PROCEDURES GIVEN FOR ELECTRONIC SUBMISSION OF U.S. SOURCE INCOME WITHHOLDING FORM.

Rev. Proc. 91-9

                          TABLE OF CONTENTS

SECTION 1. PURPOSE

The purpose of this revenue procedure is to update and set forth the requirements and conditions under which withholding agents, as defined in Part A, Sec. 5.01, may file Form 1042S, Foreign Person's U.S. Source Income Subject to Withholding, on magnetic tape. This revenue procedure supersedes Rev. Proc. 89-58, 1989-2 C.B. 752.

SEC. 2. NATURE OF CHANGES--CURRENT YEAR (TAX YEAR 1990)

.01 For Tax Year 1990, the following changes have been made to the revenue procedure:

(a) The title of Publication 1187 has changed from "Requirements and Conditions for Filing Form 1042S, Foreign Person's U.S. Source Income Subject to Withholding, on Magnetic Tape" to "Specifications for Filing Form 1042S, Foreign Person's U.S. Source Income Subject to Withholding, on Magnetic Tape"

(b) Increased record length for all records ("T", "Q", "W" and "Y") from 450 to 500 positions.

(c) Added record layouts to Part B, Sections 4-7.

(d) Recipient "Q" Record--

Positions 244-283, Street Address--

Increased length of field five (5) positions (from 35-40).

Positions 355-356, Income Code--

Changed the wording in Code 25 and 26;

Added Code 27, Publicly traded partnership distributions subject to IRC section 1446;

Added Code 28, Gambling Winnings.

Positions 372-373, Rate of Tax--

Added 28 as a valid tax rate

Removed "Catastrophic Health Care Indicator"

Position 429--

Added "Awaiting Form W-8 Indicator"

Positions 450-459--

Added field "Amount of State Tax Withheld"

Positions 460-500--

Added. (Reserved)

(e) Beginning in TY90 (for returns filed in 1991), IRS/MCC will NOT return media to the filers, whether it is test, original, or correction data, after successfully processing the media. (See Part A, Sec. 10.13.) Your files will only be returned if a replacement file is necessary.

(f) Added the IRS/MCC Telecommunication Devices for the Deaf (TDD) telephone number in Part A, Sec. 13.03.

SEC. 3. IMPORTANT NOTES AND COMMON ERRORS

.01 To prevent the data from being submitted incorrectly and to expedite the processing of your data files, following are the most frequently made errors by the filers of Form 1042S information:

(a) Incorrect format. Failure to format your records correctly will result in files being returned for replacement.

(b) Deviations. Deviations cannot and WILL NOT be permitted in any of the data fields.

(c) Failure to comply with the instructions in this revenue procedure may result in the assessment of penalties.

.02 A Transmitter Control Code (TCC) is a five-digit code assigned by the Internal Revenue Service (IRS) Martinsburg Computing Center (MCC) to magnetic media filers of information returns in the Form 1099 series, Form 8027, Form W-4, and Form 1042S. Each of these returns requires a separate TCC; i.e., Form 1042S requires a TCC of its own. You cannot use the TCC assigned for Forms 1099, Form 8027, or Form W-4. To obtain a TCC, you must file Form 4419, Application for Filing Information Returns Magnetically/Electronically, with the IRS/MCC. (See Part A, Sec. 5.02.)

.03 The only acceptable medium to file Forms 1042S is via magnetic tape at this time. It is NOT acceptable to submit your data on 8", 5 1/4" or 3 1/2" diskettes, or on tape cartridges.

.04 The only paper documents that will accompany your magnetic tape file to IRS/MCC are the transmittal Forms 4804/4802. DO NOT SEND ANY PAPER FORMS 1042, 1042S, or 8233 TO THE IRS/MCC. They must be sent to the Philadelphia Service Center. See Part A, Sec. 14 for the address.

.05 Form 4804, Transmittal of Information Returns Reported on Magnetic Media, must accompany your magnetic tape shipment. NOTE: WE WILL NOT PROCESS YOUR FILE UNTIL A COMPLETED AND SIGNED FORM 4804 HAS BEEN RECEIVED FROM YOUR ORGANIZATION. (See Part A, Sec. 10.)

.06 Recipient surnames are used to sort the recipient "Q" Records. Submit the recipient data with the surname first. However, if you prefer not to enter the surname first, use an asterisk to indicate the beginning of the surname for this purpose. If the surname is the first name on the line, the asterisk MUST be omitted, since the asterisk cannot be the first, left-most character of the name. (See Part A, Sec. 15.02.)

.07 Transmitter "T" Record - The Transmitter "T" Record MUST be the first data record on a reel, and MUST appear on each reel in the file sent by the Transmitter. FAILURE TO CODE A "T" RECORD AS THE FIRST RECORD ON EACH REEL IN YOUR FILE WILL RESULT IN THE FILE BEING RETURNED FOR REPLACEMENT. (See Part B, Sec. 4.)

