IRS Revises Specifications For Filing Tip Reporting Form Electronically.

Rev. Proc. 2000-49

Reprinted from IR Bulletin 2000-47 dated November 20, 2000 (and containing copies of Forms 4419, 4802, 4804, 8508, and 8809 for taxpayers' use)

     NOTE: Use this revenue procedure to prepare Forms 8027,

     Beginning in calendar year 2003 for Tax Year 2002, 9 track

SECTION 1. PURPOSE

.01 Form 8027 is used by large food or beverage establishments when the employer is required to make annual reports to the IRS on receipts from food or beverage operations and tips reported by employees.

     Note: All employees receiving $20.00 or more a month in tips

.03 This revenue procedure supersedes the following: Rev. Proc. 99-46 published as Publication 1239 (Rev. 03-2000), Specifications for Filing Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips, Magnetically or Electronically. This revenue procedure is effective for Forms 8027 due the last day of February 2001 and any returns filed thereafter.

SECTION 2. NATURE OF CHANGES

Numerous editorial changes have been made to the revenue procedure. Please read the publication carefully and in its entirety before attempting to prepare your magnetic/electronic file for submission. Major changes have been emphasized by using italics. The changes are as follows:

.01 Part A, Sec. 3, the street address for mailing magnetic returns and correspondence has changed to 240 Murall Dr.

.02 Part A, Sec. 7, Test Files was added to the publication.

.03 PART B, SEC. 2, TAPE SPECIFICATIONS, BEGINNING IN CALENDAR YEAR 2003 FOR TAX YEAR 2002, IRS/MCC WILL NO LONGER ACCEPT 9 TRACK TAPE FOR FILING FORMS 8027.

.04 Electronic filing specifications are in Part C. Numerous changes have been made to these instructions. Please read this part carefully.

.05 Part D is new and contains miscellaneous information on contacting IRS/MCC in a centralized location within the publication.

.06 BEGINNING IN CALENDAR YEAR 2002 FOR TAX YEAR 2001, IRS/MCC WILL NO LONGER RETURN PROBLEM MEDIA IN NEED OF REPLACEMENT. Filers will continue to receive a tracking form, listing and letter detailing the reason(s) their media could not be processed. Filers will be expected to send in replacement media within the prescribed time frame. This makes it imperative that filers maintain backup copies and/or recreate capabilities for their information return files.

SECTION 3. WHERE TO FILE AND HOW TO CONTACT THE IRS, MARTINSBURG COMPUTING CENTER

.01 All Forms 8027 filed magnetically are processed at IRS/MCC and are to be sent to the following address:

     IRS-Martinsburg Computing Center

.03 Questions pertaining to magnetic media filing of Forms W2 must be directed to the Social Security Administration (SSA). Filers can call 1-800-SSA-6270 to obtain the phone number of the SSA Employer Services Liaison Officers for their area.

.04 A taxpayer or authorized representative may request a copy of a tax return or a Form W-2 filed with a return by submitting Form 4506, Request for Copy or Transcript of Tax Form, to IRS. This form may be obtained by calling 1-800-TAX-FORM (1-800-829-3676).

.05 The Information Reporting Program (IRP) Call Site, located at the Martinsburg Computing Center, provides service to the payer/employer community (financial institutions, employers, and other transmitters of information returns). The IRP Call Site answers questions concerning tax law and magnetic/electronic filing of Forms 8027 and other information returns (Forms 1096, 1098, 1099, 5498, W-2G, W-3, 1042-S), questionable Forms W-4, inquiries dealing with backup withholding due to missing and incorrect taxpayer identification numbers and questions concerning paper filing of Forms W-2. Recipients of information returns (payees) should continue to contact 1-800-829-1040 or other numbers specified in the tax return instructions with any questions on how to report tax returns.

The Call Site accepts calls from all areas of the country. The number to call is 304-263-8700 or Telecommunications Device for the Deaf (TDD) 304-267-3367. These are toll calls. Hours of operation for the Call Site are Monday through Friday, 8:30 a.m. to 4:30 p.m. Eastern Time. The Call Site is in operation throughout the year to handle the questions of payers, transmitters, and employers. Due to the high demand for assistance at the end of January and February, it is advisable to call as soon as possible to avoid these peak filing seasons.

.06 The telephone numbers for magnetic media inquiries or electronic submissions are:

     304-263-8700 -- Call Site

.01 Section 6011(e)(2)(A) of the Internal Revenue Code requires that any person, including corporations, partnerships, individuals, estates, and trusts, required to file 250 or more information returns must file such returns on magnetic media.

