IRS PUBLISHES REQUIREMENTS FOR REPRODUCING PAPER SUBSTITUTES FOR FORMS 1096, 1098, 1099, AND W-2G.

Rev. Proc. 94-35

CONTENTS

PART A. GENERAL

SECTION 1. PURPOSE

.01 The purpose of this revenue procedure is to set forth the requirements for:

1. Using official Internal Revenue Service (IRS) forms to file information returns with IRS,

2. preparing acceptable substitutes of the official IRS forms to file information returns, and

3. using such official or acceptable substitute forms to furnish information to a recipient. This revenue procedure contains specifications for the following information returns:

 (a) Form 1098             Mortgage Interest Statement;

.03 Filers who make payments to certain persons (payees) (or in some cases receive payments) during a calendar year are required by the Internal Revenue Code (IRC) to file information returns with the IRS reflecting these payments. Further, as discussed below, these filers must provide this information to their payees.

.04 In general the manner in which a filer must file an information return is governed by section 6011 of the IRC. Typically, a filer must file information returns on magnetic media or on paper. Under section 6011 of the IRC a filer who is required to file 250 or more information returns (of any one type) during a calendar year must file those returns on magnetic media. Filers required to file less than 250 returns during a calendar year may, but are not required to, file such information returns on magnetic media (small volume filers). The IRS explains these legal requirements for filing information returns (and providing a copy to a payee) in the annual publication of Instructions to Filers of Forms 1099, 1098, 5498, and W-2G (Package 1099).

.05 Copies of the official forms for the reporting year and the instruction booklet may be obtained by calling our toll-free number 1-800-TAX-FORM (1-800-829-3676).

.06 The IRS prints and provides the forms on which various payments must be reported. Alternatively, filers may prepare substitute copies of these IRS forms and use such forms to report payments to the IRS.

.07 IRS has instituted a centralized call site, located at the Martinsburg Computing Center (MCC), to answer questions related to information returns. The call site phone number is 304-263-8700. The number for Telecommunications Device for the Deaf (TDD) is 304-267- 3367. These are not toll-free numbers.

.08 IRS has established a personal computer based Information Reporting Bulletin Board System (IRP-BBS) at MCC. This system provides information about forms and publications including this revenue procedure, news of the latest changes, answers to questions, access to shareware, and other features. The IRP-BBS is available for public use and can be reached by dialing 304-263-2749. The IRP-BBS is compatible with most modems. For more information concerning this system, call MCC at 304-263-870O (not a toll-free number) Monday through Friday 8:30 A.M. to 4:30 P.M. eastern time.

SECTION. 2. NATURE OF CHANGES

.01 The text and exhibits were updated for tax year 1994.

.02 On Form 1099-R the state and local boxes (10-15) have been divided in half so that two states and two localities can be reported on one form. The titles of boxes 10, 11, and 13 have been reworded to accommodate the split. See Exhibit K.

.03 A new Form 1099-C, Cancellation of Debt has been added. See Exhibit D.

.04 Box 5, Discharge of indebtedness, on Form 1099-G was eliminated. See Exhibit F.

.05 The instructions for the payer that appeared on the back of Copy A were moved to the back of Copy C, the copy for the payer to retain. There they can be printed in regular black ink rather than the 70% screened ink required on the back of Copy A to prevent bleeding. This change is applicable to all forms in this revenue procedure.

.06 Proposed new requirements for substitute information returns. See PART A SEC. 3.03 (1), (2), and (3).

.07 If the CORRECTED box is marked on a statement to a recipient, a date may be, but is not required to be, entered beside the box. See PART A SEC. 7.01.

.08 The statement mailing requirements, formerly in PART A SEC. 7.01 were removed. Please refer to the Instructions for Forms 1099, 1098, 5498, and W-2G (Package 1099) for information about these requirements.

SECTION. 3. REQUIREMENTS FOR ACCEPTABLE SUBSTITUTE FORMS 1096, 1098, 1099, 5498, and W-2G

.01 Paper substitutes for Form 1096 and Copy A of Forms 1098, 1099, 5498, and W-2G that totally conform to the specifications contained in this revenue procedure may be privately printed and filed as returns with the IRS. The reference to the Department of the Treasury -- Internal Revenue Service should be included on all such forms. The Catalog Number (Cat. No.) shown on the 1994 Forms 1096, 1098, 1099, 5498, and W-2G is used for IRS distribution purposes and should not be printed on any substitute forms.