.08 Name and address fields - ACCEPTABLE PUNCTUATION MARKS INCLUDE HYPHENS (-), AMPERSANDS (&), SLASHES (/), ASTERISKS (*), PERCENTS (%), PERIODS (.), COMMAS (,) AND APOSTROPHES ('). DO NOT CODE TWO OR MORE CONSECUTIVE BLANKS. The name and/or address will be considered invalid if you code other punctuation and/or two or more consecutive blanks in the name and address fields.

.09 Street Address - Recipient "Q" Record - Positions 244-283. If the Street Address is too long for the 40 positions provided in the Street Address field (positions 244-283), you may use the 2nd and 3rd Name Line fields (positions 174-243) to code additional street address information. Some filers are using these fields to code City, State, Province, and Postal Zone information, which is invalid in the name line fields. Those items must be coded in the appropriate fields. DEVIATIONS WILL NOT BE PERMITTED IN THESE ADDRESS FIELDS. YOUR FILE WILL BE RETURNED FOR CORRECTION IF THE CITY, STATE, PROVINCE, AND POSTAL ZONE FIELDS ARE NOT FORMATTED CORRECTLY.

.10 Province Name - Recipient "Q" Record - Positions 309-323. Filers are to use the two-digit Province Code for Canadian addresses, or the province name may be written out in full.

.11 Postal Code - Recipient "Q" Record - Positions 324-332--Do not code two or more consecutive, IMBEDDED blanks in this field.

.12 State Code - Recipient "Q" Record - Positions 333-334--to be used only for the correct two-character STATE Code for U.S. addresses. Filers are erroneously coding the two-character COUNTRY code here.

.13 Payer's Name - Recipient "Q" Record - Positions 385-419. Valid characters are alphabetic, numeric, ampersands (&), hyphens (-), periods (.), commas (,), and apostrophes (').

.14 Multiple Recipient "Q" Records - If you withhold tax for a recipient at different tax rates (for example, there is a change in Country Code or a country's tax treaty during the year), you must produce a separate Recipient "Q" Record for that recipient for each amount of tax withheld. Failure to do so will result in a math computation error and return of your file for replacement.

.15 When submitting a multi-reel file (see definition in Part B, Sec. 2) it is important that the End of Transmission "Y" Record is not coded until the LAST record of the LAST reel in the file. Some filers are sending in "multi-reel" files where each tape in the file ends with the "Y" Record, which is incorrect. The End of Transmission "Y" Record indicates to our program that the end of data has been reached, and the file closes at that point--no further data will be read from the file. For example, if you send in a three reel file, the first and second reels will end with either a "Q" or "W" Record, and the third (LAST) reel will end with a "Y" Record.

SEC. 4. FILING REQUIREMENTS

.01 Withholding agents who are required to file 250 or more Forms 1042S with IRS must submit these forms on magnetic tape.

.02 This requirement applies separately to original and corrected documents.

.03 These requirements shall not apply if you establish undue hardship. (See Part A, Sec. 7.)

SEC. 5. FORM 4419, APPLICATION FOR FILING INFORMATION RETURNS MAGNETICALLY/ELECTRONICALLY

.01 A withholding agent is defined as any person or entity, U.S. or foreign, required to withhold U.S. tax on payments of income subject to withholding from sources within the United States as provided for in Chapter 3 of the Internal Revenue Code. A withholding agent may be an individual, partnership, corporation, trust, estate, government agency (Federal, State or local), association, or a tax-exempt foundation or organization.

.02 Withholding agents or their agents are required to complete Form 4419, Application for Filing Information Returns Magnetically/Electronically. Applications should be filed with IRS/MCC at least 30 days before the due date of the return. You may submit Form 4419 any time during the year; however, it must be submitted prior to March 15. This will allow IRS/MCC the minimum amount of time necessary to process and respond to your application.

.03 A five-digit Transmitter Control Code (TCC) beginning with the digits 22 will be assigned and included in an approval letter. DO NOT SUBMIT YOUR FORM 1042S data using a 1099 TCC. Magnetic tape returns may not be filed with IRS/MCC until the application has been approved.

.04 Once you have received a TCC for Form 1042S filing, it is not necessary to reapply each year. If you have any changes to Form 4419 (for example, if the name of your organization or the contact person changes), please notify IRS/MCC in writing so your file can be updated. In ALL correspondence with IRS/MCC refer to your current five-digit TCC to assist IRS/MCC in locating your files.

.05 If your files have been prepared for you in the past by a service bureau, but you now have computer equipment compatible with that of IRS/MCC and wish to prepare your own files, you must request your own five-digit TCC by filing application Form 4419.