.02 The filing requirements apply separately to both original and corrected returns.

.03 Filing electronically through the FIRE system with IRS/MCC fulfills the magnetic media filing requirement.

.04 The above requirements do not apply if you establish undue hardship (see Part A, Sec. 5).

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

.01 If an employer is required to file on magnetic media but fails to do so (or fails to file electronically, in lieu of magnetic media filing) and does not have an approved waiver on record, the employer will be subject to a penalty of $50 per return in excess of 250.

.02 If employers are required to file original or corrected returns on magnetic media, but such filing would create a hardship, they may request a waiver from these filing requirements by submitting Form 8508, Request for Waiver From Filing Information Returns on Magnetic Media, to IRS/MCC.

.03 Even though an employer may submit as many as 250 corrections on paper, IRS encourages magnetically or electronically submitted corrections. Once the 250 threshold has been met, filers are required to submit any additional returns magnetically or electronically. However, if a waiver for an original filing is approved, any corrections for the same type of returns will be covered under this waiver.

.04 Generally, only the employer may sign the Form 8508. A transmitter may sign if given power of attorney; however, a letter signed by the employer stating this fact must be attached to the Form 8508.

.05 A transmitter must submit a separate Form 8508 for each employer. Do not submit a list of employers.

.06 All information requested on the Form 8508 must be provided to IRS for the request to be processed.

.07 The waiver, if approved, will provide exemption from magnetic media filing for the current tax year only. Employers 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.

.08 Form 8508 may be photocopied or computer-generated as long as it contains all the information requested on the original form.

.09 Filers are encouraged to submit Form 8508 to IRS/MCC at least 45 days before the due date of the returns.

.10 File Form 8508 for Forms W-2 with IRS/MCC, not SSA.

.11 Waivers are evaluated on a case-by-case basis and are approved or denied based on criteria set forth under section 6011(e) of the Internal Revenue Code. The transmitter must allow a minimum of 30 days for IRS/MCC to respond to a waiver request.

.12 If a waiver request is approved, the transmitter should keep the approval letter on file.

.13 An approved waiver from filing Forms 8027 on magnetic media does not provide exemption from all filing. The employer must timely file Form 8027 on acceptable paper forms with the Andover Service Center. The transmitter should also send a copy of the approved waiver to the Andover Service Center where the paper returns are filed.

SECTION 6. FORM 4419, APPLICATION FOR FILING INFORMATION RETURNS MAGNETICALLY/ELECTRONICALLY

.01 For the purposes of this revenue procedure, the EMPLOYER is the organization supplying the information and the TRANSMITTER is the organization preparing the magnetic/electronic file and/or sending the file to IRS/MCC. The employer and the transmitter may be the same entity. Employers or their transmitters are required to complete Form 4419, Application for Filing Information Returns Magnetically/Electronically.

.02 Form 4419 can be submitted at any time during the year; however, it should be submitted to IRS/MCC at least 30 days before the due date of the return(s). IRS will act on an application and notify the applicant, in writing, of authorization to file. A five- character alpha/numeric Transmitter Control Code (TCC) will be assigned and included in an acknowledgment letter within 15 to 45 days of receipt of the application. Magnetic/electronic returns may not be filed with IRS until the application has been approved and a TCC assigned. Include your TCC in any correspondence with IRS/MCC.

.03 If you file information returns other than Form 8027 on magnetic media, you must obtain a separate TCC for those types of returns. The TCC assigned for Forms 8027 is to be used for the processing of these forms only.

.04 Upon approval, a magnetic media reporting package containing the current revenue procedure, forms, and instructions will be sent to the attention of the contact person indicated on Form 4419. Annually, thereafter, IRS/MCC will send the transmitter a package containing the current revenue procedure and forms. This package will continue to be sent to the contact person indicated on the Form 4419 unless IRS/MCC has been notified in writing of any changes or updates. After you have received approval to file magnetically/ electronically, you do not need to reapply each year; however, notify IRS in writing if:

     (a) You change your name or the name of your organization, so

.06 Only employers or transmitters using equipment compatible with IRS equipment will have their application approved.

.07 If your magnetic media files have been prepared for you in the past by a transmitter, and you now have computer equipment compatible with that of IRS and wish to prepare your own files, you must request your own five-character alpha/numeric TCC by filing an application, Form 4419, as described in Sec. 6.02.

