ELECTRONIC AND MAGNETIC MEDIA SPECS FOR 1995 ARE PUBLISHED.

Rev. Proc. 95-29

NOTE: Use this revenue procedure to prepare Tax Year 1995 information returns for submission to Internal Revenue Service (IRS) using any of the following:

                         - Magnetic Tape

* THIS IS THE LAST YEAR (TAX YEAR 1995) 8-INCH FILING SPECIFICATIONS WILL APPEAR IN THIS PUBLICATION. IRS/MCC WILL DISCONTINUE PROCESSING 8-INCH DISKETTES FOR TAX YEAR 1996, CALENDAR YEAR 1997. IF YOU CURRENTLY FILE INFORMATION RETURNS ON 8-INCH DISKETTE, YOU NEED TO CHANGE TO ONE OF THE OPTIONS LISTED BELOW. REFER TO:

     PART B, MAGNETIC MEDIA SPECIFICATIONS

      PART A.  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 AS400, compatible tape cartridges; or 5 1/4-, 3 1/2-, and 8-inch diskettes, with IRS. This is the last year (Tax Year 1995) 8-inch diskette filing specifications will appear in the Publication 1220. IRS/MCC will discontinue processing 8-inch diskettes for Tax Year 1996, calendar year 1997.

This revenue procedure must be used for the preparation of Tax Year 1995 information returns and information returns for years prior to 1995 that are required to be filed. This revenue procedure must be used to prepare current and prior year information returns filed between January 1, 1996, and December 31, 1996. Specifications for filing the following forms are contained in this revenue procedure.

          (a) Form 1098, Mortgage Interest Statement.

.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. Filers 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 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) 1995 "Instructions for Forms 1099, 1098, 5498, and W-2G" provides specific instructions on completing and submitting information returns to IRS. These instructions are included near the end of this publication. They may 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, Rules and Specifications for Private Printing of Substitute Forms 1096, 1098, 1099 Series, 5498, and W-2G (Rev. Proc. 94-35, 1994-19 I.R.B.).

(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 1042-S, 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. 94-43 published as Publication 1220, (Rev. 7-94), Specifications for Filing Forms 1098, 1099, 5498 and W-2G Magnetically or Electronically.

.10 Refer to Part A, Sec. 17, for definitions of terms used in this publication.

SECTION 2. NATURE OF CHANGES--CURRENT YEAR (TAX YEAR 1995)

.01 In this publication, all pertinent changes from the prior year have been highlighted by the use of italics and double underline. This has been done for the convenience of the filers in identifying new information. Filers are still advised to read the publication in its entirety.

.02 PROGRAMMING CHANGES

       a. Payer/Transmitter "A" Record changes:

.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 (see Note) of time to file returns or to furnish the statements to recipients are to be sent to the following addresses:

 If by Postal Service:            or If by truck or air freight:

.03 The 1995 "Instructions for Forms 1099, 1098, 5498, and W-2G" have been included in the Publication 1220 for transmitter convenience. The Form 1096 is used only to transmit Copy A of paper Forms 1099, 1098, 5498, and W-2G. If filing paper returns, follow the mailing instructions on the Form 1096 and submit the paper returns to the appropriate IRS Internal Revenue Service Centers.

.04 The telephone number for the Telecommunication Device for the Deaf (TDD) is (304) 267-3367. (Not a toll-free telephone number.)

.05 The telephone number for the IRS/MCC fax machine is (304) 264-5196. (Not toll free.)

.06 Requests for paper Forms 1099 and W-2 and publications not related to magnetic media/electronic filing should 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. Filers can call 1-800-SSA-1213 to obtain the phone number of the SSA Magnetic Media Coordinator for their area.

.08 Payers 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; or, the payer 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. (For penalty information, refer to Penalty Section of 1995 "Instructions for Forms 1099, 1098, 5498, and W-2G.")