.06 A copy of Form 4419 is included in this publication for your convenience. Please read the instructions on the back of the form very carefully. This form may be computer-generated or photocopied. Requests for additional forms or other information related to magnetic media processing should be addressed to IRS/MCC. (See Part A, Sec. 13 for the address.)

SEC. 6. TEST FILES

.01 Application Form 4419 must be filed with the IRS/MCC BEFORE "test" files are submitted.

.02 IRS does not require magnetic media filers to submit test files; however, we do encourage all first time filers to submit a test for review prior to the filing season.

.03 IRS/MCC will assist new filers with their initial magnetic tape submission by reviewing "test" files to determine whether or not the file is formatted correctly and will check the content of the records to ensure it meets the specifications in the current revenue procedure.

.04 Approved withholding agents or their agents may submit "test" files to the computer assistant at IRS/MCC. IRS/MCC requires that all Form 1042S "test" files be submitted between January 1 and February 15.

.05 Include a transmittal Form 4804, 4802, or computer-generated substitute marked as "TEST DATA" that identifies your five-digit TCC and total record and money amounts. Clearly mark the tape label Form 5064 as "TEST DATA," and indicate the total number of Recipient "Q" Records in the block marked "Number of Payees."

.06 Filers will be notified of the test results. However, test tapes will not be returned after processing.

SEC. 7. FORM 8508, REQUEST FOR WAIVER FROM FILING INFORMATION RETURNS ON MAGNETIC MEDIA

.01 Withholding agents required to file Form 1042S on magnetic tape may receive a waiver from such requirements if filing on magnetic tape would create an undue hardship. The withholding agent may request a waiver from the filing requirements by submitting Form 8508, Request for Waiver From Filing Information Returns on Magnetic Media, with the IRS/MCC.

.02 A separate Form 8508 must be submitted for each withholding agent. DO NOT SUBMIT A LIST OF WITHHOLDING AGENTS.

.03 Transmitters may file Form 8508 for persons required to file on magnetic media if all information requested on Form 8508 is provided for each withholding agent, if the transmitter provides a letter stating they have power-of-attorney for the agent, and if the transmitter or withholding agent signs the request attesting that all information is true, correct, and complete.

.04 All requests for magnetic media related undue hardship exemptions must be submitted to IRS/MCC at least 90 days before the Forms 1042S are due to IRS. IF THE REQUEST IS NOT POSTMARKED 90 DAYS BEFORE THE DUE DATE OF THE 1042S RETURN (MARCH 15), IT WILL NOT BE CONSIDERED.

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

.06 A copy of Form 8508 is included in this publication and it is also may be obtained from IRS/MCC and other IRS offices. Form 8508 may also be computer-generated as long as it contains all the information requested on the original form, or it may be photocopied.

.07 If your waiver request is approved, keep it for your records. Do NOT send a copy of the approved waiver to the Philadelphia Service Center with your paper returns.

.08 An approved waiver from filing information returns on magnetic media does not provide exemption from filing; you must still file your information returns on acceptable paper forms with the Philadelphia Service Center.

.09 Magnetic tape is the only permissible magnetic medium for filing Forms 1042S and must be filed in accordance with this revenue procedure. Diskette reporting of Forms 1042S cannot be accepted at this time. However, IRS expects to accept diskettes in the near future for this program, possibly for Tax Year 1991 data filed in Calendar Year 1992.

SEC. 8. FILING DUE DATES

.01 Magnetic tape reporting to IRS for Forms 1042S must be on a calendar year basis. The dates prescribed for filing paper documents with IRS will also apply to magnetic tape filing. Files must be submitted to the IRS/MCC postmarked by March 15.

.02 Copies of Form 1042S information must be furnished to the income recipient also by March 15. If the due date falls on a Saturday, Sunday, or a legal holiday, the due date is extended to the next day that is not a Saturday, Sunday, or legal holiday.

SEC. 9. EXTENSIONS OF TIME TO FILE

.01 If a withholding agent is required to submit Forms 1042S on magnetic tape to IRS/MCC, and is unable to do so by the date prescribed in Part A, Sec. 8.01, an extension of time may be requested. Submit a letter or Form 2758, Application for Extension of Time To File Certain Excise, Income, Information, and Other Returns, to request an extension of time. Extensions will be granted in 30 day increments. If an additional extension of time is necessary, the withholding agent must submit a second request for an additional 30 day extension. A copy of the first approved extension must accompany the second request. Extensions may be granted for a maximum of 60 days.

.02 In order to be considered for an extension of time, the request MUST be postmarked by the due date of the return; otherwise, you may be subject to a late filing penalty. The request (letter or Form 2758) should be sent to the attention of the Magnetic Media Reporting Program at the IRS/MCC. When submitting a letter, the request should include:

(a) The withholding agent's (or transmitter's, if filing for multiple withholding agents) name and address.