SECTION 7. TEST FILES

.01 IRS/MCC encourages new filers to submit test files for review in advance of the filing season. Employers or transmitters must be approved to file magnetically/electronically before a test file is submitted (See Part A, Sec. 6 for application procedures.)

.02 All test files must be submitted between October 1 and December 15 of the year before the returns are due. If you are filing electronically you may submit a test file through February 15 of the year the returns are due.

SECTION 8. FILING FORMS 8027 MAGNETICALLY/ELECTRONICALLY

.01 Form 4804, Transmittal of Information Returns Reported Magnetically/Electronically, must accompany all magnetic media shipments. If you file for multiple employers and have the authority to sign the affidavit on Form 4804, you should also submit Form 4802, Transmittal of Information Returns Reported Magnetically/Electronically (Continuation). For electronic transmissions, the Form 4804 and Form 4802, if applicable, must be mailed or faxed the same day as the electronic transmission.

.02 The employer MUST sign Form 4804; however, an agent (transmitter, service bureau, paying agent, or disbursing agent) may sign Form 4804 for the employer. To do this, the agent must have the authority to sign for the employer under an agency agreement (either oral, written, or implied) that is valid under the state law and must add to his or her signature the caption "For: (name of employer)".

     NOTE: Failure to sign the Form 4804 may delay processing or

.04 Be sure to include Form 4804, 4802 or computer-generated substitutes with your magnetic media shipment. DO NOT MAIL YOUR MAGNETIC MEDIAAND THE TRANSMITTAL DOCUMENTS SEPARATELY.

.05 Indicate on Form 4804, in the block captioned "Combined Total Payee Records," the total number of establishments being reported in this shipment. This figure should match the total number of records in your magnetic/electronic file.

.06 DO NOT SUBMIT THE SAME INFORMATION ON PAPER FORMS THAT YOU SUBMIT MAGNETICALLY/ELECTRONICALLY. This does not mean that corrected documents are not to be filed. If a return has been prepared and submitted improperly, you must file a corrected return as soon as possible. Refer to Part A, Sec. 13 for requirements and instructions for filing corrected returns.

.07 If an allocation of tips is based on a good faith agreement, a copy of this agreement must accompany the submission.

.08 If, under Rev. Proc. 86-21, 1986-1 C.B. 560, the District Director granted the establishment a percentage of gross receipts of less than 8%, a copy of the determination letter must be sent with the submission. Employers with more than one establishment can receive approval from one district in each Internal Revenue Service region where the establishments are located (See sec. 31.6053-3(h)(4) of the Employment Tax Regulations).

.09 Before submitting your magnetic/electronic file, include the following:

     (a) A signed Form 4804, Transmittal of Information Returns

SECTION 9. FILING DATES

.01 Magnetic/electronic reporting to IRS for Form 8027 must be on a calendar year basis. The due date of either paper or magnetically reported Forms 8027 is the last day of February. However, Forms 8027 filed electronically are due March 31.

.02 If the due date falls on a Saturday, Sunday, or legal holiday, filing Form 8027 on the next day that is not a Saturday, Sunday, or legal holiday will be considered timely.

SECTION 10. EXTENSION OF TIME

.01 An extension of time to file may be requested for Forms 8027, 1099, 1098, 5498, W-2G, W-2, and 1042-S.

.02 Form 8809, Request for Extension of Time To File Information Returns, should be submitted to IRS/MCC. This form may be used to request an extension of time to file information returns submitted on paper, magnetically or electronically.

.03 Requesting an extension of time for multiple employers may be done by submitting Form 8809 and attaching a list of the employer names and their TINs (EIN or SSN). The listing must be attached to ensure the extension is recorded for all employers. Form 8809 may be computer-generated or photocopied. Be sure that all the pertinent information is included.

.04 Requests for extensions of time for multiple employers will be responded to with one approval letter, accompanied by a list of employers covered under that approval.

.05 As soon as it is apparent that an extension of time to file is needed, Form 8809 may be submitted. When granted, the extension will be for 30 days. It will take a minimum of 30 days for IRS/MCC to respond to an extension request. Under certain circumstances, a request for an extension of time could be denied. When a denial letter is received, any additional or necessary information may be resubmitted within 20 days. When requesting an extension of time, do not hold your files waiting for a response.

.06 While very difficult to obtain, if an additional extension of time is needed, a second Form 8809 must be submitted before the end of the initial extension period. Line 7 on the form should be checked to indicate that an additional extension is being requested. A second 30-day extension will be approved only in cases of extreme hardship or catastrophic events.

