SERVICE PROVIDES GUIDANCE FOR FILING 1990 INFORMATION RETURNS ON MAGNETIC TAPE.

Rev. Proc. 90-41

                          TABLE OF CONTENTS

PART A. -- GENERAL

SECTION 1. PURPOSE

SPECIFICATIONS FOR FILING INFORMATION RETURNS ELECTRONICALLY HAVE BEEN INCLUDED IN THIS REVENUE PROCEDURE. CONDITIONS FOR FILING ON MAGNETIC MEDIA (TAPE OR DISKETTE) AND THROUGH ELECTRONIC FILING ARE IN MOST CASES THE SAME. ANY DIFFERENCES BETWEEN MAGNETIC MEDIA AND ELECTRONIC FILING WILL BE SPECIFIED THROUGHOUT THIS REVENUE PROCEDURE. PART C OF THIS PUBLICATION PROVIDES SPECIFIC INSTRUCTIONS FOR FILING INFORMATION RETURNS ELECTRONICALLY. IF THERE ARE ANY QUESTIONS CONCERNING EITHER MAGNETIC MEDIA OR ELECTRONIC FILING, YOU MAY CONTACT INTERNAL REVENUE SERVICE (IRS) MARTINSBURG COMPUTING CENTER (MCC) FOR CLARIFICATION (SEE PART A, SEC. 3 FOR ADDRESS AND TELEPHONE NUMBER). IF YOU ARE REQUIRED TO FILE ON MAGNETIC MEDIA, YOU MAY SATISFY THE MAGNETIC MEDIA FILING REQUIREMENTS BY SUBMITTING YOUR DATA ELECTRONICALLY INSTEAD.

.01 The purpose of this revenue procedure is to provide the requirements and conditions for filing Forms 1098, 1099, 5498 and W-2G electronically or on magnetic media to IRS, including 1/2 inch magnetic tape; 5 1/4 inch and 3 1/2 inch magnetic diskettes; or IBM 3480 compatible tape cartridges. Publication 1255 provides instructions for filing on 8 inch magnetic diskette. THIS REVENUE PROCEDURE IS TO BE USED FOR THE PREPARATION OF 1990 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 (Patrons) of Taxable Distributions Received From Cooperatives.

(j) Form 1099-R, Statement for Recipients of Total Distributions From Profit-Sharing, Retirement Plans, Individual Retirement Arrangements, Insurance Contracts, Etc.

(k) Form 1099-S, Statement for Recipients of Proceeds From Real Estate Transactions.

(l) Form 5498, Individual Retirement Arrangement Information.

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

.02 Specifications for filing Forms 1042S and 8027 are contained in separate IRS publications. Specifications for filing Forms W-2 and W-2P on magnetic media are available from the Social Security Administration (SSA) ONLY.

.03 In most cases, the box numbers on the paper forms correspond with the amount codes used to file on magnetic media; however, if discrepancies occur, the instructions in this revenue procedure govern.

.04 The IRS/MCC has the responsibility for processing information returns filed on magnetic media, or by electronic filing. These information returns include Forms 1098, 1099 series, 5498, and W-2G.

IRS/MCC does NOT process Forms W-2 and W-2P; these forms are to be sent to SSA whether you file paper OR magnetic media returns.

IRS/MCC does, however, process magnetic media waiver requests and extension of time requests for filing Forms W-2/W-2P.

Therefore, contact IRS/MCC with questions concerning Forms W-2 and W-2P ONLY IF THE QUESTIONS PERTAIN TO AN EXTENSION OF TIME TO FILE ON PAPER OR MAGNETIC MEDIA OR MAGNETIC MEDIA WAIVER REQUEST. Questions pertaining to magnetic media filing of Forms W-2 or W-2P MUST be directed to SSA. TAX LAW QUESTIONS PERTAINING TO FORMS W-2 OR W-2P SHOULD BE DIRECTED TO IRS TAXPAYER SERVICE at 1-800-424-1040 (1-800-829-1040 after September 30, 1990), or to your local IRS office.

If you contact IRS/MCC with questions concerning Forms W-2/W-2P, and the questions are not pertaining to extensions of time or waivers for Forms W-2/W-2P, we will direct you to either SSA or IRS Taxpayer Service.

.05 Personnel at IRS/MCC are equipped to answer any questions you may have concerning the magnetic media or electronic filing of information returns. Tax law related questions should be directed to IRS Taxpayer Service at 1-800-424-1040 (1-800-829-1040 after September 30, 1990).

.06 This revenue procedure also provides the requirements and specifications for magnetic media or electronic filing under the Combined Federal/State Filing Program. (Refer to Part A, Sec. 16.)

.07 The following revenue procedures and publications provide more detailed filing procedures for certain information returns:

(a) 1990 "Instructions for Forms 1099, 1098, 5498, and W-2G" provides specific instructions on completing and submitting information returns to IRS. IRS/MCC includes this publication in the magnetic media reporting packages that are mailed to the transmitters who participate in the Magnetic Media Reporting Program (MMRP). These instructions are also available at IRS offices and can be obtained by contacting your local office, or by calling 1-800-424-FORM (1-800-829-FORM after September 30, 1990).

(b) Rev. Proc. 84-33, 1984-1 C.B. 502, or other current revenue procedure, regarding the optional method for agents to report and deposit backup withholding.

(c) Publication 1179, Specifications for Paper Document Reporting and Paper Substitutes for Forms 1096, 1098, 1099, 5498, and W-2G.

(d) Publication 1239, Requirements and Conditions for Submitting Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips, on Magnetic Tape.

(e) Publication 1187, Requirements and Conditions for Filing Form 1042S, Foreign Persons U.S. Source Income Subject to Withholding, on Magnetic Tape.

(f) Publication 1245, Magnetic Tape Reporting for Forms W-4.

(g) Publication 1255, Requirements and Conditions for Filing Forms 1098, 1099, 5498, and W-2G on 8 Inch Diskette.

.08 This procedure supersedes the following:

Rev. Proc. 89-43 published in Publication 1220 (Rev. 7-89) [1989-2 C.B. 494], Requirements and Conditions for Filing Forms 1098, 1099, 5498 and W-2G on Magnetic Tape, 5 1/4 and 3 1/2 Inch Magnetic Diskettes.

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

SEC. 2. NATURE OF CHANGES--CURRENT YEAR (TAX YEAR 1990)

.01 PROGRAMMING CHANGES--Part B--"Magnetic Media Specifications"

Payer/Transmitter "A" Record:

(a) Field Positions 2-3--"Payment Year"--must be incremented by one year (from 89 to 90).

(b) Field positions 42-43--"Magnetic Tape Filer Indicator"--Starting this year, magnetic tape filers MUST code the letters "LS," in uppercase letters, in Positions 42-43. This change is required for MAGNETIC TAPE FILERS AND TAPE CARTRIDGE FILERS ONLY. Diskette filers may continue to code blanks in these positions.

Payee "B" Record:

(a) Field Positions 2-3--"Payment Year"--must be incremented by one year (from 89 to 90).

(b) Field Positions 4-5--"Document Specific Code"--

The following categories for Form 1099-R Distribution Codes will now be:

(1) "Early (premature) distribution, no known exception"--Code 1

(2) "Early (premature) distribution, exception applies (as defined in section 72(q), (t), or (v))"--Code 2

(3) "Section 1035 exchange"--Code 6

(4) "Normal distribution"--Code 7

(5) Excess contributions plus earnings/excess deferrals (and/or earnings) taxable in 1990--Code 8

(6) Excess contributions plus earnings/excess deferrals taxable in 1989 --Code P

(7) Excess contributions plus earnings/excess deferrals taxable in 1988 --Code D

NOTE: IT WILL NO LONGER BE VALID TO CODE BLANKS IN BOTH POSITIONS 4 AND 5 OF THE PAYEE "B" RECORD FOR FORM 1099-R. YOU MUST PROVIDE AT LEAST ONE DISTRIBUTION CODE FOR THIS FORM. ALSO, A NUMERIC CODE MUST BE ENTERED IN ALL CASES EXCEPT WHEN CODE P OR D IS USED. HOWEVER, WHEN USING CODE P FOR AN IRA DISTRIBUTION UNDER SECTION 408(d)(4), YOU MAY ALSO ENTER CODE 1, IF IT APPLIES. IF MORE THAN ONE NUMERIC CODE IS APPLICABLE TO A DISTRIBUTION, YOU WILL NOW NEED TO REPORT TWO SEPARATE PAYEE "B" RECORDS.

(c) Field Positions 24-43--"Payer's Account Number for Payee"--In the past, if you had fewer than 20 characters, you were to left-justify the field. Now, you may EITHER left- or right-justify this field, and fill the remaining positions with blanks.

(d) Field Position 44--"IRA/SEP Indicator"--Starting this year, if you Code a "1", "2", "3", "4", "5", or "7" in either Position 4-5 of the Payee "B" Record (Document Specific Code) for Form 1099-R AND if you are reporting a distribution for an IRA or SEP, you will code a "1" in Position 44. If you are not reporting an IRA or SEP distribution, code a blank in this field.

End of Payer "C" Record--No changes.

State Totals "K" Record--No changes.

End of Transmission "F" Record--No changes.

.02 EDITORIAL CHANGES--PART A, "GENERAL"

.01 There have been numerous editorial changes due in part to the impact of the Revenue Reconciliation Act of 1989. IRS recommends that you read this publication in its entirety to ensure that you report properly. The changes are as follows:

(a) The Revenue Reconciliation Act of 1989 changed some of the magnetic media reporting requirements and penalty provisions. See Notice 90-15, printed in the IR Bulletin 1990-7 on February 12, 1990, for further information.

(b) Starting this year, IRS/MCC will be accepting information returns, both originals and corrections, by way of electronic filing as well as magnetic media. Therefore, a new section (Part C) has been added, and references to electronic filing have been made throughout this publication.

(c) The title of Publication 1220 has changed from "Requirements and Conditions for Filing Forms 1098, 1099, 5498, and W-2G on Magnetic Tape, 5 1/4 and 3 1/2 Inch Magnetic Diskettes" to "Specifications for Filing Forms 1098, 1099 series, 5498, and W-2G Electronically or on Magnetic Tape, Tape Cartridge, 5 1/4 and 3 1/2 Inch Diskettes," to incorporate the tape cartridge and electronic filing specifications.

(d) Added a new section (Part D) to provide miscellaneous information concerning the magnetic media reporting of information returns. This section contains a list of all of the magnetic media-related forms and publications available from IRS/MCC. This section also contains a table to provide the Federal dollar criteria requirements for reporting of information returns that can be compared with Table 2 in Part A, Section 16 that provides the individual state dollar criteria requirements.

(e) Added the IRS toll-free telephone number for those filers with tax law questions in Part A, Sec. 1.04, and Part A, Sec. 3.05(c).

(f) The title for the publication containing the 1099 instructions has changed in 1990 from "Instructions for Forms 1099, 1098, 5498, 1096, and W-2G" to "Instructions for Forms 1099, 1098, 5498, and W-2G". Therefore, the references in this publication have been changed accordingly.

(g) Part A, Sec. 4, "Filing Requirements", has been changed to reflect the impact of the Revenue Reconciliation Act of 1989, including:

(1) All Forms 1098, 1099 series, 5498, and W-2G are to be filed on magnetic media with IRS if you have 250 or more of any of them SEPARATELY. None of the forms will be aggregated.

