SERVICE PROVIDES GUIDELINES FOR FILING 1990 INFORMATION RETURNS ON MAGNETIC DISKETTES.

Rev. Proc. 90-43

                          TABLE OF CONTENTS

PART A. -- GENERAL

SECTION 1. PURPOSE

.01 The purpose of this revenue procedure is to provide the requirements and conditions for filing Forms 1098, 1099, 5498, and W-2G on 8 inch magnetic diskette to Internal Revenue Service (IRS). Publication 1220, "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," contains instructions for filing information returns both electronically, and on certain types of magnetic media, and is not to be used for formatting 8 inch diskettes. THIS REVENUE PROCEDURE IS TO BE USED FOR THE PREPARATION OF 8 INCH DISKETTES FOR 1990 INFORMATION RETURNS ONLY. THIS PROCEDURE IS UPDATED YEARLY TO REFLECT NECESSARY CHANGES. PLEASE READ THIS PUBLICATION CAREFULLY. IF THERE ARE ANY QUESTIONS CONCERNING YOUR FILING, YOU MAY CONTACT THE INTERNAL REVENUE SERVICE (IRS) MARTINSBURG COMPUTING CENTER (MCC) FOR CLARIFICATION. (See Part A, Sec. 3 for address and telephone number.) 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. 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 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 the IRS/MCC are equipped to answer any questions you may have concerning the magnetic media 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 filing 8 inch magnetic diskettes 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 from 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 1220, 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.

.08 This procedure supersedes the following:

Rev. Proc. 89-44 published in Publication 1255 (Rev. 7-89) [1989-2 C.B. 532], Requirements and Conditions for Filing Forms 1098, 1099, 5498 and W-2G series on 8 Inch Magnetic Diskette.

.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:

Field Positions 3-4 -- "Payment Year" -- must be incremented by one year (from 89 to 90).

Payee "B" Record:

(a) Field Positions 3-4 -- "Payment Year" -- must be incremented by one year (from 89 to 90).

(b) Field Positions 5-6 -- "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 5 AND 6 OF SECTOR 1 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 OR D 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 25-44 -- "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 45 -- "IRA/SEP Indicator" -- Starting this year, if you Code a "1", "2", "3", "4", "5", or "7" in either Position 5-6 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 45. 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"

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 1990-1 C.B. 326, 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. See Publication 1220, "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" for information on electronic filing of information returns.

(c) The title of Publication 1255 has changed to "Requirements and Conditions for Filing Forms 1098, 1099 Series, 5498, and W-2G on 8 Inch Magnetic Diskettes."

(d) Added the IRS toll-free telephone number for those filers with tax law questions in Part A, Sec. 1.05, and Part A, Sec. 3.04(c).

(e) 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.

(f) 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.

(g) Part A, Sec. 6, "Vendor List," has been added to provide information concerning the vendor list that IRS/MCC maintains for those payers 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.

(h) 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. Notify IRS/MCC to remove those TCC's not used.

(i) 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.

(j) 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, and NOT Form 1096.

(k) 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.

(l) 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).

(m) 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.

(n) Part A, Sec. 13 has information concerning the impact of the Revenue Reconciliation Act of 1989 upon the submission of corrected returns. 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.

(o) 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.

(p) 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.

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

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

(s) Part D, Miscellaneous Information, has been added concerning what magnetic media-related forms and publications are available from IRS/MCC, and to provide a table listing the federal dollar criteria for reporting information returns.

.03 EDITORIAL CHANGES -- PART B, "SINGLE DENSITY DISKETTE SPECIFICATIONS"

The following editorial changes were made to Part B, Sec. 1-15:

(a) Part B, Sec. 3, Sector 1, "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 Forms 1099-B, Amount Code 7 changed to "Unrealized profit or (loss) on open contracts 12/31/89," and Amount Code 8 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.

(b) Positions 45-49, Transmitter Control Code (TCC) -- added a sentence instructing filers to NOT enter more than one TCC per file.

(c) Position 50 -- 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.

