IRS REVISES PROCEDURES FOR MAGNETIC FILING OF NONRESIDENT ALIEN RETURNS.

Rev. Proc. 93-25

CONTENTS

SECTION 1 PURPOSE

This revenue procedure informs those who participate in the Magnetic Media Filing Program for Form 1040NR, U.S. Nonresident Alien Income Tax Return, of their obligations to the Internal Revenue Service, taxpayers, and other participants. This revenue procedure updates Rev. Proc. 92-40, 1992-1 C.B. 865.

SEC. 2. BACKGROUND AND CHANGES

.01 Section 1.6012-5 of the Income Tax Regulations provides that the Commissioner may authorize the use, at the option of a person required to make a return, of a composite return in lieu of any form specified in 26 CFR Part 1 (Income Tax), subject to the 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.

.02 A magnetically filed Form 1040NR is a composite return consisting of data transmitted on magnetic tape or floppy disk (magnetic media) and certain paper documents. The non-magnetic media portion of the return consists of Form 8453-NR, U.S. Nonresident Alien Income Tax Declaration for Magnetic Media Filing, and other paper documents that cannot be transmitted on magnetic media. Form 8453-NR must be received by the Service before any magnetically filed return is complete. A magnetically filed return must contain the same information that a return filed completely on paper contains. See section 7 for procedures for completing Form 8453-NR.

.03 The Magnetic Media Project Office in the Philadelphia Service Center will periodically issue a list of the forms and schedules that can be magnetically transmitted, as well as forms, schedules, and other information that cannot be magnetically filed.

.04 A tax return with a zero balance, balance due, or refund due may be filed on magnetic media.

.05 A tax return cannot be filed on magnetic media after October 15, notwithstanding the fact that the taxpayer has been granted an extension to file. Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return or Form 2688, Application for Additional Extension of Time To File U.S. Individual Income Tax Return, cannot be filed on magnetic media.

.06 An amended tax return cannot be filed on magnetic media. A taxpayer must file an amended tax return on paper in accordance with the instructions for Form 1040X, Amended U.S. Individual Income Tax Return.

.07 Upon request, the Form 1040NR Magnetic Media Project Office (see section 14) will provide technical information (i.e., file specifications, record layouts, and testing procedures) for magnetic media filing.

.08 This revenue procedure reflects changes in the Magnetic Media Filing Program. Significant changes to Rev. Proc. 92-40, which applied to the Magnetic Media Filing Program for the 1992 filing season, are:

(1) the advertising standards have been modified (section 10);

(2) the failure to cooperate with the Service's efforts to monitor Magnetic Media Filers and investigate magnetic media filing abuses may result in a warning letter and/or a suspension letter (section 11.09); and

(3) the obligation of a Magnetic Media Filer to inform the taxpayer of the consequences of filing a return with an address other than the taxpayer's address.

SEC. 3. MAGNETIC MEDIA FILING PARTICIPANTS--DEFINITIONS

.01 After acceptance into the Magnetic Media Filing Program, as described in Section 4, a participant is referred to as a "Magnetic Media Filer."

.02 A Magnetic Media Filer is categorized as follows:

(1) MAGNETIC MEDIA RETURN ORIGINATOR. "A magnetic media return originator" (MMRO) is either (a) "a magnetic media return preparer" who prepares tax returns, including Forms 8453- NR, for taxpayers who intend to have their returns magnetically filed; or (b) a "magnetic media return collector" who accepts completed tax returns, including Forms 8453-NR, from taxpayers who intend to have their returns magnetically filed.

(2) SOFTWARE DEVELOPER. A "software developer" develops software for the purposes of (a) formatting a return according to the Service's magnetic media return specifications; and/or (b) transmitting a magnetic media return directly to the Service. A Software Developer may also sell its software.

(3) TRANSMITTER. A transmitter submits a magnetic media return directly to the Service. The transmitter may also accept a tax return from Magnetic Media Filers and directly submit that tax return to the Service.

