Bulletin No. 2000–12

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Internal Revenue

bulletin

Bulletin No. 2000–12

March 20, 2000

HIGHLIGHTS

OF THIS ISSUE

These synopses are intended only as aids to the reader in

identifying the subject matter covered. They may not be

relied upon as authoritative interpretations.

INCOME TAX

ings rate” for 1999 and the “recomputed differential earnings

rate” for 1998 under section 809 of the Code.

Rev. Rul. 2000–13, page 774.

Fringe benefits aircraft valuation formula. For purposes

of section 1.61–21(g) of the Income Tax Regulations, relating to the rule for valuing noncommercial flights on employer-provided aircraft, the Standard Industry Fare Level

(SIFL) cents-per-mile rates and terminal charges in effect for

the first half of 2000 are set forth.

Rev. Rul. 2000–14, page 779.

LIFO; price indexes; department stores. The January 2000

Bureau of Labor Statistics price indexes are accepted for use by

department stores employing the retail inventory and last-in,

first-out inventory methods for valuing inventories for tax years

ended on, or with reference to, January 31, 2000.

Rev. Rul. 2000–15, page 774.

Election in respect to losses attributable to a disaster.

This ruling lists the areas declared by the President to qualify

as major disaster or emergency areas during 1999 under the

Disaster Relief and Emergency Assistance Act.

Rev. Rul. 2000–16, page 780.

Interests rates; underpayments and overpayments. The

rate of interest determined under section 6621 of the Code for

the calendar quarter beginning April 1, 2000, will be 9 percent

for overpayments (8 percent in the case of a corporation), 9

percent for underpayments, and 11 percent for large corporate

underpayments. The rate of interest paid on the portion of a

corporate overpayment exceeding $10,000 is 6.5 percent.

Notice 2000–16, page 826.

Differential earnings rate for mutual life insurance companies. This notice sets forth the tentative “differential earn-

EXEMPT ORGANIZATIONS

REG–209601–92, page 829.

Proposed regulations under section 513 of the Code relate

to the tax treatment of sponsorship payments received by

exempt organizations. A public hearing is scheduled for June

21, 2000.

Announcement 2000–15, page 837.

A list is provided of organizations that no longer qualify as organizations to which contributions are deductible under section 170 of the Code.

ADMINISTRATIVE

Rev. Proc. 2000–19, page 785.

Substitute printed, computed-prepared, and computer-generated tax forms and schedules. Requirements are set forth for privately designed and printed federal tax forms and conditions under which the Service will

accept computer-prepared and computer-generated tax

forms and schedules. Rev. Proc. 98–65 superseded.

Notice 2000–15, page 826.

Listed transactions. This notice lists certain transactions

that the Service has determined to be tax avoidance transactions and identifies the transactions as “listed transactions” for

purposes of section 1.6011–4T(b)(2) of the Temporary Income Tax Regulations and section 301.6111–2T(b)(2) of the

Temporary Procedure and Administration Regulations.

(Continued on the next page)

Finding Lists begin on page ii.

Department of the Treasury

Internal Revenue Service

Notice 2000–17, page 827.

Due date; 1999 federal tax returns; Patriots’ Day. This

notice extends to April 18, 2000, the due date for filing

1999 federal tax returns and requests for extensions, and

for making federal tax payments for taxpayers residing in

certain parts of the northeast due to Patriots’ Day, a legal

holiday in Massachusetts and Maine.

Announcement 2000–12, page 835.

The Treasury Department and Internal Revenue Service have

issued three sets of temporary and proposed regulations requiring promoters to register confidential corporate tax shel-

March 20, 2000

ters and to maintain lists of investors, and requiring corporate taxpayers to disclose large transactions that have characteristics common to tax shelters. In addition, the Service

has created an Office of Tax Analysis to serve as the focal

point for efforts to gather information relating to tax shelter

activity and to coordinate appropriate responses.

Announcement 2000–16, page 837.

This announcement is a reprint of proposed regulations

REG–101492–98 (2000–3 I.R.B. 326) with typographical errors corrected.

2000–12 I.R.B.

The IRS Mission

Provide America’s taxpayers top quality service by helping them understand and meet their tax responsibilities

and by applying the tax law with integrity and fairness to

all.

Introduction

The Internal Revenue Bulletin is the authoritative instrument

of the Commissioner of Internal Revenue for announcing official rulings and procedures of the Internal Revenue Service

and for publishing Treasury Decisions, Executive Orders, Tax

Conventions, legislation, court decisions, and other items of

general interest. It is published weekly and may be obtained

from the Superintendent of Documents on a subscription

basis. Bulletin contents are consolidated semiannually into

Cumulative Bulletins, which are sold on a single-copy basis.

It is the policy of the Service to publish in the Bulletin all substantive rulings necessary to promote a uniform application

of the tax laws, including all rulings that supersede, revoke,

modify, or amend any of those previously published in the

Bulletin. All published rulings apply retroactively unless otherwise indicated. Procedures relating solely to matters of internal management are not published; however, statements

of internal practices and procedures that affect the rights

and duties of taxpayers are published.

Revenue rulings represent the conclusions of the Service on

the application of the law to the pivotal facts stated in the

revenue ruling. In those based on positions taken in rulings

to taxpayers or technical advice to Service field offices,

identifying details and information of a confidential nature

are deleted to prevent unwarranted invasions of privacy and

to comply with statutory requirements.

Rulings and procedures reported in the Bulletin do not have

the force and effect of Treasury Department Regulations,

but they may be used as precedents. Unpublished rulings

will not be relied on, used, or cited as precedents by Service

personnel in the disposition of other cases. In applying published rulings and procedures, the effect of subsequent legislation, regulations, court decisions, rulings, and proce-

dures must be considered, and Service personnel and others concerned are cautioned against reaching the same conclusions in other cases unless the facts and circumstances

are substantially the same.

The Bulletin is divided into four parts as follows:

Part I.—1986 Code.

This part includes rulings and decisions based on provisions

of the Internal Revenue Code of 1986.

Part II.—Treaties and Tax Legislation.

This part is divided into two subparts as follows: Subpart A,

Tax Conventions, and Subpart B, Legislation and Related

Committee Reports.

Part III.—Administrative, Procedural, and Miscellaneous.

To the extent practicable, pertinent cross references to

these subjects are contained in the other Parts and Subparts. Also included in this part are Bank Secrecy Act Administrative Rulings. Bank Secrecy Act Administrative Rulings

are issued by the Department of the Treasury’s Office of the

Assistant Secretary (Enforcement).

Part IV.—Items of General Interest.

This part includes notices of proposed rulemakings, disbarment and suspension lists, and announcements.

The first Bulletin for each month includes a cumulative index

for the matters published during the preceding months.

These monthly indexes are cumulated on a semiannual basis,

and are published in the first Bulletin of the succeeding semiannual period, respectively.

The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.

For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402.

2000–12 I.R.B.

March 20, 2000

Part I. Rulings and Decisions Under the Internal Revenue Code of 1986

Section 61.—Gross Income

Defined

26 CFR 1.61–21: Taxation of fringe benefits.

Fringe benefits aircraft valuation

formula. For purposes of section

1.61–21(g) of the Income Tax Regulations, relating to the rule for valuing noncommercial flights on employer-provided

aircraft, the Standard Industry Fare Level

(SIFL) cents-per-mile rates and terminal

charges in effect for the first half of 2000

are set forth.

Period During Which

the Flight Is Taken

1/1/00 - 6/30/00

DRAFTING INFORMATION

The principle author of this revenue ruling is Kathleen Edmondson of the Office of

the Associate Chief Counsel (Employee

Benefits and Exempt Organizations). For

further information regarding this revenue

ruling, contact Ms. Edmondson on (202)

622-6080 (not a toll-free call).

Section 165.—Losses

26 CFR 1.165–11: Election in respect of losses

attributable to a disaster.

Election in respect of losses attributable to a disaster. This ruling lists the

areas declared by the President to qualify

as major disaster or emergency areas during 1999 under the Disaster Relief and

Emergency Assistance Act.

Rev. Rul. 2000–15

Under § 165(i) of the Internal Revenue

Code, if a taxpayer suffers a loss attributable to a disaster occurring in an area subsequently determined by the President of

March 20, 2000

Rev. Rul. 2000–13

For purposes of the taxation of fringe

benefits under section 61 of the Internal

Revenue Code, section 1.61–21(g) of the

Income Tax Regulations provides a rule

for valuing noncommercial flights on employer-provided aircraft. Section

1.61–21(g)(5) provides an aircraft valuation formula to determine the value of

such flights. The value of a flight is determined under the base aircraft valuation

formula (also known as the Standard Industry Fare Level formula or SIFL) by

Terminal

Charge

$32.98

multiplying the SIFL cents-per-mile rates

applicable for the period during which the

flight was taken by the appropriate aircraft multiple provided in section

1.61–21(g)(7) and then adding the applicable terminal charge. The SIFL cents-permile rates in the formula and the terminal

charge are calculated by the Department

of Transportation and are reviewed semiannually.

The following chart sets forth the terminal charges and SIFL mileage rates:

SIFL Mileage

Rates

Up to 500 miles

= $.1804 per mile

501-1500 miles

= $.1376 per mile

Over 1500 miles

= $.1323 per mile

the United States to warrant assistance by

the Federal Government under the Disaster Relief and Emergency Assistance Act,

42 U.S.C. §§ 5121–5204c (1988 & Supp.

V 1993) (the Act), the taxpayer may elect

to claim a deduction for that loss on the

taxpayer’s federal income tax return for

the taxable year immediately preceding

the taxable year in which the disaster occurred. For purposes of § 165(i), a disaster includes an event declared a major disaster or an emergency under the Act.

Section 1.165–11(e) of the Income Tax

Regulations provides that the election to

deduct a disaster loss for the preceding year

must be made by filing a return, an

amended return, or a claim for refund on or

before the later of (1) the due date of the

taxpayer’s income tax return (determined

without regard to any extension of time to

file the return) for the taxable year in which

the disaster actually occurred, or (2) the due

date of the taxpayer’s income tax return

(determined with regard to any extension of

time to file the return) for the taxable year

immediately preceding the taxable year in

which the disaster actually occurred.

774

The provisions of § 165(i) apply only

to losses that are otherwise deductible

under § 165(a). An individual taxpayer

may deduct losses if they are incurred in a

trade or business, if they are incurred in a

transaction entered into for profit, or if

they are casualty losses under § 165(c)(3).

The President has determined that during 1999 the areas listed below have been

adversely affected by disasters of sufficient severity and magnitude to warrant

assistance by the Federal Government

under the Act.

DRAFTING INFORMATION

The principal author of this revenue

ruling is Timothy Sheppard of the Office

of Assistant Chief Counsel (Income Tax

and Accounting). For further information

regarding this revenue ruling, contact

Robert M. Casey on (202) 622-4960 (not

a toll-free call).

2000–12 I.R.B.

Disaster Areas

in 1999

Arizona

County of Maricopa

Arkansas

Counties of Bradley, Chicot, Clay, Columbia, Drew, Faulkner, Grant,

Greene, Hempstead, Independence, Jackson, Jefferson, Lafayette,

Lonoke, Miller, Monroe, Poinsett, Pulaski, Randolph, St. Francis,

Saline, and White; and City of Beebe in White County

California

Counties of Butte, Humboldt, Napa, Plumas, San Bernardino, Shasta,

Tehama, Trinity, Tuolome, and Yuba

Type of

Disaster

Date of

Disaster

Severe storms, flooding,

and high winds

September 14-23

Severe storms, tornadoes, January 21-31

and high winds

Severe fires

August 24November 29

Severe storms,

flooding, landslides,

and mudslides

April 29-May 19

High winds,

heavy rain and flooding

associated with

Tropical Storm Floyd

September 16-21

Hurricane Floyd

September 15-17

Fire hazards

April 15-May 25

Counties of Brevard, Duval, Flagler, Glades, Highlands, Indian River,

Martin, Nassau, Palm Beach, St. Johns, St. Lucie, and Volusia.

Hurricane Floyd

September 13-25

Counties of Broward and Dade

Hurricane Floyd

September 14-16

Counties of Brevard, Broward, Collier, Dade, Flagler, Glades, Hendry,

Highlands, Indian River, Martin, Monroe, Okeechobee, Orange, Osceola,

Palm Beach, Polk, St. Lucie, Seminole, and Volusia

Hurricane Irene

October 14-24

Counties of Charlotte, De Soto, Hardee, Hillsborough, Lake, Lee,

Manatee, Pasco, Pinellas, and Sarasota

Hurricane Irene

October 14-24

Severe storms and

tornadoes

April 15

Hurricane Floyd

September 14-17

Colorado

Counties of Bent, Crowley, Custer, Elbert, El Paso, Fremont, Kiowa,

Larimer, Las Animas, Otero, Pueblo, and Weld

Connecticut

Counties of Fairfield, Litchfield, and Hartford

Delaware

County of New Castle

Florida

Counties of Alachua, Baker, Bay, Bradford, Brevard, Broward, Calhoun,

Charlotte, Clay, Collier, Columbia, Dade, De Soto, Duval, Franklin,

Gadsden, Gilchrist, Glades, Gulf, Hamilton, Hardee, Hendry, Highlands,

Hillsbrough, Holms, Indian River, Jackson, Jefferson, Lee, Leon, Levy,

Liberty, Manatee, Marion, Martin, Monroe, Nassau, Okeechobee Orange,

Osceola, Palm Beach Pinellas, Polk, Putnam, Sarasota, Seminole,

St. Lucie, Swannee, Union, Wakulla, Walton, and Washington

Georgia

Counties of Candler and Dooly

Counties of Bryan, Camden, Chatham, Glynn, Liberty, and McIntosh

Illinois

Counties of Adams, Brown, Bureau, Calhoun, Cass, Champaign,

Record/near

Christian, Cook, DeWitt, Douglas, DuPage, Ford, Fulton, Greene, Grundy, record snow

Hancock, Henderson, Henry, Iroquois, Kane, Kankakee, Kendall, Knox,

Lake, La Salle, Livingston, Logan, Macon, Marshall, Mason, McDonough,

2000–12 I.R.B.

775

January 1-15

March 20, 2000

McHenry, McLean, Mercer, Menard, Morgan, Moultrie, Peoria, Piatt, Pike,

Putnam, Sangamon, Schuyler, Scott, Shelby, Stark, Tazewell, Vermillion,

Warren, Will, and Woodford

County of Jo Daviess

Severe storms and

flash flooding

Indiana

Counties of Adams, Allen, Benton, Blackford, Boone, Carroll, Cass, Clay, Record/near record

Clinton, DeKalb, Delaware, Elkhart, Fayette, Fountain, Fulton, Grant,

snow

Hamilton, Hancock, Hendricks, Henry, Howard, Huntington, Jasper, Jay,

Johnson, Kosciusko, Lake, Lagrange, LaPorte, Madison, Marion, Marshall,

Miami, Montgomery, Morgan, Newton, Noble, Parke, Porter, Pulaski,

Putnam, Randolph, Rush, St. Joseph, Shelby, Starke, Steuben, Tipton,

Tippecanoe, Vermillion, Vigo, Wabash, Warren, Wayne, Wells, White,

and Whitley

Iowa

Counties of Black Hawk, Bremer, Buchanan, Butler, Chickasaw, Clayton,

Clinton, Crawford, Delaware, Dubuque, Fayette, Harrison, Jones, Linn,

Montgomery, and Scott

Counties of Black Hawk, Bremer, Buchanan, Butler, Cerro Gordo,

Chickasaw, Clayton, Crawford, Fayette, Floyd, Harrison, Howard, Jones,

Linn, Mills, Mitchell, Montgomery, Pottawattamie, Story, Woodbury,

and Worth

Kansas

Counties of Reno, Sedgwick, and Sumner

Louisiana

Parishes of Bossier, Caddo, Claiborne, De Soto, and Webster

Maine

Counties of Androscoggin, Cumberland, Kennebec, Oxford, and Somerset

Maryland

Counties of Anne Arundel, Calvert, Caroline, Cecil, Charles, Harford,

Kent, Queen Anne’s, Somerset, St. Mary’s, and Talbot

Massachusetts

County of Worcester

Michigan

Counties of Alcona, Allegan, Arenac, Barry, Berrien, Cass, Crawford,

Ionia, Iosco, Jackson, Kalamazoo, Kent, Lawrence, Lenawee, Macomb,

Marquette, Mecosta, Monroe, Montmorency, Muskegeon, Newaygo,

Oakland, Oceana, Ogemaw, Osceola, Oscoda, Otsego, Ottawa, St. Joseph,

Van Buren, Washtenaw, and Wayne

Minnesota

Counties of Kittston, Marshall, Pennington, Polk, Red Lake, and Roseau

Counties of Aitkin, Beltrami, Cass, Clay, Cook, Hubbard, Itasca, Lake,

and St. Louis

Missouri

Counties of Andrew, Cole, Iron, Macon, Madison, and Osage

March 20, 2000

776

May 16-17

January 1-15

Severe storms,

flooding, and tornadoes

May 16-29

Severe storms and

flooding

July 2-August 10

Severe storms and

tornadoes

May 3-6

Severe storms, tornadoes, April 3-7

and flooding

Hurricane Floyd

September 16-19

Hurricane Floyd

September 16-20

Fire

December 3-13

Near record snow

January 2-15

Severe ice storms,

flooding and

heavy rains

March 1-May 30

Severe storms, winds,

and flooding

July 4-August 2

Severe storms and

flooding

April 3-14

2000–12 I.R.B.

