SERVICE PROVIDES SPECIFICATIONS FOR SUBSTITUTE FORMS W-2, W-2P, AND W-3.

Rev. Proc. 90-48

PART A. -- GENERAL

SECTION 1. PURPOSE

01 The purpose of this revenue procedure is to provide general rules for filing and to state the requirements of the Internal Revenue Service (IRS) and the Social Security Administration (SSA) relating to reproducing paper substitutes for Form W-2, Wage and Tax Statement; Form W-2P, Statement for Recipients of Annuities, Pensions, Retired Pay, or IRA Payments; and Form W-3, Transmittal of Income and Tax Statements, for amounts paid during the 1990 calendar year.

02 For the purpose of this revenue procedure, a substitute form is one that is not printed by the IRS. A substitute Form W-2, W-2P, or W-3 must conform to the specifications in this revenue procedure to be acceptable to the IRS. Preparers should also refer to the instructions for preparing and filing Forms W-2, W-2P, and Form W-3 for additional guidelines on how to complete these forms. See Part B, Sec. 1.03, below, for information on ordering the official IRS forms and instructions.

03 NOTE: For Tax Year 1991, Form W-2P will be combined with Form 1099-R, Statement for Recipients of Total Distributions From Profit- Sharing, Retirement Plans, Individual Retirement Arrangements, Insurance Contracts, Etc. The new combined form will be filed with IRS. The layout of the new combined form will be 2 forms per page.

04 This revenue procedure supersedes Rev. Proc. 89-41, 1989-2 C.B. 454 (Reprinted as Publication 1141, Revised 7-89).

SEC. 2. NATURE OF CHANGES

01 Various editorial changes were made. Several requirements received added emphasis to help payers avoid errors.

02 The exhibits were updated for tax year 1990. The layout and content of Form W-2 was revised for tax year 1990 (see Exhibit A), reflecting the increase to a half-page format for Copy A.

03 Minimum size requirements are set forth for the substitute Form W-2, Employee's copy (Copy B, etc.). The maximum allowable size was expanded. These new size requirements apply for tax year 1990 only and are subject to change for future years. See Part B, Sec 2., below.

04 The Revenue Procedure is clarified to state that both magnetic media filers and paper filers (of Form W-2, Copy A) may use substitute employee copies (Copy B, etc.) that meet the requirements set forth in this document.

05 Instructions similar to those contained on the back of Copy C of the official form are now required to be provided to each employee (recipient). These instructions MUST include the exact language concerning the Earned Income Credit (EIC) as contained on the official form. The requirement for instructions on the back of Copy D has been eliminated.

06 The new penalty provisions that apply to Forms W-2 and other information returns are provided. See Sec. 3.07, below.

SEC. 3. GENERAL RULES FOR FILING FORMS W-2 AND W-2P

01 Employers and payers (hereafter and where applicable collectively referred to as payers) MUST use magnetic media for filing if the payer will file 250 or more 1990 Forms W-2 (Copy A) or W-2P (Copy A) with SSA. This requirement applies unless:

1. The payer can establish that filing on magnetic media will result in undue hardship, AND

2. The payor is granted a waiver of the requirement by the IRS.

To request a ONE YEAR waiver of the magnetic media filing requirement, submit Form 8508, Request for Waiver From Filing Information Returns on Magnetic Media, to:

     Internal Revenue Service

02 Payers can design their own statements to give to employees, pensioners, annuitants, recipients of retired pay, recipients of IRA (Individual Retirement Arrangement) payments, and recipients of disability income (hereafter and where applicable collectively referred to as payees). This applies to both payers who file with SSA on magnetic media or submit paper Forms W-2, Copy A. Payers who file paper Copy A, Form W-2, with SSA continue to be required to use the official IRS printed form or a substitute that exactly meets the specifications set forth in this Revenue Procedure for submission to SSA. Payee statements designed by payers MUST comply with the requirements shown in Parts B and C, below, of this Revenue Procedure. NOTE: Magnetic media users who use the official IRS printed form or any other pre-printed form are advised not to print Copy A or, if printed, to discard it to prevent duplicate information from being submitted in error, as stated in .01, above. Copy A is not needed by SSA when documents are filed on magnetic media.