.03 The Magnetic Media Filer categories are not mutually exclusive. For example, a MMRO can, at the same time, be considered a Transmitter or Software Developer depending on the function(s) performed.

SEC. 4. ACCEPTANCE IN THE MAGNETIC MEDIA FILING PROGRAM

.01 To be accepted into the Magnetic Media Filing Program, any potential Magnetic Media Filer must:

(1) file a properly completed Form MAR-8980 with the Philadelphia Service Center, unless previously accepted into the Magnetic Media Filing Program;

(2) successfully complete the necessary testing at the Philadelphia Service Center if the potential Magnetic Media Filer intends to transmit a magnetic media return or has developed software for formatting or transmitting magnetic media returns; and

(3) receive a letter of acceptance into the Magnetic Media Filing Program.

.02 Once accepted into the Magnetic Media Filing Program, a Magnetic Media Filer must submit a revised Form MAR-8980 if there is any change to the information previously submitted on that form.

.03 The following reasons may result in a rejected application for participation in the Magnetic Media Filing Program (this list is not all-inclusive):

(1) conviction of any criminal offense under the revenue laws of the United States, or of any offense involving dishonesty or breach of trust;

(2) failure to file timely and accurate tax returns, both business and personal;

(3) failure to pay personal or business tax liabilities;

(4) assessment of penalties;

(5) suspension/disbarment from practice before the Service;

(6) other facts or conduct of a disreputable nature that would reflect adversely on the Magnetic Media Filing Program;

(7) misrepresentation on an application;

(8) suspension or rejection from the Magnetic Media Filing Program in a prior year;

(9) unethical practices in return preparation; or

(10) stockpiling returns (section 5.06) prior to official acceptance into the Magnetic Media Filing Program.

SEC. 5. RESPONSIBILITIES OF A MAGNETIC MEDIA FILER

.01 To ensure that a complete return is accurately and efficiently filed, a Magnetic Media Filer must comply with all publications and notices of the Magnetic Media Project Office. Currently, these publications and notices include:

(1) Procedures for Magnetic Media Filing of U.S. Nonresident Alien Income Tax Returns, Form 1040NR; and

(2) File Specifications and Record Layouts for Magnetic Media Filing of U.S. Nonresident Alien Income Tax Returns, Form 1040NR.

.02 A Magnetic Media Filer must ensure that no other entity uses its Magnetic Tape Filer Identification Number (MTFIN). A MTFIN cannot be transferred by sale, loan, gift, or otherwise to another entity.

.03 A Magnetic Media Filer must maintain a high degree of integrity, compliance, and accuracy.

.04 A Magnetic Media Filer may only accept a return for magnetic media filing directly from a taxpayer or from another Magnetic Media Filer.

.05 If a Magnetic Media Filer charges a fee for the submission of a magnetic media tax return, the fee may not be based on a percentage of the refund amount. A Magnetic Media Filer may not charge a separate fee for Direct Deposit. See section 9 for a discussion of Direct Deposit.

.06 A potential Magnetic Media Filer may not stockpile tax returns for magnetic transmission prior to receiving official acceptance into the program. A Magnetic Media Filer may not stockpile returns at any time. Stockpiling means collecting a tax return from a taxpayer or from another Magnetic Media Filer prior to official acceptance into the program, or waiting more than a few days to submit a tax return after receiving the necessary information.

.07 A previously accepted Magnetic Media Filer must submit a revised Form MAR-8980 to update information when there is any change to:

(1) the Firm name or Doing Business As (DBA) name;

(2) the contact representative's name or telephone number; or

(3) the magnetic media filing functions performed.

.08 A Magnetic Media Filer must ensure that a magnetic media return is filed on or before the due date of the tax return. A magnetic media return is not considered filed until the magnetic media portion of the tax return has been acknowledged as accepted for processing and a signed Form 8453-NR has been received by the Service. However, if the magnetic media portion of a return and a completed and signed Form 8453-NR are submitted on or shortly before the due date and the Magnetic Media Filer complies with section 7.01 of this revenue procedure, the return will be considered timely filed.

