REVENUE PROCEDURES ON MAGNETIC DISKETTE REPORTING FOR FORMS 1098, 1099, 5498, AND W2G SERIES IS EXPLAINED BY IRS

                              CONTENTS

PART A. -- GENERAL

SECTION 1. PURPOSE

01 The purpose of this revenue procedure is to provide the requirements and conditions for filing information return Forms 1098, 1099, 5498, and W-2G on diskette. THIS REVENUE PROCEDURE IS TO BE USED FOR THE PREPARATION OF TAX YEAR 1985 INFORMATION RETURNS ONLY. THIS PROCEDURE IS UPDATED YEARLY TO REFLECT NECESSARY CHANGES. PLEASE READ THIS PUBLICATION CAREFULLY. Specifications for filing the following forms are contained in this procedure:

(a) Form 1098, Mortgage Interest Statement.

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

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

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

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

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

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

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

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

(j) Form 1099-R, Statement for Recipients of Total Distributions from Profit-Sharing, Retirement Plans, Individual Retirement Arrangements, etc.

(k) Form 5498, Individual Retirement Arrangement Information.

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

02 This procedure also provides the requirements and specifications for diskette filing under the Combined Federal/State Filing Program. Refer to Part A, Sec. 14.

03 The following revenue procedures and publications provide more detailed filing procedures for certain information returns, payer identification, transfer agents and paper substitute specifications, respectively.

(a) 1985 "Instructions for Form 1099 Series, 1098, 5498, and 1096, "provide further information on filing returns with the Internal Revenue Service (IRS). These instructions are available at local IRS offices.

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

(c) Rev. Proc. 84-33, 1984-1 C.B. 502, regarding the optional method for agents to report and deposit backup withholding.

(d) Publication 1179, Requirements for Reproducing Paper Substitutes of Forms 1096, 1099 series, 5498, W-2G and W-3G. A supplement will be issued to include instructions for substitutes of Form 1098, Mortgage Interest Statement.

04 This procedure supersedes the following revenue procedure: Rev. Proc. 84-68, 1984-42, also published in Publication 1255 Rev. (10-84). Requirements and Conditions for Filing Information Returns in the Forms 1099, 5498, and W-2G Series on Magnetic Diskette.

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

SEC. 2. BACKGROUND--PRIOR YEAR CHANGES (TAX YEAR 1984)

01 This section contains a REVIEW of the changes described in the revenue procedure last year. PLEASE insure that the necessary reprogramming was accomplished in order to comply with last year's changes as these changes will still be necessary in the program for the current year.

02 The following were general changes:

(a) Procedures for applying for waivers for undue hardship were added.

(b) An explanation of penalties was added.

(c) Reports from different branches for one payer were consolidated under one Payer/Transmitter "A" Record for each type of information return. For example, all like Form 1099-INT documents must be sorted together under one Payer/Transmitter "A" Record, followed by Payee "B" Records and one End of Payer "C" Record.

(d) The explanation of Taxpayer Identification Numbers (TINs) was rewritten to clarify changes concerning backup withholding and due diligence requirements.

(e) Changes were made to the requirements concerning the paper copy of the information return furnished to the payee.

(f) A definition for "Transfer Agent" was added.

(g) A list of valid U.S. Postal Service State Abbreviations was added to aid in developing the State Code portion of Name Line fields.

03 The following changes have been made to the Payer/Transmitter "A" Record:

(a) Amount Indicator "2" has been added for Form 5498.

(b) "Type of Return" and "Amount Indicators" have been added for Form W-2G.

(c) The codes for "Type of Payer" and "Payee 'B' Record Surname Indicator" fields should have been deleted from your programs. However, the positions in the record SHOULD NOT have been deleted. Fill these positions with blanks.

(d) The "Second Payer Name" field has been shortened from 40 characters to 39 characters. The contents of the "Second Payer Name" field, as well as the contents of the "Payer Shipping Address" and the "Payer City, State and ZIP Code" fields, are dependent upon the value in the "Transfer Agent Indicator".

(e) A "Transfer Agent Indicator" was added following the "Second Payer Name" field. The contents of this field will let IRS programs know if the information in "Second Payer Name", "Payer Shipping Address" and "Payer City, State and ZIP Code" pertains to the Payer or to the Transfer Agent.

(f) The name of "Payer Mailing Address" was changed to "Payer Shipping Address". Beginning with Tax Year 1984 returns, IRS notified payers of any information returns not containing valid TINs. This notification includes a payee notice for each such information return. Therefore, we must have an address capable of accepting volume mail.

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

(a) The meaning of the "Document Specific Code" for Form 1099-G has been expanded.

(b) The use of the "Document Specific Code" has been increased to include Type of Wager for Form W-2G.

(c) PLEASE NOTE: If any one Payment Amount Field exceeds "9999999999" (dollars and cents), as many SEPARATE Payee "B" Records as necessary to contain the total MUST be submitted for the Payee. Example: the total money amount to be reported for Payee ABC is $250,371,491.87. Three Payee "B" Records will have to be submitted for Payee ABC to contain the entire total amount. (DO NOT enter dollar signs, commas, or decimal points, in the Payee Amount fields.)

(d) New field definitions specific to Form W-2G were added.

SEC. 3. NATURE OF CHANGES--CURRENT YEAR (TAX YEAR 1985)

01 DUE TO NUMEROUS LEGISLATIVE AND FORMS CHANGES BETWEEN TAX YEARS 1984 AND 1985, CHANGES HAVE NOT BEEN LISTED INDIVIDUALLY UNDER THIS SECTION. THIS ENTIRE PUBLICATION HAS BEEN REVISED. REVIEW THIS REVENUE PROCEDURE IN ITS ENTIRETY.

