ELECTRONIC AND MAGNETIC MEDIA SPECS FOR 1996 ARE PUBLISHED.

Rev. Proc. 96-36

Use this revenue procedure to prepare Tax Year 1996 information return for submission to Internal Revenue Service (IRS) using any of the following:

     -- Magnetic Tape

Please read this publication carefully. Persons or businesses required to file information returns may be subject to penalties for failure to file or include correct information if they do not follow the instructions in this revenue procedure.

TABLE OF CONTENTS

 PART A. GENERAL

Revenue procedures are generally revised annually to reflect legislative and form changes. Comments concerning this revenue procedure, or suggestions for making it more helpful, can be addressed to:

     Internal Revenue Service

.01 The purpose of this revenue procedure is to provide the specifications for filing Forms 1098, 1099 series, 5498, and W-2G electronically or on magnetic media, which includes 1/2-inch magnetic tape; IBM 3480, 3490 or AS400 compatible tape cartridges; or 5 1/4- and 3 1/2-inch diskettes with IRS, IRS/MCC HAS DISCONTINUED PROCESSING 8-inch DISKETTES. This revenue procedure must be used for the preparation of Tax Year 1996 information returns and information returns for years prior to 1996 that are required to be filed. This revenue procedure must be used to prepare current and prior year information returns filed between January 1, 1997, and December 31, 1997. Specifications for filing the following forms are contained in this revenue procedure.

(a) Form 1098, Mortgage Interest Statement.

(b) Form 1099-A. Acquisition or Abandonment of Secured Property.

(c) Form 1099-B, Proceeds from Broker and Barter Exchange Transactions.

(d) Form 1099-C, Cancellation of Debt

(e) Form 1099-DIV, Dividends and Distributions.

(f) Form 1099-G, Certain Government Payments.

(g) Form 1099-INT, Interest Income.

(h) Form 1099-MISC, Miscellaneous Income.

(i) Form 1099-OID, Original Issue Discount.

(j) Form 1099-PATR, Taxable Distributions Received from Cooperatives.

(k) Form 1099-R, Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.

(l) Form 1099-S, Proceeds from Real Estate Transactions.

(m) Form 5498, Individual Retirement Arrangement Information.

(n) Form W-2G, Certain Gambling Winnings.

.02 Specifications for filing Forms W-2 on magnetic media are available from the Social Security Administration (SSA) ONLY. Filers can call 1-800-SSA-1213 to obtain the phone number of the SSA Magnetic Media Coordinator for their area.

.03 The Internal Revenue Service, Martinsburg Computing Center (IRS/ MCC) has the responsibility for processing Forms 1098, 1099 series, 5498, and W-2G filed magnetically or electronically. IRS/MCC does not process Forms W-2. Paper and/or magnetic media for Forms W-2 must be sent to SSA. IRS/MCC does, however, process waiver requests (Form 8508) and extension of time requests (Form 8809) for filing Forms W-2.

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

.05 This revenue procedure also provides the requirements and specifications for magnetic media or electronic filing under the Combined Federal/State Filing Program.

.06 The following revenue procedures and publications provide more detailed filing procedures for certain other information returns.

(a) 1996 "Instructions for Forms 1099, 1098, 5498, and W-2G" provides specific instructions on completing and submitting information returns to IRS.

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

(c) Publication 1179, Rules and Specifications for Private Printing of Substitute Forms 1096, 1098, 1099 Series, 5498, and W-2G.

(d) Publication 1239, Specifications for Filing Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips, on Magnetic Tape and 5 1/4- or 3 1/2-inch Diskettes.

(e) Publication 1187, Specifications for Filing Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, Electronically or on Magnetic Tape, and 5 1/4- or 3 1/2-inch Magnetic Diskettes.

(f) Publication 1245, Specifications for Filing Form W-4, Employee's Withholding Allowance Certificate, on Magnetic Tape, and 5 1/4- or 3 1/2-inch Magnetic Diskette.

.07 This revenue procedure supersedes Rev. Proc. 95-29 and 95-29A published as Publication 1220 (Rev. 6-95), Specifications for Filing Forms 1098, 1099, 5498, and W-2G Magnetically or Electronically.

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

SECTION 2. NATURE OF CHANGES -- CURRENT YEAR (TAX YEAR 1996)

.01 In this publication, all pertinent changes for TAX YEAR 1996 have been emphasized by the use of ITALICS. This has been done for the convenience of the filers in identifying new information. Filers are still advised to read the publication in its entirety.

.02 PROGRAMMING CHANGES

a. Payer/Transmitter "A" Record Changes:

(1) For all forms, Payment Year, Field Positions 2-3 must be incremented by one (from 95 to 96) unless reporting prior year data.

b. Payer/Transmitter "B" Record Changes:

(1) For all forms, Payment Year, Field Positions 2-3 must be incremented by one (from 95 to 96) unless reporting prior year data.

(2) Part B, Sec. 8: For Form 1099-R Distribution Codes, Field Positions 4-5, acceptable combinations of numeric distribution codes now include codes 8 and 4.

(3) Part B, Sec. 8: For Form 5498, a SEP Indicator has been added in Field Position 44.

.03 EDITORIAL CHANGES -- GENERAL

(a) Eight inch diskette processing has been eliminated by IRS/MCC. All references to 8-inch diskette processing have been deleted from this publication.

(b) Part A, Sec. 4.04 was included to inform payers of electronic filing methods; i.e., Mainframe and Information Reporting Program Bulletin Board System (IRP-BBS) electronic filing, and a brief overview of options available on the IRP-BBS.

(c) Part A, Sec. 5.14: Instructions have been added for obtaining an automatic waiver for filing Form 5498 for participants of Operation Joint Endeavor (Bosnia Region).

(d) Part A, Sec. 7.01: A chart has been added to clarify the GUIDELINES FOR applications for a transmitter control code (TCC).

(e) Part A, Sec. 12.02 and 12.03: Information has been added regarding the Media Tracking Slip (Form 9267) which accompanies media returned to filers due to processing problems.

(f) Part A, Sec. 17: The Definition of Terms section has been expanded.

(g) Part B, Sec. 3.01(a): Tape cartridge specifications have been expanded to include IBM 3490E as acceptable media.

(h) Part F: Information in this part has been provided as a quick reference point for addresses and telephone numbers for IRS/MCC.

(i) Numerous statements have been added and bolded throughout the publication instructing filers not to report duplicate data which may result in erroneous penalty notices being generated.

.04 EDITORIAL CHANGES -- MAGNETIC MEDIA SPECIFICATIONS

(a) Part B, Sec. 4: 8mm (.315-inch) tape cartridge specifications have been added. This is a pilot program for transmitters with AS400 operating systems only.

(b) Part B, Sec. 6: Instructions have been included for reporting IRA contributions for Operation Joint Endeavor (Bosnia Region) participants.

(c) Part B, Sec. 6, Payer/Transmitter "A" Record -- General Field Descriptions -- Field Positions 23-31, Form 5498: A note was added directing the filer to enter "1" in the IRA/SEP Indicator Field (position 44 of the Payee "B" Record) for a simplified employee pension (SEP).

(d) Part B, Sec. 8: A separate Payee "B" Record Layout Position 322-420, has been created for Form 1099-R.

(e) Part B, Sec. 8, Payee "B" Field Positions 4-5, Document Specific Code/Distribution Code for the Tax Year of Refund for 1099-G: A statement has been added to instruct filers to report the distribution code that reflects the tax year for which the REFUND was made, not 1996. Refund Years have been added to identify the valid corresponding code.

(f) Part B, Sec. 8, Payee "B" Record General Field Descriptions and Record Layout -- IRA/SEP Indicator, Field Position 44: Text was added to the Description and Remarks to enter "1" for Form 5498 if reporting a contribution to a simplified employee pension (SEP). A note was also added to reflect the change.

(g) Part C, Sec. 6: IBM 3780 Bisynchronous communication has been expanded to include the specifications and circuit number of 304-264-7045 for Hayes OPTIMA 288 V.FC Smartmodem for 14400 bps transmissions.

(h) Part C, Sec. 7: A Type of File Indicator has been added in Field Position 44 for Extension File in the Bisynchronous Electronic Filing Record Specifications.

(i) Part E, Sec. 3, RECORD LAYOUT, Field Positions 6-14: Reference to the Foreign Entity Indicator has been corrected to read, Field Position 176, must be set to "X."

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

.01 All information returns filed magnetically or electronically are processed at IRS/MCC. Files containing information returns. requests for IRS magnetic media and electronic filing information, undue hardship waivers, and requests for extensions of time to file returns or to furnish the statements to recipients are to be sent to the following addresses:

If by Postal Service:

If by Postal Service:

     304-263-8700 -- Call Site -- PART A, Sec 3.19

1-800-TAX-FORM (1-800-829-3676)

.04 The 1996 "Instructions for Forms 1099, 1098, 5498, and W-2G" have been included in the Publication 1220 for transmitter convenience. The Form 1096 is used only to transmit Copy A of paper Forms 1099, 1098, 5498, and W-2G. If filing paper returns, follow the mailing instructions on the Form 1096 and submit the paper returns to the appropriate IRS Service Center.

.05 Requests for paper Forms 1096, 1098, 1099 and W-2G, and publications unrelated to magnetic media/electronic filing should be requested by calling the "Forms Only Number" listed in your local telephone directory or by calling the IRS toll-free number 1-800-TAX-FORM (1-800-829-3676).

.06 Questions pertaining to magnetic media filing of Forms W-2 must be directed to the Social Security Administration (SSA). Filers can call 1-800-SSA-1213 to obtain the phone number of the SSA Magnetic Media Coordinator for their area.

.07 Payers SHOULD not contact IRS/MCC if they have received a penalty notice and need additional information, or are requesting an abatement of the penalty. Penalty notices contain an IRS representative's name and/or phone number for contact purposes; or, the payer may be instructed to respond in writing to the address provided. IRS/MCC does NOT issue penalty notices and does NOT have the authority to abate penalties. For penalty information, refer to the Penalty section of 1996 "Instructions for Forms 1099, 1098, 5498, and W-2G."

.08 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).

.09 The IRS Centralized Call Site answers both magnetic media and tax law questions relating to the filing of information returns (Forms 1096, 1098, 1099, 5498, 8027, W-2, W-2G, W-3, Questionable W-4's, and 1042S). The IRS/MCC Call Site also handles inquiries dealing with backup withholding due to missing and incorrect taxpayer identification numbers. The Call Site is located at IRS/MCC and operates in conjunction with the Information Reporting Program. The Call Site provides service to the payer community (financial institutions, employers, and other transmitters of information returns). 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 information 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 payers', transmitters', and employers' questions. 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.

SECTION 4. FILING REQUIREMENTS

.01 Under section 6011(e)(2)(A) of the Internal Revenue Code, any person, including a corporation, partnership, individual, estate, and trust, who is required to file 250 or more information returns must file such returns magnetically/electronically. THE 250 OR MORE REQUIREMENT APPLIES SEPARATELY FOR EACH TYPE OF RETURN AND ALSO TO EACH TYPE OF CORRECTED RETURN. Even though payers may not be required to file magnetically/electronically, IRS encourages them to do so.

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

.03 Payers who are required to submit their information returns on magnetic media may choose to submit their documents by electronic filing. Payers who submit their information returns electronically are considered to have satisfied the magnetic media filing requirements.

.04 IRS/MCC HAS TWO METHODS BY WHICH PAYERS MAY SUBMIT THEIR FILES ELECTRONICALLY. BISYNCHRONOUS (MAINFRAME) ELECTRONIC FILING, WHICH CAN BE FOUND IN PART C OF THIS PUBLICATION, OR ASYNCHRONOUS (INFORMATION REPORTING PROGRAM BULLETIN BOARD SYSTEM), WHICH IS IN PART D. AN OVERVIEW OF SOME FEATURES PROVIDED ON THE IRP-BBS ARE AS FOLLOWS:

- ELECTRONIC FILING OF INFORMATION RETURNS TO THE IRS USING DIAL-UP MODEMS

- RETURN NOTIFICATION OF THE ACCEPTABILITY OF THE DATA TRANSMITTED WITHIN 24 TO 48 HOURS

- ELECTRONIC COMMUNICATION WITH IRS AND SOCIAL SECURITY BULLETIN BOARD SYSTEMS

- ACCESS TO INFORMATION REPORTING PUBLICATIONS

- ACCESS TO SHAREWARE

- ACCESS TO FORMS RELATING TO THE INFORMATION REPORTING PROGRAM

- NEWS ABOUT THE LATEST CHANGES AND UPDATES THAT AFFECT THE INFORMATION REPORTING PROGRAM AT IRS

- ANSWERS TO MESSAGES AND QUESTIONS LEFT ON THE BULLETIN BOARD

- IRP-BBS IS AVAILABLE FOR PUBLIC USE AND CAN BE REACHED BY DIALING 304-264-7070

- TELEPHONE LINES ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK. ROUTINE MAINTENANCE IS PERFORMED DAILY, AT APPROXIMATELY 7:00 A.M. EASTERN TIME ZONE.