If you are uncertain of any specification set forth herein and want that specification clarified, you may submit a letter citing the specification in question, giving your understanding and interpretation of the specification, and enclosing an example of the form (if appropriate) to:

     Internal Revenue Service

.02 Copy B (Form 1098 -- For Payer, Form 1099-A -- For Borrower, Form 1099-C -- For Debtor, Form 1099-S -- For Transferor, other Forms 1099 -- For Recipient, Form 5498 -- For Participant, and Forms W-2G and 1099-R -- To Be Attached To the Federal Tax Return), and Copy C -- (Form 1099-R For Recipient's Records and Form W-2G For Winner's Records), must contain the information specified in PART A Section 7 in order to constitute a "statement" or "official form" under the applicable provisions of the Internal Revenue Code. The format of this information is at the discretion of the filer with the exception of the composite Form 1099 statement specified in PART A Sections 7.03 and 7.05.

.03 Forms 1096, 1098, 1099, 5498, and W-2G are subject to annual review and possible change. The IRS is considering new requirements for private printing of Forms 1096, 1098, 1099, 5498, and W-2G. The following are PROPOSED new requirements for tax year 1995:

(1) All substitutes must contain the tax year (e.g., 1995), form number (e.g., Form 1099-INT), and form name (e.g., Interest Income) prominently displayed together in one area of the statement. For example, the tax year, form number, and form name could be shown in the upper right part of the statement.

(2) The practice of furnishing a sheet that contains instructions to the recipient for multiple forms and multiple OMB numbers would no longer be allowed. For example, if you are furnishing a Form 1099-INT statement to a recipient, you must furnish only the instructions and OMB number for Form 1099-INT, not a sheet containing all OMB numbers and instructions for Form 1099-INT, Form 1099-OID, Form 1098, etc. However, if you are using a composite statement to furnish both Forms 1099-INT and 1099-DIV information, for example, you may furnish the instructions for those two forms on one sheet of paper.

(3) The quality of carbon used to produce statements to recipients must meet new standards as follows:

a.) All copies must be CLEARLY LEGIBLE;

b.) all copies must have the capability to be photocopied;

c.) fading must not be of such a degree as to preclude legibility and the ability to photocopy.

In general, black chemical transfer inks are preferred; other colors are permitted only if the above standards are met. "Spot carbons" are NOT permitted.

The IRS would be performing compliance checks with selected providers to determine their conformance with the substitute statement requirements. However this would be done in the spirit of cooperation, and no penalties would be assessed at that time. Filers are cautioned, therefore, against overstocking supplies of privately printed substitutes. THE SPECIFICATIONS CONTAINED IN THIS REVENUE PROCEDURE APPLY TO 1994 FORMS ONLY.

.04 Proposed substitutes for Copy A that do not conform to the specifications in this revenue procedure are not acceptable. Further, if you file such forms with IRS, you may be subject to a penalty for failure to file an information return under section 6721 of the Internal Revenue Code (IRC). Generally, the penalty is $50 for each failure to file a form (up to $250,000) that the IRS can not accept as a return because it does not meet the provisions in this revenue procedure. No IRS office is authorized to allow deviations from this revenue procedure.

SECTION. 4. DEFINITIONS

.01 The term "form recipient" means the person to whom you are required by law to furnish a copy of the official form or information statement: i.e., for Form 1098, the recipient is the "payer/borrower"; Form 1099-A, the "borrower"; Form 1099-C, the "debtor"; Form 1099-S, the "transferor"; other Forms 1099, the payment recipient; Form 5498, the "participant"; and Form W-2G, the "winner".

.02 The term "filer" means the person or organization required by law to file a form listed in PART A Section 1.01 with the IRS. Thus, a filer may be a payer, a creditor, a recipient of mortgage interest payments, a broker, a barter exchange, a person reporting real estate transactions, a trustee or issuer of an individual retirement arrangement (including an IRA or SEP), or a lender who acquires an interest in secured property or who has reason to know that the property has been abandoned.

.03 A corrected (or amended) return is one that corrects information previously reported to IRS. (A voided return will not correct previously reported information.)

.04 The term "substitute form" means a paper substitute of Copy A of an official form listed in PART A Section 1.01 that totally conforms to the provisions in this revenue procedure.

.05 The term "substitute form recipient statement" means a paper statement of the information reported on a form listed in PART A Section 1.01 that must be furnished to a person (form recipient), as so defined under the applicable provisions of the Internal Revenue Code and the applicable regulations.

.06 A composite substitute statement is one in which two or more required statements (e.g. Forms 1099-INT and 1099-DIV) are furnished to the recipient on one document. However, each statement must be separately designated and must contain all the requisite Form 1099 information except as provided in Part A Section 7. A composite statement CANNOT be filed with the IRS. See PART A Section 7.02 and 7.04 for more information on composite statements.

SECTION. 5. INSTRUCTIONS FOR PREPARING PAPER FORMS THAT WILL BE FILED WITH THE IRS (Copy A)

.01 The form recipient's name, street address, city, state, and ZIP code information should be TYPED OR MACHINE PRINTED IN BLACK INK on separate lines. Carbon copies and photocopies are not acceptable. The city, state, and ZIP code must be on the same line.