(b) The withholding agent's Taxpayer Identification Number (TIN).

(c) The tax year for which the extension of time is requested (e.g., 1990).

(d) The name and telephone number of a person to contact who is familiar with the request.

(e) The specific type of returns (e.g., Forms 1042S).

(f) The Transmitter Control Code (TCC) assigned to the organization or individual requesting the extension. (Please be sure that the TCC provided is your assigned TCC for Forms 1042S processing ONLY.)

(g) The reason for the delay and the date that you will be able to file.

(h) If you file for multiple withholding agents, the request must include a list of all withholding agents and their TINs (EIN or SSN).

.03 An approved extension of time for magnetic media filing does not provide additional time for supplying a copy to the recipient.

.04 If an extension of time to file on magnetic media is granted by IRS/MCC, a copy of the letter granting the extension MUST be included with the transmittal Form 4804 or computer-generated substitute when the file is submitted.

.05 Since the Form 1042 is not considered timely filed until the Form 1042S is received by IRS, an extension of time to file Forms 1042S will AUTOMATICALLY provide an extension for filing Form 1042 with the Philadelphia Service Center. If an extension of time to file the paper Form 1042S with the Philadelphia Service Center is granted by IRS/MCC, a copy of the letter granting the extension MUST be included with the paper Form 1042. NOTE: IF YOU ONLY NEED AN EXTENSION OF TIME TO FILE FORM 1042, AND NOT THE FORMS 1042S, SEND THAT REQUEST FOR THE EXTENSION OF TIME TO THE DIRECTOR, PHILADELPHIA SERVICE CENTER.

.06 An approved extension only grants additional time to file; any tax due must still be paid timely.

.07 You can request an extension of time for only one tax year.

SEC. 10. FILING OF MAGNETIC MEDIA RETURNS AND RETENTION REQUIREMENTS

.01 Form 4804, Transmittal of Information Returns Reported on Magnetic Media, MUST accompany magnetic tape submissions. If you file for multiple withholding agents and have the authority to sign the affidavit on Form 4804, you should also submit Form 4802, Transmittal for Multiple Magnetic Media Reporting. BE SURE TO INCLUDE FORM 4804, 4802, OR COMPUTER-GENERATED SUBSTITUTE WITH YOUR TAPE SHIPMENT. DO NOT MAIL THE TAPES AND THE TRANSMITTAL DOCUMENTS SEPARATELY. IRS encourages the use of a computer-generated substitute Form 4804 which includes all necessary information requested on the current form. Paper information returns must be submitted to the Philadelphia Service Center (PSC). Do NOT send Forms 1042S filed on paper forms to the IRS/MCC.

.02 Form 4804 contains an affidavit that must be signed by the withholding agent; however, the transmitter, service bureau, paying agent, or disbursing agent (all hereafter referred to as agent), may sign the affidavit on behalf of the withholding agent provided the agent has the authority to sign the affidavit under an agency agreement (either oral, written, or implied) that is valid under the state law and adds the caption "For: (name of withholding agent)." NOTE: Failure to sign the affidavit on Form 4804 will result in the file being returned unprocessed.

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

.04 DO NOT REPORT DUPLICATE INFORMATION. If you report part of your returns on paper and part on magnetic tape, be sure that the same information is not included on both. This does NOT mean that corrected documents are not to be filed. If a return has been prepared and submitted improperly, you must file a corrected return as soon as you are aware that a correction is necessary.

.05 Before submitting your magnetic tape file, include the following:

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

(b) A Form 4802 if you transmit for multiple withholding agents and have the authority to sign the affidavit on Form 4804. (See NOTE.) NOTE: You MUST indicate two money totals on Form 4804/4802: (1) "Total Gross Income Paid", and (2) "Total Amount of Tax Withheld." These money totals will reflect the totals of all of the Withholding "W" Records in your file. Failure to include the two money amounts will delay the processing of your file.

(c) The magnetic tape with an external identifying label (Form 5064). Be sure to include your Form 1042S TCC, number of Recipient "Q" Records, and type of documents (Form 1042S).

(d) On the outside of the shipping container, include a Form 4801 or a substitute for the form which reads "DELIVER UNOPENED TO TAPE LIBRARY--MAGNETIC MEDIA REPORTING--BOX __ OF __." If there is only one container, mark the outside of the as Box 1 of 1. For multiple containers, use the sequence Box 1 of 3, 2 of 3, 3 of 3.

(e) If you were granted an extension of time, include a copy of the APPROVAL letter with the magnetic tape shipment.

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

.07 Files may be returned to you due to coding or format errors. These are to be returned to IRS within 45 days from the date of notice or the withholding agent may be subject to a failure to file penalty.