- QUESTIONS, COMMENTS, OR SUGGESTIONS CAN BE DIRECTED TO THE SYSTEMS OPERATOR (SYSOP) THROUGH IRP-BBS.

.05 The following requirements apply separately to both originals and corrections filed magnetically/electronically:

 1098        250 or more of any of these forms require magnetic media

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

.01 If a payer 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 payer will be subject to a penalty of $50 per return. (For penalty information refer to the Penalty section of the 1996 "Instructions for Forms 1099, 1098, 5498, and W-2G.")

.02 If payers are required to file original or corrected returns on magnetic media, but such filing would create an undue 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 a payer may submit up to 249 corrections on paper, IRS/MCC encourages magnetically or electronically submitted corrections. Once the 250 threshold has been met, filers are required to submit any returns of 250 or more magnetically or electronically, However, if a waiver for original documents is approved, any corrections for the same type of returns will be covered under this waiver.

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

.05 A TRANSMITTER MUST SUBMIT A SEPARATE FORM 8508 FOR EACH PAYER. DO NOT SUBMIT A LIST OF PAYERS.

.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. Payers 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. However, new brokers and new barter exchanges may request an undue hardship waiver by the end of the second month following the month in which they became a broker or barter exchange.

.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. THE TRANSMITTER SHOULD NOT SEND A COPY OF THE APPROVED WAIVER TO THE SERVICE CENTER WHERE THE PAPER RETURNS ARE FILED.

.13 AN APPROVED WAIVER FROM FILING INFORMATION RETURNS ON MAGNETIC MEDIA DOES NOT PROVIDE EXEMPTION FROM ALL FILING. The payer must timely file information returns on acceptable paper forms with the appropriate submission processing site.

.14 DESERT STORM/OPERATION JOINT ENDEAVOR (BOSNIA REGION) CONTRIBUTIONS -- If a payer is required to file a Form 5498 magnetically/electronically, the payer may request an AUTOMATIC waiver to file Forms 5498 on paper for participants of Desert Storm OR OPERATIONS JOINT ENDEAVOR. THE PAYER SHOULD CLEARLY MARK DESERT STORM OR OPERATIONS JOINT ENDEAVOR ON THE WAIVER REQUEST FORM.

SECTION 6. VENDOR LIST

.01 IRS/MCC prepares a list of vendors who support magnetic media or electronic filing. The Vendor List (Pub. 1582) contains the names of service bureaus that will produce files on the prescribed types of magnetic media or via electronic filing. It also contains the names of vendors who provide software packages for payers who wish to produce magnetic media or electronic files on their own computer systems. This list is provided, UPON REQUEST, as a courtesy and in no way implies IRS/MCC approval or endorsement.

NOTE: IF FILERS MEET THE FILING REQUIREMENTS AND ENGAGE A SERVICE BUREAU TO PREPARE MEDIA ON THEIR BEHALF, THE FILERS SHOULD BE CAREFUL NOT TO REPORT DUPLICATE DATA, WHICH MAY CAUSE PENALTY NOTICES TO BE GENERATED.

.02 A PAYER MAY REQUEST A VENDOR LIST (PUB. 1582) BY CONTACTING IRS/MCC AT 304-263-8700 or by way of letter (see Part A, Sec. 3). This information is also available from the Information Reporting Program Bulletin Board System (refer to Part D). Vendor names will not be provided over the telephone.

.03 A vendor, who offers a software package, has the ability to produce magnetic media for customers, or has the capability to electronically file information returns, and would like to be included on the list, must submit a written request to IRS/MCC. The request should be submitted by August 15 and must include:

(a) Company name

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

(c) Telephone number (include area code)

(d) Contact person

(e) Type(s) of service provided (e.g., service bureau and/or software)

(f) Type(s) of media offered (e.g., magnetic tape or tape cartridge, 5 1/4- or 3 1/2-inch diskettes, or electronic filing)

(g) Type of return

.04 The vendor list is updated annually. Therefore, any changes to information already on the vendor list must also be received by IRS/MCC no later than August 15 to be included on the most current vendor list.

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

.01 Transmitters are required to submit Form 4419, Application for Filing Information Returns Magnetically/Electronically, to request authorization to file information returns with IRS/MCC. A single Form 4419 should be filed no matter how many types of returns the transmitter will be submitting magnetically/electronically. For example, if a transmitter plans to file Forms 1099-INT, one Form 4419 should be submitted. If, at a later date, another type of form is to be filed, the transmitter does not need to submit a new Form 4419.

EXCEPTIONS

AN ADDITIONAL FORM 4419 IS REQUIRED FOR FILING EACH OF THE FOLLOWING TYPES OF RETURNS: FORMS 1042-S, 8027, AND QUESTIONABLE W-4.

 FORM              TITLE                      EXPLANATION

If filers wish to report both electronically and magnetically, only one Form 4419 needs to be submitted.

.02 Magnetic tape, tape cartridge, diskette, and electronically-filed returns may not be submitted to IRS/MCC until the application has been approved. Please read the instructions on the back of Form 4419 carefully. A Form 4419 is included in the Publication 1220 for the filer's use. This form may be photocopied. Additional forms may be obtained by calling 1-800-TAX-FORM (1-800-829-3676).

.03 Upon approval, a five-character alpha/numeric Transmitter Control Code (TCC) will be assigned and included in an approval letter. The TCC MUST be coded in the Payer "A" Record. If a transmitter uses more than one TCC to file, each TCC must be reported on separate media or in separate transmissions if filing electronically.

.04 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. This package will be sent annually.

.05 If ANY of the information on the Form 4419 changes, please notify IRS/MCC in writing so that the IRS/MCC database can be updated. The transmitter should include the TCC in all correspondence.

.06 Form 4419 can be submitted at any time during the year; however, it must be submitted to IRS/MCC at least 30 days before the due date of the return(s). FOR DOCUMENTS TO BE FILED ELECTRONICALLY USING IBM 3780 BI-SYNCHRONOUS PROTOCOLS, FORM 4419 MUST BE SUBMITTED AT LEAST 45 DAYS PRIOR TO THE DUE DATE OF THE RETURNS (See PART C, SEC. 2). This will allow IRS/MCC the minimum amount of time necessary to process and respond to applications. In the event that computer equipment or software is not compatible with IRS/MCC, a waiver may be requested to file returns on paper documents.

.07 IRS/MCC encourages transmitters who file for multiple payers to submit one application and to use the assigned TCC for all payers. Include a list of all payers and TINs with the Form 4419. Transmitters are encouraged to provide an updated list to IRS/MCC annually.

.08 If a payer's files are prepared by a service bureau, the payer may not need to submit an application to obtain a TCC. Some service bureaus will produce files, code their own TCC on the media, and send it to IRS/MCC for the payer. Other service bureaus will prepare magnetic media and return the media to the payer for submission to IRS/MCC. These service bureaus may require the payer to obtain a TCC to be coded in the "A" Record. Payers should contact their service bureaus for further information.

.09 Once a transmitter is approved to file magnetically or electronically, it is not necessary to reapply each year UNLESS:

(a) The payer has discontinued filing magnetically or electronically for three years; the payer's TCC may have been reassigned by IRS/MCC.

(b) The payer's magnetic media files were transmitted in the past by a service bureau using the service bureau's TCC, but now the payer has computer equipment compatible with that of IRS/MCC and wishes to prepare his or her own files. The payer must request a TCC by filing Form 4419.

.10 One Form 4419 may be submitted regardless of how many types of media or methods used to file the return. A payer may apply for more than one TCC, but must code only one TCC per media. Notify IRS/MCC of any TCCs that will not be used so these numbers may be reassigned.

.11 In accordance with Regulations section 1.6041-7(b), 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.

.12 Approval to file does not imply endorsement by IRS/MCC of the computer software or of the quality of tax preparation services provided.

SECTION 8. TEST FILES

.01 IRS/MCC does not require test files, EXCEPT for filers wishing to participate in the Combined Federal/State Filing Program (see Part A, Sec. 16, for further information concerning the Combined Federal/State Filing Program).

.02 IRS/MCC encourages first-time magnetic media or electronic filers to submit a test. The test file should consist of a sample of each type of record:

(a) Payer "A" Record (must not be fictitious data)

(b) Multiple Payee "B" Records (AT LEAST 11 "B" RECORDS PER EACH "A" RECORD)

(c) End of Payer "C" Record

(d) State Totals "K" Record, if participating in the Combined Federal/State Filing Program

(e) End of Transmission "F" Record

See PART B for record formats.

.03 Use the Test Indicator in the "A" Record to show that this is a test file.

.04 IRS/MCC will check the file to ensure it meets the specifications of this revenue procedure. For current filers, sending a test file will provide the opportunity to ensure that their software reflects any programming changes.

If unable to submit a magnetic or electronic test file, a hardcopy printout that shows a sample of each record type (A, B, C, and F) may be submitted. THE HARD COPY PRINT TEST IS NOT ACCEPTABLE FOR COMBINED FEDERAL/STATE FILING APPROVAL.

.05 Tests should be sent to IRS/MCC between November 1 and December 31. The test file MUST BE received at MCC by December 31 in order to be processed. Filers may begin submitting test tapes and diskettes after October 1; however, the data will not be processed until on or after November 1.

.06 For tests filed electronically, the transmitter must send the signed Form 4804, Transmittal of Information Returns Reported Magnetically/Electronically, the same day the transmission is made. For tests filed on magnetic tape, tape cartridge, 5 1/4- and 3 1/2-inch diskette, the transmitter must include the signed Form 4804 in the same package with the corresponding magnetic media. Mark the "TEST" box in block 1 on the form. Also, check "TEST" on the external media label.

If submitting a hard copy printout, mark the printout as "TEST" and include name, telephone number, and address of a person who can be contacted to discuss its acceptability.

.07 IRS/MCC will send a letter of acknowledgment to indicate the test results. Unacceptable magnetic media files, along with documentation identifying the errors, will be returned. Resubmission of test files must be received by IRS/MCC no later than December 31.

.08 Successfully processed media will not be returned to filers.

SECTION 9. FILING OF INFORMATION RETURNS MAGNETICALLY/ELECTRONICALLY AND RETENTION REQUIREMENTS

.01 Form 4804, Transmittal of Information Returns Reported Magnetically/Electronically, Form 4802, Transmittal of Information Returns Reported Magnetically/Electronically (Continuation), or computer-generated substitute, must accompany all magnetic media shipments. For electronic transmissions, the Form 4804 and Form 4802, if applicable, must be sent the same day as the electronic transmission. Form 4802, Transmittal of Information Returns Reported Magnetically/Electronically (Continuation), is a continuation of Form 4804 and should only be used if the filer is reporting more than four types of returns and/or more than four payers. Form 4802 is not a stand-alone form; it can only accompany Form 4804.

.02 IRS/MCC encourages the use of computer-generated substitutes for Form 4804/4802 (See Note). The substitutes must contain all information requested on the original forms including the affidavit and signature line. Photocopies are acceptable but an original signature is required.

NOTE: WHEN USING COMPUTER-GENERATED FORMS, BE SURE TO VERY CLEARLY MARK WHICH TAX YEAR IS BEING REPORTED, THIS WILL ELIMINATE A PHONE COMMUNICATION FROM IRS/MCC TO QUESTION THE TAX YEAR.

.03 A transmitter may report for any combination of payers and/or documents in a submission. For example, if reporting Forms 1099-INT for Bank A. Forms 1099-DIV for Bank B, and Forms 1098 for Bank C, three separate tapes or diskettes need not be created. All three banks and all types of documents can be coded on one tape or diskette as long as each filing entity or type of return is separated by an "A" Record. Only one "F" Record may be used at the end of a transmission. Multiple tapes or diskettes can be sent in one package. Filers MUST include Form 4804, 4802, or computer generated substitute with their shipment.

.04 Multiple types of media may be submitted in a shipment. However, submit a separate Form 4804 for each type of media.

.05 Current and prior year data may be submitted in the same shipment; however, each tax year must be on separate media, and a separate Form 4804 must be prepared to clearly indicate each tax year.

.06 Filers who have prepared their information returns in advance of the due date are encouraged to submit this information to IRS/MCC no earlier than January 1 of the year the return is due.