(2) The "look-back" rule has been RESCINDED which stated that you are required to file on magnetic media this year if you had the requirement to file in the previous year. You are only required to file this year if you exceed the filing threshold (250) for Tax Year 1990.

(h) Part A, Sec. 6, "Vendor List," has been added to provide the vendor list that IRS/MCC maintains for those filers who wish to file on magnetic media but are having difficulty finding software companies or service bureaus in their area. This section will provide information on how to order the list if you are a filer, and how to be added to the list if you are a vendor.

(i) In the past, filers were required to apply for different Transmitter Control Codes (TCC) for different types of media. This is no longer necessary. (See Part A, Sec. 7, Form 4419, "Application for Filing Information Returns Magnetically/Electronically.") If you have more than one TCC already assigned to you, you may use any that you wish.

(j) A note was added to Part A, Sec. 7, encouraging filers to submit application Form 4419 at least 30 days before the due date of the returns to allow IRS/MCC time to process the application. However, IRS/MCC will still accept applications up to the filing due date.

(k) A note was added to Part A, Sec. 7, concerning filers who file on magnetic media with IRS/MCC, but still submit Form 1096, Annual Summary and Transmittal of U.S. Information Returns, to the IRS Service Center that processes paper information returns. If you file your information returns on magnetic media with IRS/MCC, use transmittal Form 4804 to submit your data, NOT Form 1096.

(l) Beginning this year, IRS/MCC will NOT return media to the filers, whether it is test, original, or correction data, after successfully processing the media. (See Part A, Sec. 12, "Processing of Magnetic Media Returns.") Your files will only be returned if a replacement file is necessary.

(m) A note was added to Part A, Sec. 13, "How to File Corrected Returns," concerning filers who submit late filed information returns as correction documents instead of originals (coding a "G" code in the Payee "B" Record).

(n) In the past, if you were correcting a bad payee address, you were instructed to correct the address using two transactions. This has been changed in the chart in Part A, Sec. 13. It now takes only one transaction to correct a bad payee address, UNLESS you are also correcting a bad payee name or TIN with the same correction. It will then still require two transactions to correct the bad address.

(o) Part A, Sec. 13 has information concerning the impact of the Revenue Reconciliation Act of 1989 upon the submission of corrected returns, and when IRS/MCC can process your corrections. It also refers you to the 1990 "Instructions for Forms 1099, 1098, 5498, and W-2G" for specific information concerning the due date for filing information returns, and any penalties that may apply to returns considered to be filed late or incorrectly.

(p) Part A, Sec. 14, "Taxpayer Identification Number (TIN)," has been rewritten to remove tax law information and to add information concerning the creation of Name Controls.

(q) The section on contacting IRS/MCC has been moved for easy reference to Part A, Sec. 3, "How to Contact the IRS Martinsburg Computing Center." Information was added to this chapter to instruct filers when it is appropriate to contact IRS/MCC, and if it is not appropriate, where the information can be obtained.

(r) In Part A, Sec. 19, "Major Problems Encountered," five problems were added (numbers 11, 12, 13, 14, and 15).

(s) Added the IRS/MCC Telecommunication Devices for the Deaf (TDD) telephone number in Part A, Sec. 3.03.

.03 EDITORIAL CHANGES--PART B, "MAGNETIC MEDIA SPECIFICATIONS"

.01 The following editorial changes were made to Part B, Sec. 1-9:

(a) Part B, Sec. 2, information was added concerning IRS/MCC accepting IBM 3480 compatible tape cartridges for Tax Year 1990 data, and the tape cartridge specifications are provided.

(b) Part B, Sec. 4.04, "Payer/Transmitter "A" Record," indicates that the first record in your magnetic media file will always be a "Payer/Transmitter "A" Record."

(c) Part B, Sec. 4, "Payer/Transmitter "A" Record," the following changes were made to the "AMOUNT INDICATOR FIELDS."

(1) For Forms 1099-B, 1099-DIV, 1099-G, 1099-INT, 1099-MISC, 1099-OID, and 1099-PATR, the term for "Federal Income Tax Withheld" has been further defined as "Backup Withholding."

(2) For Form 1099-R, a Note 2 has been added referring you to the 1990 "Instructions for Forms 1099, 1098, 5498, and W-2G" for the definition of Federal Income Tax Withheld, and how it is applied to Form 1099-R reporting.

(3) For Form 1099-B, Amount Code 7 changed to "Unrealized profit or (loss) on open contracts-- 12/31/89," and Amount Code 8 changed to "Unrealized profit or (loss) on open contracts--12/31/90."

(4) For Form 1099-DIV, the note has been changed to state that Amount Code 1 MUST equal the sum of Amount Codes 2, 3, 4, and 5.

(5) For Form 1099-INT, Amount Code 5, title changed to "Foreign tax paid."

(6) For Form 1099-MISC, Amount Code 3, title changed to "Prizes, awards, etc."

(7) For Form 1099-OID, Amount Code 1, title changed to "Original issue discount for 1990."

(8) For Form 5498, Amount Code 1, title changed to "Regular IRA contributions made in 1990 and 1991 for 1990." In the Note for Form 5498, any references to calendar years have been incremented by one year.

(d) Descriptive information was added, and record layout was revised to add the "Magnetic Tape Filer Indicator" in positions 42-43.

(e) Positions 44-48, Transmitter Control Code (TCC)--added a sentence instructing filers to NOT enter more than one TCC per file.

(f) Position 49--Foreign Corporation Indicator--added a note that some filers are automatically coding a "1" in this position to indicate a foreign corporation, whether it is or not. Since IRS processes foreign payer information differently from domestic payer information, this has caused processing problems. The payer may be subject to a penalty for providing incorrect information to IRS for any records coded as foreign that are not.

(g) Part B, Sec. 6, "Payee "B" Record," for Form 1099-R, the field title "Category of Distribution" was changed to "Distribution Code." Also, some category titles changed under Description and Remarks to:

(1) Early (premature) distribution, (no known exception)--Code 1

(2) Early (premature) distribution, exception applies (as defined in Section 72(q), (t), or (v))--Code 2

(3) Section 1035 exchange--Code 6

(4) Normal distribution--Code 7

(5) Excess contributions plus earnings/excess deferrals (and/or earnings) taxable in 1990--Code 8

(6) Excess contributions plus earnings/excess deferrals taxable in 1989 --Code P

(7) Excess contributions plus earnings/excess deferrals taxable in 1988 --Code D

(h) Part B, Sec. 6, "Payee "B" Record", for Form 1099-R, added a sentence under "Description and Remarks" that you MUST enter at least one numeric code from the table that provides the categories for distribution in positions 4-5 of the Document Specific Code, Payee "B" Record, except when Code P or D is used. Also, if more than one numeric code is applicable, two separate Payee "B" Records are required.

(i) Positions 24-43--"Payer's Account Number for Payee," the instruction to left-justify and fill remaining positions with blanks has changed to EITHER left- or right-justify, and fill remaining positions with blanks.

(j) Positions 45-46--"Percentage of Total Distribution," a note was added to clarify that the field is only two positions in length since the figure MUST be 99% or less, and instructs how to round off fractions. If the percentage is 100, leave this field blank.

(k) Form 1099-S, Field Positions 379-417, "Description", added a statement that if you enter the address of the property being reported, include the state and ZIP code where the property is located.

(l) Part B, Sec. 7, End of Payer "C" Record, instructions were added that submitting files with missing or incorrect End of Payer "C" records will result in your media being returned for correction.

SEC. 3. HOW TO CONTACT THE IRS MARTINSBURG COMPUTING CENTER

.01 Magnetic media processing for all service centers is centralized at IRS/MCC. Your magnetic media files containing information returns covered by this revenue procedure, and all requests for IRS magnetic media-related publications, information, undue hardship waivers, requests for extensions of time to file, or magnetic media-related forms are to be directed to the following addresses:

If by Postal Service:

.03 IRS/MCC has installed Telecommunication Devices for the Deaf (TDD). The number is 304-267-3367.

.04 Requests for 1099 paper returns, publications or forms not related to magnetic media processing, or paper Forms W-2/W-2P, MUST be requested by calling the "Forms Only Number" listed in the local telephone directory, or by calling the IRS toll-free number 1-800-424-FORM (1-800-829-FORM after September 30, 1990).

.05 Do NOT contact IRS/MCC if:

a. You have a question concerning filing Forms W-2/W-2P, either on paper or magnetic media, with SSA. You MUST contact your local SSA office for this information; therefore, IRS/MCC will refer you to SSA.

b. You want to order paper forms for information return filing, including paper Forms W-2/W-2P. IRS/MCC does NOT stock any paper forms for information return or wage reporting. Call the IRS toll-free number for forms (1-800-424-FORM, 1-800-829-FORM after September 30, 1990), or call your local IRS office to order paper forms.

c. You have a question concerning the completion of the information return or Form W-2/W-2P. (For example, "How do I report a premature distribution on Form 1099-R?"). Call the IRS toll-free number (1-800-424-1040, 1-800-829-1040 after September 30, 1990) for such information.

d. You have received a penalty notice and you need additional information, or you are requesting an abatement of the penalty. Most penalty notices contain an IRS representative's name and phone number to contact with questions. This person will be most familiar with your particular case.

The letter may instruct you to respond in writing within a certain timeframe. IRS/MCC does NOT issue penalty notices, therefore, it does NOT have the authority to abate penalties. You MUST contact the service center that issued the penalty notice if you have questions, or if you are requesting abatement of the proposed penalty.

SEC. 4. FILING REQUIREMENTS

.01 Section 6011(e)(2)(A) of the Internal Revenue Code as amended by the Revenue Reconciliation Act of 1989 (Public Law No. 101-239 (1989) 103 Stat. 2106, Section 7713), requires any person, including corporations, partnerships, individuals, estates, and trusts, who file 250 or more information returns to file such returns on magnetic media. This requirement applies separately for each type of form. The filer also has the option of filing such returns electronically in lieu of magnetic media.

Thus, for example, if a person is required to file 200 returns on Form 1099-INT and 350 returns on Form 1099-DIV for a calendar year, the person is not required to file Forms 1099-INT on magnetic media, but is required to file Forms 1099-DIV on magnetic media.

.02 All filing requirements that follow apply individually to each reporting entity as defined by its separate Taxpayer Identification Number (TIN), Social Security Number (SSN), or Employer Identification Number (EIN). For example, if you are a corporation with several branches or locations and each uses the same EIN, you must aggregate the total volume of returns to be filed for that EIN and apply the filing requirements to each type of return accordingly.

.03 The following requirements apply separately to both originals and corrections filed on magnetic media:

1098 250 OR MORE OF ANY of these forms require magnetic

.05 Filers who are required to submit their information returns on magnetic media may choose to submit their documents by electronic filing instead. (See Part C.) Filers who submit their information returns electronically are considered to have satisfied the magnetic media filing requirements.

.06 In the past, if you were required to file on magnetic media for a particular tax year, you were automatically required to file on magnetic media for the following tax year, regardless of the volume of returns. The Revenue Reconciliation Act of 1989 eliminated this "look-back" rule. Therefore, if you were required to file on magnetic media for Tax Year 1989, and the volume of documents you will be submitting for Tax Year 1990 is less than 250, you are not required to file on magnetic media for Tax Year 1990.

