IRS Publishes Rules For Paper Substitutes Of Forms W-2 And W-3.

Rev. Proc. 2000-23

PART A. GENERAL

SECTION 1. PURPOSE

.01 The purpose of this revenue procedure is to provide the general rules for filing and to state the requirements of the Internal Revenue Service (IRS) and the Social Security Administration (SSA) for reproducing paper substitutes for Form W-2, Wage and Tax Statement, and Form W-3, Transmittal of Wage and Tax Statements, for amounts paid during the 2000 calendar year. The information reported on Forms W-2 and W-3 is required to establish tax liability for employees and their eligibility for social security and medicare benefits.

.02 Forms W-2 and W-3 have only minor changes for year 2000. Please see "Nature of Changes" (Section 2, below) and the exhibits at the end of this revenue procedure for changes to Forms W-2 and W-3.

.03 For the purpose of this revenue procedure, a substitute form is one that is not printed by the IRS. A substitute Form W-2 or W-3 MUST conform to the specifications in this revenue procedure to be acceptable to the IRS. No IRS office is authorized to allow deviations from this revenue procedure. Preparers should also refer to the separate Instructions for Forms W-2 and W-3 for details on how to complete these forms. See Part C, Sec. 4.01, for information on obtaining the official IRS forms and instructions. See Part B, Sec. 2, for requirements for substitute forms furnished to employees.

.04 IRS maintains its centralized call site at Martinsburg Computing Center (IRS/MCC) to answer questions related to information returns (Forms W-2, W-3, 1099, etc.). The call site phone number is 304-263-8700 (not a toll-free number). The Telecommunication Device for the Deaf (TDD) number is 304-267-3367 (not a toll-free number). The hours of operation are Monday through Friday from 8:30 A.M. to 4:30 P.M. Eastern Time.

.05 This revenue procedure supersedes Rev. Proc. 99-24, 1999-21 I.R.B. 8, dated May 24, 1999. (Reprinted as Publication 1141).

Section 2. NATURE OF CHANGES

.01 Eliminated the necessity of submitting a paper Form 6559, Transmitter Report and Summary of Magnetic Media, for filers of Form W-2 who use the MMREF-1 format and submit data electronically or on diskette.

.02 Edited the language on the back of Copies B, C, and D of Forms W-2.

.03 Edited the "Do not" Statement at the bottom of Copy A of Forms W-2.

.04 Added "OR FOLD" to the instructions at the top of Form W-3 to help the SSA in processing of forms.

.05 Edited the instructions on Form W-3.

.06 On Form W-3, the "Signature, Title, Dateline" must be printed in non-reflective black ink. See Part B, Section 1.03.

.07 Made change to be in agreement with the Official Instructions package for Forms W-2 and W-3 regarding Railroad Retirement Tax Act. Boxes 3, 4, 5, and 6 of Forms W-2 must not be altered to include railroad retirement wages and taxes.

.08 Made change which will not allow employers EIN to be included in boxes e and f of Copy A Form(s) W-2. Employers EIN must be included in box b of Copy A Form(s) W-2.

.09 Employers state I.D. number should not be printed (Copy A of Forms W-2) in the employer's name, address, and zip code boxes e and f respectively. This information goes in box 16.

.10 Various editorial changes were made.

Section 3. GENERAL RULES FOR FILING PAPER FORMS W-2

.01 Employers must use magnetic or electronic media for filing with the SSA if they prepare and file 250 or more Year 2000 Forms W- 2 (Copy A). This requirement applies unless:

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

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

To request a waiver of the magnetic media or electronic filing requirement, for the current tax year only, submit Form 8508, Request for Waiver From Filing Information Returns on Magnetic Media, to:

     If by Postal Service:

EMPLOYERS WHO FILE FORM W-2 INFORMATION ON MAGNETIC MEDIA (USING TIB-4 INSTRUCTIONS) OR ELECTRONICALLY (USING MMREF-1 INSTRUCTIONS) WITH THE SSA MUST NOT SEND THE SAME DATA TO THE SSA ON PAPER FORMS W-2. This would result in duplicate reporting and may subject the filer to unnecessary contacts by the IRS.

.02 TIB-4, Magnetic Media Reporting (SSA Pub. No. 42-007, revised Oct., 1999) contains the specifications and procedures for filing Form W-2 information on magnetic media with the SSA. Specifications for both tape and diskette reporting for Forms W-2 are included in the TIB-4.