03 TIB-4, "Magnetic Media Reporting, Submitting Annual W-2 and W-2P Copy A Information to the Social Security Administration," contains the specifications and procedures for filing Forms W-2 (Copy A) and W-2P (Copy A) on magnetic media with SSA. Specifications for both tape and diskette reporting for Forms W-2 and W-2P are included in this Technical Instructions Bulletin (TIB-4).

04 TIB-4 may be obtained by writing to the Social Security Administration, Reports Preparation Section, P.O. Box 2317, Baltimore, MD 21235. Payers using magnetic media are cautioned to obtain the most recent revision of the TIB-4 AND SUPPLEMENTS due to possible changes in the specifications and procedures. TIB-4 will be revised in the fall of 1990.

05 Payers not using magnetic media must file Copy A of Form W-2 or Copy A of Form W-2P with SSA on either an official form or a privately printed substitute paper form that exactly meets the specifications shown in Parts B and C, below, of this Revenue Procedure.

06 1990 Forms W-2 and W-2P, whether filed on magnetic media or paper, must be submitted to SSA on or before February 28, 1991. In addition, the payee copies must be provided to the taxpayer on or before January 31, 1991. Failure to timely file with SSA or to timely provide the taxpayer copies may subject the payer to penalties. See Sec. 3.07, below, concerning which penalties apply if correct Forms W-2 are not filed with SSA or provided to the payee by the due date. Payers needing additional time to file Copy A of Form W-2 or Copy A of Form W-2P with SSA may request an extension of time to file by submitting Form 8809, Request for Extension of Time to File Information Returns, to the IRS/MCC, at the address (or alternative address) listed in Sec. 3.01, above. The extension request should be filed as early as possible, but must be postmarked no later than the due date of the forms (February 28, 1991).

NOTE: APPROVAL OF THE EXTENSION IS NOT AUTOMATIC. Approval or denial is based on administrative criteria and guidelines. The requestor will receive an approval or denial letter from IRS and must allow at least 30 days for IRS to respond. Form 8809 may be obtained by calling 1-800-424-FORM (3676) (1-800-829-3676 after September 30, 1990), or by contacting IRS/MCC (See the address and phone number in Sec. 3.01, above).

07 New Penalty provisions apply to Forms W-2 (and certain other information returns), effective with tax year 1989 returns filed in 1990. Generally, penalties will be assessed for payers who fail to file correct information returns by the due date. The penalties will apply if information returns:

1. Are not filed by the due date (as stated in Sec. 3.06, above);

2. Are filed with incorrect information;

3. Do not include all of the required information;

4. Are submitted on paper when they are required to be filed on magnetic media (as stated in Sec. 3.01, above);

5. Are filed with incorrect or missing Taxpayer Identification Numbers (TINs); or

6. Are filed in a manner that does not allow them to be processed or read by machine.

The amount of the penalty is graduated, based on when the correct Form W-2 (or other information return) is filed, as follows:

o $15 per return if the forms are filed correctly within 30 days of the due date (March 30 for returns due February 28). The maximum penalty is $75,000 per year ($25,000 for small business, as defined later);

o $30 per return if the forms are filed correctly more than 30 days after the due date but on or before August 1. The maximum penalty is $150,000 per year ($50,000 for small businesses);

o $50 per return if the forms are filed after August 1 or if the returns are not filed as required. The maximum penalty is $250,000 per year ($100,000 for small businesses).

The lower maximum penalties for small businesses (as shown above) apply if a business had average annual gross receipts for the 3 most recent tax years (or years in existence, if shorter), ending before the calendar year in which the information returns were due, of $5,000,000 or less.