SEC. 5. FORM 8508, REQUEST FOR WAIVER FROM FILING INFORMATION RETURNS ON MAGNETIC MEDIA

.01 If you are required to file on magnetic media but fail to do so (or to file electronically in lieu of magnetic media filing), and you do not have an approved waiver on record, you may be subject to a failure to file penalty.

.02 Any person required to file original or corrected returns on magnetic media may request a waiver from these filing requirements if such filing would create an undue hardship by submitting Form 8508, Request for Waiver From Filing Information Returns on Magnetic Media, with IRS/MCC.

.03 If a waiver for original documents is approved, a waiver for corrections to these documents will be automatically approved. However, if you submit your original returns on magnetic media but not your corrections, then a waiver must be requested for corrections only if they exceed the filing threshold of 250 returns.

.04 Generally, only the Payer may sign the Form 8508; however, the transmitter may sign if they have a power-of-attorney from the respective payers, and a copy of the power-of-attorney is attached to the Form 8508.

.05 A separate Form 8508 must be submitted for each payer. Do not submit a list of payers. Specify the type of returns for which the waiver is being requested on the Form 8508 (e.g., 1099-DIV, 1099-A, etc.).

.06 The waiver, if approved, will provide exemption from magnetic media filing for one tax year only. Filers may not apply for a waiver for more than one tax year at a time; application must be made each year a waiver is necessary.

.07 Copies of the Form 8508 are included in this publication, or may be obtained from other IRS offices. Form 8508 may be computer-generated as long as it contains all the information requested on the original form, or it may be photocopied.

.08 All requests for magnetic media related undue hardship exemptions must be submitted to IRS/MCC at least 90 days before the due date of the return except as stated in Sec. 5.08. IF A REQUEST IS NOT POSTMARKED AT LEAST 90 DAYS BEFORE THE DUE DATE OF THE RETURN, IT WILL NOT BE CONSIDERED. Therefore, for Forms 1098, 1099 series, and W-2G, the waiver request must be submitted to IRS/MCC with a postmark date of November 30. For Forms 5498, the waiver request must be submitted to IRS/MCC with a postmark date of March 2. Any waiver requests received with postmarks after the deadline(s) will be automatically denied.

.09 All magnetic media-related undue hardship requests for Forms W-2/W-2P are to be filed with IRS/MCC, NOT SSA, and must be postmarked at least 90 days before the due date of the return, also. Since Forms W-2/W-2P are due to SSA by February 28, the due date for the waiver request is November 30.

.10 Waivers are granted on a case-by-case basis and are approved at the discretion of the IRS/MCC. You must allow a minimum of 30 days for IRS/MCC to respond to a waiver request.

.11 If your waiver request is approved, keep it for your records. DO NOT send a copy of the approved waiver to the service center where you file your paper returns.

.12 AN APPROVED WAIVER FROM FILING INFORMATION RETURNS ON MAGNETIC MEDIA DOES NOT PROVIDE EXEMPTION FROM ALL FILING; YOU MUST STILL TIMELY FILE YOUR INFORMATION RETURNS ON ACCEPTABLE PAPER FORMS WITH THE APPROPRIATE SERVICE CENTER.

SEC. 6. VENDOR LIST

.01 IRS/MCC will provide you with a list of vendors who support magnetic media filing upon request. This list contains the names of service bureaus that will produce your files for you on the prescribed types of magnetic media, or via electronic filing. It also contains the names of vendors who can provide software packages for filers who wish to produce magnetic media or electronic files on their own computer systems or personal computers. This list is for filer information only, and in no way implies IRS approval or endorsement of their products or services.

.02 IRS/MCC will provide the vendor list to those filers who contact IRS/MCC at the address and phone number shown in Part A, Sec. 3. IRS/MCC WILL NOT PROVIDE ANY COMPANY NAMES OVER THE TELEPHONE.

.03 If you are a vendor that offers a software package, has the ability to produce magnetic media for your customers, or has the capability to electronically file information returns, and you would like to be included on the list, you MUST submit a written request. The written request must include:

a. The company name

b. Address (include the city, state, and ZIP code)

c. Telephone number (include area code)

d. Contact person

e. Type of service provided (for example, service bureau and/or software)

f. Type(s) of magnetic media offered (for example, 1/2 inch magnetic tape; tape cartridge; 8 inch, 5 1/4 inch, and/or 3 1/2 inch diskettes; electronic filing).

.04 You may submit your request to be added to the vendor list at any time. Send the written request to IRS/MCC at the address provided in Part A, Sec. 3. IRS/MCC WILL NOT ACCEPT ANY COMPANY NAMES OVER THE TELEPHONE. The vendor list will be updated once a year, in March, to include new vendors.

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

.01 For purposes of this revenue procedure, the PAYER may be the person making payments; a recipient of mortgage interest payments; a broker; a barter exchange; a person reporting a real estate transaction; a trustee or issuer of an IRA or SEP; or a lender who acquires an interest in secured property or who has reason to know that the property has been abandoned. The TRANSMITTER is the organization submitting the magnetic media file. The payer and transmitter may be the same organization.

Payers or their transmitters are required to complete Form 4419, Application for Filing Information Returns Magnetically/Electronically, to ensure equipment compatibility. A single Form 4419 should be filed no matter how many types of returns the payer or transmitter will be submitting on magnetic media or by electronic filing. For example, if you plan to file Forms 1099-INT and Forms 1099-DIV on magnetic media, submit one Form 4419. If you later wish to file another type of return on magnetic media in the Form 1099, 1098, 5498 or W-2G series, it is not necessary to submit a new Form 4419. If you wish to file both electronically and magnetically, you need only submit one Form 4419.

Copies of Form 4419, for your use, are included in this publication. Please read the instructions on the back of the form very carefully. This form may be photocopied. Requests for additional forms or other information related to magnetic media processing should be addressed to IRS/MCC. (See Part A, Sec. 3 for address.)

.02 Form 4419 can be submitted at any time during the year. However, Form 4419 should be submitted to IRS/MCC at least 30 days before the due date of the return(s) you wish to file on magnetic media. This will allow IRS/MCC the minimum amount of time necessary to process your application and send a response back to you. Otherwise, you may not receive the letter assigning your TCC to you in time for you to code the necessary TCC in your Payer/Transmitter "A" Record (see Part B, Sec. 4 for further information). For documents to be filed electronically, Form 4419 should be submitted as soon as possible, but not later than December 1. (See Part C, Sec. 2.) In the event that your computer equipment or software is not compatible with the IRS equipment, a waiver may be requested so that you may file your returns on paper documents for that tax year.

A five character alpha/numeric Transmitter Control Code (TCC) will be assigned and included in an approval letter. If you have more than one TCC, you must use more than one tape or diskette. You cannot use two TCCs on the same medium. They must be reported separately.

IRS encourages filers who file for multiple payers to submit one application and to use one Transmitter Control Code for all payers. Include a list of all payers and their TINs with the Form 4419. If you file for additional payers in later years, notify IRS in writing providing the additional names and TINs. Do not submit a new application for these additional payers.

Magnetic tape, diskette and electronically filed returns may not be submitted with IRS until the application has been approved and a TCC assigned. This TCC will be entered in the Transmitter Control Code field of the "A" Record--DO NOT enter blanks because your media will be returned.

.03 Upon approval, a magnetic media reporting package containing the appropriate revenue procedures and necessary transmittals, forms, labels, and instructions will be sent to the attention of the contact person indicated on Form 4419. Thereafter, IRS/MCC will send the transmitter a package containing the updated revenue procedure and forms each year. This package will continue to be sent to the contact person indicated on the Form 4419 unless IRS/MCC has received information concerning any changes or updates.

.04 If you have your magnetic media files prepared by a service bureau, you may not need to submit an application to obtain a TCC. Some service bureaus will produce your file for you, code their own TCC on the media, and send it to IRS/MCC for you.

Other service bureaus will prepare your magnetic media files, then send them to you to submit to IRS/MCC. These service bureaus may require you to submit an application to IRS/MCC so that you will be assigned your own TCC to be coded in the Payer/Transmitter "A" Record. (See Part B, Sec. 4.) Contact your service bureau for further information.

.05 Once approved to file magnetically or electronically, you do not need to reapply each year unless:

(a) You discontinue filing magnetically or electronically for a year, since your TCC may have been reassigned by IRS/MCC.

(b) Your magnetic media files were transmitted in the past by a service agency. However, you now have computer equipment compatible with that of IRS and wish to prepare your own files, so you must request your own TCC by filing an application Form 4419.

.06 If any of these conditions apply to you, contact IRS/MCC for clarification. Also, notify IRS/MCC if you had hardware or software changes that would affect the characteristics of the magnetic media or electronic submission. Be sure to refer to your current TCC in all correspondence with IRS/MCC.

.07 If you file on several different types of magnetic media (e.g., tape, 8 inch diskette, and 5 1/4 inch floppy disk) or by electronic filing, you need only submit one Form 4419. In the past, IRS/MCC required filers submitting different types of media to obtain different TCCs. This is no longer necessary. You may use the same TCC on all of your media. For example, if you submit a magnetic tape, an 8 inch diskette, and a 5 1/4 inch floppy disk, and an electronic file, you may use the same TCC for all types of filing. If you already have different TCCs assigned to you, you may choose any of the TCCs to be coded into the Payer/Transmitter "A" Record. It doesn't matter which one you use; however, remember to code only one TCC per medium. Please contact IRS/MCC and indicate which TCC(s) you will not be using so that we can remove them from our files. (See Part A, Sec. 3 for the address and telephone number.)

.08 If you are an approved filer on magnetic media and the name, EIN, or address of your organization or contact person changes, please notify IRS/MCC in writing so that your file may be updated to reflect the current information.

.09 In accordance with section 1.6041-7(b) of the Income Tax Regulations, payments by separate departments of a health care carrier to providers of medical and health care services may be reported on separate returns on magnetic media. In this case, the headquarters will be considered the transmitter, and the individual departments of the company filing reports will be considered payers. A single Form 4419 covering all departments filing on magnetic media should be submitted. One TCC may be used for all departments.

.10 Approval to file on magnetic media or by electronic filing does not imply endorsement by IRS of the computer software or quality of tax preparation services provided.

.11 The magnetic media or electronic file MUST be accompanied by Form 4804 (see Part A, Sec. 9), which will provide IRS with the necessary information. Filing the same information returns either magnetically or electronically, as well as on paper forms, will result in duplicate filing and may result in erroneous penalty notices being sent to the payees.

SEC. 8. TEST FILES

.01 IRS does not require magnetic media or electronic filers to submit test files, except for those filers who wish to participate in the Combined Federal/State Filing Program (see Part A, Sec. 16 for further information concerning combined federal/state filing).

However, IRS encourages first-time magnetic media or electronic filers, and filers of floppy disks or diskettes, to submit a test file for review prior to the filing season.

IRS will determine whether or not your file is formatted correctly, and will check the content of the records to ensure that it meets the specifications of the current revenue procedure.

For those filers who have submitted magnetic media files in previous tax years, sending a test file provides them the opportunity to ensure that their software reflects the annual programming changes; however, submitting a test file is not mandatory for current filers.