.07 DO NOT REPORT DUPLICATE INFORMATION. IF A FILER SUBMITS RETURNS MAGNETICALLY/ELECTRONICALLY, IDENTICAL PAPER DOCUMENTS MUST NOT BE FILED. THIS MAY RESULT IN ERRONEOUS PENALTY NOTICES.

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

NOTE: FAILURE TO SIGN THE AFFIDAVIT ON FORM 4804 MAY DELAY PROCESSING OR COULD RESULT IN THE FILES BEING RETURNED UNPROCESSED.

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

.10 An external media label, must be affixed to each tape and diskette. If diskettes are used, and the operating system is not MS-DOS compatible, the operating system and hardware information MUST be provided. Failure to provide this information may result in the diskettes being returned to the filer. For instructions on how to prepare an external media label, refer to PART F "Miscellaneous Information."

.11 On the outside of the shipping container, affix or attach a label which reads IRB _____ of _____ reflecting the number of containers in the shipment (See labels in PART F). 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).

.12 When submitting files include the following:

(a) A SIGNED Form 4804;

(b) Form 4802, if applicable;

(c) External media label affixed to magnetic media;

(d) IRB _____ of _____ outside label.

NOTE: SEE PARTS C AND D FOR ELECTRONIC SUBMISSION REQUIREMENTS.

.13 If returns from different locations (using the same name and TIN) are submitted on the same file, IRS encourages the filer to consolidate each type of information return under one "A" Record. For example, all "B" Records for the same type of return should be together under one "A" Record and followed by the End of Payer "C" Record.

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

.15 In general, payers should retain a copy of the information returns filed with IRS or have the ability to reconstruct the data for at least 3 years from the reporting due date, with the exception of Form 1099-C. A financial entity must retain a copy of Form 1099-C, Cancellation of Debt, or have the ability to reconstruct the data required to be included on the return, for at least 4 years from the date such return is required to be filed. Whenever backup withholding is imposed, a 4 year retention is required.

SECTION 10. DUE DATES

.01 The due dates for filing paper returns with IRS also apply to magnetic media or electronic filing. Filing of information returns is on a calendar year basis, except for Form 5498, which is used to report amounts contributed during, or after (but not later than April 15) of the calendar year.

.02 Information returns filed magnetically/electronically for Forms 1098, 1099, and W-2G must be submitted to IRS/MCC postmarked no later than February 28. If using a delivery service other than postal service, THE ACTUAL DATE OF RECEIPT BY IRS/MCC WILL BE USED AS THE SUBMISSION DATE. This should be considered in meeting filing requirements timely.

.03 The due date for furnishing statements to recipients is January 31. Form 5498 statements are due to the participants by January 31 for the fair market value of the account and by May 31 for contributions made to IRAs for the prior calendar year.

.04 Form 5498 filed magnetically/electronically must be submitted to IRS/MCC postmarked no later than May 31. Form 5498 is filed for contributions to be applied to 1996 that are made January 1, 1996, through April 15, 1997, and/or to report the fair market value of the IRA/SEP.

.05 If any due date falls on a Saturday, Sunday, or legal holiday, the return or statement is considered timely if filed or furnished on the next day that is not a Saturday, Sunday, or legal holiday

.06 Use this revenue procedure to prepare information returns filed magnetically or electronically beginning January 1, 1997, and received by IRS/MCC no later than December 31, 1997.

SECTION 11. EXTENSIONS OF TIME

.01 An extension of time to file may be requested for Forms 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 payers may be done by submitting Form 8809 and attaching a list of the payer names and their TINs (EIN or SSN). THE LISTING MUST BE ATTACHED TO ENSURE THAT THE EXTENSION IS RECORDED FOR ALL PAYERS. Form 8809 may be computer-generated or photocopied. Be sure that all the pertinent information is included.

.04 Requests for an extension of time to file for more than 50 payers are required to be submitted magnetically or electronically (See NOTE). Requests for an extension of time for 10 to 50 payers are encouraged to be filed magnetically or electronically via IRP-BBS. (See Part E, Sec. 3, for the record format.) The request may be filed on tape, tape cartridge, 5 1/4- or 3 1/2-inch diskette, or electronically through the IRP-BBS or mainframe.

NOTE: FORM 4419, APPLICATION FOR FILING INFORMATION RETURNS MAGNETICALLY/ELECTRONICALLY, MUST BE COMPLETED IN ORDER TO FILE AN EXTENSION REQUEST MAGNETICALLY/ELECTRONICALLY.

.05 A magnetically filed request for an extension of time should be sent using the following addresses:

If by Postal Service:

.07 AS SOON AS IT IS APPARENT THAT a 30 day extension of time to file is needed, Form 8809 may be submitted. 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.

.08 If an additional extension of time is needed, a second Form 8809 must be requested before the end of the initial extension. 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. WHEN REQUESTING A SECOND 30-DAY EXTENSION OF TIME, DO NOT HOLD YOUR FILES WAITING FOR A RESPONSE.

.09 FROM 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 1099-INT AND 5498, SUBMIT FORM 8809 POSTMARKED ON OR BEFORE FEBRUARY 28. COMPLETE MORE THAN ONE FORM 8809 TO AVOID THIS PROBLEM.

.10 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 MEDIA FILE OR TO THE SERVICE CENTER WHERE THE PAPER RETURNS ARE FILED.)

.11 Request an extension for only one tax year.

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

.13 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.

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

.15 Request an extension of time to furnish the statements to recipient of Forms 1098, 1099, 5498, W-2G, W-2, and 1042-S by submitting a letter to IRS/MCC or to the payer's local District Director containing the following information:

(a) Payer Name

(b) TIN

(c) Address

(d) Type of Return

(e) Specify that the extension request is to provide statements to recipients.

(f) Reason for Delay

(g) Signature of Payer or Person Duly Authorized

Requests for an extension of time to furnish the statements of Forms 1098, 1099, 5498, W-2G, W-2, and 1042-S to recipients are not automatically approved; however, if approved, generally an extension will allow a maximum of 30 additional days from the due date to furnish the statements to the recipients. If the request is denied, the statements must be sent to the recipients timely. The request must be postmarked by the date on which the statements are due to the recipients

SECTION 12. PROCESSING OF INFORMATION RETURNS MAGNETICALLY/ELECTRONICALLY

.01 All data received at IRS/MCC for processing will be given the same protection as individual income tax returns (Form 1040), IRS/MCC will process the data and determine if the records are formatted and coded according to this revenue procedure.

.02 If the data is formatted incorrectly, the file will be returned for replacement ACCOMPANIED WITH A MEDIA TRACKING SLIP (FORM 9267). If 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.

.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 files. A penalty for failure to file correct information returns by the due date will be assessed if the files are not corrected and returned within the 45 days OR IF THE INCORRECT FILES ARE RETURNED BY IRS/MCC FOR REPLACEMENT MORE THAN TWO TIMES. A penalty for intentional disregard of filing requirements will be assessed if a replacement file is not received. (For penalty information, refer to the Penalty section of the 1996 "Instructions for Forms 1099, 1098, 5498, and W-2G.") When possible, IRS/MCC may return only the portion of the file that needs replacement.

.04 Sample records identifying errors encountered will be provided with the returned media. It is the responsibility of the transmitter to check the entire file for similar errors.

.05 The following definitions have been provided to help distinguish between a correction and a replacement:

- A CORRECTION is an information return submitted by the transmitter to correct an information return that was previously submitted to IRS/MCC, but contained erroneous information.

- A REPLACEMENT is an information return file that IRS/MCC has returned to the transmitter due to errors encountered during processing. AFTER NECESSARY CHANGES HAVE BEEN MADE, THE FILE MUST BE RETURNED FOR PROCESSING ALONG WITH THE BLUE AND WHITE MEDIA TRACKING SLIP (FORM 9267) WHICH WAS INCLUDED IN THE SHIPMENT FROM IRS/MCC.

- FILERS SHOULD NEVER SEND ANYTHING TO IRS/MCC MARKED "REPLACEMENT" UNLESS IRS/MCC RETURNED MEDIA TO THEM.

.06 IRS/MCC will not return media after successful processing. Therefore, if the transmitter wants proof that IRS/MCC received a shipment, the transmitter should select a service with tracing capabilities or one that will provide proof of delivery.

.07 IRS/MCC will work with filers as much as possible to assist with processing problems.

NOTE: IF THE FILER IS CONTACTED BY IRS/MCC, A PROMPT RESPONSE IS IMPORTANT. IRS/MCC MAY HAVE INFORMATION THAT THE FILER NEEDS TO CORRECT HIS OR HER FILE.

.08 IRS/MCC contacts payers who have submitted payee data with missing TINs in an attempt to prevent errors that could result in penalties. Payers who submit data with missing TINs and have taken the required steps to obtain this information are encouraged to attach a letter of explanation to the required Form 4804. This will prevent unnecessary contact from IRS/MCC. This letter, however, will not prevent backup withholding notices (CP2100 or CP2100A Notices) or penalties for missing or INCORRECT TINs.

.09 Do not use special shipping containers for transmitting data to IRS/MCC. Shipping containers will not be returned.

SECTION 13. CORRECTED RETURNS

.01 The magnetic media filing requirements of 250 information returns applies separately to both original and corrected returns.

 E If a payer has 100 Forms 1099-A to be corrected, they can be filed

.03 There are numerous types of errors, and in some cases, more than one transaction may be required to correct the initial error. IF THE ORIGINAL RETURN WAS FILED AS AN AGGREGATE, THE FILERS MUST CONSIDER THIS IN FILING CORRECTED RETURNS.

.04 Corrected returns may be included on the same medium as original returns; however, separate "A" Records are required. Corrected returns must be identified on the Form 4804 and the external media label by indicating "Correction."

NOTE: IF FILERS DISCOVER THAT CERTAIN INFORMATION RETURNS WERE OMITTED ON THEIR ORIGINAL FILE, THEY MUST NOT SUBMIT THESE DOCUMENTS AS CORRECTIONS. THEY MUST SUBMIT THEM AS ORIGINALS.

.05 If a payer discovers errors for prior years that affect a large number of payees, in addition to sending IRS the corrected returns and notifying the payees, a letter containing the following information should be sent to IRS/MCC:

(a) Name and address of payer

(b) Type of error (please explain clearly)

(c) Tax year

(d) Payer TIN

(e) TCC

(f) Type of Return

(g) Number of Payees

This information will be forwarded to the appropriate office in an attempt to prevent erroneous notices from being sent to the payees. The correction must be submitted on an actual information return document or filed magnetically/electronically. Provide the correct tax year in Box 2 of the Form 4804 and the external media label.

.06 Prior year data, original and corrected, MUST be filed according to the requirements of this revenue procedure. If submitting prior year corrections, use the record format for the current year and submit on separate media. However, use the actual year designation of the correction in field positions 2-3. If filing electronically, a separate transmission must be made for each tax year.

.07 In general, filers should submit corrections for returns to be filed within the last three calendar years (four years if the payment is a reportable payment subject to backup withholding under section 3406 of the Code).

.08 All paper returns, whether original or corrected, must be filed with the appropriate service center.

.09 Form 4804 and Form 4802, must be submitted with corrected files submitted magnetically or electronically.

.10 The "B" Record provides a 20-position field for the Payer's Account Number for the Payee. 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 IN THIS FIELD. 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.

.11 The record sequence for filing corrections is the same as for original returns.

.12 Review the chart that follows. Errors normally fall under one of the two categories listed. Next to each type of error made is a list of instructions on how to file the corrected return.

GUIDELINES FOR FILING CORRECTED RETURNS MAGNETICALLY/ELECTRONICALLY

 Error Made on the Original Return  How To File the Corrected Return

ONE TRANSACTION IS REQUIRED TO MAKE THE FOLLOWING CORRECTIONS PROPERLY (See Note 2).

 2. Original return was filed with  A. Prepare a new Form 4804/4802

SECTION 14. TAXPAYER IDENTIFICATION NUMBER (TIN)

.01 Section 6109 of the Internal Revenue Code requires a person to furnish his/her TIN to the person obligated to file the information return.

.02 The payee's TIN and name combination is used to associate information returns reported to IRS/MCC with corresponding information on tax returns. It is imperative that correct Social Security and Employer Identification Numbers for payees be provided to IRS/MCC. DO NOT ENTER HYPHENS OR ALPHA CHARACTERS. Entering all zeros, ones, twos, etc., will have the effect of an incorrect TIN.

.03 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 "B" Record. For individuals, the payee TIN is generally the payee's Social Security Number. For other entities, the payee TIN is the payee's Employer Identification Number. For sole proprietors, the payee TIN may be either an SSN or EIN but the sole proprietor's name (not the business name) must be used.

