridges; or 5 1/4-, 3 1/2-, and 8-inch diskettes, with IRS.

This revenue procedure must be used for the preparation of Tax Year 1993 information returns and information returns for years prior to 1993 that are required to be filed. This revenue procedure must be used to prepare current and prior documents filed between January 1, 1994, and December 31, 1994. Specifications for filing the following forms are contained in this revenue procedure.

(a) Form 1098, Mortgage Interest Statement.

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

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

(d) Form 1099-DIV, Dividends and Distributions.

(e) Form 1099-G, Certain Government Payments.

(f) Form 1099-INT, Interest Income.

(g) Form 1099-MISC, Miscellaneous Income.

(h) Form 1099-OID, Original Issue Discount.

(i) Form 1099-PATR, Taxable Distributions Received From Cooperatives.

(j) Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.

(k) Form 1099-S, Proceeds From Real Estate Transactions.

(l) Form 5498, Individual Retirement Arrangement Information.

(m) Form W-2G, Certain Gambling Winnings.

.02 Revenue procedures are generally revised annually to reflect legislative and form changes. Comments concerning this revenue procedure, or suggestions for making it more helpful, can be addressed to Internal Revenue Service, Martinsburg Computing Center, P. O. Box 1359, Martinsburg, WV 25401 ATTN: IRB, Information Support Section.

.03 It is unlawful to intentionally transmit a computer virus to the Internal Revenue Service. Violators may be subject to a fine and/or imprisonment.

.04 Specifications for filing Forms W-2 on magnetic media are available from the Social Security Administration (SSA) only. Payers can call 1-800-SSA-1213 to obtain the phone number of the SSA Magnetic Media Coordinator for their area.

.05 The Internal Revenue Service, Martinsburg Computing Center (IRS/MCC) has the responsibility for processing Forms 1098, 1099, 5498, and W-2G filed magnetically or electronically. IRS/MCC does not process Forms W-2. Paper and/or magnetic media for Forms W-2 must be sent to SSA. IRS/MCC does, however, process magnetic media waiver requests (Form 8508) and extension of time requests (Form 8809) for filing Forms W-2.

.06 In most cases, the box numbers on the paper forms correspond with the amount codes used to file magnetically/electronically; however, if discrepancies occur, the instructions in this revenue procedure govern.

.07 This revenue procedure also provides the requirements and specifications for magnetic media or electronic filing under the Combined Federal/State Filing Program.

.08 The following revenue procedures and publications provide more detailed filing procedures for certain other information returns.

(a) 1993 "Instructions for Forms 1099, 1098, 5498, and W-2G" provides specific instructions on completing and submitting information returns to IRS. This publication is included in the magnetic media reporting packages mailed to the transmitters who participate in the Information Reporting Program (IRP). These instructions can also be obtained by contacting your local IRS office or by calling 1-800-TAX-FORM (1-800-829-3676).

(b) Rev. Proc. 84-33, 1984-1 C.B. 502, 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 W-2G (Rev. Proc. 93-24, 1993-20 I.R.B. 7).

(d) Publication 1239, Specifications for Filing Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips, on Magnetic Tape and 5 1/4- or 3 1/2-inch Diskettes.

(e) Publication 1187, Specifications for Filing Form 1042S, Foreign Person's U.S. Source Income Subject to Withholding, Electronically or on Magnetic Tape, and 5 1/4- or 3 1/2-inch Magnetic Diskettes.

(f) Publication 1245, Specifications for Filing Form W-4, Employee's Withholding Allowance Certificate, on Magnetic Tape, and 5 1/4- or 3 1/2-inch Magnetic Diskette.

.09 This revenue procedure supersedes Rev. Proc. 92-46 published as Publication 1220, (Rev. 6-92), Specifications for Filing Forms 1098, 1099, 5498 and W-2G Electronically or on Magnetic Media.

.10 Refer to Part A, Sec. 18, for definitions of terms used in this publication.

SEC. 2. NATURE OF CHANGES--CURRENT YEAR (TAX YEAR 1993)

.01 PROGRAMMING CHANGES

a. Payer/Transmitter "A" Record:

(1) Field positions 2-3 (pos. 3-4 for 8-inch diskette) "Payment Year" must be incremented by one (from 92 to 93) unless reporting prior year data.

(2) Form 1098, Payment Amount Code 3 pos. 23-31 (pos. 24-32 for 8-inch diskette) was added to report a Refund of Overpaid Interest.

(3) Form 1099-MISC, Note 1 was added in the Type of Amount Code field to explain how to report Direct Sales only.

(4) Form 1099-R, Note 3 under the Amount Codes field pos. 23-31 (pos. 24-32 for 8-inch diskette) in the Payer "A" record was expanded to clarify how to report IRA/SEP distributions.

(5) Form 1099-S, Amount Code 5 pos. 23-31 (pos. 24-32 for 8-inch diskette) was added to report the Buyers Part of Real Estate Tax.

b. Payee "B" Record changes:

(1) Field positions 2-3 (pos. 3-4 for 8-inch diskette) "Payment Year" must be incremented by one (from 92 to 93) unless reporting prior year data.

(2) 1099-MISC, field position 12 (pos. 13 for 8-inch diskette) "Direct Sales Indicator" a note was added to instruct payers how to format the record if Direct Sales is all that is being reported.

(3) 1099-R, "IRA/SEP Indicator" position 44 (pos. 45 for 8-inch diskette) extra instruction was added to this field. When reporting a distribution from an IRA or SEP, in addition to this indicator, generally, the amount of the distribution should be reported in Payment Amount Field 2 "Taxable Amount" of the Payee "B" Record.

(4) 1099-R, four additional Distribution Codes (pos. 4 and 5 [pos. 5 and 6 for 8-inch diskettes]) E, F, G, and H have been added. Distribution Codes E and F must stand alone. Distribution Code G may be used in conjunction with Distribution Code 4.

(5) A note was added to the Taxpayer Identification Number field pos. 15-23 (pos. 16-24 for 8-inch diskette) to encourage payers who submit records with missing TINs to attach a letter of explanation to Form 4804 when submitting their data.

c. End of Payer "C" Record--No changes.

d. State Totals "K" Record--No changes.

e. End of Transmission "F" Record--No changes.

.02 EDITORIAL CHANGES--"GENERAL"

There have been numerous editorial changes. IRS recommends that filers read this publication in its entirety to ensure proper reporting.

(a) The title of Publication 1220 has changed from "Specifications for Filing Forms 1098, 1099, 5498, and W-2G Electronically or on Magnetic Tape, Tape Cartridge, and 5 1/4-, 3 1/2-, and 8-inch Magnetic Diskettes" to "Specifications for Filing Forms 1098, 1099, 5498, and W-2G Magnetically or Electronically."

(b) Payers are encouraged to file Form 8508, Request for Waiver From Filing Information Returns on Magnetic Media, at least 45 days prior to the due date of the return. See Part A, Sec. 5.09.

(c) Applications or changes to the vendor list must be received by MCC no later than August 15. See Part A, Sec. 6.04.

(d) The testing periods have been changed in Part A, Sec. 8.05. Test data will be processed between November 1 and December 31; however, test tapes, tape cartridges, and 5 1/4-, 3 1/2-, or 8-inch diskettes may be submitted any time after October 1.

(e) Instructions were added to Part A, Sec. 9.05 to advise payers that current and prior year data may be submitted in the same shipment; however, each tax year must be on separate media or transmitted separately and a Form 4804 should be prepared for each tax year.

(f) Payers who have prepared their information returns in advance of the due date are encouraged to submit this information to MCC no earlier than January 1 of the year the return is due. See Part A, Sec. 9.06.

(g) Information was added to Part A, Sec. 10.05, to advise payers that this revenue procedure must be used to prepare information returns filed beginning January 1, 1994, and received at MCC by December 31, 1994.

(h) Transmitters requesting an extension of time to file for 10 or more payers are encouraged to file the request magnetically or electronically. See Part A, Sec. 11.03.

(i) Information was added to Part A, Sec. 12.08 to encourage payers who submit information returns with missing TINs and have taken all the required steps to obtain this information to attach a letter of explanation to the required Form 4804.

(j) Instruction was added (Part A, Sec. 14.06) on how to make prior year corrections. If submitting prior year data, beginning January 1, 1994, and received at MCC no later than December 31, 1994, use the format provided in this revenue procedure.

(k) New York State no longer participates in the Combined Federal/State Filing Program and all references have been deleted from Tables 1 and 2. See Part A, Sec. 17.

(l) Information concerning a request for deviation was removed from Part A, Sec. 19. Request for a deviation from the required format will no longer be approved. Filers must adhere to all the guidelines specified in this revenue procedure.

(m) Payers/Transmitters are encouraged to review Part A, Sec. 20 (Major Problems Encountered) before submitting data.

(n) Information was added to Part B, Sec. 2.03(c) and Sec. 3.02(c) to encourage filers to use fixed block records. All blocks must be divisible by 420.

(o) IRS/MCC cannot process more than one data file on a tape. See Part B, Sec. 2.06.

(p) IRS encourages payers to use blank or currently formatted diskettes when preparing files. See Part B, Sec. 4.02.

(q) Filers are encouraged to submit high density diskettes. Low density diskettes formatted in low density are acceptable. See Part B, Sec. 4.04.

(r) Information concerning Bisynchronous (mainframe) and Asynchronous (IRP-BBS) Electronic Filing has been separated. Bisynchronous electronic filing information is now in Part C and asynchronous electronic filing is now in Part D.

(s) Do not transmit data using the IRP-BBS between January 1 and January 10. During this time, the IRP-BBS is being updated to reflect current year changes. See Part D, Sec. 4.03.

(t) Information was added to Part D, Asynchronous Electronic Filing, to reflect all information contained in Publication 1527, IRP-BBS, eliminating the need to obtain both publications.

(u) The record format to submit an Extension of Time to File, magnetically or electronically, has been expanded from 206 to 226 positions; see Part G. Name and address fields were changed or expanded. Form 1042 was added to the list of forms.

.03 EDITORIAL CHANGES--MAGNETIC MEDIA SPECIFICATIONS:

(a) Cartridges will contain 37,871 CPI (characters per inch). See Part B, Sec. 3.b.4.

(b) Data submitted on compatible tape cartridges may be compressed using EDRC (Memorex) or IDRC (IBM) compression. See Part B, Sec. 3.b.6.

(c) Tape cartridges created on an IBM AS400 are not compatible with IRS/MCC. See Part B, Sec. 3.b.8.

