Rev. Proc. 65-18

SECTION 1. PURPOSE.

The purpose of this Revenue Procedure is to state the requirements of the Internal Revenue Service relating to substitutes for Form 1087, Nominee's Information Return. Requirements governing substitute forms have been changed considerably from preceding years. These changes are designed to facilitate processing of these forms by optical character recognition techniques, and to provide flexibility in their preparation by nominees.

SEC. 2. SUBSTITUTE FORMS.

Substitutes for Form 1087 which adhere to the specifications contained herein may be privately printed without the prior approval of the Internal Revenue Service. Proposed substitutes not meeting these specifications should be submitted to the Service for approval. Requests for approval should contain an explanation of the need for the specific deviations sought.

SEC. 3. FORMAT SPECIFICATIONS.

.01 For purpose of format specifications, the Form 1087 is divided into two sections: a specified format section and a variable format section. The specified format section includes the payment blocks, name, address, and identifying number of the actual owner or payee, the format identifier (section 3.04(i)), the format guidelines, and the area within three-eights inch of the left edge of the document. The variable format section consists of the remainder of the document, including the reporting year and name, address and identification number of the nominee or record owner.

.02 Additional data blocks (including additional payment blocks) may be added to substitute Forms 1087, at the option of the nominee, or in accordance with State requirements, but these additional data blocks must be contained in the variable format section except as noted in section 3.04(b).

.03 Variable Format Section Layout.--The arrangement of data in the variable format section may be varied on substitute forms to fit the requirements of State law or to accommodate the data processing system used by the nominee, except that the payment year must always be on the top line of the form, subject to section 3.04(g) below.

.04 Specified Format Section Layout.

(a) The specified format section, including contents, general arrangement, and typography, must conform to one of the formats illustrated in Exhibit B. Formats 1, 2, 3, 4, and 5 are preferred; however, formats 6 and 7 are also acceptable. If format 6 or 7 is used, and the location of the taxpayer identifying number is consistent, a three point vertical rule (.045 inch) should be preprinted immediately to the left of this number.

(b) If format 6 or 7 is used and the location of the taxpayer identifying number is not consistent for all returns, due to the nature of the mechanical equipment used by the nominee, this number need not be contained in a special box, nor identified. Preferably, it should be printed to the right of and on the same line as the name of the actual owner or payee (or first line of the payee name if there is more than one) but it can also be printed one or two lines above or below the first line of payee name. Special precaution must be taken if the printing of an account designation number in the specified format section is unavoidable. In this case such number must not be on the same line as, or on any line above, the taxpayer identifying number, nor on the same line as payments. When possible, the printing of such numbers in the specified format section should be avoided.

(c) If the taxpayer identifying number is a social security number, it must be printed in the following pattern: 000-00-0000. If it is an employer identification number, it must be printed as 00-0000000. Spaces may be used in lieu of hyphens.

(d) When there are multiple payees with different surnames, the identifying number shown must be linked to the surname to which it applies. It is preferred that such linkage be in the form of an asterisk preceding the designated surname.

(e) Payee name, street address, and city and State (including ZIP code) must be on separate lines. City, State, and ZIP code may be on the same line or on separate lines.

(f) The area within three-eights inch of the left edge of the document (exclusive of stubs) must not contain any prepunched holes and be free of any printing except for the format identifier and format guidelines appropriate to each permissible alternate format as illustrated in Exhibit B. There must be no intervening data or marks between the left edge of the document and the specified format section. In addition, there must always be a clear space of at least one-eighth inch to the right of and below the format identifier.

(g) There must be a margin of at least one-fourth inch from the top edge of the document to any printing.

(h) The overall dimensions of the specified format section and the dimensions of the individual data blocks contained therein may be varied from the dimensions shown in Exhibits A and B. However, the general arrangement of data within the section and the typography may not be altered.

(i) The appropriate format identifier (1, 2, 3, 4, 5, 6, or 7) must be shown in the upper left corner of Copy A, as illustrated in Exhibits A and B, one-fourth inch from the top and left edges. In addition, the appropriate format guidelines must also be shown on Copy A. The identifier and guidelines need not be shown on the other copies of the form.

(j) In using any of the formats, care should be taken to prevent disclosure of payment information if a window envelope is used for mailing.

SEC. 4. SPECIFICATIONS.

.01 Color and quality of paper.