.04 Failure to provide the correct name and corresponding TIN could result in a penalty and/or backup withholding notice (sometimes referred to as a "B" notice). (For penalty information, refer to the Penalty Section of the 1996 "Instructions for Forms 1099, 1098, 5498, and W-2G." For "B" Notice information, refer to the Backup Withholding Section of the same publication.)

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

CHART 1. GUIDELINES FOR SOCIAL SECURITY NUMBERS

                        In the Taxpayer

                        In the Taxpayer

SECTION 15. EFFECT ON PAPER RETURNS

.01 Magnetic/electronic reporting of information returns eliminates the need to submit paper documents to the IRS. CAUTION! DO NOT SEND COPY A OF THE PAPER FORMS TO IRS/MCC IN ADDITION TO MAGNETIC MEDIA AND ELECTRONIC FILING. This will result in duplicate filing; therefore, erroneous notices could be generated.

.02 Payers are responsible for providing statements to the payees as outlined in the 1996 "Instructions for Forms 1099, 1098, 5498, and W-2G." Refer to these instructions for filing information returns on paper with the IRS and furnishing statements to recipients.

.03 Statements to recipients should be clear and legible. If the official IRS form is not used, the filer must adhere to the specifications and guidelines in Publication 1179, "Rules and Specifications for Private Printing of Substitute Forms 1096, 1098, 1099 Series, 5498, and W-2G."

SECTION 16. COMBINED FEDERAL/STATE FILING PROGRAM

.01 The Combined Federal/State Filing Program was established to simplify information returns filing for the taxpayer. IRS/MCC will forward this information to participating states free of charge for approved filers. Separate reporting to those states is not necessary.

THE FOLLOWING INFORMATION RETURNS MAY NOT BE FILED UNDER THIS PROGRAM:

FORM 1098 -- MORTGAGE INTEREST STATEMENT

FORM 1099-A -- ACQUISITION OR ABANDONMENT OF SECURED PROPERTY

FORM 1099-B -- PROCEEDS FOR BROKER AND BARTER EXCHANGE TRANSACTIONS

FORM 1099-C -- CANCELLATION OF DEBT

FORM 1099-S -- PROCEEDS FROM REAL ESTATE TRANSACTIONS

AND

FORM W-2G -- CERTAIN GAMBLING WINNINGS

.02 To request approval to participate, a magnetic media or electronic test file coded for this program MUST BE submitted to IRS/MCC between November 1 and December 31. HARD COPY PRINT TESTS ARE NOT ACCEPTABLE for Combined Federal/State Filing approval.

.03 Attach a letter to the Form 4804 submitted with the test file to indicate a desire to participate in this program.

.04 A test file is only required for the first year. Each record, both in the test and the actual data file, must conform to this revenue procedure.

.05 If the test file is acceptable, IRS/MCC will send the filer 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. Filers must write their TCC on Form 6847. If the test file is not acceptable, IRS/MCC will return the media with a letter indicating the problems. The replacement test file must be returned to IRS/MCC postmarked on or before December 31.

.06 A separate Form 6847 is required for each payer. A transmitter may not combine payers on one Form 6847 even if 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 or it may be photocopied. 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 Only code the records for participating states and for those payers who have submitted Form 6847.

.08 SOME participating states require separate notification that the payer is filing in this manner. Since IRS/MCC acts as a forwarding agent only, IT IS THE PAYER'S RESPONSIBILITY TO CONTACT THE APPROPRIATE STATES FOR FURTHER INFORMATION.

.09 All corrections properly coded for the Combined Federal/ State Filing Program will be forwarded to the participating states.

.10 Participating states and corresponding valid state codes are listed in TABLE 1 of this section. The appropriate state code MUST be entered for those documents that meet the state filing requirements; DO NOT USE STATE ABBREVIATIONS.

.11 To simplify filing, some of the participating states have provided their information return reporting requirements (see TABLE 2). EACH STATE FILING REGULATIONS ARE SUBJECT TO CHANGE BY THE STATE. IT IS THE PAYER'S RESPONSIBILITY TO CONTACT THE PARTICIPATING STATES TO VERIFY THE CRITERIA PROVIDED IN THIS TABLE.

.12 Upon submission of the actual files, the transmitter must be sure of the following:

(a) All records should be coded exactly as required by this revenue procedure.

(b) The "C" Record MUST BE followed by a state total "K" Record for each state being reported.

(c) Payment amount totals and the valid participating state code must be included in the State Totals "K" Record.

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

TABLE 1. PARTICIPATING STATES AND THEIR CODES

                    State                    Code

 STATE           1099-  1099-  1099-  1099-  1099-  1099-  1099-

/a/ AN amounts are to be reported

/b/ Amounts are for aggregates of several types of income from the same payer.

/c/ Missouri would prefer those returns filed with respect to non-Missouri residents to be sent directly to their state agency.

The preceding list is for information purposes only. The state filing requirements are subject to change by the states. For complete information on state filing requirements, contact the appropriate state tax agencies.

Filing requirements for any state in TABLE 1 not shown in TABLE 2 are the same as the federal requirement.

SECTION 17. DEFINITION OF TERMS

 ELEMENT                         DESCRIPTION

 CUSIP Number                    A number developed by the Committee

 Service Bureau                  Person or organization with whom the

.01 The following state abbreviations are to be used 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.

                    State                    Code

.03 For foreign country addresses, filers may use a 40 position free format which should include city, province or state, postal code, and name of country in this order. This is allowable only if a "1" (one) appears in the Foreign Country Indicator Field of the "B" Record.

.04 When reporting APO/FPO addresses use the following format:

                                     EXAMPLE:

SECTION 19. MAJOR PROBLEMS ENCOUNTERED

IRS/MCC encourages filers to verify the format and content of each type of record to ensure the accuracy of the data. This may eliminate the need for IRS/MCC to return files for replacement. This may be important for those payers who have either had their files prepared by a service bureau (see Note) or who have purchased preprogrammed software packages. If a filer purchased a software package for a previous tax year, it may no longer be valid for reporting current tax year information returns. Following are some of the most frequently encountered problems with magnetic/electronic files submitted to IRS/MCC.

SOME OF THE PROBLEMS LISTED IN THE MAJOR PROBLEMS ENCOUNTERED MAY RESULT IN MEDIA BEING RETURNED FOR REPLACEMENT.

NOTE: IF FILERS MEET THE FILING REQUIREMENTS AND ENGAGE A SERVICE BUREAU TO PREPARE MEDIA ON THEIR BEHALF, THE FILERS SHOULD BE CAREFUL NOT TO REPORT DUPLICATE DATA WHICH MAY GENERATE PENALTY NOTICES.

1. DISCREPANCY BETWEEN IRS/MCC TOTALS AND TOTALS IN PAYER "C" RECORDS

The "C" Record is a summary record for a type of return for a given payer as reported in the "B" Records. IRS balances the total number of payees and payment amounts and compares them with totals in the "C" Records. Filers should verify the accuracy of the records because imbalances may necessitate return of files for replacement.

2. THE PAYMENT AMOUNT FIELDS IN THE "B" RECORD DO NOT CORRESPOND TO THE AMOUNT CODES IN THE "A" RECORD

If codes 2, 4, and 7 appear in the Amount Codes Field of the "A" Record, then the "B" Record must show payment amounts in only Fields 2, 4, and 7, right-justified and unused positions MUST BE zero (0) filled.

 EXAMPLE: "A" RECORD       247bbbbbb       --  ('b' denotes a blank)

Money amounts must be right-justified and zero (0) filled. DO NOT USE BLANKS.

4. INCORRECT TIN IN PAYER "A" RECORD

The Payer's TIN reported in positions 7-15 of the "A" Record must be correct in order for IRS/MCC to process the media. The TIN provided in the "A" Record should correspond with the name provided in the first payer name line.

5. BAD FORMAT

IRS/MCC receives data in prior year format. Be sure to use THE CURRENT REVENUE PROCEDURE (PUBLICATION 1220) for formatting data.

6. INCORRECT TAX YEAR IN THE PAYER "A" RECORD AND THE PAYEE "B" RECORD

The tax year in both the payee and payer record should reflect the year of the information that is being reported. Filers need to check their files to ensure that this information is correct.

7. INCORRECT REPORTING OF FORM W-2 INFORMATION TO IRS

Form W-2 information is submitted to SSA, and not to IRS/MCC. SSA has its own magnetic media reporting program and specifications for wage information, and the media containing Forms W-2 is submitted to SSA. Any media received at IRS/MCC that contains Form W-2 information will be returned to the filer. The local SSA office should be contacted for information concerning filing Forms W-2 on magnetic media.

8. EXCESSIVE WITHHOLDING CREDITS

Generally, for most information returns, other than Forms 1099-MISC, 1099-R, and W-2G, FEDERAL withholding amounts should not exceed 31 percent of the income reported. Validate the total reported in the withholding field against the total income reported.

9. INCORRECT FORMAT FOR TINS IN THE PAYEE "B" RECORD

A check of "B" records should be made to ensure the Taxpayer Identification Numbers (TINs) are formatted correctly. There should be nine numerics, no alphas, hyphens, commas, or blanks. Incorrect formatting of TINs may result in a penalty. (For penalty information, refer to the Penalty section of the 1996 "Instructions for Forms 1099, 1098, 5498, and W-2G.")

IRS/MCC contacts filers who have submitted payee data with missing TINs in an attempt to prevent erroneous notices. Payers/transmitters who submit data with missing TINs and have taken the required steps to obtain this information are encouraged to attach a letter of explanation to the required Form 4804. This will prevent unnecessary contact from IRS/MCC. This letter, however, will not prevent backup withholding notices (CP2100 and CP2100A Notices) or penalties for missing or incorrect TINs. (For penalty information, refer to the Penalty section of the 1996 "Instructions for Forms 1099, 1098, 5498, and W-2G.")

10. DISTRIBUTION CODES FOR FORM 1099-R REPORTED INCORRECTLY

Distribution Codes for Form 1099-R are being reported incorrectly or not being reported. See valid distribution codes for 1099-R in the Payee "B" Record layout.

11. INCORRECT RECORD TOTALS LISTED ON FORM 4804

The Combined Total Payee Records listed on the Form 4804 (Box 9) are used in the verification process of information returns. The figure in this box should be the total number of Payee "B" Records contained on the media submitted with the Form 4804. The figures on the Form 4804 are compared against the total number of Payee "B" Records processed on the media. Imbalances may necessitate the return of the files for replacement.

12. INVALID USE OF IRA/SEP INDICATOR

The IRA/SEP Indicator for Form 1099-R should be used only for the reporting of a distribution from an IRA or SEP. The total amount distributed from an IRA or SEP should be reported in Payment Amount Field 2 (IRA/SEP Distribution).

PART B. MAGNETIC MEDIA SPECIFICATIONS

SECTION 1. GENERAL

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

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

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

(b) Contain information for the filer's own personal use and used at the discretion of the filer to include information related to each individual return. IRS/MCC will not use the information supplied in this field. The length of this field will vary depending on the type of return.

.03 Transmitters should be consistent in the use of recording codes and density on files. If the media does not meet these specifications, it could be returned to the transmitter for replacement. Filers are encouraged to submit a test prior to submitting the actual file. Contact IRS/MCC for further information at 304-263-8700.

.04 Use "K" Records only if the payer is an approved Combined Federal/State filer.

SECTION 2. TAPE SPECIFICATIONS

.01 IRS/MCC can process most magnetic tape files if the following specifications are followed:

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

(1) Odd parity.

(2) A density of 1600 or 6250 CPI.

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

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

(1) Odd parity.

(2) A density of 1600 or 6250 CPI.

Transmitters should be consistent in the use of recording codes and density on files.

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

(a) Tape thickness: 1.0 or 1.5 mils and

(b) Reel diameter: 10 1/2-inch (26.67 cm), 8 1/2-inch (21.59 cm), 7-inch (17.78 cm), or 6-inch.

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

(a) A block must not exceed 32,760 tape positions.

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

(c) All records, except the header and trailer labels, may be blocked or unblocked. A record may not contain any control fields or block descriptor fields which describe the length of the block or the logical records within the block. The number of logical records within a block (the blocking factor) must be constant in every block with the exception of the last block which may be shorter (see item b above). The block length must be evenly divisible by 420.

(d) Records may not span blocks.

.04 Labeled or unlabeled tapes may be submitted.

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

Tape Mark:

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

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

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

.06 IRS/MCC can only read one data file on a tape. A data file is a group of records which may or may not begin with a tapemark, but MUST end with a trailer label. Any data beyond the trailer label cannot be read by IRS programs.

SECTION 3. TAPE CARTRIDGE SPECIFICATIONS

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

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

(b) Must meet American National Standard Institute (ANSI) standards, and have the following characteristics:

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

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

(3) Cartridges must be 18-track or 36-track parallel (See NOTE).