.07 Form 8809 must be postmarked no later than the due date of the return for which an extension is requested. If requesting an extension of time to file several types of forms, use one Form 8809, but the Form 8809 must be postmarked no later than the earliest due date. For example, if requesting an extension of time to file both Forms 8027 and 5498, submit Form 8809 postmarked on or before the last day of February.

.08 If an extension request is approved, the approval letter should be kept on file. The approval letter or copy of the approval letter for extension of time should not be sent to IRS/MCC with the magnetic/electronic file. When submitting Form 8027 on paper only to the Andover Service Center, attach a copy of the approval letter. If an approval letter has not been received, send a copy of the timely filed Form 8809.

.09 Request an extension for only one tax year.

.10 The extension request must be signed by the employer or a person who is duly authorized to sign a return, statement or other document for the employer.

.11 Failure to properly complete and sign the Form 8809 may cause delays in processing the request or result in a denial. Carefully read and follow the instructions on the back of the Form 8809.

.12 Form 8809 may be obtained by calling 1-800-TAX-FORM (1-800- 829-3676).

     Note: AN EXTENSION OF TIME TO FILE IS NOT AN EXTENSION TO ISSUE

     (a) Employer name

SECTION 11. PROCESSING OF INFORMATION RETURNS MAGNETICALLY/ELECTRONICALLY

.01 All data received at the IRS/MCC for processing will be given the same protection as individual returns (Form 1040). IRS/MCC will process your magnetic/electronic files to ensure the records were formatted and coded according to this revenue procedure.

.02 If the data is formatted incorrectly, the file will be returned for replacement accompanied by a letter of explanation along with a Media Tracking Slip (Form 9267). When media is returned, it is because IRS/MCC encountered errors (not limited to format) and was unable to process the media; therefore, requiring a replacement. Open all packages immediately. Beginning in calendar year 2002 for Tax Year 2001, IRS/MCC will no longer return problem media in need of replacement.

.03 Files must be corrected and returned with the Media Tracking Slip (Form 9267) to IRS/MCC within 45 days from the date of the letter IRS/MCC included with the returned media. A penalty for failure to file correct information returns by the due date will be assessed if the file is not corrected and returned within the 45 days or if the incorrect file is returned by IRS/MCC for replacement more than two times. Apenalty for intentional disregard of filing requirements will be assessed if a replacement file is not received.

.04 Files will not be returned to you after successful processing. Therefore, if you want proof that IRS/MCC received your shipment, you may use a carrier that provides proof of delivery.

.05 To distinguish between a correction and a replacement, the following definitions are provided:

     (a) A correction is a record submitted by the

.01 The Revenue Reconciliation Act of 1989 changed the penalty provisions for any documents, including corrections, which are filed after the original filing date for the return. The penalty for failure to file correct information returns is "time sensitive," in that prompt correction of failures to file, or prompt correction of errors on returns that were filed, can lead to reduced penalties.

     o The penalty generally is $50 for each information return that

     (a) information returns have been filed but were filed with

SECTION 13. CORRECTED RETURNS, SUBSTITUTE FORMS, AND COMPUTER-GENERATED FORMS

.01 If returns must be corrected, approved magnetic/electronic filers must provide such corrections magnetically/electronically if you have 250 or more. If your information is filed magnetically/electronically, corrected returns are identified by using the "Corrected 8027 Indicator" in field position 370 of the employer record. Form 4804 must accompany the shipment, and the box for correction should be marked in Block 1 of the form. (See Part A, Sec. 11.05 for the definition of corrections.)

.02 If corrections are not submitted on magnetic media, employers must submit them on official Forms 8027. Substitute forms that have been previously approved by IRS, or computer-generated forms that are exact facsimiles of the official form (except for minor page size or print style deviations), may be submitted without obtaining IRS approval before using the form.

.03 Employers/establishments may send corrected paper Forms 8027 to IRS at the address shown in Part A, Sec. 14.01. Corrected paper returns are identified by marking the "AMENDED" check box on Form 8027.

SECTION 14. EFFECT ON PAPER RETURNS

.01 If you are filing more than one paper Form 8027, you must attach a completed Form 8027-T, Transmittal of Employer's Annual Information Return of Tip Income and Allocated Tips, to the Forms 8027 and send to:

     Internal Revenue Service Center

SECTION 15. DEFINITION OF TERMS

 ELEMENT             DESCRIPTION

SECTION 1. GENERAL

.01 The magnetic/electronic specifications contained in this part of the revenue procedure define the required format and contents of the records to be included in the file.