.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 Transcript or Tax Form to IRS. This form may be obtained from a local IRS office or by calling 1-800-TAX-FORM (1-800-829-3676).

.10 The IRS Centralized Call Site answers 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 Questionable 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 transmitters of information returns). Recipients of information returns (payees) should continue to contact 1-800-829-1040 or other number specified in the tax return instructions with any questions on how to report 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 number to call is (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', transmitters' and employers' questions. Due to the high demand for assistance at the end of January and February, it is advisable to call as soon as possible to avoid these peak filing seasons.

SECTION 4. FILING REQUIREMENTS

.01 Under section 6011(e)(2)(A) of the Internal Revenue Code, any person, including a corporation, partnership, individual, estate, and trust, 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 return and also to each type of corrected return. 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. 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:

 NOTE:  If filers meet the filing requirements and engage a

SECTION 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 penalty of $50 per return. (For penalty information, refer to the Penalty Section of the 1995 "Instructions for Forms 1099, 1098, 5498, and W-2G.")

.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, corrections may be submitted on paper if the corrected returns are less than 250. However, if a waiver for original documents is approved, any corrections for the same type of returns will be covered under this waiver.

.04 Generally, only the payer may sign the Form 8508. A transmitter may sign if given power of attorney; however, a letter signed by the payer 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. Payers 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 6011(e) of the Internal Revenue Code. The transmitter must allow a minimum of 30 days for IRS/MCC to respond to a waiver request.

.12 If a waiver request is approved, the transmitter should keep the approval letter on file. A copy of the approved waiver should not be sent to the submission processing site where the paper returns are filed.

.13 An approved waiver from filing information returns on magnetic media does not provide exemption from all filing. The payer must timely file information returns on acceptable paper forms with the appropriate submission processing site.

.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 magnetically/electronically.

SECTION 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. This list is provided as a courtesy and in no way implies IRS/MCC approval or endorsement.

NOTE: If filers meet the filing requirements and engage a service bureau to prepare media on their behalf, the filers should be careful not to report duplicate data, which may cause penalty notices to be generated.

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

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

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

Note: Please take caution to ensure duplicate reporting does not occur by the payer and service bureau.

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

.01 Transmitters are required to submit Form 4419, Application for Filing Information Returns Magnetically/ Electronically, to request authorization to file information returns with IRS/MCC. A single Form 4419 should be filed no matter how many types of returns the transmitter will be submitting magnetically/electronically. For example, if a transmitter plans to file Forms 1099-INT, one Form 4419 should be submitted. If, at a later date, another type of form is to be filed, do not submit a new Form 4419. A separate Form 4419 is required for filing Form 1042S or Form 8027. If filers wish to report both electronically and magnetically, only one Form 4419 needs to be submitted.

.02 Magnetic tape, tape cartridge, 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 "A" Record. If a transmitter 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, 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 4419 changes, please notify IRS/MCC in writing so that the IRS/MCC database can be updated. The transmitter should include the TCC in all correspondence.

.04 Form 4419 can be submitted at any time during the year; however, it must 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 returns (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 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 the assigned TCC for all payers. Include a list of all payers and TINs with the Form 4419. Transmitters are encouraged to provide an updated list to IRS/MCC.

.06 If a payer's files are 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 and return the media to the payer for submission to IRS/MCC. These service bureaus may require the payer to obtain a TCC to be coded in the "A" Record. Payers should contact their service bureaus for further information.

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

          (a) Magnetic or electronic filing is discontinued for

.09 In accordance with Regulations section 1.6041-7(b), 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.

SECTION 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. 16 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) Payer "A" record (must not be fictitious data)

(b) Multiple Payee "B" Records (at least 11 "B" Records per each "A" Record)

(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 Test 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. The hardcopy print test is not acceptable for Combined Federal/State Filing approval.

.05 Tests should be sent to IRS/MCC between November 1 and December 31. The test file must be received at MCC by December 31 in order to be processed. Filers may begin submitting test tapes and diskettes after October 1; however, the data will not be processed until on or after November 1.