.03 MMREF-1, Magnetic Media Electronic Filing (SSA Pub. No. ICN, New June, 1999) contains specifications and procedures for filing Form W-2 information electronically or on magnetic media with the SSA. The MMREF-1 may be used to file wage reports on magnetic media or electronically. The MMREF-1 format will become mandatory for TY 2001 wage reports regardless of magnetic media, tape cartridge, diskette, or electronic.

.04 TIB-4 OR MMREF-1 may be obtained by writing to:

     Social Security Administration

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

.06 Employers may design their own statements to give to employees. This applies to employers who file with the SSA on magnetic media, electronically, or on paper. Employee statements designed by employers must comply with the requirements shown in Parts B and C, below.

NOTE: Copy A must not be filed on paper with the SSA when the same Form W-2 information is filed electronically or on magnetic media.

.07 Employers who terminate their business must provide their employees with Forms W-2 on or before the due date of the final Form 941. Employers must also file Forms W-2 and W-3 with the SSA by the last day of the month that follows the due date of the final Form 941. See Rev. Proc. 96-57, 1996-2 C.B. 389, for information on automatic extensions.

Note: Use of a reporting agent or other third-party payroll service provider does not relieve an employer of the responsibility to ensure that Forms W-2 are sent out and filed correctly and on time.

.08 Forms W-2 for 2000, filed on paper or magnetic media must be submitted to the SSA on or before February 28, 2001. Employers who file electronic Forms W-2 for 2000 have until April 2, 2001. Copies B, C, 1, and 2 must be furnished to the employee by January 31, 2001. If employment ended before December 31, 2000, the employee may be furnished his/her copy any time after employment ends, but no later than January 31, 2001. However, if the employee requests Form W-2, you must furnish him or her the completed copies within 30 days of the request or within 30 days of the final wage payment, whichever is later. This requirement is met if the form is properly addressed, mailed, and postmarked on or before the due date. Failure to timely file with the SSA or to timely provide the employee copies may subject the employer to penalties. Employers needing additional time to file Form W-2 information (paper, magnetic media, or electronic) with the 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 "ATIN: Extension of Time Coordination" at the address listed in Sec. 3.01, above. The extension request should be filed as early as possible, but must be post-marked (for paper or magnetic media) no later than the due date of the forms (February 28,2001). Extensions for electronically filed Forms W-2 must be post marked no later than April 2, 2001. DO NOT SEND FORM 8809 TO THE SSA.

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 the IRS and must allow a minimum of 30 days from the date of the request for the IRS to respond. You do not have to wait for a response before filing your return. File your return as soon as it is ready. If you have received a response, positive or negative, do not send a copy of the letter or Form 8809 with your return. Form 8809 may be obtained on the IRS's Internet Web Site at www.irs.gov/, or by using the IRS Fax Forms Program 703-368-9694, or by calling 1-800-829-3676.

.09 When requesting extensions of time for more than 10 employers, the IRS encourages filers to submit the request on tape, tape cartridge, 3 1/2 - inch diskette, or electronically. Transmitters requesting an extension of time to file for more than 50 employers are required to file the extension request on magnetic media or electronically. Transmitters who submit requests for multiple employers will receive one approval letter with an attached list of employers covered under that approval. Publication 1220, Specifications for Filing Forms 1098, 1099, 5498, and W-2G Magnetically or Electronically, provides information on how to file requests for extensions of time on tape, tape cartridge/quarter inch cartridge, 3 1/2 inch diskette, or electronically.

NOTE: To file a request for extensions of time magnetically or electronically for multiple payers third party filers/transmitters must have an IRS Transmitter Control Code (authorization to file information returns).

Section 4. GENERAL RULES FOR FILING FORM W-3

.01 Employers submitting Form(s) W-2 (Copy A) to the SSA on paper must submit with a Form W-3.

.02 Form W-3 Must be the same width (7 inches) as the Forms W- 2(s) filed.

.03 Separate instructions for the Form W-3 are provided in the "Instructions for Forms W-2 and W-3." Form W-3 is a single cut sheet including only essential filing information. Be sure to make a copy for your records of Form W-3.

.04 The Form W-3 design remains unchanged from 1999. Minor editorial changes were made to the instructions included on Form W-3.