.08 The withholding agent's Form 1042 tax return is used to verify the number of Forms 1042S filed on paper and/or magnetic tape. For transmitters or service bureaus filing Form 1042S information on magnetic tape for several withholding agents, separate Forms 1042 MUST be filed by each withholding agent included in the transmittal. Since the required Form 1042 is a tax return (with or without a remittance attached), it MUST be filed separately from the shipment of magnetic tape. Form 1042, with attached remittance (if applicable) will be sent to the Philadelphia Service Center, NOT the IRS/MCC. (See instructions for Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons.)

.09 IRS will prepare the appropriate statements for transmittal to treaty countries.

.10 Forms 1042S (Recipient "Q" Records) from different branches of the withholding agent's business activity must be consolidated under one withholding agent's "W" Record, especially when one common name and Employer Identification Number (EIN) would be used for each of the branches. For example, Bank X has branch offices in two different states. It would be acceptable for Branch Y of Bank X to report Recipient "Q" Records and associated "W" Record as "Bank X, Branch Y" when Branch Y has its own EIN, and for Branch Z of Bank X to report separately its Recipient "Q" Records and associated "W" Record as "Bank X, Branch Z" using its own EIN. Branches should not report separately when those branches are using a common EIN (and name). Branches filing separately should not use a common address (for example, the address of the parent bank) when that common address is not normally used for filing other types of returns with IRS. It is assumed that for each "W" Record (which represents a unique withholding agent), there will be a corresponding Form 1042 submitted which will reflect the accumulation of the associated Recipient "Q" Records.

.11 The magnetic tape specifications contained in Part "B" of this revenue procedure must be strictly adhered to. Deviations will not be permitted under any circumstances. This includes the city, state, province, and postal zone fields, which must be positioned exactly as shown. All magnetic tape files will be scanned for completeness of required fields, mathematical verification, and proper format. Tapes failing to meet specifications will not be processed, but will be returned to the transmitter for replacement. Replacement files must be returned to MCC within 45 days from the date of notice of the returned file.

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

.13 Beginning with Tax Year 1990, IRS/MCC will no longer return filers' magnetic media. Filers are encouraged to retain a copy of the files submitted to IRS/MCC for their records. If transmitters wish to know whether or not their files were received at IRS/MCC, a delivery service that provides certification of delivery is recommended.

SEC. 11. REPLACEMENT FILES

.01 Please open all returned files as soon as they are received. Files are returned because of errors which must be corrected and returned to IRS/MCC within 45 days from the date of notice. FAILURE TO CORRECT AND RESUBMIT YOUR REPLACEMENT FILE MAY RESULT IN A FAILURE TO FILE PENALTY.

.02 When the magnetic tape files are returned to the transmitter for replacement, a sample listing of the type of errors and frequency of such errors will be provided. The transmitter must correct the problems and submit a replacement file to IRS/MCC. Certain problems noted may not require corrective action. For example, certain Recipient "Q" Records should have had their tax withheld at a particular tax rate, but the withholding agent, for whatever reason, withheld at a different tax rate. The transmitter (in conjunction with the withholding agent, if necessary) should first verify that the tax rates in question are in fact the rates at which tax was withheld. Once verified, a letter must accompany the tape file stipulating that the tax rates are accurate as submitted.

SEC. 12. HOW TO FILE CORRECTED RETURNS

.01 Forms 1042S are required to be filed on magnetic tape if you file 250 or more returns. THIS REQUIREMENT APPLIES SEPARATELY TO BOTH ORIGINAL AND CORRECTED RETURNS.

.02 To distinguish between a correction and a replacement:

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

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

.03 If you file Forms 1042S on magnetic tape, and later determine that corrections are necessary to some of the Recipient "Q" Records, you may file the corrections on paper if you have less than 250 corrected returns. However, if you have 250 or more corrections, they MUST be submitted to IRS/MCC on magnetic tape unless you have a waiver. If you have received a waiver for original Forms 1042S, the waiver applies to the corrections as well.

.04 CORRECTED RECORDS CANNOT BE SUBMITTED ON THE SAME FILE AS ORIGINAL RETURNS.

.05 Since corrected statements supersede information previously supplied, all required data fields must be completed. If you submit corrections on magnetic tape, code an "A" in Position 371 of the Recipient "Q" Record. If you submit corrections on paper documents, mark each form "Corrected" at the top. Corrected documents must be bundled separately from other paper documents and sent to the Philadelphia Service Center. WHEN CORRECTED PAPER DOCUMENTS ARE SHIPPED SEPARATELY, AN AMENDED FORM 1042 MUST BE FILED, ALSO SUITABLY ANNOTATED.

