IRS OUTLINES PROCEDURES FOR SUBMITTING FORM 945 ON MAGNETIC TAPE.

Rev. Proc. 94-59

SECTION 1. PURPOSE

.01 The purpose of this revenue procedure is to provide a means whereby Reporting Agents preparing Form 945, Annual Return of Withheld Federal Income Tax, for groups of taxpayers can furnish the required information in the form of magnetic tape.

.02 If a current Reporting Agent is unable to comply with the changes in specifications, they must contact the local Magnetic Tape Coordinator for Business Tax Returns for further instructions.

SECTION 2. BACKGROUND

.01 Under section 31.6011(a)-8 of the Employment Tax Regulations, the Commissioner may authorize the use, at the option of the taxpayer, of a composite return in lieu of any form specified in 26 CFR Part 31 (Employment Taxes and Collection of Income Tax at Source) for use by a taxpayer, subject to such conditions, limitations, and special rules governing the preparation, execution, filing, and correction thereof as the Commissioner may deem appropriate. The composite return shall consist of a form prescribed by the Commissioner and an attachment or attachments of magnetic tape or other approved media. Notwithstanding any provisions in this part to the contrary, a single form and attachment may comprise the returns of more than one taxpayer.

.02 The magnetic tape Form 945 is a composite return consisting of the magnetic tape data and Form 4996, Magnetic Tape Filing Transmittal for Form 941, 945 or 940 Federal Tax Returns. A magnetic tape return must contain the same information that a return filed completely on paper contains.

SECTION 3. APPLICATION FOR TAPE REPORTING

.01 Reporting Agents who desire to file Forms 945, 941 and 940 on magnetic tape must first file a Letter of Application. Although this revenue procedure only covers Form 945 filed on magnetic tape, the Letter of Application may cover Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return and Form 941, Employer's Quarterly Federal Tax Return, as well. In addition, a separate but simultaneous letter may be submitted for permission to submit federal tax deposits (FTDs) on magnetic tape for Forms 945, 940, 941 and 943. Separate revenue procedures cover the filing of Forms 940, 941 and the submission of federal tax deposits on magnetic tape. Contact the Magnetic Tape Coordinator for Business Tax Returns for current copies of the other revenue procedures.

.02 The Letter of Application must be addressed to the Director, Internal Revenue Service Center, Attention: Magnetic Tape Coordinator for Business Tax Returns, of the service center that serves the primary business address of the Reporting Agent. Addresses of the service centers are shown in Section 14 of this revenue procedure.

.03 The Letter of Application must contain the following:

1. Name, address and EIN (Employer Identification Number) of the person, organization, or firm making Letter of Application.

2. Name, title and telephone number of the person to contact regarding the Letter of Application.

3. The first tax period for which the Reporting Agent plans to file returns on magnetic tape.

4. The estimated volume of returns the Reporting Agent plans to file by type of return (for example, 945, 941 or 940).

5. An agreement by the Reporting Agent to keep copies of the Reporting Agent Authorization (RAA) on file at the Reporting Agent's principal place of business for examination by the Service upon request. Such copies must be retained until the period of limitation for assessment for the last return filed under its authority expires.

6. An agreement by the taxpayer and Reporting Agent to fully pay the tax by FTDs. This revenue procedure does not restrict a non- financial organization that performs a payroll or tax service from being a Reporting Agent. See Rev. Proc. 89-48, 1989-2 C.B. 599, concerning the requirements under which FTDs can be made by the Reporting Agent.

7. An agreement by the taxpayer to fully pay contributions to state unemployment funds on time and to timely file related state unemployment tax returns (only if Form 940 filing is part of Letter of Application request).

8. Signature of the Reporting Agent or Reporting Agent's employee authorized to prepare federal tax returns for taxpayers.

.04 The Letter of Application must include two types of attachments as follows:

1. A Reporting Agent's List which identifies all taxpayers to be included in the Magnetic Tape Filing System.

2. RAAs for all taxpayers included on the Reporting Agent's List. Details of these attachments are described in the current revenue procedure on RAAs.

.05 Reporting Agents must submit a separate Letter of Application to each service center to which they intend to file returns.