(d) Form 1099-MISC, a note was added to the Amount Code field pos. 23-31 (pos. 24-32 for 8-inch diskette) of the Payer "A" record and the Direct Sales Indicator field pos. 12 (pos. 13 for 8-inch diskette) of the Payee "B" record to instruct payers/transmitters how to format the records if reporting direct sales only.

(e) Form 1099-R, additional information was added to "NOTE 3" of the Amount Code field pos. 23-31 (pos. 24-32 for 8-inch diskette) in Payer "A" Record to provide further instruction on how to report distributions for an IRA or SEP.

(f) Form 1099-R, additional information was added to the "NOTE" in the Taxable Amount Not Determined Indicator field pos. 48 (pos. 49 for 8-inch diskette) of the Payee "B" Record. When this indicator is used in conjunction with the IRA/SEP Indicator (pos. 44), generally, the amount of the distribution must be reported in Payment Amount Field 2 (pos. 62-71).

SEC. 3. WHERE TO FILE AND HOW TO CONTACT THE IRS, MARTINSBURG COMPUTING CENTER

.01 All information returns filed magnetically or electronically are processed at IRS/MCC. Files containing information returns, requests for IRS magnetic media and electronic filing information, undue hardship waivers, and requests for extensions of time to file with IRS or to furnish the statements to recipients are to be sent to the following addresses:

     If by Postal Service:

.03 The 1993 "Instructions for Forms 1099, 1098, 5498, and W-2G" have been included in the Publication 1220 for filer convenience. The Form 1096 is only used to transmit Copy A of all paper Forms 1099, 1098, 5498, and W-2G. If a filer is filing paper returns, follow the mailing instructions on the Form 1096 to submit paper returns to the appropriate IRS office.

.04 The telephone number for the Telecommunication Device for the Deaf (TDD) is (304) 267-3367.

.05 The telephone number for the IRS/MCC fax machine is (304) 264-5196.

.06 Requests for paper forms 1099 and W-2 and publications not related to magnetic media/electronic filing must be requested by calling the "Forms Only Number" listed in your local telephone directory or by calling the IRS toll free number 1-800-TAX-FORM (1-800-829-3676).

.07 Questions pertaining to magnetic media filing of Forms W-2 must be directed to SSA. Payers can call 1-800-SSA-1213 to obtain the phone number of the SSA Magnetic Media Coordinator for their area.

.08 Filers should not contact IRS/MCC if they have received a penalty notice and need additional information, or are requesting an abatement of the penalty. Penalty notices contain an IRS representative's name and/or phone number for contact purposes; however, the filer may be instructed to respond in writing to the address provided. IRS/MCC does not issue penalty notices and does not have the authority to abate penalties.

.09 A Taxpayer or authorized representative may request a copy of a tax return or a Form W-2 filed with a return by submitting Form 4506, Request for Copy of Tax Form or Transcript, to IRS. This form may be obtained from a local IRS office or by calling 1-800-TAX-FORM (1-800-829-3676).

.10 In 1991, IRS instituted a centralized call site to answer both magnetic media and tax law questions relating to the filing of information returns (Forms 1096, 1098, 1099, 5498, 8027, W-2, W-2G, W-3, and W-4). The IRS/MCC Call Site also handles inquiries dealing with Backup Withholding due to Missing and Incorrect Taxpayer Identification Numbers. The Call Site is located at IRS/MCC and operates in conjunction with the Information Reporting Program. The Call Site provides service to the payer community (financial institutions, employers, and other filers of information returns). Recipients of information returns (payees) should continue to contact 1-800-829-1040 with any questions pertaining to information returns.

The Call Site, which was phased-in over a two-year period, is now accepting calls from all areas of the country. The numbers to call are (304) 263-8700 or Telecommunications Device for the Deaf (TDD) (304) 267-3367. These are toll calls. Hours of operation for the Call Site are Monday through Friday, 8:30 a.m. to 4:30 p.m. Eastern Time. The Call Site is open throughout the year to handle payers' and employers' questions. Due to the high demand for assistance at the end of January and February, payers are encouraged to call at their earliest convenience to avoid these peak filing seasons.

SEC. 4. FILING REQUIREMENTS

.01 Under section 6011(e)(2)(A) of the Internal Revenue Code, any person, including corporations, partnerships, individuals, estates, and trusts, who is required to file 250 or more information returns must file such returns magnetically/electronically. The 250-or-more requirement applies separately for each type of form and separately to corrected returns for each Form type. Even though payers may not be required to file magnetically/electronically, IRS encourages them to do so.

.02 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 a corporation with several branches or locations uses the same EIN, the corporation must aggregate the total volume of returns to be filed for that EIN and apply the filing requirements to each type of return accordingly.

.03 Payers who are required to submit their information returns on magnetic media may choose to submit their documents by electronic filing instead. Payers who submit their information returns electronically are considered to have satisfied the magnetic media filing requirements.

.04 The following requirements apply separately to both originals and corrections filed magnetically/electronically:

 1098                         250 or more of any of these forms

SEC. 5. FORM 8508, REQUEST FOR WAIVER FROM FILING INFORMATION RETURNS ON MAGNETIC MEDIA

.01 If a payer is required to file on magnetic media but fails to do so (or fails to file electronically, in lieu of magnetic media filing) and does not have an approved waiver on record, the payer may be subject to a failure to file penalty of $50 per return.

.02 If payers are required to file original or corrected returns on magnetic media, but such filing would create an undue hardship, they may request a waiver from these filing requirements by submitting Form 8508, Request for Waiver From Filing Information Returns on Magnetic Media, to IRS/MCC.

.03 If a payer submits an original return on magnetic media, then a waiver must be requested for corrections only if the returns exceed the filing threshold. However, if a waiver for original documents is approved, any corrections for the same type of returns will be covered under this waiver request.

.04 Generally, only the payer may sign the Form 8508. A transmitter may sign if given power-of-attorney; however, a letter stating this fact must be attached to the Form 8508.

.05 A transmitter must submit a separate Form 8508 for each payer. Do not submit a list of payers.

.06 All information requested on the Form 8508 must be provided to IRS for the request to be processed.

.07 The waiver, if approved, will provide exemption from magnetic media filing for the current 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.

.08 Form 8508 may be photocopied or computer-generated as long as it contains all the information requested on the original form.

.09 Filers are encouraged to submit Form 8508 to IRS/MCC at least 45 days before the due date of the returns. However, new brokers and new barter exchanges may request an undue hardship waiver by the end of the second month following the month in which they became a broker or barter exchange.

.10 File Form 8508 for Forms W-2 with IRS/MCC, not SSA.

.11 Waivers are evaluated on a case-by-case basis and are approved or denied based on regulation criteria set forth under Section 6724 of the Internal Revenue Code. The filer must allow a minimum of 30 days for IRS/MCC to respond to a waiver request.

.12 If a waiver request is approved, the payer should keep the approval letter for their records. The payer should not send a copy of the approved waiver to the service center where they file their paper returns.

.13 An approved waiver from filing information returns on magnetic media does not provide exemptions from all filing. The payer must timely file their information returns on acceptable paper forms with the appropriate service center.

.14 Desert Storm Contributions -- If a payer is required to file a Form 5498 magnetically/electronically, the payer may request an automatic waiver from filing Desert Storm Form 5498.

SEC. 6. VENDOR LIST

.01 IRS/MCC prepares a list of vendors who support magnetic media or electronic filing. This list contains the names of service bureaus that will produce files on the prescribed types of magnetic media or via electronic filing. It also contains the names of vendors who provide software packages for payers who wish to produce magnetic media or electronic files on their own computer systems or personal computers. This list is provided to filers as a courtesy and in no way implies IRS/MCC approval or endorsement.

.02 A payer may contact IRS/MCC via telephone or letter (See Part A, Sec 3) to acquire the vendor list. This information is also available from the Information Reporting Program Bulletin Board System (refer to Part D). Vendor names will not be provided over the telephone.

.03 A vendor, who offers a software package, has the ability to produce magnetic media for customers, or has the capability to electronically file information returns, and would like to be included on the list, must submit a written request to IRS/MCC. The request should be submitted by August 15 and must include:

(a) Company name

(b) Address (include city, state, and ZIP code)

(c) Telephone number (include area code)

(d) Contact person

(e) Type of service provided (e.g., service bureau and/or software)

(f) Type(s) of media offered (e.g., magnetic tape; tape cartridge; 5 1/4-, 3 1/2-, and/or 8-inch diskettes; electronic filing)

.04 The vendor list is updated annually. All changes to information already on the vendor list must be received by IRS/MCC no later than August 15 to be included on the most current vendor list.

SEC. 7. FORM 4419, APPLICATION FOR FILING INFORMATION RETURNS MAGNETICALLY/ELECTRONICALLY

.01 Payers/transmitters are required to submit Form 4419, Application for Filing Information Returns Magnetically/Electronically, to request authorization to file information returns to IRS/MCC. A single Form 4419 should be filed no matter how many types of returns the payer/transmitter will be submitting magnetically/electronically. For example, if a filer plans to file Forms 1099-INT, the filer should submit one Form 4419. If, at a later date, another type of form is to be filed do not submit a new Form 4419. If filers wish to report both electronically and magnetically, they need only submit one Form 4419.

.02 Magnetic tape, diskette, and electronically-filed returns may not be submitted to IRS/MCC until the application has been approved. Please read the instructions on the back of Form 4419 carefully. This form may be photocopied. Additional forms may be obtained by calling 1-800-TAX-FORM (1-800-829-3676).

.03 Upon approval, a five character alpha/numeric Transmitter Control Code (TCC) will be assigned and included in an approval letter. The TCC must be coded in the Payer/Transmitter "A" Record. If a filer uses more than one TCC to file, each TCC must be reported on separate media or in separate transmissions if filing electronically.

A magnetic media reporting package containing the current revenue procedure, transmittals, forms, labels, and instructions will be sent to the attention of the contact person indicated on Form 4419. This package will be sent annually.

If any of the information on the form changes, please notify IRS/MCC in writing so that the IRS/MCC database can be updated. The filer should include their TCC in all correspondence.

.04 Form 4419 can be submitted at any time during the year; however, it should be submitted to IRS/MCC at least 30 days before the due date of the return(s). For documents to be filed electronically using IBM 3780 bisynchronous protocols, Form 4419 must be submitted at least 45 days prior to the due date of the return (see Part C, Sec. 2). This will allow IRS/MCC the minimum amount of time necessary to process and respond to applications. In the event that a filer's computer equipment or software is not compatible with IRS/MCC, a waiver may be requested to file returns on paper documents.