Nebraska

Counties of Burt, Douglas, and Washington

Severe storms and

flooding

August 6-9

Severe storms and

flash flooding

July 8-16

Tropical Storm Floyd

September 16-18

Hurricane Floyd

September 16-18

Severe storms and

flooding

July 16-August 7

Near recod snow

January 1-15

Counties of Livingston, Monroe, Ontario, Orleans, Wayne, and Wyoming

Near record snow

March 3-6

Counties of Albany, Dutchess, Essex, Greene, Nassau, Orange, Putnam,

Rensselaer, Rockland, Schenectady, Schoharie, Suffolk, Ulster, Warren,

and Westchester

Hurricane Floyd

September 16-18

Hurricane Dennis

August 29September 11

Hurricane Floyd

September 15November 2

Severe storms,

flooding, snow and ice,

ground saturation,

landslides, mudslides,

and tornadoes

March 1-July 19

Tornadoes and severe

storms

May 3-5

Nevada

County of Clark

New Hampshire

Counties of Belknap, Cheshire, and Grafton

New Jersey

Counties of Atlantic, Bergen, Burlington, Camden, Cape May,

Cumberland, Essex, Glouscester, Hudson, Hunterdon, Mercer, Middlesex,

Monmouth, Morris, Ocean, Passaic, Salem, Somerset, Sussex, Union,

and Warren

New Mexico

Counties of Dona Ana, Luna, Mora, Rio Arriba, San Juan, Sandoval, and

Sierra; and the Mescalero Apache Reservation

New York

Counties of Cattaraugus, Chautauqua, Erie, Genesee, Jefferson, Lewis,

Niagara, Orleans, St. Lawrence, and Wyoming

North Carolina

Counties of Beaufort, Brunswick, Carteret, Craven, Currituck, Dare,

Hyde, New Hanover, Onslow, Pamlico, and Pender

Counties of Alamance, Anson, Beaufort, Bertie, Bladen, Brunswick,

Camden, Carteret, Caswell, Chatham, Chowan, Columbus, Craven,

Cumberland, Currituck, Dare, Davidson, Duplin, Durham, Edgecombe,

Forsyth, Franklin, Gates, Granville, Greene, Guilford, Halifax, Harnett,

Hertford, Hoke, Hyde, Johnston, Jones, Lee, Lenoir, Martin, Montgomery,

Moore, Nash, New Hanover, Northampton, Onslow, Orange, Pamlico,

Pasquotank, Pender, Perquimans, Person, Pitt, Randolph, Richmond,

Robeson, Rockingham, Rowan, Sampson, Scotland, Stanly, Stokes,

Tyrrell, Union, Vance, Wake, Warren, Washington, Wayne, and Wilson

North Dakota

Counties of Barnes, Benson, Bottineau, Burke, Burleigh, Cass, Cavalier,

Dickey, Divide, Eddy, Emmons, Foster, Grand Forks, Griggs, Kidder,

LaMoure, Logan, McHenry, McIntosh, McLean, Mercer, Morton,

Mountrail, Nelson, Pembina, Pierce, Ramsey, Ransom, Renville,

Richland, Rolette, Sargent, Sheridan, Sioux, Steele, Stutsman, Towner,

Traill, Walsh, Ward, Wells, and Williams; and the Indian Reservations of

the Spirit Lake Sioux Tribe, Standing Rock Soiux (that portion of the

reservation that lies within the State of North Dakota), Three Affiliated

Tribes, and Turtle Mountain Band of Chippewa

Oklahoma

Counties of Caddo, Canadian, Cleveland, Craig, Creek, Grady, Kingfisher,

Latimer, Le Flore, Lincoln, Logan, McClain, Noble, Oklahoma,

Okmulgee, Ottawa, Payne Pottawatomie, and Tulsa

2000–12 I.R.B.

777

March 20, 2000

Pennsylvania

Counties of Juniata and McKean

Severe storms

and flooding

August 20-21

Counties of Dauphin, Lycoming, Northumberland, Snyder, and Union

Severe flash flooding

associated with

Tropical Depression

Dennis

September 6-7

Counties of Berks, Bucks, Chester, Delaware, Lancaster, Montgomery,

Philadelphia, and York

Hurricane Floyd

September 16-29

Hurrican Lenny

November 17-20

Hurricane Floyd

September 14-30

Severe storms,

tornadoes, and

flooding

June 4-18

Tennessee

Counties of Benton, Carroll, Crockett, Decatur, Dickson, Fayette,

Franklin, Giles, Hardeman, Haywood, Henderson, Houston, Humphreys,

Jackson, Lauderdale, Lawrence, Lewis, Madison, Maury, Montgomery,

Perry, Stewart, Warren, and Wayne

Severe storms,

tornadoes, and

high winds

January 17February 1

Counties of Cheatham, Chester, Davidson, Decatur, Dickson,

Hardeman, Hardin, Henderson, Hickman, Houston, Humphreys,

Lawrence, McNairy, Perry, Stewart, Sumner, White, and Williamson

Severe storms,

tornadoes, and

flooding

May 5-19

Severe storms

and tornadoes

May 4

Extreme fire

hazards

August 1December 10

Puerto Rico

All 78 municipalities

South Carolina

Counties Allendale, Bamberg, Barnwell, Beaufort, Berkeley, Calhoun,

Charleston, Chesterfield, Clarendon, Colleton, Darlington, Dillon,

Dorchester, Florence, Georgetown, Hampton, Horry, Jasper, Kershaw,

Lee, Lexington, Marion, Marlboro, Orangeburg, Richland, Sumter,

and Williamsburg

South Dakota

County of Shannon and the Pine Ridge Indian Reservation

Texas

Counties of Bowie, Gregg, Red River, and Titus

Counties of Anderson, Andrews, Angelina, Archer, Armstrong, Austin,

Bailey, Bandera, Bastrop, Baylor, Bell, Bexar, Blanco, Borden, Bosque,

Bowie, Brazoria, Brazos, Brewster, Briscoe, Brown, Burleson, Burnet,

Caldwell, Calhoun, Callahan, Camp, Carson, Cass, Castro, Chambers,

Cherokee, Childress, Clay, Cochran, Coke, Coleman, Collin,

Collingsworth, Colorado, Comal, Comanche, Concho, Cooke, Coryell,

Cottle, Crane, Crockett, Crosby, Culberson, Dallam, Dallas, Dawson,

Deaf Smith, Delta, Denton, DeWitt, Dickens, Donley, Eastland, Ector,

Edwards, El Paso, Ellis, Erath, Falls, Fannin, Fayette, Fisher, Floyd,

Foard, Fort Bend, Franklin, Freestone, Gaines, Galveston, Garza,

Gillespie, Glasscock, Gonzales, Gray, Grayson, Gregg, Grimes,

Guadalupe, Hale, Hall, Hamilton, Hansford, Hardeman, Hardin, Harris,

Harrison, Hartley, Haskell, Hays, Hemphill, Henderson, Hill, Hockley,

Hood, Hopkins, Houston, Howard, Hudspeth, Hunt, Hutchinson, Irion,

Jack, Jackson, Jasper, Jeff Davis, Jefferson, Johnson, Jones, Kaufman,

Kendall, Kent, Kerr, Kimble, King, Kinney, Knox, Lamar, Lamb,

Lampasas, Lavaca, Lee, Leon, Liberty, Limestone, Lipscomb, Llano,

Loving, Lubbock, Lynn, Madison, Marion, Martin, Mason, Matagorda,

McCulloch, McLennan, Medina, Menard, Midland, Milam, Mills,

Mitchell, Montague, Montgomery, Moore, Morris, Motley, Nacogdoches,

March 20, 2000

778

2000–12 I.R.B.

Navarro, Newton, Nolan, Ochiltree, Oldham, Orange, Palo Pinto,

Panola, Parker, Parmer, Pecos, Polk, Potter, Presidio, Rains, Randall,

Reagan, Real, Red River, Reeves, Roberts, Robertson, Rockwall,

Runnels, Rusk, Sabine, San Augustine, San Jacinto, San Saba,

Schleicher, Scurry, Shackelford, Shelby, Sherman, Smith, Somerveil,

Stephens, Sterling, Stonewall, Sutton, Swisher, Tarrant, Taylor, Terrell,

Terry, Throckmorton, Titus, Tom Green, Travis, Trinity, Tyler, Upshur,

Upton, Uvalde, Val Verde, Van Zandt, Victoria, Walker, Waller, Ward,

Washington, Wharton, Wheeler, Wichita, Wilbarger, Williamson,

Wilson, Winkler, Wise, Wood, Yoakum, and Young

Counties of Aransas, Brooks, Cameron, Duval, Hidalgo, Jim Hogg,

Jim Wells,Kenedy, Kleberg, Nueces, San Patricio, Webb, and Willacy

U.S. Virgin Islands

The U.S. Virgin Islands

Utah

County of Salt Lake

Vermont

Counties of Bennington, Caledonia, Essex, Lamoille, Orange, Orleans,

Rutland, Washington, Windham, and Windsor

Virginia

City of Hampton

Counties of Accomack, Brunswick, Caroline, Charles City, Chesterfield,

Dinwiddie, Essex, Fairfax, Gloucester, Greenville, Halifax, Hanover,

Henrico, Isle of Wight, James City, King and Queen, King George,

King William, Lancaster, Lunenberg, Mathews, Mecklenburg,

Middlesex, New Kent, Northampton, Northumberland, Prince George,

Richmond, Southampton, Surry, Sussex, Westmoreland, and York,

and Cities of Chesapeake City, Colonial Heights, Emporia, Franklin,

Hampton, Hopewell, Newport News, Norfolk, Petersburg, Poquoson,

Portsmouth, Richmond, Suffolk, Virginia Beach, and Williamsburg

Severe storms

and flooding caused

by Hurricane Bret

August 21-26

Hurricane Lenny

November 16-20

Tornado, severe

thunderstorms,

and hail

August 11

Severe storms

and flooding

associated with

Hurricane Floyd

September 16-21

Tropical Storm

Dennis

August 27September 13

Hurricane Floyd

September 13-26

Severe storms, straightline winds, and flooding

July 4-31

Wisconsin

Counties of Ashland, Bayfield, Douglas, Florence, Iron, Oneida, Price,

Rusk, Sawyer, and Vilas

Section 472.—Last-in, First-out

Inventories

26 CFR 1.472–1: Last-in, first-out inventories.

LIFO; price indexes; department

stores. The January 2000 Bureau of

Labor Statistics price indexes are accepted for use by department stores employing the retail inventory and last-in,

first-out inventory methods for valuing

inventories for tax years ended on, or with

reference to, January 31, 2000.

2000–12 I.R.B.

Rev. Rul. 2000–14

methods for tax years ended on, or with

reference to, January 31, 2000.

The following Department Store Inventory Price Indexes for January 2000 were

issued by the Bureau of Labor Statistics.

The indexes are accepted by the Internal

Revenue Service, under § 1.472–1(k) of

the Income Tax Regulations and Rev.

Proc. 86–46, 1986–2 C.B. 739, for appropriate application to inventories of department stores employing the retail inventory and last-in, first-out inventory

The Department Store Inventory Price

Indexes are prepared on a national basis

and include (a) 23 major groups of departments, (b) three special combinations of the

major groups - soft goods, durable goods,

and miscellaneous goods, and (c) a store

total, which covers all departments, including some not listed separately, except for

the following: candy, food, liquor, tobacco,

and contract departments.

779

March 20, 2000

BUREAU OF LABOR STATISTICS, DEPARTMENT STORE

INVENTORY PRICE INDEXES BY DEPARTMENT GROUPS

(January 1941 = 100, unless otherwise noted)

Jan.

1999

Jan.

2000

Percent Change

from Jan. 1999

to Jan. 20001

1. Piece Goods - - - - - - - - - - - - - - - - - - - - - - 2. Domestics and Draperies - - - - - - - - - - - - - - 3. Women’s and Children’s Shoes - - - - - - - - - - 4. Men’s Shoes - - - - - - - - - - - - - - - - - - - - - - 5. Infants’ Wear - - - - - - - - - - - - - - - - - - - - - - 6. Women’s Underwear - - - - - - - - - - - - - - - - 7. Women’s Hosiery - - - - - - - - - - - - - - - - - - - 8. Women’s and Girls’ Accessories - - - - - - - - - 9. Women’s Outerwear and Girls’ Wear - - - - - - 10. Men’s Clothing - - - - - - - - - - - - - - - - - - - - 11. Men’s Furnishings - - - - - - - - - - - - - - - - - - 12. Boys’ Clothing and Furnishings - - - - - - - - - 13. Jewelry - - - - - - - - - - - - - - - - - - - - - - - - - 14. Notions - - - - - - - - - - - - - - - - - - - - - - - - - 15. Toilet Articles and Drugs - - - - - - - - - - - - - - 16. Furniture and Bedding - - - - - - - - - - - - - - - 17. Floor Coverings - - - - - - - - - - - - - - - - - - - - 18. Housewares - - - - - - - - - - - - - - - - - - - - - - 19. Major Appliances - - - - - - - - - - - - - - - - - - - 20. Radio and Television - - - - - - - - - - - - - - - - 21. Recreation and Education2 - - - - - - - - - - - - - 22. Home Improvements2 - - - - - - - - - - - - - - - - 23. Auto Accessories2 - - - - - - - - - - - - - - - - - - -

507.3

643.1

640.4

894.0

628.6

560.7

316.2

535.4

376.9

603.8

585.2

482.1

965.3

729.7

946.8

678.4

602.4

813.6

237.7

69.6

100.7

130.3

107.8

493.8

622.0

613.3

887.2

650.8

571.4

327.6

530.3

369.1

612.9

618.0

497.1

962.0

764.5

970.9

697.0

603.2

789.9

233.3

62.7

95.2

129.8

107.6

-2.7

-3.3

-4.2

-0.8

3.5

1.9

3.6

-1.0

-2.1

1.5

5.6

3.1

-0.3

4.8

2.5

2.7

0.1

-2.9

-1.9

-9.9

-5.5

-0.4

-0.2

Groups 1 - 15: Soft Goods - - - - - - - - - - - - - - - - -

586.4

588.6

0.4

Groups 16 - 20: Durable Goods - - - - - - - - - - - - - -

459.0

446.2

-2.8

Groups 21 - 23: Misc. Goods2 - - - - - - - - - - - - - - -

106.0

102.2

-3.6

Store Total3 - - - - - - - - - - - - - - - - - - - - - - - - - - -

539.4

535.4

-0.7

Groups

1 Absence of a minus sign before the percentage change in this column signifies a price increase.

2 Indexes on a January 1986=100 base.

3 The store total index covers all departments, including some not listed separately, except for the following:

candy, food, liquor, tobacco, and contract

departments.

DRAFTING INFORMATION

The principal author of this revenue ruling

is Alan J. Tomsic of the Office of Assistant

Chief Counsel (Income Tax and Accounting). For further information regarding this

revenue ruling, contact Mr. Tomsic on (202)

622-4970 (not a toll-free call).

Section 6621.—Determination

of Interest Rate

26 CFR 301.6621–1: Interest rate.

Interest rates; underpayements and

overpayments. The rate of interest determined under section 6621 of the Code for

the calendar quarter beginning April 1,

March 20, 2000

2000, will be 9 percent for overpayments

(8 percent in the case of a corporation), 9

percent for underpayments, and 11 percent for large corporate underpayments.

The rate of interest paid on the portion of

a corporate overpayment exceeding

$10,000 is 6.5 percent.

tion of a corporate overpayment of tax exceeding $10,000 for a taxable period is

the sum of the federal short-term rate plus

0.5 of a percentage point for interest computations made after December 31, 1994.

Under § 6621(a)(2), the underpayment

rate is the sum of the federal short-term

rate plus 3 percentage points.

Rev. Rul. 2000–16

Section 6621(c) provides that for purposes of interest payable under § 6601 on

any large corporate underpayment, the

underpayment rate under § 6621(a)(2) is

determined by substituting “5 percentage

points” for “3 percentage points.” See §

6621(c) and § 301.6621–3 of the Regulations on Procedure and Administration for

the definition of a large corporate underpayment and for the rules for determining

Section 6621 of the Internal Revenue

Code establishes the rates for interest on

tax overpayments and tax underpayments.

Under § 6621(a)(1), the overpayment rate

beginning April 1, 2000, is the sum of the

federal short-term rate plus 3 percentage

points (2 percentage points in the case of

a corporation), except the rate for the por-

780

2000–12 I.R.B.

the applicable date. Section 6621(c) and

§ 301.6621–3 are generally effective for

periods after December 31, 1990.

Section 6621(b)(1) provides that the

Secretary will determine the federal shortterm rate for the first month in each calendar quarter.

Section 6621(b)(2)(A) provides that the

federal short-term rate determined under

§ 6621(b)(1) for any month applies during

the first calendar quarter beginning after

such month.

