# Bulletin No. 1998–21

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/agency%3Airs%3A762a403b0b8a8a07

## Record

- **Collection:** Agency decision
- **Document type:** Agency decision

## Text

Internal Revenue

bulletin

Bulletin No. 1998–21
May 26, 1998

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

Announcement 98–43, page 93.

Rev. Rul. 98–26, page 4.

A list is given of organizations now classified as private foundations.

LIFO; price indexes; department stores. The March
1998 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, March 31,
1998.

EXEMPT ORGANIZATIONS
Announcement 98–42, page 93.
Publication 3079, Gaming Publication for Tax-Exempt Organizations, is now available.

ADMINISTRATIVE
Rev. Proc. 98–35, page 6.
Magnetic media; electronic filing; 1998 form specifications. Specifications are set forth for the magnetic or
electronic filing of 1998 Forms 1098, 1099, 5498, and
W–2G. The forms may be filed with the Internal Revenue Service using 1⁄2 inch magnetic tape; IBM 3480/3490 or AS400
compatible tape cartridges; 8mm tape cartridges; 4mm cartridges; 1⁄4-inch cartridges; or 5 1⁄4-, 3 1⁄2-inch diskettes. Rev.
Proc. 97–34 superseded.

Finding Lists begin on page 99.
Announcement of the Consent Voluntary Suspension of Attorneys, Certified Public Accounts, Enrolled Agents, etc., begins on
page 96.

Department of the Treasury
Internal Revenue Service

Mission of the Service
ucts and services; and perform in a manner warranting
the highest degree of public confidence in our integrity, efficiency, and fairness.

The purpose of the Internal Revenue Service is to collect
the proper amount of tax revenue at the least cost; serve
the public by continually improving the quality of our prod-

Statement of Principles
of Internal Revenue
Tax Administration
The Service also has the responsibility of applying and
administering the law in a reasonable, practical manner.
Issues should only be raised by examining officers when
they have merit, never arbitrarily or for trading purposes.
At the same time, the examining officer should never hesitate to raise a meritorious issue. It is also important that
care be exercised not to raise an issue or to ask a court to
adopt a position inconsistent with an established Service
position.

The function of the Internal Revenue Service is to administer the Internal Revenue Code. Tax policy for raising revenue
is determined by Congress.
With this in mind, it is the duty of the Service to carry out that
policy by correctly applying the laws enacted by Congress;
to determine the reasonable meaning of various Code provisions in light of the Congressional purpose in enacting them;
and to perform this work in a fair and impartial manner, with
neither a government nor a taxpayer point of view.

Administration should be both reasonable and vigorous. It
should be conducted with as little delay as possible and
with great courtesy and considerateness. It should never
try to overreach, and should be reasonable within the
bounds of law and sound administration. It should, however, be vigorous in requiring compliance with law and it
should be relentless in its attack on unreal tax devices and
fraud.

At the heart of administration is interpretation of the Code. It
is the responsibility of each person in the Service, charged
with the duty of interpreting the law, to try to find the true
meaning of the statutory provision and not to adopt a
strained construction in the belief that he or she is “protecting the revenue.” The revenue is properly protected only
when we ascertain and apply the true meaning of the statute.

2

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 of a permanent nature are consolidated semiannually into Cumulative Bulletins, which are sold
on a single-copy basis.

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.

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.

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).

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.

Part IV.—Items of General Interest.
With the exception of the Notice of Proposed Rulemaking
and the disbarment and suspension list included in this part,
none of these announcements are consolidated in the Cumulative Bulletins.

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-

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.

3

Part I. Rulings and Decisions Under the Internal Revenue Code of 1986
Section 472.—Last-in, First-out
Inventories
26 CFR 1.472–1: Last-in, first-out inventories.

LIFO; price indexes; deparment
stores. The March 1998 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, March 31, 1998.

Rev. Rul. 98–26
The following Department Store Inventory Price Indexes for March 1998 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
methods for tax years ended on, or with
reference to, March 31, 1998.

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.

BUREAU OF LABOR STATISTICS, DEPARTMENT STORE
INVENTORY PRICE INDEXES BY DEPARTMENT GROUPS
(January 1941 = 100, unless otherwise noted)
Mar.
1997

Mar.
1998

Percent Change
from Mar. 1997
to Mar. 19981

1. Piece Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 539.0
2. Domestics and Draperies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 644.2
3. Women’s and Children’s Shoes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 646.1
4. Men’s Shoes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 900.9
5. Infants’ Wear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 630.6
6. Women’s Underwear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 544.0
7. Women’s Hosiery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 296.7
8. Women’s and Girls’ Accessories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 557.3
9. Women’s Outerwear and Girls’ Wear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 430.0
10. Men’s Clothing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 617.9
11. Men’s Furnishings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 587.7
12. Boys’ Clothing and Furnishings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 479.9
13. Jewelry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1025.2
14. Notions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 801.5
15. Toilet Articles and Drugs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 910.8
16. Furniture and Bedding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 667.5
17. Floor Coverings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 583.5
18. Housewares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 813.2
19. Major Appliances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244.9
20. Radio and Television . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
78.5
21. Recreation and Education2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111.8
22. Home Improvements2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131.9
23. Auto Accessories2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107.7
Groups 1 – 15: Soft Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 606.4
Groups 16 – 20: Durable Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 469.2
Groups 21 – 23: Misc. Goods2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113.6
Store Total3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 558.8

538.9
636.1
658.7
898.3
620.5
576.3
308.1
556.8
429.5
636.5
608.1
501.4
993.0
796.7
932.4
673.0
583.1
818.3
237.4
73.4
106.7
134.5
107.5
612.2
463.0
110.4
558.9

0.0
–1.3
2.0
–0.3
–1.6
5.9
3.8
–0.1
–0.1
3.0
3.5
4.5
–3.1
–0.6
2.4
0.8
–0.1
0.6
–3.1
–6.5
–4.6
2.0
–0.2
1.0
–1.3
–2.8
0.0

Groups

1Absence of a minus sign before percentage change in this column signifies price increase.
2Indexes on a January 1986=100 base.
3The store total index covers all departments, including some not listed separately, except for the following: candy, foods, liquor, to-

bacco, and contract departments.

May 26, 1998

4

1998–21 I.R.B.

DRAFTING INFORMATION
The principal author of this revenue
ruling is Stan Michaels of the Office of

1998–21 I.R.B.

Assistant Chief Counsel (Income Tax and
Accounting). For further information regarding this revenue ruling, contact Mr.

5

Michaels on (202) 622-4970 (not a tollfree call).

May 26, 1998

Part III. Administrative, Procedural, and Miscellaneous
NOTE:
Following is a list of related instructions and forms for filing Information Returns Magnetically/Electronically:
䉴

1998 Instructions for Forms 1099, 1098, 5498, and W–2G

䉴

Form 4419—Application for Filing Information Returns Magnetically/Electronically

䉴

Form 4804—Transmittal of Information Returns Reported Magnetically/Electronically

䉴

Form 4802—Transmittal of Information Returns Reported Magnetically/Electronically (Continuation)

䉴

Form 8508—Request for Waiver From Filing Information Returns on Magnetic Media (Forms W–2, W–2G,
1042–S, 1099, 1098, 5498, and 8027)

䉴

Form 8809, 8027,—Request for Extension of Time To File Information Returns (For Forms W–2, W–2G, 1042–S
1098, 1099, and 5498)

䉴

Notice 210—Preparation Instructions for Media Label

The Internal Revenue Service, Martinsburg Computing Center encourages filers to make copies of blank forms for future use.

Rev. Proc. 98–35
Use this revenue procedure to prepare Tax Year 1998 information returns for submission to Internal Revenue Service (IRS) using
any of the following:
– Magnetic Tape
– Tape Cartridge
– 8mm, 4mm, and Quarter Inch Cartridges
– 5 1⁄4-inch Diskette
– 3 1⁄2-inch Diskette
– Electronic Filing
– (Bisynchronous)
– (Asynchronous)

Caution to filers:
Format changes to accommodate Year 2000 are included in this publication for TY 1998, calendar
year 1999, as well as a significant change in record size from 420 positions to 750 positions.
To be in compliance with Year 2000 changes, the current bisynchronous electronic filing communications package will be changed next year.
Please read this publication carefully. Persons or businesses required to file information returns
magnetically or electronically may be subject to penalties for failure to file or include correct information if they do not follow the instructions in this revenue procedure.