.02 If you are a new filer, you must submit a Form 4419 before you send in a "TEST" file. If approved, you will be assigned a five character alpha/numeric Transmitter Control Code (TCC). This TCC must be entered in the TCC field of your Payer/Transmitter "A" Record (see Part B, Sec. 4).

.03 All tape and diskette "TEST" files must be submitted between October 1 and December 15 of each year. Do not submit tape or diskette "TEST" files after December 15. Only a hardcopy printout of the tape or diskette that shows a sample of each type of record used (A, B, C and F) may be submitted after December 15 and it must be postmarked before January 15.

.04 Electronically filed "TEST" files must be submitted between October 1 and January 15. (See Part C, Sec. 3).

.05 The information in the "A" Record must be ACTUAL information--NOT FICTITIOUS. Clearly mark the hardcopy print as "TEST" data and include identifying information such as name, telephone number, and address of a person who can be contacted to discuss its acceptability. If your "TEST" file is acceptable, we will send you an approval letter.

.06 Form 4804, Transmittal of Information Returns Reported on Magnetic Media, must accompany your test magnetic media file. Indicate that the file contains test data by marking the "TEST" checkbox in block 1 on Form 4804. Also, write "TEST" on the external media label, Form 5064. The "TEST" data must be programmed according to the current revenue procedure.

.07 For magnetic media filers, submit a "TEST" file between October 1 and December 15 for the first year you wish to participate in the Combined/Federal State Filing Program. For electronic filers, the time frame will be between October 1 and January 15. A hardcopy print is NOT an acceptable "TEST" file for this program for either magnetic media or electronic filers.

.08 Approved payers or transmitters should send the "TEST" file to IRS/MCC (see Part A, Sec. 3 for the address). See Part C, Sec. 3 for instructions on submitting electronic test files.

.09 IRS/MCC will send an acknowledgement in writing to indicate whether your "TEST" file was good or bad. If it was formatted incorrectly, we will indicate what the problems are in a letter and your file will be returned to you for replacement and resubmission. The "TEST" must be resubmitted by the deadline of December 15, 1990. After IRS/MCC successfully processes your test file, the media will not be returned.

SEC. 9. FILING OF MAGNETIC MEDIA RETURNS AND RETENTION REQUIREMENTS

.01 Form 4804, Transmittal of Information Returns Reported on Magnetic Media, must accompany all magnetic media and electronic submissions. This includes original, correction, replacement, and test data.

.02 In many cases, you can program your computer to generate a substitute Form 4804/4802 that contains the pertinent information. IRS encourages you to computer-generate your transmittal forms, as long as you include the necessary information contained on the most current revision of the form. You may also photocopy this form. If you file for multiple payers and have the authority to sign the affidavit on Form 4804, you should also submit Form 4802, "Transmittal for Multiple Magnetic Media Reporting."

.03 For magnetic media filers, the transmitter may code any combination of payers and/or documents on their media. For example, if you are reporting Forms 1099-INT for Bank A, Forms 1099-DIV for Bank B, and Forms 1098 for Bank C, you need not create 3 separate tapes or diskettes. All 3 banks and all types of documents can be coded on one tape or diskette. If you do create multiple tapes or diskettes, they can all be sent in one package; you need not send a separate package containing each tape or diskette. Be sure to include Form 4804, 4802, or computer-generated substitute with your magnetic media shipment. DO NOT MAIL THE MAGNETIC MEDIA AND THE TRANSMITTAL DOCUMENTS SEPARATELY. Magnetic media files covered by this revenue procedure are to be sent to IRS/MCC. (See Part A, Sec. 3 for the address.)

.04 Since IRS/MCC only processes returns filed magnetically or electronically, paper information returns for information not being filed magnetically or electronically must be submitted 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 IRS/MCC.

.05 DO NOT REPORT DUPLICATE INFORMATION; I.E., IF YOU SUBMIT PART OF YOUR RETURNS ON PAPER AND PART ON MAGNETIC MEDIA (OR VIA ELECTRONIC FILING), BE SURE THE SAME INFORMATION IS NOT INCLUDED IN BOTH SUBMISSIONS.

.06 Form 4804 contains an affidavit that MUST be signed by the payer; however, the transmitter, service bureau, paying agent, or disbursing agent (all hereafter referred to as agent), may sign the affidavit on behalf of the person required to file/payer if the agent has the authority to sign the affidavit under an agency agreement (either oral, written, or implied) that is valid under state law and adds the caption "FOR: (name of payer)."

NOTE: Failure to sign the affidavit on Form 4804 will result in your file being returned to you unprocessed.

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

.08 If returns from different branches or locations for one payer are submitted on the same file, consolidate each type of information return under one Payer/Transmitter "A" Record. For example, all Forms 1099-INT for the same payer on a single file must be sorted together under one Payer/Transmitter "A" Record followed by the appropriate "B" Records and one "C" Record.

.09 Before shipping magnetic media files, include the following:

(a) A signed Form 4804 (or computer-generated substitute).

(b) A Form 4802 if you transmit for multiple payers and have the authority to sign the affidavit on Form 4804.

(c) The magnetic media with an external identifying label (Form 5064) as described in Part B, Sec. 1.02. Be sure to include the proper sequence on this label.

(d) 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 (for example, Box 1 of 3, 2 of 3, 3 of 3).

(e) If you were granted an extension, include a copy of the approval letter with the magnetic media shipment. (See Part A, Sec. 11 for information on how to apply for an extension of time to file.)

NOTE: See Part C, Sec. 4 for electronic filing submission requirements.

.10 IRS will not pay for or accept "Cash-on-Delivery" or "Charge to IRS" shipments of reportable tax information that an individual or organization is legally required to submit.

.11 Files may be returned to you due to coding or format errors. These files are to be corrected and returned to IRS within 45 days from the date of notice or the payer may be subject to a penalty. A copy of page 2 of the letter sent by IRS must be returned with the replacement file.

.12 Payers are required to retain a copy of the information returns filed with IRS or to have the ability to reconstruct the data for at least three years from the reporting due date.

SEC. 10. FILING DATES

.01 The dates prescribed for filing paper returns with IRS also apply to magnetic media or electronic filing. Magnetic media or electronic filing with IRS for Forms 1098, 1099, and W-2G must be on a calendar year basis. Form 5498 is used to report amounts contributed during or after the calendar year but not later than April 15.

.02 Information returns filed on magnetic media for Forms 1098, all types of Forms 1099, and Forms W-2G must be submitted to IRS/MCC postmarked no later than February 28. The due date for furnishing the required copy or statement to the payee is January 31.

.03 Information returns filed on magnetic media for Form 5498 must be submitted to IRS/MCC postmarked no later than May 31. Trustees or issuers of IRAs or SEPs must provide participants with a statement of the value of the participant's account by January 31, in any written format. Statements are due to the participants by May 31 for contributions made to IRAs for the prior calendar year. Form 5498 is filed for contributions to be applied to 1990 that are made between January 1, 1990, and April 15, 1991.

.04 If any due date falls on a Saturday, Sunday, or legal holiday, the due date is extended to the next day that is not a Saturday, Sunday, or legal holiday.

SEC. 11. EXTENSIONS OF TIME TO FILE

.01 A payer may request an extension of time to file information returns by submitting Form 8809, Request for Extension of Time To File Information Returns, to IRS/MCC. This form may be used to request an extension of time for information returns submitted on paper; magnetic media; electronically; or for all three types of submissions.

.02 A transmitter may submit Form 8809 for multiple payers by attaching a list of their names, addresses, and TINs to Form 8809. Also, Form 8809 may be computer-generated or photocopied. Be sure that all the pertinent information is included. If you are requesting extensions of time for more than 50 payers, we strongly encourage you to submit the list of payers, addresses, and EINs on tape or diskette. Contact IRS/MCC for the format. (See Part A, Sec. 3 for the address.) Transmitters who submit the extension of time requests on magnetic media will receive one approval letter from IRS/MCC with an attached listing of the payers with approved extensions.

.03 Request an extension of time in increments of 30 days AS SOON AS YOU ARE AWARE that an extension is necessary but no later than the due date of the return. The request must be sent to IRS/MCC. (See Part A, Sec. 3 for the address.) You must allow a minimum of 30 days for IRS/MCC to respond to an extension request.

.04 Form 8809 must be postmarked no later than the due date of the return(s) for which you are requesting an extension of time. If you are requesting an extension of time to file several types of forms, you may use one Form 8809, but you must submit Form 8809 to IRS/MCC postmarked no later than the earliest due date. For example, if you are requesting an extension of time to file both Forms 1099-INT and Forms 5498, you must submit Form 8809 postmarked on or before February 28. You may complete more than one Form 8809 to avoid this problem.

.05 IRS will process your Form 8809 and respond in writing. If the extension request is granted, a copy of the approved letter ONLY must be included with the transmittal Form 1096 or Form 4804 (or computer-generated substitute) when the file is submitted. INCLUDE ONLY THE APPROVAL LETTER SENT FROM IRS. DO NOT SEND A COPY OF FORM 8809 WITH EITHER YOUR PAPER DOCUMENTS TO THE SERVICE CENTER, OR YOUR MAGNETIC MEDIA FILE TO IRS/MCC. Also, if you originally requested a 30-day extension and then find you need an additional 30 days, a copy of the first approved extension must accompany your second request. IRS/MCC will not grant more than two extensions of time for a maximum of 60 days.

.06 You can request an extension for only one tax year on Form 8809.

.07 The extension request must be signed by the payer or a duly authorized representative.

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

.09 Copies of the Form 8809 may be obtained from IRS/MCC (see Part A, Sec. 3 for the address), or from other IRS offices. Form 8809 may also be computer-generated as long as it contains all the information requested on the original form, and it may be photocopied.

SEC. 12. PROCESSING OF MAGNETIC MEDIA RETURNS

.01 All data received at IRS/MCC for processing will be given the same protection as individual returns (Forms 1040). IRS/MCC will process your magnetic media files and check that the records were formatted according to the most current revenue procedure. Please be sure that your record format and coding comply with this revenue procedure, which is to be used for the preparation of Tax Year 1990 information returns only.

.02 Revenue procedures are revised annually to reflect legislative and form changes to the information returns.

.03 If your data is formatted incorrectly, or if the file contains information that will cause invalid conditions in the IRS processing (for example, you code all 9's or all zeros in the field for the TIN), we will return your file for replacement.

.04 To distinguish between a correction and a replacement:

A correction is media submitted by the payer to correct records that were successfully processed by IRS, but contained erroneous information.

A replacement is media that IRS has returned to the payer or transmitter due to format errors encountered during processing. After necessary changes have been made, the media must be returned to IRS/MCC to be re-input.

.05 Beginning with Tax Year 1990, (processed in Calendar Year 1991), IRS/MCC will no longer return your files after processing. Therefore, if IRS/MCC returns your file to you, it is because a replacement is needed. Open all packages immediately. Files returned due to format or coding errors must be corrected and returned to IRS/MCC within 45 days from the date of the notice to avoid a failure to file penalty.

IRS/MCC will work with magnetic media filers as much as possible to assist with processing problems. If IRS/MCC calls your office, please respond promptly since we may have information that you need to correct your file.

.06 Do not use special shipping containers for transmitting data to IRS/MCC. Because of the high volume of data received and shipping costs involved, they will not be returned.