SECTION 4. REPORTING AGENT AUTHORIZATION

A RAA must be submitted for each filer on the Reporting Agent's List attached to the Letter of Application. The RAA may be submitted on Form 8655, Reporting Agent Authorization, which is available on request; or any other instrument which meets the specifications identified Rev. Proc. 89-18, 1989-1 C.B. 828. The RAA may cover the filing of Forms 945, 940 and 941 and the magnetic tape submission of FTDs on Forms 945, 940, 941 and 943, if desired.

SECTION 5. APPROVAL OF AGENT'S APPLICATION

.01 The Service will act on the Letter of Application and notify the Reporting Agent, with the return of a validated Reporting Agent's List, within 30 days of receipt. The validated Reporting Agent's List provides the name control for each taxpayer. The name control is a required field when the return is submitted on magnetic tape. See Exhibit 11, positions 72-75.

.02 Having secured a name control for each taxpayer, the Reporting Agent must submit a test tape. To allow sufficient time to work out problems, Reporting Agents are encouraged to submit the initial test tape by September 30th of the year preceding the due date of the returns which will be filed on magnetic tape. A TEST TAPE DOES NOT CONSTITUTE THE FILING OF TAX RETURNS.

.03 Submission of magnetic tapes which can be read on the Service's computers without a "job abort" and which have a 5 percent or less error rate generally constitutes approval of a Reporting Agent's Letter of Application and continuation of filing privileges. If a Reporting Agent submits a bad test tape, the Magnetic Tape Coordinator will notify the Reporting Agent of the fact. The Reporting Agent must supply a new test tape within 30 days of the coordinator's notification. If a Reporting Agent has not received approval for magnetic tape filing by the end of the tax year for which the returns will be filed, paper tax returns must be filed. The Reporting Agent may, however, resubmit a test tape for the subsequent tax year.

.04 The Magnetic Tape Coordinator for Business Tax Returns will notify prospective and current Reporting Agents in writing of approval, denial and revocation of magnetic tape filing privileges. Once authorization to file tax data on magnetic tape has been granted to a Reporting Agent, such approval will continue in effect in succeeding tax periods so long as the requirements of the most recent revenue procedure are met, and there are no equipment changes by the Reporting Agent.

SECTION 6. FILING TAPE RETURNS

.01 The Service will allow a tape return to be submitted for those taxpayers who are approved for magnetic tape filing until the Reporting Agent formally notifies the Service that specific taxpayers are being deleted from their current magnetic tape filing inventory.

.02 Under Section 6091(b) of the Internal Revenue Code, federal tax returns must be filed at the Internal Revenue service center serving the legal residence or principal business address of the taxpayer. Thus, Reporting Agents must normally file a taxpayer's return at the appropriate service center as described above even if it means submitting magnetic tapes to more than one service center. An exception may be granted once a Reporting Agent has applied for and received permission from the Service to do so. Contact your Magnetic Tape Coordinator for Business Tax Returns for details.

.03 Approval by the Service of a Letter of Application allows Reporting Agents to file at any service center that services their clients. If Reporting Agents wish to file at additional service centers, they must notify the Magnetic Tape Coordinator for Business Tax Returns of the service center where they originally applied at least 90 days prior to the initial transmittal to the new service center.

.04 The Reporting Agent will be provided with a validated copy of the Reporting Agent's Listing for taxpayers authorized to file on magnetic tape. This authorization will contain each taxpayer's EIN and name control. This authorization will be the source of the EIN and name control to be used on magnetic tape by the Reporting Agent as an identification of each taxpayer. The name control must be retained in the Reporting Agent's records and used in each taxpayer's Tax Data "B" Record (positions 72-75). It is used by the Service to ensure the correct recording of the taxpayer's return. Failure to use the correct name control can result in delays in processing the return and notices of delinquent filing being sent to the taxpayer.

.05 Packaging, shipping, and mailing instructions will be provided in the letter granting initial approval issued by the Service in response to the Letter of Application for magnetic tape filing. The first box of the tape shipment to the service center must contain Form 4996, Magnetic Tape Filing Transmittal for Form 941, 945 or 940 Federal Tax Returns, in duplicate. Failure to complete and submit this form will cause delays in processing the magnetic tape. The transmittal form must include:

(a) The name, address and telephone number (including area code) of Reporting Agent.