.09 If an acknowledgement of a magnetic media return's acceptance for processing has not been received by the Transmitter within 14 days of transmission or if a Transmitter receives an acknowledgement for a return that was not transmitted on the designated transmission, the Transmitter must immediately contact the Form 1040NR Magnetic Media Project Office at the Philadelphia Service Center for further instructions.

.10 A Magnetic Media Filer who functions as a MMRO must:

(1) comply with the procedures for securing Form 8453-NR described in section 7 of this revenue procedure;

(2) furnish the taxpayer with a copy of the signed Form 8453-NR and, in the case of a prepared or corrected return, the non-magnetic portions of the return; and

(3) retain the following material until the end of the calendar year in which the magnetic media return was filed, unless otherwise notified by the Service:

(a) a copy of the signed Form 8453-NR and the non- magnetic portion of the taxpayer's return;

(b) a complete copy of the magnetically transmitted portion of the taxpayer's return (may be retained on computer media) that can be readily and accurately converted into a magnetic media that the service can process; and

(c) the acknowledgement file received from the Service or from a third party transmitter.

.11 A MMRO who is also the paid preparer of a magnetic media return must comply with section 1.6107-1(b) of the regulations. This section of the regulations describes the tax return materials that must be retained and the retention periods for these materials.

.12 If a taxpayer's magnetic media return is acknowledged as rejected by the Service, the MMRO must immediately advise the taxpayer that the taxpayer's return has not been filed. If the taxpayer chooses to have the rejected return resubmitted on magnetic media, and the MMRO successfully works with the Magnetic Media Project Office at the Philadelphia Service Center to correct the problems causing the return to be rejected, the return will be accepted as timely filed. If the Magnetic Media Project Office at the Philadelphia Service Center determines that a magnetic media return cannot be accepted for processing or the taxpayer chooses not to have the rejected return resubmitted on magnetic media, the taxpayer must file a paper return. If the due date of the return has passed, the taxpayer must file a paper return as soon as possible with an explanation of why the return is being filed after the due date. A paper return filed in good faith under any of these circumstances will be accepted as timely filed.

.13 A Magnetic Media Filer who functions as a Transmitter must:

(1) transmit all magnetic media returns within a few days of receipt and forward the acknowledgement files to MMROs within five calendar days after receipt of the acknowledgments from the Service;

(2) match the acknowledgement file to the original transmission file and resubmit any return that was not acknowledged as accepted for processing after necessary corrections are made within seven calendar days of receiving the acknowledgement file;

(3) contact the magnetic media project office at the Philadelphia Service Center for assistance if a return has been rejected after three attempts, or if an acknowledgement is received for a return that was not in the original submission;

(4) ensure the security of all transmitted data;

(5) promptly correct any transmission error that causes a magnetic media return to be rejected; and

(6) retain an acknowledgement file received from the Service until the end of the calendar year in which the Magnetic Media return was filed.

.14 A Transmitter who provides transmission services to another Magnetic Media Filer must, in addition to the items covered in section 5.11, also:

(1) only accept a magnetic media return for transmission to the Service from an accepted Magnetic Media Filer; and

(2) provide each client with the acknowledgement file for the transmitted return within five days after receipt of the acknowledgment from the Service.

.15 A Magnetic Media Filer who functions as a Software Developer must:

(1) promptly correct any software error that causes a magnetic media return to be rejected; and

(2) promptly distribute any software correction made to their software packages to all Magnetic Media Filers utilizing these packages.

.16 In addition to the specific responsibilities described in this section, a Magnetic Media Filer must meet all the requirements of this revenue procedures to keep the privilege of participating in the Magnetic Media Filing program.

SEC. 6. PENALTIES

.01 Penalties for Disclosure or Use of Information.