.05 IRS/MCC encourages transmitters who file for multiple payers to submit one application and to use their TCC for all payers. Include a list of all payers and their TINs with the Form 4419.

.06 If payers have their files prepared by a service bureau, they may not need to submit an application to obtain a TCC. Some service bureaus will produce files, code their own TCC on the media, and send it to IRS/MCC for the payer.

Other service bureaus will prepare magnetic media files and send them back to the payer to submit to IRS/MCC. These service bureaus may require the payer to obtain their own TCC to be coded in the "A" Record. Payers should contact their service bureau for further information.

.07 Once a payer is approved to file magnetically or electronically, it is not necessary to reapply each year unless:

(a) magnetic or electronic filing is discontinued for a year; the payer's TCC may have been reassigned by IRS/MCC.

(b) The payer's magnetic media files were transmitted in the past by a service bureau using the service bureau's TCC, but now the payer has computer equipment compatible with that of IRS/MCC and wishes to prepare their own files. The payer must request a TCC by filing Form 4419.

.08 Submit one Form 4419 regardless of how many types of media or methods used to file the return. A filer may have more than one TCC, but must code only one TCC per medium. Notify IRS/MCC of any TCCs that will not be used so these numbers may be reassigned.

.09 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.

.10 Approval to file does not imply endorsement by IRS/MCC of the computer software or of the quality of tax preparation services provided.

SEC. 8. TEST FILES

.01 IRS/MCC does not require test files, except for filers wishing to participate in the Combined Federal/State Filing Program (see Part A, Sec. 17 for further information concerning the Combined Federal/State Filing Program).

.02 IRS/MCC encourages first-time magnetic media or electronic filers to submit a test. The test file should consist of a sample of each type of record:

(a) "A" Record (must not be fictitious data)

(b) Multiple Payee "B" Records

(c) End of Payer "C" Record

(d) State Totals "K" Record, if participating in the Combined Federal/State Filing Program

(e) End of Transmission "F" Record

It is not necessary to send a voluminous file; filers may choose to submit a single file or multiple files for their test.

.03 Use the indicator in the "A" Record to show that this is a test file.

.04 IRS/MCC will check the file to ensure it meets the specifications of this revenue procedure. For current filers, sending a test file will provide the opportunity to ensure that their software reflects any programming changes.

If unable to submit a magnetic or electronic test file, a hardcopy printout that shows a sample of each record type (A, B, C and F) may be submitted.

.05 Tests should be sent to IRS/MCC during these periods:

 Magnetic Media                       11/01 - 12/31

Payers may begin submitting test tapes and diskettes after October 1; however, the data will not be processed until on or after November 1.

.06 Form 4804, Transmittal of Information Returns Reported Magnetically/Electronically, must accompany the filer's magnetic media test file. Mark the "TEST" checkbox in block 1 on the form. Also, check "TEST" on the external media label, Form 5064.

If submitting a hardcopy printout, mark the printout as "TEST" and include name, telephone number, and address of a person who can be contacted to discuss its acceptability.

.07 IRS/MCC will send a letter of acknowledgement to indicate the test results. Unacceptable magnetic media files, along with documentation identifying the errors, will be returned. Resubmission of files must be received by IRS/MCC no later than December 31.

.08 Successfully processed media will not be returned to filers.

SEC. 9. FILING OF INFORMATION RETURNS MAGNETICALLY/ELECTRONICALLY AND RETENTION REQUIREMENTS

.01 Form 4804, Transmittal of Information Returns Reported Magnetically/Electronically, must accompany all magnetic media and electronic submissions.

Form 4802, Transmittal of Information Returns Reported Magnetically/Electronically (Continuation) is a continuation of Form 4804 and should only be used if the filer is reporting more than four types of returns and/or more than four payers. Form 4802 is not a stand-alone form; it can only accompany Form 4804.

.02 IRS/MCC encourages the use of computer-generated substitutes for Form 4804/4802. The substitutes must contain all information requested on the original forms including the affidavit and signature line. Photocopies are acceptable but an original signature is required.

.03 A payer/transmitter may report for any combination of payers and/or documents in a submission. For example, if reporting Forms 1099-INT for Bank A, Forms 1099-DIV for Bank B, and Forms 1098 for Bank C, three separate tapes or diskettes need not be created. All three banks and all types of documents can be coded on one tape or diskette as long as each filing entity or type of return is separated by an "A" Record. Multiple tapes or diskettes can be sent in one package. Filers should include Form 4804, 4802, or computer-generated substitute with their shipment.

.04 Multiple types of media may be submitted in a shipment. However, submit a separate Form 4804 for each type of media.

.05 Current and prior-year data may be submitted in the same shipment; however, each tax year must be on separate media, or transmitted separately, and a separate Form 4804 should be prepared for each tax year.

.06 Payers who have prepared their information returns in advance of the due date are encouraged to submit this information to IRS/MCC no earlier than January 1 of the year the return is due.

.07 Do not report duplicate information. If a filer submits returns magnetically/electronically identical paper documents must not be reported. This may result in erroneous penalty notices.

.08 Form 4804 must be signed by the payer or the transmitter, service bureau, paying agent, or disbursing agent (all hereafter referred to as agent), on behalf of the payer. An agent may sign the Form 4804 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)."

Note: Failure to sign the affidavit on Form 4804 may delay processing or will result in the files being returned unprocessed.

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

.10 An external label, Form 5064, must be affixed to each tape and diskette. 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 may result in the diskette being returned to the filer.

For instructions on how to complete Form 5064, refer to Notice 210, Preparation Instructions for Media Label, Form 5064. Notice 210 may be obtained by calling the IRS toll-free number 1-800-TAX-FORM (1-800-829-3676).

.11 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 (for example, Box 1 of 3, 2 of 3, 3 of 3).

.12 When submitting files include the following:

(a) A signed Form 4804 (or computer-generated substitute);

(b) Form 4802, if applicable;

(c) Form 5064, Media Label affixed to the magnetic media;

(d) and Form 4801, outside label.

Note: See Parts C and D for electronic submission requirements.

.13 If returns from different locations (using the same name and TIN) are submitted on the same file, IRS encourages you to consolidate each type of information return under one "A" Record. For example, all "B" Records for the same type of return should be together under one "A" Record and followed by the End of Payer "C" Record.

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

.15 In general, payers should retain a copy of the information returns filed with IRS or to have the ability to reconstruct the data for at least 3 years from the reporting due date. Whenever backup withholding is imposed, a 4-year retention is required.

SEC. 10. DUE DATES

.01 The dates for filing paper returns with IRS also apply to magnetic media or electronic filing. Filing of information returns is on a calendar year basis, except for Form 5498 which is used to report amounts contributed during, or after (but not later than April 15) of the calendar year.

.02 Information returns filed magnetically/electronically for Forms 1098, 1099, and W-2G must be submitted to IRS/MCC postmarked no later than February 28. The due date for furnishing statements to recipients is January 31.

.03 Form 5498 filed magnetically/electronically must be submitted to IRS/MCC postmarked no later than May 31. 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 1993 that are made between January 1, 1993, and April 15, 1994, and/or to report the fair market value of the IRA/SEP.

.04 If any due date falls on a Saturday, Sunday, or legal holiday, the return or statement is considered timely if filed on the next day that is not a Saturday, Sunday, or legal holiday. If the date to furnish the statement to recipient falls on a Saturday, Sunday, or legal holiday, the statement is considered timely if furnished on the next day that is not a Saturday, Sunday, or legal holiday.

.05 Use this revenue procedure to prepare information returns filed magnetically or electronically beginning January 1, 1994, and received by IRS/MCC no later than December 31, 1994.

SEC. 11. EXTENSIONS OF TIME

.01 A payer/transmitter may request an extension of time to file by submitting Form 8809, Request for Extension of Time To File Information Returns, to IRS/MCC. This form may be used to request an extension of time to file information returns submitted on paper, magnetic media or electronically.

.02 A transmitter may request an extension of time for multiple payers by submitting Form 8809 and attaching a list of the payer names, and TINs (EIN or SSN). The listing must be attached to ensure that the extension is recorded for all payers. Form 8809 may be computer-generated or photocopied. Be sure that all the pertinent information is included.

.03 Transmitters requesting an extension of time to file for 10 or more payers are encouraged to file the request on tape, tape cartridge, 5 1/4- or 3 1/2-inch diskette, or electronically through IRP-BBS. The record format is in Part G, Sec. 3, of this revenue procedure. Transmitters who submit requests for multiple payers will receive one approval letter with an attached list of payers covered under that approval.

.04 Filers may request an extension of time for 30 days as soon as they are aware that an extension is necessary but no later than the due date of the return. It will take a minimum of 30 days for IRS/MCC to respond to an extension request. Under certain circumstances a request for an extension of time could be denied. In such cases the payer receives a denial letter. When this denial letter is received the payer has 20 days to provide the necessary information and resubmit the request to IRS/MCC.

.05 If an additional extension of time is needed, another Form 8809 must be submitted. Additional time must be requested before the end of the initial extension period.

.06 Form 8809 must be postmarked no later than the due date of the return for which an extension is requested. If requesting an extension of time to file several types of forms, use one Form 8809, but the Form 8809 must be postmarked no later than the earliest due date. For example, if requesting an extension of time to file both Forms 1099-INT and 5498, submit Form 8809 postmarked on or before February 28. Complete more than one Form 8809 to avoid this problem.

.07 Request an extension for only one tax year.

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

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

.10 Copies of Form 8809 may be obtained by calling 1-800-TAX-FORM (1-800-829-3676).

.11 Request an extension of time to provide the statement to recipient by submitting a letter to IRS/MCC or to the payer's local District Director containing the following information:

(a) Payer Name;

(b) TIN;

(c) Address;

(d) Type of Return;

(e) Reason for Delay; and,

(f) Signature of Payer or Authorized Agent.

Requests for an extension of time to furnish the statements to recipients are not automatically approved; however, if approved, generally an extension will allow a minimum of 15 days to furnish the statement to the recipient. The request must be postmarked by the date on which the statements are due to be furnished to the recipients.

SEC. 12. PROCESSING OF INFORMATION RETURNS MAGNETICALLY/ELECTRONICALLY

.01 All data received at IRS/MCC for processing will be given the same protection as individual returns (Form 1040). IRS/MCC will process the data and determine if the records are formatted and coded according to this revenue procedure.

.02 If the data is formatted incorrectly, the file will be returned for replacement. If media is returned, it is because a replacement is needed. Open all packages immediately.