.05 Form W-3 should be used only to transmit paper Forms W-2 (Copy A). Magnetic media or electronic filers do not file Form W-3. Employers submitting magnetic media using the TIB-4 format must transmit Form(s) W-2 data with Form 6559, Transmitter Report and Summary of Magnetic Media, (and Form 6559-A, Continuation Sheet for Form 6559, if necessary). These forms may be obtained by calling either your SSA ESLO (see listing in Appendix) or the IRS at 1-800- 829-3676. Employers submitting Form(s) W-2 data electronically using the MMREF-1 via OWRS, Electronic Data Transfer (EDT), or diskette need not submit a Form 6559. However, employers must complete a PIN registration process that replaces the signature on Form 6559. If employers submit the MMREF-1 file using OWRS, EDT, or diskette, a Form 6559 will not be required upon completion of the annual PIN registration process. If employers submit MMREF-1 file on magnetic tape, or tape cartridge, a Form 6559 is required. Please refer to the MMREF-1 (June, 1999) specifications for further information.

    PART B. REQUIREMENTS FOR FILING PAPER SUBSTITUTES WITH SOCIAL

.01 Employers may file privately printed substitute Forms W-2 and W-3 with the SSA. The substitute form must be an exact replica of the IRS printed form with respect to layout and contents because it will be read by scanner equipment. The Government Printing Office (GPO) symbol must be deleted (see Sec. 1.16, below). The specifications and allowable tolerances for Copy A of substitute Forms W-2 are provided later in this revenue procedure. See Exhibit A for Form W-2 specifications. The specifications for Forms W-3 are provided in Exhibit B.

.02 Paper used for substitute Forms W-2, Copy A, and Form W-3 (cut sheets and continuous pinfeed forms) that are to be filed with the SSA must be white 100% bleached chemical wood, 18-20 pound paper only, optical character recognition (OCR) bond produced in accordance with the specifications shown as follows:

     Paper Requirements

.03 All printing for Copy A of Forms W-2 and Form W-3 must be in Red OCR drop-out Flint Ink, except as specified below. The following must be printed in non-reflective black ink:

1. Identifying control number "22222" (Exhibit C) at the top of Form W-2.

2. Tax year at the bottom of the Form W-2 (see Exhibit C).

3. Identifying control number "33333" (Exhibit D) at the top of Form W-3.

4. Tax year at the bottom of Form W-3 (Exhibit D).

5. Form identification "W-3" at the bottom of Form W-3 (Exhibit D).

6. The Jurat and "Signature, Title, Date" line at middle of Form W-3 (Exhibit B).

7. All instructions beginning with the "Send this entire page. . . ." line to the bottom of Form W-3 (Exhibit B).

All other printing on Forms W-2, Copy A, and W-3 must be in Red OCR drop-out Flint Ink J-6983 (formerly Sinclair and Valentine) or an exact match. This is the same ink that is used for Copy A of the Form 1099 series (see Pub. 1179), Rules and Specifications for Private Printing of Substitute Forms 1096, 1098, 1099, 5498, and W- 2G. The use of this ink is required for 2000 Forms W-3 and W-2 (Copy A.)

NOTE: Printing in any other Red OCR drop-out Flint Ink must be cleared by contacting BancTec, Inc., Attn: Forms Designer & Analysis, 2701 East Grauwyler, Bldg #1, Mail-stop #69, Irving, TX 75061 (972-579-6088).

.04 Type must be substantially identical in size and shape with corresponding type on the official form. The form identifying number must be printed in non-reflective black ink using an OCR-A font; 10 characters per inch.

1. On Form W-3 and Copy A of Forms W-2, 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) or one official Form W-3 is contained on a single page that is 7 inches wide (exclusive of any snap-stubs) by 11 inches deep. The form identifying control number for the official forms (7 inches wide) is "22222" (5 digits) for Form W-2 and "33333" (5 digits) for Form W-3. The top margin for the 2000 Forms W-3 and W-2 Copy A is .375 inch (3/8 inch). The right margin must be .15 inch and the left margin .35 inch (plus or minus .0313 inch). The margins are unchanged from 1999. Margins must be free of all printing. No printing should appear anywhere near the Form ID control number (33333 or 22222). For Forms W-2, Copy A, the combination width of Box a, "Control number," and the box containing the form identifying number (22222) must always be 2.0 inches. For Form W-3, the combined width of these boxes must always be 2.2 inches.

NOTE: All form identifying numbers must be printed in non- reflective black ink, using OCR-A font, printed 10 characters per inch.

.06 The depth of the individual scannable image on a page must be the same as that on the IRS printed forms. For Form W-2, the depth is 4.92 inches (see Exhibit A). The scannable image depth of the Form W-3 on a page must be 4.47 inches (see Exhibit B).