(1) A Magnetic Media Filer, except a Software Developer, is a tax return preparer under the definition of section 301.7216-1(b) of the Regulations on Procedure and Administration. A Magnetic Media Filer is subject to a criminal penalty for disclosure or use of tax return information, as described in section 301.7216-1(a). In general, that regulation provides that any preparer who discloses or uses any tax return information for a purpose other than preparing, assisting in preparing, or obtaining or providing services in connection with the preparation of a tax return is guilty of a misdemeanor. Section 6713 of the Internal Revenue Code also provides civil penalties that may be assessed against a preparer who makes an unauthorized disclosure or use of tax return information.

(2) Under section 301.7216-2(h) of the regulations, disclosure among accepted Magnetic Media Filers for the purpose of preparing a return is permissible. For example, it is permissible for a MMRO to pass on tax return information to a Transmitter for the purpose of having a magnetic return formatted and transmitted to the Service. However, if the tax return information is disclosed or used in any other way, the Transmitter may be guilty of a misdemeanor as described in paragraph (1) above.

.02 Other Preparer Penalties.

(1) Preparer penalties may be asserted against an individual or firm who meets the definition of an income tax return preparer under section 7701(a)(36) of the Code and section 301.7701-15 of the regulations. Examples of preparer penalties that may be asserted under appropriate circumstances include, but are not limited to, those set forth in sections 6694, 6695, and 6713 of the Code.

(2) Section 301.7701-15(d) of the regulations provides that Magnetic Media Return Collectors, Transmitters, and Software Developers are not income tax return preparers for the purpose of assessing most preparer penalties as long as their services are limited to "typing, reproduction, or other mechanical assistance in the preparation of a return or claim for refund."

(3) If the Magnetic Media Return Collector, Transmitter, or Software Developer alters the return information in a nonsubstantive way, this alteration will be considered to come under the "mechanical assistance" exception described in section 301.7701-15(d)(1) of the regulations. A nonsubstantive change is a correction or change limited to a transposition error, misplaced entry, spelling error, or arithmetic correction that falls within one of the following tolerances:

(a) the Total Tax amount, Total Payments amount, Refund amount, or the Amount You Owe shown on Form 8453-NR differs from the corresponding amount on the magnetic media return by no more than $5;

(b) the Total Income amount shown on Form 8453-NR differs from the corresponding amount on the magnetic media return by no more than $25; or

(c) dropping cents and rounding to whole dollars.

(4) If a Transmitter and Magnetic Media Return Collector alters the return information in a substantive way, rather than having the taxpayer alter the return, the Transmitter or Magnetic Media Return Collector will be considered to be the paid preparer for purposes of section 7701(a)(36) of the Code.

(5) If it can be determined that the role of a Magnetic Media Return Collector or Transmitter, or that the product of a Software Developer, goes beyond mechanical assistance, any of these parties may be held liable for income tax return preparer penalties. Rev. Rul. 85-189, 1985-2 C.B. 341, describes a situation where a Software Developer was determined to be an income tax return preparer and subject to certain preparer penalties.

.03 In addition to the above specified provisions, the Service reserves the right to assert all appropriate preparer, nonpreparer, and disclosure penalties against a Magnetic Media Filer as warranted under the circumstances.

SEC. 7. FORM 8453-NR, U.S. NONRESIDENT ALIEN INCOME TAX DECLARATION FOR MAGNETIC MEDIA FILING

.01 Procedures for Completing Form 8453-NR.

(1) A MMRO prepares the return for magnetic media filing, computes the tax based on the information that the taxpayer provides, and accepts the return for purposes of magnetic media filing, or collects an already prepared tax return for purposes of magnetic media filing.

(2) After the magnetic media return has been prepared and before the return is submitted, the taxpayer must verify the information on the magnetic media return and on Form 8453-NR and sign Form 8453-NR. An easily readable file copy of the prepared return must be provided to the taxpayer at the time of signature.