Section 6621(b)(2)(B) provides that in

determining the addition to tax under §

6654 for failure to pay estimated tax for

any taxable year, the federal short-term

rate that applies during the third month

following such taxable year also applies

during the first 15 days of the fourth

month following such taxable year.

Section 6621(b)(3) provides that the

federal short-term rate for any month is

the federal short-term rate determined

during such month by the Secretary in accordance with § 1274(d), rounded to the

nearest full percent (or, if a multiple of

1/2 of 1 percent, the rate is increased to

the next highest full percent).

Notice 88–59, 1988–1 C.B. 546, announced that, in determining the quarterly

interest rates to be used for overpayments

and underpayments of tax under § 6621,

the Internal Revenue Service will use the

federal short-term rate based on daily

compounding because that rate is most

consistent with § 6621 which, pursuant to

§ 6622, is subject to daily compounding.

Rounded to the nearest full percent, the

federal short- term rate based on daily

compounding determined during the

month of January 2000 is 6 percent. Accordingly, an overpayment rate of 9 percent (8 percent in the case of a corporation) and an underpayment rate of 9

percent are established for the calendar

quarter beginning April 1, 2000. The

overpayment rate for the portion of a corporate overpayment exceeding $10,000

for the calendar quarter beginning April 1,

2000, is 6.5 percent. The underpayment

rate for large corporate underpayments

for the calendar quarter beginning April 1,

2000, is 11 percent. These rates apply to

amounts bearing interest during that cal-

endar quarter.

Under § 6621(b)(2)(B), the 8 percent

rate that applies to estimated tax underpayments for the first calendar quarter in

2000, as provided in Rev. Rul. 99–53,

1999–50 I.R.B. 657, also applies to such

underpayments for the first 15 days in

April 2000.

Interest factors for daily compound interest for annual rates of 6.5 percent, 8

percent, 9 percent, and 11 percent are

published in Tables 66, 69, 71, and 75 of

Rev. Proc. 95–17,1995–1 C.B. 556, 620,

623, 625, and 629.

Annual interest rates to be compounded

daily pursuant to § 6622 that apply for

prior periods are set forth in the tables accompanying this revenue ruling.

DRAFTING INFORMATION

The principal author of this revenue

ruling is Raymond Bailey of the Office of

Assistant Chief Counsel (Income Tax and

Accounting). For further information regarding this revenue ruling, contact Mr.

Bailey on (202) 622-6226 (not a toll-free

call).

TABLE OF INTEREST RATES

PERIODS BEFORE JUL. 1, 1975 - PERIODS ENDING DEC. 31, 1986

OVERPAYMENTS AND UNDERPAYMENTS

PERIOD

RATE

In 1995–1 C.B.

DAILY RATE TABLE

Before Jul. 1, 1975

Jul. 1, 1975—Jan. 31, 1976

Feb. 1, 1976—Jan. 31, 1978

Feb. 1, 1978—Jan. 31, 1980

Feb. 1, 1980—Jan. 31, 1982

Feb. 1, 1982—Dec. 31, 1982

Jan. 1, 1983—Jun. 30, 1983

Jul. 1, 1983—Dec. 31, 1983

Jan. 1, 1984—Jun. 30, 1984

Jul. 1, 1984—Dec. 31, 1984

Jan. 1, 1985—Jun. 30, 1985

Jul. 1, 1985—Dec. 31, 1985

Jan. 1, 1986—Jun. 30, 1986

Jul. 1, 1986—Dec. 31, 1986

12%

20%

16%

11%

13%

11%

10%

Table 2, pg. 557

Table 4, pg. 559

Table 3, pg. 558

Table 2, pg. 557

Table 5, pg. 560

Table 6, pg. 560

Table 37, pg. 591

Table 27, pg. 581

Table 75, pg. 629

Table 31, pg. 585

Table 27, pg. 581

Table 25 pg. 579

Table 23, pg. 577

2000–12 I.R.B.

781

March 20, 2000

TABLE OF INTEREST RATES

FROM JAN. 1, 1987 - Dec. 31, 1998

OVERPAYMENTS

Jan. 1, 1987—Mar. 31, 1987

Apr. 1, 1987—Jun. 30, 1987

Jul. 1, 1987—Sep. 30, 1987

Oct. 1, 1987—Dec. 31, 1987

Jan. 1, 1988—Mar. 31, 1988

Apr. 1, 1988—Jun. 30, 1988

Jul. 1, 1988—Sep. 30, 1988

Oct. 1, 1988—Dec. 31, 1988

Jan. 1, 1989—Mar. 31, 1989

Apr. 1, 1989—Jun. 30, 1989

Jul. 1, 1989—Sep. 30, 1989

Oct. 1, 1989—Dec. 31, 1989

Jan. 1, 1990—Mar. 31, 1990

Apr. 1, 1990—Jun. 30, 1990

Jul. 1, 1990—Sep. 30, 1990

Oct. 1, 1990—Dec. 31, 1990

Jan. 1, 1991—Mar. 31, 1991

Apr. 1, 1991—Jun. 30, 1991

Jul. 1, 1991—Sep. 30, 1991

Oct. 1, 1991—Dec. 31, 1991

Jan. 1, 1992—Mar. 31, 1992

Apr. 1, 1992—Jun. 30, 1992

Jul. 1, 1992—Sep. 30, 1992

Oct. 1, 1992—Dec. 31, 1992

Jan. 1, 1993—Mar. 31, 1993

Apr. 1, 1993—Jun. 30, 1993

Jul. 1, 1993—Sep. 30, 1993

Oct. 1, 1993—Dec. 31, 1993

Jan. 1, 1994—Mar. 31, 1994

Apr. 1, 1994—Jun. 30, 1994

Jul. 1, 1994—Sep. 30, 1994

Oct. 1, 1994—Dec. 31, 1994

Jan. 1, 1995—Mar. 31, 1995

Apr. 1, 1995—Jun. 30, 1995

Jul. 1, 1995—Sep. 30, 1995

Oct. 1, 1995—Dec. 31, 1995

Jan. 1, 1996—Mar. 31, 1996

Apr. 1, 1996—Jun. 30, 1996

Jul. 1, 1996—Sep. 30, 1996

Oct. 1, 1996—Dec. 31, 1996

Jan. 1, 1997—Mar. 31, 1997

Apr. 1, 1997—Jun. 30, 1997

Jul. 1, 1997—Sep. 30, 1997

Oct. 1, 1997—Dec. 31, 1997

Jan. 1, 1998—Mar. 31, 1998

Apr. 1, 1998—Jun. 30, 1998

Jul. 1, 1998—Sep. 30, 1998

Oct. 1, 1998—Dec. 31, 1998

March 20, 2000

1995–1 C.B.

RATE TABLE

10%

11%

10%

782

575

577

627

625

627

579

581

579

577

623

621

619

571

573

575

577

575

623

621

623

575

573

UNDERPAYMENTS

1995–1 C.B.

RATE TABLE

10%

11%

10%

11%

12%

11%

10%

577

579

629

627

629

581

583

581

579

625

623

621

573

575

577

579

577

625

623

625

577

575

2000–12 I.R.B.

TABLE INTEREST RATES

FROM JANUARY 1, 1999 - PRESENT

NONCORPORATE OVERPAYMENTS AND UNDERPAYMENTS

RATE

Jan. 1, 1999—Mar. 31, 1999

Apr. 1, 1999—Jun. 30, 1999

Jul. 1, 1999—Sep. 30, 1999

Oct. 1, 1999—Dec. 31, 1999

Jan. 1, 2000—Mar. 31, 2000

Apr. 1, 2000—Jun. 30, 2000

1995–1 C.B.

TABLE

PAGE

573

575

623

625

TABLE OF INTEREST RATES

FROM JANUARY 1, 1999 - PRESENT

CORPORATE OVERPAYMENTS AND UNDERPAYMENTS

Jan. 1, 1999—Mar. 31, 1999

Apr. 1, 1999—Jun. 30, 1999

Jul. 1, 1999—Sep. 30, 1999

Oct. 1, 1999—Dec. 31, 1999

Jan. 1, 2000—Mar. 31, 2000

Apr. 1, 2000—Jun. 30, 2000

OVERPAYMENTS

1995–1 C.B

RATE TABLE PG

UNDERPAYMENTS

1995–1 C.B.

RATE

TABLE PG

571

573

621

623

RATE

1995–1 C.B.

TABLE

13%

12%

11%

10%

11%

12%

11%

10%

583

629

627

625

577

579

581

583

581

629

627

573

575

623

625

TABLE OF INTEREST RATES FOR

LARGE CORPORATE UNDERPAYMENTS

FROM JANUARY 1, 1991 - PRESENT

Jan. 1, 1991—Mar. 31, 1991

Apr. 1, 1991—Jun. 30, 1991

Jul. 1, 1991—Sep. 30, 1991

Oct. 1, 1991—Dec. 31, 1991

Jan. 1, 1992—Mar. 31, 1992

Apr. 1, 1992—Jun. 30, 1992

Jul. 1, 1992—Sep. 30, 1992

Oct. 1, 1992—Dec. 31, 1992

Jan. 1, 1993—Mar. 31, 1993

Apr. 1, 1993—Jun. 30, 1993

Jul. 1, 1993—Sep. 30, 1993

Oct. 1, 1993—Dec. 31, 1993

Jan. 1, 1994—Mar. 31, 1994

Apr. 1, 1994—Jun. 30, 1994

Jul. 1, 1994—Sep. 30, 1994

Oct. 1, 1994—Dec. 31, 1994

Jan. 1, 1995—Mar. 31, 1995

Apr. 1, 1995—Jun. 30, 1995

Jul. 1, 1995—Sep. 30, 1995

Oct. 1, 1995—Dec. 31, 1995

Jan. 1, 1996—Mar. 31, 1996

Apr. 1, 1996—Jun. 30, 1996

2000–12 I.R.B.

783

March 20, 2000

TABLE OF INTEREST RATES FOR

LARGE CORPORATE UNDERPAYMENTS—Continued

FROM JANUARY 1, 1991 - PRESENT

RATE

1995–1 C.B.

TABLE

11%

10%

11%

629

581

579

577

579

627

629

1995–1 C.B.

TABLE

572

574

572

620

618

620

572

570

568

570

618

620

Jul. 1, 1996—Sep. 30, 1996

Oct. 1, 1996—Dec. 31, 1996

Jan. 1, 1997—Mar. 31, 1997

Apr. 1, 1997—Jun. 30, 1997

Jul. 1, 1997—Sep. 30, 1997

Oct. 1, 1997—Dec. 31, 1997

Jan. 1, 1998—Mar. 31, 1998

Apr. 1, 1998—Jun. 30, 1998

Jul. 1, 1998—Sep. 30, 1998

Oct. 1, 1998—Dec. 31, 1998

Jan. 1, 1999—Mar. 31, 1999

Apr. 1, 1999—Jun. 30, 1999

Jul. 1, 1999—Sep. 30, 1999

Oct. 1, 1999—Dec. 31, 1999

Jan. 1, 2000—Mar. 31, 2000

Apr. 1, 2000—Jun. 30, 2000

TABLE OF INTEREST RATES FOR CORPORATE

OVERPAYMENTS EXCEEDING $10,000

FROM JANUARY 1, 1995 - PRESENT

RATE

6.5%

7.5%

6.5%

5.5%

6.5%

5.5%

4.5%

5.5%

6.5%

Jan. 1, 1995—Mar. 31, 1995

Apr. 1, 1995—Jun. 30, 1995

Jul. 1, 1995—Sep. 30, 1995

Oct. 1, 1995—Dec. 31, 1995

Jan. 1, 1996—Mar. 31, 1996

Apr. 1, 1996—Jun. 30, 1996

Jul. 1, 1996—Sep. 30, 1996

Oct. 1, 1996—Dec. 31, 1996

Jan. 1, 1997—Mar. 31, 1997

Apr. 1, 1997—Jun. 30, 1997

Jul. 1, 1997—Sep. 30, 1997

Oct. 1, 1997—Dec. 31, 1997

Jan. 1, 1998—Mar. 31, 1998

Apr. 1, 1998—Jun. 30, 1998

Jul. 1. 1998—Sep. 30, 1998

Oct. 1, 1998—Dec. 31, 1998

Jan. 1, 1999—Mar. 31, 1999

Apr. 1, 1999—Jun. 30, 1999

Jul. 1, 1999—Sep. 30, 1999

Oct. 1, 1999—Dec. 31, 1999

Jan. 1, 2000—Mar. 31, 2000

Apr. 1, 2000—Jun. 30, 2000

March 20, 2000

784

2000–12 I.R.B.

Part III. Administrative, Procedural, and Miscellaneous

Rev. Proc. 2000–19

TABLE OF CONTENTS

CHAPTER 1 - INTRODUCTION TO SUBSTITUTE FORMS

Section 1.1 - Overview of Revenue Procedure 2000–19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 1.2 - IRS Contacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 1.3 - Nature of Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 1.4 - Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 1.5 - Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

786

787

788

789

CHAPTER 2 - GENERAL GUIDELINES FOR SUBMISSIONS AND APPROVALS

Section 2.1 - General Specificiations for Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 2.2 - Highlights of Permitted Changes and Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 2.3 - Vouchers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 2.4 - Restrictions on Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 2.5 - Guidelines for Obtaining IRS Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 2.6 - Office of Management and Budget (OMB) Requirements

for All Substitute Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

789

790

791

794

CHAPTER 3 - PHYSICAL ASPECTS AND REQUIREMENTS

Section 3.1- General Guidelines for Substitute Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 3.2 - Paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 3.3 - Printing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 3.4 - Margins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 3.5 - Examples of Approved Formats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 3.6 - Miscellaneous Information for Substitute Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

794

796

797

798

CHAPTER 4 - ADDITIONAL RESOURCES

Section 4.1 - Guidance From Other Revenue Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 4.2 - Ordering Publications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 4.3 - Electronic Tax Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 4.4 - Federal Tax Forms on CD-ROM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

799

800

CHAPTER 5 - REQUIREMENTS FOR SPECIFIC TAX RETURNS

Section 5.1 - Tax Returns (Form 1040, 1040A, 1120, Etc.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 5.2 - Changes Permitted to Graphics (Forms 1040A and 1040) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 5.3 - Changes Permitted to Form 1040A Graphics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 5.4 - Changes Permitted to Form 1040 Graphics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

801

802

803

CHAPTER 6 - FORMAT AND CONTENT OF SUBSTITUTE RETURNS

Section 6.1 - Acceptable Formats for Computer-Generated Forms

and Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 6.2 - Additional Instructions for All Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

804

CHAPTER 7 - OCR FORMS

Section 7.1 - Special Form 1040EZ Optical Character Recognition/Image

Character Recognition (OCR/ICR) Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 7.2 - Computer-Generated Alternative Returns,

Form 1040PC Format Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 7.3 - Specifications for OCR Scannable Application Forms

for Employee Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2000–12 I.R.B.

785

805

807

808

March 20, 2000

CHAPTER 8 - MISCELLANEOUS FORMS AND PROGRAMS

Section 8.1 - Paper Substitutes for Form 1042-S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 8.2 - Specifications for Filing Substitute Schedules K-1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 8.3 - Procedures for Printing Internal Revenue Service Envelopes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 8.4 - Procedures for Substitute Form 5471 and Form 5472 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

809

811

813

CHAPTER 9 - ALTERNATIVE METHODS OF FILING

Section 9.1 - Forms for Electronically Filed Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 9.2 - FTD Magnetic Tape Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 9.3 - Effect on Other Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

814

815

EXHIBITS

Exhibit A-1. Schedule A (Preferred)

Exhibit A-2. Schedule A (Acceptable)

Exhibit B-1. Schedule B (Preferred)

Exhibit B-2. Schedule B (Acceptable)

Exhibit CG-A. Schedule A (Computer Generated)

Exhibit CG-B. Schedule B (Computer Generated)

Exhibit C. Sample Checklist

Exhibit L-1. List of Forms Referred to in Revenue Procedure

Chapter 1

Introduction to Substitute Forms

Section 1.1 - Overview of Revenue Procedure 2000–19

1.1.1

Purpose

This revenue procedure provides the general requirements and conditions for the development, print

ing, and approval of all substitute tax forms to be acceptable for filing in lieu of official IRS forms.

1.1.2

Unique Forms

Certain unique, specialized forms require the use of other additional revenue procedures to supplement

this publication. See Chapter 4.

1.1.3

Scope

The Internal Revenue Service accepts quality substitute tax forms that are consistent with the official

forms and do not have an adverse impact on our processing. The IRS Substitute Forms Program administers the formal acceptance and processing of these forms nationwide. While this program deals primarily with paper documents, it also interfaces with other processing and filing media such as:

•

Magnetic tape,

Optical character recognition, and

Electronic filing, etc.

Only those substitute forms that comply fully with the requirements set forth herein are acceptable.

Exhibit L-1 lists the form numbers mentioned in this document and their titles. This revenue procedure is updated as required to reflect pertinent tax year form changes and to meet processing and/or

legislative requirements.

1.1.4

Forms Covered

by This

Revenue Procedure

The following types of forms are covered by this revenue procedure:

•

1.1.5

Forms NOT

Covered by

This Revenue

March 20, 2000

IRS tax returns and their related forms and schedules.

