Rev. Proc. 67-31

SECTION 1. PURPOSE

.01 The purpose of this Revenue Procedure is to state requirements and conditions under which information reportable on U.S. Information Return, Form 1099, Wage and Tax Statement, Form W-2, or Nominee's Information Return, Form 1087 (hereafter referred to collectively as information returns), may be submitted to the Service by payers, employers, or nominees (hereafter referred to collectively as payers), in the form of magnetic tape in lieu of original copies of paper documents.

.02 This procedure replaces Revenue Procedure 66-32 dated July 25, 1966. The changes embodied herein are intended to clarify and simplify the requirements for magnetic tape reporting and to improve Service processing. Although tape specifications have been revised, ANY MAGNETIC TAPE WHICH FULLY MET THE REQUIREMENTS OF REVENUE PROCEDURE 66-32 WILL BE ACCEPTED IN CALENDAR YEAR 1968. (See attachment I, sec. 1.02.)

SEC. 2. APPLICATION FOR TAPE REPORTING

.01 Information returns may be filed in the form of magnetic tape in lieu of paper documents. Such returns may be filed by payers, or by agents acting for a single payer or a group of payers. Tape reporting is not restricted to payers with the ability to submit all of their information on magnetic tape. A combination of tape records and paper documents are acceptable as long as there is no duplication or omission of documents.

.02 Payers or agents who desire to file information returns in the form of magnetic tape must first file a letter of application. This letter should be addressed to the Director of Internal Revenue Service Center in the region in which the payer or agent normally files returns, marked "Attention, Chief of Planning Staff." Addresses of the Internal Revenue Service Centers are shown in section 8 of this Procedure.

The letter of request must contain the following:

(a) Name, address, and EI number of person, organization, or firm making the request.

(b) Name, title, and telephone number of person to contact regarding the request.

(c) An estimate, by type of form, of the number of returns to be reported in tape format, and the number, by type of form, to be reported on paper forms.

(d) Type and nature of equipment to be used to prepare tape files, i.e., manufacturer and model of main frame and tape drives, tape width (1/2", 3/4", etc.) density (characters per inch), and recording code (BCD, Excess 3, Octal, etc.).

(e) Internal Revenue office where paper forms were filed last year.

(f) List of payers to be included in the file if the requestor is an agent.

(g) Signature of official responsible for the preparation of tax reports or his authorized agent.

.03 Application for magnetic tape reporting must be filed by November 1st of the tax year for which authorization to file magnetic tape is being requested. The Service will act on applications and notify applicants of authorization or disapproval within 30 days of receipt of applications.

.04 Generally, payers using equipment compatible with the Service's can presume that tape reporting will be approved. Compatible tape characteristics are shown in attachment I, section 1.01. If payers or agents have the capability to prepare several types of tapes, the Service prefers that compatible tapes be prepared.

.05 If payers or agents propose to submit incompatible tapes, the Service will attempt to find conversion facilities. Generally, magnetic tape reporting will be disapproved only when the Service is unable to obtain facilities to convert a payer's file to a compatible form.

.06 In general, once authorization to file magnetic tape has been granted to a payer, such approval will continue in effect in succeeding years, providing that the requirements of this Revenue Procedure are met, and there are no equipment changes by the payer. However, to provide the Service with the necessary planning information, a renewal application must be filed. The Service will mail renewal applications by July 1 to all payers and agents who had filed tape returns in prior years. Renewal application must be received by the Service by November 1. The Service will act on renewal applications within 30 days of receipt.

SEC. 3. FILING OF TAPE RETURNS.

.01 Packaging, shipping, and mailing instructions will be provided in the authorizing letter issued by the Service in response to an application for tape reporting or a renewal request.

.02 Payers submitting a portion of their information returns on magnetic tape and the remainder on paper forms, should file magnetic tape records and paper documents at the same location and in the same shipment.

.03 A single Form 1096 or W-3 will be required from each payer, to cover the entire shipment of returns, including those on paper and magnetic tape. For agents filing returns for several payers, the appropriate transmittal documents, Form 1096 or W-3 must be filed for each payer whose payments are included in the transmittal.

.04 The dates prescribed for filing paper documents with the Service will also apply to magnetic tape filing. Requests for extensions of time of filing and related matters, should be made to the Service Center which has issued the authorizing letter, marked attention, Chief, Planning Staff. If an extension is granted by the Service, a copy of the letter granting the extension should be attached to the W-3 or 1096.

.05 The magnetic tape specifications contained in attachment 1 to this Revenue Procedure, must be adhered to unless deviations have been specifically granted by the Service.

