IRS ISSUES NEW REQUIREMENTS FOR FILING QUARTERLY TAX RETURNS.

Rev. Proc. 92-100

SECTION 1. PURPOSE

.01 The purpose of this revenue procedure is to provide a means whereby Reporting Agents preparing Form 941, Employer's Quarterly Federal Tax Return, and Form 941E, Quarterly Return of Withheld Federal Income Tax and Medicare Tax, for groups of taxpayers can furnish the required information in the form of magnetic tape.

.02 This revenue procedure supersedes Rev. Proc. 91-57, 1991-2 C.B. 817. If a current Reporting Agent is unable to comply with the changes in specifications, they must contact the local Magnetic Tape Coordinator for Business Tax Returns for further instructions.

SEC. 2. CHANGES

.01 This revenue procedure reflects the current changes to the Tax Data "B" Record and the Schedule "B" Tax Liability Data Record "D". Six new fields have been added to the Tax Data "B" Record (see Exhibit 11). They are Final Return Indicator position 154, Date Final Wages Paid positions 155-160, Liability First Month positions 458-471, Liability Second Month positions 472-485, Liability Third Month positions 486-499 and Total Liability for the Quarter positions 500-513. The Schedule A Tax Liability fields have been expanded to 31 days for 3 months with a total for each month (positions 515-1858). The eighth-monthly subtotals in the Schedule B Tax Liability Data Record "D" have been removed (see Exhibit 12).

.02 Important Regulation Changes for 1993. The new regulations treat a taxpayer as a "monthly depositor" or a "semi-weekly depositor". A taxpayer with reported taxes of $50,000 or less during a fixed twelve-month period is a monthly depositor and will report the tax liability in fields 458-513 of the Tax Data "B" Record. A taxpayer with reported taxes over $50,000 during a fixed twelve-month period is a semi-weekly depositor and will report the tax liability in fields 20-1363 of the Schedule "B" Tax Liability Data Record "D".

.03 All record lengths have been expanded from 1220 to 1860 characters because of the increase in length of the tax liability fields to 14 positions and the expansion of the Schedule A Tax Liability fields.

SEC. 3. BACKGROUND

.01 Section 31.6011(a)-8 of the Employment Tax Regulations provides that the Commissioner may authorize the use, at the option of the employer, of a composite return in lieu of any form specified in 26 CFR Part 31 (Employment Taxes and Collection of Income Tax at Source) for use by an employer, subject to such conditions, limitations, and special rules governing the preparation, execution, filing, and correction thereof as the Commissioner may deem appropriate. The composite return shall consist of a form prescribed by the Commissioner and an attachment or attachments of magnetic tape or other approved media. A single form and an attachment or attachments of magnetic tape may comprise the returns of more than one employer.

.02 The magnetic tape Form 941 or 941E is a composite return consisting of the magnetic tape data and Form 4996, Magnetic Tape Filing Transmittal for Form 941, 941E or 940 Federal Tax Returns. A magnetic tape return must contain the same information that a return filed completely on paper contains.

SEC. 4. APPLICATION FOR TAPE REPORTING

.01 Reporting Agents who desire to file Forms 941, 941E and 940 on magnetic tape must first file a Letter of Application. Although this revenue procedure only covers Forms 941 and 941E filed on magnetic tape, the Letter of Application may cover Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, as well. In addition, a separate but simultaneous letter may be submitted for permission to submit federal tax deposits (FTDs) on magnetic tape for Forms 940, 941/941E and 943. Separate revenue procedures cover the filing of Forms 940 and the submission of federal tax deposits on magnetic tape. Contact the Magnetic Tape Coordinator for Business Tax Returns for current copies of the other revenue procedures.

.02 The Letter of Application must be addressed to the Director, Internal Revenue Service Center, Attention Magnetic Tape Coordinator for Business Tax Returns, of the service center that serves the primary business address of the Reporting Agent. Addresses of the service centers are shown in Section 14 of this revenue procedure.