(4) Cartridges will contain 37,871 CPI or 75,742 CPI (characters per inch).

(5) Mode will be full function.

(6) The data may be compressed using EDRC (Memorex) or IDRC (IBM) compression.

(7) Either EBCDIC (Extended Binary Coded Decimal Interchange Code) or ASCII (American Standard Coded Information Interchange) may be used.

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

(a) A block MUST NOT exceed 32,760 tape positions.

(b) If the use of blocked records would result in a short block, all remaining positions of the block must be filled with 9's; however, the last block of the file may be filled with 9's or truncated. DO NOT PAD A BLOCK WITH BLANKS.

(c) All records, except the header and trailer labels, may be blocked or unblocked. A record may not contain any control fields or block descriptor fields which describe the length of the block or the logical records within the block. The number of logical records within a block (the blocking factor) must be constant in every block with the exception of the last block which may be shorter (see item b above). The block length must be evenly divisible by 420.

(d) Records may not span blocks.

.03 Tape cartridges may be labeled or unlabeled.

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

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

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

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

NOTE: FILERS SHOULD INDICATE ON THE EXTERNAL MEDIA LABEL AND TRANSMITTAL FORM 4804 WHETHER THE CARTRIDGE IS 36-TRACK OR 18-TRACK.

SECTION 4. 8MM (.315-INCH) TAPE CARTRIDGES

FOR TAX YEAR 1996, THE PROCESSING OF 8MM TAPE CARTRIDGE (ALSO REFERRED TO AS CASSETTE) AS AN ACCEPTABLE FORM OF MAGNETIC MEDIA IS OFFERED AS A PILOT PROGRAM FOR TRANSMITTERS WITH AS400 OPERATIONS SYSTEMS ONLY:

.01 IN MOST INSTANCES, IRS/MCC CAN PROCESS TAPE CARTRIDGES THAT MEET THE FOLLOWING SPECIFICATIONS:

(a) MUST MEET AMERICAN NATIONAL STANDARD INSTITUTE (ANSI) STANDARDS, AND HAVE THE FOLLOWING CHARACTERISTICS:

(1) 8MM (.315-INCH) TAPE CARTRIDGES WILL BE 2 1/2-INCH BY 3 3/4-INCH.

(2) MAGNETIC TAPE WILL BE CHROMIUM DIOXIDE PARTICLE BASED 8MM TAPE.

(3) MODE WILL BE FULL FUNCTION.

(4) COMPRESSED DATA IS NOT ACCEPTABLE.

(5) EITHER EBCDIC (EXTENDED BINARY CODED DECIMAL INTERCHANGE CODE) OR ASCII (AMERICAN STANDARD CODED INFORMATION INTERCHANGE) MAY BE USED. HOWEVER, IRS/MCC ENCOURAGES THE USE OF EBCDIC. THIS INFORMATION MUST APPEAR ON THE EXTERNAL MEDIA LABEL AFFIXED TO THE CARTRIDGE.

(6) A FILE MAY CONSIST OF MORE THAN ONE CARTRIDGE, HOWEVER, NO MORE THAN 250,000 DOCUMENTS MAY BE TRANSMITTED PER FILE OR PER CARTRIDGE. THE FILENAME, FOR EXAMPLE; IRSTAX WILL CONTAIN A THREE DIGIT EXTENSION. THE EXTENSION WILL INDICATE THE SEQUENCE OF THE CARTRIDGE WITHIN THE FILE 1 OF 3, 2 OF 3, AND 3 OF 3 AND WOULD APPEAR IN THE HEADER LABEL IRSTAX.001, IRSTAX.002, AND IRSTAX.003 ON EACH CARTRIDGE OF THE FILE.

.02 THE 8MM (.315-INCH) TAPE CARTRIDGE RECORDS DEFINED IN THIS REVENUE PROCEDURE MAY BE BLOCKED SUBJECT TO THE FOLLOWING:

(a) A BLOCK MUST NOT EXCEED 32,760 TAPE POSITIONS.

(b) IF THE USE OF BLOCKED RECORDS WOULD RESULT IN A SHORT BLOCK, ALL REMAINING POSITIONS OF THE BLOCK MUST BE FILLED WITH 9'S; HOWEVER, THE LAST BLOCK OF THE FILE MAY BE FILLED WITH 9'S OR TRUNCATED. DO NOT PAD A BLOCK WITH BLANKS.

(c) ALL RECORDS, EXCEPT THE HEADER AND TRAILER LABELS, MAY BE BLOCKED OR UNBLOCKED. A RECORD MAY NOT CONTAIN ANY CONTROL FIELDS OR BLOCK DESCRIPTOR FIELDS WHICH DESCRIBE THE LENGTH OF THE BLOCK OR THE LOGICAL RECORDS WITHIN THE BLOCK. THE NUMBER OF LOGICAL RECORDS WITHIN A BLOCK (THE BLOCKING FACTOR) MUST BE CONSTANT IN EVERY BLOCK WITH THE EXCEPTION OF THE LAST BLOCK WHICH MAY BE SHORTER (SEE ITEM B ABOVE). THE BLOCK LENGTH MUST BE EVENLY DIVISIBLE BY 420.

(d) 'COPY' OR 'SAVE' COMMAND MUST BE USED TO STORE DATA ON THE CARTRIDGE.

(e) EXTRANEOUS DATA FOLLOWING THE "F" RECORD WILL RESULT IN MEDIA BEING RETURNED FOR REPLACEMENT.

(f) RECORDS MAY NOT SPAN BLOCKS.

(g) NO MORE THAN 250,000 DOCUMENTS PER CARTRIDGE AND PER FILE.

.03 FOR FASTER PROCESSING, IRS/MCC ENCOURAGES TRANSMITTERS TO USE HEADER LABELED CARTRIDGES. IRSTAX MAY BE USED AS A SUGGESTED FILENAME.

.04 FOR THE PURPOSES OF THIS REVENUE PROCEDURE, THE FOLLOWING MUST BE USED:

TAPE MARK:

(a) USED TO SIGNIFY THE PHYSICAL END OF THE RECORDING ON TAPE.

(b) FOR EVEN PARITY, USE BCD CONFIGURATION 001111 (8421).

(c) MAY FOLLOW THE HEADER LABEL AND PRECEDE AND/OR FOLLOW THE TRAILER LABEL.

.05 IF EXTRANEOUS DATA FOLLOWS THE END OF THE FILE "F" RECORD, THE FILE MUST BE RETURNED FOR REPLACEMENT. THEREFORE, IRS/MCC ENCOURAGES TRANSMITTERS TO USE BLANK TAPE CARTRIDGES RATHER THAN CARTRIDGES PREVIOUSLY USED, IN THE PREPARATION OF DATA WHEN SUBMITTING INFORMATION RETURNS.

.06 IRS/MCC CAN ONLY READ ONE DATA FILE ON A TAPE. A DATA FILE IS A GROUP OF RECORDS WHICH MAY OR MAY NOT BEGIN WITH A TAPEMARK, BUT MUST END WITH A TRAILER LABEL. ANY DATA BEYOND THE TRAILER LABEL CANNOT BE READ BY IRS PROGRAMS.

SECTION 5. 5 1/4-INCH AND 3 1/2-INCH DISKETTE SPECIFICATIONS

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

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

(b) Data must be recorded in standard ASCII code. For 5 1/4-inch diskettes, data may be recorded using EBCDIC if the diskette is created on an IBM System 36.

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

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

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

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

(g) A diskette file may consist of multiple diskettes as long as the file naming conventions are followed.

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

 Capacity       Tracks      Sides/Density      Sector Size

.03 IRS/MCC prefers that 5 1/4- and 3 1/2-inch diskettes be created using MS-DOS; however, diskettes created using other operating systems may be acceptable.

NOTE: 3 1/2-INCH DISKETTES CREATED ON A SYSTEM 36 OR AS400 ARE NOT ACCEPTABLE.

IRS/MCC has equipment that can convert diskettes created under most operating systems to the appropriate MS-DOS format. IRS/MCC strongly recommends that transmitters submit a test file for 5 1/4- and 3 1/2-inch diskettes, especially if their data was not created using MS-DOS.

.04 Transmitters are encouraged to use high density diskettes. Low density diskettes are acceptable BUT must be formatted in low density.

.05 Transmitters should check media for viruses before submitting media to IRS/MCC.

SECTION 6. PAYER/TRANSMITTER "A" RECORD -- GENERAL FIELD DESCRIPTIONS

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

.02 The number of "A" Records depends on the number of payers and the different types of returns being reported. The payment amounts for one payer and for one type of return should 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 a payer is filing Form 1099-DIV to report Amount Codes 1, 2, and 3, all three amount codes should be reported under one "A" Record, not three separate "A" Records. For "B" Records that do not contain payment amounts for all three amount codes, enter zeros for those which have no payment to be reported.

.04 The first record on the file must be an "A" Record. A transmitter may include "B" Records for more than one payer on a tape or diskette. However, each GROUP of "B" Records must be preceded by an "A" Record and followed by an End of Payer "C" Record. A single tape or diskette may contain different types of returns but the types of returns MUST NOT BE intermingled. A separate "A" Record is required for each payer and each type of return being reported.

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

.06 An "A" Record may be blocked with "B" Records, however, the initial record on a file must be an "A" Record. IRS/MCC will accept an "A" Record after a "C" Record.

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

.08 All alpha characters entered in the "A" Record must be upper-case.

.09 When filing Form 1098, Mortgage Interest Statement, the "A" Record will reflect the name of the recipient of the interest referred to as the payer in these instructions. The "B" Record will reflect the individual paying THE INTEREST (borrower/payer of record) AND THE amount paid.

NOTE: For ALL fields marked REQUIRED, a transmitter must provide the information described under Description and Remarks. For fields NOT MARKED REQUIRED, a transmitter must allow for the field, but may be instructed to enter BLANKS or zeros in the indicated media position(s) and for the indicated length. All records are now a fixed length of 420 positions.

Record Name: Payer/Transmitter "A" Record

 Field

 FORM 1098 -- Amount Codes    For Reporting Mortgage

 FORM 1099-B Amount Codes     For Reporting Payments on Form 1099-B:

NOTE 2: PAYMENT AMOUNT FIELDS 6, 7, 8, AND 9 ARE TO BE USED FOR THE REPORTING OF REGULATED FUTURES OR FOREIGN CURRENCY CONTRACTS.

 FORM 1099 -- Amount Codes    For Reporting Cancellation of Debt on

NOTE 2: A DEBT IS ANY AMOUNT OWED TO THE DEBTOR INCLUDING PRINCIPAL, INTEREST, PENALTIES, ADMINISTRATIVE COSTS, AND FINES, TO THE EXTENT THEY ARE INDEBTEDNESS UNDER SECTION 61(a)(12). THE AMOUNT OF DEBT DISCHARGED OR CANCELED MAY BE ALL OR ONLY PART OF THE TOTAL AMOUNT OWED. SEE THE 1996 "INSTRUCTIONS FOR FORMS 1099, 1098, 5498, AND W-2G" FOR FURTHER INFORMATION.

NOTE 3: AMOUNT CODE 7 WILL BE USED ONLY IF A COMBINED FORM 1099-A AND 1099-C IS BEING FILED. SEE THE 1996 "INSTRUCTIONS FOR FORMS 1099, 1098, 5498, AND W-2G" FOR FURTHER INFORMATION ON REPORTING THE FAIR MARKET VALUE OF PROPERTY AND COORDINATION WITH FORM 1099-A.

 FORM 1099 -- Amount Codes    For Reporting Payments on Form

 FORM 1099-G -- Amount Codes  For Reporting Payments on Form 1099-G:

NOTE 2: DO NOT REPORT TIMBER ROYALTIES UNDER A "PAY-AS-CUT" CONTRACT; THESE MUST BE REPORTED ON FORM 1099-S.

NOTE 3: AMOUNT CODE 7 IS NORMALLY USED TO REPORT NONEMPLOYED COMPENSATION. HOWEVER, AMOUNT CODE 7 MAY ALSO BE USED TO REPORT CROP INSURANCE PROCEEDS. SEE POSITIONS 4-5 OF THE "B" RECORD FOR INSTRUCTIONS. IF NONEMPLOYED COMPENSATION AND CROP INSURANCE PROCEEDS ARE BEING PAID TO THE SAME PAYEE, A SEPARATE "B" RECORD FOR EACH TRANSACTION IS REQUIRED.

NOTE 4: FOR THE CONVENIENCE OF THE PAYER, THE SPECIAL DATA ENTRIES FIELD IN THE PAYEE "B" RECORD MAY BE USED TO REPORT STATE AND LOCAL INCOME TAX WITHHELD. THIS INFORMATION DOES NOT NEED TO BE REPORTED TO IRS.