(d) Part B, Sec. 6, Sector 1, "Payee "B" Record," for Form 1099-R, the field title "Document Specific Code" 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 earning/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

(e) Part B, Sec. 6, Sector 1, "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 5-6 of the Document Specific Code, Payee "B" Record, except when Code P or D is used. Also, if more than one numeric code applies, two separate Payee "B" Records are required.

(f) Positions 25-44 -- "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.

(g) Positions 46-47 -- "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 includes instructions on how to round off fractions. If the percentage is 100, leave this field blank.

(h) Form 1099-S, Part B, Sec. 11, Sector 4, Field Positions 32-70, "Description", and Part C, Sec. 10, Sector 2, Field Positions 140-178, "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.

(i) Part B, Sec. 13 and Part C, Sec. 12, End of Payer "C" Record, instructions were added that submitting files with a missing or incorrect End of Payer "C" Record 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 the 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 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).

.04 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.

(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 files 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 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 a corporation has several branches or locations and each uses the same EIN, aggregate the total volume of returns to be filed and apply the filing requirements to each type of return accordingly.

.03 The following filing 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 Publication 1220 for information concerning the electronic filing of information returns). Filers who submit their information returns electronically will 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, and 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 the corrections only if they exceed the filing threshold of 249 returns.

.04 Generally, only the payer may sign the Form 8508; however, the transmitter may sign if the transmitter has 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 (i.e., 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 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 the 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 RETURNS, 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 the IRS/MCC, NOT SSA, and must be postmarked at least 90 days before the due date of the return. 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 IRS with 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 payers 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 these 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 who 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 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.

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 the IRS/MCC. (See Part A, Sec. 3 for the 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 your five character alpha/numeric Transmitter Control Code (TCC) in time to code in your Payer/Transmitter "A" Record (see Part B, Sec. 3 for further information). In the event that your computer equipment or software is not compatible with the IRS equipment, a waiver may be granted so that you may file your returns on paper documents for that tax year. If you have more than one TCC, you must use more than one tape or diskette; i.e., you cannot use two TCCs on the same medium. They must be reported separately.

IRS encourages transmitters 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.

Returns submitted on 8 inch diskette may not be filed 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. Magnetic media submitted without a TCC will be held for processing until an application is approved.

.03 Upon approval, a magnetic media reporting package containing the appropriate revenue procedure 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 changes or updates.

.04 If you have your 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 using their TCC 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 to be assigned your own TCC to be coded in the Payer/Transmitter "A" Record. (See Part B, Sec. 3.) 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. 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. You must request your own TCC by filing an application Form 4419.

If any of these conditions apply to you, contact IRS/MCC for clarification.

.06 Also notify IRS/MCC if you had hardware or software changes that would affect the characteristics of the magnetic media 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), 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, you may use the same TCC for all 3 types of media. 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 does not imply endorsement by the IRS of the computer software or quality of tax preparation services provided.

.11 The magnetic media file must be transmitted with 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 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 filers, and filers of floppy disks or diskettes, to send a test 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.

.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. 3).

.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. 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.

.04 The information in the "A" Record must be "ACTUAL" information -- NOT FICTITIOUS.

.05 Form 4804, Transmittal of Information Returns Reported on Magnetic Media, must accompany your magnetic media test 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.

.06 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. A hardcopy print is NOT an acceptable "TEST" file for this program.

.07 Approved payers or transmitters should send the "TEST" file to the IRS/MCC (see Part A, Sec. 3 for the address).

.08 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 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 diskette will not be returned.

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

.01 Form 4804, Transmittal of Information Returns Reported on Magnetic Media, must accompany all magnetic media 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 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 diskettes. All 3 banks and all types of documents can be coded on one diskette. If you do create multiple diskettes, they can all be sent in one package; you need not send a separate package containing each 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 the IRS/MCC. (See Part A, Sec. 3 for the address.)

.04 IRS/MCC only processes returns filed magnetically or electronically, so 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, 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)".

.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.)

.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 filing. Magnetic media 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 filed on paper; magnetic media; and/or electronically.