Applications for permission to file returns electronically and forms used as required documentation for electronically filed returns.

Powers of Attorney.

Estimated tax payment vouchers.

Forms and schedules relating to partnerships, exempt organizations, and employee plans.

The following types of forms are not covered:

•

W-2, W-3 (see Publication 1141 for information on these forms)

1096, 1098 series, 1099 series, 5498 series, and W-2G (see Publication 1179 for information on

786

2000–12 I.R.B.

Procedure

these forms)

Federal Tax Deposit (FTD) coupons, which may not be reproduced.

Forms 1040-ES(OCR) and 1041-ES(OCR), which may not be reproduced.

Requests for information or documentation initiated by the Service.

Forms used internally by the Service.

State tax forms.

Forms developed outside IRS (except for Form TD F 90-22.1, Report of Foreign Bank and

Financial Accounts).

•

Section 1.2 — IRS Contacts

1.2.1

Where To Send

Substitute Forms

Send your substitute forms for approval to the following offices (DO NOT send forms with taxpayer

data):

Form

Office and Address

4789, 8300, 8362, 8852,

TD F 90-22.1, TD F 90-22.47

IRS Computing Center

BSA Compliance Branch

P.O. Box 32063

Detroit, MI 48232-0063

4461, 4461-A, 4461-B, 5300, 5303,

5307, 5310, 5310-A, and 6406

Internal Revenue Service

Attn: EP OCR Forms Coordinator

OP:E:EP:FC

1111 Constitution Avenue, NW

Room 2232 IR

Washington, DC 20224

All others (except W-2, W-3, 1096,

1098, 1099, 5498, and W-2G)

Internal Revenue Service

Attn: Substitute Forms Program

OP:FS:FP:F:CD

1111 Constitution Avenue, NW

Room 5244 IR

Washington, DC 20224

In addition, the Substitute Forms Program can be contacted via email at tfpmail@publish.no.irs.gov.

Use this email address only to inquire about forms covered by this revenue procedure. DO NOT attach

graphic files for approval with email.

For questions about Forms W-2 and W-3, refer to IRS Publication 1141, General Rules and

Specifications for Private Printing of Substitute Forms W-2 and W-3. For Forms 1096, 1098, 1099,

5498, and W-2G, refer to IRS Publication 1179, Specifications for Paper Document Reporting and

Paper Substitutes for Forms 1096, 1098, 1099 Series, 5498, and W-2G.

Section 1.3 - Nature of Changes

1.3.1 Changes to the

Revenue Procedure

•

2000–12 I.R.B.

The pages of this revenue procedure has been numbered to facilitate ease of use.

The IRS Internet website address has been changed to http://www.irs.gov. References to the FTP

and Telnet addresses have been deleted..

Definition of “advanced draft” has been added.

Vendor responsibility for monitoring revisions to official forms has been articulated.

Section on Form 941 OCR requirements has been removed.

Pricing information for the Federal Tax Forms CD-ROM has been revised.

Processing of 1999 Plan Year Forms 5500 and 5500-EZ will be processed by the Pension and

Welfare Benefits Administration, effective July 1, 2000.

787

March 20, 2000

•

Form 5500-C/R has been obsoleted for Plan Year 1999.

The Electronic Filing Program is now called the IRS e-file Program.

Instructions for the boxes on Form 1042-S have been revised.

Voucher scan lines now have a six-digit tax period (YYYYMM).

Forms 8543-NR and 8453-OL are now referenced in the section on electroncially filed returns.

Forms 1040-ES(OCR) and 1041-ES(OCR) added to list of forms not covered by this revenue

procedure.

Four-digit portion of ZIP codes on envelopes revised for froms 1040, 940, and 943.

Various editorial changes have been made.

Section 1.4 - Definitions

1.4.1

Substitute

Form

A tax form (or related schedule) that differs in any way from the official version and is intended to

replace theentire form that is printed and distributed by the Service. This term also covers those

approved substitute forms exhibited in this revenue procedure.

1.4.2

Printed (or

Preprinted)

Form

A form produced using conventional printing processes. Also, a printed form which has been reproduced

by photocopying or similar processes.

1.4.3

Preprinted

Pin-Fed Form

A printed form that has marginal perforations for use with automated and high-speed printing equipment.

1.4.4 ComputerPrepared

Substitute

Form

A preprinted form in which the taxpayer’s tax entry information has been inserted by a computer, computer-printer, or other computer type equipment, such as word-processing equipment.

1.4.5 ComputerGenerated

Substitute

Tax Return

or Form

A tax return or form that is entirely designed and printed by the use of a computer printer,such as a

laser printer, etc., on plain white paper. This return or form must conform to the physical layout of the

corresponding Service form although the typeface may differ. The text should match the text on the

officially printed form as closely as possible; condensed text and abbreviations will be considered

on a case-by-case basis. Exception: All jurats (perjury statements) must be reproduced verbatim.

1.4.6 ManuallyPrepared Form

A preprinted reproduced form in which the taxpayer’s tax entry information is entered by an individual using a pen, pencil, typewriter, or other non-automated equipment.

1.4.7 ComputerGenerated Answer

Sheet Format

Tax Return

A tax return that contains only the taxpayer’s significant line entries, and is formatted three columns

per page with tax form headings, a summary, and jurat. This return is printed on plain white paper

using a computer printer.

1.4.8 Graphics

Those parts of a printed tax form that are not tax amount entries nor called-for information. Generally,

these are line numbers, captions, shadings, instructions, special indicators, borders, rules, and strokes

created by typesetting, photographics, photocomposition, etc.

1.4.9 Acceptable

Reproduced Form

A legible photocopy of an original form.

1.4.10 Supporting

Statement

(Supplemental

Schedule)

A document providing detailed information to support an entry for a line(s) on an official or approved

substitute form and filed with (attached to) a tax return. (A supporting statement is not a tax form and

does not take the place of an official form, unless specifically permitted elsewhere in this procedure.)

1.4.11 Specific

Forms Terms

The following terms are used throughout this revenue procedure in reference to all substitute forms,

with the exception of the 1040PC “answer sheet format” tax return.

Continued on next page

March 20, 2000

788

2000–12 I.R.B.

1.4.12

Format

The overall physical arrangement and general layout of a substitute form.

1.4.13 Sequence

The same numeric and logical placement order of data, as reflected on the official form version.

Sequence is an integral part of the total format requirement.

1.4.14 Line

Reference (Code)

The line numbers, letters or alphanumerics used to identify each captioned line on the official forms,

and printed to the immediate left of each caption or data entry field.

1.4.15 Item

Caption

The textual portion of each line on the form identifying the specific data elements required.

1.4.16 Data

Entry Field

All areas designated on a form for the insertion of data, such as dollar amounts, quantities, responses,

checkboxes, etc.

1.4.17 Advanced

Draft

A draft revision of a new or revised form may be posted to the IRS Internet site for information

purposes. Substitute forms may be submitted based on these advanced drafts but any company that

receives forms approval based on these early drafts is responsible for monitoring and revising froms

to mirror any revisions in the final forms provided by the Service.

Section 1.5 - Agreement

Section 1.5.1

Important

Stipulation of

This Revenue

Procedure

Any person or company who uses substitute forms and makes all or part of the changes specified in

this revenue procedure agrees to the following stipulations:

•

The Internal Revenue Service presumes the changes are made in accordance with these procedures and, as such, will be noninterruptive to the processing of the tax return.

•

Should any of the changes prove to be not exactly as described, and as a result become disruptive to the Internal Revenue Service during processing of the tax return, the person or company agrees to accept the determination of the IRS as to whether or not the form may continue to

be used during the filing season.

•

The person or company agrees to work with the IRS in correcting noted deficiencies.

Notification of deficiencies may be made by any combination of fax, letter, email, or phone contact and may include the return of unacceptable forms for resubmission of acceptable forms.

Chapter 2

General Guidelines for Submissions and Approvals

Section 2.1 - General Specifications for Approval

2.1.1 Overview

If you produce any tax returns and forms using IRS guidelines on permitted changes, you can generate your own substitutes without further approval. If your changes are more extensive, you must get

official approval before using substitute forms. These changes include the use of typefaces and sizes

other than those found on the official form and the condensing of line item descriptions to save space.

2.1.2 Schedules

Schedules are considered to be an integral part of a complete tax return when assigned consecutive

page numbers and printed contiguously with page 1 of the return.

2.1.3 Example of

Schedules That

Must Be Submitted

With the Return

Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, is an example of this

situation, where Schedules A through U have pages numbered as part of the basic return. For a Form

706 to be approved, the entire form including Schedules A through U must be submitted.

2.1.4 Examples of

Schedules That

However, Schedules 1, 2, and 3 of Form 1040A are examples of schedules that can be separately computer-generated. Although printed by the IRS as a continuation of Form 1040A, none of these schedContinued on next page

2000–12 I.R.B.

789

Can Be Submitted

Separately

ules have page numbers that require them to be filed with Form 1040A, and may, therefore, be separated from Form 1040A and submitted as computer-generated substitute schedules.

2.1.5 Use and

Distribution of

Unapproved Forms

The Internal Revenue Service is continuing a program to identify and contact tax return preparers,

forms developers, and software publishers who use or distribute unapproved forms that do not conform to this revenue procedure. The use of unapproved forms impedes processing of the returns.

Section 2.2 - Highlights of Permitted Changes and Requirements

2.1.1 Methods of

Reproducing

Internal Revenue

Service Forms

Official versions are supplied by the Internal Revenue Service, such as those in the taxpayer’s tax package,

those printed in revenue procedures, and over-the-counter forms available at IRS and other governmental

public offices or buildings. Forms are also available on CD-ROM, and on-line viaFedworld and the Internet.

There are methods of reproducing Internal Revenue Service printed tax forms suitable for use as substitute tax forms without prior approval.

•

You can photocopy most tax forms and use them instead of the official ones. The entire substitute form, including entries, must be legible.

•

You can reproduce any current tax form as cut sheets, snapsets, and marginally punched, pin-fed

forms so long as you use an official IRS version as the master copy.

•

You can reproduce a “signature form” as a valid substitute form. Many tax forms (including returns)

have a taxpayer signature requirement as part of the form layout. The jurat/perjury statement/signature line areas must be retained and worded exactly as on the official form. The requirement for

a signature by itself does not prohibit a tax form from being properly computer-generated.

•

You can computer-generate Answer Sheet Format Tax Returns on plain bond paper using IRSaccepted software for the 1040PC format for return types 1040EZ, 1040, 1040A, and attachments, forms, and schedules.

Section 2.3 - Vouchers

2.3.1 Overview

All payment vouchers (Forms 940-V, 940-EZ(V), 941- V, 943-V, 945-V, 1040-V, and 2290-V) must

be reproduced. Substitute vouchers must be the same size as the officially printed vouchers. Vouchers

that are prepared for printing on a laser printer may include a scanline.

2.3.2 Scanline

Specifications

NNNNNNNNN AA AAAA NN N NNNNNN NNN

D E

A - Social Security Number/Employer Identification Number (SSN/EIN) has 9 numeric spaces.

B - Check Digit has 2 alpha spaces.

C - Name Control has 4 alphanumeric spaces.

D - Master File Tax (MFT) Code has 2 numeric spaces (see below).

E - Taxpayer Identification Number (TIN) Type has 1 numeric space (see below).

F - Tax period has six numeric spaces in year/month format (YYYYMM).

G - Transaction Code has 3 numeric spaces.

2.3.3 MFT Code

Code Number for:

•

Form 1040 family - 30;

•

Form 940/940-EZ - 10;

•

Form 941 - 01;

•

Form 943 - 11;

•

Form 945 - 16; and

•

Form 2290 - 60.

2.4 TIN Type

Type Number for:

•

Form 1040 family - 0; and

•

Forms 940, 940-EZ, 941, 943, 945, and 2290 - 2.

2.3.5 Voucher Size

The voucher size must be exactly 8.0” X 3.25”. The document scanline must be vertically positioned

1.625 inches from the bottom of the scanline to the bottom of the voucher. The right most character

Continued on next page

March 20, 2000

790

2000–12 I.R.B.

of the scanline must be placed 3.5 inches from the right leading edge of the document. The maximum

vertical displacement is .06 inches. The minimum required horizontal clear space between characters

is .014 inches. The line to be scanned must have a clear band 0.25 inches in height from top to bottom of the scanline, and from border to border of the document. “Clear band” means no printing

except for dropout ink.

2.3.6 Print and

Paper Weight

Vouchers must be imaged in black ink using OCR A or OCR B, size 1 font. The paper must be 20 to

24 pound OCR bond paper weight.

Section 2.4 - Restrictions on Changes

2.4.1

Things You

CANNOT Do to IRS

Forms Suitable

for Substitute

Tax Forms

You cannot, without prior IRS approval, change any Internal Revenue Service tax form or use your

own (non-approved) versions (preprinted labels), including graphics, unless specifically permitted by

this revenue procedure.

You cannot adjust any of the graphics on Forms 1040, 1040A, and 1040EZ (except in those areas specified in Chapter 5 of this revenue procedure) without prior approval from the IRS Substitute Forms

Program.

You cannot use your own preprinted label on tax returns filed with IRS, unless you fully comply with

the exception criteria specified in the section on use of preaddressed IRS labels in this revenue procedure.

Section 2.5 - Guidelines for Obtaining IRS Approval

2.5.1 Basic

Requirements

Preparers who desire to file substitute privately designed and printed tax forms and/or computer-generated and computer-prepared tax forms must develop such substitutes using the guidelines for substitute forms established in this chapter. These substitutes, unless excepted by revenue procedure, must

be approved by the IRS before being filed.

2.5.2 1040PC

Format Return

A software developer who wants to market, distribute, or use for its own clientele, a tax preparation

package featuring the 1040PC tax return format, must first file an application to participate in the program. Only after successfully fulfilling test requirements will a developer’s software package be

accepted by the IRS to produce 1040PC tax returns.

2.5.3 Conditional

Approval Based

on Advance Drafts

The Internal Revenue Service cannot grant final approval of your substitute form until the official form

has been published. However, the IRS has established a location on the Internet for the posting of

advance drafts of forms. This site can be reached through the Tax Professional’s Corner at

http://www.irs.ustreas.gov/prod/bus_info/tax_pro.

We encourage submission of proposed substitutes of these advance draft forms, and will grant conditional approval based solely on these early drafts. These advance drafts are subject to significant

change before forms are finalized. If these advance drafts are used as the basis for your substitute

forms, you will be responsible for subsequently updating your final forms to agree with the final official version before use. These revisions need not be submitted for further approval.

NOTE: Approval of forms based on advance drafts will not be granted after the final version of an official form is published.

•

Any alteration of forms must be within the limits acceptable to the Service. It is possible that,

from one filing period to another, a change in law or a change in internal need (processing, audit,

compliance, etc.) may change the allowable limits for the alteration of the official form.

•

When specific approval of any substitute form (other than those specified in Chapter 2, IRS

Contacts) is desired, a sample of the proposed substitute should be forwarded for consideration

by letter to the Substitute Forms Program Coordinator at the address shown in Chapter 2.

•

To expedite multiple forms approval, we prefer that your proposed forms be submitted in separate sets by return. For example, Forms 1040 and their normally related schedules or attachContinued on next page

2000–12 I.R.B.

791

March 20, 2000

2.5.3 Conditional

Approval Based

on Advanced Drafts

(continued)

ments should be submitted separately from Forms 1120, 1065, 5500 Series, etc., if at all possible. Schedules and forms (e.g., Forms 3468, 4136, etc.) that can be used with more than one

type of return (e.g., 1040, 1041, 1120, etc.) should be submitted only once for approval, regardless of the number of different tax returns with which they may be ultimately associated. In addition, all pages of a multipage form or return should be submitted in the same package.

2.5.4 Approving

Offices

As no IRS office except the ones specified in this procedure (per the chart in Chapter 1) are authorized

to approve substitute forms, unnecessary delay may result if forms are sent elsewhere for approval.

All forms submitted to any other office must be forwarded to the appropriate office for formal control

and review. The Substitute Forms Program Coordinator may then coordinate the response with the

program analyst responsible for the processing of that form. Such coordination may include allowing

the analyst to officially approve the form. No IRS office is authorized to allow deviations from this

revenue procedure.

2.5.5 Service’s

Review of Software

Programs, etc.

The IRS does not review or approve the logic of specific software programs, nor confirm the calcula

tions entered on forms output from these programs that are submitted for approval. The accuracy of

the program itself remains the responsibility of the software package developer, distributor, or user.

The Substitute Forms Program is primarily concerned with the prefiling quality review of the final

forms output, produced by whatever means, that are expected to be processed by IRS field offices. For

the above reasons, it is suggested that you submit forms without including any “taxpayer” information

such as names, addresses, monetary amounts, etc.

2.5.6 When to Send

Proposed Substitutes

Proposed substitutes, which are required to be submitted per this revenue procedure, should be sent as

much in advance of the filing period as possible. This is to allow adequate time for analysis and

response.