.07 When submitting your file to IRS/MCC, please keep in mind that:

a. You may include any of the forms covered by this revenue procedure on one tape, tape cartridge, diskette, or electronic submission. You do not have to separate the different types of forms on different media. For example, one tape or diskette could contain Forms 1098, 1099-INT, 1099-DIV, and 5498 for different payers. You need only identify the different forms and payers with different Payer/Transmitter "A" Records which are coded on the magnetic media. (See Part B, Sec. 4 for details.)

b. You may submit multiple types of media in your shipment. However, submit a separate Form 4804 for each type of media.

c. Enclose your transmittal Form 4804 in with your shipment. Do not send it in a separate mailing. If your shipment is packed in several packages, use label Form 4801 to indicate the number of packages, and put the transmittal in the first package.

d. IRS/MCC will NOT be returning your magnetic media to you after successfully processing it. Therefore, if you want proof that IRS/MCC received your shipment, you may choose to send your submission using a service with tracing capabilities, or that will provide proof of delivery (for example, U.S. Postal Service Certified Mail, Federal Express or UPS.)

SEC. 13. HOW TO FILE CORRECTED RETURNS

.01 The filing requirement thresholds listed in Part A, Sec. 4 apply separately to both original and corrected returns.

EXAMPLE: If you have 100 Forms 1099-A to be corrected, they can be filed on paper since they fall under the 250 threshold. However, if you have 300 Forms 1099-A to be corrected, they must be filed on magnetic media since they meet the 250 threshold. If for some reason you cannot file these corrections on magnetic media, you must request a waiver (see Part A, Sec. 5) before filing on paper, or you may be subject to a penalty. No waiver is required for corrections that fall under the required threshold.

.02 Corrections for the current year should be aggregated and filed no later than August 1 of each year. However, if you discover errors after August 1, you are still required to file corrections so that you will not be subject to a penalty for intentional disregard of the filing requirements. Failure to correct information returns submitted with erroneous information may result in penalties being assessed for failure to provide correct information. ALL FIELDS MUST BE COMPLETED WITH THE CORRECT INFORMATION, NOT JUST THE DATA FIELDS NEEDING CORRECTION. Submit corrections only for the returns filed in error, not the entire file. If your entire file is in error, contact IRS/MCC immediately. If you file corrected returns on paper forms, submit Copy A to the appropriate service center. Furnish corrected statements to recipients as soon as possible.

.03 See the 1990 "Instructions for Forms 1099, 1098, 5498 and W-2G" for information concerning the due date for filing information returns, and any penalties that may apply to returns considered to be filed late or incorrectly. A copy of these instructions is included in your MMR (Magnetic Media Reporting) package each year. This will also contain specific information concerning the impact of the Revenue Reconciliation Act of 1989 on the penalty provisions for ANY documents, including corrections, which are filed after the original filing due date for the information return.

.04 There are numerous types of errors. More than one transaction may be required to properly correct the initial error. A "G" in magnetic media position 7 of the "B" Record is used to indicate a corrected return. You are strongly encouraged to read this ENTIRE section before attempting to make ANY correction.

.05 Corrected returns submitted to IRS on magnetic media, using a "G" coded Payee "B" Record, may be included on the same medium as those corrections without the "G" code; however, separate "A" Records are required. Corrected returns are to be identified as corrections on the transmittal document by marking the appropriate checkbox, and also on the EXTERNAL label of the file.

NOTE: If you discover that your original file omitted certain information returns that should have been included, do not submit those documents as "correction," and do not code the Payee "B" Records with the correction "G" code. They will be considered as late filed original documents and may be subject to a penalty.

.06 The instructions that follow will provide information on how to file corrected returns on magnetic media or by electronic filing for the current tax year. However, if you discover errors in previous years' files, please send us a letter with the following information:

(a) Name and address of payer

(b) Type of error. (Please explain clearly.)

(c) Tax year

(d) EIN

(e) TCC

(f) Number of Payees

This information will be forwarded to the appropriate office and may prevent erroneous notices from being generated against payee accounts. You are also required to furnish corrected statements to the payees.

.07 If you are not required to file your corrections on magnetic media and you file them on paper forms, do not submit the paper returns to IRS/MCC. 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 IRS/MCC. (Refer to Part A, Sec. 3 for the address.) CORRECTED TAPES, TAPE CARTRIDGES, AND/OR DISKETTES WILL NOT BE RETURNED AFTER PROCESSING.

.08 Corrected statements to payees should be clearly identified as "CORRECTED" and should be provided to them as soon as possible.

.09 Use the same name and TIN (SSN or EIN) for the payer on Form 4804/4802 and all related Payer/Transmitter "A" Records.

.10 A transmittal Form 4804 (or computer-generated substitute) is used to transmit magnetic media and electronic files. A Form 4802, Transmittal for Multiple Magnetic Media Reporting, is a continuation sheet for a Form 4804. Use Form 4802 if you file for multiple payers, or submit multiple types of information returns, AND are an authorized agent for the payers. (See Part A, Sec. 9.05.)

.11 On magnetic media and electronic files, the Payee "B" Record provides a 20-position field to enter a Payer's Account Number for the Payee. This same account number may be provided on paper forms. This number will help identify the appropriate incorrect return if more than one return is filed for a particular payee. DO NOT ENTER A TIN (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 THAT WILL DISTINGUISH THE SPECIFIC ACCOUNT. THIS NUMBER SHOULD APPEAR ON THE INITIAL RETURN AND ON THE CORRECTED RETURN IN ORDER TO IDENTIFY AND PROCESS THE CORRECTION PROPERLY. THIS NUMBER IS ALSO PROVIDED WITH YOUR INVALID/NO-TIN NOTIFICATION BY THE IRS AND MAY HELP YOU DETERMINE THE BRANCH OR SUBSIDIARY REPORTING THE TRANSACTION.

.12 REVIEW THE CHART THAT FOLLOWS. The types of errors made normally fall under one of the two categories listed. Next to each type of error made, you will find a list of instructions on how to properly file the corrected return for that type of error. READ ALL OF THE INSTRUCTIONS LISTED AND FOLLOW CAREFULLY 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 CORRECTED RETURNS.

       Guidelines for Filing Corrected Returns On Magnetic Media

.01 Section 6109 of the Internal Revenue Code, and the regulations thereunder, require a person whose Taxpayer Identification Number (TIN) must be shown on an information return to furnish his or her TIN to the person required to file the information return. 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.

.02 The payee'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 ZEROS. IRS validates the SSN by using the Name Control of the surname (last name) of the individual who has been assigned this number. For this reason, provide the surname in the First Payee Name Line and/or the Name Control in positions 8-11 of the Payee "B" Record (see Part B, Sec. 6). Failure to provide this information may make it impossible for IRS to validate the SSN.

.03 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 payer and payee names with associated TINs should be consistent with the names and TINs used on other tax returns.

Also, the name and TIN provided must belong to the owner of the account. If the account is recorded in more than one name, furnish the name and TIN of one of the owners of the account. The TIN provided MUST be associated with the name of the payee provided in the first name line of the 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.

.04 Failure to provide the correct name with the payee TIN, or failure to provide a valid TIN, could result in an Invalid/No TIN notice (sometimes referred to as "B" notice) being generated for that TIN.

.05 The following charts will help you determine the TIN to be furnished to IRS for those persons for whom you are reporting information (payees).

            CHART 1. Guidelines for Social Security Numbers

.01 Magnetic media reporting of the information returns listed in Part A, Sec. 4 applies only to the Copy A information submitted to IRS.

.02 Payers are responsible for providing statements to the payees as outlined in the 1990 "Instructions for Forms 1099, 1098, 5498 and W-2G."

.03 Refer to 1990 "Instructions for Forms 1099, 1098, 5498, and W-2G" for instructions and changes to reporting information returns on paper.

.04 Send all information returns filed on paper to the appropriate service center, not to IRS/MCC.

.05 If you file your information returns on magnetic media, DO NOT file the same returns on paper, since that will result in duplicate filing. Filing on magnetic media or by electronic filing takes the place of submitting the documents on paper. In some cases, you may want to file your original documents on magnetic media or electronically, but submit your corrections on paper documents. This is allowable as long as your corrections do not exceed the filing threshold; if the volume of corrections does exceed the threshold, you MUST have an approved waiver to submit your corrections on paper.

SEC. 16. COMBINED FEDERAL/STATE FILING PROGRAM

.01 The Combined Federal/State Program was established to simplify information returns filing for the taxpayer by providing the tax information to participating states free-of-charge. IRS/MCC will forward this information to participating states for approved filers so separate reporting to those states is not necessary. FORMS 1098, 1099-A, 1099-B, 1099-S AND W-2G CANNOT BE FILED UNDER THIS PROGRAM.

.02 To request approval to participate, a "TEST" file coded for this program, MUST be submitted by the transmitter to IRS/MCC between October 1 and December 15 using the revenue procedure that will be used for the actual data files.

.03 Attach a letter to the Form 4804 submitted with the "TEST" file which indicates that you wish to participate in this program.

.04 The "TEST" file is only required for the first year. Once you are approved, you need not resubmit tests each year except when notified by IRS. (See Part A, Sec. 8 for general guidelines on submission of "TEST" files.) Each record, both in the "TEST" file and the "ACTUAL" data file, must conform exactly to the revenue procedure for that tax year. Records must be coded using each state's dollar criteria from TABLE 2 of this section for each type of return.

.05 If your "TEST" file is acceptable, we will send you an approval letter, and a Form 6847, Consent for Internal Revenue Service to Release Tax Information, which the payer MUST complete, sign, and return to IRS/MCC before any tax information can be released to the state. Be sure to write your TCC on Form 6847. If your "TEST" file is not acceptable, we will return your media with a letter indicating what the problems were, and your replacement "TEST" file must be returned to IRS/MCC postmarked on or before December 15.

.06 A separate Form 6847 is required for each payer; therefore, this form may be photocopied so that you may provide copies to all of the payers for whom you submit magnetic media or electronic files. A transmitter may not combine payers on one Form 6847 even though acting as Attorney-in-Fact for several payers. Form 6847 may be computer-generated as long as it includes all information that is on the original form. If the Form 6847 is signed by an Attorney-in-Fact, the written consent from the payer must clearly indicate that the Attorney-in-Fact is empowered to authorize release of the information.

.07 If you file for multiple payers, code the records only for participating states for those payers who have properly submitted Form 6847. Do not submit "ACTUAL" data records coded for the Combined Federal/State Program WITHOUT PRIOR APPROVAL from IRS.

.08 If you had applied to participate in this program in the past but did not meet the requirements, you must resubmit the Form 6847 with the proper signatures as specified.

.09 Some participating states require separate notification that you are filing in this manner. Since IRS acts as a forwarding agent only, IT IS YOUR RESPONSIBILITY TO CONTACT THE APPROPRIATE STATES FOR FURTHER INFORMATION.

.10 Approval to participate in the Combined Federal/State Program will be revoked if files submitted do not totally conform to the specifications in this revenue procedure.

.11 IT IS THE FILER'S RESPONSIBILITY TO TRANSMIT CORRECTED RETURNS TO THE STATES.

.12 Participating states and corresponding valid state codes 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. It is the filer's responsibility to file information returns with those nonparticipating states.

.13 The appropriate state code MUST be entered for those documents which meet the state's filing requirements (see TABLE 1). DO NOT USE STATE ABBREVIATIONS. 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).