A penalty also applies to payee statements (or statements for recipients) if:

1. The payee statement is not provided by January 31 (as stated in Sec. 3.06, above);

2. If a statement furnished to payees includes incorrect information; or --

3. If a statement is furnished to payees that does not include all the required information.

The penalty is $50 per return with a maximum of $100,000 per year. There is no reduction in the penalty for providing a correct information return to the payee after the due date.

The penalties as stated here will not apply if the payer can show that the failure was due to reasonable cause and not to willful neglect.

NOTE: For tax year 1989 returns only, penalties will be waived if incorrect returns, which were filed timely, are corrected by October 1, 1990.

SEC. 4. GENERAL RULES FOR FILING FORM W-3

01 Employers and payers (hereafter and where applicable collectively referred to as payers) submitting Forms W-2 or W-2P (Copy A) on paper to SSA must transmit Form W-2 or W-2P with Form W- 3.

02 Form W-3 must be the same width (i.e. 7 inches, 7.5 inches, or 8 inches) as the Forms W-2 or W-2P filed.

03 Form W-3 should only be used to transmit paper Forms W-2 (Copy A) or Forms W-2P (Copy A). Magnetic media filers do not file Form W-3. Payers using magnetic media must transmit Form W-2 or W-2P data with Form 6559, Transmitter Report of Magnetic Media Filing, along with either Form 6560, Employer Summary of Form W-2 Magnetic Media Wage Information, or Form 6561, Payer Summary of Form W-2P Magnetic Media Pension Information. A set of these forms (Form 6559, 6560, and 6561) are provided by SSA to all approved magnetic media filers in the TIB-4 instructions. The forms may also be obtained by calling IRS at 1-800-424-FORM (3676) (1-800-829-3676 after September 30, 1990).

PART B. REQUIREMENTS FOR FILING PAPER SUBSTITUTES

SEC. 1. GENERAL RULES FOR FILING "PAPER SUBSTITUTES" FOR FORMS W-2, W-2P, AND W-3

01 Paper substitutes that conform totally to the specifications contained in this revenue procedure may be privately printed without the prior approval of the IRS. SUBSTITUTE FORMS THAT DO NOT CONFORM TOTALLY TO THESE SPECIFICATIONS ARE NOT ACCEPTABLE. This applies to both paper substitutes that are filed with SSA and those that are given to employees. Forms should NOT be submitted to IRS or SSA for general approval. However, 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, your interpretation of that specification, and an example of the how the form would appear if produced using your understanding of the specification to:

     Internal Revenue Service

02 Forms W-2, W-2P, and W-3 are subject to annual review and possible change. Payers are cautioned against overstocking supplies of privately printed substitutes.

03 Copies of the current year, official Forms W-2, W-2P, and W-3 and the instructions for these forms may be obtained from most IRS offices or by calling 1-800-424-FORM (3676) (1-800-829-3676 after September 30, 1990). The IRS provides only cut sheet sets with no carbon interleaves for Forms W-2, W-2P, and W-3. Reproduction proofs of the official Forms W-2, W-2P, and W-3 are also available. See Part C, Sec. 4, below, for information on ordering reproduction proofs.

04 Substitute Forms W-2, W-2P, and W-3 transmitted to SSA should generally contain only data provided to payees and summary data as requested by the instructions for the form.

05 If it is necessary to report more than three items in Box 17 of Form W-2, filers of paper forms (Copy A) should use a second Form W-2 to report the additional items. Box 17 may be enlarged on employee copies (Copy B, etc.), so long as the substitute used is in compliance with the specifications contained herein (see Secs. 2 and 3, below). If a second Form W-2 is provided to report additional items in Box 17, other wage and tax data must not be duplicated on the second form.

06 Substitute Forms W-2, W-2P, and W-3 may be redesigned as to the spacing for state and local tax data AS LONG as the vertical and horizontal spacing for all federal payment and data boxes are in compliance with the specifications contained herein.

07 All ballot boxes on Forms W-2 (Copy A), W-2P (Copy A), and W- 3 must be 8-point boxes. NOTE: If a box is marked, more than 50% of the applicable ballot box must be covered by an "X".