.03 The Letter of Application must contain the following:

1. Name, address and EIN (Employer Identification Number) of the person, organization, or firm making Letter of Application.

2. Name, title, and telephone number of the person to contact regarding the Letter of Application.

3. The first tax period for which the Reporting Agent plans to file returns on magnetic tape.

4. The estimated volume of returns the Reporting Agent plans to file by type of return (for example, 941, 941E or 940).

5. An agreement by the Reporting Agent to keep copies of the Reporting Agent Authorization (RAA) on file at the Reporting Agent's principal place of business for examination by the Service upon request. Such copies must be retained until the period of limitation for assessment for the last return filed under its authority expires.

6. An agreement by the taxpayer and Reporting Agent to fully pay the tax by FTDs. This revenue procedure does not restrict a non-financial organization that performs a payroll or tax service from being a Reporting Agent. See Rev. Proc. 89-48, 1989-2 C.B. 599, concerning the requirements under which FTDs can be made by the Reporting Agent.

7. An agreement by the taxpayer to fully pay contributions to state unemployment funds on time and to timely file related state unemployment tax returns (only if Form 940 filing is part of Letter of Application request).

8. Signature of the Reporting Agent or Reporting Agent's employee authorized to prepare federal tax returns for taxpayers.

.04 The Letter of Application must include two types of attachments as follows:

1. A Reporting Agent's List which identifies all taxpayers to be included in the Magnetic Tape Filing System.

2. RAAs for all taxpayers included on the Reporting Agent's List. Details of these attachments are described in the current revenue procedure on RAAs.

.05 Reporting Agents must submit a separate Letter of Application to each service center to which they intend to file returns.

SEC. 5. REPORTING AGENT AUTHORIZATION

A RAA must be submitted for each filer on the Reporting Agent's List attached to the Letter of Application. The RAA may be submitted on Form 8655, Reporting Agent Authorization, which is available on request; or any other instrument which meets the specifications identified Rev. Proc. 89-18. The RAA may cover the filing of Forms 940, 941 and 941E and the magnetic tape submission of FTDs on Forms 940, 941/941E and 943, if desired.

SEC. 6. APPROVAL OF AGENT'S APPLICATION

.01 The Service will act on the Letter of Application and notify the Reporting Agent, with the return of a validated Reporting Agent's List, within 30 days of receipt. The validated Reporting Agent's List provides the name control for each taxpayer. The name control is a required field when the return is submitted on magnetic tape. See Exhibit 11, positions 72-75.

.02 Having secured a name control for each taxpayer, the Reporting Agent must submit a test tape. To allow sufficient time to work out problems, Reporting Agents are encouraged to submit the initial test tape well in advance of the due date of the returns which will be filed on magnetic tape.

 Tax Period       End of Tax       Due Date    Initial Test Tape must

.04 The Magnetic Tape Coordinator for Business Tax Returns will notify prospective and current Reporting Agents in writing of approval, denial and revocation of magnetic tape filing privileges. Once authorization to file tax data on magnetic tape has been granted to a Reporting Agent, such approval will continue in effect in succeeding tax periods so long as the requirements of the most recent revenue procedure are met, and there are no equipment changes by the Reporting Agent.

SEC. 7. FILING TAPE RETURNS

.01 The Service will allow a tape return to be submitted for those taxpayers who are approved for magnetic tape filing until the Reporting Agent formally notifies the Service that specific employers are being deleted from their current magnetic tape filing inventory.

.02 Under Section 6091(b) of the Internal Revenue Code, federal tax returns must be filed at the Internal Revenue service center serving the legal residence or principal business address of the taxpayer. Thus, Reporting Agents must normally file a taxpayer's return at the appropriate service center as described above even if it means submitting magnetic tapes to more than one service center. An exception may be granted once a Reporting Agent has applied for and received permission from the Service to do so. Contact your Magnetic Tape Coordinator for Business Tax Returns for details.