SEC. 4. WAGE AND PENSION INFORMATION FILED WITH SSA

01 Section 8(b), Public Law 94-202, 1976-1 C.B. 503, enacted in January 1976, authorized the combined reporting of FICA detailed information in one consolidated annual W-2 (Copy A) to the Federal government. AS A RESULT, FORMS W-2 AND W-2P ARE TO BE FILED WITH THE SOCIAL SECURITY ADMINISTRATION (SSA), NOT WITH THE INTERNAL REVENUE SERVICE.

02 SSA will accept magnetic media filing of Forms W-2 and W-2P and has issued the following concerning this: TIB-4a, "MAGNETIC TAPE REPORTING, Submitting FICA Wage and Tax Data to the Social Security Administration"; TIB-4b, "MAGNETIC TAPE REPORTING, Submitting Annuity, Pension, Retired Pay or IRA Payment to the Social Security Administration"; and TIB-4c, "DISKETTE REPORTING, Submitting FICA wage and tax data to the Social Security Administration". Applications for Filing Forms W-2 and W-2P on magnetic media appear in TIBs-4a, 4b, and 4c.

03 Copies of Social Security Administration publications TIB-4a, 4b, and 4c are available from any local Social Security Administration office or the SSA Regional Magnetic Media Coordinators.

SEC. 5. APPLICATION FOR MAGNETIC MEDIA REPORTING AND REQUESTS FOR UNDUE HARDSHIP WAIVERS

01 For purposes of this revenue procedure, the PAYER is the organization making the payments and the TRANSMITTER is the organization preparing the diskette file. The payer and transmitter may be the same organization. Payers or their transmitters are required to complete Form 4419, Application for Magnetic Media Reporting of Information Returns. A copy of this form, for your use, can be found at the end of this publication. Requests for additional information or forms relating to magnetic media processing should be addressed to the Magnetic Media Coordinator at the appropriate service center or the National Computer Center.

On January 1, 1985, the National Computer Center assumed responsibility for the magnetic media processing previously handled by the Philadelphia, Kansas City, and Austin Service Centers. Beginning January 1, 1986, magnetic media process for ALL service centers will be centralized at the National Computer Center. Addresses are listed in Part A, Sec. 13 of this revenue procedure.

02 Applications should be filed with the National Computer Center or the appropriate service center 90 days before the due date of the return. IRS will act on an application and notify the applicant, in writing, of authorization to file. A five character TRANSMITTER CONTROL CODE will be assigned and included in an acknowledgement letter within 30 days of receipt of the application. Diskette returns may not be field with IRS until the application has been approved. Do not enter blanks in the "A" Record Transmitter Control Code field; enter the five character Transmitter Control Code which is assigned to you by IRS after you have filed an application and it has been approved.

03 After you have received approval to file on magnetic media, you do not need to reapply each year UNLESS:

(a) there are hardware or software changes that would affect the characteristics of the magnetic media submission (e.g., changing from diskette to tape filing or vice versa) or,

(b) you discontinue filing on magnetic media for a year (your five character Transmitter Control Code may be reassigned).

If either of these conditions applies to you, you should contact your coordinator for clarification. In ALL correspondence, refer to your current five character Transmitter Control Code to assist the coordinator in locating your files.

04 IRS will assist new filers with their initial diskette submission by reviewing "TEST" files submitted in advance of the filing season. Approved payers or transmitters should submit "TEST" files with the Magnetic Media Coordinator at the appropriate service center or the National Computer Center. You MUST submit a "TEST" file in order to participate in the Combined Federal/State Program; however, you are encouraged to submit "TEST" files if you are a new filer on magnetic media. As a guideline, IRS prefers that all "TEST" files be submitted between September and December. Refer to Part A, Sec. 13 for addresses. Do not submit "TEST" diskettes after January 1. If you are unable to submit your "TEST" file by the end of December, you may ONLY send a sample hardcopy printout or diskette dump to the National Computer Center which shows a sample of each record (A, B, C, K and F) USED.

Clearly mark the hardcopy printout or diskette dump as "TEST DATA", and include identifying information such as name, address and telephone number of someone familiar with the "TEST" print or diskette dump who may be contacted to discuss its acceptability. After January 1, 1986, submit the "TEST" print or diskette dump showing a sample of each record to the National Computer Center only.

05 If your magnetic media files have been prepared for you in the past by a service agency, and you now have computer equipment compatible with that of IRS and wish to prepare your own files, you must request your own five character Transmitter Control Code by filing an application, Form 4419, as described above.

06 If you as an individual or organization are an approved filer on magnetic media and you change your name or the name of your organization, please notify the National Computer Center or service center Magnetic Media Coordinator so that your file may be updated to reflect the proper name.

07 In accordance with section 1.6041-7(b) of the Income Tax Regulations, payments to providers of medical and health care services from separate departments of a health care carrier may be reported as separate returns on magnetic media. In this case, the headquarters office will be considered to be the transmitter and the individual departments of the company filing reports will be considered to be payers. A SINGLE application form covering ALL the departments which will be filing on diskette should be submitted. One five character Transmitter Control Code may be used for all departments.

08 Section 1.6045-1(l) of the Income Tax Regulations requires brokers and barter exchanges to use magnetic media in reporting all Form 1099-B data to the IRS. Generally, NEW brokers and NEW barter exchanges may request an undue hardship exception by filing an application, by the end of the second month following the month in which they became a broker or barter exchange, with the National Computer Center or service center Magnetic Media Coordinator.

09 ALL requests for undue hardship exemptions should be submitted at least 90 days before the due date of the return, except as stated in Sec. 5.08 above.