May 26, 1998

6

1998–21 I.R.B.

Table of Contents
Part A. General
Section 1.
Section 2.
Section 3.
Section 4.
Section 5.
Section 6.
Section 7.
Section 8.
Section 9.
Section 10.
Section 11.
Section 12.
Section 13.
Section 14.
Section 15.
Section 16.
Section 17.
Section 18.
Section 19.

Purpose
Nature of Changes—Current Year (Tax Year 1998)
Where to File and How to Contact the IRS, Martinsburg Computing Center
Filing Requirements
Form 8508, Request for Waiver from Filing Information Returns on Magnetic Media
Vendor List
Form 4419, Application for Filing Information Returns Magnetically/Electronically
Test Files
Filing of Information Returns Magnetically/ Electronically and Retention Requirements
Due Dates
Extensions of Time
Processing of Information Returns Magnetically/Electronically
Corrected Returns
Taxpayer Identification Number (TIN)
Effect on Paper Returns and Statements to Recipients
Combined Federal/State Filing Program
Definition of Terms
State Abbreviations
Major Problems Encountered

Part B. Magnetic Media Specifications
Section 1.
Section 2.
Section 3.
Section 4.
Section 5.
Section 6.
Section 7.
Section 8.
Section 9.
Section 10.
(l)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)
(15)
(16)
(17)
Section 11.
Section 12.
Section 13.

General
Tape Specifications
Tape Cartridge Specifications
8mm, 4mm, and Quarter Inch Cartridge Specifications
5 1⁄4-inch and 3 1⁄2-inch Diskette Specifications
Transmitter “T” Record—General Field Descriptions
Transmitter “T” Record—Record Layout
Payer “A” Record—General Field Descriptions
Payer “A” Record—Record Layout
Payee “B” Record—General Field Descriptions and Record Layouts
Payee “B” Record—Record Layout Positions 544–750 for Forms 1098, 1098–E, and 5498–MSA
Payee “B” Record—Record Layout Positions 544–750 for Form 1098–T
Payee “B” Record—Record Layout Positions 544–750 for Form 1099–A
Payee “B” Record—Record Layout Positions 544–750 for Form 1099–B
Payee “B” Record—Record Layout Positions 544–750 for Form 1099–C
Payee “B” Record—Record Layout Positions 544–750 for Form 1099–DIV
Payee “B” Record—Record Layout Positions 544–750 for Form 1099–G
Payee “B” Record—Record Layout Positions 544–750 for Form 1099–INT
Payee “B” Record—Record Layout Positions 544–750 for Form 1099–LTC
Payee “B” Record—Record Layout Positions 544–750 for Form 1099–MISC
Payee “B” Record—Record Layout Positions 544–750 for Form 1099–MSA
Payee “B” Record—Record Layout Positions 544–750 for Form 1099–OID
Payee “B” Record—Record Layout Positions 544–750 for Form 1099–PATR
Payee “B” Record—Record Layout Positions 544–750 for Form 1099–R
Payee “B” Record—Record Layout Positions 544–750 for Form 1099–S
Payee “B” Record—Record Layout Positions 544–750 for Form 5498
Payee “B” Record—Record Layout Positions 544–750 for Form W–2G
End of Payer “C” Record—General Field Descriptions and Record Layout
State Totals “K” Record—General Field Descriptions and Record Layout
End of Transmission “F” Record—General Field Descriptions and Record Layout

Part C. Bisynchronous (Mainframe) Electronic Filing Specifications
Section 1.

General

1998–21 I.R.B.

7

May 26, 1998

Section 2.
Section 3.
Section 4.
Section 5.
Section 6.
Section 7.

Electronic Filing Approval Procedure
Test Files
Electronic Submissions
Transmittal Requirements
IBM 3780 Bisynchronous Communication Specifications
Bisynchronous Electronic Filing Record Specifications

Part D. Asynchronous (IRP–BBS) Electronic Filing Specifications
Section 1.
Section 2.
Section 3.
Section 4.
Section 5.
Section 6.
Section 7.

General
Electronic Filing Approval Procedure
Test Files
Electronic Submissions
Transmittal Requirements
Information Reporting Program-Bulletin Board System (IRP–BBS) Specifications
IRP–BBS First Logon Procedures

Part E. Magnetic/Electronic Specification for Extensions of Time
Section 1.
Section 2.
Section 3.

General
Magnetic Tape, IBM 3480/3490, Tape Cartridge, 8mm, 4mm, and QIC (quarter in cartridge), 5 1⁄4- and 3 1⁄2-inch
Diskette, and Electronic Specifications
Record Layout

Part F. Miscellaneous Information
Section 1.
Section 2.

Addresses for Martinsburg Computing Center
Telephone Numbers for Contacting IRS/MCC

May 26, 1998

8

1998–21 I.R.B.

Part A. General
Revenue procedures are generally revised annually to reflect legislative and form changes. Comments concerning this revenue
procedure, or suggestions for making it more helpful, can be addressed to:
Internal Revenue Service
Martinsburg Computing Center
Attn: IRB, Information Support Section
P. O. Box 1359
Martinsburg, WV 25402

Sec. 1. Purpose
.01 The purpose of this revenue procedure is to provide the specifications for filing Forms 1098, 1099, 5498, and W–2G magnetically or electronically, which includes 1⁄2-inch magnetic tape; IBM 3480, 3490 or AS400 compatible tape cartridges (including
8mm) or 5 1⁄4- and 3 1⁄2-inch diskettes with IRS. IRS/MCC has discontinued processing 8-inch diskettes. This revenue procedure
must be used for the preparation of Tax Year 1998 information returns and information returns for tax years prior to 1998 that are required to be filed. This revenue procedure must be used to prepare current and prior year information returns filed beginning January 1, 1999, and received by IRS/MCC or postmarked by December 15, 1999. Specifications for filing the following forms are
contained in this revenue procedure.
(a) Form 1098, Mortgage Interest Statement.
(b) Form 1098–E, Student Loan Interest Statement
(c) Form 1098–T, Tuition Payments Statement
(d) Form 1099–A, Acquisition or Abandonment of Secured Property
(e) Form 1099–B, Proceeds From Broker and Barter Exchange Transactions
(f) Form 1099–C, Cancellation of Debt
(g) Form 1099–DIV, Dividends and Distributions
(h) Form 1099–G, Certain Government Payments
(i) Form 1099–INT, Interest Income
(j) Form 1099–LTC, Long-Term Care and Accelerated Death Benefits
(k) Form 1099–MISC, Miscellaneous Income
(l) Form 1099–MSA, Distributions From Medical Savings Accounts
(m) Form 1099–OID, Original Issue Discount
(n) Form 1099–PATR, Taxable Distributions Received From Cooperatives
(o) Form 1099–R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.
(p) Form 1099–S, Proceeds From Real Estate Transactions
(q) Form 5498–IRA Contribution Information
(r) Form 5498–MSA, Medical Savings Account Information
(s) Form W–2G, Certain Gambling Winnings
.02 Specifications for filing Forms W–2 on magnetic media are available from the Social Security Administration (SSA) only.
Filers can call 1-800-SSA-1213 to obtain the phone number of the SSA Magnetic Media Coordinator for their area.
.03 IRS/MCC does not process Forms W–2. Paper and/or magnetic media for Forms W–2 must be sent to SSA. IRS/MCC does,
however, process waiver requests (Form 8508), extension of time to file requests (Form 8809) for Forms W–2 and requests for extension of time to provide the employee copies of Forms W–2.
.04 Generally, the box numbers on the paper forms correspond with the amount codes used to file magnetically/electronically;
however, if discrepancies occur, the instructions in this revenue procedure govern.
.05 This revenue procedure also provides the requirements and specifications for magnetic media or electronic filing under the
Combined Federal/State Filing Program.
.06 The following revenue procedures and publications provide more detailed filing procedures for certain other information returns.
(a) 1998 “Instructions for Forms 1099, 1098, 5498, and W–2G” provides specific instructions on completing and submitting information returns to IRS.
(b) Rev. Proc. 84–33, 1984–1 C.B. 502, regarding the optional method for agents to report and deposit backup withholding.
(c) Publication 1179, Rules and Specifications for Private Printing of Substitute Forms 1096, 1098, 1099, 5498, and W–2G.
(d) Publication 1239, Specifications for Filing Form 8027, Employer’s Annual Information Return of Tip Income and Allocated
Tips, on Magnetic Tape and 5 1⁄4- or 3 1⁄2-inch Diskettes.
(e) Publication 1187, Specifications for Filing Form 1042–S, Foreign Person’s U.S. Source Income Subject to Withholding, Electronically or on Magnetic Tape, and 5 1⁄4- or 3 1⁄2-inch Diskettes.
(f) Publication 1245, Specifications for Filing Form W–4, Employee’s Withholding Allowance Certificate, Magnetically or Electronically.