.03 Files must be corrected and returned to IRS/MCC within 45 days from the date of the letter included with the files to avoid a failure-to-file penalty. When possible, IRS/MCC may only return the portion of the file that needs replacement.

.04 A sample "B" record identifying errors encountered will be provided with the returned media. It is the payer's responsibility to check the entire file for similar errors.

.05 The following definitions have been provided to help distinguish between a correction and a replacement:

A correction is an information return submitted by the payer to correct an information return that was successfully processed by IRS/MCC, but contained erroneous information.

A replacement is an information return file that IRS/MCC has returned to the payer/transmitter due to errors encountered during processing. After necessary changes have been made, the file must be returned for processing.

.06 IRS/MCC no longer returns media after successful processing. Therefore, if the filer wants proof that IRS/MCC received a shipment, the filer should select a service with tracing capabilities or one that will provide proof of delivery.

.07 IRS/MCC will work with filers as much as possible to assist with processing problems. If the filer is contacted by IRS/MCC, please respond promptly. IRS/MCC may have information that the filer needs to correct their file.

.08 IRS/MCC contacts payers who have submitted payee data with missing TINs in an attempt to prevent errors that could result in penalties. Payers who submit data with missing TINs and have taken the required steps to obtain this information, are encouraged to attach a letter of explanation to the required Form 4804. This will prevent unnecessary contact from IRS/MCC.

.09 Do not use special shipping containers for transmitting data to IRS/MCC since they cannot be returned.

SEC. 13. PENALTIES

.01 Sections 6721 through 6724 of the Internal Revenue Code contain the penalty provisions for most information returns. The penalty for failure-to-file correct information returns is "time sensitive" in that failure to correct errors may result in a higher penalty.

The penalty, under Section 6722, is $50 for each information return that is not filed, or is not filed correctly, by the prescribed filing date, with a maximum penalty of $250,000 per year ($100,000 for small businesses with average annual gross receipts, over the most recent 3-year period, not in excess of $5,000,000). The penalty generally is reduced to:

(a) $30 for each information return for failure to comply if the failure is corrected more than 30 days after the return was due, but on or before August 1 of the calendar year in which the return was due, with a maximum penalty of $150,000 per year ($50,000 for small businesses with average annual gross receipts, over the most recent 3-year period, not in excess of $5,000,000).

(b) $15 for each information return for failure to comply if the failure is corrected within 30 days after the date the return was due (March 30 if the due date is February 28), with a maximum penalty of $75,000 per year ($25,000 for small businesses with average annual gross receipts, over the most recent 3-year period, not in excess of $5,000,000).

.02 In addition, a de minimis rule provides that if:

(a) information returns were filed with incomplete or incorrect information, and

(b) the failures are corrected on or before August 1 of the calendar year in which the returns were due, then the penalty for filing incorrect returns (but not the penalty for filing late) will not apply to the greater of 10 returns or one-half of 1 percent of the total number of information returns the filer is required to file for the calendar year.

.03 The penalty under Section 6722, is $50 for each recipient statement that is not furnished on or before the prescribed filing date or is furnished with incorrect information. The maximum penalty is $100,000 per year.

.04 Intentional Disregard of Filing Requirements--If any failure to file a correct information return is due to intentional disregard of the filing and correct information requirements, the penalty is at least $100 per information return with no maximum penalty.

.05 Forms 1099-R--The penalties under Sections 6721 and 6722 do not apply to Form 1099-R, which is filed under section 6047. The penalty for failure to timely file Form 1099-R is $25 for each day during which such failure continues but the total amount imposed under this subsection on any person for failure to file a return shall not exceed $15,000. See Section 6652(e) of the Internal Revenue Code.

.06 Forms 5498--The penalties under Sections 6721 and 6722 do not apply to Form 5498, which is filed under Section 408(i). The penalty for failure to timely file Form 5498 is $50 per return with no maximum. See Section 6693(a) of the Internal Revenue Code.

.07 Penalties may be waived if failures are due to reasonable cause and not willful neglect.

Caution: Congress has considered, and may consider again, legislation that would apply the penalties under Sections 6721 and 6722 to Forms 1099-R and 5498.

SEC. 14. CORRECTED RETURNS

.01 The 250 magnetic media filing requirement applies separately to both original and corrected returns.

Example: If a payer has 100 Forms 1099-A to be corrected, they can be filed on paper since they fall under the 250 threshold. However, if the payer has 300 Forms 1099-B to be corrected, they must be filed magnetically/electronically since they exceed the 250 threshold. If for some reason a payer cannot file the 300 corrections on magnetic media, to avoid penalties, a request for a waiver must be submitted before filing on paper. No waiver is required for corrections that fall under the required threshold.

.02 Corrections should be filed as soon as possible, but no later than August 1 of the year the return is due, in order to avoid the maximum $50 penalty. However, if payers discover errors after August 1, they may still be required to file corrections so that they will not be subjected to a penalty for intentional disregard of the filing requirements. Failure to correct information returns may result in penalties for failure to provide correct information. 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 the entire file is in error, contact IRS/MCC immediately. Furnish corrected statements to recipients as soon as possible.

.03 There are numerous types of errors, and in some cases, more than one transaction may be required to correct the initial error. If the original return was filed as an aggregate, the filer must consider this in filing corrected returns. NOTE: IRS/MCC strongly encourages filers to read this entire section before attempting to make any corrections.

.04 Corrected returns may be included on the same medium as original returns; however, separate "A" Records are required. Corrected returns must be identified on the Form 4804 and the Form 5064 by marking the correction box provided.

Note: If filers discover that certain information returns were omitted on their original file, they should not submit these documents as corrections. They should submit them as originals.

.05 If a payer discovers errors for prior years that affect a large number of payees, in addition to sending IRS the corrected returns and notifying the payees, a letter containing the following information should be sent to IRS/MCC:

(a) Name and address of payer

(b) Type of error (please explain clearly)

(c) Tax year

(d) Payer TIN

(e) TCC

(f) Number of Payees

This information will be forwarded to the appropriate office in an attempt to prevent erroneous notices from being sent to the payees. The correction must be submitted on an actual information return document or filed magnetically/electronically.

Provide the correct tax year in Box 2 of the Form 4804 and on Form 5064.

.06 Prior-year data, original or corrected, must be filed according to the requirements of this revenue procedure. If submitting prior-year corrections, use the record format for the current year. However, use the actual year designation of the correction in field positions 2-3 or positions 3-4 for 8-inch diskette filing. If filing electronically, a separate transmission must be made for each tax year.

.07 In general payers/transmitters should submit corrections for returns to be filed within the last three calendar years (four years if the payment is a reportable payment subject to backup withholding under section 3406 of the Code).

.08 All paper returns, whether original or corrected, must be filed with the appropriate service center.

.09 Form 4804 and Form 4802, must be submitted with corrected files submitted magnetically or electronically.

.10 The "B" Record provides a 20-position field for the Payer's Account Number for the Payee. 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 in this field. 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 should appear on the initial return and on the corrected return in order to identify and process the correction properly.

.11 The record sequence for filing corrections is the same as for original returns.

.12 Review the chart that follows. Errors normally fall under one of the two categories listed. Next to each type of error made is a list of instructions on how to file the corrected return.

                Guidelines for Filing Corrected Returns

SEC. 15. TAXPAYER IDENTIFICATION NUMBER (TIN)

.01 Under Section 6109 of the Internal Revenue Code, the regulations require a person furnish their TIN to the person obligated to file the information return.

.02 The payee's TIN and name combination is used to associate information returns reported to IRS/MCC with corresponding information on tax returns. It is imperative that correct social security and employer identification numbers for payees be provided to IRS/MCC. Do not enter hyphens or alpha characters. Entering all zeros, ones, twos, etc. will have the effect of an incorrect TIN.

.03 The payer and payee names with associated TINs should be consistent with the names and TINs used on other tax returns. Also, the name and TIN provided must belong to the owner of the account. If the account is recorded in more than one name, furnish the name and TIN 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 "B" Record. For individuals, the payee TIN is generally the payee's social security number. For other entities, the payee TIN is the payee's Employer Identification Number. For sole proprietors, the payee TIN may be either a SSN or EIN but the sole proprietor's name (not the business name) must be used.

.04 Failure to provide the correct name and corresponding TIN could result in a penalty and/or backup withholding notice (sometimes referred to as a "B" notice).

.05 The following charts will help payers determine the TIN to be furnished to IRS/MCC for those persons for whom they are reporting information (payees).

            CHART 1. Guidelines for Social Security Numbers

.01 Magnetic/electronic reporting of information returns eliminates the need to submit paper documents to the IRS. CAUTION! Do not send Copy A of the paper forms to IRS/MCC in addition to magnetic media and electronic filing. This will result in duplicate filing; therefore, notices could be generated.

.02 Payers are responsible for providing statements to the payees as outlined in the 1993 "Instructions for Forms 1099, 1098, 5498, and W-2G." Refer to these instructions for filing information returns on paper with the IRS and furnishing statements to recipients.

.03 Statements to recipients should be clear and legible. If the official IRS form is not used, the filer must adhere to the specifications and guidelines in Publication 1179, Specifications for Paper Document Reporting and Paper Substitutes for Forms 1096, 1098, 1099 Series, 5498, and W-2G.

SEC. 17. COMBINED FEDERAL/STATE FILING PROGRAM

.01 The Combined Federal/State Filing Program was established to simplify information returns filing for the taxpayer. IRS/MCC will forward this information to participating states free of charge for approved filers. Separate reporting to those states is not necessary. 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 to IRS/MCC between November 1 and December 31 for magnetic media and electronic files.

.03 Attach a letter to the Form 4804 submitted with the test file to indicate a desire to participate in this program.

.04 A test file is only required for the first year. Each record, both in the test and the actual data file, must conform to this revenue procedure.

.05 If the test file is acceptable, IRS/MCC will send the filer an approval letter, and 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. Filers must write their TCC on Form 6847. If the test file is not acceptable, IRS/MCC will return the media with a letter indicating the problems, and the replacement test file must be returned to IRS/MCC postmarked on or before December 31.

.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 computer-generated as long as it includes all information that is on the original form or it may be photocopied. 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 Only code the records for participating states and for those payers who have submitted Form 6847.

.08 Some participating states require separate notification that the payer is filing in this manner. Since IRS/MCC acts as a forwarding agent only, it is the payer's responsibility to contact the appropriate states for further information.

.09 All corrections properly coded for the Combined Federal/State Filing Program will be forwarded to the participating states.