.02 The name of the appropriate form recipient must be shown on the first or second name line in the area on the form provided for the form recipient's name and address. No descriptive information or other name should precede the form recipient's name. Only ONE form recipient's name should appear on the first name line of the form. If the names of multiple recipients must be set forth on the form, on the first name line insert the recipient name that corresponds to the taxpayer identification number (TIN) used for information reporting purposes. Place the other form recipients name, on the succeeding name line (up to 2 name lines are allowable). Because certain states require that trust accounts be provided in a different format, generally filers should provide information returns reflecting payments to trust accounts with (1) the trust's employer identification number (EIN) in the recipient's TIN area, (2) the trust's name on the recipient's first name line, and (3) the name of the trustee on the recipient's second name line.

.03 You should use the ACCOUNT NUMBER box for an account number designation. This number must not appear anywhere else on the form, and this box may not be used for any other item. Showing the account number is optional. However, it may be to your benefit to include the recipient's account number or designation on paper documents if your system of records uses the account number or designation in conjunction with, or rather than, the name, social security number, or employer identification number for identification purposes. If you furnish the account number, the IRS will include it in future notices to you about backup withholding. If you use window envelopes and reduced rate mail to mail statements to recipients, be sure the account number does not appear in the window. Otherwise the Postal Service may not accept them for mailing.

.04 Filers should TYPE OR MACHINE PRINT data entries, insert data in the MIDDLE OF BLOCKS well separated from other printing and guidelines, and take other measures to guarantee a clear, dark black, sharp image.

.05 Machine printed forms should be printed using a 6 lines/inch option.

.06 Machine printed forms should be printed in 10 pitch pica (i.e., 10 print positions per inch) or 12 pitch elite (i.e., 12 print positions per inch). Proportional spaced fonts are unacceptable.

.07 To correct returns, enter an "X" within the checkbox located at the top of the form making the correction, to the left of the word "CORRECTED." DO NOT type the words CORRECTED RETURN on the Form 1096, 1098, 1099, 5498, or W-2G. See "Corrected and Void Returns" located in the 1994 "Instructions for Forms 1099, 1098, 5498, and W- 2G" (Package 1099).

.08 If you make an error while typing or printing a Form 1098, 1099, or 5498, enter an "X" in the "VOID" box at the top of the form. An entry in the "VOID" box will not correct previously filed information returns.

.09 Use only computer print or a typewriter. DO NOT use a felt tip marker. The machine used to "read" paper forms generally cannot "read" this ink type.

.10 Substitute forms prepared in continuous or strip form must be burst and stripped to conform to the size specified for a single sheet before they are filed with IRS. The size specified DOES NOT INCLUDE PINFEED HOLES. Pinfeed holes MUST NOT be present on forms filed with the IRS.

.11 Use decimal points to indicate dollars and cents. DO NOT use dollar signs ($), ampersands (&), asterisks (*), commas (,), or other special characters in the numbered money boxes. Example: 200.00 is acceptable.

.12 DO NOT FOLD Forms 1096, 1098, 1099, or 5498 being mailed to IRS. Mail these forms flat in an appropriately sized envelope or box. Folded documents cannot be readily moved through the scanner transport used in IRS processing.

.13 DO NOT STAPLE Forms 1096 to the returns being transmitted. Staple boles in the vicinity of the return code number reduce the IRS's ability to machine scan the type of documents.

.14 DO NOT type other information on Copy A. DO NOT cut or separate the individual forms on the sheet of forms of Copy A (except Forms W-2G).

.15 MAIL completed paper forms to the IRS service center specified on the back of Form 1096 and in the 1994 Instructions for Forms 1099, 1098, 5498, and W-2G (Package 1099). CAUTION: SEE NEW "WHERE TO FILE" ADDRESSES, for tax year 1994. Specific information needed to complete the forms in this revenue procedure is given in those instructions. A chart is included in those instructions giving a quick guide to which form must be filed to report a particular payment.

SECTION. 6. MAGNETIC MEDIA AND ELECTRONIC FILING

.01 All forms listed in Section 1.01 (except Form 1096) may be filed magnetically or electronically. The IRS encourages all filers including nominees (hereafter collectively referred to as filers) to file information returns on magnetic media or electronically instead of on paper forms.

.02 Any person who is required to file 250 or more (of any one type of form) information returns for one calendar year MUST file on magnetic media unless an undue hardship waiver is requested and received. To request a one year waiver of the magnetic media filing requirements, for the current tax year only, submit Form 8508, Request for Waiver From Filing Information Returns on Magnetic Media. See Publication 1220 Part A, Sec. 5, for more information. Specifications for filing information returns on magnetic media are contained in Publication 1220, "Specifications for Filing Forms 1098, 1099, 5498, and W-2G Magnetically or Electronically." Copies of this publication may be obtained by calling 1-800-TAX-FORM (1-800-829- 3676). Payers who do not comply with the magnetic media filing requirements and who are not granted a waiver may be subject to certain penalties. NOTE: Filing electronically will satisfy the magnetic media filing requirements.