(b) Employer Identification Number of Reporting Agent.

(c) Type of tax return filed on the magnetic tape (945).

(d) Tax period (use YYMM of tax year -- for example, 9412).

(e) Number of tax returns filed on accompanying tape.

(f) Total taxes reported.

(g) Total taxes deposited.

(h) Number of revenue procedure used as basis for magnetic tape preparation (for example, 94-59).

(i) Service center where RAAs are filed.

(j) Signature of Reporting Agent or authorized employee, title and date.

.06 Form 945, 941 or 940 data must all be filed on separate magnetic tapes.

.07 The Reporting Agent must notify the Magnetic Tape Coordinator for Business Tax Returns if the agent does not receive notification of receipt of the transmittal within 15 days from the date the transmittal was sent.

.08 If this revenue procedure is revised in terms of its computer specifications, current Reporting Agents will be advised by the Magnetic Tape Coordinator for Business Tax Returns to submit test tapes prior to their first usage of the new specifications. If the changes are minor, the Magnetic Tape Coordinator may waive the requirement.

.09 If a Reporting Agent changes computer equipment, a test tape must be submitted. The guidelines in Section 5 of this revenue procedure will be followed, in regards to submission and acceptance of test tapes. If, by the end of the tax year for which the returns will be filed, the Reporting Agent has not submitted a test tape that meets the requirements of this revenue procedure, the Magnetic Tape Coordinator will advise the Reporting Agent to submit paper returns. The Reporting Agent may resubmit a test tape for the subsequent tax year.

SECTION 7. DUE DATES

.01 The due dates prescribed for filing paper returns with the Service also apply to magnetic tape filing of federal business tax returns.

.02 In no case may returns with more than one due date be included on one tape file.

SECTION 8. EFFECT ON PAPER RETURNS

Authorization to file on magnetic tape does not prohibit the filing of paper tax returns, but merely permits filing of such returns through the Magnetic Tape Filing System. If for some reason (for example, late receipt of records), a Reporting Agent prefers to file a paper return in lieu of magnetic tape filing for a given taxpayer, the Reporting Agent may do so even after having been given authorization to file that taxpayer's returns on magnetic tape.

SECTION 9. ADDING AND DELETING FILERS FROM MAGNETIC TAPE FILING SYSTEM

.01 After a Reporting Agent has been notified by the Service that the Letter of Application for tape reporting has been approved, the Reporting Agent may want to add and delete taxpayers from the Magnetic Tape Filing System.

.02 Specific instructions for adding and deleting taxpayers from the Magnetic Tape Filing System are contained in the current revenue procedure on RAAs. Contact the Magnetic Tape Coordinator for Business Tax Returns to secure the current version.

.03 Returns may not be filed for a taxpayer until a RAA has been submitted for the taxpayer and the taxpayer's identifying information has been included on a Reporting Agent's List which in turn has been subsequently validated by the Service. Until the Reporting Agent has received the validated list, a valid tax return cannot be submitted through the Magnetic Tape Filing System.

SECTION 10. CHANGE OF ADDRESS

.01 The taxpayer may notify the Service of an address change at any time by providing clear and concise written notification of a change of address (in accordance with Rev. Proc. 90-18, 1990-1 C.B. 491), on a Form 8822, Change of Address (see Exhibit 2). The change of address form is available on request. The toll-free number for forms is 1-800-829-FORM.

.02 If a taxpayer requests that a change of address be processed from the address that is submitted in the taxpayer's magnetic tape record, enter an address change indicator in tape position 153 of the Tax Data "B" Record (see Exhibit 11) with an entry of "1". The taxpayer's address of record will then be updated with the information that is given in tape positions 87-152 of the Tax Data "B" Record.

.03 For a list of address abbreviations, refer to postal guidelines (i.e. National Five-Digit Zip Code & Post Office Directory) for acceptable standard address formats and abbreviations.

SECTION 11. STATE ABBREVIATIONS

.01 You must use the following state abbreviations when developing the state code portion of address fields.