.10 Participating states and corresponding valid state codes are listed in Table 1 of this section. The appropriate state code must be entered for those documents that meet the state filing requirements; do not use state abbreviations.

.11 To simplify filing, some of the participating states have provided their information return reporting requirements (see Table 2). It is the payer's responsibility to contact the participating states to verify the criteria provided in this table.

.12 Upon submission of the actual files, the filer must be sure of the following:

(a) All records should be coded exactly as required by this revenue procedure.

(b) The "C" Record must be followed by a state total "K" Record for each state being reported.

(c) Payment amount totals and the valid participating state code must be included in the State Totals "K" Record.

(d) The last "K" Record is followed by an "A" Record or an 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 Filing Program.

 State                                                            Code

.03 For foreign country addresses, filers may use a 40-position free format which should include city, province or state, postal code, and name of country in this order. This is allowable only if a "1" appears in the Foreign Country Indicator Field of the "B" Record.

.04 When reporting APO/FPO addresses use the following format:

                                        EXAMPLE:

IRS/MCC encourages filers to verify the format and content of each type of record to ensure the accuracy of the data. This may eliminate the need for IRS/MCC to return files for replacement. This may be important for those payers who have either had their files prepared by a service bureau or who have purchased pre-programmed software packages. If a filer purchased a software package for a previous tax year, it may no longer be valid for reporting current tax year information returns. Following are some of the most frequently encountered problems with magnetic/electronic files submitted to IRS/MCC.

1. Discrepancy between IRS/MCC totals and totals in Payer "C" Records.

The "C" Record is a summary record for a type of return for a given payer as reported in the "B" Records. IRS balances the total number of payees and payment amounts and compares them with totals in the "C" Records. Payers should verify the accuracy of the records because imbalances may necessitate return of files for replacement.

2. The Payment Amount Fields in the "B" Record do not correspond to the amount codes in the "A" Record.

If codes 2, 4, and 7 appear in the Amount Codes Field of the "A" Record, then the "B" Record must show payment amounts in only Fields 2, 4, and 7, right-justified and unused positions zero (0) filled.

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

Money amounts must be right-justified and zero (0) filled. Do not use blanks.

4. Incorrect TIN in Payer "A" Record.

The Payer's TIN reported in positions 7-15 (positions 8-16 for 8-inch diskettes) of the "A" Record must be correct in order for IRS/MCC to process the media. The TIN provided in the "A" Record should correspond with the name provided in the first payer name line.

5. Bad Format.

IRS/MCC receives 5 1/4- and 3 1/2-inch diskettes formatted using 8-inch diskette specifications and vice versa. Be sure to use the proper section of this revenue procedure for formatting data.

6. Incorrect tax year in the Payer "A" and Payee "B" records.

The tax year in both the payee and payer record should reflect the year of the information that is being reported. Filers need to check their files to ensure that this information is correct.

7. Form W-2 information submitted on same media as Form 1099 information.

Form W-2 information is submitted to SSA, and not to IRS/MCC. SSA has its own magnetic media reporting program for wage information, and the media containing Forms W-2 is submitted to SSA. Any media received at IRS/MCC that contains Form W-2 information will be returned to the filer. Filers need to contact their local SSA office for information concerning filing Forms W-2 on magnetic media.

8. Excessive withholding credits.

For most information returns, other than Form 1099-R, withholding credits should not exceed 31 percent of the income reported. Validate the total reported in the withholding field against the total income reported.

9. Incorrect format for TINs in the Payee "B" Record.

A check of "B" records should be made to ensure the Taxpayer Identification Numbers (TINs) are formatted correctly. There should be nine numerics, no alphas, hyphens, commas or blanks. Incorrect formatting of TINs may result in a penalty.

IRS/MCC contacts payers who have submitted payee data with missing TINs in an attempt to prevent erroneous notices. Payers who submit data with missing TINs and have taken the required steps to obtain this information, are encouraged to attach a letter of explanation to the required Form 4804. This will prevent unnecessary contact from IRS/MCC.

10. Distribution Codes for Form 1099-R reported incorrectly.

A numeric Distribution Code must always be used in conjunction with Distribution Codes A, B, or C. The numeric code must be reported in position 4, and the A, B, or C must be in position 5. (Positions 5 and 6, respectively, for 8-inch diskettes.)

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.

.02 A provision is made in the "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. 17.)

(b) Contain information for the filer's own personal use and used at the discretion of the filer to include information related to each individual return. IRS/MCC will not use the information supplied in this field. The length of this field will vary depending on the type of return.

.03 Filers should be consistent in the use of recording codes and density on files. If a filer's tape cartridge does not meet these specifications, they are encouraged to submit a test prior to submitting the actual file. Contact IRS/MCC for further information.

.04 Use "K" Records only if the payer is an approved Combined Federal/State filer.

SEC. 2. TAPE SPECIFICATIONS

.01 IRS/MCC can process most magnetic tape files if the following specifications are followed:

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

(1) Odd Parity.

(2) A density of 1600, or 6250 CPI.

(3) If filers use UNISYS Series 1100, they must submit an interchange tape.

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

(1) Odd Parity.

(2) A density of 1600 or 6250 CPI.

Filers should be consistent in the use of recording codes and density on files.

.02 All compatible tape files must have the following characteristics: Type of tape--1/2-inch (12.7 mm) wide, computer-grade magnetic tape on reels of up to 2,400 feet (731.52 m) within the following specifications:

(a) Tape thickness: 1.0 or 1.5 mils and

(b) Reel diameter: 10 1/2-inch (26.67 cm), 8 1/2-inch (21.59 cm), 7-inch (17.78 cm), or 6-inch.

.03 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 9s; however, the last block of the file may be filled with 9s or truncated. Do not pad a block with blanks.

(c) All records, except the header and trailer labels, may be blocked or unblocked. A record may not contain any control fields or block descriptor fields which describe the length of the block or the logical records within the block. The number of logical records within a block (the blocking factor) must be constant in every block with the exception of the last block which may be shorter (see item b above). The block length must be evenly divisible by 420.

(d) Records may not span blocks.

.04 Labeled or unlabeled tapes may be submitted.

.05 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.

.06 IRS/MCC can only read one data file on a tape. A data file is a group of records beginning with a tapemark and ending with a trailer label. Any data beyond the trailer label cannot be read by IRS programs.

SEC. 3. TAPE CARTRIDGE SPECIFICATIONS

.01 In most instances, IRS/MCC can process tape cartridges that meet the following specifications:

(a) must be IBM 3480 or 3490 compatible.

(b) must meet American National Standard Institute (ANSI) standards, and have the following characteristics:

(1) Tape cartridges will be 1/2-inch tape contained in plastic cartridges which are approximately 4-inches by 5-inches by 1-inch in dimension.

(2) Magnetic tape will be chromium dioxide particle based 1/2-inch tape.

(3) Cartridges must be 18-track parallel.

(4) Cartridges will contain 37,871 CPI (characters per inch).

(5) Mode will be full function.

(6) The data may be compressed using EDRC (Memorex) or IDRC (IBM) compression.

(7) Either EBCDIC (Extended Binary Coded Decimal Interchange Code) or ASCII (American Standard Coded Information Interchange) may be used.

(8) Tape cartridges created on an IBM AS400 are not compatible with IRS/MCC.

.02 The tape cartridge 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 9s; however, the last block of the file may be filled with 9s or truncated. Do not pad a block with blanks.

(c) All records, except the header and trailer labels, may be blocked or unblocked. A record may not contain any control fields or block descriptor fields which describe the length of the block or the logical records within the block. The number of logical records within a block (the blocking factor) must be constant in every block with the exception of the last block which may be shorter (see item b above). The block length must be evenly divisible by 420.

(d) Records may not span blocks.

.03 Tape cartridges may be labeled or unlabeled.

.04 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.

SEC. 4. 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. For 5 1/4-inch diskettes, data may be recorded using EBCDIC if the diskette is created on an IBM System 36.

(c) Records must be a 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 use as carriage return/line feed (cr/lf) characters if applicable.

(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 three-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 file naming conventions are followed.

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

 Capacity          Tracks         Sides/Density           Sector Size

.03 IRS/MCC prefers that 5 1/4- and 3 1/2-inch diskettes be created using MS/DOS; however, diskettes created using other operating systems may be acceptable. IRS/MCC has equipment that can convert diskettes created under virtually any operating system to the appropriate MS/DOS format. IRS/MCC strongly recommends that filers submit a test file for 5 1/4- and 3 1/2-inch diskettes, especially if their data was not created using MS/DOS.

.04 Filers are encouraged to use high density diskettes. Low density diskettes are acceptable but must be formatted in low density.

SEC. 5. PAYER/TRANSMITTER "A" RECORD--GENERAL FIELD DESCRIPTIONS

.01 The Payer/Transmitter "A" Record identifies the payer and transmitter of the magnetic media file and provides parameters for the succeeding "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 depends on the number of payers and the different types of returns being reported. The payment amounts for one payer and for one type of return should 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 a payer was filing Form 1099-DIV to report Amount Codes 1, 2, and 3, all three amount codes should be reported under one "A" Record, not three separate "A" Records. For "B" Records that 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 on the file must be an "A" Record. A transmitter may include "B" Records for more than one payer on a tape or diskette; however, each group of "B" Records must be preceded by an "A" Record and followed by an End of Payer "C" Record. A single tape or diskette may contain different types of returns but the types of returns must not be intermingled.

.05 All records must be a fixed length of 420 positions.

.06 An "A" Record may be blocked with "B" Records; however, the initial record on a file must be an "A" Record. IRS/MCC 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 must be upper-case.

.09 When reporting Form 1098, Mortgage Interest Statement, the "A" Record will reflect the name of the recipient of the interest referred to as the payer in these instructions. The "B" Record will reflect the individual paying the interest (borrower/payer of record) and the amount paid.

               RECORD NAME: PAYER/TRANSMITTER "A" RECORD

If reporting IRA contributions for a Desert Shield/Storm participant for other than 1993, enter "DS," the year for which the contribution was made, and the amount of the contribution in the Special Data Entries field of the "B" Record.

For further information concerning Inherited IRAs or Desert Shield/Storm participant reporting refer to the 1993 "Instructions for Forms 1099, 1098, 5498, and W-2G," and Notice 91-17, 1991-1 C.B. 319.

 Amount Codes Form                      For Reporting Payments on

[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.]