10 The requirements to receive a waiver from filing REQUIRED information returns on magnetic media for tax year 1985 are more stringent than they were for tax year 1984. Filers must submit a WRITTEN statement requesting an undue hardship waiver from magnetic media filing for a specific period of time, not to exceed one tax year. If the filer requires a waiver for a longer period of time, the filer must reapply at the appropriate time each year (90 days before the due date of the return). Filers may not apply for a waiver for more than one tax year at a time. The written statement MUST contain the following identifying information:

(a) The filer's name and address.

(b) The filer's Taxpayer Identification Number (SSN or EIN).

(c) The period for which the waiver is requested: Tax Year 1985.

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

(e) The type of returns and expected volume of each form.

(f) The reason for the request.

(g) An estimated cost for filing the returns on paper, on magnetic media if YOU prepare the files, and on magnetic media using the services of an agency who will charge you for this service. IF YOU EXPECT TO FILE OVER 500 RETURNS, YOU MUST SUBMIT A COPY OF A WRITTEN COST ESTIMATE FOR MAGNETIC MEDIA FILING FROM A SERVICE AGENCY; FOR 500 OR LESS, SUBMIT AN ESTIMATE AS DESCRIBED ABOVE.

11 If you request a waiver from filing on magnetic media and it IS approved, DO NOT SEND A COPY OF THE APPROVED WAIVER TO THE SERVICE CENTERS. Do NOT staple, paperclip or use rubber bands on any scannable forms. Paper returns are read by an optical scanner (OCR) at the service centers.

12 Waivers are granted on a case-by-case basis and may be approved at the discretion of the service center or National Computer Center Magnetic Media Coordinators. Refer to Part A, Sec. 13 for addresses. Waiver requests should be filed 90 days before the due date of the return, except as stated in Sec. 5.08 above.

13 If you are required to file on magnetic media but fail to do so, and you do not have an approved waiver on record, you may be subject to a failure to file penalty. Refer to Sec. 6.02 below.

14 AN APPROVED WAIVER FROM FILING INFORMATION RETURNS ON MAGNETIC MEDIA DOES NOT PROVIDE EXEMPTION FOR ALL FILING; YOU MUST SUBMIT YOUR INFORMATION RETURNS ON ACCEPTABLE PAPER FORMS.

15 A diskette reporting package, which includes all the necessary transmittals, labels, and instructions, will be mailed to all approved filers between October and December of each year.

SEC. 6. FILING OF MAGNETIC MEDIA REPORTS

01 Section 6011(e) of the Internal Revenue Code, as amended by the Interest and Dividend Tax Compliance Act of 1983, Pub. L. 98-67, 1983-2 C.B. 352, requires that any person, including individuals, estates and trusts, required to file more than 50 information returns in the aggregate for payments of interest (Forms 1099-INT and 1099-OID), dividends (Form 1099-DIV) or patronage dividends (Form 1099-PATR) for any calendar year, must file such returns on magnetic media. For example, if a payer must file 30 Forms 1099-DIV and 25 Forms 1099-INT, filing on magnetic media is required. This requirement shall not apply if you establish that it will cause you undue hardship.

02 The penalty for both the failure to timely file certain information returns and failure to file returns as prescribed by is now $50 per payee up to a maximum of $50,000 a year. However, there is no maximum penalty for returns of 1099-INT, 1099-OID, 1099-DIV, 1099-PATR or 5498. If the failure to file is due to intentional disregard of the filing requirements, the penalty may be greater than $50 per payee and there is no maximum penalty.

03 Generally, payers are now subject to a $50 penalty for EACH failure to include the payee's correct TIN on an information return.

04 Rev. Proc. 84-24, 1984-1 C.B. 465, gives detailed information on preparing transmittal documents for information returns and is available at your local IRS office. Specific guidelines are given on how to report the payer's name, address and TIN on transmittal documents and information returns. Instructions for multiple transmittals and the submission of transmittals by service bureaus or agents are also covered.

05 THE DISKETTE RECORDS ARE TO BE SUBMITTED TO THE NATIONAL COMPUTER CENTER; HOWEVER, PAPER INFORMATION RETURNS ARE TO CONTINUE TO BE FILED WITH THE APPROPRIATE SERVICE CENTERS. SEE PART A, SEC. 13 FOR ADDRESSES. Form 4804, Transmittal of Information Returns Reported on Magnetic Media, must accompany diskette submissions. If you file for multiple payers and have the authority to sign the affidavit on Form 4804, you should also submit Form 4802, Multiple Payer Transmittal for Magnetic Media Reporting.

FOR THE IRS TO ENSURE THAT YOUR ACTUAL DATA RECORDS WERE FORMATTED FOLLOWING THIS REVENUE PROCEDURE, INCLUDE A HARDCOPY PRINTOUT, FAST PRINT OR DISKETTE DUMP SHOWING A SAMPLE OF EACH TYPE OF RECORD (A, B, C, K AND F) USED ON THE DISKETTE. This will be reviewed prior to actual processing to ensure that the data is in the proper format. Be sure to include Form 4804, 4802, or computer generated listing WITH your diskette shipment. IRS encourages the use of computer generated Form 4804 which includes ALL necessary information requested on the actual form. DO NOT MAIL THE DISKETTES AND THE TRANSMITTAL DOCUMENTS SEPARATELY.

Paper information returns must be transmitted to the appropriate service center using Form 1096, Annual Summary and Transmittal of U.S. Information Returns. DO NOT SEND INFORMATION RETURNS FILED ON PAPER FORMS TO THE NATIONAL COMPUTER CENTER.

06 The affidavit which appears on Form 1096 and Form 4804 should be signed by the payer; however, the transmitter, service bureau, paying agent, or disbursing agent may sign the affidavit on behalf of the payer if all of the following conditions are met:

(a) It has the authority to sign the affidavit under an agency agreement (either oral, written, or implied) that is valid under the state law.

(b) It has the responsibility (either oral, written, or implied) conferred on it by the payer to request the TINs of borrowers, recipients, or participants reported on magnetic media or paper returns.