.02 A self-prepared media label must be affixed to each piece of media submitted for processing. Notice 210 provides instructions on how to complete a self-prepared media label.

.03 The record format in Part B, Sec. 6, applies to both magnetic and electronic files.

SECTION 2. TAPE SPECIFICATIONS

     Note: Beginning in calendar year 2003 for Tax Year 2002, IRS/MCC

     (a) 9-track EBCDIC (Extended Binary Coded Decimal Interchange

.02 All compatible tape files must have the following characteristics: Type of tape -- 1/2 inch (12.7mm) wide, computer grade magnetic tape on reels up to 2,400 feet (731.52 m) within the following specifications:

     (a) Tape thickness: 1.0 or 1.5 mils

.04 The tape record defined in this revenue procedure may be blocked or unblocked, subject to the following:

     (a) All records except the header and trailer labels may be

     Header label:

.01 In most instances, IRS/MCC can process tape cartridges that meet the following specifications:

     (a) Must be IBM 3480, 3490, 3490E, 3590, 3590E, or AS400

     (a) A block must not exceed 32,736 tape positions.

.04 For the purposes of this revenue procedure, the following must be used:

     Tape Mark:

.01 In most instances, IRS/MCC can process 8mm tape cartridges that meet the following specifications:

     (a) Must meet American National Standard Institute (ANSI)

     (a) A block must not exceed 32,736 tape positions.

.04 For faster processing, IRS/MCC encourages transmitters to use header labeled cartridges. ATMTAX may be used as a suggested filename.

.05 For the purposes of this revenue procedure, the following must be used:

     Tape Mark:

.07 4mm (.157-inch) cassettes are now acceptable with the following specifications:

     (a) 4 mm cassettes must be 2 1/4-inch by 3-inch.

     (a) QIC cartridges must be 4_ by 6_.

IRS/MCC has discontinued processing 5 1/4-inch diskettes. Filers who use 5 1/4-inch diskettes must now use another method of submitting information returns magnetically/electronically.

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

     (a) 3 1/2-inches in diameter.

.03 Deviations from the prescribed format are not acceptable.

SECTION 6. RECORD FORMAT AND LAYOUT

FORM 8027 RECORD FORMAT

 Field

SECTION 1 BACKGROUND

01. All electronic filing of information returns are received at IRS/MCC via the FIRE (Filing Information Returns Electronically) System. The FIRE System can be accessed via analog and ISDN BRI connections. The system is designed to support the electronic filing of information returns only. The telephone number for electronic filing is (1-304-262-2400). Publications and forms are no longer available electronically from MCC. Users needing publications and forms will need to download them from the IRS's Internet Web Site at www.irs.gov or order them by calling 1-800-TAX-FORM (1-800-829-3676).

SECTION 2. ADVANTAGES OF FILING ELECTRONICALLY

Some of the advantages of filing electronically are as follows:

     (1) Results available within 10 workdays as to the acceptability

.01 Electronic filing of Forms 8027, originals, corrections, and replacements of information returns is offered as an alternative to magnetic media (tape, tape cartridge, or diskette) or paper filing, but is not a requirement. Transmitters filing electronically will fulfill the magnetic media requirements for those payers who are required to file magnetically. It may also be used by payers who are under the filing threshold requirement, but would prefer to file their information returns this way. If the original file was sent magnetically, but was returned for replacement, the replacement may be transmitted electronically. Also, if the original file was submitted via magnetic media, any corrections may be transmitted electronically.

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

.03 Files submitted to IRS/MCC electronically must be in standard ASCII code. No magnetic media or paper forms are to be submitted with the same information as the electronically submitted file.

.04 If a request for extension is approved, transmitters who file electronically will be granted an extension of time to file. Part A, Sec. 10, explains procedures for requesting extensions of time. Filers are encouraged to file their data as soon as possible.

.05 The format is the same for electronically filed records as they are for 3 1/2-inch diskettes, tapes, and tape cartridges, and must be in standard ASCII code. For electronically filed documents, each transmission is considered a separate file.

SECTION 4. ELECTRONIC FILING APPROVAL PROCEDURE

.01 Filers must obtain, or already have, a Transmitter Control Code (TCC) assigned prior to submitting their files electronically. (Filers who currently have a TCC for magnetic media filing do not have to request a second TCC for electronic filing.) Refer to Part A, Sec. 6, for information on how to obtain a TCC.