SEC. 13. HOW TO CONTACT THE MARTINSBURG COMPUTING CENTER

.01 Copies of revenue procedures, application Form 4419, waiver request Form 8508, transmittal Forms 4804/4802, media label Form 5064, and additional magnetic media related materials are available from the IRS/MCC. Send your magnetic media files, and any inquiries to MCC at the following addresses:

     If by U.S. Postal Service, send to:

.03 IRS/MCC has installed Telecommunications Devices for the Deaf (TDD). The number is (304) 267-3367.

SEC. 14. EFFECT ON PAPER DOCUMENTS

.01 Magnetic tape reporting to IRS eliminates the need for submission of paper Forms 1042S. However, withholding agents must continue to provide recipients with requisite information.

.02 If only a portion of the statements are reported on magnetic tape and the remainder are reported on paper forms to IRS, they must be filed on the prescribed forms.

.03 Form 1042 is a tax return used to verify the number of Forms 1042S filed on paper and/or magnetic tape. In certain cases, a withholding agent may be required to attach a remittance to Form 1042. The address for filing paper Forms 1042S, Form 1042 (with a remittance attached, if applicable), or Forms 8233, is:

          Internal Revenue Service Center

SEC. 15. DATA ENTRIES

.01 Since recipients' Taxpayer Identification Numbers (TINs) are not required on all Forms 1042S (see specific Instructions for Withholding Agents, in the Instructions for Forms 1042 and 1042S), the specifications in PART "B" of this revenue procedure permit omission of such identifying numbers. (See "Q" Record, Positions 113-121.) Although identifying numbers are not always required for nonresident alien income recipients, IRS requires this information being furnished when available.

.02 Recipient surnames are used to computer-generate Sort Names. Use an asterisk to indicate the beginning of the surname for this purpose. If the surname is the first name on the line, as may be the case for nationals of Asian countries, the asterisk is to be omitted. In the case of a partnership or joint ownership, or some other case where more than one individual is listed, asterisk only the first surname.

A blank will always precede the asterisk when it is used, but no asterisk may be followed by a blank. Do not use an asterisk with corporate or any other business entity or governmental organization name, except partnerships or sole proprietorships. NEVER HAVE MORE THAN ONE BLANK SEPARATING PORTIONS OF A NAME LINE OR AN ADDRESS FIELD.

NOTE: IT IS VERY IMPORTANT THAT THE ASTERISK IS PLACED BEFORE THE SURNAME (unless the above-mentioned exceptions apply). DEVIATIONS FROM THIS FORMAT ARE NOT ACCEPTABLE.

.03 Sometimes the recipient's identification recorded on the withholding agent's records is lengthy, and exceeds the 105 characters allotted in the Recipient Name Line and Supplement Name Lines on the magnetic tape records. This is most common in the case of trusts or other types of fiduciary accounts. The first 105 characters of the recipient's identification normally provide sufficient descriptive data for IRS's purposes. IRS encourages all agents to truncate or abbreviate lengthy recipient descriptions. Never have more than one blank separating portions of a name line or an address field.

.04 All monetary amount fields must show dollars and cents (omit the decimal point). For example, $135.72 must be shown as 13572, and $100 must be shown as 10000. All money amount fields are positive and must not be signed in any fashion. All money amounts must be right-justified and zero filled. Do not truncate any money amount fields. If the amount is more than the allowed space, prepare a second "Q" Record to show the difference.

.05 There are several circumstances where more than one "Q" Record is expected for a recipient. These situations include:

(a) Different sources of income. For example, Recipient X derived income from Capital Gains (Income Code 09) and Industrial Royalties (Income Code 10). One "Q" Record must be provided listing Income Code "09," and the Gross Income Paid and Tax Withheld pertaining solely to that type of income.

A separate "Q" Record must document the Income Code "10" information.

(b) Change in Country Code during the year. For example, the withholding agent received notification via Form 1001 that the recipient changed his official country for which tax treaty benefits apply from country X to country Y. One "Q" Record must be provided reflecting Gross Income Paid, Tax Rate, and Tax Withheld for country X (reflecting income and withholding from January 1 through June 30). A second "Q" Record must be provided reflecting Income, Tax Rate, and Tax Withheld for country Y (covering income and withholding from July 1 through December 31).

(c) Change in a country's tax treaty rate during the year. For example, effective April 1, country X changed its tax treaty rate for a particular type of income from 10% to 20%. One "Q" Record must be provided reflecting Gross Income Paid and Tax Withheld at the 10% rate (covering January 1 through March 31). A second "Q" Record must also be provided reflecting Gross Income Paid and Tax Withheld at the 20% rate (covering April 1 through December 31).