(3) A Magnetic Media Filer must submit a Form 8453-NR to the Philadelphia Service Center with each magnetically filed return. A single Form 8453-NR (inscribed with the language "See attached Multiple Return Information Listing") may be used for a multiple return filing if the person who signs Form 8453-NR has proper authorization to sign each of the returns included in the multiple return filing. A person who makes a multiple return filing must attach to Form 8453-NR an information page(s) titled "Form 8453-NR for Multiple Returns -- Tax Return Information Listing" at the top of the pages(s). Below the title, the multiple return filer must provide his or her name and address.

The next item on the page(s) must be a list that includes every taxpayer's name control, taxpayer identification number, and the information shown on lines one through five on Form 8453-NR, for each return included in a multiple return filing.

(4) A Magnetic Media Filer must ensure that the Service receives by April 15 all the returns of individuals who were employees and who received wages subject to U.S. income tax withholding. For those individuals who did not receive wages as an employee that were subject to U.S. income tax withholding, the Service must receive the returns by June 15. However, section 2.05 of this revenue procedure provides that a magnetic media return cannot be filed after October 15.

(5) If a Magnetic Media Filer functions as a MMRO, the Magnetic Media Filer must sign the MMRO's Declaration on Form 8453-NR.

(6) If the Magnetic Media Filer is also the paid preparer, the Magnetic Media Filer must check the "Paid Preparer's" box and sign the MMRO Declaration on Form 8453-NR.

.02 Corrections to Form 8453-NR.

(1) If the MMRO makes changes to a magnetic media return after Form 8453-NR has been signed by the taxpayer, but before it is transmitted, the MMRO must have all the necessary parties described above sign a new Form 8453-NR with the corrections if either of the following applies:

(a) the "Total Income" (Form 8453-NR, line 1) differs from the amount on the magnetic media return by more than $25; or

(b) the "Total Tax" (Form 8453-NR, line 2), the "Refund" (Form 8453-NR, line 4), or the "Amount Owed" (Form 8453-NR, line 5), differs from the amount on the magnetic media return by more than $5.

(2) A new Form 8453-NR is not required for a nonsubstantive change. A nonsubstantive change is limited to a correction within the above tolerances for an arithmetic error, transposition error, misplaced entry, or a spelling error. The incorrect nonsubstantive information must be neatly lined through on Form 8453-NR and the correct data entered next to the lined-through entry. Also, enter the initials or the name of the person making the correction.

(3) Dropping cents and rounding to whole dollars does not constitute a substantive change or alteration to the return unless the amount differs by more than the above tolerances. All rounding should be accomplished in accordance with the instructions in the Form 1040-NR tax package.

.03 If the Service determines that a Form 8453-NR is missing, the MMRO must provide the Service with a copy of the signed Form 8453-NR from the MMRO's records.

.04 If a substitute Form 8453-NR is used, it must be approved by the Service prior to use. See Rev. Proc. 92-21, 1992-11 I.R.B. 8, or its successor procedures.

SEC. 8. INFORMATION A MAGNETIC MEDIA FILER MUST PROVIDE TO THE TAXPAYER

.01 The MMRO must furnish the taxpayer with a paper copy of the magnetic media material that was transmitted to the Service. This information can be contained on a replica of an official form or on an unofficial form. However, on an unofficial form, data entries must be referenced to the line numbers on an official form.

.02 The MMRO must also provide the taxpayer with a paper copy of the paper portion of the taxpayer's return.

.03 The MMRO must advise the taxpayer to retain a complete copy of the return and any supporting material.

.04 The MMRO must advise the taxpayer that an amended return, if needed, must be filed as a paper return and mailed to the Philadelphia Service Center.

.05 The MMRO must, upon request, provide the taxpayer with the date the magnetic media portion of the taxpayer's return was acknowledged as accepted for processing by the Service.