1998–21 I.R.B.

9

May 26, 1998

(g) Rev. Proc. 98–25, specifications set forth for the magnetic or electronic filing of 1999 Form 8851, Summary of Medical Savings Accounts, Magnetically/Electronically.
.07 This revenue procedure supersedes Rev. Proc. 97–34 published as Publication 1220 (Rev. 7–97), Specifications for Filing
Forms 1098, 1099, 5498, and W–2G Magnetically or Electronically.
.08 Refer to Part A, Sec. 17, for definitions of terms used in this publication.

Sec. 2. Nature of Changes—Current Year (Tax Year 1998)
.01 Legislative changes for Tax Year 1998 necessitated major changes in the record format for information returns filed
magnetically/electronically. There are two new forms for Tax Year 1998, the Form 1098–E, Student Loan Interest Statement,
and Form 1098–T, Tuition Payments Statement. However, for Tax Year 1998, Form 1098–T is not required to be reported
magnetically. Additional fields have been added to some of the existing records. IRS/MCC has redesigned the record layouts and expanded record lengths from 420 positions to 750 positions for the Payer “A” Record, the Payee “B” Record, the
End of Payer “C” Record, the State Totals “K” Record, and the End of Transmission “F” Record. In addition, a Transmitter
“T” Record has been added as the first record on the file. This record will contain transmitter information from the Form
4804, Transmittal of Information Returns Reported Magnetically/Electronically. The record changes make it imperative for
filers to read this publication in its entirety. Failure to comply with the new record formats will result in the media being returned to the filer.
.02 In previous years, new or revised information in the publication has been highlighted by the use of italics. Due to the
complete change in record formats, italics will not be used in this publication. Filers are encouraged to read the entire publication.
.03 Within the next few years, IRS/MCC will discontinue processing 5 1⁄4-inch diskettes as an acceptable form of media.
Filers are encouraged to explore optional types of media or methods for submitting information returns to IRS/MCC. The
Information Reporting Program-Bulletin Board System (IRP–BBS) is a highly recommended alternative to diskette filing.

Sec. 3. Where to File and How to Contact the IRS, Martinsburg Computing Center
.01 All information returns filed magnetically or electronically are processed at IRS/MCC. Files containing information returns,
requests for IRS magnetic media and electronic filing information, undue hardship waivers, and requests for extensions of time to
file returns or to furnish the statements to recipients are to be sent to the following addresses:

✉

✈

If by Postal Service:
IRS-Martinsburg Computing Center
Information Reporting Program
P. O. Box 1359
Martinsburg, WV 25402-1359

or

If by truck or air freight:
IRS-Martinsburg Computing Center
Information Reporting Program
Route 9 and Needy Road
Martinsburg, WV 25401

.02 Send a magnetically filed extension of time request to one of the following addresses:

✉

If by Postal Service:
IRS-Martinsburg Computing Center
Information Reporting Program
Attn: Extension of Time Coordinator
P. O. Box 879
Kearneysville, WV 25430

✈

If by truck or air freight:
IRS-Martinsburg Computing Center
Information Reporting Program
Attn: Extension of Time Coordinator
Route 9 and Needy Road
Martinsburg, WV 25401
.03 Telephone inquiries for the Information Reporting Call Site may be made between 8:30 a.m. and 4:30 p.m. Eastern time,
Monday through Friday.
.04 The telephone numbers for magnetic media inquiries or electronic submissions are:

☎

304-263-8700 - Call Site - Part A, Sec 3.10

May 26, 1998

10

1998–21 I.R.B.

Asynchronous filing
304-264-7070 - IRP–BBS (Information Reporting Program- Bulletin Board System) - Part D
Bisynchronous filing
(Mainframe filing)
304-264-7080 - 4.8 Modems - Part C
304-264-7040 - 9.6 Modems - Part C
304-264-7045 - 14.4 Modems - Part C
304-267-3367 - TDD (Telecommunication Device for the Deaf)
304-264-5602 - Fax Machine
(These are not toll-free telephone numbers.)
TO OBTAIN FORMS:
1-800-TAX-FORM (1-800-829-3676)
304-264-7070 - IRP–BBS access to forms
http://www.irs.ustreas.gov - INTERNET access to forms
.05 The 1998 “Instructions for Forms 1099, 1098, 5498, and W–2G” have been included in the Publication 1220 for transmitter
convenience. The Form 1096 is used only to transmit Copy A of paper Forms 1099, 1098, 5498, and W–2G. If filing paper returns,
follow the mailing instructions on the Form 1096 and submit the paper returns to the appropriate IRS Service Center.
.06 Requests for paper Forms 1096, 1098, 1099 and W–2G, and publications related to magnetic media/electronic filing should
be made by calling the IRS toll-free number 1-800-TAX-FORM (1-800-829-3676).
.07 Questions pertaining to magnetic media filing of Forms W–2 must be directed to the Social Security Administration (SSA).
Filers can call 1-800-SSA-1213 to obtain the phone number of the SSA Magnetic Media Coordinator for their area.
.08 Payers should not contact IRS/MCC if they have received a penalty notice and need additional information, or are requesting
an abatement of the penalty. A penalty notice contains an IRS representative’s name and/or phone number for contact purposes; or,
the payer may be instructed to respond in writing to the address provided. IRS/MCC does not issue penalty notices and does not
have the authority to abate penalties. For penalty information, refer to the Penalty section of the 1998 “Instructions for Forms 1099,
1098, 5498, and W–2G.”
.09 A taxpayer or authorized representative may request a copy of a tax return, including Form W–2 filed with a return, by submitting Form 4506, Request for Copy or Transcript of Tax Form, to IRS. This form may be obtained by calling 1-800-TAX-FORM
(1-800-829-3676).
.10 The IRS Centralized Call Site answers both magnetic media and tax law questions relating to the filing of information returns
(Forms 1096, 1098, 1099, 5498, 8027, W–2G, 1042–S, and W–4). The IRS/MCC Call Site answers tax law and paper filing related
questions about Forms W–2 and W–3, as well as handling inquiries dealing with backup withholding due to missing and incorrect
taxpayer identification numbers. The Call Site is located at IRS/MCC and operates in conjunction with the Information Reporting
Program. The Call Site provides service to the payer community (financial institutions, employers, and other transmitters of information returns). Recipients of information returns (payees) should continue to contact 1-800-829-1040 or other numbers specified
in the tax return instructions with any questions on how to report information on their tax returns.
The Call Site accepts calls from all areas of the country. The number to call is 304-263-8700 or Telecommunications Device for
the Deaf (TDD) 304-267-3367. These are toll calls. Hours of operation for the Call Site are Monday through Friday, 8:30 a.m. to
4:30 p.m. Eastern Time. The Call Site is in operation throughout the year to handle the questions of payers, transmitters, and employers. Due to the high demand for assistance at the end of January and February, it is advisable to call as soon as possible to avoid
these peak filing seasons.

Sec. 4. Filing Requirements
.01 The regulations under section 6011(e)(2)(A) of the Internal Revenue Code provide that, any person, including a corporation,
partnership, individual, estate, and trust, who is required to file 250 or more information returns must file such returns magnetically/electronically. The 250* or more requirement applies separately for each type of return and also to each type of corrected return.
*Even though as many as 249 information returns may be submitted on paper to the Internal Revenue Service,
IRS encourages filers to transmit information returns magnetically or electronically.
.02 All filing requirements that follow apply individually to each reporting entity as defined by its separate Taxpayer Identification Number (TIN) [Social Security Number (SSN), Employer Identification Number (EIN), Individual Taxpayer Identification
Number (ITIN), or Adoption Taxpayer Identification Number (ATIN)]. For example, if a corporation with several branches or locations uses the same EIN, the corporation must aggregate the total volume of returns to be filed for that EIN and apply the filing requirements to each type of return accordingly.
.03 Payers who are required to submit their information returns on magnetic media may choose to submit their documents by
electronic filing. Payers who submit their information returns electronically are considered to have satisfied the magnetic media filing requirements.