SECTION. 7. SUBSTITUTE STATEMENTS TO FORM RECIPIENTS AND FORM RECIPIENT COPIES

(If you are not using the official IRS form to furnish statements to recipients) A substitute statement must comply with the rules in this section. In general see Notice 87-17, 1987-1 C.B. 454 and Notice 87-70, 1987-2 C.B. 380 on the manner in which certain statements must be provided to payers.

.01 SUBSTITUTE STATEMENTS TO RECIPIENTS -- Forms 1099-INT, DIV, OID, and PATR ONLY. -- The requirement to furnish form recipients with an official Form 1099-INT, DIV, OID, or PATR may be met by furnishing Copy B of the official form or by furnishing a substitute Form 1099 (form recipient statement) if it contains the same language as that of the official IRS form (such as aggregate amounts paid to the form recipient, any Federal income tax withheld under section 3406 of the IRC, the name, address, and TIN of the person making the return, and any other information required by the official form). Generally, information not required by the official form should not be included on the form. However, applicable state tax withholding information may be included. You may enter a total of the individual accounts listed on the form only if they have been paid by the same payer. For example, if you are listing interest paid on several accounts in one financial institution on FORM 1099-INT, you may also enter the total interest amount. You may also enter a date next to the corrected box if that box is checked.

A mutual fund complex may separately state on one document (e.g., one piece of paper) the dividend income earned by a recipient from each fund as required by Form 1099-DIV. Each fund and the earnings from each must be separately stated. The form must contain an instruction to the recipient that each fund name, not the name of the mutual fund complex, must be reported on the recipient's tax return. The form cannot contain an aggregate total of all funds.

The form recipient statement, e.g., Copy B of a substitute form for 1099-INT, 1099-DIV, 1099-OID, and 1099-PATR, must contain the information listed below:

(1) Box captions and numbers that are applicable must be clearly identified, using the same wording and numbering as on the official form. However on FORM 1099-INT, if box 3 is not on your substitute form, you may drop "not included in box 3" from the box 1 caption.

(2) The form recipient statement must contain all applicable form recipient instructions provided on the front and back of the official IRS form. Those instructions may be provided on a separate sheet of paper.

(3) The form recipient statement must contain the following statement in bold and conspicuous type, "This is important tax information and is being furnished to the Internal Revenue Service. If you are required to file a return, a negligence penalty or other sanction may be imposed on you if this income is taxable and the IRS determines that it has not been reported."

(4) The caption "Federal income tax withheld" must be in bold face type on the form recipient statement.

(5) The form recipient statement must contain the Office of Management and Budget (OMB) number as shown on the official IRS form. See Part D, Section 2.

(6) The form recipient statement must show the title and number of the official IRS Form 1099 for which it substitutes (such as Form 1099-INT, Interest Income), and each copy must be appropriately labeled (such as Copy B, For Recipient) (see PART D Section 1.02 for applicable labels of forms). The year for which the payment is reported must be shown in a prominent location. IRS would prefer the words "Substitute for" or "In lieu of" not appear on the form recipient statement.

(7) If the form recipient statement contains all the information listed in (1) through (6) above, layout and format of the form is at the discretion of the filer. However, IRS encourages the use of statements with boxes so that the statement has the appearance of a form and can be easily distinguished from other nontax statements. IRS is moving toward uniformity of all tax forms to reduce taxpayer confusion on reporting tax information.

(8) With respect to mutual funds furnishing a statement as a single filer, each fund and the earnings from each must be separately stated. The form must contain an instruction to the recipient that each fund name, not the name of the mutual fund complex, is to be reported on the shareholder's tax return. The form cannot contain an aggregate total of all funds.

.02 COMPOSITE SUBSTITUTE STATEMENTS -- FORMS 1099-INT, DIV, OID, AND PATR ONLY. -- A composite form recipient statement is permitted for reportable payments of interest, dividends, original issue discount, and/or patronage dividends (FORMS 1099-INT, DIV, OID OR PATR) when one payer is reporting more than one of these payments during a calendar year to the same form recipient. Generally, do not include any other Form 1099 information (e.g., 1098, 1099-A), on a composite statement with the forms listed above. EXCEPTION: A filer may include Form 1099-B information on a composite form with the forms listed above. Although the composite form recipient statement may be on one sheet, the format of the composite form recipient statement must satisfy the following requirements in addition to the requirements listed in Section 7.01 above.

(1) All information pertaining to a particular type of payment must be located and blocked together on the form and must be separate from any information covering other types of payments included on the form. For example, if you are reporting interest and dividends, the FORM 1099-INT information must be presented separately from the FORM 1099-DIV information.

(2) The titles and numbers of the official IRS forms for which the composite form recipient statement substitutes must be shown at the beginning of each appropriate block of information.