(a) Paper used for Copy A must be white and 100 percent bleached chemical wood, 2 1/2 percent maximum groundwood permissible. No optical brighteners may be added; however, minimal trace amounts will be acceptable. The paper must be: Weight, 40 pound (basis 17 x 22--1,000), tolerance plus/minus 5 percent (weight must be inclusive of any coatings or chemical treatments); brightness, 80 percent or more when measured on a brightness meter in accordance with TAPPI specifications T-452; low finish; free of any dirt specks which would affect optical scanning; and uniformly textured. The minimum qualifications are the typical physical characteristics in weight, caliper, stiffness, and tear resistance normally associated with a 40-pound chemical wood bond or writing paper.

(b) The paper used for other copies must be white, minimum 18-pound (17 x 22--1,000) and of good quality.

.02 Color and quality of ink.--All preprinted data and rules on Copy A must be in a black nonreflective ink. A nonreflective ink is one which has 10 percent reflectance or less between the wavelength range of 3500 and 5000 Angstroms and 20 percent or less between the wavelength range of 5000 to 10,000 Angstroms. (These reflectances are referenced to magnesium oxide which is considered 100 percent.)

.03 Typography.--Type must be substantially identical in size and shape with corresponding type on the official form. All horizontal rules on the document and all vertical rules outside the specified format section must be one point (.015 inch). All vertical rules within the specified format section and format identifier lines must be three point (.045 inch). When present, mailing guides must be less than one-half point (.0075 inch). A .045-inch vertical rule must precede and follow each payment block, as illustrated in Exhibits A and B. The format identifier must be printed in the 10-point Remington typewriter font as shown in GPO "Specimens of Type Faces." Vertical rules must be parallel to the left edge of the document; horizontal rules, parallel to the top edge.

.04 Dimensions.--The official form is 8 inches wide by 3 1/2 inches deep, exclusive of a 1/2-inch snap-stub on the left side of the form. The substitute forms may vary in width from 7 3/8 inches to 8 inches and in depth from 3 1/4 inches to 3 3/4 inches, although adherence to the size of the official form is preferred. The snap feature is not required on substitutes. If the substitute forms are in continuous or strip form, they must be burst and stripped to conform to the size specified before they are filed.

.05 Clear area.--The back of Copy A must be free of all printing.

.06 Carbonized forms or "spot carbons".--Carbonized forms and "spot carbons" are not permissible. Interleaved carbon, if used, should be black and of good quality to preclude smudging.

.07 The Government Printing Office symbols.--The Government Printing Office symbols must be omitted.

.08 Copies B and C.--Copies B and C are included in the official assembly for the convenience of the nominee. Although there is no requirement that privately printed substitute forms include these copies, Copy B may be desired by the nominee for his records and Copy C will satisfy the requirements of law and regulations concerning the statement of information which is to be furnished to the actual owner or payee.

SEC. 5. ADDITIONAL INSTRUCTIONS.

.01 Arrangement of assembly.--Except as provided in paragraph .02 below, the parts of the assembly shall be arranged, from top to bottom, as follows: Copy A, "For Internal Revenue Service", Copy B, "For Nominee", Copy C, "For Actual Owner or Payee".

.02 Additional copies.--Additional copies may be prepared by nominees for States requiring the report. When this is done, one such copy may be inserted between Copies A and B. Forms for delivery to State or local taxing authorities should be clearly labeled to indicate the purpose for which they are intended and should not bear any part of the designation, "Form 1087, U.S. Treasury Department, Internal Revenue Service."

.03 Instructions for Nominees.

(a) Only originals or ribbon copies may be filed with the Service. Carbon copies are not acceptable.

(b) The Service requests the cooperation of nominees in typing or machine printing whenever possible and in providing good quality data entries on the forms, i.e., using a black ribbon, inserting data in the middle of blocks, well separated from other printing and guidelines, and taking any other measures that will guarantee a clear, sharp image. However, nominees are not expected to purchase typewriters, machines, or special ribbons to prepare the forms.

SEC. 6. SUBSTITUTES NOT MEETING ABOVE CONDITIONS.

Proposed substitute forms which do not meet the conditions stated above, and requests for submission of Forms 1087 in the form of tabulating cards or magnetic tape, should be forwarded by letter to the Commissioner of Internal Revenue, Attention: D:S:Pl., Washington, D.C., 20226.

SEC. 7. REPRODUCTION PROOFS.

Reproduction proofs of the official Form 1087 are available upon the request of any person who desires to use reproductions of such form. Requests for reproduction proofs should be addressed to the Commissioner of Internal Revenue, Attention: A:FM:P, Washington, D.C., 20224.

SEC. 8. EFFECT ON OTHER DOCUMENTS.

This Revenue Procedure supersedes Revenue Procedure 63-17, C.B. 1963-1,505.

[Editor's note: Exhibits A and B illustrate physical specifications of the forms discussed. These illustrations are not suitable for electronic reproduction.]