NOTE: These three situations are NOT mutually exclusive. Therefore, if a recipient has two sources of income, each of which is derived from a country whose corresponding tax treaty rates changed during the year, and the recipient submitted a Form 1001 to the Withholding Agent changing his country code for tax purposes, as many as six (6) separate "Q" Records must be provided. FAILURE TO PROVIDE MULTIPLE RECIPIENT "Q" RECORDS UNDER THESE VARIOUS CIRCUMSTANCES WILL RESULT IN MATH COMPUTATION ERRORS WHEN IRS/MCC PROCESSES YOUR FILE, AND WILL RESULT IN THE FILE BEING RETURNED FOR REPLACEMENT.

PART B. MAGNETIC TAPE SPECIFICATIONS

SECTION 1. GENERAL

.01 These specifications prescribe the required format and content of the records to be included in the file, but not the methods or equipment to be used in their preparation. Usually, IRS/MCC will be able to process, without translation, any compatible tape file. To be compatible, a tape file must meet all of the following:

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

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

(1) Odd parity

(2) Recording density - 800, 1600, or 6250 BPI

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

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

(1) Odd Parity

(2) Recording density - 800, 1600, or 6250 BPI

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

(1) Odd Parity

(2) Recording density - 556 or 800 BPI

NOTE: Beginning in TY91, IRS/MCC will no longer accept 7-track tapes.

.02 All compatible tape files must have the following characteristics:

Type of tape - 0.5 inch (12.7 mm) wide, computer grade magnetic tape on reels of up to 2400 feet (731.52M) within the following specifications:

(a) Tape thickness: 1.0 or 1.5 mils and

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

.03 An acceptable tape file will contain data records as follows:

(a) Single reel:

(1) A Transmitter "T" Record; then

(2) one or more Recipient "Q" Records followed by a specific Withholding Agent "W" Record; then

(3) additional "Q" and "W" Record sequences for other withholding agents as needed; then

(4) an End of Transmission "Y" Record.

(b) Multiple reels:

(1) A Transmitter "T" Record at the beginning of each reel; then

(2) sequences of Recipient "Q" Records followed by corresponding Withholding Agent "W" Records; then

(3) an End of Transmission "Y" Record ending the last reel.

(c) Notes:

(1) A sequence of Recipient "Q" Records may be continued from one reel to the next if they apply to the same withholding agent, without the necessity of repeating the "W" Record. The sequence might be, for example, QQQQ (end of one reel); TQQQQW (beginning of next reel).

.04 A multi-reel file is a group of tape reels submitted under one TCC with each reel ending with a "Q" or "W" Record EXCEPT for the last reel of the file, which ends with an End of Transmission "Y" Record. The external labels for a multi-reel file must indicate a continuous file (e.g., 1 of 3, 2 of 3, 3 of 3). However, if several reels are submitted under one TCC and each reel has an End of Transmission "Y" Record, for the purposes of IRS processing, this is not considered a multi-reel file, so mark the labels on these reels as 1/1. IRS/MCC encourages the submission of multi-reel files. If you submit multi-reel files, please be sure that you do NOT code an End of Transmission "Y" Record until the LAST reel in the multi-reel file.

.05 An external label, Form 5064, must appear on each tape submitted for processing. The following information is needed:

(a) The transmitter's name.

(b) The 1042S five-digit TCC.

(c) The tax year of the data (e.g., 1990)

(d) In the block which describes the Operating System/Hardware, indicate the recording code and density (for example, EBCDIC, 6250 BPI)

(e) Indicate the document type (1042S) in the block which describes "Return(s)."

(f) In the "Number of Payees" block indicate the total number of Recipient "Q" Records on that reel.

(g) In the "Transmitter's number for media" block indicate the reel number assigned by your organization to the tape. (Optional: If your organization uses a numbering system for your tape reels, indicate your in-house reel number; otherwise, leave blank).

(h) The sequence of each tape (for example, 1 of 3, 2 of 3, 3 of 3).

.06 All records, including header and trailer labels (if used) must be transmitted at the same density.

SEC. 2. DEFINITION OF TERMS

 Element            Description

.01 The tape records defined in this revenue procedure may be blocked or unblocked, subject to the following:

(a) Records must be a fixed length of 500 positions.

(b) Records may be blocked or unblocked, except header and trailer labels which must be blocked.

(c) A block may not exceed 15,000 characters, although shorter blocks may be written as desired. If records are being blocked, but sufficient records are not available to fill a complete block, the block may either be "padded" with 9s to fill all unused positions or truncated after the last data record to create a "short block". Do NOT pad the block with blanks or create blank records (for example, Q followed by 499 blanks, etc.).

(d) Records may not span blocks.

(e) Two forms of blocking are acceptable:

(1) Only "Q" Records are blocked; all other records are unblocked.

(2) Header and trailer labels, if used, are blocked.