.02 A transmitter may request an extension of time to file for multiple payers by attaching a list of their names, addresses, and TINs to Form 8809. Form 8809 may be computer-generated or photocopied; however, 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 submit 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 approval letter only MUST be included with the transmittal Form 1096, 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 types of returns covered by this revenue procedure on one diskette. You do not have to separate the different types of forms on different media. For example, one diskette could contain Forms 1098, 1099-INT, 1099-DIV, and 5498 for different payers. You need only identify the different types of returns and payers with different Payer/Transmitter "A" Records which are coded on the magnetic media. (See Part B, Sec. 3 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 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 them 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.

.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 ALL FIELDS MUST BE COMPLETED WITH THE CORRECT INFORMATION, NOT JUST THE DATA FIELDS NEEDING CORRECTION. 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.

.05 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 8 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.

.06 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 "corrections," and do not code the Payee "B" Record with the correction "G" code. They will be considered as late filed original documents and may be subject to the penalty.

.07 The instructions that follow will provide information on how to file corrected returns on magnetic media 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.

.08 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 DISKETTES WILL NOT BE RETURNED AFTER PROCESSING.

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

.10 A transmittal Form 4804 (or computer-generated substitute) is used to transmit magnetic media. 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 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/NOTIN 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 AND FOLLOW CAREFULLY ALL OF THE INSTRUCTIONS LISTED FOR THE TYPES OF ERRORS 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 9-12 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 information submitted to IRS (Copy A).

.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, 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 that 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 to submit 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 and for those payers who have properly submitted Form 6847. Do not submit 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 a test and 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 states not participating in the Combined Federal/State program.

.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 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 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 Sector 1, positions 24, 25 and 26 of the Payer "A" Record, then the Payee "B" Record must show payment amounts in Fields 2 (Sector 1, position 62-71), 4 (Sector 1, position 82-91) and 7 (Sector 1, position 112-121), right-justified and unused positions zero filled.

EXAMPLE: "A" RECORD 247bbbbbbb -- (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 in the leftmost position to indicate negative amounts. If a 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 records. 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 Sector 1, positions 8-16 of the Payer "A" Record must be correct in order for IRS to process the media. Be sure the EIN reported on the Form 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; i.e., 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 Publication 1220 for formatting magnetic tape, tape cartridge, 5 1/4 and 3 1/2 inch diskettes, and for electronic filing. 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 Indicators 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 Part B, Sector 2, positions 44-83 and Part C, Sector 1, positions 132-171 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 Part B, Sector 2, positions 84-123 and Part C, Sector 1, positions 172-211 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 (Part B, Sector 3, positions 43-71 and Part C, Sector 2, positions 43-71), State (Part B, Sector 3, positions 72-73 and Part C, Sector 2, positions 72-73), and ZIP Code (Part B, Sector 3, positions 74-82 and Part C, Sector 2, positions 74-82 and Part C, Sector 2, positions 74-82) 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 23 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 23.

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

Form W-2/W-2P information is processed by the Social Security Administration (SSA). The Social Security Administration has its own magnetic media reporting program for wage information; therefore, 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 Taxpayer Identification Numbers (TIN) in the Payee "B" Record.

A check of your Payee "B" Records should be made to ensure the TIN's are formatted correctly. There should be nine digits, no alpha characters, no hyphens or commas. Incorrect formatting of TIN's may result in a penalty.

PART B. SINGLE DENSITY DISKETTE 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 a single density diskette file and must be strictly adhered to unless deviations have been specifically granted by IRS.

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

(a) 8 inches in diameter.

(b) Recorded in EBCDIC.

(c) Contain 77 tracks of which:

(1) Track 0 is the index track (the operating system reserves track 0 for the directory information and writes the file name and location in the directory; data cannot be written in track 0).

(2) Tracks 1 through 73 are data tracks.

(3) Track 74 is unused.

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

(d) Each Track must contain 26 sectors.

(e) Each Sector must contain 128 bytes.

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

(g) IRS can process single sided, single density, soft sectored diskettes as well as double sided, double density, soft sectored diskettes. Part C provides specifications for double density diskettes which have sectors of 256 bytes.