.06 If for purposes of filing a return, a taxpayer chooses to use an address other than his or her home address (or other usual mailing address), the Magnetic Media Filer must inform the taxpayer that the address reported on the return will become the taxpayer's "last known address" for all purposes of the Code. This means that all future written communications from the Service to the taxpayer will be sent to the address reported on the return rather than to the taxpayer's home address (or other usual mailing address). In particular, the Service is required by the Code to send the following notices to a taxpayer's "last known address":

(1) formal document request for the production of foreign-based documentation (section 982(c)(1));

(2) notification of disclosure proceedings (section 6110(f)(3)(B));

(3) notice of deficiency (section 6212(b));

(4) notice and demand for tax (section 6303(a));

(5) notice of revocation of certification of release or nonattachment of a lien (section 6325(f)(2)(A));

(6) notice of intention to levy (section 6331(d)(2)(C));

(7) copy of notice of levy with respect to a life insurance or endowment contract (section 6332(b)(1));

(8) notice of seizure and sale (section 6335(a) and (b));

(9) notice of liability in transferee cases (section 6901(g)); and

(10) notice of third-party summons (section 7609(a)(2)).

See Rev. Proc. 90-18, 1990-1 C.B. 491, for additional information about "last known address."

SEC. 9. DIRECT DEPOSIT OF REFUNDS

.01 The Service does not guarantee a specific date that a refund will be directly deposited into the taxpayer's financial institution account. The taxpayer's account must be with a financial institution located in the United States. Because of disclosure laws, the Service cannot provide information to the Magnetic Media Filer about any delay or denial of a Direct Deposit without proper written authorization.

.02 Neither the Service nor the Financial Management Service (FMS) is responsible for the misapplication of a Direct Deposit that is caused by error or negligence on the part of the taxpayer, Magnetic Media Filer, financial institution, or any of their agents.

.03 An MMRO must:

(1) ensure that the taxpayer is aware of all the general information regarding a Direct Deposit;

(2) not charge a separate fee for Direct Deposit;

(3) accept any Direct Deposit election to any eligible financial institution designated by the taxpayer;

(4) ensure that the taxpayer is eligible to choose Direct Deposit;

(5) verify that the taxpayer has entered the Direct Deposit information requested on Part II of Form 8453-NR correctly and that the information entered is the information transmitted on magnetic media; and

(6) caution the taxpayer that once a magnetic media return has been accepted for processing by the Service:

(a) the Direct Deposit election cannot be rescinded;

(b) the Routing Transit Number of the financial institution cannot be changed; and

(c) the taxpayer's account number cannot be changed;

(7) notify the taxpayer if the Direct Deposit request will not be honored by the Service;

(8) inform the taxpayer if the magnetic media portion of a return was acknowledged as accepted for processing by the Service, but the Direct Deposit request was not honored during initial processing; and

(9) not mislead the taxpayer about why a Direct Deposit was denied.

SEC. 10. ADVERTISING STANDARDS FOR A MAGNETIC MEDIA FILER AND A FINANCIAL INSTITUTION

.01 A Magnetic Media Filer shall comply with the advertising and solicitation provisions of 31 C.F.R. Part 10 (Treasury Department Circular No. 230). This circular prohibits the use or participation in the use of any form of public communication containing a false, fraudulent, misleading, deceptive, unduly influencing, coercive, or unfair statement or claim. In addition, advertising must not imply a special relationship with the Service, FMS, or the Treasury Department. Claims for faster refunds by virtue of magnetic media filing must be consistent with the language in official Service publications.

.02 The use of the Service's name, "Internal Revenue Service," or "IRS" within a firm's name may result in immediate suspension from the Magnetic Media Filing Program.

.03 The use of improper or misleading advertising in relation to the Magnetic Media Filing Program (including the time frames for refunds) is grounds for suspension or rejection from the Magnetic Media Filing Program.

.04 Use of Direct Deposit name and logo.