(3) Any information required by the official IRS forms that would otherwise be repeated in each information block is only required to be listed once in the first information block on the composite form. For example, there is no requirement to report the name of the filer in each information block. This rule does not apply to any money amounts, e.g., Federal income tax withheld, or to any other information that applies to money amounts.

(4) A composite statement shall be considered an acceptable substitute of a required statement only if the type of payment and the recipient's tax obligation with respect to the payment are no less clear than if such statement were furnished separately on an official form.

.03 SUBSTITUTE STATEMENTS TO RECIPIENTS -- FORMS 1098, 1099-A, 1099-B, 1099-C, 1099-G, 1099-MISC, 1099-R, 1099-S, 5498, W-2G, AND CERTAIN FORMS 1099-INT AND 1099-DIV. Statements to form recipients of payments reportable on FORMS 1098, 1099-A, 1099-B, 1099-C, 1099-G, 1099-MISC, 1099-R, 1099-S, 5498, 1099-DIV ONLY FOR SECTION 404(k) DIVIDENDS REPORTABLE UNDER SECTION 6047, AND 1099-INT ONLY FOR PAYMENTS OF $600.00 OR MORE MADE IN THE COURSE OF A TRADE OR BUSINESS REPORTABLE UNDER SECTION 6041 can be, but are not required to be, copies of the official forms. If you do not use the official form as the form recipient statement, the substitute form recipient statement must meet the following requirements:

(1) The form number and title must be the same as the official form. The filer and form recipient identifying information required on the official IRS form must be included.

(2) All applicable money amounts and information, including box numbers, required to be reported to the form recipient must be titled on the form recipient statement in substantially the same manner as those on the official IRS form. The caption "Federal income tax withheld" must be in bold face type on the form recipient statement. EXCEPTION: If you are reporting a payment as "Other Income" in box 3, FORM 1099-MISC, you may substitute appropriate explanatory language for the box title. For example, for payments of accrued wages and leave to a beneficiary of a deceased employee (required by Rev. Rul. 86-109 to be reported on FORM 1099-MISC), you might change the title of box 3 to "Beneficiary payments" or something similar.

(3) Appropriate instructions to the form recipient, similar to those on the official IRS form, must be provided to aid in the proper reporting of the items on the form recipient's income tax return. For payments reported on FORM 1099-B, the requirement to include instructions that are substantially similar to those on the official IRS form may be satisfied by providing form recipients with a single set of instructions with respect to all statements required to be furnished in a calendar year. NOTE: If Federal income tax withheld is shown on FORM 1099-R, Copy B (to be attached to the tax return) and Copy C (for taxpayer's records) MUST be furnished to the recipient. If Federal income tax withheld is not shown on FORM 1099-R, only Copy C is required to be furnished, but the instructions similar to those contained on the back of the official Copy B and Copy C must be furnished to the recipient. For convenience, you may choose to provide both Copies B and C to the recipient.

(4) A mutual fund complex may separately state on one document (e.g. one piece of paper) the Form 1099-B information for a recipient from each fund as required by Form 1099-B. The gross proceeds, from each transaction, etc., within a fund must be separately stated. The form must contain an instruction to the recipient that each fund name, not the name of the mutual fund complex, must be reported on the recipient's tax return. The form cannot contain an aggregate total of all funds.

(5) For FORM 1099-S, Proceeds From Real Estate Transactions, you may use a Uniform Settlement Statement under the Real Estate Settlement Procedures Act of 1974 (RESPA), as the written statement to the transferor if it is conformed by including on the statement the legend described in (7)(e) and by designating which information on the Uniform Settlement Statement is being reported to IRS on FORM 1099-S.

(6) Form recipient statements must contain the following legends:

(a) FORM 1098 -- (i) "The information in boxes 1, 2 and 3 is important tax information and is being furnished to the Internal Revenue Service. If you are required to file a return, a negligence penalty or other sanction may be imposed on you if the IRS determines that an underpayment of tax results because you overstated a deduction for this mortgage interest or for these points or because you did not report this refund of interest on your return." (ii) "The amount shown may not be fully deductible by you on your Federal income tax return. Limitations based on the cost and value of the secured property may apply. In addition, you may only deduct an amount of mortgage interest to the extent it was incurred by you, actually paid by you, and not reimbursed by another person."

(b) FORM 1099-A AND 1099-C -- "This is important tax information and is being furnished to the Internal Revenue Service. If you are required to file a return, a negligence penalty or other sanction may be imposed on you if taxable income results from this transaction and the IRS determines that it has not been reported."

(c) 1099-B, 1099-DIV, 1099-G, 1099-INT, 1099-MISC, AND W-2G (Copy C) -- "This is important tax information and is being furnished to the Internal Revenue Service. If you are required to file a return, a negligence penalty or other sanction may be imposed on you if this income is taxable and the IRS determines that it has not been reported." Copy B of Form W2G must state "This information is being furnished to the Internal Revenue Service. Report this income on your Federal tax return. If this form shows Federal income tax withheld in box 2, attach this copy to your return."

