MAGNETIC TAPE REPORTING RULES FOR FORM W-4, EMPLOYEE'S WITHHOLDING ALLOWANCE CERTIFICATES

Rev. Proc. 84-41

PART "A" GENERAL

SECTION 1. PURPOSE

01 The purpose of this Revenue Procedure is to provide the requirements and conditions for submitting certain Forms W-4, Employee's Withholding Allowance Certificates, on magnetic tape instead of filing paper returns. All employers are required to send to the Internal Revenue Service copies of all Forms W-4 submitted by their employees who claim the following:

(a) 15 or more withholding allowances, or

(b) exempt status and usually earn more than $200 a wee at the time the Form W-4 was filed. Forms W-4 information may be filed on magnetic tape and sent monthly to the Service.

SECTION 2. APPLICATION FOR MAGNETIC MEDIA REPORTING

01 Tape reporting is not restricted to employers with the ability to submit all their information on magnetic tape; a combination of tape records and paper documents is acceptable as long as there is no duplication or omission of documents.

02 Employers or transmitters who desire to file statements in the form of magnetic tape must first file a letter of application of Form 4419, Application for Magnetic Media Reporting of Information Returns. This letter or form should be addressed to the attention of the Magnetic Media Coordinator of one of the following service centers:

  (a) Internal Revenue Service

(a) Name, address, and employer identification number of the person, organization, or entity making the request.

(b) Name, title, and telephone number of the person to contact regarding the request.

(c) Estimate of the number of Forms W-4 to be reported in tape format, and the number, if any, expected to be reported on copies of paper Forms W-4.

(d) Type and nature of equipment to be used to prepare the tape; i.e., manufacturer and model of the mainframe and tape drives, tape width (1/2", 3/4", etc.), density (characters per inch), recording code (BCD, Excess 3, Octal, etc.).

(e) Signature of the official responsible for the preparation and submission of Forms W-4 to the Service.

03 The Service will act on applications and notify applicants of authorization to file or of disapproval within 30 days of receipt of an application. No magnetic tape returns may be filed with the Service until authorization to file is received.

04 Only employers or transmitters using equipment compatible with the Service's equipment will have their applications approved. Compatible tape characteristics are shown in PART "B" Section 1.01.

05 In general, once authorization to file on magnetic tape has been granted, such approval will continue in effect in succeeding years, providing that the requirements of this Revenue Procedure are met and there are no equipment changes by the employer or transmitter. However, new applications are required whenever any of the following situations arise:

(a) If the users change from equipment producing compatible tapes.

(b) If the users submit tapes that are not listed as compatible.

(c) If the users discontinue tape reporting for one or more quarters, then decide to resume this method of reporting.

SECTION 3. FILING DATES

01 Magnetic tape reporting to the Service must be quarterly (monthly reporting is encouraged), following the quarter ending due dates below:

              Period Covered         Due Date

01 Packaging, shipping, and mailing instructions will be provided by the Service to all approved filers within 45 days of the granting of approval. A magnetic tape reporting package, which includes all necessary transmittals and labels, will be mailed to all approved filers.

02 Employers or transmitters may submit a portion of their Forms W-4 information on magnetic tape and the remainder on paper forms, provided there is NO DUPLICATE FILING. The magnetic tape records and paper forms must be filed at the same location, i.e., the appropriate service center, but in separate shipments. A Service-provided transmittal Form 6466 must accompany all magnetic tape shipments to the service center. (For all paper Forms W-4 sent to IRS, employers or transmitters must supply a cover letter which included the employer's name, address, employer identification number, and number of Forms W-4 being submitted.)

03 The affidavit which appears on the Service-provided Form 6466 for tape submission must be signed by the employer, the transmitter, service bureau, or disbursing agent who must:

(a) have the authority to sign the affidavit under an agency agreement (either oral, written, or implied) that is valid under State law; and

(b) have the responsibility (either oral, written, or implied) conferred on it by the employer to request taxpayer identifying numbers of employees reported on magnetic tape or paper returns; and

(c) sign the affidavit and add the caption "For: (name of employer)."

04 Although a duly authorized agent signs the affidavit, the employer is held responsible for the accuracy of Forms W-4 contained on magnetic tape.