(c) It signs the affidavit and adds the caption "For: (name of payer)."

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

08 If a portion of the returns are submitted on paper documents with the service center, include a statement on the Form 1096 that the remaining returns are being filed on magnetic media with the National Computer Center. DO NOT REPORT THE SAME INFORMATION ON PAPER FORMS THAT YOU REPORT ON MAGNETIC MEDIA. IF YOU REPORT PART OF YOUR RETURNS ON PAPER AND PART ON MAGNETIC MEDIA, BE SURE THAT DUPLICATE RETURNS, WITH THE SAME INFORMATION, ARE NOT INCLUDED ON BOTH. This does not mean that corrected documents are not to be filed. If a return has been prepared and submitted improperly, you must file a corrected return as soon as possible. Refer to Part A, Sec. 10 for requirements and instructions on filing corrected returns.

09 Reports from different branches for one payer MUST be consolidated under one Payer/Transmitter "A" Record for each type of information return. For example, all Forms 1099-INT must be sorted together under one Payer/Transmitter "A" Record followed by the appropriate "B" Records and one "C" Record.

10 Health care carriers, or their agents, filing Form 1099-MISC per Part A, Sec. 5.07, may submit part of their returns on paper documents and part on magnetic media if the records of some departments are not maintained on computer files. However, an information return is required if the aggregate amount paid to a health care service provider from all departments equals $600 or more. For example, Department A pays $200, Department B pays $300, and Department C pays $100 to the same health care service provider. The aggregate amount paid from all departments equals $600. The health care carrier or agent must submit either one information return for the aggregate amount of $600 or three separate returns, from the departments, indicating the amount paid by each department.

11 Before submitting magnetic media files, include the following:

(a) A signed Form 4804 or computer generated substitute. If you send TWO copies of the Form 4804, one will be used as an acknowledgement.

(b) A Form 4802 (if you transmit for multiple payers).

(c) A hard copy printout or listing of the first five and last two blocks of your file. The listing should show a sample of each type of record (A, B, C, K and F) used on the magnetic media being submitted.

(d) The magnetic media with an external identifying label as described in part B, Sec. 1.

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

(f) If you were granted an extension and are filing late, include a copy of the approved extension letter with the magnetic media.

12 IRS will not pay or accept "Collect on Delivery" or "Charged to IRS" shipments of reportable tax information that an individual or organization is legally required to submit. The current policy is to return magnetic materials or requested information from the IRS, at U.S. Government expense.

13 Files returned to you due to coding or format errors are to be corrected and returned to IRS within 30 days of receipt by the filer.

SEC. 7. FILING DATES

01 The dates prescribed for filing paper returns with IRS also apply to magnetic media filing. Magnetic media reporting to the IRS for all types of Form 1098, 1099 Series, 5498, and W-2G must be on a calendar year basis.

02 Information returns filed on magnetic media for Forms 1098, types of Forms 1099, and W-2G must be submitted to IRS by February 28. The due date for furnishing the required copy or statement to the recipient is January 31.

03 Information returns filed on magnetic media for Form 5498 must be submitted to IRS by May 31. Copies of this form or statements are due to the participant by May 31 for contributions made to IRAs and SEPs; however, participant copies or statements for DECs are due the time the contribution is made or January 31, whichever is the later. Form 5498 is filed for contributions to be applied to 1985 that are made between January 1, 1985, and April 15, 1986.

SEC. 8. EXTENSIONS OF TIME TO FILE

01 If a payer or transmitter of returns on magnetic media is unable to submit their magnetic media file by the dates prescribed in Sec. 7.02 and 7.03 above, submit a letter requesting an extension of up to 30 days to file, as soon as you are aware that an extension will be necessary. The request MUST be filed BEFORE the due date of the return. The letter should be sent to the attention of the Magnetic Media Reporting Program at the National Computer Center where the diskette file is to be submitted. See part A, Sec. 13 for the address. The request should include:

(a) The filer's name and address.

(b) The filer's Taxpayer Identification Number (SSN or TIN).

(c) The tax year for which the extension of time is requested: tax year 1985.

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

(e) The type of returns and expected volume.

(f) The Transmitter Control Code assigned to the organization or individual requesting the extension (if a number has been assigned).

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

02 If an extension of time to file on magnetic media is granted by the National Computer Center, a COPY of the letter GRANTING THE EXTENSION MUST be attached to the transmittal Form 4804 or computer generated substitute when the file is submitted.

SEC. 9 PROCESSING OF MAGNETIC MEDIA RETURNS

01 The National Computer Center will process tax information from magnetic media files. All magnetic media files that are received timely by the National Computer Center will be returned to the filers by August 15 of the year in which submitted.

02 After January 1, 1986, all magnetic media processing will be centralized at the National Computer Center. Due to the volume of input received and the cost to return special containers, special shipping containers should not be used for transmitting data to the National Computer Center since IRS cannot guarantee return of such containers.

03 Files will be returned to you for correction if they are unprocessable due to format or coding errors, or by the request of the filer. Files must be corrected and returned to the National Computer Center within 30 days of receipt by the filer. The corrected files will be returned to the filer by the National Computer Center within 6 months of receipt. PLEASE BE SURE THAT YOUR FORMAT AND CODING COMPLY WITH THIS REVENUE PROCEDURE. THIS REVENUE PROCEDURE IS TO BE USED FOR THE PREPARATION OF TAX YEAR 1985 INFORMATION RETURNS ONLY. AS SOME LEGISLATIVE AND FORMS CHANGES AFFECTING INFORMATION RETURNS OCCUR EACH YEAR, THIS PROCEDURE IS UPDATED TO REFLECT NECESSARY CHANGES. PLEASE READ THIS PUBLICATION CAREFULLY.