2.5.7 Accompanying

Statement

When the sample substitute is submitted, there should be an accompanying statement that lists the

form number of each substitute requested and detail those items that deviate from the official form in

position, arrangement, appearance, line numbers, additions, deletions, etc. Included with each of the

items should be a detailed reason or justification for the change and an approximation of the number

of forms expected to be filed.

When requesting approval for multiple forms, the statement should be presented as a checksheet.

Checksheets are not mandatory, but do facilitate the approval process. The checksheet may look like

the example (Exhibit C) displayed in the back of this procedure or may be one of your own design.

Please include your fax number on the checksheet.

2.5.8 Approval/

Non-Approval

Notice

The Substitute Forms Coordinator will fax the checksheet or an approval letter back to the originator

if a fax number has been provided, unless:

•

the requester has asked for a formal letter; or

•

significant corrections are required to the submitted forms

Notice of approval may contain qualifications for use of the substitutes. Notices of non-approval letters may specify the changes required for approval, and may also require resubmission of the form(s)

in question. Telephone contact is used when possible.

2.5.9 Duration of

Approval

Most signature tax returns and many of their schedules and related forms have the tax (liability) year

printed in the upper right corner. Approvals for these forms are usually good for one calendar year

(January through December of the year of filing). Quarterly tax forms in the 94X series, and Form

720, require approval for any quarter in which the form has been revised.

2.5.10 Limited

Continued Use

of Approved

Change

•

If the preprinted year is the only change made to a form, the form for the upcoming year is not

subject to review.

•

Otherwise, each new filing season requires a new approval.

Limited continued use of a change approved for one tax year may be allowed for the same form in the

following tax year. Examples of such limitations and requirements are the use of abbreviated words,

revised form spacing, compressed text lines, shortened captions, etc., which do not change the con

sistency of lines or text on the official forms.

If substantial changes are made to the form, new substitutes must be submitted for approval. If only

minor editorial changes are made to the form, it is not subject to review.

Continued on next page

March 20, 2000

792

2000–12 I.R.B.

If you received written approval of a previous tax year substitute form governed by this revenue procedure and continue to use the approved change on your current tax year substitute form, you may

revise your form to include this change and, without additional written approval, use it as a current tax

year substitute form, provided you comply with the requirements in this revenue procedure.

2.5.11 When

Approval Is

Not Required

If you received written approval for a specific change on a specific form last year, such as deleting the

vertical lines used to separate dollars and cents on some forms and schedules, e.g., Schedules A&B

of Form 1040, you may again make the same change on the same form this year if the item changed

is still present on this year’s official form.

•

The new substitute does not have to be sent to the IRS and written approval is not required.

•

However, the new substitute must conform to the official current year IRS form in other respects:

date, Office of Management and Budget (OMB) approval number, attachment sequence number,

Paperwork Reduction Act Notice statement, arrangement, item caption, line number, line reference, data sequence, etc.

•

It must also comply with this revenue procedure—which may have eliminated, added to, or otherwise changed the guideline(s) which affected the change approved last year.

Exception: Those written approvals which state that the approved change or form would not be

allowed in any other tax year, or for a temporary, limited, or interim approval pending resolution of a

failure to meet one or more IRS-prescribed requirements are subject to revire in subsequent years.

•

This authorization for continued use of an approved change is limited to the continuation of

design logic from an immediately prior tax year substitute form to a current tax year substitute

form.

2.5.12 Continuous

Use Forms

Forms without preprinted tax years are called “continuous use” forms. Many of these forms had expiration dates, but these are being phased out. Continuous use forms are revised when a legislative

change affects the form or a change will facilitate processing.

2.5.13 Internet

Program Chart

A chart of print dates (for annual and quarterly forms) and most current revision dates (for continuous

use forms) will be maintained on the Internet. For further details, see the section on Internet access in

Chapter 4 of this revenue procedure.

2.5.14 Required

Copies

Generally, you must send us one copy of each form being submitted for approval. However, if you

are producing forms for different computer systems (e.g., IBM (or compatible) vs. MacIntosh) or different types of printers (laser vs. dot matrix), and these forms differ significantly in appearance, submit one copy for each type of system or printer.

2.5.15 Requestor’s

Responsibility After

Receipt of Approval

Following the receipt of initial approval for a substitute forms package, or of a software output program to print substitute forms, it is the responsibility of the originator (designer or distributor) to provide each subsequent client firm or individual with the pertinent Service forms requirements that must

be met for continuing acceptability.

Examples of this responsibility include:

•

2.5.16 Source Code

The Substitute Forms Program Unit, OP:FS:FP:F:CD, will assign a unique source code to each firm

that submits substitute paper forms for approval. This will be a permanent control number that should

be used on every form created by a particular firm.

•

2000–12 I.R.B.

The use of prescribed print paper, font size, legibility, state tax data deletion.

The legal requirements of the Paperwork Reduction Act Notice for informing all users of substitute forms of the official use and collection requirements stated in the instructions for the official IRS forms, completion of documents, etc.

This source code should be printed at the bottom left margin area on the first page of every

approved substitute paper form.

The source code for paper returns consists of three alpha characters.

This source code should not be used on optically scanned (OCR) forms.

793

March 20, 2000

Section 2.6 - Office of Management and Budget (OMB) Requirements for All Substitute Forms

2.6.1 OMB

Requirements for

All Substitute Forms

Legal Requirements of the Paperwork Reduction Act of 1995 (“Act”). Public Law 104-13 requires that:

•

OMB approve all IRS tax forms that are subject to the Act,

•

Each IRS form contains (in the upper right corner) the OMB number, if any, and

•

Each IRS form (or its instructions) states why IRS needs the information, how it will be used,

and whether or not the information is required to be furnished.

This information must be provided to every user of official or substitute tax forms.

2.6.2 Application

of Act to Substitute

Forms

2.6.3 Required

Explanation to

Users

2.6.4 Obtaining

OMB Number

and Notice

On forms to which OMB numbers have been assigned:

•

All substitute forms must contain in the upper right corner the OMB number that is on the official form.

•

Format Required - OMB No. XXXX-XXXX (Preferred) or OMB # XXXX-XXXX.

You must also inform the users of your substitute forms of the IRS use and collection requirements

stated in the instructions for the official IRS form.

•

If you provide your users or customers with the official IRS instructions, page 1 of each form

must retain either the Paperwork Reduction Act Notice, or a reference to it as the IRS does on

the official forms (usually in the lower left corner of the forms).

•

If the IRS instructions are not provided to users of your forms, the exact text of the Paperwork

Reduction Act Notice must be furnished on the form or separately.

•

This notice reads, in part, “We ask for this information to carry out the Internal Revenue laws of

the United States. You are required to give us the information. We need it to ensure that you are

complying with these laws and to allow us to figure and collect the right amount of tax...”

•

You must also include a copy of the alternative statement provided to users of your forms with

the forms you submit for approval.

The OMB number and Paperwork Reduction Act Notice may be obtained from the official form (or

its instructions), or any format produced by the IRS (e.g., Compact Disc (CD), Internet download, or

Bulletin Board System (BBS) download).

Chapter 3

Physical Aspects and Requirements

Section 3.1 - General Guidelines for Substitute Forms

3.1.1 General

Information

The Official Form is the standard. Because a substitute form is a variation from the official form, you

should know the requirements of the official form for the year of use before you modify it to meet your

needs. The IRS provides several means of obtaining the most frequently used tax forms. These

include the Internet, fax-on-demand, CD-ROM and an electronic forms bulletin board (see chapter 4).

3.1.2 Design

Each form must follow the design of the official form as to format arrangement, item caption, line

numbers, line references, and sequence.

3.1.3 State Tax

Information

Prohibited

State tax information must not appear (be visible) on the federal tax return or associated form or schedule

which is filed with the IRS, except where amounts are claimed on or required by the federal return,

e.g., state and local income taxes, Schedule A (Form 1040).

Continued on next page

March 20, 2000

794

2000–12 I.R.B.

3.1.4 Vertical

Alignment of

Amount Fields

IF a form is to be...

A form is to be manually prepared

THEN...

•

Computer-generated

•

Computer-prepared

•

3.1.5 Attachment

Sequence Number

•

The federal column must have a vertical line

or some type of indicator in the amount field

to separate dollars from cents if the official

form has a vertical line.

The cents column must be at least 3/10” wide.

Vertically align the amount entry fields where

possible.

Use one of the following amount formats:

•

0,000,000.

•

0,000,000.00

You may remove the vertical line in the

amount field that separates dollars from cents.

Use one of the following amount formats:

•

0,000,000.

•

0,000,000.00

Most individual income tax forms have a required “attachment sequence number” located just

below the year designation in the upper right corner of the form. The IRS uses this number to

indicate the order in which forms are to be attached to the tax return so they may be processed

in that order. Some of the attachment sequence numbers may change each year.

On computer-prepared forms:

•

The sequence number may be printed in no less than 12-point boldface type and centered below

the form’s year designation.

•

The sequence number may also be placed following the year designation for the tax form and

separate with an asterisk.

•

It is not necessary to duplicate the “Attachment Sequence Number” wording, except for the

actual number.

3.1.6 Paid Preparer’s

Information and

Signature Area

On Forms 1040EZ, 1040A, 1040, and 1120, etc., the “Paid Preparer’s Use Only” area may not be

rearranged or relocated. You may, however, add three extra lines to the paid preparer’s address area

without prior approval. This applies to other tax forms as well. Please note that the preparer’s area

on Form 1040EZ is on the bottom of page 2. Substitute Forms 1040EZ with the preparer area in any

location other than the bottom of page 2 will not be accepted.

3.1.7 Assembly

of Forms

If developing software or forms for use by others, please inform your customers/clients that the order

in which the forms are arranged may affect the processing of the package. A return must be arranged

in order indicated below.

2000–12 I.R.B.

795

March 20, 2000

If the form is...

Then sequence is

1040

•

Any other (Form 1120, 1120S,

1065, 1041, etc.)

•

Form 1040

Schedules and forms in sequence number

order

The tax return

Lettered schedules (Schedule D, etc.) in

alphabetical order

• nNnumbered forms in numerical order

Supporting statements should then follow in the same sequence as the forms they support. Additional

information required should be attached last.

In this way, the forms are received in the order in which they must be processed. If you do not send

returns to us in this order, the IRS has to delay processing to disassemble them and place them in

order before processing is continued.

Section 3.2 - Paper

3.2.1 Paper

Content

The paper must be:

•

Chemical wood writing paper that is equal to or better than the quality used for the official form,

•

At least 18 pound (17” x 22”, 500 sheets), or

•

At least 50 pound offset book (25” x 38”, 500 sheets).

3.2.2 Paper with

Chemical Transfer

Properties

There are several kinds of paper prohibited for substitute forms. These are:

•

Carbon-bonded paper

•

Chemical transfer paper except when the following specifications are met:

•

Each ply within the chemical transfer set of forms must be labeled.

•

Only the top ply (ply one and white in color), the one that contains chemical on the back

only (coated back), may be filed with the Service.

3.2.3 Example

A set containing three plies would be constructed as follows:

one ply (coated back), “Federal Return, File with IRS”; ply two (coated front and back), “Taxpayer’s

copy”, and ply three (coated front), “Preparer’s copy.”

•

The file designation, “Federal Return, File with IRS,”

for ply one must be printed in the bottom right margin (just below the last line of the form) in

12-point, bold-face type.

•

It is not mandatory, but recommended, that the file designation ”Federal Return, File with IRS,”

be printed in a contrasting ink for visual emphasis.

3.2.4 Carbon

Paper

Do not attach any carbon paper to any return you file with the Internal Revenue Service.

3.2.5 Paper and

Ink Color

We prefer that the color and opacity of paper substantially duplicates that of the original form. This

means that your substitute must be printed in black ink and may be on white or on the colored paper

the IRS form is printed on. Forms 1040A and 1040 substitute reproductions may be in black ink without the colored shading. The only exception to this rule is Form 1041-ES, which should always be

printed with a very light gray shading in the color screened area. This is necessary to assist us in expeditiously separating this form from the very similar Form 1040-ES.

3.2.6 Page Size

Substitute or reproduced forms and computer prepared/generated substitutes may be the same size as

the official form (8” x 11” in most cases) or they may be the standard commercial size (8 1/2” x 11”)

exclusive of pin-feed holes. The thickness of the stock cannot be less than .003 inch.

March 20, 2000

796

2000–12 I.R.B.

Section 3.3 - Printing

3.3.1 Printing

Medium

The private printing of all substitute tax forms must be by conventional printing processes, photo

copying, computer-graphics, or similar reproduction processes.

3.3.2 Legibility

All forms must have a high standard of legibility, both as to printing and reproduction and as to fill-in

matter. Entries of taxpayer data may be no smaller than eight points. The Internal Revenue Service

reserves the right to reject those with poor legibility. The ink and printing method used must ensure

that no part of a form (including text, graphics, data entries, etc.) develops “smears” or similar quality deterioration. This includes any subsequent copies or reproductions made from an approved master substitute form, either during preparation or during IRS processing.

3.3.3 Type Font

Many federal tax forms are printed using “Helvetica” as the basic type font. We request that you use

this type font when composing substitute forms.

3.3.4 Print Spacing

Substitute forms should be printed using a 6 lines/inch vertical print option. They should also be printed horizontally in 10 pitch pica (i.e., 10 print characters per inch) or 12 pitch elite (i.e., 12 print positions per inch).

3.3.5 Image Size

The image size of a printed substitute form should be as close as possible to that of the official form.

You may omit any text on both computer-prepared and computer-generated forms that is solely

instructional.

3.3.6 Title Area

Changes

To allow a large top margin for marginal printing and more lines per page, the title line(s) for all substitute forms (not including the form’s year designation and sequence number, when present), may be

photographically reduced by 40 percent or reset as one line of type. When reset as one line, the type

size may be no smaller than 14-point. You may omit “Department of the Treasury, Internal Revenue

Service” and all reference to instructions in the form’s title area.

3.3.7 Remove

Government Printing

Office Symbol and

IRS Catalog Number

When privately printing substitute tax forms, the Government Printing Office symbol and/or jacket

number must be removed. In the same place, using the same type size, print the Employer

Identification Number (EIN), the Social Security Number (SSN) of the printer or designer, or the IRS

assigned source code. (We prefer this last number be printed in the lower left area of the first page of

each form.) Also remove the IRS Catalog Number, if one is present in the bottom center margin, and

the Recycle Symbol, if the substitute is not produced on recycled paper.

3.3.8 Printing

on One Side

of Paper

While it is preferred that both sides of the paper be used for substitute and reproduced forms, resulting in the same page arrangement as that of the official form or schedule, the IRS will not reject your

forms if only one side of the paper is used.

3.3.9 Photocopy

Equipment

The IRS does not undertake to approve or disapprove the specific equipment or process used in reproducing official forms. Photocopies of forms must be entirely legible and satisfy the conditions stated

in this and other revenue procedures.

3.3.10 Reproductions

Reproductions of official forms and substitute forms that do not meet the requirements of this revenue

procedure may not be filed instead of the official forms. Illegible photocopies are subject to being

returned to the filer for resubmission of legible copies.

3.3.11 Removal

of Instructions

You may remove all references to instructions. No prior approval is needed. One exception is that the

statement, “For Paperwork Reduction Act Notice, see instructions”, must be retained or a similar

statement provided on each form. Some forms refer the taxpayer to a page number in the instructions

for information on the Paperwork Reduction Act.

Section 3.4 - Margins

3.4.1 Margin Size

The format of a reproduced tax return when printed on the page must have margins on all sides at least

as large as the margins on the official form. This allows room for IRS employees to make the necessary entries on the form during processing.

•

2000–12 I.R.B.

A 1/2” to 1/4” inch margin must be maintained across the top, bottom, and both sides (exclusive

of any pin-fed holes) of all computer-generated substitutes.

797

March 20, 2000

•

3.4.2 Marginal

Printing

The marginal, perforated strips containing the pin-fed holes must be removed from all forms

prior to filing with the Internal Revenue Service.

Non-tax material allowed in limited areas.

•

Printing is never allowed in the top right margin of the tax return form (i.e., Forms 1040, 1040A,

1040EZ, 1120, 940, 941, 5500 Series, etc.). The Service uses this area to imprint a Document

Locator Number for each return.

With the exception of the actual tax return forms (i.e., Forms 1040, 1040A, 1040EZ, 1120, 940,

941, etc.), you may print in the left vertical margin and in the left half of the bottom margin.

Prior approval is not required for the marginal printing allowed when printed on an official form or on

a photocopy of an official form.

The marginal printing allowance is also the guide for the preparation of acceptable substitute forms.

There is no exception to the requirement that no printing is allowed in the top right margin of the tax

return form.

Section 3.5 - Examples of Approved Formats

3.5.1 Examples of

Approved Formats

From the Exhibits

Two sets of exhibits (Exhibits A-1, A-2, B-1, and B-2) are at the end of this revenue procedure. These

are examples of how the guidelines in this revenue procedure may be used in some specific cases.

Vertical spacing is six (6) lines to the inch.

3.5.2 Examples of

Acceptable computergenerated formats

Examples of acceptable computer-generated formats are also shown in the Exhibits section of this rev

enue procedure. Exhibits CG-A and CG-B show computer-generated Schedules 1995 A and B.