SEC. 2. REQUIREMENTS FOR SUBSTITUTE FORMS FURNISHED TO PAYEES (COPIES B, C, AND 2 OF FORMS W-2 AND W-2P)

01 All payers (including payers who file on magnetic media and do not file a paper Copy A) must furnish payees with at least two statements (three statements are appropriate for payees required to file a state, city, or local income tax return). The dimensions of these copies may be expanded from the dimensions of the official form to allow space for conveying additional information such as additional entries required for Boxes 17 or 18, withholding from pay for health insurance, union dues, bonds, charity, etc. This may permit the payer to eliminate other statements or notices which would otherwise be furnished to payees.

     1. The MAXIMUM allowable dimensions are:

02 The paper for all copies should be white. The substitute Copy B (or its equal), that payees are instructed to attach to their Federal income tax return, must be at least 12 pound paper (basis 17 x 22-500), while the other copies furnished the payee should be at least 9-pound paper (basis 17 x 22-500).

03 Interleaved carbon and chemical transfer paper for payee copies must meet the following standards:

1. All copies must be CLEARLY LEGIBLE;

2. All copies must have the capability to be photocopied; and

3. Fading must not be of such a degree as to preclude legibility and the ability to photocopy.

The Service prefers that forms not be printed with iron based inks used for magnetic character reading (MICR) or any other specialty inks having magnetic properties. Similarly, forms should not be imaged by any process that employs magnetic toners.

In general, black chemical transfer inks are preferred; other colors are permitted only if the above standards are met. "Spot carbons" are NOT permitted (See Sec. 3.15, below for standards for chemical transfer paper for Copy A.)

04 Substitute forms for payees need contain only the payment boxes and captions that are applicable. Certain other boxes contained on the official form may be omitted. IN ALL CASES, the following boxes MUST be present:

1. The payee name, address, Social Security Number (SSN);

2. The payer name, address, and Employer Identification Number (EIN);

3. The tax year;

4. Federal income tax withheld; and

5. Wage, tips, other compensation.

Payment boxes and captions that are applicable must be clearly identified, using, where possible, the same wording as on the official form. On Form W-2, Copy B, payers ARE REQUIRED to identify the amount of Federal income tax withheld as "Box 9" and the amount of wages, tips, other compensation as "Box 10." On Form W-2P, Copy B, payers ARE REQUIRED to identify the taxable amount as "Box 10" and the amount of Federal income tax withheld as "Box 11". These same payment boxes on Copy B are required to be outlined in bold 2-point rule (see Exhibit M) or identified in some manner to distinguish these boxes from the rest of the form. If Form W-2 contains additional data (e.g., saving bonds withholding, retirement withholding, or payroll savings.), there should be a special highlighting of the areas pertaining to (1) Federal income tax withheld, (2) Wages, tips, and other compensation, and (3) Advance EIC (Earned Income Credit) payment.

05 Substitute forms for payees (Copies B, C, and 2 of Forms W-2 and W-2P) must meet the following requirements:

1. All copies of Forms W-2 and W-2P must clearly show the form number, the form title, and the tax year. The title of Form W-2 is "Wage and Tax Statement." The title of Form W-2P is "Statement for Recipients of Annuities, Pensions, Retired Pay, or IRA Payments."

2. If the substitute forms are NOT LABELED as to the disposition of the copies, then written notification must be provided to each payee as specified below:

(a) The first copy of the form (Copy B) should be filed with the employee's (or recipient's) Federal tax return.

(b) The second copy of the form (Copy C) is for the employee's (or recipient's) records.

(c) If applicable, the third copy (Copy 1) of the form should be filed with the employee's state, city, or local income tax return.

3. If the substitute forms are LABELED, then the forms must contain the applicable description:

(a) "Copy B, to be filed with employee's Federal tax return", "Copy C, for employee's records", and the designation "Form W-2, Department of the Treasury -- Internal Revenue Service", OR

(b) "Copy B, file with recipient's Federal tax return," "Copy C, for recipient's records," and the designation "Form W-2P Department of the Treasury -- Internal Revenue Service."