.07 The words "Do Not Cut, Fold, Staple, or Separate Forms on This Page" must be printed twice in Red OCR dropout Flint Ink between the two Forms W-2 on Copy A only (see Exhibit A). Perforations are required on all copies (except Copy A) to enable the separation of individual forms. Continuous pinfeed Copy A forms must be separated at the page perforation into individual 11" deep pages before submission to the SSA. The pinfeed strips must also be removed. However, the two W-2 documents contained on the 11" deep page must not be separated.

.08 Box 13 Copy A, Form W-2, do not enter more than three codes in this box. If more than three items need to be reported in box 13, use a separate Forms W-2 to report the additional items (see Multiple forms in the 2000 Instructions for Forms W-2 and W-3). Do not report the same Federal tax data to the SSA on more than one Copy A, Form W-2.

.09 The words "For Privacy Act and Paperwork Reduction Act Notice, see separate instructions," must be printed in red OCR drop- out Flint Ink on Forms W-2, Copy A (see Exhibit A for format and location). The Forms W-2 and W-3 instructions contain the Privacy Act Notification previously shown on the Form W-3.

.10 The Office of Management and Budget (OMB) Number must be printed on each ply of Forms W-2 and on W-3 (see Exhibits A and B for format and location).

.11 The instructions on the official Form W-3, must be printed in their entirety on all substitute Forms W-3 (see Exhibit B).

Household employers filing Forms W-2 for household employees should send the forms to the same address listed in the instructions.

Note: Household employers, even those with only one household employee, must file a Form W-3 with Form W-2. On Form W-3 mark the "Hshid Emp." box in Box b.

.12 Privately printed continuous substitute Form W-2, Copy A, must be perforated at each 11" page depth. No perforations are allowed between the individual forms (5 1/2 inch Forms W-2) on a single copy page of Copy A. Continuous pinfeed Copy A forms must be separated at the page perforation prior to submitting them to the SSA. Two Copy A forms are contained on one page. The two copies must remain together on the page. Only the pages are to be separated (burst). Perforations are required between all the other individual copies on a page (Copies 1, B, C, 2, and D) included in the set.

.13 The back of a substitute Forms W-2, Copy A, and Form W-3 must be free of all printing.

.14 Spot carbons are NOT permitted for Copy A of Forms W-2. 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 Form W-2, Copy A, only if the following standards are met:

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

2. Chemically transferred images must be black in color.

3. Carbon-coated forms are not permitted. Front and back chemically treated paper cannot be processed properly by scanning equipment.

In general, the use of black ink for data submitted on Forms W- 2 and W-3 provides better readability for processing by the scanning equipment. Colors other than black are not easily read by the scanner may result in delays and errors in the processing of Forms W-2 and W-3. "Spot carbons" are NOT permitted.

.16 The GPO symbol must not be placed on substitute Copy A of Forms W-2.

.17 The Catalog Numbers, shown on the 2000 Forms W-2 as "Cat. No. 10134D", and Form W-3 as "Cat. No. 10159Y", are used for IRS distribution purposes and should not be printed on substitute forms.

.18 Form W-3, box 13 has been opened to allow third-party payers of sick pay to enter "Third-Party Sick Pay Recap". This will help identify and expedite processing of those forms.

Section 2. REQUIREMENTS FOR SUBSTITUTE FORMS FURNISHED TO EMPLOYEES (COPIES B, C, AND 2 OF FORMS W-2)

.01 All employers (including those who file on magnetic media or electronically) must furnish employees with at least two copies of the Forms W-2 (three or more for employees required to file a state, city, or local income tax return). The dimensions of these copies (Copies B, C, and 2), but not Copy A, may be expanded from the dimensions of the official form to allow space for conveying additional information, including additional entries required for Boxes 13 or 14, such as withholding from pay for health insurance, union dues, bonds, or charity. The requirement that a maximum of three items are permitted in Box 13 of Form W-2 applies only to the paper Copy A that is filed with the SSA. As long as sufficient space is provided on the substitute employee copies, as many items as needed may be placed in Box 13 or Box 14. Also, on these copies (Copies B, C, and 2), the size of these boxes may be adjusted. (However, see the minimum sizes for certain boxes, below). This may permit the employer to eliminate other statements or notices that would otherwise be furnished to employees.

1. The MAXIMUM allowable dimensions for employee copies of Forms W-2 are:

(a) Depth should be no more than 6.5 inches;

(b) Width should be no more than 8.5 inches.

2. The MINIMUM allowable dimensions for employee copies of Forms W-2 are:

(a) 2.67 inches deep by 5.0 inches wide.

(b) Horizontal or vertical format is permitted.