SECTION 5. PROCESSING OF MAGNETIC MEDIA STATEMENTS

01 The magnetic tape specifications contained in Part B of this Revenue Procedure must be strictly adhered to. If files are unprocessable, they will be returned to the filer for correction and resubmission of tapes or for submission of copies of paper Forms W-4. Corrected files must be filed with the Service as soon as possible. If the delay will be more than two weeks, contact the Service Center Magnetic Media Coordinator for instructions.

02 The Service will copy the information from the original tapes and will return the original tapes to the employer. Normally tapes will be returned either within three months after the quarterly due date for submission to the Service, or within three months after actual receipt of acceptable tapes, whichever is later.

SECTION 6. EFFECT ON PAPER DOCUMENTS

01 Magnetic tape reporting to the Service eliminates the need for submission of copies of paper Forms W-4. However, employers must maintain the original Form W-4 for their records.

02 If only a portion of the statements is reported on magnetic tape and the remainder is reported on paper forms, those paper statements must be filed on the prescribed forms.

SECTION 7. ADDITIONAL INFORMATION

Request for additional copies of this Revenue Procedure or for additional information on tape reporting of Forms 941, 1099, 5498, or 1042S should be addressed to the attention of the Magnetic Media Coordinator of the appropriate Internal Revenue Service Center listed in Section 2.02 above.

PART 'B' MAGNETIC TAPE SPECIFICATIONS

SECTION 1. GENERAL

01 These specifications prescribe the required format and content of the records to be included in the file, but not the methods or equipment to be used in their preparation. Usually, the Service will be able to process, without translation, any compatible tape file. To be compatible, a tape file must meet all of the following specifications:

(a) Type of Tape -- 1/2 inch Mylar base, oxide coated

(b) Recording Density -- 556 or 800 bits per inch (BPI)

(c) Parity -- Even or Odd

(d) Interrecord gap -- 3/4 inch

(e) Recording Code -- 7 channel binary coded decimal (BCD)

02 Conversion facilities are currently available for the following tapes:

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

(1) Odd Parity

(2) 800, 1600, or 6250 Densities

(b) 9 channel ASCII (American Standard Coded Information Interchange) with

(1) Odd Parity

(2) 800, 1600, or 6250 Densities

03 Although the Service can process, after translation, tapes created at 6250 BPI, it is preferred that filers submit 1600 BPI tapes if possible.

04 The employer or the transmitter must affix an external label to each tape with the following information:

(a) Name of Transmitter

(b) Number of data records on that reel

(c) Density (556, 800, 1600, or 6250 BPI)

(d) Channel (7 or 9)

(e) Parity (odd or even)

(f) Manufacturer and model of main frame and tape drives

(g) Sequence number of reel, and total number of reels in the file (i.e., 1 of 3, 2 of 4)

05 All records, including Header and Trailer Labels (if used), must be transmitted at the same density.

06 Do not submit an employee W-4 record without the required employer identification information. Every record must contain both employee and employer data.

SECTION 2. LABEL CONVENTIONS

01 Header Labels, Trailer Labels, Record Marks, and Tape Marks are all optional. They may be used as required by the transmitter's equipment or programming. If used they must conform to the following standards:

(a) Header Labels

(1) Transmitters may use standard headers, provided they begin with 1HDR, HDR1, VOL1, or VOL.2.

(2) Header labels may not exceed 80 characters in length.

(b) Trailer Labels

(1) Standard trailer labels may be used provided that they begin with 1EOR, 1EOF, EOR1, OR EOF1.

(2) Trailer labels may not exceed 80 characters in length.

(c) Record Marks

(1) Special character used to separate blocked records on tape.

(2) Can be written only at the end of a record or block.

(3) For odd parity tapes, use BCD bit configuration of 011010; for even parity use 111010.

(4) All records are of uniform length; therefore, records marks are not necessary on this file.

(d) Tape Marks

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

(2) Tape marks, if used, must be BCD configuration 001111 in even parity.

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

SECTION 3. RECORD LENGTH AND BLOCKING

01 Tape records prescribed in the specifications may be blocked or unblocked, subject to the following:

(a) All data records are of a fixed length of 400 positions.

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

(c) If blocking is used (more than one record per block) the desired blocking factor is ten records per block. At no time may a block contain more than 4,000 characters, but a smaller block size may be used if necessary. If sufficient records are not available for a full block, the remainder should be "padded" with 9's to fill all unused positions. Do not pad the block with blanks, or create blank records.

           RECORD NAME:  W-4 MAGNETIC TAPE RECORD

Rev. Proc. 80-8, 1980-1 C.B. 592, is superseded.