.06 For tests filed electronically, the transmitter must send the signed Form 4804, Transmittal of Information Returns Reported Magnetically/Electronically, the same day the transmission is made. For tests filed on magnetic tape, tape cartridge, 5 1/4", 3 1/2" or 8" diskette, the transmitter must include the signed Form 4804 in the same package with the corresponding magnetic media. Mark the "TEST" check box 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 test files must be received by IRS/MCC no later than December 31.

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

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

.01 Form 4804, Transmittal of Information Returns Reported Magnetically/Electronically, Form 4802, Transmittal of Information Returns Reported Magnetically/Electronically (Continuation), or computer-generated substitute, must accompany all magnetic media shipments. For electronic transmissions, the Form 4804 and Form 4802, if applicable, must be sent the same day as the electronic transmission. 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.(See Note) 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 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. Only one "F" record may be used at the end of a transmission. Multiple tapes or diskettes can be sent in one package. Filers should include Form 4804, 4802, or computer-generated substitute with their shipment. (See Note).

Note: Be sure, when using computer generated forms, to very clearly mark which tax year is being reported. This will eliminate a phone communication from IRS/MCC to question the tax year.

.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, and a separate Form 4804 should be prepared to clearly indicate each tax year.

.06 Filers 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 filed. This may result in erroneous penalty notices.

.08 Form 4804 may 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 could result in the files being returned unprocessed.

.09 Although an 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 is included in this publication.

.11 On the outside of the shipping container, affix or attach 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;

(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 the filer 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 have the ability to reconstruct the data for at least 3 years from the reporting due date, with the exception of Form 1099-C. A financial entity must retain a copy of Form 1099-C, Cancellation of Debt, or have the ability to reconstruct the data required to be included on the return, for at least 4 years from the date such return is required to be filed. Whenever backup withholding is imposed, a 4-year retention is required.

SECTION 10. DUE DATES

.01 The due 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. If using a delivery service other than postal service, the actual date of receipt by IRS/MCC will be used as the received date. This should be considered in meeting filing requirements timely. Late filed media could result in a penalty for failure to file correct information returns by the due dates. (For information on penalties, refer to the Penalty Section of the 1995 "Instructions for Forms 1099, 1098, 5498, and W-2G."

.03 The due date for furnishing statements to recipients is January 31. Form 5498 statements are due to the participants by January 31 for the fair market value of the account and by May 31 for contributions made to IRAs for the prior calendar year.

.04 Form 5498 filed magnetically/electronically must be submitted to IRS/MCC postmarked no later than May 31. Form 5498 is filed for contributions to be applied to 1995 that are made January 1, 1995, through April 15, 1996, and/or to report the fair market value of the IRA/SEP.

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

.06 Use this revenue procedure to prepare information returns filed magnetically or electronically beginning January 1, 1996, and received by IRS/MCC no later than December 31, 1996.

SECTION 11. EXTENSIONS OF TIME

.01 An extension of time to file may be requested for Forms 1099, 1098, 5498, W-2G, W-2, and 1042S.

.02 A 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, magnetically or electronically.

.03 A transmitter may request an extension of time to file for multiple payers by submitting Form 8809 and attaching a list of the payer names and their 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.

.04 For Tax Year 1995 (returns due to be filed in 1996), transmitters requesting an extension of time to file for more than 50 payers are required to file the extension request magnetically or electronically. Transmitters requesting an extension of time for 10 to 49 payers are encouraged to file the request magnetically or electronically. (See Part G, Sec. 3 for the record format.) The request may be filed on tape, tape cartridge, 5 1/4- or 3 1/2-inch diskette or through the IRP-BBS or electronically.

.05 A magnetically filed request for an extension of time should be sent using the following addresses:

 If by Postal Service:

.07 Filers may request an extension of time to file 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 transmitter receives a denial letter. When this denial letter is received, the transmitter has 20 days to provide additional or necessary information and resubmit the extension request to IRS/MCC or file the information returns.