NOTE: These maximum and minimum size specifications are for the 2000 only and may change in future years. The maximum width of 8.5 inches is for employee copies of Form W-2 only. The width of the paper Copy A, submitted to the SSA, is specified in Part B, section 1.05 above.

.02 The paper for all copies must be white. The substitute Copy B (or its equal), which employees 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 employee must be at least 9 pound paper (basis 17 x 22-500).

.03 Interleaved carbon and chemical transfer paper for employee 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.

.04 The following requirements govern the private printing of employee copies of Forms W-2. All substitutes must be a form, that contains boxes, box numbers, and box titles that, when applicable, match the IRS printed form. The employee copy of Forms W-2 (Copy C) must contain the note "This information is being furnished to the Internal Revenue Service. If you are required to file a tax return, a negligence penalty or other sanction may be imposed on you if this income is taxable and you fail to report it." The placement, numbering, and size of certain boxes (the "core" information) is specified as follows:

1. The items and box numbers that constitute the core data are:

     Box 1 -- Wages, tips, other compensation,

2. The block of core data (boxes 1 through 6) must be placed in the upper right of the form. Substitute employee copies of Form(s) W-2 that are printed using a vertical format with dimensions smaller than the IRS printed form may have the core data entirely on the top of the form (see Exhibit F). In no instance will boxes or other information be permitted to the right of the core data. Standard margins or a small amount of other blank space may appear to the top or right of this data.

The form title, number, or copy (Copy B, C, or 2) may be at the top of the form. Also, a reversed or blocked-out area to accommodate a postal permit number or other postal considerations is permitted at the upper right of the form.

3. Boxes 1 through 6 each must be a minimum of 1 3/8 inches wide and 1/4 inch deep.

4. Other required boxes:

- Employer identification number (EIN),

- Employer's name, address, and ZIP code,

- Employee's social security number, and

- Employee's name, address, and ZIP code.

These items are required to be present on the form and must be in boxes similar to those on the IRS printed form. However, they may be placed in any location, other than the top or upper right. The lettering system used on the IRS printed form ("a" through "f") need not be used. The employer identification number may be included in the box for the employer's name and address. If this is done, a separate box for the EIN is not required. The "Control number" box (box "a" on the IRS printed form) is not required.

5. The Tax Year (2000) must be clearly printed (in non- reflective black ink) on all copies of substitute Forms W-2. It is recommended (but not required) that this information be located to the right of the form title on the lower left of the Form W-2. The use of 24 pt. OCR-A font is recommended but not required.

6. If applicable, box 7, "Social security tips", must be shown separately from "Social security wages." A separate box is not required unless social security tips are to be reported. Boxes 1 and 2 on Copy B are required to be outlined in bold 2point rule (see Exhibit E) or highlighted in some manner to distinguish these boxes.

7. If box 9 for "Advance EIC" payment (Advance Earned Income Credit) is present, the box must be outlined in bold 2-point rule or highlighted in some manner to distinguish this box. However, if no amounts are paid for "Advance EIC", this box is not required and may be omitted by printers. Do not use box 9 for any other purpose than reporting Advance EIC payments.

8. If box 8 "Allocated tips" are being reported for an employee (or class of employees that are being provided Forms W-2), it is recommended (but not required) that this box also be outlined in bold 2-point rule or highlighted on Copy B. However, if allocated tips are not being reported, this box may be omitted by printers.

9. Employers who are required to withhold and report state income tax information are required to include the following boxes on substitute Forms W-2:

Box 16 -- State and Employer's state I.D. no.

Box 17 -- State wages, tips, etc.

Box 18 -- State income tax.

10. Employers who are required to withhold and report local income tax information are required to include the following boxes on substitute Forms W-2:

Box 19 -- Locality name

Box 20 -- Local wages, tips, etc.

Box 21 -- Local income tax.

11. If state or local tax information is required, this information is also considered "core data." The state and local information must be placed at the bottom of the form. See the exhibits at the end of this revenue procedure.

12. Other boxes on the IRS printed form (boxes 7 through 15) need not appear on substitute Forms W-2 provided to employees unless an employer has that item of information to report to an employee. For example, if an employee did not have social security tips (box 7), Allocated tips (box 8), or Advance EIC payment (box 9), the form could be printed without those boxes. However, if the employer provided amounts for (box 10) dependent care benefits those amounts would be required to be reported separately and shown in a box labeled "Dependent care benefits" as on the IRS printed form and the exhibits in this revenue procedure.