(d) FORM 1099-R -- "Report this income on your Federal tax return. If this form shows Federal income tax withheld in box 4, attach this copy to your return. This information is being furnished to the Internal Revenue Service."

(e) FORM 1099-S -- "This is important tax information and is being furnished to Internal Revenue Service. If you are required to file a return, a negligence penalty or other sanctions may be imposed on you if this item is required to be reported and the IRS determines that it has not been reported."

(f) FORM 5498 -- "The information in boxes 1, 2, 3, and 4 is being furnished to the Internal Revenue Service." NOTE: If the trustee does not issue FORM 5498 to a participant because no contributions were made to an IRA for the year, a year-end statement issued to the participant reporting the fair market value of the account must contain a similar legend designating which information is being furnished to IRS.

.04 COMPOSITE SUBSTITUTE STATEMENT -- FORMS SPECIFIED IN 7.03 ONLY. -- A composite form recipient statement for forms specified in 7.03 is permitted when one filer is reporting more than one of the related payments during a calendar year to the same form recipient. A composite statement is not allowable for a combination of forms listed in 7.01 above and forms listed in 7.03 except that a filer may report FORM 1099-B information on a composite form with the forms as described in 7.02 above. Although the composite form recipient statement may be on one sheet, the format of the composite form recipient statement must satisfy the requirements listed in items (1), (2), (3) and (4) of 7.02 above in addition to the requirements specified in 7.03. Further, a composite statement shall be considered an acceptable substitute of a required statement only if the type of payment and the recipient's tax obligation with respect to the payment are no less clear than if such statements were furnished separately. A composite statement of FORMS 1098 AND 1099-INT (for interest reportable under section 6049) IS NOT ALLOWABLE.

PART B -- SPECIFICATIONS FOR SUBSTITUTE FORMS TO BE FILED WITH IRS (EXCEPT FORM W-2G)

SECTION 1. GENERAL

.01 The following specifications prescribe the format requirements for FORMS 1096 and Copy A of FORMS 1098, 1099, AND 5498.

.02 The form identifying number (e.g., 9191 for FORM 1099-DIV) must be printed in non-reflective black carbon-based ink in print positions 15 through 19 using an OCR A font. The checkboxes located to the right of the form identifying number must be 10-point boxes, the void checkbox is in print position 25 and the corrected checkbox in position 33. These measurements are from the left edge of the paper, not including the perforated strip.

SECTION. 2. SPECIFICATIONS FOR FORMS 1096 AND COPY A OF FORMS 1098, 1099 AND 5498

.01 The substitute form must be an exact replica of the official IRS reproduction proof with respect to layout and contents. "Spot carbons" are NOT PERMITTED for Copy A. Use of chemical transfer paper for Copy A is acceptable. The Government Printing Office (GPO) symbol must be deleted. Specifications for Copy A are provided in Exhibits A through N. Specifications for Form 1096 are provided in Exhibit O.

.02 Color and quality of paper for Copy A (cut sheets and continuous pinfeed forms) as specified by JCP Code 0-25, dated November 29, 1978, must be white 100% bleached chemical wood, optical character recognition (OCR) bond produced in accordance with the following specifications:

NOTE: Reclaimed fiber in any percentage is permitted provided the requirements of this standard are met.

 (1)  Acidity: Ph value, average, not less than             4.5

OCR Specifications

The contractor must have or initiate a quality control program to assure OCR ink density. In addition, the contractor must have access to either a MacBeth PCM-II tester or a Kidder 082A tester to evaluate the ink at regular intervals throughout a shift.

Paper and Ink

Readings will be made when printed on approved 20 lb. white OCR bond with a reflectance of not less than 80%. Black ink used must not have a reflectance greater than 15%. These readings are based on requirements of the "REI Input 80 Model C1 & D" Optical Scanner using Flint Ink (formerly known as Sinclair -- Valentine J-6983 red ink) or equal.

MacBeth PCM II Tester

The tested Print Contrast Signal (PCS) values when using the MacBeth PCM-II tester on the "C" scale must range from .01 minimum to .06 maxmium.

Kidder 082A Tester

The tested Print Contrast Signal (PCS) values when using the Kidder 082A tester on the Infra Red (IR) scale must range from .12 minimum to .21 maximum. White calibration disc must be 100%, sensitivity must be set at one (1).

Alternative Tester

If an alternative tester is used it must be approved by the Government so that tested (PCS) values can be established with this equipment. Approval may be obtained by writing to the following address:

     Commissioner of Internal Revenue

.04 Typography -- Type must be substantially identical in size and shape with corresponding type on the official form. All rules are either 1/2-point or 3/4-point. Rules must be identical to that on the official IRS form. NOTE: The form identifying number must be nonreflective carbon-based black ink in OCR A Font.