(h) An IBM 5360 compatible diskette would meet the above specifications.

(i) Hard sectored diskettes are not compatible.

(j) A diskette should be clearly marked as to which type of data (single sided/single density or double sided/double density) is on each diskette, and preferably, the entire file should consist of either all single sided/single density or all double sided/double density diskettes.

.03 Payers who can substantially conform to these specifications, but require some minor deviations, MUST contact IRS/MCC. 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.

.04 Form 5064, Media Label, must be affixed to each diskette submitted for processing. The following information is needed:

(a) The transmitter's name.

(b) The five character alpha/numeric Transmitter Control Code (TCC).

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

(d) Operating system/software and hardware.

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

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

(g) An in-house volume serial number assigned by the transmitter to the diskette, if applicable. (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 diskette (e.g., 001 of 008; 002 of 008, etc.) However, if your file is complete on one diskette (ends with an "F" Record) the sequence will be 001 of 001. The information on the external label, Form 5064, will assist IRS in processing the file, or in locating a file if the transmitter requests its return due to errors.

SEC. 2. DISKETTE HEADER LABEL

The following header label format applies to both single and double density diskettes.

The header label on the diskette must be located in track 0, sector 8 and must be formatted as shown in the following layout. If your system automatically creates a header label, this is not necessary. If the file will consist of multiple diskettes, the Multi-Volume indicator in the diskette header label must contain a "C".

[Editor's note: Pictorial record layouts depicting specifications discussed above have been omitted. These illustrations are not suitable for electronic reproduction.]

SEC. 3. PAYER/TRANSMITTER "A" RECORD

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

.02 The number of "A" Records appearing on a diskette will depend on the number of payers and the different types of returns being reported. 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 that do not contain payment amounts for all three amount codes, enter zeros for those which have no amount to be reported.

.04 After the header label on the diskette, the first record appearing in the file must be an "A" Record. When a single density diskette is used each "A" Record will consist of at least 2 sectors of 128 positions each; however, if you are transmitting for someone other than yourself, 4 sectors are required.

.05 A transmitter may include Payee "B" Records for more than one payer on a diskette; however, each GROUP of Payee "B" Records must be preceded by an "A" Record.

.06 A single diskette may also contain different types of returns, but the returns MUST NOT be intermingled. A separate "A" Record is required for each payer and each type of return being reported. An "A" Record may be blocked with "B" Records; however, the initial record on a file must be an "A" Record. IRS will accept an "A" Record after a "C" Record.

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

.08 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.

NOTE: For all fields marked REQUIRED, you must provide the information described under Description and Remarks. For fields not marked REQUIRED, you must allow for the field but may be instructed to enter blanks or zeros in the indicated diskette position(s) and for the indicated length.

               RECORD NAME: PAYER/TRANSMITTER "A" RECORD

            Amount                      For Reporting Payments on Form

            Amount                      For Reporting Payments on Form

 33-44      Blank              12       Enter blanks.

 51-90      First              40       REQUIRED. Must be present or

 91-128     Blank              38       Enter blanks.

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

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

.01 This section contains the general information concerning the Payee "B" Record for all information returns filed on single sided/single density soft-sectored diskettes. For a detailed description of the record refer to the following in Part B:

(a) Sec. 6. PAYEE "B" RECORD -- FIELD DESCRIPTIONS FOR SECTORS 1 THROUGH 4 OF FORMS 1098, 1099-DIV, 1099-G, 1099-INT, 1099-MISC, 1099-PATR, 1099-R, 5498 AND SECTORS 1 THROUGH 3 OF FORMS 1099-A, 1099-B, 1099-OID, 1099-S AND W-2G.

(b) Sec. 7. PAYEE "B" RECORD LAYOUTS FOR SECTORS 1 THROUGH 4 OF FORMS 1098, 1099-DIV, 1099-G, 1099-INT, 1099-MISC, 1099-PATR, 1099-R, 5498 AND SECTORS 1 THROUGH 3 OF FORMS 1099-A, 1099-B, 1099-OID, 1099-S AND W-2G.