1998–21 I.R.B.

11

May 26, 1998

.04 IRS/MCC has two methods by which payers may submit their files electronically. Bisynchronous (mainframe) electronic filing, which can be found in Part C of this publication, or Asynchronous (Information Reporting Program-Bulletin Board System),
which is in Part D. An overview of some features provided on the IRP–BBS are as follows:
• Electronic filing of information returns to the IRS using dial-up modems
• Return notification of the acceptability of the data transmitted within 24 to 48 hours
• Electronic communication with IRS and SSA bulletin board systems
• Access to shareware
• Access to forms and publications relating to the Information Reporting Program
• News about the latest changes and updates that affect the Information Reporting Program at IRS
• Answers to messages and questions left on the bulletin board
• Available for public use and can be reached by dialing 304-264-7070
• IRP–BBS is accessible 24 hours a day, 7 days a week. Routine maintenance is performed daily, at approximately 7:00 a.m.
Eastern Time.
• Questions, comments, or suggestions can be directed to the Systems Operator (SYSOP) through IRP–BBS.
.05 The following requirements apply separately to both originals and corrections filed magnetically/electronically:
1098
1098–E
1098–T*
1099–A
1099–B
1099–C
1099–DIV
1099–G
1099–INT
1099–LTC
1099–MISC
1099–MSA
1099–OID
1099–PATR
1099–R
1099–S
5498
5498–MSA
W–2G

250 or more of any of these forms require magnetic media or electronic filing with IRS. These are stand alone
alone documents and are not to be aggregated for purposes of determining the 250 threshold. For
example, if you must file 100 Forms 1099–B and 300 Forms 1099–INT, Forms 1099–B need not be filed
magnetically or electronically since they do not meet the threshold of 250. However, Forms 1099–INT must be
filed magnetically or electronically since they meet the threshold of 250.

*For Tax Year 1998, Form 1098–T may be reported on paper regardless of the 250 threshold.
.06 The above requirements do not apply if the payer establishes hardship (see Part A, Sec. 5).

Sec. 5. Form 8508, Request for Waiver From Filing Information Returns on Magnetic Media
.01 If a payer is required to file on magnetic media but fails to do so (or fails to file electronically, in lieu of magnetic media filing) and does not have an approved waiver on record, the payer will be subject to a penalty of $50 per return in excess of 250. (For
penalty information, refer to the Penalty section of the 1998 “Instructions for Forms 1099, 1098, 5498, and W–2G.”)
.02 If payers are required to file original or corrected returns on magnetic media, but such filing would create a hardship, they
may request a waiver from these filing requirements by submitting Form 8508, Request for Waiver From Filing Information Returns
on Magnetic Media, to IRS/MCC.
.03 Even though a payer may submit as many as 249 corrections on paper, IRS encourages magnetically or electronically submitted corrections. Once the 250 threshold has been met, filers are required to submit any returns of 250 or more magnetically or electronically. However, if a waiver for original documents is approved, any corrections for the same type of returns will be covered
under this waiver.
.04 Generally, only the payer may sign the Form 8508. A transmitter may sign if given power of attorney; however, a letter
signed by the payer stating this fact must be attached to the Form 8508.
.05 A transmitter must submit a separate Form 8508 for each payer. Do not submit a list of payers.
.06 All information requested on the Form 8508 must be provided to IRS for the request to be processed.
.07 The waiver, if approved, will provide exemption from magnetic media filing for the current tax year only. Payers may not
apply for a waiver for more than one tax year at a time; application must be made each year a waiver is necessary.

May 26, 1998

12

1998–21 I.R.B.

.08 Form 8508 may be photocopied or computer-generated as long as it contains all the information requested on the original
form.
.09 Filers are encouraged to submit Form 8508 to IRS/MCC at least 45 days before the due date of the returns.
.10 File Form 8508 for the W–2 series of forms with IRS/MCC, not SSA.
.11 Waivers are evaluated on a case-by-case basis and are approved or denied based on criteria set forth in the regulations under
section 6011(e) of the Internal Revenue Code. The transmitter must allow a minimum of 30 days for IRS/MCC to respond to a
waiver request.
.12 If a waiver request is approved, the transmitter should keep the approval letter on file. The transmitter should not send a
copy of the approved waiver to the service center where the paper returns are filed.
.13 An approved waiver from filing information returns on magnetic media does not provide exemption from all filing.
The payer must timely file information returns on acceptable paper forms with the appropriate service center.
.14 Desert Storm/Operation Joint Guard (OJG) [See Note] (Bosnia Region) Contributions - If a payer is required to file a
Form 5498 magnetically/electronically, the payer may request an automatic waiver to file Forms 5498 on paper for participants of
Desert Storm or Operation Joint Guard. The payer should clearly mark Desert Storm or Operation Joint Guard on the waiver request
form.
☛ Note: Military personnel under Operation Joint Guard (OJG) will be treated the same as military personnel under Operation Joint Endeavor (OJE) for purposes of Pub. L. 104–117 and Notice 96–34, 1996–1 C.B. 379.

Sec. 6. Vendor List
.01 IRS/MCC prepares a list of vendors who support magnetic media or electronic filing. The Vendor List (Pub. 1582) contains
the names of service bureaus that will produce files on the prescribed types of magnetic media or via electronic filing. It also contains the names of vendors who provide software packages for payers who wish to produce magnetic media or electronic files on
their own computer systems. This list is compiled as a courtesy and in no way implies IRS/MCC approval or endorsement.
.02 If filers meeting the filing requirements engage a service bureau to prepare media on their behalf, the filers should be
careful not to report duplicate data, which may cause penalty notices to be generated.
.03 The Vendor List may be updated in print every other year. The most recently printed copy will be available by contacting
IRS/MCC at (304) 263-8700 or by way of a letter (see Part A, Sec. 3). The copy of the Vendor List on the Information Reporting
Program-Bulletin Board System is updated whenever changes or new information is received (Refer to Part D).
.04 A vendor, who offers a software package, has the ability to produce magnetic media for customers, or has the capability to
electronically file information returns, and would like to be included on the list, must submit a written request to IRS/MCC. The request should include:
(a) Company name
(b) Address (include city, state, and ZIP code)
(c) Telephone number (include area code)
(d) Contact person
(e) Type(s) of service provided (e.g., service bureau and/or software)
(f) Type(s) of media offered (e.g., magnetic tape or tape cartridge, 5 1⁄4- or 3 1⁄2-inch diskettes, or electronic filing)
(g) Type of return

Sec. 7. Form 4419, Application for Filing Information Returns Magnetically/Electronically
.01 Transmitters are required to submit Form 4419, Application for Filing Information Returns Magnetically/ Electronically, to
request authorization to file information returns with IRS/MCC. A single Form 4419 should be filed no matter how many types of
returns the transmitter will be submitting magnetically/ electronically. For example, if a transmitter plans to file Forms 1099–INT,
one Form 4419 should be submitted. If, at a later date, another type of form (Forms 1098, 1099, 5498 and W–2G) is to be filed, the
transmitter does not need to submit a new Form 4419.
EXCEPTIONS
An additional Form 4419 is required for filing each of the following types of returns: Forms 1042–S, 8027, and W–4.
FORM

TITLE

EXPLANATION

1042–S

Foreign Person’s U.S.
Source Income Subject
to Withholding

Payments subject to withholding under Chapter 3
of the Code, including interest, dividends, royalties, pensions and annuities, gambling winnings
and compensation for personal services.

13

May 26, 1998

1998–21 I.R.B.

8027

Employer’s Annual
Information Return
of Tip Income and
Allocated Tips

Receipts from operations where tipping is customary. Used by the employer to report employee’s
tips or allocated tips.

W–4
(See Note)

Employee’s Withholding
Allowance Certificate

Forms received during the quarter from employees
quarter from employees still employed at the end
of the quarter who claim the following:
(a) More than 10 withholding allowances or
(b) Exempt status and wages normally would be
more than $200 a week.