.05 Dimension -- Three Forms 1098, 1099, or 5498 (Copy A) are contained on a single page, except Form 1099-R which contains two documents per page, which is 8 inches wide (exclusive of any snap- stubs and/or pinfeed holes) by 11 inches deep. There is a .33 inch top margin from the top of the corrected box, and there is a .25 inch right margin. There is a 1/32" (0.0313") tolerance for the right margin. These measurements are constant for all Forms 1098, 1099 and 5498. The measurements will be shown only once in the exhibit section of this publication, on the Form 1098. Exceptions to these measurements will be shown on the remainder of exhibits. If the right and top margins are properly aligned, the left margin for all forms will be correct. All margins must be free of all printing. See Exhibits A through O in this publication for the correct form measurements.

.06 The depth of the individual trim size of each form on a page must be (3-2/3 inches except 5-1/2 inches for Form 1099-R) the same as that of the official form.

.07 The words "For Paperwork Reduction Act Notice and instructions for completing this form, see Instructions for Forms 1099, 1098, 5498, and W-2G" must be printed on Copy A (and Copy C).

.08 The OMB Number MUST be printed on Copies A and Form 1096 in the same location as that on the official form.

.09 PRIVATELY PRINTED CONTINUOUS SUBSTITUTE FORMS (COPY A) MUST BE PERFORATED AT EACH 11" (3 PER PAGE, OR 2 PER PAGE FOR 1099-R) PAGE DEPTH. NO PERFORATIONS ARE ALLOWED BETWEEN THE 3-2/3" FORMS (OR 5- 1/2" FOR FORM 1099-R) ON A SINGLE COPY PAGE OF COPY A.

.10 The words "DO NOT CUT OR SEPARATE FORMS ON THIS PAGE" must be printed in red dropout ink (as required by form specifications) between the three, or two for Forms 1099-R. NOTE: Perforations are required between all the other individual copies (Copies B and C, and Copies 1 and 2 for Form 1099-R and Form 1099-MISC, and Copy D for Form 1099-R) included in the set.

.11 Chemical transfer paper is permitted for Copy A only if the following standards are met:

(1) Only chemically backed paper is acceptable for Copy A.

(2) Carbon coated forms are not permitted. Front and back chemically treated paper cannot be processed properly by machine.

(3) Chemically transferred images must be black in color.

.12 Hot wax spot carbons are NOT permitted for Copy A. Interleaved carbon should be black and must be of good quality to assure legibility of information on all copies to preclude smudging. All copies must be CLEARLY LEGIBLE. Fading must not be of such a degree as to preclude legibility.

.13 Printer's symbol -- The GPO symbol must not be printed on substitute Copy A. Instead, the employer identification number (EIN) of the forms printer must be entered in the bottom margin on the face of each individual form of Copy A, or the bottom margin on the reverse side of each Form 1096. The form MUST NOT contain the statement "IRS approved."

.14 A postal indicia may be used (if it meets the following criteria:) a) it is printed in the OCR ink color prescribed for the form; and b) no part of the indicia is within 1 print position of the scannable area.

PART C. SPECIFICATIONS FOR SUBSTITUTE FORMS W-2G TO BE FILED WITH IRS

SECTION 1. GENERAL

.01 The following specifications prescribe the format requirements for Form W-2G -- COPY A ONLY.

.02 A filer may file a substitute Form W-2G with the IRS (hereinafter referred to as substitute Copy A). The substitute form (filed with the IRS) must be an exact replica of the official form with respect to layout and contents.

SECTION. 2. SPECIFICATIONS FOR COPY A FOR FORMS W-2G

.01 Color and Quality of Paper -- Paper for Copy A must be white chemical wood bond, or equivalent, 20 pound (basis 17 X 22-500), plus or minus 5 percent. The paper must consist substantially of bleached chemical wood pulp and be free from unbleached or ground wood pulp or recycled printed paper. It also must be suitably sized to accept ink without feathering.

.02 Color and Quality of Ink -- All printing must be in a high quality nongloss black ink. Bar codes should be free from picks and voids.

.03 Typography -- The type must be substantially identical in size and shape with that on the official form. All rules on the document are either 1/2 point (.007 inch), 1 point (0.015 inch), or 3 point (0.045). Vertical rules must be parallel to the left edge of the document; horizontal rules, parallel to the top edge.

.04 Dimensions -- The official form is 8 inches wide X 3-2/3 inches deep, exclusive of a 2/3 inch snap stub on the left side of the form. The snap feature is not required on substitutes. The top and right margins must be 1/4 inch plus or minus .0313. If the top and right margins are properly aligned, the left margin for all forms will be correct. All margins must be free of any printing. If the substitute forms are in continuous or strip form, they must be burst and stripped to conform to the size specified for a single form.