 FORM 1099-OID -- Amount      For Reporting Payments on Form

 FORM 1099-R -- Amount Codes  For Reporting Payments on Form 1099-R:

NOTE 2: IF THE PAYMENT SHOWN FOR AMOUNT CODE 1 IS A TOTAL DISTRIBUTION, ENTER A "1" (ONE) IN POSITION 47 OF THE "B" RECORD. AN AMOUNT MUST BE SHOWN IN AMOUNT FIELD 1.

NOTE 3: IF A DISTRIBUTION IS A LOSS, DO NOT ENTER A NEGATIVE AMOUNT. FOR EXAMPLE, IF STOCK IS DISTRIBUTED BUT THE VALUE IS LESS THAN THE EMPLOYEE'S AFTER-TAX CONTRIBUTIONS, ENTER THE VALUE OF THE STOCK IN AMOUNT CODE 1, ENTER "0" (ZERO) IN AMOUNT CODE 2, AND ENTER THE EMPLOYEE'S CONTRIBUTIONS IN AMOUNT CODE 5. IF THE TAXABLE AMOUNT CANNOT BE DETERMINED, ENTER A "1" (ONE) IN POSITION 48 OF THE "B" RECORD. IF REPORTING AN IRA/SEP DISTRIBUTION, GENERALLY INCLUDE THE AMOUNT OF THE DISTRIBUTION IN THE TAXABLE AMOUNT (PAYMENT AMOUNT FIELD 2, POSITIONS 61-70) AND ENTER A "1" (ONE) IN THE IRA/SEP INDICATOR FIELD (POSITION 44). A "1" (ONE) MAY BE ENTERED IN THE TAXABLE AMOUNT NOT DETERMINED INDICATOR FIELD (POSITION 48) OF THE PAYEE "B" RECORD, BUT THE AMOUNT OF THE DISTRIBUTION MUST STILL BE REPORTED IN PAYMENT AMOUNT FIELDS 1 AND 2. SEE THE EXPLANATION FOR BOX 2A OF FORM 1099-R IN THE 1996 "INSTRUCTIONS FOR FORMS 1099, 1098, 5498, AND W-2G" FOR MORE INFORMATION ON REPORTING THE TAXABLE AMOUNT.

NOTE 4: SEE THE 1996 "INSTRUCTIONS FOR FORMS 1099, 1098, 5498, AND W-2G" FOR INFORMATION CONCERNING FEDERAL INCOME TAX WITHHELD FOR FORM 1099-R.

NOTE: FOR PAYERS WHO WISH TO REPORT STATE OR LOCAL INCOME TAX, SEE PART B, SECTION 7 (6) PAYEE "B" RECORD -- RECORD LAYOUT POSITIONS 322-420 FORM 1099-R.

 FORM 1099-S -- Amount Codes  For Reporting Payments on Form 1099-S:

 FORM 5498 -- Amount Codes    For Reporting Payments on Form 5498:

IF REPORTING IRA CONTRIBUTIONS FOR A DESERT STORM/SHIELD PARTICIPANT FOR OTHER THAN 1996 OR AN OPERATIONS JOINT ENDEAVOR (BOSNIA REGION) PARTICIPANT, ENTER "DS," FOR DESERT STORM OR "JE" OF JOINT ENDEAVOR, THE YEAR FOR WHICH THE CONTRIBUTION WAS MADE, AND THE AMOUNT OF THE CONTRIBUTION IN THE SPECIAL DATA ENTRIES FIELD OF THE "B" RECORD. DO NOT ENTER THE CONTRIBUTIONS IN AMOUNT CODE 1.

FOR INFORMATION CONCERNING DESERT STORM/SHIELD PARTICIPANT REPORTING, REFER TO THE 1994 "INSTRUCTIONS FOR FORMS 1099, 1098, 5498, AND W-2G," OR NOTICE 91-17, 1991-1 C.B. 319. THE INSTRUCTIONS FOR FILING FORM 5498 FOR DESERT STORM/SHIELD PARTICIPANTS WILL ALSO APPLY TO PARTICIPANTS OF OPERATION JOINT ENDEAVOR OF THE BOSNIA REGION.

 FORM W-2G -- Amount Codes    For Reporting Payments on Form W-2G:

 32       Test Indicator   1  REQUIRED. Enter "T" if this is a TEST

 50-89    First Payer     40  REQUIRED. Enter the name of the payer

 90-129   Second Payer    40  If the Transfer (or Paying) Agent

                      Reel                 Payer          Last

SECTION 8. PAYEE "B" RECORD -- GENERAL FIELD DESCRIPTIONS AND RECORD LAYOUTS

.01 The "B" Record contains the payment information from the information returns. When filing information returns, the format for the "B" Records will remain constant and is a fixed length of 420 positions. The record layout for positions 1 through 321 is the same for all "B" Records. Positions 322 through 420 vary for Forms 1099-A, 1099-B, 1099-C. 1099-OID, 1099-S, and W-2G to accommodate variations within these forms. In the "A" Record, the amount codes that appear in tape or diskette positions 23 through 31 will be left-justified and filled with blanks. In the "B" Record, the filer must allow for all nine Payment Amount Fields. For those fields not used, enter "O's" (zeros). For example, a payer reporting on Form 1099-MISC, should ENTER "A" in tape position 22 of the "A" Record, Type of Return. If reporting payments for Amount Codes 1, 2, 4, and 7, the payer would report media positions 23 through 31 of the "A" Record as "1247bbbbb." (In this example, "b" denotes blanks. Do not enter the letter 'b'.) In the "B" Record:

POSITIONS 51 THROUGH 60 for Payment Amount 1 will represent Rents.

POSITIONS 61-70 for Payment Amount 2 will represent Royalties.

POSITIONS 71-80 for Payment Amount 3 will be "0's" (zeros).

POSITIONS 81-90 for Payment Amount 4 will represent Federal income tax withheld.

POSITIONS 91-110 for Payment Amounts 5 and 6 will be "0's" (zeros).

POSITIONS 111-120 for Payment Amount 7 will represent Non-employee compensation.

POSITIONS 121-140 Amounts 8 and 9 will be "0's" (zeros).

.02 The following specifications include a field in the payee records called "Name Control" in which the first four characters of the payee's surname are to be entered by the filer.

.03 If filers are unable to determine the first four characters of the surname, the Name Control Field may be left blank. Compliance with the following will facilitate IRS computer programs in generating the name control:

(a) The surname of the payee whose TIN is shown in the "B" Record should always appear first. If, however, the records have been developed using the first name first, the filer 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 "B" Record must be present in the First Payee Name Line. Surnames of any other payees may be entered in the Second Payee Name Line.

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

.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 personal use of the filer. 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 option to use the Special Data Entry Field. If this field is coded, it will not affect the processing of the "B" Records.

.06 Those payers participating in the Combined Federal/State Filing Program must adhere to all of the specifications in Part A, Sec. 16, in order to participate in this program. Forms 1098, 1099-A, 1099-B, 1099-C, 1099-S, and W-2G cannot be filed under the Combined Federal/State Filing Program.

.07 All alpha characters entered in the "B" Record must be uppercase.

.08 DO NOT USE DECIMAL POINTS (.) to indicate dollars and cents. Ten dollars must appear as 0000001000 in the payment amount field.

.09 IRS strongly encourages transmitters to review the data for accuracy before submission to prevent issuance of erroneous notices. Transmitters should be especially careful that the names, TINs, account numbers, types of income, and income amounts are correct.

.10 When reporting Form 1098, Mortgage Interest Statement, the "A" Record will reflect the name and TIN of the recipient of the interest, the filer of the Form 1098 (the payer). The "B" Record will reflect the individual paying the interest (borrower/payer of record) and the amount paid. For Form 1099-S, the "A" Record will reflect the person responsible for reporting the transaction (the filer of the Form 1099-S) and the "B" Record will reflect the seller/transferor.

NOTE: FOR ALL FIELDS MARKED REQUIRED, THE TRANSMITTER MUST PROVIDE THE INFORMATION DESCRIBED UNDER DESCRIPTION AND REMARKS. FOR THOSE FIELDS NOT MARKED REQUIRED, THE TRANSMITTER MUST ALLOW FOR THE FIELD, BUT MAY BE INSTRUCTED TO ENTER BLANKS OR ZEROS IN THE INDICATED POSITION(S) AND FOR THE INDICATED LENGTH. ALL RECORDS ARE A FIXED LENGTH OF 420 POSITIONS.

Record Name: Payee "B" Record

 Field

           Crop Insurance Proceeds   FOR FORM 1099-MISC, Enter "1"

           Type of Wager             FOR FORM W-2G, enter the

 8-11      Name Control       4      If determinable, enter the first

The following examples may be helpful to filers in developing the Name Control:

                            NAME                         NAME CONTROL

/**/ For Hispanic names, when two last names are shown for an individual, derive the name control from the first last name.

 12        Direct Sales       1      1099 MISC ONLY. Enter a "1"

 13        Blank              1      ENTER BLANK.

                            TYPE OF TIN        TYPE OF ACCOUNT

 24-43     Payer's Account    20     Enter any number assigned by the

 45-46     Percentage of      2      FORM 1099-R ONLY. Use this field

 48        Taxable Amount     1      FORM 1099-R ONLY. Enter a "1"

 49-50     Blank              2      ENTER BLANKS.

NOTE 2: IF A PAYER IS REPORTING A /*/ MONEY AMOUNT IN EXCESS OF 9999999999 (DOLLARS AND CENTS), IT MUST BE REPORTED AS FOLLOWS:

(1) The first Payee "B" Record MUST contain /*/ 9999999999.

(2) The second Payee "B" Record will contain the remaining money amount.

/*/ DO NOT SPLIT THIS FIGURE IN HALF.

 51-60    Payment           10     The amount reported in this field

 141-160  Blank             20     ENTER BLANKS.

For Form 5498 Inherited IRAs, enter the beneficiary's name followed by the word "beneficiary." For example, "Brian Young as beneficiary of Joan Smith" or something similar that signifies that the IRA was once owned by Joan Smith. Filers may abbreviate the word "beneficiary" as, for example, "benef." Refer to the 1996 "Instructions for Forms 1099, 1098, 5498, and W-2G." The beneficiary's TIN must be reported in positions 15-23 of the "B" Record.

 202-241  Second Payee      40     If there are multiple payees,

 282-310  Payee City        29     REQUIRED. Enter the city, town or

                         Document         2nd

          (1) Forms 1098, 1099-DIV, 1099-G, 1099-INT, 1099-MISC,

 322-349   Blank              28     ENTER BLANKS.

FORMS 1098, 1099-DIV, 1099-G, 1099-INT, 1099-MISC, 1099-PATR, AND 5498

                         Combined

 322-349   Blank              28     ENTER BLANKS.

                           Date of

 Field

 419-420   Blank               2     Enter blanks, or carriage

             Special      Gross

 Field

             Special

 Field

             Special                     Combined        Blank

 Field

                         STATE INCOME     LOCAL INCOME

 Field

                                       Address

(8) PAYEE "B" RECORD -- RECORD LAYOUT POSITIONS 322-420 FORM W-2G

 Field

  Blank      Date Won     Transaction      Race       Cashier

.01 THE END OF PAYER "C" RECORD IS A FIXED RECORD LENGTH OF 420 POSITIONS. The control total fields are each 15 positions in length.

.02 The "C" Record consists of the total number of payees and the totals of the payment amount fields filed by a given payer and/or a particular type of return. The "C" Record MUST BE written after the last "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.

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

.04 Payers/Transmitters should verify the accuracy of the totals since data with missing or incorrect "C" Records may be returned for replacement.

 Field

 11-25     Control            15

 Record     Number of               Control     Control

.01 The State Totals "K" Record is a fixed record length of 420 positions. The control total fields are each 15 positions in length.

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

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

.04 In developing the "K" Record, for example, if a payer 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 via this program.

.07 CONTROL TOTAL FIELDS HAVE BEEN ADDED FOR THE ACCUMULATED TOTALS OF STATE AND LOCAL WITHHOLDING FIELDS FROM THE "B" RECORDS FOR FORM 1099-R ONLY FOR EACH STATE BEING REPORTED.

(1) STATE TOTALS "K" RECORD -- RECORD LAYOUT FORMS 1099-DIV, 1099-G, 1099-INT, 1099-MISC, 1099-OID, 1099-PATR, AND 5498

 Field

 11-25     Control            15

 Record      Number of    Blank     Control     Control      Control

 Field

 11-25     Control            15

 Record    Number of    Blank    Control    Control    Control

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

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

Record Name: End of Transmission "F" Record

 Field

SECTION 1. GENERAL

.01 Bisynchronous electronic filing of Forms 1098, 1099, 5498, and W-2G information returns is offered as an alternative to magnetic media (tape, tape cartridge, or diskette) or paper filing, but is not a requirement. This method uses IBM 3780 communications protocols and is used primarily by mainframe filers. Electronic filing 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.