.08 If an additional extension of time is needed, a second Form 8809 may be submitted before the end of the initial extension with a postmark reflecting the date mailed. Line 7 on the form should be checked to indicate that the original extension has been received and the additional extension is being requested. A second 30-day extension will be approved only in cases of extreme hardship or catastrophic event.

.09 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.

.10 Request an extension for only one tax year.

.11 The extension request must be signed by the payer or a person who is duly authorized to sign a return, statement or other document for the payer.

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

.13 Form 8809 may be obtained by calling 1-800-TAX-FORM (1-800-829-3676). Form 8809 is also provided in this publication for your convenience.

.14 Request an extension of time to furnish the statements to recipients of Forms 1098, 1099, 5498, W-2G, W-2, and 1042S by submitting a letter to IRS/MCC or to the payer's local District Director containing the following information:

       (a) Payer Name

SECTION 12. PROCESSING OF INFORMATION RETURNS MAGNETICALLY/ELECTRONICALLY

.01 All data received at IRS/MCC for processing will be given the same protection as individual income tax 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 IRS/MCC included with the returned files. A penalty for failure to file correct information returns by the due date will be assessed if the files are not corrected and returned within the 45 days or if the incorrect files are returned by IRS/MCC for replacement more than two times. A penalty for intentional disregard of filing requirements will be assessed if a replacement file is not received. (For penalty information, refer to the Penalty Section of the 1995 "Instructions for Forms 1099, 1098, 5498, and W-2G.") When possible, IRS/MCC may only return the portion of the file that needs replacement.

.04 Sample records identifying errors encountered will be provided with the returned media. It is the responsibility of the transmitter 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 transmitter 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 transmitter due to errors encountered during processing. After necessary changes have been made, the file must be returned for processing.

.06 IRS/MCC will not return media after successful processing. Therefore, if the transmitter wants proof that IRS/MCC received a shipment, the transmitter 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. This letter, however, will not prevent backup withholding notices (CP2100 or CP2100A-Notices) or penalties for missing or incorrect TINs.

.09 Do not use special shipping containers for transmitting data to IRS/MCC. Shipping containers will not be returned.

SECTION 13. CORRECTED RETURNS

.01 The magnetic media filing requirement of 250 information returns 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 meet 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. Corrections filed after August 1 may be subject to the maximum penalty of $50 per return. Corrections filed prior to August 1 may be subject to a lesser penalty. (For information on penalties, refer to the Penalty Section of the 1995 "Instructions for Forms 1099, 1098, 5498, and W-2G." However, if payers discover errors after August 1, they may still be required to file corrections so that they will not be subject 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 filers 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

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

.06 Prior year data, original and 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 and submit on separate media. 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, filers 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 submission processing site.

.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 Magnetically/

       Guidelines for Filing Corrected Returns Magnetically/

If a filer is reporting "G" coded, "C" coded, and/or "Non-coded" (original) returns on the same media, they must be reported under separate "A" records. _________________________________________________________________

SECTION 14. TAXPAYER IDENTIFICATION NUMBER (TIN)

.01 Section 6109 of the Internal Revenue Code requires a person to furnish his/her 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 an 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). (For penalty information, refer to the Penalty Section of the 1995 "Information for Forms 1099, 1098, 5498, and W-2G. For "B" Notice information, refer to the Backup Withholding Section of the same publication.)

.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 2. Guidelines for Employer Identification Numbers _________________________________________________________________

                          In the Taxpayer

SECTION 15. EFFECT ON PAPER RETURNS

.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, erroneous notices could be generated.

.02 Payers are responsible for providing statements to the payees as outlined in the 1995 "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, "Rules and Specifications for Private Printing of Substitute Forms 1096, 1098, 1099 Series, 5498, and W-2G."

SECTION 16. 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-C, 1099-S, and W-2G cannot be filed under this program.