.14 To simplify filing, several of the participating states have provided lists of their information return reporting requirements (see TABLE 2). It is your responsibility to contact the participating states to verify the criteria provided in this table.

.15 If you have met ALL of the above conditions:

(a) You must submit all records coded exactly as required by this revenue procedure.

(b) The "C" Record must be followed by a "K" Record for each state. The "K" Record indicates the number of payees 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. 8, for a description of the "K" Record.)

(d) The last "K" Record is followed by an "A" Record or End of Transmission "F" Record (if this is the last record of the entire file).

             TABLE 1. PARTICIPATING STATES AND THEIR CODES

 Element                 Description

.01 You MUST use the following state abbreviations when developing the state code portion of address fields. (This table provides state abbreviations only and does not represent those states participating in the Combined Federal/State Filing Program. For a list of states that participate in the Combined Federal/State Filing Program, refer to Part A, Sec. 16, Table 1.)

 State                                                            Code

.03 For Foreign Country addresses you may use a 40-position free format in lieu of the 29-2-9 City, State, and ZIP Code format; however, this is only allowable if a "1" appears in the Foreign Country Indicator Field of the "B" Record. You may choose to spell out the name of the foreign country or use abbreviations.

.04 When reporting APO/FPO addresses in Payee documents, the following format should be used:

     EXAMPLE:   Payee Name           PVT Willard J. Doe

After preparing your files, we encourage you to verify the format and content of each type of record to ensure the accuracy of your data submission. This may eliminate the need for IRS/MCC to return your file for replacement, and therefore reduce the likelihood of a penalty assessment for incorrect submissions. We strongly urge you to print your data before shipping to make sure you have good data in your records according to the format found in this revenue procedure. This is especially true for those filers who have either had their files prepared by a third party service bureau, or who have purchased pre-programmed software packages. If you purchased your software package for a previous tax year, it will no longer be valid for reporting your tax year 1990 information returns, since there were programming changes.

Following are some of the most frequently encountered problems with magnetic media files submitted to IRS/MCC which result in files being returned to the filer:

1. The Payment Amount Fields in the Payee "B" Record do not correspond to the amount indicators in the Payer "A" Record.

If Amount Indicators 2, 4 and 7 appear in positions 23, 24 and 25 of the Payer "A" Record, then the Payee "B" Record must show payment amounts in Fields 2 (positions 61-70), 4 (positions 81-90) and 7 (positions 111-120), right-justified and unused positions zero filled.

    EXAMPLE: "A" RECORD 247bbbbbb -- (b = blank)

Money amounts must be right-justified and zero (0) filled. DO NOT USE BLANKS. Each payment amount must be entered in U.S. dollars and cents; however, do not use dollar signs, decimal points, or commas, as these characters are understood. For example, if you are reporting a money amount of $100.00, your payment amount field would be coded "0000010000."

DO NOT ENTER NEGATIVE AMOUNTS EXCEPT for Amount Indicators 2, 6, 7, 8 or 9 of the Form 1099-B. A negative overpunch in the units position may be used instead of a minus sign to indicate negative amounts. If a plus or minus sign or negative overpunch is not used, the amount is assumed to be positive.

3. Data is in prior year's format.

Revenue procedures are updated each year and you must use the current revenue procedure to format your programs. DO NOT USE 1989 REVENUE PROCEDURES FOR 1990 FILING.

4. Discrepancy between IRS totals and totals in Payer "C" Records.

The Payer "C" Record is a summary record for a type of return for a given payer as reported in the Payee "B" Records. IRS computers automatically compute the total number of payees and total payment amounts in the Payee "B" Records and these totals are compared against the totals in the Payer "C" Records. These totals are also manually checked against the totals provided on Forms 4804/4802. Payers should verify the accuracy of the records because imbalances necessitate return of files for correction.

5. Incorrect/Invalid EIN in Payer "A" Record.

The Payer's federal EIN reported in position 7-15 of the Payer "A" Record must be correct in order for IRS to process the media. Be sure the EIN reported on the Forms 4804 and Form 4802 matches the EIN reported in the "A" Record. Do not enter blanks, hyphens, alphas, all 9s or all 0s. This field may be left blank for foreign corporations not required to have an EIN if the foreign indicator code is present in the "A" Record. Also, please double check for transposed numbers because an incorrect EIN will cause records to go unpostable, which means the records will not post to the Master File.

6. Bad Format.

We receive magnetic tape formatted using 8-inch diskette specifications and vice versa. BE SURE TO USE THE PROPER REVENUE PROCEDURE FOR FORMATTING YOUR DATA. Use this publication (1220) for formatting magnetic tape, tape cartridge, 5 1/4 and 3 1/2 inch diskettes, or your electronic files. Use Publication 1255 for formatting 8-inch diskettes ONLY.

7. Reporting Payments on Form 1099-R, Payer "A" Record.

There is no provision for reporting the Distribution Code (entered in Box 7 on the paper Form 1099-R) in the Payer "A" Record. This information is reported in the Document Specific Code of the Payee "B" Record. Therefore, the Amount Indicators in the Payer "A" Record should be reported as follows if you are reporting all 8 Amount Codes: 12345689b. Amounts are entered in ascending sequence, left-justified, and unused positions blank filled. The Amount Indicator may change from year to year. Please be sure your Payer "A" Record only contains the Amount Indicators specified in the Revenue Procedure.

8. Block size exceeds 25,200 positions.

Be sure your records do not span blocks. Even though the size was changed from 10,000 to 25,200 positions, filers are still exceeding the block size.

9. Bad or incomplete address in the Payer "A" Record.

The Payer's address in Field Position 131-170 of the Payer "A" Record should be left-justified and blank filled, and must agree with the address provided on Forms 4804/4802. Payer's City, State and ZIP MUST appear in positions 171-210 and must be left-justified and blank filled.

10. Record length is invalid.

Beginning in Tax Year 1987, the record length was changed from 360 to 420 positions. Some filers are still using old programs that create records of 360 positions, which are now unacceptable.

RECORDS MUST BE A FIXED 420 POSITIONS.

11. The City/State/ZIP Code in the Payee "B" Record is in wrong format.

The Payee City (Positions 282-310), State (Positions 311-312), and ZIP Code (Positions 313-321) in the Payee "B" Record MUST be coded in the correct positions. If your program cannot code this information in the correct fields, you MUST request a deviation in writing from IRS/MCC. Files submitted with the City/State/ZIP Code information coded incorrectly, and for which a deviation has not been approved by IRS/MCC, will be returned for replacement.

12. Invalid type of return indicator.

You must indicate the type of return submitted by inserting the appropriate code in Position 22 of the Payer/Transmitter "A" Record. For example, if the type of return being reported is Form 1099-INT, a code "6" must be inserted in Position 22.

13. Form W-2/W-2P information submitted on same media as Form 1099 information.

Form W-2/W-2P information is submitted to the Social Security Administration (SSA), and NOT to IRS/MCC. The Social Security Administration has its own magnetic media reporting program for wage information, and the media containing Forms W-2/W-2P is submitted to SSA. Any media received at IRS/MCC which contains Form W-2/W-2P information will be returned to the filer. Contact your local SSA office for information concerning filing Forms W-2/W-2P on magnetic media.

14. Excessive withholding credits.

For most information returns, other than Form 1099-R, withholding credits should NOT exceed 20 percent of the income reported. Validate the total reported in the withholding field against the total income reported.

15. Incorrect format for TINs in the Payee "B" Record.

A check of your "B" records should be made to ensure the Taxpayer Identification Numbers (TIN) are formatted correctly. There should be nine digits, no alpha characters, no hyphens or commas. Incorrect formatting of TINs may result in a penalty.

PART B. MAGNETIC MEDIA SPECIFICATIONS

SECTION 1. GENERAL

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

.02 An external label, Form 5064, must appear on each tape and diskette submitted for processing. If diskettes are used and the operating system is not MS/DOS compatible, the operating system and hardware information MUST be provided. Failure to provide this information will result in the diskette being returned to the filer. The following information is needed on the label:

(a) The transmitter's name. (b) The five character alpha/numeric Transmitter Control Code.

(c) The tax year of the data (i.e., 1990).

(d) Operating system software and hardware used to create the file (e.g., Apple MacIntosh/MacWrite V2.2).

(e) Document types (e.g., 1098, 5498, INT, DIV, MISC, etc.).

(f) The total number of Payee "B" Records on the media.

(g) An in-house volume serial number which may be assigned by the transmitter to the magnetic media (this is optional for those organizations which assign their own numbers to their media). If you do not assign media numbers, leave this blank.

(h) The sequence of each tape or diskette (e.g., 001 of 008, 002 of 008, etc.). However, if your file is complete on one tape or diskette, then the sequence will be 001 of 001.

The information on the external media label, Form 5064, will assist IRS in processing 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 they will not be returned.

.03 A provision is made in the Payee "B" Records for Special Data Entries. These entries are optional. If the field is not utilized, enter blanks to maintain a fixed record length of 420 positions. The field is intended to serve one or both of these purposes:

(a) Contain information required by state or local governments. Filers who wish to use this option for satisfying state or local reporting requirements should contact their state or local department of revenue for filing instructions. (Also refer to Part A, Sec. 16.)

(b) This field is also reserved for the filer's own personal use and may be used at the discretion of the filer to include information related to each individual return. IRS will not use the information supplied in this field. The length of this field will vary depending on the type of return. For Forms 1098, 1099-DIV, 1099-G, 1099-INT, 1099-MISC, 1099-PATR, 1099-R, and 5498, there are 67 positions reserved for Special Data Entries. For Form 1099-A, there are 21 positions; for Form 1099-B, there are 10 positions; for Forms 1099-OID, there are 28 positions; and for Forms 1099-S, there are 23 positions. Form W-2G has no available space within the Payee "B" Record for Special Data Entries.

.04 All records must be a fixed length of 420 positions. Use "K" Records only if you are an approved Combined Federal/State filer.

SEC. 2. TAPE SPECIFICATIONS

.01 In most instances, IRS can process any compatible magnetic tape files. Tape files must be EBCDIC, ASCII or BCD and must meet the following criteria:

(a) 9 track EBCDIC (Extended Binary Coded Decimal Interchange Code) with:

(1) Odd Parity

(2) A density of 800, 1600, or 6250 BPI.

(3) If you use UNISYS Series 1100, you must submit an interchange tape.

(b) 9 track ASCII (American Standard Coded Information Interchange) with:

(1) Odd Parity

(2) A density of 800, 1600, or 6250 BPI.

(c) 7 track BCD (Binary Coded Decimal) with:

(1) Either Even or Odd Parity

(2) A density of 556 or 800 BPI. (IRS will accept and process 7 track tapes; however, 9 track is preferred.)

Please be consistent in the use of recording codes and density on your files. If files are generated in more than one recording code and/or density, multiple shipments would be appreciated.

.02 All compatible tape files must have the following characteristics: Type of tape--0.5 inch (12.7 mm) wide, computer grade magnetic tape on reels of up to 2400 feet (731.52 m) within the following specifications:

(a) Tape thickness: 1.0 or 1.5 mils and

(b) Reel diameter: 10.5 inch (26.67 cm), 8.5 inch (21.59 cm), or 7 inch (17.78 cm).

.03 Starting in Tax Year 1990 (reported in calendar year 1991), IRS/MCC will accept IBM 3480 compatible tape cartridges.