☛ Note: Employers are not required to send other Forms W–4 unless notified to do so by the IRS.
.02 Magnetic tape, tape cartridge, diskette, and electronically-filed returns may not be submitted to IRS/MCC until the application has been approved. Please read the instructions on the back of Form 4419 carefully. A Form 4419 is included in the Publication
1220 for the filer’s use. This form may be photocopied. Additional forms may be obtained by calling 1-800-TAX-FORM (1-800829-3676). The form is also available on IRP–BBS at 304-264-7070 or on Internet at http://www.irs.ustreas.gov.
.03 Upon approval, a five-character alpha/numeric Transmitter Control Code (TCC) will be assigned and included in an approval
letter. The TCC must be coded in the Transmitter “T” Record. If a transmitter uses more than one TCC to file, each TCC must be
reported on separate media or in separate transmissions if filing electronically.
.04 Annually, a Publication 1220 containing the current revenue procedure, forms, and instructions will be sent to the attention of
the contact person indicated on Form 4419.
.05 If any of the information (name, TIN or address) on the Form 4419 changes, please notify IRS/MCC in writing so the
IRS/MCC database can be updated. However, a change in the method by which information returns are being submitted is not information which needs to be updated (i.e., tape to disk, disk to BBS). The transmitter should include the TCC in all correspondence.
.06 Form 4419 can be submitted any time during the year; however, it must be submitted to IRS/MCC at least 30 days before the
due date of the return(s) for current year processing. For documents to be filed electronically using IBM 3780 bisynchronous
protocols, Form 4419 must be submitted at least 45 days prior to the due date of the returns (See Part C, Sec. 2). This will
allow IRS/MCC the minimum amount of time necessary to process and respond to applications. In the event that computer equipment or software is not compatible with IRS/MCC, a waiver may be requested to file returns on paper documents.
.07 IRS/MCC encourages transmitters who file for multiple payers to submit one application and to use the assigned TCC for all
payers.
.08 If a payer’s files are prepared by a service bureau, the payer may not need to submit an application to obtain a TCC. Some
service bureaus will produce files, code their own TCC on the media, and send it to IRS/MCC for the payer. Other service bureaus
will prepare magnetic media and return the media to the payer for submission to IRS/MCC. These service bureaus may require the
payer to obtain a TCC to be coded in the Transmitter “T” Record. Payers should contact their service bureaus for further information.
.09 Once a transmitter is approved to file magnetically or electronically, it is not necessary to reapply each year unless:
(a) The payer has discontinued filing magnetically or electronically for two years; the payer’s TCC may have been reassigned by
IRS/MCC. Payers, who are aware that the TCC assigned will no longer be used, are requested to notify IRS/MCC so these
numbers may be reassigned; or
(b) The payer’s magnetic media files were transmitted in the past by a service bureau using the service bureau’s TCC, but now the
payer has computer equipment compatible with that of IRS/MCC and wishes to prepare his or her own files. The payer must
request a TCC by filing Form 4419.
.10 One Form 4419 may be submitted regardless of how many types of media or methods are used to file the return. Multiple
TCCs will only be issued to payers with multiple TINs. Only one TCC will be issued per TIN unless the filer has checked the
application for the following forms in addition to the Forms 1099; Form 1042–S, Form 8027, and/or Form W–4. A separate
TCC will be assigned for each of these forms.
.11 In accordance with Regulations section 1.6041–7(b), payments by separate departments of a health care carrier to providers
of medical and health care services may be reported on separate returns on magnetic media. In this case, the headquarters will be
considered the transmitter, and the individual departments of the company filing reports will be considered payers. A single Form
4419 covering all departments filing on magnetic media should be submitted. One TCC may be used for all departments.
.12 Approval to file does not imply endorsement by IRS/MCC of any computer software or of the quality of tax preparation services provided by a service bureau or software vendor.

Sec. 8. Test Files
.01 IRS/MCC does not require test files, except for filers wishing to participate in the Combined Federal/State Filing Program
(See Part A, Sec. 16, for further information concerning the Combined Federal/State Filing Program).

May 26, 1998

14

1998–21 I.R.B.

.02 IRS/MCC encourages first-time magnetic media or electronic filers to submit a test. The test file must consist of a sample of
each type of record:
(a) Transmitter “T” Record (all fields marked required must include transmitter information)
(b) Payer “A” Record (must not be fictitious data)
(c) Multiple Payee “B” Records (at least 11 “B” Records per each “A” Record)
(d) End of Payer “C” Record
(e) State Totals “K” Record, if participating in the Combined Federal/State Filing Program
(f) End of Transmission “F” Record (See Part B for record formats.)
.03 Use the Test Indicator “T” in Field Position 28 of the “T” Record to show this is a test file.
.04 IRS/MCC will check the file to ensure it meets the specifications of this revenue procedure. For current filers, sending a test
file will provide the opportunity to ensure their software reflects any programming changes. If unable to submit a magnetic or electronic test file, a hard copy printout that shows a sample of each record type (T, A, B, C, and F) may be submitted. The hard copy
print test is not acceptable for Combined Federal/State Filing approval.
.05 Tests should be sent to IRS/MCC between November 1 and December 15. The test file must be received at MCC by December 15 in order to be processed. Filers may begin submitting test tapes and diskettes after October 1; however, the data will not be
processed until on or after November 1.
.06 For tests filed electronically, the transmitter must send the signed Form 4804, Transmittal of Information Returns Reported
Magnetically/Electronically, the same day the transmission is made. For tests filed on magnetic tape, tape cartridge, 8mm, 4mm,
and quarter inch cartridge, 5 1⁄4- and 3 1⁄2-inch diskette, the transmitter must include the signed Form 4804 in the same package with
the corresponding magnetic media. Mark the “TEST” box in Block 1 on the form. Also, mark “TEST” on the external media label.
If submitting a hard copy printout, mark the printout as “TEST” and include name, telephone number, and address of a person
who can be contacted to discuss its acceptability.
.07 IRS/MCC will send a letter of acknowledgment to indicate the test results. Unacceptable magnetic media files, along with
documentation identifying the errors, will be returned. Resubmission of test files must be received by IRS/MCC no later than December 15.
.08 Successfully processed media will not be returned to filers.

Sec. 9. Filing of Information Returns Magnetically/Electronically and Retention Requirements
.01 Form 4804, Transmittal of Information Returns Reported Magnetically/Electronically, Form 4802, Transmittal of Information
Returns Reported Magnetically/Electronically (Continuation), or a computer-generated substitute, must accompany all magnetic
media shipments. For electronic transmissions, the Form 4804 and Form 4802, if applicable, must be sent the same day as the electronic transmission. Form 4802, Transmittal of Information Returns Reported Magnetically/Electronically (Continuation), is a continuation of Form 4804 and should only be used if the filer is reporting more than five types of returns and/or more than five payers.
Form 4802 is not a stand-alone form; it can only accompany Form 4804.
.02 IRS/MCC allows for the use of computer-generated substitutes for Form 4804/4802. The substitutes must contain all information requested on the original forms including the affidavit and signature line. Photocopies are acceptable but an original signature is required. When using computer- generated forms, be sure to mark very clearly which tax year is being reported. This
will eliminate a phone communication from IRS/MCC to question the tax year.
.03 A transmitter may report for any combination of payers and/or documents in a submission. Each file must begin with a “T”
Record and end with an “F” record for the end of a transmission. For example, if reporting Forms 1099–INT for Bank A, Forms
1099–DIV for Bank B, and Forms 1098 for Bank C, three separate tapes or diskettes need not be created. All three banks and all
types of documents can be coded within a file on one tape or diskette as long as each bank or type of return has a separate “A”
Record. Multiple tapes or diskettes can be sent in one package. For each separate type of media, the first record on the file must be
the Transmitter “T” Record. A Form 4804, Transmittal of Information Returns Reported Magnetically/Electronically, must be
submitted for every Transmitter “T” Record. Filers must include Form 4804, 4802, or computer-generated substitute with
their shipment.
.04 Multiple types of media may be submitted in a shipment. However, submit a separate Form 4804 for each type of media.
.05 Current and prior year data may be submitted in the same shipment; however, each tax year must be on separate media, and a
separate Form 4804 must be prepared to clearly indicate each tax year.
.06 Filers who have prepared their information returns in advance of the due date are encouraged to submit this information to
IRS/MCC no earlier than January 1 of the year the return is due.
.07 Do not report duplicate information. If a filer submits returns magnetically/electronically, identical paper documents
must not be filed. This may result in erroneous penalty notices.
.08 Form 4804 may be signed by the payer or the transmitter, service bureau, paying agent, or disbursing agent (all hereafter referred to as agent), on behalf of the payer. Failure to sign the affidavit on Form 4804 may delay processing or could result in
the files being returned unprocessed. An agent may sign the Form 4804 if the agent has the authority to sign the affidavit under an
agency agreement (either oral, written, or implied) that is valid under state law and adds the caption “FOR: (name of payer).”