SEC. 10. HOW TO FILE CORRECTED RETURNS

01 If a return has been prepared and submitted improperly, you must file a complete corrected return as soon as possible. ALL FIELDS OR BOXES MUST BE COMPLETED WITH THE CORRECT INFORMATION, NOT JUST THE DATA FIELDS NEEDING CORRECTION. If you file corrected returns on paper forms, submit Copy A to the appropriate service center. There are numerous types of errors. It may require more than one transaction to properly correct the initial error. You are strongly encouraged to read this ENTIRE section before attempting to make ANY correction. If the initial return was filed as an aggregate, you must consider this in filing the corrected returns.

02 Corrected returns submitted to IRS on magnetic media, using a "G" coded Payee "B" Record, may be submitted on the same diskette as those corrections submitted WITHOUT the "G" code; however, they must be submitted using a separate "A" Record. Corrected returns for different tax years may not be submitted on the same file. Corrected returns are to be identified as corrections on the transmittal document and the EXTERNAL label of the file.

03 The instructions that follow will provide information on how to file corrected returns on magnetic media AND on paper forms. Please refer to the appropriate chart AND type of error for instructions on how to PROPERLY file the corrected return(s).

04 You may file corrected returns on paper forms; however, you are encouraged to file on magnetic media if you file MORE than 50 corrected returns.

05 If you file your corrected returns on paper forms, do not submit the paper returns to the National Computer Center. ALL PAPER RETURNS, WHETHER ORIGINAL OR CORRECTED, MUST BE FILED WITH THE APPROPRIATE SERVICE CENTER. CORRECTED RETURNS FILED ON MAGNETIC MEDIA MUST BE FILED WITH THE NATIONAL COMPUTER CENTER. Refer to Part A, Sec. 13 for address information.

06 Statements to the recipient or participant should be identified as "CORRECTED" and should be provided to them as soon as possible.

07 If you file corrected returns on paper forms, use IRS forms or acceptable OCR scannable paper substitutes. Always submit Copy A to the appropriate service center. NOTE: Form W-2G is not required to be in OCR scannable format. Publication 1179, "Requirements for Reproducing Paper Substitutes of Forms 1096, 1099 Series, 5498, W-2G and W-3G" provides requirements and instructions. A supplement will be issued to include instructions for paper substitutes of Form 1098, Mortgage Interest Statement.

08 For further instructions on filing information returns with IRS, refer to the 1985 "Instructions for Form 1099 Series, 1098, 5498 and 1096." If these instructions are not included in your magnetic media reporting packages, request a copy from your local IRS office.

09 Type or machine print all information on returns filed on paper.

10 Use the proper form. If you are in doubt, review the instructions noted in 08 above or contact your local IRS office.

11 Use only the boxes provided on the paper forms. Do not add additional boxes.

12 Do not change the title of any box on the paper forms.

13 Use the same name and TIN (SSN or EIN) for the filer on the Form 1096 transmittal form and all related forms that follow.

14 A separate transmittal Form 1096 is required for each TYPE of paper information return filed in the 1098, 5498 and 1099 Series. A transmittal Form W-3G is required to transmit paper Forms 1099-R and W-2G. DO NOT USE THE SAME TRANSMITTAL DOCUMENT TO FILE ORIGINAL AND CORRECTED RETURNS WHETHER ON PAPER FORMS OR MAGNETIC MEDIA. A transmittal Form 4804 or computer generated substitute is used to transmit magnetic media. A Form 4802 is a CONTINUATION form for a Form 4804. Please utilize a Form 4802 if you file on magnetic media for multiple payers and are an authorized agent for the payers.

15 Do not staple, fold, paperclip or use rubberbands on any paper information returns filed with IRS. This could impair the OCR scanning process.

16 Use the correct tax year's forms to file information returns with IRS (i.e., do not submit tax year 1985 returns using 1984 forms). The same is true for magnetic media filing. You must submit your returns filed on magnetic media using the revenue procedure for the tax year of the returns. Forms and revenue procedures are normally updated each year to include necessary changes.

17 Most information returns contain a "VOID" box and a "CORRECTED" box. The "VOID" box is used only if you make an error while typing or printing the paper forms. Mark this box ONLY when you wish the return to be disregarded or passed over. The OCR scanner at the service centers WILL NOT READ a "VOID" return; it will pass over it and go to the next form if the "VOID" box is marked. Do not confuse the "VOID" box and the "CORRECTED" box.

18 On magnetic media files, the Payee "B" Record provides space to enter a Payer's Account Number for the Payee. This same account number may be provided on paper forms. In order to properly file corrected returns, this number will help identify the appropriate incorrect return. DO NOT ENTER A TIN (SSN OR EIN). A PAYER'S ACCOUNT NUMBER FOR THE PAYEE MAY BE A CHECKING ACCOUNT NUMBER, SAVINGS ACCOUNT NUMBER, SERIAL NUMBER OR ANY OTHER NUMBER ASSIGNED TO THE PAYEE BY THE PAYER, WHICH WILL DISTINGUISH THE SPECIFIC ACCOUNT. THIS NUMBER MUST APPEAR ON THE INITIAL RETURN AND ON THE CORRECTED RETURN IN ORDER TO IDENTIFY AND PROCESS THE CORRECTION PROPERLY.

19 REVIEW BOTH CHARTS 1 AND 2 THAT FOLLOW. The types of errors made will NORMALLY fall under one of the four categories listed. Next to each TYPE of error made, you will find a list of instructions to tell you how to PROPERLY file the corrected return for THAT type of error. READ ALL OF THE INSTRUCTIONS LISTED AND FOLLOW THEM FOR THE TYPE OF ERROR MADE ON THE INITIAL RETURN. IN SOME CASES TWO TRANSACTIONS ARE REQUIRED TO PROPERLY FILE CORRECTIONS. IF THE ORIGINAL RETURN WAS FILED AS AN AGGREGATE, YOU MUST CONSIDER THIS IN FILING THE CORRECTED RETURNS.