(c) For this purpose, the word "Department" may be abbreviated as "Dept." as on the official, IRS printed forms. The reference to the Department of the Treasury -- Internal Revenue Service should be omitted from other copies provided in the set.

4. Instructions similar to those contained on the back of Copy C of the official form MUST be provided to each employee (recipient). These instructions must include the exact language concerning the Earned Income Credit (EIC) as is contained on the official form. For Form W-2, the Social Security (FICA) rates applicable for the current tax year must appear either on the front or the back of the copy (Copy C) retained by the employee; or be communicated to the employee via a separate statement.

NOTE: IF you are a Federal employer or a state or local government employer with employees covered only under Medicare, you must provide the current rate for hospital insurance benefits (Medicare) for those employees.

5. Payees should be advised that substitute wage and tax statements are acceptable for filing with their Federal income returns.

SEC. 3. REQUIREMENTS FOR SUBSTITUTE "PRIVATELY PRINTED" FORMS SUBMITTED TO SSA (FORMS W-2 (COPY A), FORMS W-2P (COPY A), AND FORMS W-3)

01 Payers may file privately printed substitute Forms W-2, W-2P, and W-3 with SSA. The substitute form must be an exact replica of the official reproduction proof with respect to layout and contents because it will be read by machine. The dimensions of a substitute form may differ as far as width (see Sec. 3.05, below). The printing of the Government Printing Office (GPO) symbol must be deleted (see Sec. 3.16, below). The specifications and allowable tolerances for the Copy A of substitute Forms W-2 and W-2P are provided later in this Revenue Procedure. See Exhibits A, D, and E for Form W-2 specifications and Exhibits B, F, and G for Form W-2P specifications. The specifications and allowable tolerances for Forms W-3 are provided in Exhibits C, H, and I.

NOTE: PRINTERS OF FORMS W-2 OR W-2P THAT ARE WIDER THAN 7 INCHES MUST PROVIDE FORMS W-3 THAT ARE THE SAME WIDTH AS THE FORMS W-2 OR W- 2P (i.e., 7 1/2" FORMS W-3 WITH 7 1/2" WIDTH FORMS W-2 OR W-2P; 8" WIDTH FORMS W-3 WITH 8" WIDTH FORMS W-2 or W-2P).

02 Paper for substitute Copy A (of Forms W-2 and W-2P) and Form W-3, (cut sheets and continuous pinfeed forms), that are to be filed with SSA must be white 100% bleached chemical wood, optical character recognition (OCR) bond produced in accordance with the specifications shown as follows:

      1. Acidity: pH value, average,

03 All printing for Copy A (of Forms W-2 and W-2P) and Form W-3 will be in red OCR dropout ink, as specified, except for the form identifying numbers '22222,' '55555,' or '33333' at the top of the form and the descriptive information at the bottom (see Exhibits J, K, and L) that will be printed in nonreflective black ink. All other printing will be in red OCR dropout ink meeting, or comparable to, the specifications in this paragraph. The screened area of any substitute form (Copy A of Form W-2 and W-2P, and the Form W-3 that is sent to SSA) should generally correspond to that present on the official form. Vertical rules require screening of .05 inches on each side of an inside rule. Horizontal screening should follow the standard format and allow for typewriter spacing. All screened areas are to be printed in red OCR dropout ink. The numbered captions are printed as a solid with no screened background (see Exhibits). Sinclair and Valentine (U.S.) red OCR dropout ink number J-25083 is the preferred ink because it is easier for the forms preparer to read.

NOTE: Printing in any other red OCR dropout ink must be cleared by contacting Manager of Sales Support, Recognition Equipment, Inc., P.O. Box 660204, Dallas, TX 75266, telephone number (214) 579-6927.

04 Type must be substantially identical in size and shape with corresponding type on the official form. NOTE: The form identifying number must be in OCR A font.

1. On Copy A of Forms W-2 and W-2P and for Form W-3, all the perimeter rules must be 1-point (0.014 inch), while all other rules must be one-half point (0.007 inch).