(c) Sec. 8. PAYEE "B" RECORD -- FIELD DESCRIPTIONS AND RECORD LAYOUT FOR SECTOR 4 OF FORM 1099-A.

(d) Sec. 9. PAYEE "B" RECORD -- FIELD DESCRIPTIONS AND RECORD LAYOUT FOR SECTOR 4 OF FORM 1099-B.

(e) Sec. 10. PAYEE "B" RECORD -- FIELD DESCRIPTIONS AND RECORD LAYOUT FOR SECTOR 4 OF FORM 1099-OID.

(f) Sec. 11. PAYEE "B" RECORD -- FIELD DESCRIPTIONS AND RECORD LAYOUT FOR SECTOR 4 OF FORM 1099-S.

(g) Sec. 12. PAYEE "B" RECORD -- FIELD DESCRIPTIONS AND RECORD LAYOUT FOR SECTOR 4 OF FORM W-2G.

For tax year 1990 data, all "B" Records will consist of at least 3 sectors of 128 positions each. If you are not a Combined Federal/State filer or if you are not utilizing the Special Data Entries field, Sector 4 can be eliminated for Forms 1098, 1099-DIV, 1099-G, 1099-INT, 1099-MISC, 1099-PATR, 1099-R, and 5498.

The "B" Record will always consist of 4 Sectors for Forms 1099-A, 1099-B, 1099-OID, 1099-S, and W-2G.

In the "A" Record, the Amount Indicator Codes that appear in diskette positions 24 through 32 of Sector 1 will be left-justified and blank filled. In the "B" Record, allow for all nine payment amount fields. For those fields not used, enter zeros. For example, if you are reporting on Form 1099-PATR, enter a "7" in diskette position 23 of Sector 1 of the "A" Record, Type of Return Indicator field. If you are reporting payments for Amount Codes 2, 4, and 7, then diskette positions 24 through 32 of Sector 1 of the "A" Record will be "247bbbbbb" (b = blanks). In the Payee "B" Record:

Positions 52 through 61 of Sector 1 for Payment Amount 1 will be zeros.

Positions 62-71 of Sector 1 will reflect the actual payment amount to be reported for "Nonpatronage distributions."

Positions 72-81 of Sector 1 for Payment Amount 3 will be zeros.

Positions 82-91 of Sector 1 will reflect the actual payment amount to be reported for "Federal income tax withheld."

Positions 92-111 of Sector 1 for Payment Amounts 5 and 6 will be zeros.

Positions 112-121 of Sector 1 will reflect the actual payment amount to be reported for "Energy investment credit."

Positions 3-22 of Sector 2 for Payment Amounts 8 and 9 will be zeros.

.02 The record layout for Sectors 1, 2 and 3 will be the same for all "B" records. Sector 4, however, will be different for Forms 1099-A, 1099-B, 1099-OID, 1099-S and W-2G. Refer to Part B, Sec. 8, 9, 10, 11 or 12, respectively for the layout of Sector 4 of these records.

.03 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 payers. The surname or last name should appear first in the First Payee field of all Payee "B" Records; however, if your records have been developed using the first name first, a blank must appear between the first and last names.

.04 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, you enter 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 field. Surnames of any other payees in the record may be entered in the Second Payee Name field.

.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 does not 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 For those filers participating in the Combined Federal/State Filing Program, positions 70 and 71 of Sector 4 in the Payee "B" Record must contain the appropriate state code for the state to receive the information. The file should also meet the money criteria described in Part A, Sec. 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.

.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 FORMS 1099-S THE "A" RECORD WILL REFLECT THE PERSON RESPONSIBLE FOR REPORTING THE TRANSACTION. THE "B" RECORD WILL REFLECT THE SELLER.

SEC. 6. PAYEE "B" RECORD -- FIELD DESCRIPTIONS FOR SECTORS 1 THROUGH 4 OF FORMS 1098, 1099-DIV, 1099-G, 1099-INT, 1099-MISC, 1099-PATR, 1099-R, 5498 AND SECTORS 1 THROUGH 3 OF FORMS 1099-A, 1099-B, 1099-OID, 1099-S AND W-2G.