SEC. 7. PAYEE "B" RECORD ("B" Record) GENERAL FIELD DESCRIPTIONS AND RECORD LAYOUTS

.01 The "B" Record contains the payment information from the individual returns. When filing information returns, the format for the "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 for Forms 1099-A, 1099-B, 1099-OID, 1099-S and W-2G to accommodate variations within these forms.

In the "A" Record, the Amount Codes that appear in tape or diskette positions 23 through 31 will be left-justified and filled with blanks. In the "B" Record, the filer will allow for all nine payment amount fields. For those fields not used, enter zeros (0). For example, if a payer is reporting on Form 1099-PATR, they will enter a "7" in tape position 22 of the "A" Record, Type of Return. If they are reporting payments for Amount Codes 2, 4, and 7, then media positions 23 through 31 of the "A" Record will be "247bbbbbb" (b = blanks). In the "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 The following specifications include a field in the payee records called "Name Control" in which the first four characters of the payee's surname are to be entered by the filer.

.03 If filers 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 SSN is shown in the "B" Record should always appear first. If, however, the records have been developed using the first name first, the filer must leave a blank space between the first and last names.

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

.04 See Part A, Sec. 15 for further information concerning Taxpayer Identification Numbers (TINs).

.05 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; therefore, the IRS program does not check the content or format of the data entered in this field. It is the filer's choice whether or not this field is used. If this field is coded, it will not affect the processing of the "B" Records.

.06 Those payers participating in the Combined Federal/State Filing Program must adhere to all of the specifications in Part A, Sec. 17 in order to participate in this program. Forms 1098, 1099-A, 1099-B, 1099-S, and W-2G cannot be filed under the Combined Federal/State Filing 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. Ten dollars must appear as 0000001000 in the payment amount field.

.09 IRS strongly encourages filers to review their data for accuracy before submission to prevent issuance of erroneous notices. Filers should be especially careful that the names, TINs, account numbers, types of income, and income amounts are correct.

                     RECORD NAME: PAYEE "B" RECORD

The following sections define the field positions for the different types of returns in the payee "B" record (positions 322-420):

(1) Forms 1098, 1099-DIV, 1099-G, 1099-INT, 1099-MISC, 1099-PATR, 1099-R and 5498

(2) Form 1099-A

(3) Form 1099-B

(4) Form 1099-OID

(5) Form 1099-S

(6) Form W-2G

 (1) FORMS 1098, 1099-DIV, 1099-G, 1099-INT, 1099-MISC, 1099-PATR,

.01 The End of Payer "C" Record is a fixed record length of 420 positions. The Control Total fields are each 15 positions in length.

.02 The "C" Record consists of the total number of payees and the totals of the payment amount fields filed by a given payer and/or a particular type of return. The "C" Record must be written after the last "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.

.03 In developing the "C" Record, for example, if a payer 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.

.04 Payers/Transmitters should verify the accuracy of the totals since data with missing or incorrect "C" Records will be returned for replacement.

                 RECORD NAME: END OF PAYER "C" RECORD

.01 The state totals "K" record is a fixed record length of 420 positions. The Control Total fields are each 15 positions in length.

.02 The "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, for example, if a payer 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. 17 for the requirements and conditions that must be met to file via this program.

                 RECORD NAME: STATE TOTALS "K" RECORD

.01 The end of transmission "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

SECTION 1. GENERAL

.01 Bisynchronous electronic filing of information returns is offered as an alternative to magnetic media (tape, tape cartridge, or diskette) or paper filing, but is not a requirement. This method uses IBM 3780 communications protocols and is used primarily by mainframe filers. Electronic filing will fulfill the magnetic media requirements for those payers who are required to file magnetically. It may also be used by payers who are under the filing threshold requirement but would prefer to file their information returns this way. Forms 1098, 1099, 5498, and W-2G, originals and corrections, may be filed electronically.

.02 The electronic filing of information returns is not affiliated with the Form 1040 electronic filing program. These two programs are totally independent, and separate approval to participate in each of them must be obtained. All inquiries concerning the electronic filing of information returns should be directed to IRS/MCC. IRS/MCC personnel cannot answer questions or assist taxpayers in the filing of Form 1040 tax returns. Filers with questions of this nature will be directed to the Taxpayer Service toll free number (1-800-829-1040) for assistance.

.03 Filers participating in the electronic filing program for information returns will submit their returns to IRS/MCC by way of modems, and not through magnetic media or paper filing.

.04 Upon request, payers/transmitters who file electronically will be granted an extension of 30 days to file. Part A, Sec. 11 explains procedures for requesting extensions of time. Filers are encouraged to file their data as soon as possible.

.05 The formats of the "A," "B," "C," "K," and "F" Records are the same for electronically filed records as they are for 5 1/4- and 3 1/2-inch diskettes, tapes and tape cartridges. For electronically filed documents, each transmission is considered a separate file; therefore, each transmission must have an End of Transmission (EOT) Record.

SEC. 2. ELECTRONIC FILING APPROVAL PROCEDURE

.01 Filers must obtain, or already have, a Transmitter Control Code (TCC) assigned to them prior to submitting their files electronically. Refer to Part A, Sec. 7 for information on how to obtain a TCC.

.02 Filers using bisynchronous protocols must obtain an IRS/MCC-assigned password prior to submitting test or actual data files. To obtain a password, the following steps must be taken:

(a) Bisynchronous filers who already have a TCC must submit either Form 4419 or a letter to indicate that they wish to file information returns electronically. Another TCC will not be assigned. If a letter is submitted, it must contain the following:

1) Name and address of Transmitter.

2) Transmitter Control Code.

3) Name and phone number of a contact person within the filer's organization to whom a password will be assigned.

(b) Within 30 days of receiving the application or letter, IRS/MCC will send Form 6086, Time Sharing Operation (TSO) Password Assignment, to the filer which will contain the password to be used for electronic submissions.

(c) Upon receipt of Form 6086, the user (person who will actually transmit the data) will separate the acknowledgement from the password. Both the user and the user's manager must sign the acknowledgement and mail to:

     Chief, Security and Disclosure Branch

e) For security reasons, all bisynchronous passwords will be obsoleted periodically, and a new password will automatically be assigned. If filers have any questions relating to the security procedures, and/or they need to report their password has been compromised, they must contact IRS/MCC as soon as possible.

.03 It is the user's responsibility to remember the password and not allow the password to be compromised.

SEC. 3. TEST FILES

.01 Filers are not required to submit a test file. The purpose of test files is to resolve any data or communication problems prior to the filing season. If a filer wishes to submit an electronic test file for Tax Year 1993, it must be submitted to IRS/MCC between November 1, 1993, and December 31, 1993.

.02 If a filer has encountered problems while transmitting electronic test files, contact IRS/MCC for assistance.

.03 A password must be obtained before submitting an electronic test file. Bisynchronous electronic test files will be processed and filers will be notified as to the acceptability of their data within 10 workdays of the date the data is received by IRS/MCC.

SEC. 4. ELECTRONIC SUBMISSIONS

.01 Electronically-filed information may be submitted to IRS/MCC 24 hours a day, 7 days a week. Technical assistance will be available Monday through Friday between 8:30 a.m. and 4:30 p.m. Eastern Time Zone by calling (304) 263-8700.

.02 Long transmissions are not encouraged since the transmission may be interrupted by line noise problems.

SEC. 5. TRANSMITTAL REQUIREMENTS

.01 All data submitted electronically is verified by transmittal Form 4804. Form 4804 must be submitted to IRS/MCC postmarked on or before the due date of the return or within two (2) workdays of the electronic transmission, whichever is earlier. No return is considered filed until a Form 4804 is received by IRS/MCC.

.02 Form 4804 can be ordered by calling the IRS toll free forms and publications order number 1-800-TAX-FORM or it may be computer-generated. If a filer chooses to computer-generate Form 4804, all of the information contained on the original form, including the affidavit, must also be contained on the computer-generated form.

.03 The filer whose TCC is used in the "A" Record is responsible for submitting the transmittal Form 4804.

.04 Forms 4804 may be mailed to the following addresses:

     If by Postal Service:

SEC. 6. IBM 3780 BISYNCHRONOUS COMMUNICATION SPECIFICATIONS

.01 Transmissions using IBM 3780 bisynchronous protocols must be in EBCDIC character code. Modems must be compatible with either Bell 208B for 4800 bps transmissions, or AT&T 2296A for 9600 bps transmissions. Both modems are dial-up type modems using the Public Switched Telephone Network. IBM 3780 data compression is acceptable for any bisynchronous transmission.

.02 IRS/MCC will accept information returns filed electronically over switched telecommunications network circuits. For 4800 bps, the circuit will be (304) 267-0807. For 9600 bps, the circuit will be (304) 267-9572. Both circuits are equipped for bisynchronous transmission using the IBM 3780 protocol.

.03 The 4800 bps line terminates at a Bell 208B modem. The Bell 208B modem uses phase-shift keying and eight-phase modulation to transmit binary serial data signals over the telephone line in half-duplex mode. The following options have been selected:

-- Transmit Level set to -4 dBm

-- Compromise Equalizer in (4--dB Slope)

-- DSR off in Analog Loop Mode

-- Automatic Answer

-- Transmitter Internally Timed

-- RS-CS Interval of 50 ms

.04 The 9600 bps line terminates at an AT&T Dataphone II 2296A modem. The AT&T 2296A modem is a full-duplex, CCITT V.32 compatible unit which operates at 9600 bps or 4800 bps (fallback). The following options have been selected:

-- Receiver Responds to Remote Loopback

-- Loss-of-Carrier Disconnect

-- Received-Space Disconnect

-- Send-Space Disconnect

-- Automatic Answer

-- Answer on Ring 1

-- DTR Interlock

-- Retrain Enable

-- Internal Timing

-- CTS Controlled by RTS

-- 0--1 ms RTS to CTS Delay

-- CTS Dependent on Carrier

-- RR Indicates Carrier

-- 9600 Trellis Coding

-- 4800 bps Fallback

-- 4 dB Compromise Equalization

SEC. 7. BISYNCHRONOUS ELECTRONIC FILING RECORD SPECIFICATIONS

.01 For bisynchronous filing there are two additional identifier records which must be used to transmit data. These records are 420 positions in length and are the first ($$REQUEST) and second ($$ADD) records sent in an electronic transmission. The purpose of these records is to provide the password and identity of the transmitter. The $$REQUEST, $$ADD and the data file should be transmitted as one file. In some cases, filers have attempted to send the $$REQUEST and $$ADD as separate files. Doing this will result in a failed transmission.