(1) The width of a substitute Copy A must be 8 inches. The left margin must be free of all printing other than that shown on the official form.

(2) The depth of a substitute Copy A must be 3-2/3 inches.

.05 Carbonized forms or "hot wax spot carbons" -- Carbonized forms and "hot wax spot carbons" are not permitted. Interleaved carbons, if used, should be black and good quality to preclude smudging.

.06 Printer's Symbol -- The Government Printing Office (GPO) symbol must not be printed on substitute Forms W-2G. Instead the employer identification number (EIN) of the forms printer must be printed in the bottom margin on the face of each individual form of Copy A of such substitute forms. The form must not contain the statement "IRS approved."

PART D. ADDITIONAL INSTRUCTIONS FOR FORMS 1098, 1099, 5498, AND W-2G

SECTION 1. OTHER COPIES

.01 Copies B, C, and in some cases D, 1, and 2, are included in the official assembly for the convenience of the filer. There is no legal requirement that privately printed substitute forms include all these copies, Copies B, and in some cases Copies C, will satisfy the requirement of the law and regulations concerning the statement of information that is required to be furnished to the form recipient. NOTE: If Federal income tax withheld is shown on Form W-2G or 1099-R, Copy B (to be attached to the tax return) and Copy C must be furnished to the recipient. Copy D (Forms 1099-R and W-2G) may be desired as a filer record copy. Only Copy A should be filed with the IRS.

.02 Arrangement of Assembly -- The parts of the assembly must be arranged, from top to bottom, as follows: (a) All forms -- Copy A "For Internal Revenue Service Center." (b) Form 1098 -- Copy B "For Payer"; Copy C "For Recipient." (c) Form 1099-A -- Copy B "For Borrower"; Copy C "For Lender." (d) Form 1099-C Copy B "For Debtor"; Copy C "For Creditor"; (e) Forms 1099-9, 1099-DIV, 1099-G, 1099-INT, 1099-D, and 1099-PATR -- Copy B "For Recipient"; Copy C "For Payer." (f) Form 1099-MISC -- Copy 1 "For State Tax Department"; Copy B "For Recipient"; Copy 2 "To be filed with recipient's state income tax return, when required."; Copy C "For Payer." (g) Form 1099-R -- Copy 1 "For State, City, or Local Tax Department"; Copy B "Report this income on your Federal tax return. If this form shows Federal income tax withheld in box 4, attach this copy to your return."; Copy C "For Recipient's Records"; Copy 2 "File this copy with your state, city, or local income tax return, when required."; Copy D "For Payer." (h) Form 1099-S -- Copy B "For Transferor"; Copy C "For Filer." (i) Form 5498 -- Copy B "For Participant"; Copy C "For Trustee or Issuer." (j) Form W-2G -- Copy 1 "For State Tax Department"; Copy B "Report this income on your Federal tax return. If this form shows Federal income tax withheld in box 2, attach this copy to your return." Copy C "For Winner's Records"; Copy 2 "Attach this copy to your state income tax return, if required."; Copy D "For Payer."

.03 Perforations are required between forms on all copies except Copy A to enable the separation of individual forms.

SECTION. 2. OMB REQUIREMENTS

.01 Office of Management and Budget (OMB) Requirements for Substitute Forms -- Public Law 96-511 requires that: (1) OMB approve Internal Revenue Service tax forms, (2) each form show (in the upper right corner) the OMB approval number, and (3) the form (or its instructions) state why IRS is collecting the information, how it will be used and whether it must be given to IRS. The official IRS forms or instructions contain this information and any substitute must contain it also.

.02 The OMB requirements for substitute IRS forms are:

(1) All substitute forms, including substitute statements to recipients, must show the OMB number as it appears on the official IRS form;

(2) For Copy A, the OMB number must appear exactly as shown on the official IRS form;

(3) For any copy other than Copy A, the OMB number must use one of the following formats:

(a) OMB No. XXXX-XXXX (preferred) or;

(b) OMB # XXXX-XXXX.

(4) All substitute forms must set forth the reasons for IRS collection, use, and requirements, as stated in the "Instructions for Forms 1099, 1098, 5498, and W-2G" (Package 1099).

.03 The official OMB numbers may be obtained from reproduction proofs or official IRS printed forms.

SECTION. 3. REPRODUCTION PROOFS

.01 Reproduction Proofs -- IRS Publication 1192, Catalog of Reproducible Forms and Instructions, containing order blanks and a list of items available for reproduction proofs are mailed annually to requesters of record and to other users upon request. Printers and others wishing to obtain reproduction proofs may send their requests to:

     Internal Revenue Service

SECTION. 4. EFFECT ON OTHER REVENUE PROCEDURES

Revenue Procedure 93-24, 1993-1 C.B. 555, covering paper returns and statements for payments made during the 1993 calendar year is hereby superseded.

[Exhibits omitted]