.01 For Forms 1099-A, 1099-B, 1099-OID, 1099-S, and W-2G, see Part B, Sec. 8, 9, 10, 11 and 12, respectively for the field descriptions and record layouts for Sector 4 of these records.

NOTE: For all fields marked REQUIRED, you must provide the information described under Description and Remarks. For those fields not marked REQUIRED, you must allow for the field but may be instructed to enter blanks or zeros in the indicated position(s) and for the indicated length.

                     RECORD NAME: PAYEE "B" RECORD

 13-14      Blank              2        Enter blanks.

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

SEC. 8. PAYEE "B" RECORD -- FIELD DESCRIPTIONS AND RECORD LAYOUT FOR SECTOR 4 OF FORM 1099-A

.01 This section contains information pertaining to Sector 4 of Form 1099-A. For detailed explanations of the 1099-A fields see the 1990 "Instructions for Forms 1099, 1098, 5498, and W-2G" included in your reporting package.

.02 See Part B. Sec. 6 for field descriptions of Sectors 1, 2 and 3 of the Payee "B" Record for Form 1099-A.

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

                     RECORD NAME: PAYEE "B" RECORD

.01 This section contains the general payment information for Sector 4 of Form 1099-B. For detailed explanations of the 1099-B fields see the 1990 "Instructions for Forms 1099, 1098, 5498, and W-2G" included in your reporting package.

.02 See Part B, Sec. 6 for field descriptions for Sectors 1, 2 and 3 of the Payee "B" Record for Form 1099-B.

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

                     RECORD NAME: PAYEE "B" RECORD

.01 This section contains information pertaining to Sector 4 of Form 1099-OID. For detailed explanations of the 1099-OID fields see the 1990 "Instructions for Forms 1099, 1098, 5498, and W-2G" included in your reporting package.

.02 See Part B, Sec. 6 for field descriptions of Sectors 1, 2 and 3 of the Payee "B" Record for Form 1099-OID.

                     RECORD NAME: PAYEE "B" RECORD

.01 This section contains the general payment information for Sector 4 of Form 1099-S. For detailed explanations of the 1099-S fields see the 1990 "Instructions for Forms 1099, 1098, 5498, and W-2G," included in your reporting package.

.02 See Part B, Sec. 6 for field descriptions for Sectors 1, 2 and 3 of the Payee "B" Record for Form 1099-S.

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

                     RECORD NAME: PAYEE "B" RECORD

.01 This section contains the general payment information for Sector 4 of Form W-2G. For detailed explanations of the W-2G fields see the 1990 "Instructions for Forms 1099, 1098, 5498, and W-2G" included in your reporting package.

.02 See Part B, Sec. 6 for field descriptions for Sectors 1, 2 and 3 of the Payee "B" Record for Form W-2G.

.03 FORM W-2G CANNOT BE FILED UNDER THE COMBINED FEDERAL/STATE FILING PROGRAM.

                     RECORD NAME: PAYEE "B" RECORD

.01 The "C" Record consists of 2 Sectors of 128 positions each. 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 27-41, 57-86, and 102-116 of Sector 1 and positions 3-32 of Sector 2 would be zero filled.

.05 Payers/Transmitters must verify the accuracy of the totals in the "C" Record and must enter the totals on the 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 diskette being returned for correction.

                 RECORD NAME: END OF PAYER "C" RECORD

.01 The "K" Record consists of 2 Sectors of 128 positions each. The Control Total fields are each 15 positions in length.

.02 The State Totals "K" Record is a summary for a given payer and type of return to a given state in the Combined Federal/State Filing Program. Use 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 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 consists of one 128-position Sector. 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 The specifications contained in this part of the revenue procedure describe the required format and contents of the records to be included in a double density diskette file. These specifications must be adhered to unless deviations have been specifically granted by IRS.

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

(a) 8 inches in diameter.

(b) Recorded in EBCDIC.