.06 Service programs are flexible and may therefore be able to accommodate some minor deviations. Hence, payers who can substantially conform to these specifications but require such minor deviations are encouraged to contact the Chief of the Planning Staff at one of the Internal Revenue Service Centers (see sec. 8 below for addresses). However, under no circumstances may tapes deviating from the specifications in attachment 1 be submitted without prior approval of the Service.

SEC. 4. PROCESSING OF TAPE RETURNS.

.01 The Service will copy the information from the tapes. Normally, the original tapes received by the Service will be returned to the payers or agents by August 31 of the year in which submitted.

.02 However, if the tapes submitted to the Service are unprocessable, and must be returned for correction prior to processing they will be returned within 6 months of receipt of acceptable tapes.

SEC. 5. CORRECTED RETURNS.

.01 The appropriate paper form will normally be used if it is necessary to correct payee records in the magnetic tape files. Each Form 1099 or 1087 correcting a tape record must be annotated in the manner specified for corrected returns in Revenue Procedures 67-21, 67-22 or 67-23 as appropriate. Corrected documents should contain all relevant information so that they completely supersede the returns recorded on tape.

.02 Returns correcting paper documents may be submitted in the same shipment with tape returns (per sec. 2.01), but should be bundled separately from other paper documents. When correcting documents are shipped separately, corrected Forms 1096 or W-3 must also be filed.

.03 If a large volume of corrected returns are necessary and the payer or agent possess the capability to provide such corrections on tape, he should contact the Chief of the Planning Staff at the Internal Revenue Service Center to which the tape returns were or are to be submitted.

SEC. 6. EFFECT ON PAPER DOCUMENTS.

.01 Reports on magnetic tape can be substituted for only the original copy (copy A) of Forms W-2, 1099 and 1087. When magnetic tape returns are filed in lieu of Forms 1099 or 1087, payers will not be required to furnish payees or other persons with copies which conform to the format and paper specifications of Revenue Procedures 67-21 or 67-22 as appropriate. However, payers must supply their payees with the information required to be shown on the paper forms, in a manner conducive to proper reporting on their tax returns. In addition, payers filing magnetic tape returns in lieu of Form W-2, must continue to furnish their payees with the prescribed forms or with paper substitutes which meet the requirements and specifications in Revenue Procedure 67-23.

.02 If only a portion of the information returns is reported on magnetic tape and the remainder is reported on paper forms, those returns not submitted on magnetic tape must be filed on the appropriate prescribed forms, or on paper substitutes meeting the format requirements and paper specifications in Revenue Procedures 67-21, 67-22 or 67-23.

SEC. 7. DATA ENTRIES.

.01 The Service expects that payers will make every effort to keep to a minimum information returns submitted without taxpayer identifying numbers, through continued compliance with the requirements set forth in section 1.6109 of the Income Tax Regulations, and section 31.6109 of the Employment Tax Regulations. However, when a taxpayer identification number of a payee has not been furnished to the payer, the specifications in attachment I permit its omission.

.02 The Service must be able to identify the surname associated with the taxpayer identifying number furnished on an information return. When returns are received in the form of paper documents this is accomplished through a manual editing process. However, manual editing is precluded when returns are received on magnetic tape. Hence, the attached specifications include a data field in the payee records called "Name Control," in which the first four alphabetic characters of the payee surname are to be entered by payers.

.03 If payers are unable to provide the first four characters of the payee surname, the specifications permit the submission of information returns on magnetic tape with the Name Control field left blank. However, compliance with at least one and preferable both of the following will facilitate the Service computer programs required to generate the Name Control.

(a) Record the surname on the first name line,

(b) In cases of multiple payees, provide the required linkage by recording an asterisk immediately preceding the surname of the person whose identifying number has been provided.

.04 Sometimes the payee identification recorded on the payer's records is lengthy, and exceeds the 80 characters allotted on the magnetic tape records. This is most common in the case of trusts or other types of fiduciary accounts; the first 80 characters of the payee identification normally provide sufficient descriptive data for Service purposes. Although it is preferred that payers would truncate or abbreviate lengthy payee descriptions, provision is made in the specifications for additional payee descriptions.

.05 Provision is also made in these specifications for data entries not required for Federal tax purposes but which may be required by State governments, in order to minimize the programming burden should payers desire to report on tape to States as well as to the Federal Government.

SEC. 8. ADDITIONAL INFORMATION.

Requests for additional copies of this Revenue Procedure and the attached specifications, or requests for additional information on tape reporting should be addressed to the Chief, Planning Staff, Internal Revenue Service Center at one of the following addresses:

          (a) Midwest Region

This Revenue Procedure supersedes Revenue Procedure 66-32, C.B. 1966-2, 1213.