.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 Taxpayer Service toll free number (1-800-829-1040) for assistance.

.03 Filers participating in the electronic filing program for information returns will submit their returns to IRS/MCC by way of modems, and not through magnetic media or paper filing.

.04 If a request for extension is approved, transmitters who file electronically will be granted an extension of 30 days to file. Part A, Sec. 11, explains procedures for requesting extensions of time. Filers are encouraged to file their data as soon as possible.

.05 The formats of the "A", "B", "C", "K", and "F" Records are the same for electronically filed records as they are for 5 1/4- and 3 1/2-inch diskettes, tapes, and tape cartridges. For electronically filed documents, each transmission is considered a separate file; therefore, each transmission must have an End of Transmission (EOT) "F" Record.

SECTION 2. ELECTRONIC FILING APPROVAL PROCEDURE

.01 Filers must obtain, or already have, a Transmitter Control Code (TCC) assigned to them prior to submitting their files electronically. (Filers who currently have a TCC for magnetic filing do not have to request a second TCC for electronic filing.) Refer to Part A, Sec. 7, for information on how to obtain a TCC.

.02 Filers using bisynchronous protocols must obtain an IRS/MCC-assigned password prior to submitting test or actual data files. To obtain a password, the following steps must be taken:

(a) Bisynchronous filers who already have a TCC must submit either Form 4419 or a letter to indicate that they wish to file information returns electronically. Another TCC will not be assigned. If a letter is submitted, it must contain the following:

1) Name and address of transmitter.

2) Transmitter Control Code.

3) Name and phone number of a contact person within the filer's organization to whom a password will be assigned.

(b) Within 30 days of receiving the application or letter, IRS/ MCC will send Form 6086, Time Sharing Operation (TSO) Password Assignment, to the filer which will contain the password to be used for electronic submissions.

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

     Chief, Security and Disclosure Branch

(e) For security reasons, all bi-synchronous passwords will expire periodically, and a new password will automatically be assigned. If filers have any questions relating to the security procedures, and/or they need to report their password has been compromised, they must contact IRS/MCC as soon as possible at:

     IRS/MCC

.03 It is the user's responsibility to remember the password and not allow the password to be compromised.

SECTION 3. TEST FILES

.01 Filers are not required to submit a test file; however, the submission of a test file is encouraged for first time electronic filers in order to resolve any data or communication problems prior to the filing season. If filers wish to submit an electronic test file for Tax Year 1996 (returns to be filed in 1997), it MUST BE submitted to IRS/MCC NO EARLIER THAN November 1, 1996, through December 31, 1996.

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

.03 A password must be obtained before submitting an electronic test file.

.04 Bisynchronous electronic test files will be processed and filers will be notified as to the acceptability of their data within 5 workdays of the date the data and transmittal Form 4804 are received by IRS/MCC.

.05 A test file is required from filers who want approval for the Combined Federal/State Filing Program. See Part A, Sec. 16, for further details.

SECTION 4. ELECTRONIC SUBMISSIONS

.01 Electronically filed information may be submitted to IRS/MCC 7 days a week, 24 hours a day, except for routine maintenance/backup which is performed at 4:00 a.m. Eastern Time. 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 Lengthy transmissions (100,000 or more records) are not encouraged since the transmission may be interrupted by line noise problems. It is advisable to break lengthy files into multiple transmissions.

.03 The time required to transmit information returns electronically will vary depending on the modem speed, if IBM 3780 data compression is used, and if the records are blocked. The following transmission rate was based on an actual test file received at MCC using 4800 bps, no compression, and one record per block:

      4500 RECORDS     50 MINUTES

.01 All data submitted electronically is verified by transmittal Form 4804. The transmitter must send the signed Form 4804 the same day the transmission is made. No return is considered filed until a Form 4804 is received by IRS/MCC.

.02 Form 4804 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. 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 filer whose TCC is used in the "A" Record is responsible for submitting the transmittal Form 4804.

.04 Forms 4804 may be mailed to the following addresses:

If by Postal Service:

SECTION 6. IBM 3780 BISYNCHRONOUS COMMUNICATION SPECIFICATIONS

.01 Transmissions using IBM 3780 bisynchronous protocols must be in EBCDIC character code. Modems must be compatible with either Bell 208B for 4800 bps transmissions, AT&T 2296A for 9600 bps transmissions, or HAYES OPTIMA 288 V.FC SMARTMODEM FOR 14400 BPS TRANSMISSIONS. These modems are dial-up type modems using the Public Switched Telephone Network. IBM 3780 data compression is acceptable for any bisynchronous transmission. Records may be blocked up to 4096 bytes with INTER RECORD SEPARATORS.

.02 IRS/MCC will accept information returns filed electronically over switched telecommunications network circuits. For 4800 bps, the circuit will be 304-264-7080. For 9600 bps, the circuit will be 304-264-7040. FOR 14400 BPS, THE CIRCUIT WILL BE 304-264-7045. These circuits are equipped for bisynchronous transmission using the IBM 3780 protocol.

.03 The 4800 bps line terminates at a Bell 208B modem. The Bell 208B modem uses phase-shift keying and eight-phase modulation to transmit binary serial data signals over the telephone line in half-duplex mode. The following options have been selected:

-- Transmit Level set to -4 dBm

-- Compromise Equalizer in (4 -- Db Slope)

-- DSR off in Analog Loop Mode

-- Automatic Answer

-- Transmitter Internally Timed

-- RS-CS Interval of 50 ms

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

-- Receiver Responds to Remote Loopback

-- Loss-of-Carrier Disconnect

-- Received-Space Disconnect

-- Send-Space Disconnect

-- Automatic Answer

-- Answer on Ring 1

-- DTR Interlock

-- Retrain Enable

-- Internal Timing

-- CTS Controlled by RTS

-- 0-1 ms RTS to CTS Delay

-- CTS Dependent on Carrier

-- RR Indicates Carrier

-- 9600 Trellis Coding

-- 4800 bps Fallback

-- 4 dB Compromise Equalization

.05 THE 14400 BPS LINE TERMINATES AT A HAYES OPTIMA 288 V.FC SMARTMODEM. THE HAYES OPTIMA SMARTMODEM IS A HALF-DUPLEX. ITU-T (FORMERLY CCITT) V.32 AND V.32 BIS COMPATIBLE UNIT WHICH OPERATES AT 14400 BPS, 9600 BPS, OR 4800 BPS (FALLBACK). THE FOLLOWING OPTIONS HAVE BEEN SELECTED:

-- MONITOR DTR SIGNAL

-- ASSERT DSR SIGNAL AFTER HANDSHAKE NEGOTIATION, BUT BEFORE CONNECT RESULT CODE

-- RING CONTROL S=1

SECTION 7. BISYNCHRONOUS ELECTRONIC FILING RECORD SPECIFICATIONS

.01 For bisynchronous filing there are two additional identifier records which must be used to transmit data. These records are 420 positions in length and are the first ($$REQUEST) and second ($$ADD) records sent in an electronic transmission. The purpose of these records is to provide the password and identity of the transmitter. The $$REQUEST, $$ADD, and the data file should be transmitted as one file. In some cases, filers have attempted to send the $$REQUEST and $$ADD as separate files. Doing this will result in a failed transmission.

.02 With the exception of these additional records, the file format for electronic filing is the same as for magnetic media filing. The format of each of these records is as follows:

Record Name: $$REQUEST

 Field

      $$REQUEST

.04 Upon receiving a data file and transmittal Form 4804, IRS/MCC will release the data for further processing. If the media cannot be processed, the filer will be notified by either letter or telephone that the data must be retransmitted. This file name, if necessary, will be provided by IRS/MCC and is to be placed in positions 45-51 of the $$ADD record when the file is retransmitted.

Record Name: $$ADD

 Field

      $$ADD                                             Transmitter

SECTION 1. GENERAL

.01 Asynchronous electronic filing of Forms 1098, 1099, 5498, and W-2G, 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. Electronic filing using the Information Reporting Program Bulletin Board System (IRP-BBS) will fulfill the magnetic media requirements for those filers who are required to file magnetically. It may also be used by those 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 Taxpayer Service toll-free number (1-800-829-1040) for assistance.

.03 Filers participating in the electronic filing program for information returns will submit their returns to IRS/MCC by way of modems and not through magnetic media or paper filing. FILES SUBMITTED IN THIS MANNER MUST BE IN STANDARD ASCII CODE.

.04 If a request for extension is approved, transmitters who file electronically will be granted an extension of 30 days to file. Part A, Sec. 11, explains procedures for requesting extensions of time. Filers are encouraged to file their data as soon as possible.

.05 The formats of the "A", "B", "C", "K", and "F" Records are the same for electronically filed records as they are for 5 1/4- and 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; therefore each transmission must have an End of Transmission (EOT) "F" Record.

SECTION 2. ELECTRONIC FILING APPROVAL PROCEDURE

.01 Filers must obtain, or already have, a Transmitter Control Code (TCC) assigned to them prior to submitting their files electronically. (Filers who currently have a TCC for magnetic filing do not have to request a second TCC for electronic filing.) Refer to Part A, Sec. 7 for information on how to obtain a TCC.

.02 Once a TCC is obtained, filers using IRP-BBS assign their own passwords and do not need special approval.

.03 With all passwords, it is the user's responsibility to remember the password and not allow the password to be compromised. However, if filers do forget their password, call 304-263-8700 for assistance.

NOTE: PASSWORDS ON THE IRP-BBS ARE CASE SENSITIVE.

SECTION 3. TEST FILES

.01 Filers are not required to submit a test file; however, the submission of a test file is encouraged for first time electronic filers in order to resolve any data or communication problems prior to the filing season. If filers wish to submit an electronic test file for Tax Year 1996 (returns to be filed in 1997), IT MUST BE submitted to IRS/MCC NO EARLIER THAN November 1, 1996, through December 31, 1996.

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

.03 Filers can verify the status of their transmitted test data by dialing the IRP-BBS. This information will be available within two workdays after their transmission is received by IRS/ MCC.

.04 A TEST FILE IS REQUIRED from filers who want approval FOR THE COMBINED FEDERAL/STATE FILING PROGRAM. See Part A, Sec. 16 for further details.

SECTION 4. 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 Filers may submit as many documents as they choose electronically. Filers are allowed 240 minutes a day; however, more time may be requested if needed. It may be advantageous to break down large files (FILES IN EXCESS OF TWO HOURS OF TRANSMISSION TIME) into several smaller files. For example, if large files contain several types of returns or payers, transmit each return or payer as a separate file. As a result, if only one of the files is incorrect, a replacement would be needed for only the incorrect file.

.03 DO NOT TRANSMIT DATA USING IRP-BBS JANUARY 1 THROUGH JANUARY 7. This will allow time for the IRP-BBS to be updated to reflect current year changes.

.04 Data compression is encouraged when submitting information returns by way of the IRP-BBS. MCC has the ability to decompress files created using several popular software compression programs such as ARC, LHARC, and PKZIP. Software data compression can be done alone or inconjunction with V.42bis hardware compression.

The time required to transmit information returns electronically will vary depending on the modem speed and the type of data compression used, if any. However, transmissions to IRP-BBS will be significantly faster than electronic filing to the mainframe. THE TIME REQUIRED TO TRANSMIT A FILE CAN BE REDUCED BY AS MUCH AS 85 PERCENT BY USING SOFTWARE COMPRESSION AND HARDWARE COMPRESSION.

The following are actual transmission rates achieved in test uploads at MCC using compressed files (PKZIP) and the xmodem protocol. The actual transmission rates will vary depending on the protocol that is used. (Uploads will be approximately 25 percent faster when using the XMODEM-1K or ZMODEM protocols.)

        TRANSMISSION

SECTION 5. TRANSMITTAL REQUIREMENTS

.01 The results of the electronic transmission will be posted to the (F)ile Status area of the IRP-BBS, however, no further processing will occur until the signed Form 4804 is received. The transmitter must send the signed Form 4804 the same day the electronic transmission is made. No return is considered filed until a Form 4804 is received by IRS/MCC.

.02 Form 4804 can be ordered by calling the IRS toll-free forms and publication order number 1-800-TAX-FORM, (1-800-829-3676), downloaded from the IRP-BBS, or it may be computer-generated. A copy of the form is also available in the back of this publication. 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 filer whose TCC is used in the "A" Record is responsible for submitting the transmittal Form 4804.