13. Employers may provide multiple entries in box 13, but each entry must use the same code as assigned by the IRS for that type of item. (See the "Reference Guide for Box 13 Codes" in the 2000 Instructions for Forms W-2 and W-3.) For example, employers reporting elective deferrals to a section 401(k) plan must enter in box 13 "D" and not "A", even though it is the first or only item to go in this box. Use the codes shown with the dollar amount. Employers may enter more than three codes in box 13 of Copies 1, 2, B, C, and D of Forms W-2. Do not report in box 13 any items that are not listed as Codes A-T in the 2000 Instructions for Forms W-2.

14. For codes D,E,F,G,H, and S, if any elective deferrals, salary reduction amounts, or non-elective contributions to a section 457(b) plan during the year are make-up amounts under the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) for a prior year, you must enter the prior year contributions separately. You must enter the code, the year, and the amount. For example, elective deferrals under USERRA to a section 401(k) plan are reported in box 13 as follows: D 1999 2250.00, D 1998 1250.00. The 2000 contribution does not require a year designation; enter it as D 7000.00.

15. If you are a military employer and provide your employee with basic housing, subsistence allowances, and combat zone compensation, report the amount in box 13, Form W-2, using code Q.

16. Employer contributions to an employee's Medical Savings Accounts (MSA), must be reported in box 13, Form W-2, using code R.

17. An employee elective contribution to a salary reduction SIMPLE retirement account must be included in box 13, Form W-2, using code S. However, if the amount is contributed to a SIMPLE retirement that is part of a section 401(k) arrangement, that amount must be reported in box 13, Form W-2, using code D.

18. Amounts paid or expenses incurred on behalf of an employee for qualified adoption expenses must be reported in box 13, Form W- 2, using code T.

19. Employers may use box 14 for any other information they wish to give their employee. Each item must be labeled. Examples are union dues, health insurance premiums deducted, nontaxable income, voluntary after-tax contributions, or educational assistance payments.

20. If you are reporting prior year payments contributions under USERRA (see item 13 above), you may report box 14 makeup amounts for non elective employer contributions, voluntary after-tax contributions, required employee contributions, and employer matching contributions. Report such amounts separately for each year.

21. If the employer has employees who are subject to any of the five categories/check boxes within box 15, the entire box 15 (ballot box) is required to be reported with the proper check mark designation. For example, if an employer provides a pension plan, box 15 must be reported and check marked for pension plan designation.

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

1. All copies of Form W-2 must clearly show the form number, the form title, and the tax year prominently displayed together in one area of the form. The title of Form W-2 is "Wage and Tax Statement." It is recommended (but not required) that this be located on the bottom left of Form W-2. The reference to the Department of the Treasury -- Internal Revenue Service must be on all copies of Form W-2 provided to the employee. It is recommended (but not required) that this be located on the bottom right of Form W-2.

2. If the substitute forms are not labled as to the disposition of the copies, then written notification must be provided to each employee as specified below:

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

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

(c) If applicable, the third copy (Copy 2) of the form is filed with the employee's state, city, or local income tax return.

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

"Copy B, To Be Filed With Employee's FEDERAL Tax Return," and "Copy C, for EMPLOYEES RECORDS." It is recommended (but not required) that this be located on the lower left of Form W-2. "Copy 2 To Be Filed with Employee's State, City, or Local Income Tax Return".

4. Instructions similar to those contained on the back of Copies B and C of the official Form W-2 must be provided to each employee. Employers may modify or delete certain information in these instructions (such as modification for employees of railroads to cover Railroad Retirement Tier 1 and Tier 2 compensation and taxes). Employers are allowed to delete instructions that do not apply to the employee. For example, if none of the employees have dependent care benefits (box 10), the employer may delete the instructions for that item. Also, if an employer will only be reporting amounts for a 401(k) plan in box 13, those instructions may be modified to cover only Code D and its instructions.

5. You must notify employees who have no income tax withheld that they may be able to claim a tax refund because of the earned income credit (EIC). You will meet this notification requirement if you issue the official IRS Form W-2 with the EIC notice on the back of the copy (Copy B), or a substitute Form W-2 with the same statement. You may also meet the requirement by providing a substitute Form W-2 without the EIC notice and Notice 797, Possible Federal Tax Refund Due to the Earned Income Credit (EIC), or your own statement that contains the same wording. You also may change the font on Copy C (back page only) so that the EIC notification and W-2 instructions may fit entirely on the back of Copy C. For more information about notification requirements, see Notice 1015 (formerly Pub. 1325), Have You Told Your Employees About the Earned Income Credit (EIC)?.