ATTACHMENT I -- 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 the Service 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.

.03 An acceptable tape file will contain, for each payer, (1) a Payer/Transmitter Record, ("A" Record), (2) a series of Payee Records, ("B" Records), and (3) an End of Payer Record, ("C" Record). In addition, multiple reel files will have End of Reel Records, ("D" Record). All files will contain an End of Transmission Record, ("F" Record). All records including headers and trailers if used, must be written at the same density.

SEC. 2. CONVENTIONS AND DEFINITIONS.

.01 Certain conventions may be required by the programming system or equipment used by the payer, with respect to header and trailer labels, record marks, and tape marks. Their use is optional, but if present they must adhere to the following:

 Header label............ 1. Can only be the first record on a reel.

           Element                            Description

SEC. 3. RECORD LENGTH.

.01 The tape records prescribed in the specifications may be blocked or unblocked, subject to the following:

1. A block may not exceed 4,000 tape positions.

2. If the use of blocked records would result in a short block at the end of the file representing all payments made by the payer, all remaining positions of the block must be filed with 9's. However, filling with 9's is allowable only in the last block of returns for a payer.

3. Two forms of blocking are acceptable:

(a) Only payee records are blocked; all other records are unblocked.

(b) All records, except header and trailer labels, if used, are blocked. If so, and if payments from more than one payer are reported on the same tape, a Payer/Transmitter Record cannot be in the middle of a block, but must be the first record in a block.

.02 Provision is made for special data entries in the payee record (B record). These entries are optional; a payer or agent may choose not to utilize this field. If the field is utilized it must be present on all payee records of a payer. The field is intended to serve one or both of these purposes:

1. Carry information required by state or local governments in connection with income reporting on magnetic tape to those jurisdictions when authorized.

2. Carry additional payee description if the eighty characters provided in the payee record (B record) are insufficient. However, it would be preferable to the Service if such lengthy payer records were truncated or otherwise shortened. (Contact the Service Center for detailed instructions if additional payee description will be required.)

SEC. 4. PAYER/TRANSMITTER RECORD.

Identifies the payer and transmitter of the tape files and provides parameters for the succeeding Payee Records. IRS relies in its computer programs on the absolute relationship between the parameters in the Payer/Transmitter Record and the data fields to which they apply. The number of Payer/Transmitter Records appearing on one tape reel will depend on the number of payers being reported. A transmitter may include Payee Records ("B" Records) for more than one payer on a tape reel; however, each separate Payer's Payee Records must be preceded by a Payer/Transmitter Record ("A" Record). Separate tape files on separate reels must be submitted if payer is reporting payment data for more than one type of information return. When multiple reels are required for a single file, the correct Payer/Transmitter Record ("A" Record) must be repeated as the first record (second record if header labels are used) on every succeeding reel in the file to which it applies, and the reel number must be incremented by 1 on each tape after the first one.

   Tape            Element name                  Entry

Contains payment record from individual information returns. Records may be blocked or unblocked. A block may not exceed 4,000 tape positions. All records must be fixed length.

   Tape            Element name                  Entry

Write this record after the last Payee Record for a Payer has been written. A tape reel may contain more than one End of Payer Record if the last Payee Record for more than one Payer is written on the reel. Each end of Payer Record must contain a count of payees and totals of each payment amount reported for all Payee Records written of the same reel, which have not been summarized in preceding End of Payer Records on the reel. The End of Payer Record must be followed by a new Payer/Transmitter Record, and a new End of Reel Record, or End of Transmission Record. The new Payer/Transmitter Record, however, cannot be written in the same block as the End of Payer Record. A new block, with the new Payer/Transmitter Record as the first record, must be started. The End of Payer Record cannot be followed by a Tape Mark.

   Tape            Element name                  Entry

Write this record when the end of the normal writing area of each reel has been reached, but all records in the file have not been written. This record indicates that there are additional reels in the file. Each End of Reel Record must contain a count of payees and totals of each payment amount reported for all Payee Records not summarized in End of Payer Records which may precede it on the reel. The counts and totals in the End of Reel Record should summarize only the Payee Records which precede it on the reel. This record cannot be followed by a Payer/Transmitter, End of Payer, or End of Transmission Record. A Tape Mark or Tape Mark and Trailer Label (see sec. 2.01) may follow.

   Tape         Element name                     Entry

Write this record after the last End of Payer Record in the file. This record can be followed only by a Tape Mark or Tape Mark and Trailer Label (see sec. 2.01).

   Tape            Element name                  Entry

The following chart shows, by type of file, the record types to be used in the first two and the last three records written on a tape reel.

                                1st    2nd   2nd from  Next to  Last