2. Vertical rules must be parallel to the left edge of the form; horizontal rules parallel to the top edge.

05 Two official Forms W-2 (Copy A), three official Forms W-2P (Copy A), or one official Form W-3 are contained on a single page that is 7 inches wide (exclusive of any snap-stubs) by 11 inches deep. The form identifying number for the official forms (7 inches wide) is '22222' for Form W-2; '55555' for Form W-2P; and '33333' for Form W-3. Although adherence to the size of the official page is preferred, the width of privately printed substitute pages may be 7 inches, 7 1/2 inches, or 8 inches exclusive of any left or right snap-stubs, or pin-feed holes. If a 7 inch form is produced, the image must be an exact copy of the official reproduction proof. If the width of the substitute page is increased, the width of specified fields on the substitute page must be increased in accordance with Exhibits D, E, F, G, H, and I. The top margin for all forms must be .25 inch, the right margin must be .15 inch, and the left margin .35 inch, plus or minus .0313 inch. Margins must be free of all printing. For Forms W-2 (Copy A), W-2P (Copy A), and W-3 the combination width of Box 1, "Control number", and the box containing the form identifying number must always be 2.2 inches.

1. When the width of Copy A is increased to 8 inches, exclusive of any left or right snap-stubs or pin-feed holes, the form identifying number must be shown as 222 for Form W-2, 555 for Form W- 2P, or 333 for Form W-3. This number tells the scan equipment used by SSA which information document it is reading, the width size and the position of individual data fields (see Exhibits D, F, and H).

2. When the width of Copy A is increased to 7 1/2 inches, exclusive of any left or right snap-stubs or pin-feed holes, the form identifying must be shown as 2222 for Form W-2, 5555 for Form W-2P, or 3333 for Form W-3. This number tells the scan equipment used by SSA which information document it is reading, the width size and the position of individual data fields (see Exhibits E, G, and I).

06 The depth of the individual image on a page must be the same as that of the official reproduction proof. For Form W-2, the depth is 5.5 inches (see Exhibit A). For Form W-2P the depth is 3 2/3 inches (see Exhibit B). The depths of the Form W-3 on a page must be 3.37 inches (see Exhibit C). The depths are the same for the 7 inch, 7 1/2 inch, and 8 inch wide forms.

07 The words "DO NOT CUT OR SEPARATE FORMS ON THIS PAGE" must be printed in red OCR dropout ink between the two Forms W-2 (Copy A) or the three Forms W-2P (Copy A) (see Exhibits A and B) and must also be present on 7 1/2 inch and 8 inch wide substitute Forms W-2 or W-2P. Perforations are required on all copies (except Copy A) to enable the separation of individual forms.

08 The words "For Paperwork Reduction Act Notice, see separate instructions." MUST be printed on Forms W-2 (Copy A) and W-2P (Copy A) (see Exhibits A and B for format and location) and MUST also be present on 7 1/2 inch and 8 inch wide substitute Forms W-2 and W-2P.

09 The Office of Management and Budget (OMB) Number MUST be printed on EACH ply of Form W-2 , W-2P, and W-3 (see Exhibits A, B, and C for format and location) and MUST also be present on 7 1/2 inch and 8 inch wide substitute Forms W-2, W-2P, or W-3.

10. The statement "PLEASE RETURN THIS ENTIRE PAGE WITH THE ACCOMPANYING FORMS W-2 OR W-2P TO THE SOCIAL SECURITY ADMINISTRATION ADDRESS FOR YOUR STATE, AS LISTED BELOW. HOUSEHOLD EMPLOYERS FILING FORMS W-2 FOR HOUSEHOLD EMPLOYEES SHOULD SEND THE FORMS TO THE ALBUQUERQUE DATA OPERATIONS CENTER." and the list of SSA addresses MUST be printed on Forms W-3 (see Exhibit C), whether Forms W-3 are 7 inches wide, 7 1/2 inches wide, or 8 inches wide.