NOTE: Printers are cautioned that the rules set forth here (Part B., Sec. 2) apply to employee copies (Copies B, C, and 2) only. Paper filers who send Copy A of Form W-2 to the SSA must follow the requirements in Parts B, Sec. 1 and Sec. 3, for those paper submissions.

Section 3. GENERAL RULES FOR FILING "PAPER SUBSTITUTES" FOR FORMS W-2 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. Please do not mail your paper Forms W-2 or W-3 tax year submissions to the IRS address below. The address below is for correspondence or questions relating to specifications in this publication. Penalties may be assessed for not complying with the form specifications set forth in this publication. SUBSTITUTE FORMS THAT DO NOT CONFORM TOTALLY TO THESE SPECIFICATIONS ARE NOT ACCEPTABLE. This applies to both paper substitutes that are filed with the SSA and those that are given to employees. Forms submitted to SSA (W-3, W-2 Copy A), that do not conform totally to the specifications, may be returned. Forms cannot be submitted to the IRS or the SSA for specific 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 how the form would appear if produced using your understanding of the specification. Any questions pertaining to Copies B, C, and 2 of Forms W-2 should be sent to:

     Internal Revenue Service

     Social Security Administration

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

.03 Copies of the current year's IRS printed Forms W-2 and W- 3, and the instructions for these forms may be obtained using IRS'S Web Site www.irs.gov, or from most IRS offices, or by calling 1-800- 829-3676. The IRS provides only cut-sheet sets of Forms W-2 and W-3.

.04 Substitute Forms W-2 and W-3 filed with the SSA should contain only data that is required according to the Instructions for Forms W-2 and W-3 and this revenue procedure.

.05 Substitute Forms W-2, Copy A, and W-3 are machine imaged and scanned by the SSA; therefore, these forms must meet the same specifications as Forms W-2 and W-3 produced by the IRS. The vertical and horizontal spacing for all Federal payment and data boxes on Form W-2 must be in compliance with the specifications contained herein.

.06 The ballot boxes in box 15 of Forms W-2, Copy A must be point-1 inch boxes (See Exhibit A); and the "Void" box must be point-14 inch. The spacing on each side of the "Void" box must be point-8 inch (See Exhibit A). The Form W-3 box b must be point-11 inch ballot boxes (see Exhibit B). Please insure you adhere to the dimensions provided in the exhibits.

NOTE: If a box is marked, more than 50 percent of the applicable ballot box must be covered by an "X".

.07 Copy A of Forms W-2 and Form W-3 must have the form producer's EIN entered to the left of "Department of Treasury."

PART C. ADDITIONAL INSTRUCTIONS

Section 1. INSTRUCTIONS FOR FORMS PRINTERS

.01 Except as provided below, if magnetic or electronic mediais not used for filing with the SSA, the substitute copies of Forms W-2 assembly should be arranged in the same order as the IRS printed Forms W-2. 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 employer with the SSA must carry the designation "Copy A."

NOTE: Magnetic media/electronic filers do not submit paper Copy A of Forms W-2 or Form W-3 to SSA. TIB-4 specifications (and MMREF-1 specifications (if not filed electronically)) require a Form 6559 transmittal for magnetic media filers of Forms W-2. MMREF-1 specifications do not require Form 6559 if filed electronically and the PIN registration process is completed annually.

1. Privately printed substitute forms are not required to contain a copy to be retained by employers (Copy D). However, employers must be prepared to verify or duplicate this information if it is requested by the IRS or the SSA. Paper filers that do not keep Copy D should be able to generate a Facsimile of Copy A in case of loss.

2. Except as provided in the arrangement of the official assemblies, additional copies that may be prepared by employers shall not be placed ahead of the copy "FOR EMPLOYEE'S RECORDS," on Form W-2 (Copy C).

3. Instructions similar to those contained on the back of Copies B and C of the official form must be provided to each employee. These instructions may be printed on the back of the substitute Copies B and C or may be provided to employees on a separate statement. Do not print these instructions on the back of Copy 1 or 2 that is to be filed with the employee's state or local income tax return.

.02 All privately printed Forms W-2 (Copy A) and W-3 must have the tax year, form number, and form title printed on the bottom face of each form using identical type to that of the official format. The tax year must be printed in non-reflective black ink using 24- point OCR-A font on (Copy A), of Forms W-2, and Form W-3. The form titles for Forms W-2 (Copy A) and W-3 respectively, e.g., "Wage and Tax Statements" and "Transmittal of Wage and Tax Statements" must be printed in Red OCR drop-out Flint Ink. The form identifying control number for Forms W-2 and Form W-3, must be printed in non-reflective black ink, using OCR-A font printed 10 characters per inch. The word "Form" on the W-2 and W-3 must be printed in Red OCR dropout Flint Ink.