1998–21 I.R.B.

15

May 26, 1998

.09 Although an authorized agent may sign the affidavit, the payer is responsible for the accuracy of the Form 4804 and the returns filed. The payer will be liable for penalties for failure to comply with filing requirements.
.10 A self-adhesive external media label, created by the filer, must be affixed to each tape and diskette. (IRS no longer provides self-adhesive labels for this purpose.) For instructions on how to prepare an external media label, refer to Notice 210 in the
forms section. If diskettes are used, and the operating system is not MS–DOS compatible, the operating system and hardware information must be provided. Failure to provide this information may result in the diskettes being returned to the filer.
.11 On the outside of the shipping container, affix or attach a label which reads IRB Box ___of___ reflecting the number of containers in the shipment. (Filers can create a label with this information or cut out one of the labels on the special label page provided
in this publication.) If there is only one container, mark the outside as Box 1 of 1. For multiple containers, include the sequence for
example, Box 1 of 3, 2 of 3, 3 of 3).
.12 When submitting files include the following:
(a) A signed Form 4804;
(b) Form 4802, if applicable;
(c) External media label (created by filer) affixed to magnetic media;
(d) IRB Box _____ of ______ outside label.
☛ Note: See Parts C and D for Electronic Submission Requirements.
.13 If returns from different locations (using the same name and TIN) are submitted on the same file, IRS encourages the filer to
consolidate each type of information return under one “A” Record. For example, all “B” Records for the same type of return should
be together under one “A” Record and followed by the End of Payer “C” Record.
.14 IRS/MCC will not pay for or accept “Cash-on-Delivery” or “Charge to IRS” shipments of tax information that an individual
or organization is legally required to submit.
.15 Payers should retain a copy of the information returns filed with IRS or have the ability to reconstruct the data for at least 3
years from the reporting due date, with the exception of Form 1099–C. A financial entity must retain a copy of Form 1099–C, Cancellation of Debt, or have the ability to reconstruct the data required to be included on the return, for at least 4 years from the date
such return is required to be filed. Whenever backup withholding is imposed, a 4 year retention is required.

Sec. 10. Due Dates
As a result of due dates for Tax Year 1998 falling on weekends in 1999, the information returns, the recipient copies, and the participant copies will be treated as timely if filed or furnished on or before the following dates:
Forms 1098, 1099 and W–2G
Recipient Copy - February 1, 1999
IRS Copy - March 1, 1999
Forms 5498 and 5498–MSA
Participant Copy - June 1, 1999
IRS Copy - June 1, 1999
(Participants Copy Form 5498-for fair market value of account and for Education IRA Contributions-February 1, 1999)
.01 The due dates for filing paper returns with IRS also apply to magnetic media or electronic filing. Filing of information returns
is on a calendar year basis, except for Forms 5498 and 5498–MSA, which are used to report amounts contributed during or after the
calendar year (but not later than April 15).
.02 If any due date falls on a Saturday, Sunday or legal holiday, the return or statement is considered timely if filed or furnished
on the next business day (i.e., the next day that is not a Saturday, Sunday, or legal holiday).
.03 Information returns filed magnetically/electronically for Forms 1098, 1099, and W–2G must be submitted to IRS/MCC postmarked on or before March 1, 1999.
.04 Returns postmarked by the United States Postal Service (USPS) on or before March 1, 1999, and delivered by United States
mail to the IRS/MCC after the due date, are treated as timely under the “timely mailing as timely filing “ rule. A similar rule applies
to items delivered by private delivery services (PDSs) designated by the IRS. A PDS must be designated by the IRS before it will
qualify for the timely mailing rule. Designation is determined with respect to each type of delivery service offered by a PDS (e.g.,
next day delivery, two day delivery, etc.). Notices 97–26, 1997–1 C.B. 413 and 97–50, 1997–37 I.R.B. 21 provide the list of designated PDSs and the types of delivery services designated. Designation is effective until the IRS issues a revised list of designated
PDSs. Notice 97–26 also provides rules for determining the date that is treated as the postmark date. For items delivered by a nondesignated PDS, the actual date of receipt by IRS/MCC will be used as the filing date. For items delivered by a designated PDS, but
through a type of service not designated in Notice 97–26 and Notice 97–50, the actual date of receipt by IRS/MCC will be used as
the filing date. The timely mailing rule also applies to furnishing statements to recipients and participants and filing Forms 5498 and
5498–MSA.

May 26, 1998

16

1998–21 I.R.B.

.05 Statements to recipients must be furnished on or before February 1, 1999 for TY98. Form 5498 statements to the participants
must be furnished on or before February 1, 1999 for TY98 for the fair market value of the account and for contributions to an education IRA and by June 1, 1999 for TY98 for contributions made to all other types of IRAs for the prior calendar year.
.06 Forms 5498 and 5498–MSA filed magnetically or electronically must be filed with IRS/MCC on or before June 1, 1999 for
TY98. Forms 5498 and 5498–MSA are filed for contributions to be applied to 1998 that are made January 1, 1998 through April 15,
1999 and/or to report the fair market value of any IRA/SEP/SIMPLE or medical savings account.
.07 Use this revenue procedure to prepare information returns filed magnetically or electronically beginning January 1, 1999 and
received by IRS/MCC no later than December 15, 1999.

Sec. 11. Extensions of Time
.01 An extension of time to file may be requested for Forms 1099, 1098, 5498, 5498–MSA, W–2G, W–2 series of forms, and
1042–S.
.02 Form 8809, Request for Extension of Time To File Information Returns, should be submitted to IRS/MCC at the addresses
listed later in this section. This form may be used to request an extension of time to file information returns submitted on paper,
magnetically or electronically.
.03 Requesting an extension of time for multiple payers (50 or less) may be done by submitting Form 8809 and attaching a list of
the payer names and their TINs (EIN or SSN). The listing must be attached to ensure that the extension is recorded for all payers. Form 8809 may be computer- generated or photocopied. Be sure that all the pertinent information is included.
.04 Requests for an extension of time to file for more than 50 payers are required to be submitted magnetically or electronically.
Requests for an extension of time for 10 to 50 payers are encouraged to be filed magnetically or electronically. (See Part E, Sec. 3,
for the record format.) The request may be filed on tape, tape cartridge, 5 1⁄4- or 3 1⁄2-inch diskette, or electronically through the
IRP–BBS or mainframe.
.05 If a filer does not have an IRS/MCC assigned Transmitter Control Code (TCC), a Form 4419, Application for Filing Information Returns Magnetically/Electronically, must be submitted to obtain a TCC. This number must be used to submit an extension request magnetically/electronically.
.06 All magnetically filed requests for an extension of time should be sent using the following addresses:

✉

If by Postal Service:
IRS-Martinsburg Computing Center
Information Reporting Program
Attn: Extension of Time Coordinator
P. O. Box 879
Kearneysville, WV 25430

✈

If by truck or air freight:
IRS-Martinsburg Computing Center
Information Reporting Program
Attn: Extension of Time Coordinator
Route 9 and Needy Road
Martinsburg, WV 25401
.07 Requests for extensions of time for multiple payers will be responded to with one approval letter, accompanied by a list of
payers covered under that approval.
.08 As soon as it is apparent that a 30-day extension of time to file is needed, Form 8809 may be submitted. It will take a minimum of 30 days for IRS/MCC to respond to an extension request. Under certain circumstances, a request for an extension of time
could be denied. When a denial letter is received, any additional or necessary information may be resubmitted within 20 days.
.09 If an additional extension of time is needed, a second Form 8809 must be filed by the initial extended due date. Check line 7
on the form to indicate that an additional extension is being requested. A second 30-day extension will be approved only in cases of
extreme hardship or catastrophic event. If requesting a second 30-day extension of time, submit the information return files as
soon as prepared. Do not wait for MCC’s response to your second extension request.
.10 Form 8809 must be postmarked no later than the due date of the return for which an extension is requested. If requesting an
extension of time to file several types of forms, use one Form 8809, but the Form 8809 must be postmarked no later than the earliest
due date. For example, if requesting an extension of time to file both Forms 1099–INT and 5498, submit Form 8809 postmarked on
or before March 1, 1999. Complete more than one Form 8809 to avoid this problem.
.11 If an extension request is approved, the approval letter should be kept on file. The approval letter or copy of the approval letter for an extension of time should not be sent to IRS/MCC with the magnetic media file or to the service center where the paper returns are filed.
.12 Request an extension for only one tax year.