 STATE                       CODE

 State                       Code

      PAYEE NAME               PVT JOHN M. DOE

The following material must be retained for four years after the due date of the return:

(a) a complete copy of the magnetic tape return (may be retained on magnetic media),

(b) the notification of receipt of the transmittal received from the Service, and

(c) a copy of the signed Form 4996, Magnetic Tape Filing Transmittal for Forms 941, 945 and 940 Federal Tax Returns.

SECTION 13. INFORMATION A REPORTING AGENT MUST PROVIDE TO THE TAXPAYER

.01 The Reporting Agent must furnish the taxpayer with a paper copy of the magnetic tape material that was sent to the Service. This information can be contained on a replica of an official form or on an unofficial form. However, on an unofficial form, data entries must be referenced to the line references on an official form.

.02 The Reporting Agent must also provide the taxpayer with a paper copy of the paper portion of the taxpayer's return.

.03 The Reporting Agent must advise the taxpayer to retain a complete copy of a return and any supporting material.

.04 The Reporting Agent must, upon request, provide the taxpayer with the date the magnetic tape portion of the taxpayer's return was acknowledged as received by the service center.

SECTION 14. ADDITIONAL INFORMATION

Requests for additional copies of this revenue procedure, Letter of Applications for magnetic tape filing, copies of Form 4996 and Form 8822, requests for copies of appropriate input record element specifications, and requests or tape filing information must be addressed to the Director, Internal Revenue Service Center, Attention: Magnetic Tape Coordinator of Business Tax Returns, at one of the following addresses:

     1. North-Atlantic Region

.01 Conventions.

(1) Reporting Agents who submit Forms 945, 940 and 941 on magnetic tape must conform to Level 3 of the ANSI Standard X3.27-1978 (Magnetic Tape Labels and File Structure for Information Interchange). Specifically this calls for recognition of the following label types: VOL1, HDR1, HDR2, EOV1, EOV2, EOF1, and EOF2 (see Exhibits 3 through 9 for specific label specifications). No user labels or non-labeled tapes will be accepted for processing.

(2) Record Mark. No restrictions apply to record marks.

(3) Tape Mark. The tape marks will be automatically generated for an interchange tape (as defined above in .01 (1)). An example as to their positioning is given in Section 16.02 of this revenue procedure.

.02 Definitions.

 Element                  Description

.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. A physical tape reel must have the following physical characteristics:

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

VOL1

First and subsequent reels

VOL1

/**/ Up to 100 Data Records "B" may be submitted per Data Record "C". The Data Record "D" is used as needed and must immediately follow its corresponding Data Record "B". However, the number of Data Records "D" must not be included in the 100-count. Repeat the sequence of "B", "D" and "C" Records, as needed.

.04 All records including headers and trailers, if used, must be written at the same density.

.05 Affix an external label to each tape with the following information:

1. Name of Reporting Agent.

2. Number of tax returns submitted on this reel of tape.

3. Payment period in YYMM (year, year, month, month) format. For example, 9412.

4. Density (1600, 6250).

5. Channel (9).

6. Parity (odd).

7. Sequence number of reel and total number of reels in file. For example, (1 of 3).

.06 Record Blocking Factor. The tape records prescribed in the specifications must be blocked at one record per block.

.07 Data. Only character data may be used. This means numeric fields cannot use overpunched signs and must be right justified with remaining unused positions zero filled. All money fields must include two decimal positions on the right. All numeric data must be in unsigned ASCII characters (no binary data). Where necessary, separate positions have been provided for signs, using "1" for plus and "0" (zero) for minus. All fields must have either numeric or alphabetic characters with the exception of the special characters which are allowed in the name and street address fields of the Agent "A" Record and Tax Data "B" Record. Special characters must be limited to hyphen (-) and slash (/) in the street address and hyphen (-) and ampersand (&) in the name control.

.08 Agent "A" Record. The Agent "A" Record (see Exhibit 10) identifies the Reporting Agent who prepares and transmits the tape file. Only Form 945 data may be present on this magnetic tape. Form 940 and 941 data must be on separate tapes. The Agent "A" Record must be reported on the first reel of the file and precede the first Tax Data "B" Record.