.03 The substitute Form W-2, Copy B, which employees attach to their Federal income tax return, must be printed on at least 12- pound paper (basis 17 x 22-500) while the other copies furnished to employee's should be at least 9-pound paper (basis 17 x 22-500).

.04 Employee copies of Forms W-2 (Copies B, C, etc.), including those that are printed on a single sheet of paper, MUST be produced so as to be easily separated by the employee. Perforations between the individual copies that are printed on a single sheet of paper satisfy this requirement. The use of scissors is not considered easily separated forms.

.05 The Form W-2, Copy A, and Form W-3 that are filed with the SSA must have no printing on the reverse side.

.06 Instructions similar to those provided as part of the official forms must be provided as part of any substitute Forms W-2 or W-3.

Section 2. INSTRUCTIONS FOR EMPLOYERS

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

.02 Employers should type or machine print entries on forms whenever possible, and provide good quality data entries by using a high quality type face, inserting data in the middle of blocks that are well separated from other printing and guidelines, and taking any other measures that will guarantee clear, sharp images. USE at least 10- point font. (SSA prefers 12-point Courier font.) Omit dollar signs but include decimal points for all cents. The employer must provide a machine scannable Form W-2, Copy A. The employer must refrain from printing any data in the top margin of the forms. UNLESS ABSOLUTELY NECESSARY, DO NOT PRINT ANYTHING IN THE CONTROL NUMBER BOX ON THE FORMS W-2 OR W-3. The employer must also provide payee copies (Copies B, C, and 2) that are legible and capable of being photocopied (by the employee). When Forms W-2 or W-3 are typed, black ink must be used with no script type, inverted font, italics or dual case alpha characters used.

.03 The Employer Identification Number (EIN) must be entered in box b of Form W-2. The EIN also must be entered in box e of Form W-3. Note: The EIN entered on Form W-3 in box e must be the same EIN entered on Forms W-2 in box b, and on Forms 941, 943, CT-1, Schedule H (Form 1040), or any other forms filed with the IRS.

.04 The employer's name, and address may be preprinted.

.05 Generally, an agent that has an approved Form(s) 2678, Employer Appointment of Agent, should enter its name as the employer in box c of Form W-2, and file one Form W-2. However, if the agent is (a)acting as an agent for two or more employers, or is an employer and is acting as an agent for another employer, and (b)pays social security wages in excess of the wage base to an individual, special reporting for payments to that individual is needed. The agent should file separate Forms W-2 reflecting the wages paid by each employer. Box c of Forms W-2 should include the name of the agent, agent for (name of employer), and address of agent. Each Form W-2 should reflect the EIN of the agent in box b. In addition, the employer's EIN should be shown in box h of Form W-3.

.06 The preparation and filing instructions for Forms W-2 and W-3 are included in the 2000 Instructions for Forms W-2 and W-3.

.07 To avoid confusion and questions by employees, employers are encouraged to delete the following items from the employee copies of Forms W-2 that are provided to employees:

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

2 The word "Void" and associated box, and

3 Any other captions or box numbers that would not be of any informational use to employees (unless otherwise required).

.09 Employers should use the IRS preprinted supplied label they received with Pub. 393 or 2184 when filing Form W-3 with the SSA. The label should be placed inside the brackets printed in boxes e, f, and g.

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

.01 The Paperwork Reduction Act requires: (1) OMB approval of IRS tax forms, (2) that each form (all copies) show the OMB approval number, and (3) that the form (or its instructions) state why the IRS is needs the information, how it will be used and whether it must be furnished. 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 as it appears on the official IRS printed form (see Exhibits A and B).

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

     OMB No. 1545-0008 (preferred),

Section 4. FORMS and PUBLICATIONS

.01 Electronic access to IRS tax forms, instructions, publications, and other tax data is available through the following:

     WWW - http://www.irs.gov

.02 A list of the Social Security Administrations ESLO Coordinators is included in the Appendix.

Section 5. EFFECT ON OTHER REVENUE PROCEDURES

.01 Rev. Proc. 99-24, 1999-21, dated May 24, 1999 (Reprinted as Publication 1141, Revised 6-99), is superseded.

                         Exhibit A Form W-2

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