THE TAPE CARTRIDGE SPECIFICATIONS WILL BE AS FOLLOWS:

(a) The tape transports that will be processing the tape cartridges will be IBM 3480. Therefore, the tape cartridges must be IBM 3480 compatible.

(b) The tape cartridges must meet American National Standard Institute (ANSI) standards, and have the following characteristics:

(1) Tape cartridges will be 1/2 inch tape contained in plastic cartridges which are approximately 4 inches by 5 inches by 1 inch in dimension.

(2) Magnetic tape will be chromium dioxide particle based 1/2 inch tape.

(3) Cartridges will be 18-track parallel.

(4) Cartridges will be double density.

(5) Cartridges will contain 14,907 bytes/cm (37,871 bytes/in).

If your tape/data cartridge does not meet these specifications, you may submit it as a "TEST" file, and IRS/MCC will try to process it. Contact IRS/MCC for further information (see Part A, Sec. 3 for information on contacting IRS/MCC).

.04 Payers who can substantially conform to these specifications, but require some minor deviations, MUST contact IRS/MCC in writing. Tapes deviating from the specifications in this revenue procedure must not be submitted without prior approval from IRS. If you file on the Combined Federal/State Filing Program, your files must conform totally to this revenue procedure.

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

(a) A block must not exceed 25,200 tape positions.

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

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

(d) Records may not span blocks.

.06 Labeled or unlabeled tapes may be submitted.

.07 For the purposes of this revenue procedure the following must be used.

Tape Mark:

(a) Used to signify the physical end of the recording on tape.

(b) For even parity, use BCD configuration 001111 ("8421").

(c) May follow the header label and precede and/or follow the trailer label.

SEC. 3. 5 1/4 INCH AND 3 1/2 INCH DISKETTE SPECIFICATIONS

.01 To be compatible, a diskette file must meet the following specifications:

(a) 5 1/4 or 3 1/2 inches in diameter.

(b) Data must be recorded in standard ASCII code.

(c) Records must be fixed length of 420 bytes per record.

(d) Delimiter character commas (,) must not be used.

(e) Positions 419 and 420 of each record have been reserved for carriage return/line feed (cr/lf) characters.

(f) Filename of IRSTAX must be used. Do not enter any other data in this field. If a file will consist of more than one diskette, the filename IRSTAX will contain a 3 digit extension. This extension will indicate the sequence of the diskettes within the file. For example, the first diskette will be named IRSTAX.001, the second diskette will be IRSTAX.002, etc.

(g) A diskette file may consist of multiple diskettes as long as the filename conventions are adhered to.

(h) Diskettes must meet one of the following specifications:

 Capacity          Tracks          Sides/Density          Sector Size

.03 Deviations from the prescribed formats will not be acceptable. Diskettes deviating from the specifications in this revenue procedure must not be submitted without prior approval from IRS. If you file under the Combined Federal/State Filing Program, your files must conform totally to this revenue procedure.

SEC. 4. PAYER/TRANSMITTER "A" RECORD

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

.02 The number of "A" Records appearing on a tape reel or diskette will depend on the number of payers and the different types of returns being reported. The payment amounts for one payer for one type of return must be consolidated under one "A" Record if submitted on the same file.

.03 Do not submit separate "A" Records for each payment amount being reported. For example, if you are filing Form 1099-DIV to report Amount Codes 1, 2, and 3, all three amount codes must be reported under one "A" Record, not three separate "A" Records. For Payee "B" Records which do not contain payment amounts for all three amount codes, enter zeros for those which have no payment to be reported.

.04 The first record appearing on the file must be an "A" Record. A transmitter may include Payee "B" Records for more than one payer on a tape or diskette; however, each GROUP of Payee "B" Records must be preceded by an "A" Record.

.05 ALL RECORDS MUST BE A FIXED LENGTH OF 420 POSITIONS.

.06 A single tape or diskette may also contain different types of returns but the types of returns MUST NOT be intermingled. A separate "A" Record is required for each payer and for each type of return being reported. However, once you have written the first Payer "A" Record, you need not write another unless you report for another payer or another type of document, even if you have more than one tape or diskette. An "A" Record may be blocked with "B" Records; however, the initial record on a file must be an "A" Record. IRS will accept an "A" Record after a "C" Record.

.07 Do not begin any record at the end of a block or diskette and continue the same record into the next block.

.08 All alpha characters entered in the "A" Record should be uppercase.

.09 WHEN REPORTING FORM 1098, MORTGAGE INTEREST STATEMENT, THE "A" RECORD WILL REFLECT THE NAME OF THE RECIPIENT OF THE INTEREST (THE FILER). THE "B" RECORD WILL REFLECT THE INDIVIDUAL PAYING THE INTEREST (BORROWER/PAYER OF RECORD) AND THE AMOUNT PAID.

               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. 6. PAYEE "B" RECORD--GENERAL FIELD DESCRIPTIONS AND RECORD LAYOUTS

.01 The Payee "B" Record contains the payment information from the individual returns. When filing information documents on magnetic media, the format for the Payee "B" Records will remain constant and is a fixed length of 420 positions. The record layout for positions 1 through 321 is the same for all "B" Records. Positions 322 through 420 vary slightly for Forms 1099-A, 1099-B, 1099-OID, 1099-S and W-2G to accommodate variations within these forms. The individual field definitions follow the Payee ZIP Code field in the "B" Record.

All records must be submitted with a fixed length of 420 positions. In the "A" Record, the Amount Indicator Codes that appear in tape or diskette positions 23 through 31 will be left-justified and blank filled. In the "B" Record, you will allow for all nine payment amount fields. For those fields not used enter zeros (0). For example, if you are reporting on Form 1099-PATR, you will enter a "7" in tape position 22 of the "A" Record, Type of Return Indicator field. If you are reporting payments for Amount Codes 2, 4 and 7, then media positions 23 through 31 of the "A" Record will be "247bbbbbb" (b = blanks). In the Payee "B" Record:

Positions 51 through 60 for Payment Amount 1 will be zeros.

Positions 61-70 will reflect the actual payment amount to be reported for "Nonpatronage distributions."

Positions 71-80 for Payment Amount 3 will be zeros.

Positions 81-90 will reflect the actual payment amount to be reported for "Federal income tax withheld."

Positions 91-110 for Payment Amounts 5 and 6 will be zeros.

Positions 111-120 will reflect the actual payment amount to be reported for "Energy investment credit."

Positions 121-140 for Payment Amounts 8 and 9 will be zeros.

.02 IRS must be able to identify the surname or last name associated with the TIN (SSN or EIN) furnished on a return. The specifications below include a field in the payee records called "Name Control" in which the first four characters of the payee's surname or last name are to be entered by the payer. The surname or last name should appear first in the First Payee Name Line field of all Payee "B" Records.

.03 If payers are unable to determine 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, your records have been developed using the first name first, you must leave a blank space between the first and last names.

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

.04 See Part A, Sec. 14 for further information concerning Taxpayer Identification Numbers (TIN).

.05 A field is also provided in these specifications for Special Data Entries. This field may be used to record information required by state or local governments, or for the filer's own personal use. IRS does not use the data provided in the Special Data Entries field; therefore, the IRS program doesn't check the content or format of the data entered in this field. It is the filer's choice whether or not this field is used. If this field is coded, it will not affect the processing of the Payee "B" Records.

.06 Those filers participating in the Combined Federal/State Filing Program must code their records appropriately for the state to receive the information. The state code appears in positions 417 and 418 of the "B" Record. The file should also meet the money criteria described in Part A, Sec. 16, Table 2.

.07 Do not code for the states unless prior approval to participate has been granted by IRS. See Part A, Sec. 16, Table 1 for a list of the valid participating state codes. FORMS 1098, 1099-A, 1099-B, 1099-S, 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. 16 in order to participate in this program.

.08 All alpha characters entered in the "B" Record should be uppercase.

.09 Do not use decimal points (.) to indicate dollars and cents on magnetic media.

.10 IRS STRONGLY ENCOURAGES FILERS TO REVIEW THEIR DATA FOR ACCURACY BEFORE SUBMISSION TO PREVENT ISSUANCE OF ERRONEOUS NOTICES TO PERSONS FOR WHOM REPORTS ARE FILED. FILERS SHOULD BE ESPECIALLY CAREFUL THAT THEIR TAXPAYER NAMES, SOCIAL SECURITY NUMBERS (SSNs), ACCOUNT NUMBERS, TYPES OF INCOME, AND INCOME AMOUNTS ARE CORRECT.

.11 WHEN REPORTING FORM 1098, MORTGAGE INTEREST STATEMENT, THE "A" RECORD WILL REFLECT THE NAME AND EIN OF THE RECIPIENT OF THE INTEREST (THE FILER). THE "B" RECORD WILL REFLECT THE INDIVIDUAL PAYING THE INTEREST (THE BORROWER/PAYER OF RECORD) AND THE AMOUNT PAID. FOR FORM 1099-S, THE "A" RECORD WILL REFLECT THE PERSON RESPONSIBLE FOR REPORTING THE TRANSACTION. THE "B" RECORD WILL REFLECT THE SELLER.

                     RECORD NAME: PAYEE "B" RECORD

NOTE: For detailed explanations of the distribution codes, see the 1990 "Instructions for Form 1099, 1098, 5498, and W-2G" included in your Magnetic Media Reporting Packages.

            Crop Insurance              If the payment amount reported

 12-13      Blank               2       Enter blanks.

.01 THE "C" RECORD IS A FIXED RECORD LENGTH OF 420 POSITIONS. The Control Total fields are each 15 positions in length.

.02 The End of Payer "C" Record is a summary record for a type of return for a given payer.

.03 The "C" Record will contain the total number of payees and the totals of the payment amount fields filed by a given payer. The "C" Record MUST be written after the last Payee "B" Record for each type of return for a given payer. For each "A" Record and group of "B" Records on the file, there must be a corresponding "C" Record.

.04 In developing the "C" Record, for example, if you used Amount Codes 1, 3 and 6 in the "A" Record, the totals from the "B" Records will appear in Control Totals 1, 3 and 6 of the "C" Record. In this example, positions 26-40, 56-85, and 101-145 would be zero filled. Positions 146-420 would be blank filled.

.05 Payers/Transmitters must verify the accuracy of the totals in the "C" Record and must enter the totals on Forms 4804, 4802 or computer-generated substitute, which will accompany the shipment. The lines used on Forms 4804 and 4802 to record payment amounts correspond with the Amount Codes used in the "A" Record.

.06 Missing or incorrect End of Payer "C" Records will result in the media returned for correction.

                 RECORD NAME: END OF PAYER "C" RECORD

.01 THE "K" RECORD IS A FIXED RECORD LENGTH OF 420 POSITIONS. The Control Total fields are each 15 positions in length.

.02 The State Totals "K" Record is a summary for a given payer and a given state in the Combined Federal/State Filing Program, used ONLY when state reporting approval has been granted.

.03 The "K" Record will contain the total number of payees and the totals of the payment amount fields filed by a given payer for a given state. The "K" Record(s) must be written after the "C" Record for the related "A" Record.

.04 In developing the "K" Record, for example, if you used Amount Codes 1, 3 and 6 in the "A" Record, the totals from the "B" Records coded for this state will appear in Control Totals 1, 3 and 6 of the "K" Record.