Vertical spacing is six (6) lines to the inch. You may also refer to them as examples of how the guidelines in this revenue procedure may be used in specific cases. A combination of upper and lower case

print fonts is acceptable in producing the computer-generated forms included in this procedure. This

same logic for computer-generated forms can be applied to any IRS form that is normally reproducible

as a substitute form, with the exception of tax return forms as discussed elsewhere. These examples

are from a prior year and are not to be used as substitute forms.

Section 3.6 - Miscellaneous Information for Substitute Forms

3.6.1 Filing

Substitute Forms

To be acceptable for filing, a substitute return or form must print out in a format that will allow the

party submitting the return to follow the same instructions as for filing official forms. These instructions are in the taxpayer’s tax package or in the related form instructions. The form must be on the

appropriate size paper, be legible, and include a jurat where one appears on the published form.

3.6.2 Caution

to Software

Publishers

The IRS has received returns produced by software packages with approved output where either the

form heading was altered or the lines were spaced irregularly. This produces an illegible or unrecognizable return or a return with the wrong number of pages. We realize that many of these problems

are caused by individual printer differences but they may delay input of return data and, in some cases,

generate correspondence to the taxpayer. Therefore, in the instructions to the purchasers of your product, both individual and professional, please stress that their returns will be processed more efficiently if they are properly formatted. This includes:

•

3.6.3 Use

Preaddressed

IRS Label

March 20, 2000

Having the correct form numbers and titles at the top of the return, and

Submitting the same number of pages as if the form were an official IRS form, with the line

items on the proper pages.

If you are a practitioner filling out a return for a client or a software publisher who prints instruction

manuals, stress the use of the preaddressed label provided in the tax package the IRS sent to the tax

payer, when available. The use of this label (or its precisely duplicated label information) is extremely important for the efficient, accurate, and economical processing of a taxpayer’s return. Labeled

returns indicate that a taxpayer is an established filer and permits us to automatically accelerate processing of those returns. This results in quicker refunds, more accurate names/addresses and postal

deliveries, and less manual review by IRS functions.

Continued on next page

798

2000–12 I.R.B.

3.6.5 Programming

to Print Forms

Whenever applicable:

•

Use only the following label information format for single filers:

JOHN Q. PUBLIC

310 OAK DRIVE

HOMETOWN, STATE 94000

•

Use only the following information for joint filers:

JOHN Q. PUBLIC

MARY I. PUBLIC

310 OAK DRIVE

HOMETOWN, STATE 94000

Chapter 4

Additional Resources

Section 4.1 - Guidance From Other Revenue Procedures

4.1.1 General

Guidance for the substitute tax forms not covered in this revenue procedure and the revenue procedures that govern their use are as follows:

•

Revenue Procedure 94-79, IRS Publication 1355, Requirements and Conditions for the

Reproduction, Private Design, and Printing of Substitute Forms 1040-ES.

•

Revenue Procedures 99-24, IRS Publication 1141, General Rules and Specifications for Private

Printing of Substitute Forms W-2 and W-3.

•

Revenue Procedure 99-34, IRS Publication 1179, Specifications for Paper Document Reporting

and Paper Substitutes for Forms 1096, 1098, 1099, 5498, and W-2G.

•

Revenue Procedure 98-44, IRS Publication 1187, Specifications for Filing Form 1042-S,

Foreign Person’s U.S. Source Income Subject to Withholding, on Magnetic Tape.

•

Revenue Procedure 99-29, IRS Publication 1220, Specifications for Filing Forms 1098, 1099,

5498, and W-2G Magnetically or Electronically.

•

Revenue Procedure 95-18, IRS Publication 1223, Specifications for Private Printing of

Substitute Forms W-2c and W-3c.

Section 4.2 - Ordering Publications

4.2.1 Sources of

Publications

The publications listed below may be ordered by calling 1-800-TAX-FORM (1-800-829-3676).

Identify the requested document by IRS publication number:

•

Pub. 1141, the revenue procedure on specifications for private printing for Forms W-2 and W-3.

•

Pub. 1167, the revenue procedure on substitute printed, computer- prepared, and computer-generated tax forms and schedules. This publication is available from the IRS Internet website.

•

Pub. 1179, the revenue procedure on paper substitute information returns (Forms 1096, 1098,

1099, 5498, and W-2G).

•

Pub. 1192, Catalog of Reproducible Forms and Instructions.

•

Pub. 1220, the revenue procedure on electronic or magnetic tape and magnetic diskette reporting for information returns (Forms 1098, 1099 series, 5498, and W-2G).

•

Pub. 1223, the revenue procedure on substitute Forms W-2c and W-3c.

•

Pub. 1239, Specifications for Filing Form 8027, Employer’s Annual Information Return of Tip

Income and Allocated Tips, on Magnetic Tape.

•

Pub. 1245, Magnetic Tape Reporting for Forms W-4.

Continued on next page

2000–12 I.R.B.

799

March 20, 2000

4.2.2 Where

To Order

•

Pub. 1345, Handbook for Electronic Filers of Individual Income Tax Returns (Tax Year 1999).

(This is an annual publication; tax year is subject to change). This publication is available from

the IRS Internet website.

•

Pub. 1345-A, Handbook for Electronic Filers of Individual Income Tax Returns (Tax Year 1999)

(Supplement). This publication, printed in the late fall, supplements Publication 1345.

•

Pub. 1355, the revenue procedure on the requirements for substitute Form 1040-ES.

If you are mailing your order, the address to use is determined by your location.

If you live in the ...

Then mail your order to ...

Western United States

Western Area Distribution Center

Rancho Cordova, CA 95743-0001

Central United States

Central Area Distribution Center

P.O. Box 8903

Bloomington, IL 61702-8903

Eastern United States or

or foreign country

Eastern Area Distribution Center

P.O. Box 85074

Richmond, VA 23261-5074

Section 4.3 - Electronic Tax Products

4.3.1 The

Internet

Copies of tax forms with instructions, publications, and other tax related materials may be obtained

via the Internet. Forms can be downloaded in several file formats (PDF- Portable Document Format,

PS - PostScript, and PCL - Printer Control Language). Those choosing to use PDF files for viewing

on a personal computer can also download a free copy of the Adobe Acrobat Reader.

•

World Wide Web - http://www.irs.gov

Access to these sites is free but time on the Internet is subject to the fees charged by your Internet provider.

4.3.2 Fedworld

(BBS)

The Internal Revenue Information Systems (IRIS) Bulletin Board can be reached via FedWorld, an

aggregation of federal BBS maintained by the Department of Commerce. IRIS can be reached directly by modem at (703) 321-8020; FedWorld’s main number is (703) 321-3339. These are toll calls.

4.3.3 Tax Fax

The most frequently requested tax forms, instructions, and other information are available through IRS

Tax Fax at (703) 368-9694. Call from your fax machine and follow the voice prompts. Your request

will be transmitted directly back to you. Each call is limited to requesting three items; users pay the

telephone line charges.

4.3.4 Report of

Print Dates

The Service makes available a site on the Internet that shows print dates for forms used by taxpayers

in the preparation of returns and subsequent transactions. It is in three parts:

•

Schedule of anticipated print dates of annual returns,

•

Schedule of anticipated print dates of quarterly returns, and

•

Schedule of last revision dates for continuous use only forms.

The site address is http://www.irs.gov/prod/bus_info/tax_pro/formsch.html. The site will be updated

weekly during peak printing periods and as necessary at other times.

Section 4.4 - Federal Tax Forms on CD-ROM

4.4.1 Information

About Federal Tax

Forms CD-ROM

March 20, 2000

The CD-ROM contains over 3,000 tax forms and publications for small businesses, return preparers,

and others who frequently need current or prior year tax products. Most current tax forms on the CDROM may be filled in electronically, then printed out for submission and saved for recordkeeping.

800

2000–12 I.R.B.

Other products on the CD-ROM include the Internal Revenue Bulletins, Tax Supplements, and

Internet resources for the tax professional with links to the World Wide Web.

All necessary software to view the files must be installed from the CD-ROM. Software for Adobe

Acrobat Reader is included on the disk. The software will run under Windows 95/98/NT and

MacIntosh System 7.5 and later. All products are presented in Adobe’s Portable Document Format

(PDF). In addition, the TIPs are provided in the Standard Generalized Markup Language (SGML).

4.4.2 System

Requirements and

How to Order the

Federal Tax Forms

CD-ROM

For system requirements, contact the National Technical Information Service (NTIS) help desk at 703487-4608.

The cost of the CD if purchased via the Internet at http://www.irs.gov/cdorders from NTIS is $16 (plus

a $5 handling fee). If purchased using the following methods the cost is $23 (plus a $5 handling fee).

•

by phone - 1-877-CDFORMS (1-877-233-6767)

•

by fax - (703) 605-6900

•

by mail using the order form contained in IRS Publication 1045 (Tax Professionals Program)

•

by mail to:

National Technical Information Service

5285 Port Royal Road

Springfield, VA 22161

There is a $7 discount per CD for orders of 50 or more copies, making the price $16 per CD plus a $5

handling fee.

Chapter 5

Requirements for Specific Tax Returns

Section 5.1 - Tax Returns (Form 1040, 1040A, 1120, Etc.)

5.1.1 Acceptable

Forms

There are acceptable computer-generated versions of a tax return form (e.g., Form 1040, 1040A, 1120,

etc., which requires a signature and that establishes tax liability) that are permitted under the following conditions:

•

These substitute returns must be printed on plain white paper.

•

Substitute returns and forms must conform to the physical layout of the corresponding IRS form

although the typeface may differ. The text should match the text on the officially published form

as closely as possible; condensed text and abbreviations will be considered on a case-by-case

basis.

Exception: All jurats (perjury statements) must be reproduced verbatim. No text can be added, deleted, or changed in meaning. It must be readily identifiable as a valid tax return.

5.1.2 ComputerGenerated

Condensed

Format Versions

•

Various computer-graphic print media such as laser printing, dot matrix addressable printing,

etc., may be used to produce the substitute forms.

•

The substitute return must be the same exact number of pages, and contain the same line text as

the official return.

•

All computer-generated tax returns MUST be submitted for approval prior to their original use.

Should you receive an approval letter for a return and the following year’s return has no changes

except the preprinted year, the latter return is not subject to approval. Exception: If the approval

letter specifies a one-time exception for your return, the next year’s return must be approved.

The accepted condensed print format version for individual returns is the 1040PC “answer sheet format” tax return. The approval process for Form 1040PC differs from that of traditional forms. See

Chapter 7 for additional information.

Continued on next page

2000–12 I.R.B.

801

March 20, 2000

5.1.3 Prohibited

Forms

The following are prohibited:

•

Tax returns (e.g., Forms 1040, etc.) computer-generated on lined or color-barred paper.

•

Tax returns that differ from the official IRS forms in a manner that makes them not standard or

processable.

5.1.4 Changes

Permitted to

Forms 1040

and 1040A

Certain changes (listed in Section 5.2 through 5.4) are permitted to the graphics of the form without

prior approval, but these changes apply only to acceptable preprinted forms. Changes not requiring

prior approval are good only for the annual filing period, which is the current Tax Year. Such changes

are valid in subsequent years only if the official form does not change.

5.1.5 Other

Changes Not

Listed

All changes not listed in Sections 5.2 through 5.4 require prior approval from the Service BEFORE

the form may be filed.

Section 5.2 - Changes Permitted to Graphics (Forms 1040A and 1040)

5.2.1 Adjustments

You may make minor vertical and horizontal spacing adjustments to allow for computer or word-processing printing. This includes widening the amount columns or tax entry areas so long as the adjustments do not exceed other provisions stated in revenue procedures. No prior approval is needed for

these changes.

5.2.2 Name and

Address Area

The horizontal rules and instructions within the name and address area may be removed and the entire

area left blank; no line or instruction can remain in the area. However, the statement regarding use of

the IRS label should be retained. The heavy ruled border (when present) that outlines the name,

address area, and social security number must not be removed, relocated, expanded, or contracted.

5.2.3 Required

Format

When the name and address area is left blank, the following format must be used when printing the

taxpayer’s name and address. Otherwise, unless the taxpayer’s preprinted label is affixed over the

information entered in this area, the lines must be filled in as shown:

•

1st name line (35 characters maximum)

•

2nd name line (35 characters maximum)

•

In-care-of name line (35 characters maximum)

•

City, State (25 char. max.), one blank char., & ZIP (five char.)

5.2.4 Conventional

Name and

Address Data

When there is no in-care-of name line, the name and address will consist of only three lines (single

filer) or four lines (joint filer).

Name and address (joint filer) with no in-care-of name line:

JOHN Z. JONES

MARY I. JONES

1234 ANYWHERE ST., APT 111

ANYTOWN, STATE 12321

5.2.5 Example of

In-Care-Of Name

Line

Name and address (single filer) with in-care-of name line:

5.2.6 Social Security

Number (SSN) and

Employer Identification

Number (EIN) Area

The vertical lines separating the format arrangement of the SSN/EIN may be removed. When the vertical lines are removed, the SSN and EIN formats must be 000-00-0000 or 00-0000000, respectively

5.2.7 Cents Column

•

JOHN Z. JONES

C/O THOMAS A. JONES

4311 SOMEWHERE AVE.

SAMETOWN, STATE 54345

•

March 20, 2000

You may remove the vertical rule that separates the dollars from the cents.

All entries in the amount column should have a decimal point following the whole dollar

amounts whether or not the vertical line that separates the dollars from the cents is present.

You may omit printing the cents, but all amounts entered on the form must follow a consistent

format. You are strongly urged to round off the figures to whole dollar amounts, following the

official return instructions.

Continued on next page

802

2000–12 I.R.B.

•

5.2.8 “Paid

Preparer’s Use

Only” Area

Where several amounts are summed together, the total should be rounded off subsequent to the

addition (i.e, individual amounts should not be rounded off for computation purposes).

When printing money amounts, you must use one of the following ten- character formats: (a)

0,000,000. (b) 000,000.00

When there is no entry for a line, leave the line blank.

On all forms, the paid preparer’s information area may not be rearranged or relocated. You may add

three lines and remove the horizontal rules in the preparer’s address area.

Section 5.3 - Changes Permitted to Form 1040A Graphics

5.3.1 General

No prior approval is needed for the following changes (for use with computer-prepared forms only).

5.3.2 Line 4 of

Form 1040A

This line may be compressed horizontally (to allow for same line entry for the name of the qualifying

child) by using the following caption: “Head of household; child’s name” (name field).

5.3.3 Other Lines

Any line whose caption takes up two or more vertical lines may be compressed to one line by using

contractions, etc., and by removing instructional references.

5.3.4 Page 2 of

Form 1040A

All lines must be present and numbered in the order shown on the official form. These lines may also

be compressed.

5.3.5 Color

Screening

It is not necessary to duplicate the colorscreening used on the official form. A substitute Form 1040A

may be printed in black and white only, with no color screening.

5.3.6 Other

Changes Prohibited

No other changes to the Form 1040A graphics are allowed without prior approval, except for the

removal of instructions and references to instructions.

Section 5.4 - Changes Permitted to Form 1040 Graphics

5.4.1 General

No prior approval is needed for the following changes (for use with computer-prepared forms only).

5.4.2 Line 4 of

Form 1040

This line may be compressed horizontally (to allow for a larger entry area for the name of the qualifying child) by using the following caption: “Head of household; child’s name” (name field).

5.4.3 Line 6c of

Form 1040

The vertical lines separating columns (1) through (4) may be removed. The captions may be short

ened to allow a one-line caption for each column.

5.4.4 Other Lines

Any other line whose caption takes up two or more vertical lines may be compressed to one line by

using contractions, etc., and by removing instructional references.

5.4.5 Line 21 Other Income

The fill-in portion of this line may be expanded vertically to three lines.

The amount entry box must remain a single entry.

5.4.6 Line 40 of

Form 1040 - Tax

You may change the line caption to read “Tax” and computer print the words “Total includes tax from”

and either “Form(s) 8814”, or “Form 4972”. If both forms are used , print both form numbers.

5.4.7 Line 47 of

Form 1040

You may change the caption to read: “Other credits from Form” and computer-print only the form(s)

that apply.

5.4.8 Color

Screening

It is not necessary to duplicate the color screening used on the official form. A substitute Form 1040

may be printed in black and white only, with no color screening.

5.4.9 Other

Changes Prohibited

No other changes to the Form 1040 graphics are permitted without prior approval except for the

removal of instructions and references to instructions.

2000–12 I.R.B.

803

March 20, 2000

Chapter 6

Format and Content of Substitute Returns

Section 6.1 - Acceptable Formats for Computer-Generated Forms and Schedules

6.1.1 Exhibits and

Use of Acceptable

ComputerGenerated Formats

Exhibits of acceptable computer-generated formats for the schedules usually attached to the Form

1040 are shown in the Exhibits section of this revenue procedure.

•

If your computer-generated forms appear exactly like the exhibits, no prior authorization is needed.

•

Those who want to computer-generate forms not shown here may do so, but they must design

such forms themselves by following the manner and style of those in the Exhibits section of this

revenue procedure, and by taking care to observe other requirements and conditions stated here.