11. The Paperwork Reduction Act Notice must be printed on Form W-3 (see Exhibit C for format and location), whether Forms W-3 are 7 inches wide, 7 1/2 inches wide, or 8 inches wide.

12. PRIVATELY PRINTED CONTINUOUS SUBSTITUTE FORMS W-2 (COPY A) AND W-2P (COPY A) MUST BE PERFORATED AT EACH 11" (3-ON FORMS W-2P AND 2 ON FORMS W-2) PAGE DEPTH. NO PERFORATIONS ARE ALLOWED BETWEEN THE INDIVIDUAL FORMS (5 1/2 INCH FORMS W-2 OR 3 2/3 INCH FORMS W-2P) ON A SINGLE COPY PAGE OF COPY A. NOTE: Perforations are required between all the other INDIVIDUAL copies on a page (Copy 1, B, C, 2, and D) included in the set.

13. The back of a substitute Copy A and Form W-3 (page 1) must be free of all printing.

14. Spot carbons are NOT PERMITTED for Copy A of Forms W-2 or W- 2P or for Form W-3. Interleaved carbon should be black and must be of good quality to assure legibility of information on all copies and to preclude smudging.

15. 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.

16. The GPO symbol must not be placed on substitute Copy A of Forms W-2 and W-2P. In the place of the GPO symbol, the Employer Identification Number (EIN) of the forms printer must be printed in the bottom margin on the face of each individual sheet of Copy A. In addition, the EIN of the forms printer must be printed on the face of the substitute Form W-3 that is filed with SSA.

PART C. ADDITIONAL INSTRUCTIONS

SEC. 1. INSTRUCTIONS FOR FORMS PRINTERS

01 Except as provided below, if magnetic media is not used for filing with SSA, the substitute copies of Forms W-2 and W-2P assembly should be arranged in the same order as the official Forms W-2 and W- 2P. Copy A should be first, followed sequentially by perforated sets (Copies 1, B, C, 2, and D). The substitute form to be filed by the payer with SSA must carry the designation "Copy A." NOTE: Magnetic media filers do not need to print Copy A since it is not needed by SSA for processing. (See the caution in Part A, Sec. 3.02, above.)

1. It is not a requirement that privately printed substitute forms contain a copy to be retained by payers (Copy D). However, payers must be prepared to verify or duplicate this information if it is requested by the IRS or SSA. Paper filers that do not keep Copy D should be able to generate a facsimile of Copy A in case of loss. The requirement that instructions be printed on the back of Copy D has been eliminated.

2. Except as provided in the arrangement of the official assemblies, additional copies that may be prepared by payers shall not be placed ahead of the copy "For employee's records," Form W-2 (Copy C) or "For Recipient's Records," Form W-2P (Copy C).

3. Instructions similar to those contained on the back of Copy C of the official form MUST be provided to each employee (recipient). For Form W-2, the social security (FICA) rates applicable for the current tax year must appear either on the front or the back of the copy (Copy C) retained by the employee; or be communicated to the employee via a separate statement. NOTE: Federal, state and local government employers with employees covered only under Medicare, must provide the current rate for hospital insurance benefits (Medicare) for employees.

02 All privately printed Forms W-2 (Copy A) and W-2P (Copy A) must have the tax year printed on the bottom face of each form using identical type to that of the official format.

03 The substitute Copy B (or its equal), which payees are instructed to attach to their Federal income tax return, must be at least 12-pound paper (basis 17 x 22-500), while the other copies furnished to payees should be at least 9-pound paper (basis 17 x 22- 500).

04 The OCR bond Form W-3 that is filed with SSA must have no printing on the reverse side.

05 Instructions similar to those provided as part of the official form must be provided as part of any substitute Form W-3.

06 All privately printed Forms W-3 must have the tax year printed on the bottom face of each substitute Form W-3, using identical type to that of the official format.

07 The copy of the substitute Form W-3 that contains the instructions and is to be retained by the employer should be at least 18-pound paper (basis 17 x 22-500).