.02 To request approval to participate, a magnetic media or electronic test file coded for this program must be submitted to IRS/MCC November l through December 31. Hardcopy print tests are not acceptable for Combined Federal/State Filing approval.

.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. 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 if 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). Each state filing regulations are subject to change by the state. 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 transmitter 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 must be 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

             1099-          1099-  1099-  1099-  1099-

NR - No filing requirement.

/b/ Amounts are for aggregates of several types of income from the same payer.

/c/ Missouri would prefer those returns filed with respect to non-Missouri residents to be sent directly to their state agency.

SECTION 17. DEFINITION OF TERMS

 Element                    Description

.01 The following state abbreviations are to be used 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.

 __________________________________________________________________

.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" (one) appears in the Foreign Country Indicator Field of the "B" Record.

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

                                   EXAMPLE:

SECTION 19. MAJOR PROBLEMS ENCOUNTERED

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 (see Note:) 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.

NOTE: IF FILERS MEET THE FILING REQUIREMENTS AND ENGAGE A SERVICE BUREAU TO PREPARE MEDIA ON THEIR BEHALF, THE FILERS SHOULD BE CAREFUL NOT TO REPORT DUPLICATE DATA WHICH MAY GENERATE PENALTY NOTICES.

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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. Filers should verify the accuracy of the records because imbalances may necessitate return of files for replacement.

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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 must be zero (0) filled.

        EXAMPLE:  "A" RECORD    247bbbbbb   --  ('b' denotes a

3. Blanks or invalid characters appear in Payment Amount Fields in the "B" Record.

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

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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.

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5. Bad Format.

IRS/MCC receives data in prior year format as well as 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 the current revenue procedure for formatting data.

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6. Incorrect tax year in the Payer 'A' and the 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.

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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 and specifications 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. The local SSA office should be contacted for information concerning filing Forms W-2 on magnetic media.

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8. Excessive withholding credits.

Generally, for most information returns, other than Forms 1099-MISC, 1099-R and W-2G, Federal withholding amounts should not exceed 31 percent of the income reported. Validate the total reported in the withholding field against the total income reported.

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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. (For penalty information, refer to the Penalty Section of the 1995 "Instructions for Forms 1099, 1098, 5498, and W-2G".)

IRS/MCC contacts filers who have submitted payee data with missing TINs in an attempt to prevent erroneous notices. Payers/transmitters 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. This letter, however, will not prevent backup withholding notices (CP2100 and CP2100A Notices) or penalties for missing or incorrect TINs. (For penalty information, refer to the Penalty Section of the 1995 "Instructions for Forms 1099, 1098, 5498, and W-2G".)

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

Distribution Codes for Form 1099-R are being reported incorrectly or not being reported. See valid distribution codes for 1099-R in the Payee B Record layout.

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11. Incorrect Record Totals Listed on Form 4804.

The Combined Total Payee Records listed on the Form 4804 (Box 9) are used in the verification process of information returns. The figure in this box should be the total number of Payee "B" Records contained on the media submitted with the Form 4804. The figures on the Form 4804 are compared against the total number of Payee "B" Records processed on the media. Imbalances may necessitate the return of the files for replacement.

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12. Invalid Use of IRA/SEP Indicator.

The IRA/SEP Indicator for Forms 1099-R should be used only for the reporting of a distribution from an IRA/SEP. The total amount distributed from an IRA or SEP should be reported in Payment Amount Field 2 (IRA/SEP Distribution).

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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 the state or local department of revenue for filing instructions. (Also refer to Part A, Sec. 16.)

(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 Transmitters should be consistent in the use of recording codes and density on files. If a filer's media 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.

SECTION 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 transmitters 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.

Transmitters 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 32,760 tape positions.

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

(c) All records, except the header and trailer labels, may be blocked 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 which may or may not begin with a tapemark, but must end with a trailer label. Any data beyond the trailer label cannot be read by IRS programs.