  CHART 1. GUIDELINES FOR FILING CORRECTED RETURNS ON MAGNETIC MEDIA

01 Under section 6109 of the Internal Revenue Code, recipients of all reportable payments on information returns are required to furnish Taxpayer Identification Numbers (TINs) to the payer. The number must be furnished to the payer whether or not the payee is required to file a tax return or is covered by social security. Refer to Sec. 15 for a definition of Taxpayer Identification Number (TIN).

02 The recipient's TIN is used to associate and verify amounts reported to IRS with corresponding amounts on tax returns. Therefore, it is particularly important that correct social security and employer identification numbers for payees be provided on magnetic media or paper forms submitted to IRS. DO NOT ENTER HYPHENS, ALPHA CHARACTERS, ALL 9s OR ALL ZEROES.

03 Under section 6676 of the Internal Revenue Code, a $50 penalty applies for each failure to furnish a TIN to another person who is required to file an information return, and for each failure to include a TIN on an information return. The penalty for payments other than interest or dividends applies unless the failures were due to reasonable cause and not willful neglect.

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

05 For any reportable payment, if the payee fails to provide a TIN to the payer or if IRS notifies you that the TIN provided is incorrect, then backup withholding must be instituted for that payee. In the case of notice of an incorrect TIN from IRS, the payer must begin withholding on the 31st day after the notice is received. If the payer receives another TIN in the manner required from the payee within 30 days of notice from IRS, no withholding is required.

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

07 Sole proprietors who are payers should show their employer identification number in the Payer/Transmitter "A" Record. However, sole proprietors that are not otherwise required to have an employer identification number should use their social security number.

08 Sole proprietors' social security numbers must be used in the Payee "B" Record.

09 The charts below will help you determine the number to be furnished to IRS for recipients of reportable payments (payees).

            CHART 1. GUIDELINES FOR SOCIAL SECURITY NUMBERS

01 Diskette reporting of the information returns listed in Part A, Sec. 1 applies only to the original (Copy A).

02 For payments of dividends or interest (reported on Forms 1099-DIV, 1099-PATR, 1099-INT or 1099-OID), the payer is required to furnish an official Form 1099 to a payee either in a separate mailing by First-Class mail or in person. These forms may not be combined or mailed with other information furnished to the recipient except Form W-9 or other Form 1099 statements. The payer may use substitute Forms 1099 if they are substantially similar to the official forms and if the payer complies with all revenue procedures relating to substitute Forms 1099 in effect at the time (see Publication 1179, Requirements for Reproducing Paper Substitutes of Forms 1096, 1099 Series, 5498, W-2G and W-3G). A supplement will be issued to include instructions for substitutes of Form 1098, Mortgage Interest Statement. Copy B (For Recipient) of the substitute forms must contain the statement "This is important tax information and is being furnished to the IRS. If you are required to file a return, a negligence penalty will be imposed on you if this income is taxable and IRS determines that it has not been reported."

03 Statements to recipients for Forms 1098, 1099-A, 1099-B, 1099-G, 1099-MISC (except for substitute payments in lieu of dividends and tax-exempt interest), 1099-R, 5498 or W-2G need not be a copy of the paper form filed with IRS. It is important that income items be properly classified for Federal tax purposes on the statement the payer gives to recipients. The message "This information is being furnished to IRS" must appear on the statements. The payer may combine the statements with other reports or financial or commercial notices, or expand them to include other information of interest to the recipient. Also, be sure that all copies of the forms are legible and provide the recipient with applicable instructions that appear on the back of the recipient's copy of the official IRS form so that the information may properly be used by the recipient in meeting his or her tax obligations.

04 If a portion of the returns is reported on diskette and the remainder is reported on paper forms, those returns not submitted on diskette must be filed on official forms or on acceptable paper substitutes meeting specifications in Publication 1179, Requirements for Reproducing Paper Substitutes of Forms 1096, 1099 Series, 5498, W-2G and W-3G. A supplement will be issued to include instructions for substitutes of Form 1098, Mortgage Interest Statement. SEC. 13 MAGNETIC MEDIA COORDINATOR CONTACTS

01 On January 1, 1985, the National Computer Center assumed responsibility for the MAGNETIC MEDIA processing previously handled by the Philadelphia, Kansas City, and Austin Service Centers. Beginning January 1, 1986, magnetic media processing for ALL service centers will be centralized at the National Computer Center. N OR AFTER JANUARY 1, 1986, PLEASE DIRECT ALL REQUESTS FOR MAGNETIC MEDIA RELATED PUBLICATIONS, INFORMATION, UNDUE HARDSHIP WAIVERS, OR FORMS TO THE FOLLOWING ADDRESS:

     Magnetic Media Reporting

Prior to January 1, 1986, requests for MAGNETIC MEDIA related publications, forms, undue hardship waivers, or information will still be handled by the following service centers only:

     (a) Internal Revenue Service

     (a) Internal Revenue Service

01 The Combined Federal/State Program was established to simplify information returns filing for the taxpayer. IRS will accept, upon prior approval, diskette files containing state reporting information only for those states listed in Table 1 in this section. FORMS 1098, 1099-A, 1099-B AND W-2G CANNOT BE FILED UNDER THE COMBINED FEDERAL/STATE FILING PROGRAM.

02 To request approval to participate in the Combined Federal/State Program, a "test" file, CODED FOR THIS PROGRAM, must be submitted between September and December using the revenue procedure that will be used for the actual data files. Refer to Part A, Sec. 13 for address information. See Part A, Sec. 5.04 for general guidelines on submission of "test" files. Each record, both in the "test" file and actual data file, must be 360 positions in length, and the file must conform EXACTLY to the revenue procedure for the tax year of the ACTUAL data. Combined Federal/State records must be coded using each state's dollar criteria from Table 2 of this Section for each TYPE of return.