.09 Form 945 Tax Data "B" Record.

(1) Tax Data "B" Records (see Exhibit 11) contain tax information for each filer reported by the Reporting Agent. The number of Tax Data "B" Records appearing on one tape reel will depend on the number of taxpayers represented (only one tax return for each EIN).

(2) All Tax Data "R" Records must be for the current tax period. All money amount fields must contain dollars and cents, must be right justified with zero filling on left and must be zero filled if an amount is not present. Fields identified as indicators or signs must always carry a value. Other non-money fields must be left justified and blank filled on right with blank filling of nonsignificant fields.

(3) Monthly summary of federal tax liability should be completed if deposits are made on a monthly schedule.

.10. Form 945-A Tax Liability Data "D" Record.

(1) Form 945-A Tax Liability Data "D" Records will be used if the taxpayer was required to deposit using the semiweekly deposit schedule. See Exhibit 12. If the taxpayer was a monthly schedule depositor and accumulated a tax liability of $100,000 or more during any month, the taxpayer became a semiweekly depositor for the remainder of the year and must report liabilities on the Form 945-A Tax Liability Data "D" Record for the ENTIRE year. See the instructions for Form 945 and Circular E for more information on deposit rules.

(2) Each Tax Data "D" Record must follow its corresponding Tax Data "B" Record.

.11 Checkpoint Totals "C" Record.

(1) Write this record after each 100 or fewer (if less than 100 remain) Tax Data "B" Records. If a "D" record is written after the 100th "B" record, the "C" record would be written after the "D" record. Each Checkpoint Totals "C" Record must contain a count of Tax Data "B" Records, the sum of Total Taxes, and the sum of the Total Taxes Deposited Amounts for all Tax Data "B" Records which have not been summarized in preceding Checkpoint Totals "C" Records (see Exhibit 13).

(2) The Checkpoint Totals "C" Record must be followed by a Tax Data "B" Record except when the Checkpoint Totals "C" Record is at the end of the file. In that case, it will be followed by an End of File "E" Record.

(3) All Checkpoint Totals "C" Records must be fixed length. All money amount fields will contain dollars and cents. The Checkpoint Totals "C" Records cannot be followed by a tape mark.

.12 End of File "E" Record. Write this record after the last Checkpoint Totals "C" Record in the file. All money amounts must contain dollars and cents. All End of File "E" Records must be fixed length. This record must be followed only be a tape mark and trailer label. (See Exhibit 14).

SECTION 17. EFFECTIVE DATE

This revenue procedure is effective for filing Forms 945 on magnetic tape for tax year beginning January 1, 1994.

EXHIBIT 1, FORM 4996 [Exhibit omitted]

EXHIBIT 2, FORM 8822 [Exhibit omitted]

EXHIBIT 3

VOL1 Label

 Character Position       Acceptable values

EXHIBIT 4

HDR1 Label

 Character Position       Acceptable values

EXHIBIT 5

HDR2 Label

 Character Position       Acceptable values

EXHIBIT 6

EOF1 Label

 Character Position       Acceptable values

EXHIBIT 7

EOF2 Label

 Character Position       Acceptable values

EXHIBIT 8

EOV1 Label

 Character Position       Acceptable values

EXHIBIT 9

EOV2 Label

 Character Position       Acceptable values

EXHIBIT 10

                           AGENT "A" RECORD

1). If Total Tax (189-203) is less than $500.00, zero fill positions 235-417.

2). If you are required to use the semiweekly deposit schedule, the Form 945 Data Record "D" is used and positions 235-417 must be zero filled.

3). If on any day during any monthly deposit period reported tax is $100,000 or more, the Form 945 Data Record "D" is used and positions 235-417 must be zero filled.

 235-248   Liability - January           Enter the tax liability for

TAX DATA "D" RECORD

Note: The Form 945-A, Annual Record of Federal Tax Liability, positions 2-5320 must be completed if the taxpayer was required to deposit using the semiweekly deposit schedule. Also complete positions 2-5320 if the taxpayer was a monthly schedule depositor and accumulated a tax liability of $100,000 or more during any month.

 Tape