SECTION 3. TAPE CARTRIDGE SPECIFICATIONS

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

(a) Must be IBM 3480, 3490 or AS400 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 or 36-track parallel. (See Note)

(4) Cartridges will contain 37,871 CPI or 75,742 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.

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

(a) A block must not exceed 32,760 tape positions.

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

(c) All records, except the header and trailer labels, may be blocked 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.

Note: Filers should indicate on the Form 5064 Label and transmittal Form 4804 whether the cartridge is 36 track or 18 track.

SECTION 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. Although, 3 1/2-inch diskettes created on a System 36 or AS400 ARE NOT 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 transmitters 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 Transmitters are encouraged to use high density diskettes. Low density diskettes are acceptable but must be formatted in low density.

SECTION 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 Payee "B" Records. IRS computer programs rely on the absolute relationship between the parameters and data fields in the "A" Record and the data fields in the "B" Records to which they apply.

.02 The number of "A" Records 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 is 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. A separate "A" Record is required for each payer and each type of return being reported.

.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 filing 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

  ______________________________________________________________

SECTION 7. PAYEE "B" RECORD GENERAL FIELD DESCRIPTIONS AND RECORD LAYOUTS

.01 The "B" Record contains the payment information from the information 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-C, 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 must allow for all nine Payment Amount Fields. For those fields not used, enter "0's" (zeros). For example, if a payer is reporting on Form 1099-MISC, ENTER "A" in tape position 22 of the "A" Record, Type of Return. If they are reporting payments for Amount Codes 1, 2, 4, and 7, then media positions 23 through 31 of the "A" Record will be "1247bbbbb" (In this example, "b" denotes blanks. Do not enter the letter 'b'.) In the "B" Record:

          Positions 51 through 60 for Payment Amount 1 will

.03 If filers are unable to determine the first four characters of the surname, the Name Control Field may be left blank. Compliance with the following will facilitate IRS computer programs in generating the name control:

(a) The surname of the payee whose TIN 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. 14 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 personal use of the filer. 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 option to use the Special Data Entry Field. 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. 16 in order to participate in this program. Forms 1098, 1099-A, 1099-B, 1099-C, 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 uppercase.

.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 transmitters to review the data for accuracy before submission to prevent issuance of erroneous notices. Transmitters should be especially careful that the names, TINs, account numbers, types of income, and income amounts are correct.

.10 When reporting Form 1098, Mortgage Interest Statement, the "A" Record will reflect the name and TIN of the recipient of the interest, the filer of the Form 1098 (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 (the filer of the Form 1099-S) and the "B" record will reflect the seller/transferor.

 _________________________________________________________________

           (l)  Forms 1098, 1099-DIV, 1099-G, 1099-INT, 1099-MISC,

 _________________________________________________________________

      FORMS 1098, 1099-DIV, 1099-G, 1099-INT, 1099-MISC,

 _________________________________________________________________

  ____________________________________________________

  ____________________________________________________________

 (7)  PAYEE "B" RECORD - RECORD LAYOUT POSITIONS 322-420

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.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.

 _________________________________________________________________

 ____________________________________________________________

SECTION 9. STATE TOTALS "K" RECORD - RECORD LAYOUT

.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. 16 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

       ______________________________________________

PART C. BISYNCHRONOUS (MAINFRAME) ELECTRONIC FILING SPECIFICATIONS

SECTION 1. GENERAL

.01 Bisynchronous electronic filing of Forms 1098, 1099, 5498, and W-2G 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.

.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 If a request for extension is approved, 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) "F" Record.

SECTION 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 expire 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 at:

                             IRS/MCC

SECTION 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 1995, it must be submitted to IRS/MCC November 1, 1995, through December 31, 1995.

.02 If a filer encounters problems while transmitting electronic test files, IRS/MCC should be contacted for assistance.

.03 A password must be obtained before submitting an electronic test file.

.04 Bisynchronous electronic test files will be processed and filers will be notified as to the acceptability of their data within 5 workdays of the date the data and transmittal Form 4804 are received by IRS/MCC.