(c) Contains 77 cylinders (A cylinder refers to both of the tracks available to the read/write heads at any of the 77 locations on the double sided, double density diskette).

(1) Cylinder 00 is the index cylinder (the operating system reserves cylinder 00 for the directory information and writes the file name and location in the directory; data cannot be written in cylinder 00).

(2) Cylinders 1-74 are the primary data cylinders.

(3) Cylinders 75 and 76 are reserved for alternate cylinder assignment.

(d) Each track contains 26 sectors; therefore, each cylinder contains 52 sectors.

(e) Each sector must contain 256 bytes.

(f) Data may be recorded on both sides of the diskette.

(g) IRS can process single sided, single density, soft sectored diskettes as well as double sided, double density, soft sectored diskettes.

Part B provides specifications for single density diskettes which have sectors of 128 bytes.

(h) An IBM 5360 compatible diskette would meet the above specifications. If using other processors, data should be recorded in the Basic Data Exchange (EBCDIC) format.

(i) Hard sectored diskettes are not compatible.

(j) A diskette should be clearly marked as to which type of data (single sided/single density or double sided/double density) is on each diskette, and preferably, the entire file should consist of either all single sided/single density or all double sided/double density diskettes.

.03 Refer to Part B, Sec. 1.03 through Sec. 2 for further information concerning diskette requirements which apply to both single and double density diskettes.

SEC. 2. PAYER/TRANSMITTER "A" RECORD

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

.02 The number of "A" Records appearing on a diskette will depend on the number of payers and the different types of returns being reported. 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 After the header label on the diskette (See Part B, Sec. 2, for format of the header label), the first record appearing in the file MUST be an "A" Record. When a double density diskette is used, each "A" Record will consist of at least one 256 position sector; however, if you are transmitting for someone other than yourself, 2 sectors are required.

.05 A transmitter may include Payee "B" Records for more than one payer on a diskette; however, each GROUP of Payee "B" Records must be preceded by an "A" Record.

.06 A single diskette may also contain different types of returns, but the returns MUST NOT be intermingled. A separate "A" Record is required for each payer and each type of return being reported. An "A" Record may be blocked with "B" Records; however, the initial record on a file must be an "A" Record. IRS will accept an "A" Record after a "C" Record.

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

.08 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

            Amount Indicators           For Reporting Payments on Form

 51-90      First Payer Name   40       REQUIRED. Must be present or

[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. 4. PAYEE "B" RECORD -- GENERAL INFORMATION FOR ALL FORMS

.01 This section contains the general information concerning the Payee "B" Record for all information returns filed on double sided/double density soft sectored diskettes. For a detailed description of the record refer to the following in Part C:

(a) Sec. 5. PAYEE "B" RECORD -- FIELD DESCRIPTIONS FOR SECTORS 1 AND 2 OF FORMS 1098, 1099-DIV, 1099-G, 1099-INT, 1099-MISC, 1099-PATR, 1099-R, 5498 AND SECTOR 1 OF FORMS 1099-A, 1099-B, 1099-OID, 1099-S AND W-2G. (See Part C, Sec. 7, 8, 9, 10 and 11 for field descriptions for Sector 2 of Forms. 1099-A, 1099-B, 1099-OID, 1099-S and W-2G.)

(b) Sec. 6. PAYEE "B" RECORD LAYOUTS FOR SECTORS 1 AND 2 OF FORMS 1098, 1099-DIV, 1099-G, 1099-INT, 1099-MISC, 1099-PATR, 1099-R, 5498 AND SECTOR 1 OF FORMS 1099-A, 1099-B, 1099-OID, 1099-S AND W-2G.

(c) Sec. 7. PAYEE "B" RECORD -- FIELD DESCRIPTIONS AND RECORD LAYOUT FOR SECTOR 2 OF FORM 1099-A.

(d) Sec. 8. PAYEE "B" RECORD -- FIELD DESCRIPTIONS AND RECORD LAYOUT FOR SECTOR 2 OF FORM 1099-B.