If the "test" diskette is determined to be acceptable, IRS will return it to the filer with a letter of approval to participate in the Combined Federal/State Program, Form 6847, Consent For Internal Revenue Service to Release Tax Information, will be included with the letter of approval. You MUST complete Form 6847, include your 5 character Transmitter Control Code on the form, and return it to IRS before IRS will release tax information to any of the participating states. Do not submit ACTUAL data records coded for the Combined Federal/State Program without prior approval from IRS. The first time you submit actual data files coded for this program, include the signed Form 6847.

03 States that participate in this program and the valid state code assigned to each are listed in Table 1 of this Section. If the state that you wish information released to does NOT participate in the program, do NOT code your records for that state. If the state participates, if you have received prior approval, and if all other conditions are met, IRS will forward the tax information to the participating state at no charge to the filer.

04 IF CORRECTIONS MUST BE MADE, IRS WILL NOT TRANSMIT CORRECTED RETURNS TO THE STATES. THIS WILL BE THE RESPONSIBILITY OF THE FILER.

05 IRS will make no attempt to process files with any deviations. Approval to participate in the Combined Federal/State Program will be revoked if any files are submitted that do not TOTALLY conform.

06 IRS is acting as a forwarding agent ONLY. Some participating states require separate notification that you are filing in this manner. It is your responsibility to contact the appropriate states for further information.

07 The appropriate state code should be entered for those documents which meet that state's filing requirements. IT IS THE FILER'S RESPONSIBILITY to determine the state code to be used and to obtain the filing requirements from the appropriate state(s).

08 If you meet all of the requirements for this program, you MUST provide the state totals from the "K" record on a separate Form 4804, Transmittal of Information Returns on Magnetic Media (or Form 4802, Multiple Payer Transmittal For Magnetic Media Reporting) or computer generated substitute for each state, OR you must include a listing which identifies each state and the "K" record totals for each.

09 If you have met ALL of the above conditions:

(a) You must submit all records using two 128 position sectors which indicate the appropriate coding related to this program.

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

(c) Payment amount totals and the valid participating state code must be included in the state totals "K" Record. Refer to Part B, Sec. 16, for a description of the "K" Record.

(d) The "K" record is followed by an end of transmission "F" Record (if this is the last record of the entire file).

10 Only those states listed in Table 1 below will receive information from IRS. IT IS THE FILER'S RESPONSIBILITY TO FILE INFORMATION RETURNS WITH STATES THAT DO NOT PARTICIPATE IN THIS PROGRAM.

        TABLE 1. PARTICIPATING STATES AND THEIR CODES

                  TABLE 2. DOLLAR CRITERIA

 _____________________________________________________________________

You MUST use the following U.S. Postal Service State abbreviations when developing the state code portion of Name Line fields. (This table provides state abbreviations only and does not represent those states participating in the Combined Federal/State Program. For a list of states that participate in the Combined Federal/State Program, refer to Sec. 14.10.)

 ___________________________________________________________

SECTION 1. GENERAL

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

02 To be compatible, a diskette file must meet the following specifications in total:

(a) 8 inches in diameter.

(b) recorded in basic data exchange mode.

(c) contain 77 tracks of which:

(1) Track 0 is the index track

(2) Tracks 1 through 73 are data tracks

(3) Track 74 is unused

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

(d) each Track must contain 26 sectors.

(e) each Sector must contain 125 bytes.

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

(g) IRS can only process single sided, single density, soft sectored diskettes, double sided, double density, hard sectored diskettes are NOT acceptable and will be returned if submitted.

(h) an IBM 3741 compatible diskette would meet the above specifications. Other types of diskettes would have to be tested to determine acceptability.

03 Payers who can substantially conform to these specifications, but who require some minor deviations, MUST contact the Magnetic Media Coordinator at the National Computer Center or the service centers. Under no circumstances may diskettes deviating from the specifications in this revenue procedure be submitted without prior written approval from IRS. If you file under the Combined Federal/State program, your files must conform totally to this revenue procedure.

04 An external label must appear on each diskette submitted for processing. The following information is needed:

(a) The transmitter's name.

(b) The five character Transmitter Control Code.

(c) The type of computer equipment that the data was prepared on.

(d) The type of drive utilized.

(e) The tax year of the data (e.g., 1985).

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

(g) The total number of payers (from the "F" record).

(h) The total number of payees (from the "C" record).

(i) The total number of diskettes in the file.

(j) A diskette number assigned by the transmitter.

(k) The sequence of each diskette (e.g., 001 of 008).

This information will assist IRS in processing the file or in locating a file, should the transmitter request that it be returned due to errors. IRS advises that special shipping containers not be used for transmitting data since it cannot be guaranteed that they will be returned.

SEC. 2 DISKETTE HEADER LABEL

01 The header label on the diskette must be formatted as shown in the following layout:

 _____________________________________________________________________

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

(g) Bypass Data Set--Position 41; enter B if you want to bypass this data set; otherwise, enter a blank.

(h) Data Set Assessability--Position 42; enter a blank, any other character in this field causes the equipment to refuse the disk.

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

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

(k) Expiration Date--Positions 67 through 72; MAY be used to contain the date that the data set expires. The format is YYMMDD where YY is the year, MM is the month and DD is the day.

(l) Verify Mark--Position 73; this single character field shows if the data set is verified. If it is, enter V, if it is not verified, enter a blank.

(m) End of Data (EOD)--Positions 75-79l enter the track number in positions 75 and 76, enter a "0" (zero) in position 77 and enter the sector number in positions 78 and 79.