.04 Forms 4804 may be mailed to the following addresses:

If by Postal Service:

.01 The IRP-BBS is an electronic bulletin board system available to filers of information returns. In addition to filing information returns electronically, the IRP-BBS provides other capabilities. Some of the advantages of IRP-BBS are as follows:

(1) Notification within two workdays as to the acceptability of the data transmitted.

(2) Immediate access to the latest changes and updates that affect the Information Reporting Program at IRS/MCC (program, legislative, etc.).

(3) Access to publications such as the Publication 1220 as soon as they are available.

(4) Capability to communicate with IRS/MCC personnel.

(5) Ability to retrieve information and files applicable to the IRP-BBS.

.02 The IRP-BBS is available for public use and accessible using various personal computer communications equipment; however, electronic submission of information returns is limited to holders of valid TCCs. A TCC is not needed to access those portions of the IRP-BBS that contain forms and publications or to leave questions or messages for IRS/MCC personnel.

.03 Filers using IRP-BBS can determine the acceptability of files submitted by checking the file status area of the bulletin board. These reports are not immediately available but will be available two workdays after the transmission is received by IRS/MCC.

.04 Contact the IRP-BBS by dialing 304-264-7070. The communication software settings for IRP-BBS are:

-- No parity

-- Eight data bits

-- One stop bit

-- Full duplex

The communication software should be set up to use the fastest speed allowed by the filer's modem.

.05 Due to the large number of communication products available, it is impossible to provide specific information on a particular software package or hardware configuration. Filers should contact their software or hardware supplier for assistance.

.06 IRP-BBS software provides a menu-driven environment allowing access to different parts of IRP-BBS. Whenever possible, IRS/MCC personnel will provide assistance in resolving any communication problems with IRP-BBS.

.07 IRP-BBS can be accessed at speeds from 1200 to 28,800 bps. The speed is automatically negotiated for connection at the speed of the calling modem. The communication standards supported include Industry Standard 212A, V.22bis, V.32, V.32bis, V.34, and V.FC. Point-to-point error control is supported using the V.42 ITU-T standard or MNP 2-4. Data compression is supported using V.42bis ITU-T standard or MNP5.

SECTION 7. IRP-BBS FIRST LOGON PROCEDURES

.01 The following information will be requested to set up the filer's user profile when logging onto the IRP-BBS for the first time.

(A) Enter the letter, that corresponds to the filer's terminal, from the following:

      < A > IBM PC < B >   IBM w/ANSI       < C > Atari

(B) Upper/lower case, line feed needed, 0 (zero) nulls after each < CR >, do you wish to modify this? (Most users answer no.)

COMMON USER PROBLEMS

 PROBLEM                PROBABLE CAUSE         SOLUTION

 PROBLEM                PROBABLE CAUSE         SOLUTION

SECTION 1. GENERAL INFORMATION

.01 The specifications in Part E include the required 200-byte record format for extensions of time to file requests submitted on magnetic media or via electronically. Also included are the instructions for the information that is to be entered in the record. FILERS ARE ADVISED TO READ THIS SECTION IN ITS ENTIRETY TO ENSURE PROPER FILING.

.02 ONLY FILERS WHO HAVE BEEN ASSIGNED A TRANSMITTER CONTROL CODE MAY REQUEST AN EXTENSION OF TIME MAGNETICALLY OR ELECTRONICALLY. IF YOU MEET THE THRESHOLD OF MORE THAN 50 PAYERS WHEN REQUESTING AN EXTENSION BUT ARE BELOW THE 250 DOCUMENTS THRESHOLD, YOU MUST STILL SUBMIT A FORM 4419, APPLICATION FOR FILING INFORMATION RETURNS MAGNETICALLY/ELECTRONICALLY. Requests for extensions of time may be made for Forms 1098, 1099, 5498, W-2G, W-2, and 1042-S.

.03 For Tax Year 1996 (returns due to be filed in 1997), transmitters requesting an extension of time to file FOR MORE THAN 50 PAYERS (NOT PAYEES) ARE REQUIRED TO FILE THE EXTENSION REQUEST ON MAGNETIC MEDIA OR ELECTRONICALLY. Transmitters requesting an extension of time for 10 to 50 payers (not payees) are encouraged to file the request magnetically or electronically. The request may be filed on tape, tape cartridge, 5 1/4- and 3 1/2-inch diskette, or electronically through the IRP-BBS.

.04 For extension requests filed on magnetic media, the transmitter must fax the completed, signed Form 8809, Request for Extension of Time to File Information Returns, in the same package as the corresponding media. For extension requests filed electronically, the transmitter must FAX the Form 8809 the same day the transmission is made.

.05 TRANSMITTERS SHOULD NOT SUBMIT A LIST OF PAYER NAMES AND TINS WITH THE FORM 8809 WITH THE MAGNETIC MEDIA OR ELECTRONIC FILES. BOX 6 OF THE FORM 8809 MUST BE COMPLETED WITH THE TOTAL NUMBER OF PAYER RECORDS (TOTAL NUMBER OF PAYERS) ON THE TRANSMITTER'S EXTENSION OF TIME FILE.

.06 To be considered, an extension request must be postmarked or transmitted by the due date of the returns; otherwise, the request will be denied.

.07 The extension record format is also on the IRP-BBS and can be downloaded. SEE PART D FOR MORE INFORMATION ON HOW TO CONTACT THE IRP-BBS.

.08 A magnetically-filed request for an extension of time should be sent using the following addresses:

If by Postal:

.09 If using a delivery service other than postal service, the actual date of receipt by IRS/MCC will be used as the submitted date. This should be considered in meeting filing requirements timely.

.10 Transmitters who submit their extensions of time requests magnetically or electronically will receive a letter from IRS/MCC with an attached list of the payers specifying approval and/or denial.

.11 Do not submit tax year 1996 extensions of time to file requests on magnetic media or electronically before January 1, 1997.

.12 Filers may request an extension of time AS SOON AS THEY ARE AWARE that an extension is necessary but not later than the due date of the return. 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. In such cases, the transmitter receives a denial letter. When this denial letter is received, the transmitter has 20 days to provide the additional of necessary information and resubmit the extension request to IRS/MCC.

.13 Each piece of magnetic media MUST have an external media label containing the following information:

(a) Transmitter name

(b) Transmitter Control Code (TCC)

(c) Tax year

(d) The words "Extension of Time"

(e) Record count

.14 A request for an extension of time to file is not automatically granted. Approval or denial is dependent on information provided on the Form 8809.

.15 If the first request for an extension of time to file was submitted magnetically or electronically, additional extension requests should be submitted in the same manner.

.16 If an additional extension of time is needed, a second Form 8809 may be submitted before the end of the initial extension with a postmark reflecting the date mailed. Line 7 on the form should be checked to indicate that the original extension has been received and the additional extension is being requested.

.17 See Part A, Sec. 11, for complete information on requesting an extension of time to file information returns. If there are additional questions or concerns, contact IRS/MCC.

SECTION 2. MAGNETIC TAPE, TAPE CARTRIDGE, 5 1/4- AND 3 1/2-INCH DISKETTE AND IRP-BBS SPECIFICATIONS

.01 Tape specifications are as follows:

(a) 9 track.

(b) EBCDIC (Extended Binary Coded Decimal Interchange Code) or ASCII (American Standard Coded Information Interchange) recording mode.

(c) 1600 or 6250 BPI.

(d) A block must not exceed 32,600 tape positions and must be a multiple of 200.

(e) Record length of 200 bytes.

(f) Labeled or unlabeled tapes may be submitted.

.02 Tape cartridge specifications are as follows:

(a) Must be IBM 3480, 3490, or AS400 compatible.

(b) Must meet American National Standard Institute (ANSI) standards and have the following characteristics:

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

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

(3) Cartridges will be 18-track or 36-track parallel. INDICATE ON THE EXTERNAL MEDIA LABEL IF THE TAPE CARTRIDGE IS 18-OR 36-TRACK.

(4) Mode will be full function.

(5) The data may be compressed using EDRC (Memorex) or IDRC (IBM) compression.

(6) Either EBCDIC or ASCII.

(c) A block must not exceed 32,600 tape positions and must be a multiple of 200.

(d) Record length of 200 bytes.

(e) Labeled or unlabeled tape cartridges may be submitted.

.03 Diskette specifications are as follows:

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

(b) ASCII recording mode only. Additional specifications may be found in Part B, Sec. 3, of this revenue procedure.

(c) Record length of 200 bytes.

(d) Diskettes must be created using the MS-DOS operating system.

(e) Filename of IRSEOT must be used. No other filenames are acceptable. If a file will consist of more than one diskette, the filename IRSEOT will contain a three-digit extension. This extension will indicate the sequence of the diskettes within the file. For example, the first diskette will be named IRSEOT.001, the second diskette will be named IRSEOT.002, etc.

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

(g) Positions 199 and 200 of each record have been reserved for use as carriage return/line feed (cr/lf) characters, if applicable.

.04 Bisynchronous electronic specifications include:

(a) Transmitter must have Transmitter Control Code number (TCC).

(b) Access phone numbers:

       4800 bps    304-264-7080

NOTE: SEE PART C, BISYNCHRONOUS (MAINFRAME) ELECTRONIC FILING SPECIFICATIONS, FOR DETAILED INFORMATION ON FILING WITH IRS/MCC VIA HI-SYNCHRONOUS PROTOCOLS.

.05 IRP-BBS specifications include:

(a) Transmitter must have Trans-witter Control Code number (TCC).

(b) IRP-BBS access phone number is 304-264-7070.

(c) Communications software settings are:

-- No parity

-- Eight data bits

-- One stop bit

-- Full duplex

(d) Access speeds from 1200 to 28,800 bps.

(e) Data compression is encouraged.

NOTE: SEE PART D, IRP-BBS ELECTRONIC FILING SPECIFICATIONS, FOR DETAILED INFORMATION ON FILING WITH IRS/MCC VIA IRP/BBS.

SECTION 3. RECORD LAYOUT

.01 Positions 6 through 174 of the following record should contain information about the payer for whom the extension of time to file is being requested. Do not enter transmitter information in these fields. ONLY ONE TCC MAY BE PRESENT IN A FILE.

RECORD LAYOUT

 Field

 176       Foreign Entity     1      Enter character "X" if Indicator

 Transmitter                     Second

SECTION 1. ADDRESSES FOR MARTINSBURG COMPUTING CENTER

TO SUBMIT AN APPLICATION TO FILE, WAIVER REQUEST (FORMS), CORRESPONDENCE, AND MAGNETIC MEDIA FILES, USE THE FOLLOWING:

Mailing by U. S. Postal Service:

Mailing by U.S. Postal Service:

PHONE NUMBERS FOR CONTACTING THE MARTINSBURG COMPUTING CENTER

INFORMATION REPORTING PROGRAM CALL SITE:

       304-263-8700

304-264-5602

ELECTRONIC FILING:

       (IRP-BBS)

Media label, Form 5064, has been obsoleted. It is no longer necessary to use special labels from IRS for your media. Any pressure sensitive label can now be used as long as it contains the following information:

TYPE OF FILING: Indicate whether data is ORIGINAL, REPLACEMENT, TEST OR CORRECTION.

TAX YEAR: Indicate tax year for which media is submitted.

IRS TCC: (Transmitter Control Code): Provide TCC assigned to the transmitter. (See Part A, Section 7.)

TRANSMITTER'S NAME

OPERATING SYSTEM/HARDWARE:

For 5 1/4 and 3 1/2 inch diskette files, indicate the type of personal computer operating system, and software package used to create the media (for example: IBM.PC/AT-MSD/DOS, Apple Macintosh/ MacWrite V2.2).

Recommended label format:

Type of filing ______________________________________

For tape cartridge, indicate operating system, either EBCDIC or ASCII, and either 18- or 36-track.

For 8mm tape cartridge, indicate operating system, and either EBCDIC or ASCII.

NUMBER OF PAYEES: Indicate the total number of Payee "B" Records, Recipient "Q" Records for Form 1042S, or total number of establishments for Form 8027 REPORTED ON THE MEDIA.

TRANSMITTER NUMBER FOR MEDIA: If available, provide the in-house number assigned by your organization to the tapes, tape cartridges or diskettes.

MEDIA SEQUENCE: Indicate sequence number of media and total number of media in file (FOR EXAMPLE: MEDIA SEQUENCE 1 OF 3, 2 OF 3, 3 OF 3).

PLEASE AFFIX EXTERNAL LABEL TO APPROPRIATE AREA ON MAGNETIC MEDIA. DO NOT HINDER THE ABILITY TO PROCESS MEDIA WHEN AFFIXING LABEL.

THIS IS THE END OF PUBLICATION 1220 FOR TAX YEAR 1996.