.02 Once a TCC is obtained, electronic filers assign their own passwords and do not need prior or special approval.

.03 For all passwords, it is the user's responsibility to remember the password and not allow the password to be compromised. Passwords are user assigned at first logon and are up to 8 alpha/numerics, which are case sensitive. However, if filers do forget their password, call 304-263-8700 for assistance.

Note: Passwords are case sensitive.

SECTION 5. TEST FILES

.01 Filers are not required to submit a test file; however, the submission of a test file is encouraged for all new electronic filers to test hardware and software connectivity. If filers wish to submit an electronic test file, it must be submitted to IRS/MCC no earlier than October and no later than December 15 the year before the returns are due.

.02 If a filer encounters problems while transmitting the electronic test file, contact IRS/MCC for assistance.

.03 Filers can verify the status of their transmitted test data by dialing the electronic filing system phone number (1-304-262- 2400). This information will be available within 10 workdays after their transmission is received by IRS/MCC.

SECTION 6. ELECTRONIC SUBMISSIONS

.01 Electronically filed information may be submitted to IRS/MCC 24 hours a day, 7 days a week. Technical assistance will be available Monday through Friday between 8:30 a.m. and 4:30 p.m. Eastern time by calling 304-263-8700.

.02 The FIRE System will be down from December 29, 2000, through January 7, 2001. This will allow time for IRS/MCC to update its system to reflect current year changes.

.03 Data compression is encouraged when submitting information returns electronically. WinZip and PKZip are acceptable compression packages. UNIX COMPRESS may be acceptable; however, a test file is recommended to verify compatibility. IRS/MCC cannot accept self- extracting zip files or compressed files containing multiple files.

The time required to transmit information returns electronically will vary depending on the modem speed and the type of data compression used, if any. The time required to transmit a file can be reduced by as much as 95 percent by using software compression and hardware compression.

The following are actual transmission rates achieved in test uploads at MCC using compressed files. The actual transmission rates will vary depending on the modem speeds.

 Transmission

.05 Filers are advised not to resubmit an entire file if records were omitted from the original transmission. This will result in duplicate filing. A new file should be sent consisting of the records that had not previously been submitted.

SECTION 7. TRANSMITTAL REQUIREMENTS

     Note: In the future, Form 4804 may not be required for

.02 Form 4804, which is located in the back of this publication, can be ordered by calling the IRS toll-free forms and publications order number 1-800-TAX-FORM (1-800-829-3676), or it may be computer- generated. It may also be obtained from the IRS's Internet Web Site at www.irs.gov. If a filer chooses to computer-generate Form 4804, all of the information contained on the original form, including the affidavit, must also be contained on the computer-generated form.

.03 The TCC used in your file is the TCC which must appear on the transmittal Form 4804.

.04 Forms 4804 should be mailed to the following address:

     If by Postal Service, air or truck freight:

.01 The FIRE System is designed exclusively for the filing of Forms 1042-S, 1099, 1098, 5498, 8027, W2-G and W-4.

.02 A transmitter must have a TCC before a file can be transmitted. If you have a TCC for magnetic media filing, that TCC can also be used for electronic filing.

.03 It is the filer's responsibility to dial back to verify the acceptability of files submitted by checking the file status area of the system. These reports will be available on the electronic system in 10 workdays after the transmission is received by IRS/MCC.

.04 Contact the FIRE System by dialing 304-262-2400. This number supports analog connections from 1200bps to 56Kbps or ISDN BRI 128Kbps connections. The system can be accessed via Dial-up network/web browser (see Section 9) or communications software (see Section 10). The Dial-up network/web browser will provide an Internet-like look without going through the Internet (point-to- point). If you do not have this capability, a text interface is provided that can be accessed via communication software such as Hyperterminal, Procomm, PCAnywhere, etc.

SECTION 9. DIAL-UP NETWORK/BROWSER SPECIFICATIONS (WEB INTERFACE)

.01 The following are some general instructions (many of these settings may already be set by default in your software):

     Dial-up network settings:

UPLOADING FILES WITH DIAL-UP NETWORKING/WEB BROWSER IN WINDOWS 95/98

     (1) This is a point-to-point connection -- not the Internet.

The first time you dial-in, you will need to configure your Dial-Up Networking.

Select 'Make new connection'.

Type a descriptive name for the system you are calling.

Select your modem.

Click 'Next'.

Enter area code 304 and telephone number 262-2400.

Click 'Next'.