In this case, a "T" Record must be the first record in the first block on the reel; a "W" Record must follow all associated "Q" Records; and the "Y" Record is the LAST record in the final block on the LAST reel in a multi-reel file, or the last record in the last block of a single reel (only block padding (all 9's) could follow).

.02 The first position of each record indicates the record type:

 Transmitter                                                        T

(a) Header labels must begin with VOL1, VOL2, HDR1, HDR2, or 1HDR. If used, they must be the first record(s) on the reel immediately before the Transmitter "T" Record. Header labels may not exceed 80 characters in length.

(b) Trailer labels must begin 1EOR, 1EOF, EOF1, or EOR1. If used, they must be the last record(s) on the reel, after the "Y" record and tape mark (if a tape mark is used). Trailer labels may not exceed 80 characters in length.

(c) Record marks, if used, may only follow the data portion of a record or block. All records are of uniform length, and record marks are not needed.

(d) Tape marks, if used, must be IBM 001111 (Octal 17) in even parity. They always appear immediately after the "Y" record. If header and trailer labels are also used, the tape mark must follow the header label and must precede and/or follow the trailer label(s).

.04 The minimum file transmitted must consist of a Transmitter "T" Record, a Recipient "Q" Record, and Withholding Agent "W" Record, and an End of Transmission "Y" Record.

SEC. 4. THE TRANSMITTER "T" RECORD

This record identifies the entity preparing and transmitting the magnetic tape file. The Transmitter and one of the withholding agents may be the same, but they need not be. The Transmitter "T" Record MUST be the first data record on a reel (preceded only by header labels, if any), and MUST appear on each reel in the file sent by the Transmitter. On multiple reel files the reel number must be incremented by 1 (one) for each tape reel after the first reel. Each "T" Record has a fixed length of 500 positions.

NOTE: ALL MAGNETIC TAPES SUBMITTED TO IRS/MCC WITHOUT THE TRANSMITTER "T" RECORD AS THE FIRST RECORD WILL BE RETURNED TO THE FILER FOR REPLACEMENT.

                  RECORD NAME: TRANSMITTER "T" RECORD

.01 This Record contains complete name and address data for both Withholding Agent and Recipient of Income, together with all the particulars of the income paid and tax withheld. Complete Withholding Agent data is required because each Recipient "Q" Record is treated as if it were a separate Form 1042S, and is processed independently of other records. Since the "Q" Record is restricted to one type of income only, it may be necessary to write more than one "Q" Record for any given individual income recipient, who may have received income of more than one type (see Part A, Sec. 15.05).

.02 All recipient "Q" Records for a particular Withholding Agent must be written before the corresponding Withholding Agent "W" Record, and before "Q" Records for another Withholding Agent may begin. Any order of "Q" Records within those belonging to a given Withholding Agent may be used (for example, they may be sorted alphabetically by surname, or by country code, or by country of the mailing address, etc.) at the convenience of the Transmitter or Withholding Agent, since the "Q" Records are fully independent.

.03 All "Q" Records have a fixed length of 500 positions. All fields are required unless otherwise stated.

                   RECORD NAME: RECIPIENT "Q" RECORD

Enter a "W" Record after the last "Q" Record submitted for a particular Withholding Agent. The "W" Record serves as a summary of the preceding "Q" Record data, and enables IRS to cross-check the correctness of information received. Several "W" Records for different withholding agents may appear on the same Transmitter's file. Also, the "W" Record may refer to "Q" Records on more than one reel, provided all of the preceding "Q" Records are for the same withholding agent. A "W" Record may only be followed by new Recipient "Q" Records for the next Withholding Agent, if any, or by a tape mark and/or trailer label when more reels follow this reel, or by an End of Transmission "Y" Record, when this is the last reel of the file. The "W" Record cannot be the last record on the FILE. Each "W" Record has a fixed length of 500 positions. All fields in the "W" Record are required as follows:

               RECORD NAME: WITHHOLDING AGENT "W" RECORD

.01 The "Y" Record is a fixed record length of 500 positions and all positions listed are required. The "Y" Record is a summary of the number of withholding agents and total number of tape reels in the entire file.

.02 This record will be written after the last "W" Record of the entire file. End the LAST reel ONLY of a file with an End of Transmission "Y" Record. The "Y" Record may only be preceded by a "W" Record. It may only be followed by a tape mark, or a tape mark and a trailer label (if trailer labels are used), or a trailer label.

.03 PLEASE NOTE THAT IF SUBMITTING A MULTI-REEL FILE, THERE WILL ONLY BE ONE END OF TRANSMISSION "Y" RECORD. THE END OF TRANSMISSION "Y" RECORD WILL BE THE LAST RECORD IN THE FINAL BLOCK ON THE LAST REEL IN YOUR FILE.

              RECORD NAME: END OF TRANSMISSION "Y" RECORD

Revenue Procedure 89-58 is superseded.