.02 With the exception of these additional records, the file format for electronic filing is the same as for magnetic media filing. The format of each of these records is as follows:

                        RECORD NAME: $$REQUEST

.04 Upon receiving a data file and transmittal Form 4804, IRS/MCC will release the data for further processing. If the data is found to be unprocessable, the filer will be contacted by either letter or telephone and notified that the data must be retransmitted. This file name, if necessary, will be provided by IRS/MCC either by letter or telephone, and is to be placed in positions 45-51 of the $$ADD record when the file is retransmitted.

                          RECORD NAME: $$ADD

SECTION 1. GENERAL

.01 Asynchronous electronic filing of information returns is offered as an alternative to magnetic media (tape, tape cartridge, or diskette) or paper filing, but is not a requirement. Electronic filing using the Information Reporting Program Bulletin Board System (IRP-BBS) will fulfill the magnetic media requirements for those filers who are required to file magnetically. It may also be used by those payers who are under the filing threshold requirement, but would prefer to file their information returns this way. Forms 1098, 1099, 5498, and W-2G, originals, corrections, and replacements may be filed electronically. If the original job was sent magnetically, but was returned for replacement, the replacement can be transmitted electronically. Also, if the original file was submitted via magnetic media, any corrections may be transmitted electronically.

.02 The electronic filing of information returns is not affiliated with the Form 1040 electronic filing program. These two programs are totally independent, and filers must obtain separate approval to participate in each of them. All inquiries concerning the electronic filing of information returns should be directed to IRS/MCC. IRS/MCC personnel cannot answer questions or assist taxpayers in the filing of Form 1040 tax returns. Filers with questions of this nature will be directed to the Taxpayer Service toll free number (1-800-829-1040) for assistance.

.03 Filers participating in the electronic filing program for information returns will submit their returns to IRS/MCC by way of modems and not through magnetic media or paper filing.

.04 Upon request, payers/transmitters who file electronically will be granted an extension of 30 days to file. Part A, Sec. 11 explains procedures for requesting extensions of time. Filers are encouraged to file their data as soon as possible.

.05 The formats of the "A," "B," "C," "K," and "F" Records are the same for electronically filed records as they are for 5 1/4- and 3 1/2-inch diskettes, tapes, and tape cartridges. For electronically filed documents, each transmission is considered a separate file. Do not use the 8-inch diskette format for electronic filing.

SEC. 2. ELECTRONIC FILING APPROVAL PROCEDURE

.01 Filers must obtain, or already have, a Transmitter Control Code (TCC) assigned to them prior to submitting their files electronically. (Filers who currently have a TCC for magnetic filing do not have to request a second TCC for electronic filing.) Refer to Part A, Sec. 7 for information on how to obtain a TCC.

.02 Once a TCC is obtained, filers using IRP-BBS assign their own passwords and do not need special approval.

.03 With all passwords, it is the user's responsibility to remember the password and not allow the password to be compromised. However, if filers do forget their password, call (304) 263-8700 for assistance. Note: Passwords on the IRP-BBS are case sensitive.

SEC. 3. TEST FILES

.01 Filers are not required to submit a test file; however, the submission of a test file is encouraged for first time electronic filers in order to resolve any data or communication problems prior to the filing season. If filers wish to submit an electronic test file for Tax Year 1993, it must be submitted to IRS/MCC between November 1, 1993, and December 31, 1993.

.02 If problems are encountered while transmitting the electronic test file, contact IRS/MCC for assistance.

.03 Filers can verify the status of their transmitted test data by calling the IRP-BBS. This information will be available within two workdays after their transmission is received by IRS/MCC.

.04 A test file is required from filers who want approval for the Combined Federal/State Filing Program. See Part A, Sec. 17 for further details.

SEC. 4. ELECTRONIC SUBMISSIONS

.01 Electronically-filed information may be submitted to IRS/MCC 24 hours a day, 7 days a week. Technical assistance will be available Monday through Friday between 8:30 a.m. and 4:30 p.m. Eastern Time Zone by calling (304) 263-8700.

.02 Filers may submit as many documents as they choose electronically. Filers are allowed 240 minutes a day; however, more time may be requested if needed. It may be advantageous to break down large files (files in excess of several hours of transmission time) into several smaller files. For example, if large files contain several types of returns or payers, transmit each return or payer as a separate file. As a result, if only one of the files is incorrect, a replacement would be needed for only the incorrect file.

.03 Do not transmit data using IRP-BBS between January 1 and January 10. This will allow time for the IRP-BBS to be updated to reflect current year changes.

.04 Data compression is encouraged when submitting information returns by way of the IRP-BBS. MCC has the ability to decompress files created using several popular software compression programs such as ARC, COMPRESS, LHARC, and PKZIP. Software data compression can be done alone or in conjunction with V.42bis hardware compression. Transmission time can be reduced by as much as 80 percent when data compression is used; therefore, it is highly recommended.

.05 Files submitted to IRP-BBS must have a unique filename; therefore, the IRP-BBS will build the filename that must be used. The name will consist of the filer's TCC, submission type (T = Test, P = Production, C = Correction, and R = Replacement) and a sequence number. Filers may call the file anything they choose on their end. The filename that the filer gives the IRP-BBS must be the one the program builds for them. The sequence number will be incremented every time they send, or attempt to send, a file. Record the upload date, time, and filename. This information will be needed by MCC in order to identify the file if assistance is required and to complete Form 4804.

.06 If the original submission was filed magnetically and was returned for replacement, the replacement may be filed electronically. Be sure to indicate at the prompt that this is a replacement for information filed magnetically.

SEC. 5. TRANSMITTAL REQUIREMENTS

.01 All data submitted electronically is verified against information provided on the Form 4804. Form 4804 must be submitted to IRS/MCC postmarked on or before the due date of the return or within two (2) workdays of the electronic transmission, whichever is earlier. No return is considered filed until a Form 4804 is received by IRS/MCC.

.02 Form 4804 can be ordered by calling the IRS toll free forms and publication order number 1-800-TAX-FORM, downloaded from the IRP-BBS, or it may be computer generated. A copy of the form is also available in the back of this publication. If a filer chooses to computer-generate Form 4804, all of the information contained on the original form, including the affidavit, must also be contained on the computer-generated form.

.03 The filer whose TCC is used in the "A" Record is responsible for submitting the transmittal Form 4804.

.04 Forms 4804 may be mailed to the following addresses:

     If by Postal Service:

Note: If a filer is required to submit a large volume of Forms 4804/4802, please mail in lieu of faxing.

SEC. 6. INFORMATION REPORTING PROGRAM BULLETIN BOARD SYSTEM (IRP-BBS) SPECIFICATIONS

.01 The IRP-BBS is an electronic bulletin board system available to filers of information returns. In addition to filing information returns electronically, the IRP-BBS provides other capabilities. Some of the advantages of IRP-BBS are as follows:

(1) Notification within two workdays as to the acceptability of the data transmitted.

(2) Immediate access to the latest changes and updates that affect the Information Reporting Program at IRS/MCC (program, legislative, etc.).

(3) Access to publications such as the Publication 1220 as soon as they are available.

(4) Capability to communicate with IRS/MCC personnel.

(5) Ability to retrieve information and files applicable to the IRP-BBS.

.02 The IRP-BBS is available for public use and accessible using various personal computer communications equipment; however, electronic submission of information returns is limited to holders of valid TCCs. A TCC is not needed to access those portions of the IRP-BBS that contain forms and publications or to leave questions or messages for IRS/MCC personnel.

.03 Filers using IRP-BBS can determine the acceptability of files submitted by checking the file status area of the bulletin board. These reports are not immediately available but will be available within two workdays of successful processing of the file.

.04 Contact the IRP-BBS by dialing (304) 263-2749. The communication software settings for IRP-BBS are:

-- No parity

-- Eight data bits

-- One stop bit

-- Full duplex

The communication software should be set up to use the fastest speed allowed by the filer's modem.

.05 Due to the large number of communication products available, it is impossible to provide specific information on a particular software package or hardware configuration. Filers should contact their software or hardware supplier for assistance.

.06 IRP-BBS software provides a menu driven environment allowing access to different parts of IRP-BBS. Whenever possible, IRS/MCC personnel will provide assistance in resolving any communication problems with IRP-BBS.

.07 IRP-BBS can be accessed at speeds from 300 to 14,400 bps. The speed is automatically negotiated for connection at the speed of the calling modem. The communication standards supported include Bell 212A, V.22bis, V.32, and V.32bis. Point-to-point error control is supported using the V.42 CCITT standard or MNP 2-4. Data compression is supported using V.42bis CCITT standard or MNP5.

SEC. 7. IRP-BBS FIRST LOGON PROCEDURES

.01 The following information will be requested to set up the filer's user profile when logging onto the IRP-BBS for the first time.

(A) # Chars per line on screen (10-132)? (Most computers have 80 character screen display)

(B) Enter the letter, that corresponds to the filer's terminal, from the following:

               < A > IBM PC

(C) Upper/lower case, line feed needed, O nulls after each < CR >, do you wish to modify this? (Most users answer no)

(D) Do you wish to have a pause after each display page (Y/N)? (Most users answer yes)

(E) How many lines per display page (10-80)? (Most computers have a 24 line screen display)

                         COMMON USER PROBLEMS

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 a single density diskette file and must be strictly adhered to unless deviations have been specifically granted by IRS.

.02 IRS is considering eliminating 8-inch diskettes as an acceptable type of media in the future.

.03 To be compatible, a single density diskette file must meet the following specifications in total:

(a) 8-inches in diameter.

(b) Recorded in EBCDIC.

(c) Contain 77 tracks of which:

(1) Track 0 is the index track (the operating system reserves track 0 for the directory information and writes the file name and location in the directory; data cannot be written in track 0).

(2) Tracks 1 through 73 are data tracks.

(3) Track 74 is unused.

(4) Tracks 75 and 76 are alternate data tracks.

(d) Each Track must contain 26 sectors.

(e) Each Sector must contain 128 bytes.

(f) Data must be recorded on only one side of the diskette.

(g) IRS can process single sided, single density, soft sectored diskettes as well as double sided, double density, soft sectored diskettes. Part E provides specifications for double density diskettes which have sectors of 256 bytes.

(h) An IBM 5360 compatible diskette would meet the above specifications.

(i) Hard sectored diskettes are not compatible.

(j) A diskette should be clearly marked as to type of data (single sided/single density), and the entire file should consist of all single sided/single density diskettes.

.04 Exchange files are created through the Transfer command and Copyfile files are created through the Copy command. In order to do this, initialize the diskettes using the FORMAT parameter in the INIT procedure.