.03 Approval by the Service of a Letter of Application allows Reporting Agents to file at any service center that services their clients. If Reporting Agents wish to file at additional service centers, they must notify the Magnetic Tape Coordinator for Business Tax Returns of the service center where they originally applied at least 90 days prior to the initial transmittal to the new service center.

.04 The Reporting Agent will be provided with a validated copy of the Reporting Agent's Listing for taxpayers authorized to file on magnetic tape. This authorization will contain each taxpayer's EIN and name control. This authorization will be the source of the EIN and name control to be used on magnetic tape by the Reporting Agent as an identification of each taxpayer. The name control must be retained in the Reporting Agent's records and used in each taxpayer's Tax Data "B" Record (positions 72-75). It is used by the Service to ensure the correct recording of the taxpayer's return. Failure to use the correct name control can result in delays in processing the return and notices of delinquent filing being sent to the taxpayer.

.05 Packaging, shipping, and mailing instructions will be provided in the letter granting initial approval issued by the Service in response to the Letter of Application for magnetic tape filing.

The first box of the tape shipment to the service center must contain the following:

1. Form 4996, Magnetic Tape Filing Transmittal for Form 941, 941E or 940 Federal Tax Returns, in duplicate. Failure to complete and submit this form will cause delays in processing the magnetic tape. The transmittal form must include:

(a) The name, address and telephone number (including area code) of Reporting Agent.

(b) Employer Identification Number of Reporting Agent.

(c) Type of tax return filed on the magnetic tape (941 or 941E).

(d) Tax period (use YYMM of tax year - for example, 9306).

(e) Number of tax returns filed on accompanying tape.

(f) Total taxes reported.

(g) Total taxes deposited.

(h) Total Forms 941c and other attachments to support adjustments included in this shipment.

(i) Number of revenue procedure used as basis for magnetic tape preparation (for example, 92-100).

(j) Service center where RAAs are filed.

(k) Signature of Reporting Agent or authorized employee, title and date.

2. A control listing identifying taxpayers on the current tape file being submitted. These taxpayers were previously approved by the Service for magnetic tape filing. List the taxpayers in EIN sequence with each taxpayer's name and address (address is optional).

3. Employers are required to send to the Service quarterly copies of all Forms W-4, Employee's Withholding Allowance Certificates, received during the quarter from employees still employed at the end of the quarter who claim the following:

(a) More than 10 withholding exemptions, or

(b) Exempt status and are expected to earn more than $200 a week.

Employers are not required to send other Forms W-4 unless notified by the Service in writing to do so. Copies of Forms W-4 may be filed with paper Forms 941 and 941E or may be filed on magnetic tape. See Rev. Proc. 92-80, 1992-39 I.R.B. 20, also published as Pub. 1245, which contains information concerning magnetic media filing.

.06 Form 941, 941E or 940 data must all be filed on separate magnetic tapes.

.07 The Reporting Agent must notify the Magnetic Tape Coordinator for Business Tax Returns if the agent does not receive notification of receipt of the transmittal within 15 days from the date the transmittal was sent.

.08 The Reporting Agent must notify the Magnetic Tape Coordinator for Business Tax Returns when the tape is received back from the Service. This may be done by telephone or by returning a receipted copy of the tape charge-out.

.09 If this revenue procedure is revised in terms of its computer specifications, current Reporting Agents will be advised by the Magnetic Tape Coordinator for Business Tax Returns to submit test tapes prior to their first usage of the new specifications. If the changes are minor, the Magnetic Tape Coordinator may waive the requirement.

.10 If a Reporting Agent changes computer equipment, a test tape must be submitted. The guidelines in section 6 of this revenue procedure will be followed, in regards to submission and acceptance of test tapes. If, by the end of the tax period quarter for which the returns will be filed, the Reporting Agent has not submitted a test tape that meets the requirements of this revenue procedure, the Magnetic Tape Coordinator will advise the Reporting Agent to submit paper returns. The Reporting Agent may resubmit a test tape for the subsequent tax period quarter.