(e) Sec. 9. PAYEE "B" RECORD -- FIELD DESCRIPTIONS AND RECORD LAYOUT FOR SECTOR 2 OF FORM 1099-OID.

(f) Sec. 10. PAYEE "B" RECORD -- FIELD DESCRIPTIONS AND RECORD LAYOUT FOR SECTOR 2 OF FORM 1099-S.

(g) Sec. 11. PAYEE "B" RECORD -- FIELD DESCRIPTIONS AND RECORD LAYOUT FOR SECTOR 2 OF FORM W-2G.

For tax year 1990 data, all "B" Records will consist of two sectors of 256 positions each. In the "A" Record, the Amount Indicator Codes that appear in diskette positions 24 through 32 of Sector 1 will be left-justified and blank filled. In the "B" Record, you will allow for all nine payment amount fields and for those not used, enter zeros. For example, if you are reporting on Form 1099-PATR, you will enter a "7" in diskette position 23 of Sector 1 of the "A" Record, Type of Return Indicator field. If you are reporting payments for Amount Codes 2, 4 and 7, then diskette positions 24 through 32 of Sector 1 of the "A" Record will be "247bbbbbb" (b = blanks). In the Payee "B" Record:

Positions 52 through 61 of Sector 1 for Payment Amount 1 will be zeros.

Positions 62-71 of Sector 1 will reflect the actual payment amount to be reported for "Nonpatronage distributions."

Positions 72-81 of Sector 1 for Payment Amount 3 will be zeros.

Positions 82-91 of Sector 1 will reflect the actual payment amount to be reported for "Federal income tax withheld."

Positions 92-111 of Sector 1 for Payment Amounts 5 and 6 will be zeros.

Positions 112-121 of Sector 1 will reflect the actual payment amount to be reported for "Energy investment credit."

Positions 122-141 of Sector 1 for Payment Amounts 8 and 9 will be zeros.

.02 The record layout for Sector 1 will be the same for all "B" Records. Sector 2, however, will be different for Forms 1099-A, 1099-B, 1099-OID, 1099-S and W-2G. Refer to Part C, Sec. 7, 8, 9, 10 and 11 respectively for the record layouts for Sector 2 of these records.

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

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

(a) The surname of the payee whose TIN (SSN or EIN) is shown in the Payee "B" Record should always appear first. If, however, you enter the first name first, you must leave a blank space between the first and last 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 field. Surnames of any other payees in the record may be entered in the Second Payee Name field.

.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 Sector 2, positions 180 and 181. 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 participating states.

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.

.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 (BORROWER/PAYER OF RECORD) AND THE AMOUNT PAID.

SEC. 5. PAYEE "B" RECORD -- FIELD DESCRIPTIONS FOR SECTORS 1 AND 2 OF FORMS 1098, 1099-DIV, 1099-G, 1099-INT, 1099-MISC, 1099-PATR, 1099-R, 5498 AND SECTOR 1 OF FORMS 1099-A, 1099-B, 1099-OID, 1099-S AND W-2G.

.01 For Forms 1099-A, 1099-B, 1099-OID, 1099-S and W-2G, see Part C, Sec. 7, 8, 9, 10 and 11 respectively for the field descriptions and record layouts for Sector 2 of these records.

                     RECORD NAME: PAYEE "B" RECORD

01. See Part C, Sec. 7, 8, 9, 10 and 11 for the field descriptions and record layouts for Sector 2 of Form 1099-A, 1099-B, 1099-OID, 1099-S and W-2G.

[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. 7. PAYEE "B" RECORD -- FIELD DESCRIPTIONS AND RECORD LAYOUT FOR SECTOR 2 OF FORM 1099-A

.01 This section contains information pertaining to Sector 2 of Form 1099-A. For detailed explanations of the 1099-A fields see the 1990 "Instructions for Forms 1099, 1098, 5498, and W-2G" included in your reporting package.

.02 See Part C, Sec. 5 for field descriptions for Sector 1 of the Payee "B" Record for Forms 1099-A.

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

                     RECORD NAME: PAYEE "B" RECORD