.05 There MUST be a separate "K" Record for each state being reported.

.06 Refer to Part A, Sec. 16 for the requirements and conditions that MUST be met to file on this program.

                 RECORD NAME: STATE TOTALS "K" RECORD

.01 THE "F" RECORD IS A FIXED RECORD LENGTH OF 420 POSITIONS. The "F" Record is a summary of the number of payers in the entire file.

.02 This record should be written after the last "C" Record (or last "K" Record, when applicable) of the entire file.

              RECORD NAME: END OF TRANSMISSION "F" RECORD

SECTION 1. GENERAL

.01 Electronic filing of information returns is being offered by IRS/MCC as an alternative to magnetic media (tape or diskette) or paper filing, but is not a requirement. Electronic filing can be used in place of magnetic media filing by filers who are required to file magnetically and will fulfill the magnetic media requirements. It may also be used by those payers who are under the filing threshold requirement, but would prefer to file their information returns electronically. For Tax Year 1990, any Forms 1098, 1099 series, 5498, and W-2G, both originals and corrections, may be filed electronically.

The electronic filing of information returns is not affiliated with the Form 1040 electronic filing program. These two programs are totally independent of each other, and you must obtain separate approval to participate in each of them. All inquiries concerning the electronic filing of information returns should be directed to IRS/MCC. However, IRS/MCC personnel cannot answer questions or assist taxpayers in the filing of Form 1040 tax returns. Filers with questions of this nature will be directed to the Taxpayer Service toll-free number (1-800-424-1040, 1-800-829-1040 after September 30, 1990) for assistance.

.02 Filers participating in the electronic filing program for information returns will submit their returns to IRS/MCC by way of modems, and not through either magnetic media or paper filing. Upon receipt of Form 4804, the electronically filed data will be released for processing (see Part A, Sec. 9 for further information on submitting Form 4804). Form 4804 must be submitted to IRS/MCC postmarked on or before the due date of the return, or within two (2) workdays of the electronic transmission, whichever is earlier. No return is considered filed until a completed Form 4804 is timely received by IRS/MCC. Filers who transmit unprocessable files will be notified either by telephone or letter within 10 workdays of our receipt of the electronic transmission and associated Form 4804.

.03 Filers who choose to file electronically will be granted, upon request, an extension of time to file for 30 days after the due date of the return being submitted. See Part A, Sec. 11 for specific information on requesting an extension of time. This extension will be liberally granted to electronic filers to avoid the problem of filers not being able to timely transmit their data due to inaccessibility of phone lines. It is suggested, however, that filers transmit their data as soon as possible.

.04 For Tax Year 1990 information filed in calendar year 1991, IRS/MCC will accept electronically filed transmissions using IBM 3780 bisynchronous protocols. In order to make electronic filing as accessible as possible, IRS/MCC is also exploring the possibility of accepting electronic transmission using asynchronous protocols. Asynchronous protocols would allow filers to submit data to IRS/MCC using modems available in many personal computers. When this publication was being revised, the procedure for accepting asynchronous transmissions had not been determined. As soon as this determination is made, IRS/MCC will publish an announcement.

.05 The formats of the "A", "B", "C", "K", and "F" records are the same for electronically filed records as they are for magnetic media. For electronically filed documents, each transmission is considered a separate file; therefore, each transmission MUST have an End of File "F" Record. See Part B, Sec. 4 through 9 for information on the record formats.

SECTION 2. ELECTRONIC FILING PROCEDURE

.01 Filers who want to file electronically, but do not have a Transmitter Control Code (TCC) assigned to them, must submit Form 4419, Application for Filing Information Returns Magnetically/Electronically, prior to transmitting data (see Part A, Sec. 7).

Filers who already have a TCC must submit either Form 4419, or a letter, to indicate that they wish to file information returns electronically. The purpose of this is so IRS/MCC can determine the compatibility of the electronic filing parameters, and another TCC will NOT be assigned to current filers. If a letter is submitted, it must contain the following:

1) Name and address of transmitter.

2) Transmitter Control Code already assigned.

3) Type of modem and communication software that will be used in transmitting the data.

4) Name and phone number of a contact person within your organization to whom a password will be assigned.

.02 Within 30 days of receiving the application or letter, IRS/MCC will send Form 6086, TSO Password Assignment, to the filer which will contain the password to be used for electronic submissions. After a password is received and the acknowledgement returned, the filer may submit a test file.

.03 Upon receipt of Form 6086, the user (person who will actually transmit the data) will separate the acknowledgement from the password. Both the user and the user's manager MUST sign the acknowledgement and mail to:

         Chief, Security and Disclosure Branch

.04 For security reasons, at the end of each filing season, all passwords will be obsoleted. In December, filers who filed electronically in the prior year will automatically receive a new password via Form 6086. If electronic filing is to be used again, the filer must respond to IRS/MCC as specified in Part C, Sec. 2.03. If you have any questions relating to the security procedures, and/or you need to report that your password was compromised, contact IRS/MCC as soon as possible (see Part A, Sec. 3).

.05 If filers have no experience with data transmission, they may choose to use a third party to transmit their data electronically. Filers can obtain a list of approved electronic transmitters by contacting IRS/MCC and requesting a copy of the vendor list (see Part A, Sec. 6). Vendors wishing to be included on this list should notify IRS/MCC in writing. An acceptable test file must be submitted prior to being included on the vendor list as an electronic filer.

SECTION 3. TEST FILES

.01 Filers transmitting directly to IRS/MCC are not required to submit a test file. The purpose of test files is to resolve any data or communication problems prior to the filing season. However, if you wish to submit an electronic test file for Tax Year 1990, it MUST be submitted to IRS/MCC between October 15, 1990, and January 15, 1991.

You MUST obtain a password before submitting an electronic test file (see Part C, Sec. 2 for information on obtaining a password). Electronic test files will be processed and filers will be notified as to the acceptability of their data within ten (10) workdays of the date the transmittal Form 4804 is received by IRS/MCC.

.02 Electronic test files must be verified by transmittal Form 4804. Form 4804 can be ordered from IRS/MCC (see Part A, Sec. 3), or it may be computer-generated. If you choose to computer-generate Form 4804, all of the information contained on the original form, including the affidavit, must also be contained on the computer-generated form (see Part A, Sec. 9).

.03 If problems are encountered while transmitting your electronic test file, contact the Electronic Filing Coordinator at IRS/MCC for assistance (see Part A, Sec. 3 for the telephone number).

SECTION 4. ELECTRONIC SUBMISSIONS

.01 After the information returns are electronically filed, a signed Form 4804 must be submitted to IRS/MCC postmarked on or before the due date of the returns, or postmarked within 2 (two) workdays of the transmission, whichever is earlier. The filer whose TCC is used in the Payer/Transmitter "A" Record is responsible for submitting the transmittal Form 4804. Only one (1) TCC can be used per transmission. When transmitting your electronic file to IRS/MCC, you MUST use the password assigned to your organization.

.02 Electronically filed information return data may be transmitted to IRS/MCC 24 hours a day; however, transmissions should be limited to a maximum of 1 1/2 hours duration. This limitation is to prevent line noise problems encountered during longer transmissions. Technical assistance will be available at IRS/MCC between 8:30 AM and 4:30 PM Eastern time.

.03 Actual information return data may be electronically transmitted to IRS/MCC between January 22 and December 31, 1991 (for Tax Year 1990 submissions). However, the due date(s) for electronically filed returns are not extended. (See Part A, Sec. 10.)

.04 Completed transmittal Forms 4804 should be mailed to the following addresses:

    If by Postal Service:

SECTION 5. COMMUNICATION SPECIFICATIONS

.01 Transmissions are made by using IBM 3780 bisynchronous (BSC) protocols and must be in EBCDIC character code. Modems must be compatible with either Bell 208B for 4800 BPS transmissions, or AT&T 2296A for 9600 BPS transmissions. Both modems are dial-up type modems using the Public Switched Telephone Network. IBM 3780 data compression is acceptable for any transmission.

.02 IRS/MCC will accept information returns filed electronically over switched tele-communications network circuits. For 4800 BPS, the circuit will be (304) 267-0807. For 9600 BPS, the circuit will be (304) 267-9572. Both of these circuits are equipped for bisynchronous (BSC) transmission, using the IBM 3780 protocol.

.03 The 4800 BPS line terminates at an AT&T 208BR modem. The AT&T 208BR modem uses phase-shift keying and 8-phase modulation to transmit binary serial data signals over the telephone line in half-duplex mode. The following options have been selected:

--Transmit Level set to -4 dBm

--Compromise Equalizer in (4-dB Slope)

--DSR off in Analog Loop Mode

--Automatic Answer

--Transmitter Internally Timed

--RS-CS Interval of 50 ms

.04 The 9600 BPS line terminates at an AT&T Dataphone II 2296A modem. The AT&T 2296A modem is a full-duplex, CCITT v.32 compatible unit which operates at 9600 BPS or 4800 BPS (fallback). The following options have been selected:

--Receiver Responds to Remote Loopback

--Loss-of-Carrier Disconnect

--Received-Space Disconnect

--Send-Space Disconnect

--Automatic Answer

--Answer on Ring 1

--DTR Interlock

--Retrain Enable

--Internal Timing

--CTS Controlled by RTS

--0 - 1 ms RTS to CTS Delay

--CTS Dependent on Carrier

--RR Indicates Carrier

--9600 Trellis Coding

--4800 BPS Fallback

--4 dB Compromise Equalization

SECTION 6. ELECTRONIC FILING RECORD SPECIFICATIONS

.01 There are two additional identifier records which must be used to transmit data electronically. These records are 420 positions in length, and are the first ($$REQUEST) and second ($$ADD) records sent in an electronic transmission. The purpose of these records is to provide the password and identity of the transmitter. The format of each of these record is as follows:

                        RECORD NAME: $$REQUEST

.02 Upon making contact with IRS/MCC and furnishing a valid password in the $$ADD identifier record, a data transmission session will commence. The transmission will continue until an End of Transmission "F" Record is received. At the end of each transmission, the following message should be received electronically by the filer: "DATA RECEIVED AT MCC." If this message is not received there may be a problem with your electronic submission, and you should contact IRS/MCC immediately. After this message is sent to the filer by IRS/MCC to indicate a successful transmission, the line will be disconnected.

.03 Upon receiving a data file and transmittal Form 4804, IRS/MCC will release the data for further processing. If the data is found to be unprocessable, the filer will be contacted by either letter or telephone and notified that the data must be re-transmitted. For re-transmitted files, the filer will be assigned a replacement file name to be used during the re-transmission. This file name will be provided by IRS/MCC either by letter or telephone, and is to be placed in positions 45-51 of the $$ADD record when the file is re-transmitted.

                 ELECTRONIC FILING IDENTIFIER $$ADD

SECTION 1. MAGNETIC MEDIA-RELATED FORMS AND PUBLICATIONS AVAILABLE AT THE IRS MARTINSBURG COMPUTING CENTER

.01 IRS/MCC maintains supplies of magnetic media-related forms and publications including:

     -- Publication 1220, Specifications for Filing Forms 1098, 1099

SECTION 2. FEDERAL DOLLAR CRITERIA

.01 For your convenience, the federal requirements for reporting the information returns to IRS is provided in Table 1.

                 TABLE 1. FEDERAL DOLLAR REQUIREMENTS