SEC. 8. DUE DATES

.01 The due dates prescribed for filing paper returns with the Service also apply to magnetic tape filing of federal business tax returns.

.02 In no case may returns with more than one due date be included on one tape file.

SEC. 9. EFFECT ON PAPER RETURNS

Authorization to file on magnetic tape does not prohibit the filing of paper tax returns, but merely permits filing of such returns through the Magnetic Tape Filing System. If for some reason (for example, late receipt of records), a Reporting Agent prefers to file a paper return in lieu of magnetic tape filing for a given taxpayer, the Reporting Agent may do so even after having been given authorization to file that taxpayer's returns on magnetic tape.

SEC. 10. ADDING AND DELETING FILERS FROM MAGNETIC TAPE FILING SYSTEM

.01 After a Reporting Agent has been notified by the Service that the Letter of Application for tape reporting has been approved, the Reporting Agent may want to add and delete taxpayers from the Magnetic Tape Filing System.

.02 Specific instructions for adding and deleting taxpayers from the Magnetic Tape Filing System are contained in the current revenue procedure on RAAs. Contact the Magnetic Tape Coordinator for Business Tax Returns to secure the current version.

.03 Returns may not be filed for a taxpayer until a RAA has been submitted for the taxpayer and the taxpayer's identifying information has been included on a Reporting Agent's List which in turn has been subsequently validated by the Service. Until the Reporting Agent has received the validated list, a valid tax return cannot be submitted through the Magnetic Tape Filing System.

SEC. 11. CHANGE OF ADDRESS

.01 The taxpayer may notify the Service of an address change at any time by providing clear and concise written notification of a change of address (in accordance with Rev. Proc. 90-18, 1990-1 C.B. 491), on a Form 8822, Change of Address (see Exhibit 2). The change of address form is available on request. The toll-free number for forms is 1-800-829-FORM.

.02 If a taxpayer requests that a change of address be processed from the address that is submitted in the taxpayer's magnetic tape record, enter an address change indicator in tape position 153 of the Tax Data "B" Record (Exhibit 11) with an entry of "1". The taxpayer's address of record will then be updated with the information that is given in tape positions 85-150 of the Tax Data "B" Record.

SEC. 12. ADJUSTMENTS TO 941 AND 941E RETURNS

.01 Adjustments may be made on returns submitted on magnetic tape.

.02 Positions 307-316 of Tax Data "B" Record are used to report adjustment of social security and Medicare taxes reported. These positions must be used in conjunction with the social security and Medicare adjustment indicator (position 161) of the Tax Data "B" Record. If there is no adjustment of social security and Medicare taxes, the adjustment indicator must be zero. If there is an adjustment of social security and Medicare taxes, the adjustment indicator must be set to 1, 2, 3, or 4 depending on the circumstances explained as follows:

1. Fractions of cents. The social security and Medicare adjustment indicator must be set to 1 if the adjustment consists only of a difference between the total social security and Medicare taxes (positions 296-305) and the amount actually collected from your employees' wages because of fractions of cents added or dropped due to rounding.

2. Adjustments of tax on tips. The social security and Medicare adjustment indicator must be set to 3 if the adjustment to social security and Medicare taxes consists only of total uncollected employee social security and Medicare taxes on tips (i.e. employee previously reached maximum limitation through combination of wages and tips).

3. Adjustment of tax on third-party sick pay. The social security and Medicare adjustment indicator must be set to 4 if the adjustment to social security and Medicare taxes consists only of social security and Medicare tax on third-party sick pay for which the employer is not responsible.

4. If the description for the adjustment to social security and Medicare taxes listed above is not applicable or the adjustment to social security and Medicare taxes is present for more than one reason, the social security and Medicare adjustment indicator must be set to 2, and a statement or Form 941c must be submitted with the tape identifying the taxpayer and explaining the adjustment to social security and Medicare taxes. If the second reason for a social security and Medicare adjustment is "FRACTIONS ONLY," then it may be ignored and either "social security and Medicare tip" or "sick pay" values may be used.