(1) The name "Direct Deposit" will be used with initial capital letters or all capital letters.

(2) The logo/graphic for Direct Deposit will be used whenever feasible in advertising copy.

(3) The color or size of the Direct Deposit logo/graphic may be changed when used in advertising pieces.

.05 Advertising materials shall not carry the FMS or Treasury Seals.

.06 Advertising for a cooperative electronic return project (public and/or private sector) must clearly state the names of all cooperating parties.

.07 A Magnetic Media Filer shall keep a copy of all media communications until the end of the calendar year in which the communications were made.

.08 Acceptance to participate in the Magnetic Media Filing Program does not imply endorsement by the Service or FMS of the software or quality of services provided.

SEC. 11. MONITORING AND SUSPENSION OF A MAGNETIC MEDIA FILER

.01 The Service will monitor a Magnetic Media Filer for conformity with this revenue procedure. The Service will issue a warning letter that describes specific corrective action for deviations from this revenue procedure.

.02 The Service will monitor the timely receipt of Forms 8453-NR, as well as monitoring their overall legibility.

.03 The Service will monitor the quality of the Magnetic Media Filer's submissions throughout the filing season. The Service will also monitor magnetic media returns and tabulate rejections, errors, and other defects. If quality deteriorates, the Magnetic Media Filer will receive a warning from the Service.

.04 The Service will monitor complaints about a Magnetic Media Filer and issue a warning or suspension letter as appropriate.

.05 The Service reserves the right to rescind the magnetic media filing privilege of any Magnetic Media Filer who violates any provision of this revenue procedure or who does not consistently submit accurate returns. When suspended, the Magnetic Media Filer may be counseled concerning the requirements for reacceptance to the Magnetic Media Filing Program. The following conditions may lead to a warning letter or suspension from the Magnetic Media Filing Program (this list is not all- inclusive):

(1) the reasons listed in section 4.03;

(2) deterioration in the format of individual submissions;

(3) unacceptable cumulative error rate;

(4) untimely received, illegible, missing, or unapproved substitute Forms 8453-NR;

(5) stockpiling returns while participating in the Magnetic Media Filing Program;

(6) a transmitter not providing preparer clients with acknowledgement files within five days after receipt from the Service;

(7) significant complaints about a Magnetic Media Filer;

(8) failure on the part of Magnetic Media Filer to ensure that no other entity uses its MTFIN; or

(9) failure on the part of a Magnetic Media Filer to cooperate with the Service's efforts to monitor Magnetic Media Filers and investigate magnetic media filing abuse.

.06 The Service will list in the Internal Revenue Bulletin the name of any entity that is suspended from the Magnetic Media Filing Program and the effective date of that suspension.

.07 A suspension from participation in the Magnetic Media Filing Program or a revocation of the privilege to participate in the Magnetic Media Filing Program is effective as of the date of the letter informing the Magnetic Media Filer of the suspension or revocation.

SEC. 12. ADMINISTRATIVE REVIEW PROCESS FOR DENIAL OF PARTICIPATION IN, OR SUSPENSION FROM, THE MAGNETIC MEDIA FILING PROGRAM

.01 An applicant who has been denied participation in the Magnetic Media Filing Program, or a participant who has been suspended from the program, has the right to administrative review.

.02 An appeal for administrative review must be received by the Director of Practice, Internal Revenue Service, within 30 days from the date of denial or the date of suspension. A copy of the denial letter and a copy of the firm's Form MAR-8980 must be attached. Requests for Administrative Review should be faxed to (202) 927-2301 or mailed to:

                   Director of Practice HR:DP

Rev. Proc. 92-40, 1992-1 C.B. 865 is superseded.

SEC. 14. EFFECTIVE DATE

This revenue procedure is effective May 14, 1993.

SEC. 15. MAGNETIC MEDIA PROJECT OFFICE CONTACT

All questions regarding this revenue procedure should be directed to:

                    Internal Revenue Service