SEC. 2. INSTRUCTIONS FOR PAYERS

01 Only originals or ribbon copies of Copy A (Forms W-2 and W- 2P) and Form W-3 may be filed with SSA. CARBON COPIES AND PHOTOCOPIES ARE NOT ACCEPTABLE.

02 Payers should type or machine print entries on forms whenever possible and provide good quality data entries by using black ribbon, inserting data in the middle of blocks, well separated from other printing and guidelines, and taking any other measures that will guarantee clear, sharp images. The payer must provide a machine scannable form for Copy A and payee copies (Copies B, C, and 2) that are legible and capable of being photocopied (by the recipient).

03 The Employer Identification Number (EIN) may be entered anywhere in Box 2 along with the Payer's name and address on Copy A of Forms W-2 and W-2P. (If this is done, the EIN need not be entered in Box 3 of either Form W-2 or W-2P.) For Forms W-3, the EIN must be entered where prescribed by the Form W-3 instructions.

04 The payer's name, address, and EIN may be pre-printed.

05 The optional employer's state number may be pre-printed in the employer's (payer's) name, address, and ZIP code box. If this is done, Box 4 of Forms W-2 and W-2P need not be completed, so long as the applicable state taxing authority does not object.

06 The preparation and filing instructions for Forms W-2 and W- 2P are contained in the 1990 instructions for Forms W-2 and W-2P. The preparation and filing instructions for Form W-3 are contained as part of the 1990 Form W-3 snap set assembly.

07 To avoid confusion and questions by payees, payers are encouraged to delete the following items from copies for Forms W-2 and W-2P provided to payees:

1. Form identifying number (e.g., 22222, 55555);

2. The words "subtotal" and "void" and their boxes;

3. Any other captions or box number that would not be of any informational use to payees.

08 Payers are encouraged to use the IRS supplied labels on all Forms W-3 filed with SSA.

SEC. 3. OFFICE OF MANAGEMENT AND BUDGET (OMB) REQUIREMENTS FOR SUBSTITUTE FORMS

01 Public Law 96-511 requires: (1) OMB approval of IRS tax forms, (2) that each form (all copies) show the OMB approval number and, when appropriate, the form's expiration date, and (3) that the form (or its instructions) state why IRS is collecting the information, how we will use it and whether it must be given to us. The official IRS form (or instructions) will contain this information.

02 As it applies to substitute IRS forms, this means:

1. All substitute forms (all copies) MUST show the OMB number and any expiration date as they appear on the official IRS form (see Exhibits A, B, and C).

2. The OMB number must be in one of the following formats:

OMB No. 1545-0008 (preferred),

or

OMB #. 1545-0008

3. You must inform the users of your substitute forms of the reasons for IRS collection, use, and requirements, as stated in the instructions for the official IRS form.

SEC. 4. REPRODUCTION PROOFS

01 Order blanks for reproductions proofs (repro-proofs) are mailed annually to requestors of record, and on request to other users. Reproduction copies of Forms W-2, W-2P, and W-3 each consist of two parts. Part 1 is line art, i.e., type and rule. Part 2 is a black solid that should be photographically screened by the user to allow a 10%-20% dot pattern when printed in red OCR dropout ink. In some cases, where the production method requires the use of something other than a standard dot pattern, the printed value of part 2 must still be 10%-20%. Printers and others wishing to obtain reproduction proofs should call the toll-free number and ask for Publication 1192, which has order blanks for obtaining reproduction proofs. Written requests for Publication 1192 may be sent to: Internal Revenue Service, Eastern Area Distribution Center, ATTN: Repro Coordinator, 4300 Carolina Ave, Richmond, VA 23222.

02 Publication 1192 contains information and the individual costs for each reproduction copy. Payment must be submitted with each request.

SEC. 5 EFFECT ON OTHER REVENUE PROCEDURES

01 Rev. Proc. 89-41, 1989-2 C.B. 454, is superseded.

[Editor's note: Exhibits A through M illustrate physical specifications of the forms discussed. These illustrations are not suitable for electronic reproduction.]