.03 Adjustments to preceding quarters (income tax withholding adjustments) must be reported in positions 198-207 of the Tax Data "B" Record. Errors made in income tax withheld may be corrected for wages paid in earlier quarters of the same calendar year. Do not report adjustments to income tax withholding for earlier years unless it is to correct an administrative adjustment. Any magnetic tape return with an adjustment to preceding quarters must be supported by a statement or Form 941c submitted with the magnetic tape. The statement must identify the taxpayer and explain the adjustment. The Adjustment Indicator for Income Tax Withheld (position 162 of the Tax Data "B" Record) must be set to "1" if there is an adjustment or be set to zero if there is no adjustment.

.04 Adjustments to backup withholding tax for preceding quarters of the calendar year must be reported in positions 343-352 of the Tax Data "B" Record. Any magnetic tape return with an adjustment to backup withholding must be supported by a statement or Form 941c submitted with the magnetic tape. The statement must identify the taxpayer and explain the adjustment. The Adjustment Indicator for Backup Withholding (position 163 of the Tax Data "B" Record) must be set to "1" if there is an adjustment or be set to zero if there is no adjustment.

.05 Include all statements and Forms 941c with the magnetic tape shipment for approval and subsequent adjustment action. Attach a cover letter that identifies the employer for each statement and Form 941c included with the magnetic media tape shipment.

SEC. 13. FILING FORMS W-2 (COPY A) WITH THE SOCIAL SECURITY ADMINISTRATION

Forms W-2, Wage and Tax Statements, must be filed directly with the Social Security Administration on tape or paper documents. For directions for tape filing, you may call or write the appropriate Service Center Magnetic Tape Coordinator for Business Tax Returns, or any Social Security Administration office and ask for Technical Information Bulletin 4a (TIB-4a), or you may write to the following address:

     Social Security Administration

Retain the following material for an appropriate period (e.g., four years after the due date of the return) unless otherwise notified by the Service:

(a) a complete copy of the magnetic tape return (may be retained on magnetic media); and

(b) the notification of receipt of the transmittal received from the Service.

SEC. 15. ADDITIONAL INFORMATION

Requests for additional copies of this revenue procedure, Letter of Applications for magnetic tape filing, copies of Form 4996 and Form 8822, requests for copies of appropriate input record element specifications, and requests for tape filing information must be addressed to the Director, Internal Revenue Service Center, Attention: Magnetic Tape Coordinator of Business Tax Returns, at one of the following addresses:

          1. North-Atlantic Region

.01 Conventions.

(1) Reporting Agents who submit Forms 940, 941 and 941E on magnetic tape must conform to Level 3 of the ANSI Standard X3.27-1978 (Magnetic Tape Labels and File Structure for Information Interchange). Specifically this calls for recognition of the following label types: VOL1, HDR1, HDR2, EOV1, EOV2, EOF1, and EOF2 (see exhibits 3 through 9 for specific label specifications). No user labels or non-labeled tapes will be accepted for processing.

(2) Record Mark. No restrictions apply to record marks.

(3) Tape Mark. The tape marks will be automatically generated for an interchange tape (as defined above in .01 (1)). An example as to their positioning is given in Section 15.02 of this revenue procedure.

.02 Definitions.

 Element                      Description

.01 These specifications prescribe the required format and content of the records to be included in the file, but not the methods or equipment to be used in their preparation. A physical tape reel must have the following physical characteristics:

 Type of tape            1/2 inch Mylar base, oxide coated

     VOL1

.03 All records including headers and trailers, if used, must be written at the same density.