SECTION 4. ELECTRONIC SUBMISSIONS

.01 Electronically filed information may be submitted to IRS/MCC 7 days a week, 24 hours a day, except for routine maintenance/backup which is performed at 4:00 a.m. Eastern Time. Technical assistance will be available Monday through Friday between 8:30 a.m. and 4:30 p.m. Eastern Time by calling (304) 263-8700.

.02 Lengthy transmissions (100,000 or more records) are not encouraged since the transmission may be interrupted by line noise problems. It is advisable to break lengthy files into multiple transmissions.

.03 The time required to transmit information returns electronically will vary depending on the modem speed, if IBM 3780 data compression is used, and if the records are blocked. The following transmission rate was based on an actual test file received at MCC using 4800 bps, no compression, and one record per block:

                4500 records     50 minutes

.01 All data submitted electronically is verified by transmittal Form 4804. The transmitter must send the signed Form 4804 the same day the transmission is made. 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 (1-800- 829-3676) 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:

SECTION 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. Records may be blocked up to 4096 bytes with INTER RECORD SEPARATORS.

.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

             - Receiver Responds to Remote Loopback

.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:

 _________________________________________________________________

 ______________________

.04 Upon receiving a data file and transmittal Form 4804, IRS/MCC will release the data for further processing. If the media cannot be processed, the filer will be notified by either letter or telephone that the data must be retransmitted. This file name, if necessary, will be provided by IRS/MCC 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 Forms 1098, 1099, 5498 and W-2G, originals, corrections, and replacements 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. If the original file was sent magnetically, but was returned for replacement, the replacement may 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 If a request for extension is approved, 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.

SECTION 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.

SECTION 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 1995, it must be submitted to IRS/MCC November 1, 1995, through December 31, 1995.

.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 dialing 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. 16 for further details.

SECTION 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 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 two 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 January 1 through January 7. 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, 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 85 percent when data compression is used; therefore, it is highly recommended.

The time required to transmit information returns electronically will vary depending on the modem speed and the type of data compression used, if any. However, transmissions to IRP-BBS will be significantly faster than electronic filing to the mainframe. The time required to transmit a file can be reduced by as much as 85% by using software compression and hardware compression.

The following are actual transmission rates achieved in test uploads at MCC using compressed files (PKZIP) and the xmodem protocol. The actual transmission rates will vary depending on the protocol that is used. (Uploads will be approximately 25% faster when using the XMODEM-1K or ZMODEM protocols.):

 _________________________________________________________________

SECTION 5. TRANSMITTAL REQUIREMENTS

.01 The results of the electronic transmission will be posted to the (F)ile Status area of the IRP-BBS, however, no further processing will occur until the signed Form 4804 is received. The transmitter must send the signed Form 4804 the same day the electronic transmission is made. 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, (1-800-829-3676) 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.

SECTION 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

.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 two workdays after the transmission is received by IRS/MCC.

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

                         - No parity

.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 1200 to 28,800 bps. The speed is automatically negotiated for connection at the speed of the calling modem. The communication standards supported include Industry Standard 212A, V.22bis, V.32, V.32bis, V.34, and V.FC. Point-to-point error control is supported using the V.42 ITU-T standard or MNP 2-4. Data compression is supported using V.42bis ITU-T standard or MNP5.

SECTION 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  < B >  IBM w/ANSI    < C >  Atari

(C) Upper/lower case, line feed needed, O (zero) 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 will be eliminating 8-inch diskettes as an acceptable type of media in calendar year 1997 (Tax Year 1996). Filers currently reporting on 8-inch diskettes MUST make arrangements to file on 1/2-inch magnetic tape, tape cartridge (IBM 3480/3490 or AS400 compatible), 5 1/4- or 3 1/2-inch diskettes or electronically.

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

          (a) 8-inches in diameter.

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

SECTION 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."

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