1998–21 I.R.B.

17

May 26, 1998

.13 The extension request must be signed by the payer or a person who is duly authorized to sign a return, statement or other document for the payer.
.14 Failure to properly complete and sign the Form 8809 may cause delays in processing the request or result in a denial. Carefully read and follow the instructions on the back of the Form 8809.
.15 Form 8809 may be obtained by calling 1-800-TAX-FORM (1-800-829-3676). The form is also available on IRP–BBS at
304-264-7070 or on Internet at http://www.irs.ustreas.gov. A copy of the Form 8809 is also provided in the back of the Publication 1220.
.16 Request an extension of time to furnish the statements to recipients of Forms 1098, 1099, 5498, W–2G, W–2 series of forms,
and 1042–S by submitting a letter to IRS/MCC containing the following information:
(a) Payer name
(b) TIN
(c) Address
(d) Type of return
(e) Specify that the extension request is to provide statements to recipients.
(f) Reason for delay
(g) Signature of payer or person duly authorized
Requests for an extension of time to furnish the statements for Forms 1098, 1099, 5498, W–2G, W–2 series of forms, and 1042–S
to recipients are not automatically approved; however, if approved, generally an extension will allow a maximum of 30 additional
days from the due date to furnish the statements to the recipients. The request must be postmarked by the date on which the statements are due to the recipients.

Sec. 12. Processing of Information Returns Magnetically/Electronically
.01 All data received at IRS/MCC for processing will be given the same protection as individual income tax returns (Form 1040).
IRS/MCC will process the data and determine if the records are formatted and coded according to this revenue procedure.
.02 If the data is formatted incorrectly, the file will be returned for replacement accompanied with a Media Tracking Slip (Form
9267). When media is returned, it is because IRS/MCC encountered errors (not limited to format) and was unable to process the
media, therefore, requiring a replacement. Open all packages immediately.
.03 Files must be corrected and returned with the Media Tracking Slip (Form 9267) to IRS/MCC within 45 days from the date of
the letter IRS/MCC included with the returned files. A penalty for failure to file correct information returns by the due date will be
assessed if the files are not corrected and returned within the 45 days or if the incorrect files are returned by IRS/MCC for replacement more than two times. A penalty for intentional disregard of filing requirements will be assessed if a replacement file is
not received. (For penalty information, refer to the Penalty section of the 1998 “Instructions for Forms 1099, 1098, 5498, and
W–2G.”)
.04 Sample records identifying errors encountered will be provided with the returned media. It is the responsibility of the transmitter to check the entire file for similar errors.
.05 The following definitions have been provided to help distinguish between a correction and a replacement:
• A correction is an information return submitted by the transmitter to correct an information return that was previously submitted to and processed by IRS/MCC, but contained erroneous information.
• A replacement is an information return file that IRS/MCC has returned to the transmitter due to errors encountered during processing. After necessary changes have been made, the file must be returned for processing along with the Media Tracking Slip
(Form 9267) which was included in the shipment from IRS/MCC.
• Filers should never send anything to IRS/MCC marked “Replacement” unless IRS/MCC returned media to them.
.06 IRS/MCC will not return media after successful processing. Therefore, if the transmitter wants proof that IRS/MCC received
a shipment, the transmitter should select a service with tracking capabilities or one that will provide proof of delivery.
.07 IRS/MCC will work with filers as much as possible to assist with processing problems. If the filer is contacted by
IRS/MCC, a prompt response is important. IRS/MCC may have information that the filer needs to correct his or her file.
.08 IRS/MCC contacts payers who have submitted payee data with missing TINs in an attempt to prevent errors that could result
in penalties. Payers who submit data with missing TINs and have taken the required steps to obtain this information are encouraged
to attach a letter of explanation to the required Form 4804. This will prevent unnecessary contact from IRS/MCC. This letter, however, will not prevent backup withholding notices (CP2100 or CP2100A Notices) or penalties for missing or incorrect TINs.
.09 Do not use special shipping containers for transmitting data to IRS/MCC. Shipping containers will not be returned.

Sec. 13. Corrected Returns
.01 The magnetic media filing requirement of information returns of 250 or more applies separately to both original and corrected
returns.

May 26, 1998

18

1998–21 I.R.B.

If a payer has 100 Forms 1099–A to be corrected, they can be
E
filed on paper since they fall under the 250 threshold. However,
X
if the payer has 300 Forms 1099–B to be corrected, they must be
A
filed magnetically or electronically since they meet the 250 threshold.
M
If for some reason a payer cannot file the 300 corrections on magnetic
P
media, to avoid penalties, a request for a waiver must be submitted before
L
filing on paper. If a waiver is approved for original documents, any corrections
E
for the same type of return will be covered under this waiver.
.02 Corrections should be filed as soon as possible. Corrections filed after August 1 may be subject to the maximum penalty of
$50 per return. Corrections filed by August 1 may be subject to a lesser penalty. (For information on penalties, refer to the Penalty
section of the 1998 “Instructions for Forms 1099, 1098, 5498, and W–2G.”) However, if payers discover errors after August 1, they
may still be required to file corrections so they will not be subject to a penalty for intentional disregard of the filing requirements.
Failure to correct information returns may result in penalties for failure to provide correct information. All fields must be completed with the correct information, not just the data fields needing correction. Submit corrections only for the returns filed in
error, not the entire file. Furnish corrected statements to recipients as soon as possible.
.03 There are numerous types of errors, and in some cases, more than one transaction may be required to correct the initial error.
If the original return was filed as an aggregate, the filers must consider this in filing corrected returns.
.04 Corrected returns may be included on the same medium as original returns; however, separate “A” Records are required. Corrected returns must be identified on the Form 4804 and the external media label by indicating “Correction.” If filers discover that
certain information returns were omitted on their original file, they must not code these documents as corrections. The file
must be coded and submitted as originals.
.05 If a payer discovers errors for prior years that affect a large number of payees, in addition to sending IRS the corrected returns
and notifying the payees, a letter containing the following information should be sent to IRS/MCC:
(a) Name and address of payer
(b) Type of error (please explain clearly)
(c) Tax year
(d) Payer TIN
(e) TCC
(f) Type of Return
(g) Number of Payees
This information will be forwarded to the appropriate office in an attempt to prevent erroneous notices from being sent to the payees. The correction must be submitted on an actual information return document or filed magnetically/electronically. Provide the
correct tax year in Block 2 of the Form 4804 and on the external media label.
.06 Prior year data, original and corrected, must be filed according to the requirements of this revenue procedure. If submitting
prior year corrections, use the record format for the current year and submit on separate media. However, use the actual year designation of the correction in Field Positions 2–5. If filing electronically, a separate transmission must be made for each tax year.
.07 In general, filers should submit corrections for returns filed within the last 3 calendar years (4 years if the payment is a reportable payment subject to backup withholding under section 3406 of the Code).
.08 All paper returns, whether original or corrected, must be filed with the appropriate service center.
.09 Form 4804 and Form 4802 (if applicable), must be submitted with corrected files submitted magnetically or electronically.
.10 The “B” Record provides a 20-position field for the Payer’s Account Number for the Payee. This number will help identify
the appropriate incorrect return if more than one return is filed for a particular payee. Do not enter a TIN in this field. A payer’s
account number for the payee may be a checking account number, savings account number, serial number, or any other number assigned to the payee by the payer that will distinguish the specific account. This number should appear on the initial return and on the
corrected return in order to identify and process the correction properly.
.11 The record sequence for filing corrections is the same as for original returns.
.12 Review the chart that follows. Errors normally fall under one of the two categories listed. Next to each type of error made is
a list of instructions on how to file the corrected return.
Guidelines for Filing Corrected Returns Magnetically/Electronically
Error Made on the Original Return

How To File the Corrected Return

Two (2) separate transactions are required to make the following corrections properly. Follow the directions for both Transactions 1 and 2. (See Note 1)
1. Original return was filed
with one or more of the following errors:
(a) No payee TIN (SSN, ITIN, ATIN, or EIN)

Transaction 1: Identify incorrect returns
A. Prepare a new Form 4804/4802 that includes information related
to this new file.