The Service encourages the submission of all proposed forms covered by this revenue procedure.

6.1.2 Instructions

The format of each substitute schedule or form must follow the format of the official schedule or form

as to item captions, line references, line numbers, sequence, form arrangement and format, etc.

Basically, try to make the form look like the official one, with readability and consistency being primary factors. You may use periods and/or other similar special characters to separate the various parts

and sections of the form. DO NOT use alpha or numeric characters for these purposes. With the

exceptions described in paragraph 6.1.3, all line numbers and items must be printed even though an

amount is not entered on the line.

6.1.3 Line Numbers

When a line on an official form is designated by a number or a letter, that designation (reference code)

must be used on a substitute form. The reference code must be printed to the left of the corresponding captioned line and also immediately preceding the data entry field even if there is no reference

code immediately preceding the data entry field on the official form. If an entry field contains multiple lines but shows the line references only one time on the left and right side of the form, do not use

more than the same number of line references on the substitute return.

In addition, the reference code that is immediately before the data field must either be followed by a

period or enclosed in parentheses. There also must be at least two blank spaces between the period or

the right parenthesis and the first digit of the data field. (See example below.)

6.1.4 Decimal Points

A decimal point (i.e., a period) should be used for each money amount regardless of whether the amount

is reported in dollars and cents or in whole dollars, or whether or not the vertical line that separates the

dollars from the cents is present. The decimal points must be vertically aligned when possible.

Example:

5 STATE & LOCAL INC.

TAXES................5 495.00

6 REAL ESTATE

TAXES................6

7 PERSONAL PROPERTY

TAXES................7 198.00

5 STATE & LOCAL INC.

TAXES................(5) 495.00

6 REAL ESTATE

TAXES................(6)

7 PERSONAL PROPERTY

TAXES................(7) 198.00

6.1.5 Multiple

Page Forms

When submitting multiple page forms, send all pages of the form in the same package. If you are not

producing certain pages, please note that in your cover letter.

Section 6.2 - Additional Instructions for All Forms

6.2.1 Use of Your

Own Internal Control

Numbers and

March 20, 2000

Internal control numbers and identifying symbols of the computer preparer may be shown on the sub

stitute, if the use of such numbers or symbols is acceptable to the taxpayer and the taxpayer’s representative. If shown, such information must not be printed in the top 1/2” clear area of any form or

Continued on next page

804

2000–12 I.R.B.

Identifying Symbols

schedule requiring a signature. With the exception of the actual tax return form (i.e., Forms 1040,

1120, 940, 941, 5500 Series, etc.), you may print in the left vertical and bottom left margins. The bottom left margin you may use extends 3 1/2 inches from the left edge of the form.

6.2.2 Descriptions

for Captions,

Lines, etc.

Descriptions for captions, lines, etc., appearing on the substitute forms may be limited to one print line

by using abbreviations and contractions, and by omitting articles, prepositions, etc. However, sufficient key words must be retained to permit ready identification of the caption, line, or item.

6.2.3 Derivation

of Final Totals

Explanatory detail and/or intermediate calculations for derivation of final line totals may be included

on the substitute. We prefer that such calculations be submitted in the form of a supporting statement.

If intermediate calculations are included on the substitute, the line on which they appear may not be

numbered or lettered. Intermediate calculations may not be printed in the right column. This column

is reserved for official numbered and lettered lines that correspond to the ones on the official form. If

a supporting statement is submitted, intermediate calculations or subtotals may be formatted at the preparer’s option.

6.2.4 Instructional

Text Prescribed

for the Official Form

Text prescribed for the official form, which is solely instructional in nature, e.g., “Attach this schedule to Form 1040,” “See instructions,” etc., may be omitted from the substitute form.

6.2.5 Mixing of

Forms on the Same

Page Prohibited

Information for more than one schedule or form may not be shown on the same printout page. Both

sides of the paper may be printed for multiple page official forms; but it is unacceptable to intermix

single page schedules of forms, except for Schedules A and B (Form 1040), which are printed back to

back by the Service.

Schedule E can be printed on both sides of the paper, because the official form is multiple page, with

page 2 continued on the back. However, do not print Schedule E on the front page and Schedule SE

on the back, or Schedule A on the front and Form 8615 on the back, etc. Both pages of a substitute

form must match the official form version it represents, except that the back page may be blank if the

Service form only contains the instructions thereon.

6.2.6 Identifying

Computer-Prepared

Substitutes

Identify all computer-prepared substitutes clearly; print the form designation 1/2” from the top margin and 1 1/2” from the left margin; print the title centered on the first line of print; and print the taxable year and, where applicable, the sequence number on the same line _ to 1” from right margin.

Include the taxpayer’s name and SSN on all forms and attachments. Also, print the OMB number as

reflected on the official form.

6.2.7 Negative

Amounts

Negative (or loss) monetary amount entries should be enclosed in brackets, or signed minus, to assist

in the accurate computation and input of form data. On many official forms the Service preprints

brackets in selected negative data fields, and these designations should be retained or inserted on

affected substitute forms.

Chapter 7

OCR Forms

Section 7.1 - Special Form 1040EZ Optical Character Recognition/Image Character Recognition

(OCR/ICR) Requirements

7.1.1 Form 1040EZ

Designed in

OCR/ICR Format

The Form 1040EZ is designed in OCR/ICR format. The IRS has the capability to machine read this

form by optical character recognition/image character recognition (OCR/ICR) equipment. Form

1040EZ data may also be filed electronically or on a 1040PC format return.

An acceptable substitute OCR/ICR Form 1040EZ must generally be an exact replica of the official

OCR/ICR reproduction proof with respect to layout, content, and required OCR/ICR characteristics.

2000–12 I.R.B.

805

March 20, 2000

7.1.2 Paper

Requirements for

OCR/ICR Form

1040EZ

7.1.3 Specific Ink

Requirements

The special paper requirements which must be met for the development of a substitute (privately print

ed) OCR/ICR Form 1040EZ include the following:

Property

Requirements

Color and quality of paper

Paper must be white, OCR/ICR grade bond,

with no fluorescent additives or water marks,

and with zero rag content.

Reflectivity of paper

Must be 80% or greater.

Opacity

The paper opacity ratio must be 80% or more.

Paper Weight

Specified paper weight is 20 lb. OCR/ICR

bond (.0035”).

Dirt

Must not exceed 10 parts per million.

Finish (smoothness)

Must be between 90 and 160 units (Sheffield).

Porosity

Paper should have a Gurley reading between

15 and 95.

Gloss

Paper with shiny or lustrous appearance

(glossy) should be avoided.

Size

Form trim size must be 8” x 11”.

The specific ink requirements which must be met for this form include the following:

Property

March 20, 2000

Requirements

Print Color

The face of the form prints in black and green,

the back prints in black only (70 % screen).

Ink

Green ink used must be highly reflective

OCR/ICR type, such as Flint J-27975, or an

exact match. Black ink used must be nonreflective.

Face Registration

Black to green must be .02” (plus or minus)

both horizontally and vertically.

Face Screen

Forms contain a green-screened background

equal to a 15% tone of 110-line screen. Follow

registration marks on repro-proof for screen

positioning. Handprinted boxes are included

on Page 1 of the reproduction proof and should

be printed as a 50% value of the recommended

OCR/ICR green ink. Inks used for handprinted

boxes must reflect at least 90% of the background on which it is printed as measured in

the visible range.

Face Margins

Approximately 2/6” head from top trimmed

edge to screen (1/2” to black image). 1/6” outside from trimmed edges to screen.

Back Margins

1/2” head, 5/16” foot, and 5/16” sides.

Back Screen

Back copy should be screened for 70% tone

value.

806

2000–12 I.R.B.

7.1.4 Typography

Type must be substantially identical in both size and shape with corresponding type on the official

form reproduction proof.

7.1.5 Proper

Alignment and

Position of

Handprinted

Characters

To assure proper alignment and position of handprinted characters representing return lines 1 through

10 tax data, they must be handprinted (entered) into the preprinted amount field boxes on the form. A

#2 lead wooden pencil, or blue, and/or black ink pen (ball point, fountain, or felt-tipped) is recommended as the writing tool that will consistently provide the required stroke width and print contrast

on entered characters.

7.1.6 Reading of

Handprinted

Character

Techniques

Reading of handprinted characters requires adherence to the following techniques:

•

Enter numeric amount digits carefully and clearly. Fill at least 2/3 of the individual character

box height, keeping the character within the box with no overlapping or touching characters. Specific

required constraints are shown below.

•

When entering “fours”, keep the top open.

•

When entering “ones”, do not use serifs.

•

When entering “twos”, do not add extra loops.

•

All character lines must be connected with no gaps.

7.1.7 Note:

All the general and detailed provisions of this revenue procedure apply (in addition to this specific

OCR/ICR Section) to the development of substitute OCR/ICR Forms 1040EZ.

Section 7.2 - Computer-Generated Alternative Returns, 1040PC Format Return

7.2.1 Introduction

The Internal Revenue Service offers an electronic approach for filing individual income tax returns.

The 1040PC Format Return is an alternative to th e conventional preprinted tax return. The 1040PC

is an answer sheet return, generated on a personal computer in a three-column format, that prints only

tax data that is input into the software. Tax returns are filed by tax preparers and taxpayers using commercially available tax preparation software packages that include the 1040PC Format Return print

option.

7.2.2 1040PC

Format Returns

1040PC Format Returns are computer-prepared, printed on plain white paper, signed and mailed to the

designated processing center, and processed like any other conventionally filed return.

7.2.3 Software

Packages Must

Be Purchased

Preparers, or taxpayers, must purchase IRS-accepted tax preparation software packages that include

the 1040PC print option. All that is necessary to participate in 1040PC is a personal computer, accepted software, a printer, and plain white paper. The 1040PC is attractive to tax preparers and taxpayers

who might not be interested or capable of electronic filing.

7.2.4 Options

Available to

Taxpayers

The Direct Deposit option is available to taxpayers filing 1040PC returns. Balance due returns may

also be filed using 1040PC. The payment may be forwarded to the Service Center with a separate

payment voucher (Form 1040-V).

7.2.5 Use of the

1040PC Program

All software used to generate the 1040PC Format Return must be tested and accepted by the Internal

Revenue Service. Testing will validate 1040PC returns generated by the software and that the software program is in compliance with validity and consistency checks in the IRS 1040PC project specifications. Software developers who wish to participate in the 1040PC program must submit Form

9356, Application for Software Developers to Participate in the 1040PC Answer Sheet for Individual

Income Tax Returns, to the 1040PC Filing Section.

7.2.6 Acceptance

Code

Upon successful completion of software acceptance testing, the software developer will be issued a

software acceptance code that will be embedded into the software and print on every 1040PC return

generated. This is not the same as the Source Code issued by the Substitute Forms Program or the

approval number which is generated for OCR Scannable Application Forms for Employee Plans.

7.2.7 References/

Information on

the 1040PC

Format Return

The Internal Revenue Service believes that 1040PC will prove beneficial to taxpayers, tax preparers,

and the Service. For specific information about the alternative computer-generated 1040PC Format

Return, refer to Publication 1678, Project 1040PC, Handbook for 1040PC Format Preparers and

Publication 1630, Project 1040PC, Specifications for Software Developers. You may also call (202)

283-0823 or write:

2000–12 I.R.B.

807

March 20, 2000

Internal Revenue Service

1040PC Filing Office, OP:FS:S:P:S

5000 Ellin Rd

Lanham, MD 20706

Section 7.3 - OCR Scannable Application Forms for Employee Plans

7.3.1 OCR

Scannable

Documents

Forms 4461, 4461-A, 4461-B, 5300, 5303, 5307, 5310-A, 5310-A, and 6406 are OCR scannable documents submitted to key district offices for employee plans matters. They may be submitted as computer-generated substitute forms if the requirements of this section are satisfied.

7.3.2 OCR Data

Sheet Requirements

An OCR data sheet must be generated according to the following requirements:

•

Set at least 1” margin at top, bottom, and both sides.

•

A data element consists of a less than sign (delimiter), information or at least 5 blank spaces, and

a greater than sign (delimiter). All data elements from page one of the application forms listed

above must be printed on the OCR data sheet, even if no information is entered between the

delimiters.

•

Each data element must start at the left margin.

•

One line for each data field, except for employer and plan name fields which may be two lines.

However, only one set of delimiters may bracket the field, even if the field is on two lines.

•

Each data element must appear on the OCR data sheet in the same sequence as printed on the

preprinted form, reading top to bottom and from left to right.

•

Each data field must be sequentially numbered at left commencing with 1. See Notice 90-38 for

examples of the acceptable format.

•

The data sheet must be printed on 8 _” x 11” white nonrecycled paper suitable for use with printing equipment and duplicating machines. A photocopy is not acceptable. Heavyweight bond

paper and onion skin paper are not acceptable.

•

Use 10 pitch type in a standard business font (e.g., courier, elite, pica).

•

Add at least two spaces before and after each less than and greater than sign (delimiters).

•

Do not fold or staple the OCR data sheet. It may remain loose, or be paper or spring clipped to

the application.

•

At the top of the OCR data sheet add the heading “OCR Data Sheet, File With Application Form

(Enter Form Number), Approval Number” (leave nine spaces for approval number).

7.3.3 Where To

Send OCR Data

Sheet for Approval

The OCR data sheet must be submitted for approval to EP OCR Forms Coordinator, OP:E:EP:FC,

Room 2232, 1111 Constitution Ave., NW, Washington, DC 20224.

7.3.4 Submission

Requirements

The OCR data sheet must be submitted with a complete word-for-word identical copy of the application form except as described below. This copy may be a photocopy or a computer-generated substitute form. Computer-generated substitute forms may be submitted for approval to the address above.

However, except for the OCR data sheet, such approval is not required if the requirements of this revenue procedure are satisfied. If approval is requested, leave nine spaces for the approval number

above the OMB approval number.

7.3.5 Procedures

for Filing the

OCR Data Sheet

The OCR data sheet replaces the first copy of page 1 of the application which must otherwise be submitted in duplicate. To avoid confusion when generating the OCR data sheet, the following wording

should be deleted from page 1 of the application: “File page 1 of the form in duplicate” and “Both

copies of this page must be signed”. If the Procedural Requirements Checklist is being generated, the

following line item statements should be modified as indicated. The question “Has page one been submitted in duplicate” should be modified to read, “Have you submitted the OCR data sheet?”, and the

question “Have you signed both copies of page 1 of the application?” should be modified to read

“Have you signed the application?”

7.3.6 Nonscannable

EP Application

Forms

Nonscannable EP application forms, e.g., Form(s) 5305 and 5306, may be computer generated. They

need not be submitted for approval if the requirements of this revenue procedure are satisfied. If

approval is desired, these forms may be submitted to the Substitute Forms Coordinator.

March 20, 2000

808

2000–12 I.R.B.

Chapter 8

Miscellaneous Forms and Programs

Section 8.1 - Paper Substitutes for Form 1042-S

8.1.1 Paper

Substitutes

Paper substitutes for Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding, that

totally conform to the specifications contained in this procedure may be privately printed without prior

approval from the Internal Revenue Service. Proposed substitutes not conforming to these specifications must be submitted for consideration.

8.1.2 Timeframe

for Submission

of Form 1042-S

The request should be submitted by November 15 of the year prior to the year the form is to be used.

This is to allow the Service adequate time to respond and the submitter adequate time to make any corrections. These requests should contain a copy of the proposed form, the need for the specific deviation(s), and the number of information returns to be printed.

8.1.3 Revisions

Form 1042-S is subject to annual review and possible change. Withholding agents and form suppliers are cautioned against overstocking supplies of the privately printed substitutes.

8.1.4 Obtaining

Copies

Copies of the official form for the reporting year may be obtained from most Service offices. The

Service provides only cut sheets (no carbon interleaves) of these forms. Continuous fan-fold/pin-fed

forms are not provided.

8.1.5 Instructions

For Withholding

Agents

Instructions for withholding agents:

•

Only original copies may be filed with the Service. Carbon copies and reproductions are

not acceptable.

•

The term “Recipient’s U.S. taxpayer identification number” for an individual means the social

security number (SSN) or individual taxpayer identification number (ITIN), consisting of nine

digits separated by hyphens as follows: 000-00-0000. For all other recipients, the term means

employer identification number (EIN). The EIN consists of nine digits separated by hyphen as

follows: 00-0000000. The taxpayer identification number (TIN) must be in one of these formats.

•

Withholding agents are requested to type or machine print whenever possible, provide quality

data entries on the forms (that is, use black ribbon and insert data in the middle of blocks well

separated from other printing and guidelines), and take other measures to guarantee a clear, sharp

image. Withholding agents are not required, however, to acquire special equipment solely for

the purpose of preparing these forms.

•

The “VOID” and “CORRECTED” boxes must be printed at the bottom left corner of the form,

and checked if applicable.

•

Substitute forms prepared in continuous or strip form must be burst and stripped to conform to

the size specified for a single form before they are filed with the Service. The dimensions are

found below. Computer cards are acceptable provided they meet all requirements regarding layout, content, and size.

8.1.6 Substitute

Forms Format

Requirements

2000–12 I.R.B.