When you receive a message that you have successfully created a new Dial-Up Networking connection, click 'Finish'.

Click 'Connect' to dial. If you are prompted for a user name and password, complete according to local procedures; otherwise, click 'OK'.

When you receive the message that you have connected to our system, click on your Web Browser (remember, you are not connecting via the Internet -- this is a point-to-point connection).

In the URL Address enter http://10.225.224.2 and press ENTER.

Subsequent Dial-Up Network connections

Click 'Connect'.

If prompted for user name and password, complete according to local procedures; otherwise, click 'OK'.

When you receive 'Connection Complete', click 'OK'.

Click on your Web Browser (remember, you are not connecting via the Internet).

In the URL Address enter http://10.225.224.2 and press ENTER.

First time connection to The FIRE System (If you have logged on previously, skip to Subsequent Connections to the FIRE System.)

Click 'Create New Account'.

Fill out the registration form and click 'Create'.

Enter your logon name (most users logon with their first and last name).

Enter your password (the password is user assigned and is case sensitive).

Click 'Create'.

If you receive the message 'account created', click 'OK'.

Click 'Start the FIRE Application'

Subsequent connections to The FIRE System

Click 'Log On'.

Enter your logon name (most users logon with their first and last name).

Enter your password (the password is user assigned and is case sensitive).

At Menu Options:

Click 'Information Returns'

Enter your TCC:

Enter your EIN:

Click 'Submit'.

The system will then display the company name, address, city, state, ZIP code and phone number. This information will be used to contact or send any correspondence regarding this transmission. Update as appropriate and/or click 'Accept'.

Click one of the following:

     Original File

FIRE Replacement (file was originally transmitted on this system) Click file to be replaced Magnetic Media Replacement File

Enter the alpha character from Form 9267, Media Tracking Slip, that was returned with your magnetic media shipment.

Click 'Submit'.

Enter the drive/path/filename of the file you want to upload or click 'Browse' to locate the file. Click 'Upload'.

When the upload is complete, the screen will display the total bytes received and the file name to be recorded on your Form 4804, Box 7b.

If you have more files to upload for that TCC:

Click 'File Another'; otherwise,

Click 'Back to Main Menu'.

It is your responsibility to check the acceptability of your file; therefore, be sure to dial back into the system in 10 business days.

     At the Main Menu:

(Form 4804 is not needed on a replacement file unless the number of payees has changed from the original/correction file.)

'File Bad' -- Correct the errors and resubmit the file as a 'replacement'.

'Not Yet Processed' -- File has been received, but we do not have results available yet. Please check back in a few days.

Click on the desired file for a detailed report of your transmission.

When finished viewing your files, click on 'Main Menu'.

Click 'Log Off'.

Close your Web Browser.

IMPORTANT

Go back into your Dial-Up Network and click 'hang-up'; otherwise, you may stay connected and incur unnecessary phone charges.

SECTION 10. COMMUNICATION SOFTWARE SPECIFICATIONS (TEXT INTERFACE)

.01 Communications software settings must be:

     o No parity

.03 Due to the large number of communication products available, it is impossible to provide specific information on all soft-ware/ hardware configurations. However, since most of our filers use Windows 95, 98 or NT software, the following instructions are geared toward those products (Procomm, PCAnywhere and many other communications packages are also acceptable and the product does not necessarily need to be Windows based.):

Uploading Files Using Hyperterminal in Windows 95, 98 or NT

Select Programs

Accessories

Communications (Windows 98)

Hyperterminal

The first time you log on, select Hyperterminal, Hyperterm or Hyperterm.exe, whichever is available on your system.

Thereafter, you can just select the icon that you have saved.

A box will appear titled 'Connection Description'.

Enter a name and choose an icon for the connection:

Country Code: United States of America

Area Code: 304

Phone Number: 262-2400

Connect Using: (default)

(If you need to modify the phone number, select File, then Properties to enter defaults for the area code, phone numbers and/or special access codes.)

Click on Dial.

A 'Connect' box will appear to show the status.

Once you have connected to The FIRE System, if you do not get a menu within a few seconds, press the

ENTER key one time.

First Time Logon

When you have connected to the system, enter 'new' to create your logon name and password. Complete the registration information and enter 'y' to create account.

Logon Name and Password

Logon Name: Enter a logon name. Most users enter their first and last name as the logon name.

Password: Enter a password of your choosing (1-8 alpha/numerics -- case sensitive).

After entering the password, you will go to the Main Menu.