SEC. 3. PAYER/TRANSMITTER "A" RECORD

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

02 The number of "A" Records appearing on a diskette will depend on the number of payers and the different types of returns being reported. After the header label on the diskette, the first record appearing in the file must be an "A" Record. For diskette filing, the ACTUAL record lengths for the "A" and "B" records must agree with whatever is entered in diskette positions 29-31 and 32-34 of the "A" Record. A transmitter may include Payee "B" Records for more than one payer on a diskette, however, each GROUP of Payee "B" Records must be preceded by an "A" Record. A single diskette may also contain different types of returns, but the returns MUST not be intermingled. A separate "A" Record is required for each type of return being reported. An "A" Record may be blocked with "B" Records; however, the initial record on a FILE must be an "A" Record. The IRS will accept an "A" Record after a "C" Record.

               RECORD NAME: PAYER TRANSMITTER "A" RECORD

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

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

01 This section contains the general information concerning the Payee "B" Record for all information returns. For detailed description of the record refer to the following:

(a) Sec. 6. PAYEE "B" RECORDS--FIELD DESCRIPTIONS FOR FORMS 1098, 1099-DIV, 1099-G, 1099-INT, 1099-MISC, 1099-OID, 1099-PATR, 1099-R and 5498.

(b) Sec. 8. PAYEE "B" RECORD--FIELD DESCRIPTIONS FOR FORM 1099-A.

(c) Sec. 10. PAYEE "B" RECORD--FIELD DESCRIPTIONS FOR FORM 1099-B.

(d) Sec. 12. PAYEE "B" RECORD--FIELD DESCRIPTIONS FOR FORM W-2G.

02 The Payee "B" Record contains the payment information from the individual statements. When filing information documents on diskette(s), the format for the Payee "B" Records will vary in relation to the number of payment amount fields being reported. The number of payment amount fields will depend upon the number of Payment Amount Indicator Codes used in positions 19-27 of the Payer/Transmitter "A" Record. For example, if you are reporting 1099-INT, position 18 of the Payer/Transmitter "A" Record will be coded with a "6". If the Amount Indicators used to report this interest are Amount Codes "1," "2," and "3," then diskette positions 19-27 of the "A" Records will be coded "123bbbbbb" (b represents BLANK position). To correspond with Amount Indicators "1," "2," and "3" of the "A" Record, the "B" Record will contain three payment amount fields. Diskette positions 32-41 of the Payee "B" Record will contain the payment amount to be reported for Amount Code "1" (earnings from savings and loan associations, credit unions, bank deposits, bearer certificates of deposits, etc.); diskette positions 42-51 of the "B" Record would contain the payment amount to be reported for Amount Code 42" (amount of forfeiture); and diskette positions 52-61 of the "B" Record would contain the payment amount to be reported for Amount Code "3" (Federal income tax withheld). The First Payee Name Line begins immediately after the last payment amount THAT IS INDICATED AS BEING USED. In this example, the First Payee Name Line would begin in diskette position 62.

03 All payee records MUST CONTAIN CORRECT PAYEE NAME AND ADDRESS INFORMATION entered in the fields described in this section. Any records containing an invalid TIN (SSN OR EIN) and having no address data present will be returned for correction.

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

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

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

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

06 Provision is also made in these specifications for data entries required by state or local governments. This should minimize the Payer/Transmitter's programming burden should payers desire to report on diskette to state or local governments. See Part A, Sec. 14, for the Combined Federal/State filing requirements.

07 Those filers participating in the Combined Federal/State Filing Program MUST have 128 position sectors. Positions 127 and 128 in the Payee "B" Record Sector 2 or 3 MUST contain the appropriate state code for the state to receive the information. The file should also meet the money criteria described in Part A, Sec. 14.11. Do not code for the states unless prior approval to participate has been granted by IRS. See Part A, Sec. 14 for a list of the valid participating state codes. FORMS 1098, 1099-A, 1099-B AND W-2G CANNOT BE FILED UNDER THE COMBINED FEDERAL/STATE FILING PROGRAM. Your files must meet all of the requirements specified in Part A, Sec. 14 in order to participate in this program.

SEC. 6 PAYEE "B" RECORD--FIELD DESCRIPTIONS FOR FORMS 1098, 1099-DIV, 1099-G, 1099-INT, 1099-MISC, 1099-OID, 1099-PATR, 1099-R AND 5498

01 This section contains the general payment information from individual statements for Forms 1098, 1099-A, 1099-DIV, 1099-G, 1099-INT, 1099-MISC, 1099-OID, 1099-PATR, 1099-R and 5498.

02 In most instances each Payee "B" Record will be composed of two sectors on the diskette with positions 1-41 being a constant format and the variance occurring in positions 42-128 of the first sector and the entire second sector. In those instances where six or more payment amount fields are reported, each Payee "B" Record will be composed of three sectors on the diskette with positions 1-41 of the first sector being a constant format and the variance occurring in positions 42-128 of the first sector and the entire second and third sectors.

                     RECORD NAME: PAYEE "B" RECORD

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

 SEC. 8. PAYEE "B" RECORD -- FIELD DESCRIPTIONS FOR FORM 1099-A

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

SEC. 10. PAYEE "B" RECORDS-FIELD DESCRIPTIONS FOR FORM 1099-B

01 This section contains the general payment information from individual statements for Form 1099-B. For detailed explanations of the 1099-B fields request a copy of the 1985 "Instructions for Form 1099 Series, 1098, 5498, and 1096" available from local IRS offices.

02 For Form 1099-B, SECTOR 3 will be required if there is more than one payment field to be reported in the Payee "B" Record.

03 FORM 1099-B CANNOT BE FILED UNDER THE COMBINED FEDERAL/STATE FILING PROGRAM.

                     RECORD NAME: PAYEE "B" RECORD