Property

Substitute Forms Format Requirements

Printing

Privately printed substitute Forms 1042-S must

be exact replicas of the official forms with

respect to layout and contents. Only the dimensions of the substitute form may differ and the

printing of the Government Printing Office symbol must be deleted. The exact dimensions are

found below.

Line Entries

Line 1 must be present, line 2 may be omitted if

it is not needed. If line 2 is omitted, also omit

line 3.

Columns

None of the columns can be omitted. Each column (a through h) must be present and in the

exact order. The column for each payment

amount must contain the appropriate caption.

809

March 20, 2000

Property

Substitute Forms Format Requirements

Color 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; or offset book

paper, 50 pound (basis 25 x 38-500). No optical brighteners may be added to the pulp or

paper during manufacture. The paper must consist of principally bleach chemical woodpulp or

recycled printed paper. It also must be suitably

sized to accept ink without feathering.

• Copies B, C, D (for Recipient), and E (For

Withholding Agent) are provided in the official assembly solely for the convenience of

the withholding agent. Withholding agents

may choose the format, design, color and

quality of the paper used for these copies.

Color and Quality of Ink

All printing must be in a high quality non-gloss black

ink. Bar codes should be free from picks and voids.

Typography

Type must be substantially identical in size and

shape to corresponding type on the official form.

All rules on the document are either 1 point

(0.015”) or 3 point (0.045”). Vertical rules must

be parallel to the left edge of the document; horizontal rules, parallel to the top edge.

Dimensions

• The official form is 8” wide x 5-1/2” deep,

exclusive of a _ snap stub on the left side of

the form. The snap feature is not required on

substitutes.

• The width of a substitute Copy A must be a

minimum of 7” and a maximum of 8”,

although adherence to the size of the official

form is preferred. If the width of substitute

Copy A is reduced from that of the official

form, the width of each field on the substitute

form must be reduced proportionately. The

left margin must be 1/2” and free of all printing other than that shown on the official form.

• The depth of a substitute Copy A must be a

minimum of 5 1/6” and a maximum of 5 1/2”.

March 20, 2000

Carbons

Carbonized forms or “spot carbons” are not permissible. Interleaved carbons, if used, must be

of good quality to preclude smudging and

should be black.

Other Copies

Copies B, C, and D are required to be furnished

forthe convenience of payees who are required

to send a copy of the form with other federal and

state returns they file. Copy E may be desired as

a withholding agent’s record/copy.

Assembly

If all five parts are present, the parts of the assembly shall be arranged from top to bottom as follows: Copy A (Original) “For Internal Revenue

Service,” Copies B, C, and D “For Recipient,” and

Copy E “For Withholding Agent.”

810

2000–12 I.R.B.

Section 8.2- Specifications for Filing Substitute Schedules K-1

8.2.1 Schedule K-1

Requirements

Prior approval is NOT required for a substitute Schedule K-1 that accompanies Form 1065 (for partnership), a Form 1120S (for small business corporation), or a Form 1041 (for fiduciary) when the substitute Schedule K-1 meets all of the following requirements.

•

The Schedule K-1 must contain the payer and recipient’s name, address and SSN/EIN.

The Schedule K-1 must contain all the items required for use by the taxpayer.

The line items must be in the same order and arrangement as those on the official form.

Each taxpayer’s information must be on a separate sheet of paper. Therefore, all continuously

printed substitutes must be separated, by taxpayer, before filing with the Service.

Schedule K-1 for recipients must have instructions for required line items attached.

You may be subject to penalties if you file Schedules K-1 with the Service and furnish Schedules

K-1 to partners, shareholders, or beneficiaries that do not conform to the specifications of this

revenue procedure.

The amount of each partner’s shareholder’s or beneficiary’s share of each line item must be

shown. The furnishing of a total amount of each line item and a percentage (or decimal equivalent) to be applied to such total amount by the partner, shareholder, or beneficiary does not satisfy the law and the specifications of this revenue procedure.

If you file Schedules K-1 not conforming to the above specifications, IRS may consider these as

not processable and return them to you to be filed correctly. You may also be subjected to the

penalty as mentioned.

Section 8.3 - Procedures for Printing Internal Revenue Service Envelopes

8.3.1 Procedures

for Printing IRS

Envelopes

Organizations are permitted to produce substitute tax return envelopes. Use of substitute return

envelopes that comply with the requirements set forth in this section will assist in delivery of mail by

the U.S. Postal Service and facilitate internal sorting once the envelopes are received at the Internal

Revenue Service Centers.

The permanent five-digit ZIP codes must be utilized when mailing returns to the prescribed service

center:

Service Center

Atlanta, GA

Kansas City, MO

Austin, TX

Philadelphia, PA

Memphis, TN

Andover, MA

Cincinnati, OH

Holtsville, NY

Ogden, UT

Fresno, CA

Zip Code

39901

64999

73301

19255

37501

05501

45999

00501

84201

93888

8.3.2 Sorting of

Returns by

Form Type

The sorting of returns by form type is accomplished by the preprinted bar codes on return envelopes

that are included in each specific type of form or package mailed to the taxpayer. The 32 bit bar code

located to the left of the address on each envelope identifies the type of form that person is filing and

assists the Service in consolidating like returns for processing. Failure to use the envelopes furnished

by the Service results in additional processing time and effort, and possibly delays the timely deposit

of funds, processing of returns, and issuance of refund checks.

8.3.3 Sorting of

Returns by ZIP+4

or 9 Digit ZIP Codes

The Internal Revenue Service will not furnish or sell bulk quantities of preprinted tax return envelopes

to taxpayers or tax practitioners. A suitable alternative has been developed that will accommodate the

sorting needs of both the IRS and the U.S. Postal Service. The new alternative is based on the use of

2000–12 I.R.B.

811

March 20, 2000

ZIP + 4 or 9 digit ZIP codes for mailing various types of tax returns to the different area service centers. Essentially, the Postal Service will utilize the last four digits to identify and sort the various form

types into separate groups for processing. The list of add-on four digits or + 4 portion of the 9 digit

ZIP codes with the related form designations is provided below and is to become a permanent part of

the five digit service center ZIP codes shown above.

8.3.4 Add-on Four

Digits or + 4

Portion of the

9 Digit ZIP Codes

8.3.5 Changes

Involving EPMF

Forms (Plan Year

1999)

Form ZIP + FOUR

XXXXX-0001

XXXXX-0102

XXXXX-0005

XXXXX-0046

XXXXX-0018

XXXXX-0011

XXXXX-0012

XXXXX-0013

XXXXX-0014

XXXXX-0015

XXXXX-0020

XXXXX-0024

XXXXX-0027

XXXXX-0031

XXXXX-0044

Package

Reserved

1040

941

940

943

1065

1120

1120S

1040EZ

1040A

5500-CR

5500EZ

990

2290

5500

Beginning July 1, 2000, all Forms 5500 and 5500-EZ (for the 1999 plan year) will be processed by

the Pension and Welfare Benefits Administration (PWBA), an agency of the Department of Labor. In

addition, Form 5500-C/R has been obsoleted for plan year 1999. Forms 5500 and 5500-EZ should

be filed as follows:

If the plan year is ...

Then file the form with ...

1999 even if the form used is

a prior year form

The PWBA. See the instructions for Forms

5500 and 5500-EZ for the mailing addresses.

Do not use the tables in paragraphs 8.3.1 or

8.3.4.

1998 or earlier

The Internal Revenue Service using the tables

in paragraphs 8.3.1 and 8.3.4.

Forms 5500 and 5500-EZ for plan year 1999 will be printed in green drop-out ink. While it is not setting up a program to approve substitute (non-standard) forms, PWBA has announced that it will not

reject during the first processing year any 1999 annual return/report filing submitted on an unofficial

computer generated version of the form. They have however established the following criteria:

•

The form should be the same size as the hand-print form.

The layout on each page should be the same as the layout on the approved hand-print form.

There should be no addition or deletion of words, and no misspellings or abbreviations (other

than exact duplication of abbreviations on the approved form).

The font size, spacing, and boxes on the form should be substantially the same as those used on

the approved hand-print form.

Additional information is available on the PWBA website, http://www.efast.dol.gov.

March 20, 2000

812

2000–12 I.R.B.

8.3.6 Reproducible

Program Is

Abolished

The Reproducible Program that in past years supplied the envelope Reproduction Proofs was abolished September 30, 1996. The IRS will no longer provide camera copy to practitioners for the production of envelopes. Practitioners must develop their own camera copy.

8.3.7 Guidelines

for Having

Envelopes

Preprinted

Use of preparer company names, addresses, and logos is permissible as long as prescribed clear areas

are not invaded. The government recommends that the envelope stock have an average opacity not

less than 89 percent and contain a minimum of 50 percent waste paper. Use of carbon-based ink is

essential for effective address and bar code reading. Envelope construction can be of side seam or

diagonal seam design. The government recommends that the size of the envelope should be 5-3/4” by

9”. Continuous pin-fed construction is not desirable but is permissible if the glued edge is at the top.

This requirement is firm because mail opening equipment is designed to slice or otherwise open the

bottom edge of each envelope.

8.3.7 Envelopes/

Zip Codes

The above procedures or guidelines are written for the user having envelopes preprinted. Many practitioners may not wish to have volumes of the different envelopes with differing ZIP codes/form designations preprinted for reasons of low volume, warehousing, waste, etc. In this case, the practitioner can type or machine print the addresses with the appropriate ZIP codes to accommodate sorting. If

the requirements/guidelines outlined in this section cannot be met, then use of only the appropriate five

digit service center ZIP code is needed.

Section 8.4 - Procedures for Substitute Form 5471 and Form 5472

8.4.1 Form 5471

and Form 5472

This section covers instructions for producing substitutes for:

•

Form 5471, Information Return of U.S. Persons with Respect to Certain Foreign Corporations,

and accompanying Schedules J, M, N, and O.

•

Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign

Corporation Engaged in a U.S. Trade or Business (Under Sections 6038A and 6038C of the

Internal Revenue Code).

8.4.2 Paper and

Computer-Generated

Substitutes

Paper and computer-generated substitutes for Form 5471 and the accompanying Schedules J, M, N,

and O, and Form 5472 that totally conform to the specifications contained in this procedure may be

privately printed, but must have prior approval and are subject to annual review from the Internal

Revenue Service.

8.4.3 Official Forms

Can Be Obtained

From Most

Service Offices

Copies of the official forms for the reporting year may be obtained from most Service offices. The

Service provides only cut sheets of these forms. Continuous fan-folded/pin-fed forms are not provided.

8.4.4 Quality

Substitute Forms

The Service will accept quality substitute tax forms that are consistent with the official forms they represent AND that do not have an adverse impact on our processing. Therefore, only those substitute

forms that conform to, and do not deviate from, the corresponding official forms are acceptable.

8.4.5 ComputerPrepared Tax

Forms

If the substitute returns and schedules meet the guidelines prescribed herein, the Service will (for filing purposes) accept computer-prepared Forms 5471 and 5472 filled in by a computer, word processing equipment or similar automated equipment or a combination of computer-prepared/generated and filled

in information. They may be filed separately or attached to individual or business income tax returns.

8.4.6 Format

Arrangement

The specifications for Form 5471 and 5472 are as follows:

•

2000–12 I.R.B.

The substitute must follow the design of the official form as to format, arrangement, item caption, line numbers, line references, and sequence. It must be an exact textual and graphic MIRROR image of the official form for it to be acceptable.

The filer must use one of the official ten character amount formats. All entries in the amount

column should have a decimal point following the whole dollar amounts whether or not the vertical line that separates the dollars from the cents is present. It must follow a consistent format.

The reference code must be printed to the left of the corresponding captioned line and also

immediately preceding the data entry field EVEN if there is no reference code preceding the data

entry field on the official form. The reference code that is immediately before the data field must

either be followed by a period or enclosed in parentheses. There also must be at least two blank

spaces between the period or the right parenthesis and the first digit of the data field.

813

March 20, 2000

•

8.4.7 Filing

Instructions

The size of the page must be the same as the official form (8 1/2” x 11”).

The acceptable type is “Helvetica”.

The spacing of the type must be 6 lines/inch vertical, 10 or 12 print characters per inch horizontally.

A 1/2 to 1/4” margin must be maintained across the top, bottom, and both sides (exclusive of any

pin-fed holes).

The substitute form must be of the same number of pages as the official one.

The preprinted brackets in the money fields should be retained.

The filer must COMPLETELY fill in all the specified numbers or referenced lines as they appear

on the official form (not just totals) BEFORE attaching any supporting statement.

Supporting statements are NEVER to be used until the required official form they support are

first totally filled in (completed). A blank or incomplete form that refers to a supporting statement, in lieu of completing a tax return, is unacceptable.

Descriptions for captions, lines, etc., appearing in the substitute forms may be limited to one

print line by using abbreviations and contractions, and by omitting articles, prepostitons, etc.

However, sufficient key words must be retained to permit ready identification of the caption,

line, or item.

Text prescribed for the official form, which is solely instructional in nature, e.g., “Attach this

schedule to Form 1040”, “See instruction”, etc., may be omitted from the form.

Instructions for filing substitute forms are the same as for filing official forms.

Chapter 9

Alternative Methods of Filing

Section 9.1 - Forms for Electronically Filed Returns

9.1.1 Electronic

Filing Program

Electronic filing is a method by which qualified filers transmit tax return information directly to an

IRS Service Center over telephone lines in the format of the official Internal Revenue Service forms.

The Service accepts both refund and balance due indiviual tax returns that are filed electronically.

9.1.2 Applying

for the Electronic

Filing Program

Anyone wishing to participate in the IRS e-File program for individual income tax returns must submit a Form 8633, Application To Participate in the IRS e- file Program. (Note: For business returns,

prospective participants must submit a Form 9041, Application For Electronic/Magnetic Media Filing

of Business and Employee Benefit Plan Returns.)

9.1.3 Mailing

Intructions

If an application filed is...

Form 8633 for Individual

Income Taxes (regular mail)

Internal Revenue Service

Andover Service Center

Attn: EFU Acceptance - Stop 983

P.O. Box 4099

Woburn, MA 01888-4099

Internal Revenue Service

Andover Service Center

Attn: EFU Acceptance -Stop 983

310 Lowell Street

Andover, MA 05501

Internal Revenue Service

Andover Service Center

Attn: EFU Acceptance - Stop 983

P.O. Box 4050

Woburn, MA 01888-4050

Internal Revenue Service

Philadelphia Service Center

Attn: DP 115

11601 Roosevelt Blvd.

Philadelphia, PA 19154

Form 8633 for Individual

Income Taxes (overnight mail)

Form 9041 for Forms 1065

Form 9041 for Forms 1041

March 20, 2000

Then mail it to:

814

2000–12 I.R.B.

Form 9041 for Forms 5500 and 5500-EZ

Internal Revenue Service

Attn: EFU (EPMF), Stop 261

P.O. Box 30309, A.M.F.

Memphis, TN 38310

9.1.4 Obtaining

the Taxpayer

Signature

The taxpayer signature does not appear on the electronically transmitted tax return and is obtained by

the qualified electronic filer on Form 8453, U. S. Individual Income Tax Declaration for an IRS e-file

Return, for Forms 1040, 1040A, and 1040EZ. Form 8453, which serves as a transmittal for the associated non electronic (paper) documents, such as Forms W-2, W-2G, and 1099-R, is a one-page form

and can only be approved through the Substitute Forms Program in that format. Forms 8453-OL and

8453-NR serve the same purpose for taxpayers filing through online services and Form 1040-NR filers, respectively. For specific information about electronic filing, refer to Publication 1345, Handbook

for Electronic Filers of Individual Income Tax Returns. (Note: For business returns, the electronic/magnetic media participants must use the official Form 8453-E, F or P, or an approved substitute

that duplicates the official form in language, format, content, color, and size.)

9.1.5 Guidelines

for Preparing

Substitute Forms

in the Electronic

Filing Program

A participant in the electronic filing program who wants to develop a substitute form should follow

the guidelines for preparing substitute forms throughout this publication, and send a sample of the

form for approval to the Substitute Forms Coordinator at the address in Chapter 2. Forms 8453 prepared using a font where all IRS-approved wording will not fit on a single page will not be accepted

as a substitute form. This applies primarily to dot-matrix printers, although forms prepared similarly

on laser and inkjet printers will also be rejected. PLEASE NOTE: Use of unapproved forms could

result in suspension of the participant from the electronic filing program.

Section 9.2 - FTD Magnetic Tape Payments

9.2.1 Instructions

for Reporting

Agents

Publication 1315 provides the requirements and instructions for reporting agents who sumit Federal

Tax Deposits (FTD) payment information on magnetic tape. Magnetic tape submissions for FTD can

be made for Forms 940, 941, 942, 943, 720, CT-1, 990-PF, 990-T, 990-C, 1042, and 1120,

9.2.2 Instructions

for Banks

and Fiduciaries

Revenue Procedure 89–49 (Pub. 1374) provides the requirements and instructions for certain banks

and fiduciaries to submit quarterly Form 1041-ES payments on magnetic tape through the Federal Tax

Deposit (FTD) system.

Section 9.3 - Effect on Other Documents

9.3.1 Effect on