Transferring Your Electronic File

Enter 'A' for Electronic Filing.

After reading Information Notice, press ENTER.

Enter 'A' for Forms 1098, 1099, 5498, W-2G, 1042-S, 8027 and Questionable Forms W-4.

Press the Tab key to advance to TCC box; otherwise, enter 'E' to exit.

Enter your TCC:

Enter your EIN:

The system will then display the company name, address, city, state, ZIP code, and phone number. This information will be used to contact or send correspondence (if necessary) regarding this transmission. If you need to update, enter 'n' to change information; otherwise, enter 'y' to accept.

Select one of the following:

'A' for an Original file

'B' for a Replacement file

'C' for a Correction file

'D' for a Test file

If you selected 'B' for a replacement file, select one of the following:

'A' Replacement Files For This System This option is to replace an original/correction file that was submitted electronically on this system but was bad and needs to be replaced. Select the file needing replaced.

'B' Magnetic media replacement files Enter the alpha character from Form 9267, Media Tracking Slip, that was returned with your magnetic media shipment.

Choose one of the following protocols (Hyperterminal is normally set to Zmodem by default):

     X -- Xmodem

To send a file:

Go to the hyperterminal menu bar.

Click on Transfer.

Click on Send file.

A box will appear titled 'Send File'.

Enter the drive/path/filename or click on Browse to locate your file.

Click on Send.

When the upload is complete, the screen will display the total bytes received and the file name to be recorded on your Form 4804, Box 7b.

Press ENTER to continue.

If you have more files to send for the same TCC/EIN, enter 'y'; otherwise, enter 'n'.

It is your responsibility to check the acceptability of your file; therefore, be sure to dial back into the system in 10 business days.

At the Main Menu:

Enter 'B' for file status.

Press the Tab key to advance to TCC box; otherwise, enter 'E' to exit.

Enter your TCC:

Enter your EIN:

Choose the appropriate option.

Tab to the file you want to look at and press ENTER.

If 'Results' indicate:

'File Good' and you agree with the 'Count of Payees' and have mailed your Form 4804, you are finished with this file. (Form 4804 is not needed on a replacement file unless the number of payees changes from the original/correction file.)

'File Bad' -- Correct the errors and resubmit the file as a replacement.

'Not Yet Processed' -- File has been received, but we do not have results available yet. Please check back in a few days.

When you are finished, enter 'E' from the Main Menu to logoff.

Enter '2' to hang-up.

SECTION 11. MODEM CONFIGURATION

.01 Hardware features

(a) Enable hardware flow control

(b) Enable modem error control

(c) Enable modem compression

SECTION 12. COMMON PROBLEMS ASSOCIATED WITH ELECTRONIC FILING

The following are the major non-format errors associated with electronic filing:

1. No Form 4804, Transmittal of Information Returns Reported Magnetically/Electronically.

Even though you have sent your information returns electronically, you still need to mail a signed Form 4804 by the due date of the return. See Part C, Section 7.04, for the mailing address.

2. Transmitter does not dial back to the electronic system to determine file acceptability.

The results of your file transfer are posted to the FIRE System within ten business days. It is your responsibility to verify file acceptability and, if the file contains errors, you can get an online listing of the errors. Date received and number of payee records are also displayed.

3. Incorrect file is not replaced timely.

If your file is bad, correct the file and timely resubmit as a replacement.

4. Transmitter compresses several files into one.

Only compress one file at a time. For example, if you have 10 uncompressed files to send, compress each file separately and send 10 separate compressed files.

5. Transmitter sends a file and File Status indicates that the file is good, but the transmitter wants to send a replacement or correction file to replace the original/correction/replacement file.

Once a file has been transmitted, you cannot send a replacement file unless File Status indicates the file is bad (1-2 business days after file was transmitted). If you do not want us to process the file, you must first contact us at 304-263-8700 to see if this is a possibility. However, this will count as a replacement. (See Part A, Sec. 11, for the definition of replacement.)

6. Transmitter sends an original file that is good, then sends a correction file for the entire file even though there are only a few changes.

The correction file, containing the proper coding, should only contain the records needing correction, not the entire file.

7. File is formatted as EBCDIC.

All files submitted electronically must be in standard ASCII code.

Part D. Miscellaneous Information

Section 1. Addresses for Martinsburg Computing Center

To submit an application to file, Form 4840, correspondence, and magnetic media files, use the following:

     Mailing by U. S. Postal Service, truck or air freight:

     Information Reporting Program Call Site: 304-263-8700