.05 Form 5064, Media Label, must be affixed to each diskette submitted for processing.

SEC. 2. DISKETTE HEADER LABEL

The following header label format applies to both single and double density diskettes.

The header label on the diskette must be located in track 0, sector 8 and must be formatted as shown in the following layout. IRS/MCC does not require this information. If the file will consist of multiple diskettes, the Multi-Volume indicator (pos. 45) in the diskette header label must contain a "C."

                Data Set (File)

(b) Unused--Any field marked blank is unused and should contain only blanks.

(c) Data Set (File) Name--Positions 6 through 13; use this field to identify the data set. The Data Set Name must begin with an alphabetic character. This name should be the same for every diskette in a file.

(d) Sector Length--Positions 23 through 27; enter the sector length 128 in positions 25-27 and fill positions 23 and 24 with zeroes.

(e) Beginning of Data--Positions 29 through 33; enter the five-digit address designated for the first record of this data set, xx0yy (xx = track number, yy = sector number). For example, if the first record is in track 01, sector 02, enter 01002.

(f) End of Data--Positions 35 through 39; enter the five-digit address of the last position of the diskette reserved for this data set. For example, to reserve the entire diskette for a data set, enter 73026.

(g) Bypass Data Set--Position 41, this field not accessed by IRS, any character is acceptable.

(h) Data Set Accessibility--Position 42; this field not accessed by IRS; any character is acceptable.

(i) Write Protect--Position 43; this field defines the protected status of the associated data set. P = read only; blank = read/write. With P in this position, a filer can only select the Update (U) mode.

(j) Position 44 is blank for Single Sided/Single Density diskettes.

(k) Multi-Volume--Position 45; this field indicates whether a complete data set is on a diskette. Blank = data set complete; C = data set continued on another diskette; L = last diskette of a multi-diskette data set.

(l) Sequence Number--For Copyfile files only. Sequentially ascending numbers must be entered in every diskette header label.

(m) Expiration Date--Positions 67 through 72; may be used to contain the date that the data set expires, YYMMDD (YY = year, MM = month, DD = day). This field is not accessed by IRS; any characters are acceptable.

(n) Verify Mark--Position 73; this field is used to indicate the data set was verified. If verified enter V, if not enter a blank.

(o) Next Available Data Position--Positions 75-79. Enter the address of the next available position after End of Data (f). In positions 75 and 76 enter the track number, in position 77 enter a "0" (zero), and in positions 77-78 enter the sector number.

SEC. 3. PAYER/TRANSMITTER "A" RECORD--GENERAL INFORMATION

.01 The Payer/Transmitter "A" Record identifies the payer and transmitter of the diskette 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.

.02 The number of "A" Records depends on the number of payers and the different types of returns being reported. The payment amounts for one payer for one type of return should 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 a payer is 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 "B" Records that do not contain payment amounts for all three amount codes, enter zeros for those which have no amount to be reported.

.04 After the header label on the diskette, the first record in the file must be an "A" Record. When a single density diskette is used, each "A" Record will consist of at least 2 sectors of 128 positions each. If a payer is transmitting for someone other than themselves, 4 sectors are required in order to identify both the payer and transmitter.

.05 A transmitter may include "B" Records for more than one payer on a diskette; however, each group of "B" Records must be preceded by an "A" Record and followed by an End of Payer "C" Record.

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

.08 When reporting Form 1098, Mortgage Interest Statement, the "A" Record will reflect the name of the recipient of the interest (the payer), referred to as the "payer" in these instructions. The "B" Record will reflect the individual paying the interest (borrower/payer of record) and the amount paid.

               RECORD NAME: PAYER/TRANSMITTER "A" RECORD

If reporting IRA contributions for a Desert Shield/Storm participant for other than 1993, enter "DS," the year for which the contribution was made, and the amount of the contribution in the Special Data Entries field of the "B" Record.

For further information concerning Inherited IRAs or Desert Shield/Storm participant reporting, refer to the 1993 "Instructions for Forms 1099, 1098, 5498, and W-2G," and Notice 91-17, 1991-1 C.B. 319.

 Amount Codes Form                      For Reporting Payments on

[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.]

SEC. 5. PAYEE "B" RECORD--GENERAL INFORMATION FOR ALL FORMS

.01 This section contains the general information concerning the Payee "B" Record for all information returns filed on single sided/single density soft-sectored diskettes. For a detailed description of the record refer to the following in Part E:

(a) Sec. 6, PAYEE "B" RECORD--FIELD DESCRIPTIONS FOR SECTORS 1 THROUGH 4 OF FORMS 1098, 1099-DIV, 1099-G, 1099-INT, 1099-MISC, 1099-PATR, 1099-R, 5498 AND SECTORS 1 THROUGH 3 OF FORMS 1099-A, 1099-B, 1099-OID, 1099-S AND W-2G.

(b) Sec. 7, PAYEE "B" RECORD LAYOUTS FOR SECTORS 1 THROUGH 4 OF FORMS 1098, 1099-DIV, 1099-G, 1099-INT, 1099-MISC, 1099-PATR, 1099-R, 5498 AND SECTORS 1 THROUGH 3 OF FORMS 1099-A, 1099-B, 1099-OID, 1099-S AND W-2G.

(c) Sec. 8, PAYEE "B" RECORD--FIELD DESCRIPTIONS AND RECORD LAYOUT FOR SECTOR 4 OF FORM 1099-A.

(d) Sec. 9, PAYEE "B" RECORD--FIELD DESCRIPTIONS AND RECORD LAYOUT FOR SECTOR 4 OF FORM 1099-B.

(e) Sec. 10, PAYEE "B" RECORD--FIELD DESCRIPTIONS AND RECORD LAYOUT FOR SECTOR 4 OF FORM 1099-OID.

(f) Sec. 11, PAYEE "B" RECORD--FIELD DESCRIPTIONS AND RECORD LAYOUT FOR SECTOR 4 OF FORM 1099-S.

(g) Sec. 12, PAYEE "B" RECORD--FIELD DESCRIPTIONS AND RECORD LAYOUT FOR SECTOR 4 OF FORM W-2G.

All "B" Records must consist of at least 3 sectors of 128 positions each. If a payer is not a Combined Federal/State payer or utilizing the Special Data Entries field, Sector 4 can be eliminated for Forms 1098, 1099-DIV, 1099-G, 1099-INT, 1099-MISC, 1099-PATR, 1099-R, and 5498.

The "B" Record will always consist of 4 Sectors for Forms 1099-A, 1099-B, 1099-OID, 1099-S, and W-2G.

In the "A" Record, the Amount Codes that appear in diskette positions 24 through 32 of Sector 1 will be left-justified and blank filled. In the "B" Record, allow for all nine payment amount fields. For those fields not used, enter zeros. For example, if a payer is reporting on Form 1099-PATR, enter a "7" in diskette position 23 of Sector 1 of the "A" Record, Type of Return field. If a payer is reporting payments for Amount Codes 2, 4, and 7, then diskette positions 24 through 32 of Sector 1 of the "A" Record will be "247bbbbbb" (b = blanks). In the "B" Record:

Positions 52 through 61 of Sector 1 for Payment Amount 1 will be zeros.

Positions 62-71 of Sector 1 will reflect the actual payment amount to be reported for "Nonpatronage distributions."

Positions 72-81 of Sector 1 for Payment Amount 3 will be zeros.

Positions 82-91 of Sector 1 will reflect the actual payment amount to be reported for "Federal income tax withheld."

Positions 92-111 of Sector 1 for Payment Amounts 5 and 6 will be zeros.

Positions 112-121 of Sector 1 will reflect the actual payment amount to be reported for "Energy Investment Credit."

Positions 3-22 of Sector 2 for Payment Amounts 8 and 9 will be zeros.

.02 The record layout for Sectors 1, 2 and 3 is the same for all "B" records. Sector 4, however, will be different for Forms 1099-A, 1099-B, 1099-OID, 1099-S and W-2G. Refer to Part E, Sec. 8, 9, 10, 11 or 12, respectively for the layout of Sector 4 of these records.

.03 The following specifications include a field in the payee records called "Name Control" in which the first four characters of the payee's surname are to be entered by the payers.

.04 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 SSN is shown in the "B" Record should always appear first. If a payer enters the first name first, they must leave a blank space between the first and last names.

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

.05 See Part A, Sec. 15 for further information concerning Taxpayer Identification Numbers (TINs).

.06 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 payer's own personal use. IRS does not use the data provided in the Special Data Entries field; therefore, the IRS program does not check the content or format of the data entered in this field. It is the payer's choice whether or not this field is used. If this field is coded, it will not affect the processing of the "B" Records.

.07 Those payers participating in the Combined Federal/State Filing Program must adhere to specifications in Part A, Sec. 17, in order to participate in this program. Forms 1098, 1099-A, 1099-B, 1099-S and W-2G cannot be filed under the Combined Federal/State Filing Program.

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

.09 Do not use decimal points (.) to indicate dollars and cents. Ten dollars must appear as 0000001000 in the payment amount field.

.10 IRS strongly encourages payers to review their data for accuracy before submission to prevent issuance of erroneous notices to persons for whom reports are filed. Payers should be especially careful that the names, TINs, account numbers, types of income, and income amounts are correct.

.11 When reporting Form 1098, Mortgage Interest Statement, the "A" Record will reflect the name and TIN of the recipient of the interest (the payer). The "B" Record will reflect the individual paying the interest (Borrower/Payer of Record) and the amount paid. For Forms 1099-S, the "A" Record will reflect the person responsible for reporting the transaction and the "B" Record will reflect the seller/transferor.

SEC. 6. PAYEE "B" RECORD--FIELD DESCRIPTIONS FOR SECTORS 1 THROUGH 4 OF FORMS 1098, 1099-DIV, 1099-G, 1099-INT, 1099-MISC, 1099-PATR, 1099-R, 5498 AND SECTORS 1 THROUGH 3 OF FORMS 1099-A, 1099-B, 1099-OID, 1099-S AND W-2G

For Forms 1099-A, 1099-B, 1099-OID, 1099-S, and W-2G, see Part D, Secs. 8, 9, 10, 11 and 12, respectively for the field descriptions and record layouts for Sector 4 of these records.

Note: For all fields marked required, a payer must provide the information described under Description and Remarks. For those fields not marked required, a payer must allow for the field but may be instructed to enter blanks or zeros in the indicated position(s) and for the indicated length.

                     RECORD NAME: PAYEE "B" RECORD