.04 Affix an external label to each tape with the following information:

1. Name of Reporting Agent.

2. Number of tax returns submitted on this reel of tape.

3. Payment period in YYMM (year, year, month, month) format. For example, 9306.

4. Density (1600, 6250).

5. Channel (9).

6. Parity (odd).

7. Sequence number of reel and total number of reels in file. For example, 1 of 3).

.05 Record Blocking Factor. The tape records prescribed in the specifications must be blocked at one record per block.

.06 Data. Only character data may be used. This means numeric fields cannot use overpunched signs and must be right justified with remaining unused positions zero filled. All money fields must include two decimal positions on the right. All numeric data must be in unsigned ASCII characters (no binary data). Where necessary, separate positions have been provided for signs, using "1" for plus and "0" (zero) for minus. All fields must have either numeric or alphabetic characters with the exception of the special characters which are allowed in the name and street address fields. Special characters can only be used in the name line fields and the street address fields of the Agent "A" Record and Tax Data "B" Record. Special characters must be limited to hyphen (-) and slash (/) in the street address and the name line.

.07 Agent "A" Record. The Agent "A" Record (see Exhibit 10) identifies the Reporting Agent who prepares and transmits the tape file. Only Form 941 or Form 941E data may be present on this magnetic tape. Form 940 data must be on separate tapes. The Agent "A" Record must be reported on the first reel of the file and precede the first Tax Data "B" Record.

.08 Form 941/941E Tax Data "B" Records.

(1) Tax Data "B" Records (see Exhibit 11) contain tax information for each filer reported by the Reporting Agent. The number of Tax Data "B" Records appearing on one tape reel will depend on the number of taxpayers represented (only one tax return for each EIN).

(2) All Tax Data "B" Records must be for the current tax period. All money amount fields must contain dollars and cents and be right justified with zero filling on left and must be zero filled if an amount is not present. Fields identified as indicators or signs must always carry a value. Other non-money fields must be left justified and blank filled on right with blank filling of non-significant fields.

.09 Form 941/941E Schedule B Tax Liability Tax Data "D" Records.

(1) Schedule B Tax Liability Tax Data "D" Records (see Exhibit 12) will be used when your reported taxes during the fixed twelve-month period is more than $50,000 or if on any day during a month your reported tax exceeds $100,000.

(2) Each Schedule B Tax Liability Tax Data "D" Record must follow its corresponding Tax Data "B" Record.

(3) Tape position 151 of the Tax Data "B" Record must equal "B" if the Schedule B Tax Liability Tax Data "D" is used. Otherwise, tape position 151 of the Tax Data "B" Record must equal zero (0).

.10 Checkpoint Totals "C" Record.

(1) Write this record after each 100 or fewer (if less than 100 remain) Tax Data "B" Records. If a "D" record is written after the 100th "B" record the "C" record would be written after the "D" record. Each Checkpoint Totals "C" Record must contain a count of Tax Data "B" Records, the sum of Total Taxes, and the sum of the Total Amounts of FTDs for all Tax Data "B" Records which have not been summarized in preceding Checkpoint Totals "C" Records (see Exhibit 13).

(2) The Checkpoint Totals "C" Record must be followed by a Tax Data "B" Record except when the Checkpoint Totals "C" Record is at the end of the file. In that case, it will be followed by an End of File "E" Record.

(3) All Checkpoint Totals "C" Records must be fixed length. All money amount fields will contain dollars and cents. The Checkpoint Totals "C" Records cannot be followed by a tape mark.

.11 End of File "E" Record. Write this record after the last Checkpoint Totals "C" Record in the file. All money amounts must contain dollar and cents. All End of File "E" Records must be fixed length. This record must be followed only by a tape mark and trailer label. (See Exhibit 14).

SEC. 18. EFFECT ON OTHER DOCUMENTS

This revenue procedure supersede Rev. Proc. 91-57, 1991-2 C.B. 817

SEC. 19. EFFECTIVE DATE

This revenue procedure is effective December 7, 1992.

                              EXHIBIT 1

EXHIBIT 3

 VOL1 Label

EXHIBIT 4

 HDR1 Label