1998–21 I.R.B.

19

May 26, 1998

Guidelines for Filing Corrected Returns Magnetically/Electronically (Continued)
Error Made on the Original Return
(b) Incorrect payee TIN
(c) Incorrect payee name
(d) Wrong type of return indicator

How To File the Corrected Return
B. Mark “Correction” in Block 1 of Form 4804.
C. Prepare a new file. The first record on the file will be the Transmitter “T” Record.
D. Make a separate “A” Record for each type of return and each
payer being reported. The information in the “A” record will be
exactly the same as it was in the original submission with one exception, the Correction File Indicator must be set to “1” (one) in
Field Position 50.
E. The Payee “B” Records must contain exactly the same information as submitted previously, except, insert a Corrected Return Indicator Code of “G” in Field Position 6 of the “B” Records, and
for all payment amounts, enter “0” (zero).
F. Corrected returns submitted to IRS/MCC using “G” coded “B”
Records may be on the same file as those returns submitted with a
“C” code; however, separate “A” Records are required.
G. Prepare a separate “C” Record for each type of return and each
payer being reported.
H. Continue with Transaction 2 to complete the correction.
Transaction 2: Report the correct information
A. Make a separate “A” Record for each type of return and each
payer being reported. The Correction File Indicator must be set
to “1” (one) in Field Position 50.
B. The Payee “B” Records must show the correct information as
well as a Corrected Return Indicator Code of “C” in Field Position 6.
C. Corrected returns submitted to IRS/MCC using “C” coded “B”
Records may be on the same file as those returns submitted with a
“G” Codes; however, separate “A” Records are required.
D. Prepare a separate “C” Record for each type of return and each
payer being reported.
E. The last record on the file will be the End of Transmission “F”
Record.
F. Indicate “Correction” on the external media label.

☛ Note 1: Payers who can show they have reasonable cause (defined in the regulations under section 6724 of the Internal
Revenue Code) are not required to make corrections for returns filed with a missing or incorrect name and/or TIN. These
payers should change their records in order to submit correct information in the future. Payers who cannot show reasonable
cause are encouraged to make corrections for the current processing year by August 1 to reduce applicable penalties. Corrections filed by August 1 will reduce the $50 per return penalty for filing returns with missing or incorrect information to
$30. The penalty is further reduced to $15 per return if the corrections are filed within 30 days of the due date. (For penalty
information, refer to the Penalty section of the 1998 “Instructions for Forms 1099, 1098, 5498, and W–2G.”) Corrections
filed after August 1 will not reduce the penalty but will allow IRS to update the payee’s records. The regulations for IRC section 6724 are available in Publication 1586, Reasonable Cause Regulations and Requirements for Missing and Incorrect
Name/TINs. The publication may be obtained by calling 1-800-TAX-FORM (1-800-829-3676).
One transaction is required to make the following corrections properly (See Note 2).
2. Original return was filed with one or
more of the following errors:
(a) Incorrect payment amount codes in
the Payer “A” Record
(b) Incorrect payment amounts in the
Payee “B” Record

A. Prepare a new Form 4804/4802 that includes information relating
to this new file.
B. Mark “Correction” in Block 1 of Form 4804.
C. Prepare a new file. The first record on the file will be the Transmitter “T” Record.
D. Make a separate “A” Record for each type of return and each
payer being reported. Information in the “A” Record may be the

May 26, 1998

20

1998–21 I.R.B.

Guidelines for Filing Corrected Returns Magnetically/Electronically (Continued)
Error Made on the Original Return

How To File the Corrected Return

(c) Incorrect code in the document
specific/distribution code field in the
Payee “B” Record
(d) Incorrect payee address
(e) Direct sales indicator

same as it was in the original submission. The Correction File
Indicator must be set to “1” (one) in Field Position 50.
E. The Payee “B” Records must show the correct information as well
as a Corrected Return Indicator Code of “G” in Field Position 6.
F. Corrected returns submitted to IRS/MCC using file as those returns submitted without the “G” code; however, separate “A”
Records are required.
G. Prepare a separate “C” Record for each type of return and each
payer being reported.
H. The last record on the file will be the End of Transmission “F”
Record.
I. Indicate “Correction” on the external media label.

☛ Note 2: If a filer is correcting the name and/or TIN in addition to any errors listed in item 2 of the chart, two transactions
will be required. If a filer is reporting “G” coded, “C” coded, and/or “Non-coded” (original) returns on the same media,
each category must be reported under separate “A” records.

Sec. 14. Taxpayer Identification Number (TIN)
.01 Section 6109 of the Internal Revenue Code requires a person to furnish his/her TIN to the person obligated to file the information return.
.02 The payee’s TIN and name combination is used to associate information returns reported to IRS/MCC with corresponding information on tax returns. It is imperative that correct Taxpayer Identification Numbers (TINs) for payees be provided to IRS/MCC.
Do not enter hyphens or alpha characters. Entering all zeros, ones, twos, etc., will have the effect of an incorrect TIN.
.03 The payer and payee names with associated TINs should be consistent with the names and TINs used on other tax returns.
Also, the name and TIN provided must belong to the owner of the account. If the account is recorded in more than one name, furnish the name and TIN of one of the owners of the account. The TIN provided must be associated with the name of the payee provided in the first name line of the “B” Record. For individuals, the payee TIN is generally the payee’s Social Security Number
(SSN). For other entities, the payee TIN is the payee’s Employer Identification Number (EIN). The payee TIN may also refer to an
Individual Taxpayer Identification Number (ITIN) or Adoption Taxpayer Identification Number (ATIN). For sole proprietors, the
payee TIN may be either an SSN or EIN but the sole proprietor’s name (not the business name) must be used on the first name
line.
.04 Failure to provide the correct name and corresponding TIN could result in a penalty and/or backup withholding notice (sometimes referred to as a “B” notice). (For penalty information, refer to the Penalty section of the 1998 “Instructions for Forms 1099,
1098, 5498, and W–2G.” For “B” Notice information, refer to the Backup Withholding section of the same publication.)
.05 The following charts will help payers determine the TIN to be furnished to IRS/MCC for those persons for whom they are reporting information (payees).
Chart 1. Guidelines for Social Security Numbers

For this type of
account-

In the Taxpayer
Identification
Number Field of
the Payee “B”
Record, enter the
SSN of-

In the First Payee
Name Line of the
Payee “B” Record,
enter the name of-

1. Individual

The individual

The individual

2. Joint account (Two or
more individuals, including
husband and wife)

The actual owner of the
account or, if combined
funds, the first indivdual
on the account.

The individual whose SSN is entered

1998–21 I.R.B.

21

May 26, 1998

3. Custodian account
of a minor (Uniform
Gift, or Transfers,
to Minors Act)

The minor

The minor

4. The usual revocable
savings trust account
(grantor is also trustee)

The grantor-trustee

The grantor-trustee

5. A so-called trust
account that is not a
legal or valid trust
under state law

The actual owner

The actual owner

6. Sole proprietorship

The owner (An SSN or EIN)

The owner, not the business name (The filer may
enter the business name on the second name line.)

Chart 2. Guidelines for Employer Identification Numbers
In the Taxpayer
Identification
Number Field of
the Payee “B”
Record, enter the
EIN of-

In the First Payee
Name Line of the
Payee “B” Record,
enter the name of-

1. A valid trust, estate, or
pension trust

The legal entity1

The legal trust, estate, or pension trust

2. Corporate

The corporation

The corporation

3. Association, club, religious,
charitable, educational, or other
tax-exempt organization

The organization

The organization

4. Partnership account held in
the name of the business

The partnership

The partnership

5. A broker or registed
nominee/middleman

The broker or nominee/middleman

The broker or nominee/middleman

6. Account with Department of
Agriculture in the name of a public
entity (such as a state or local
government, school district, or
prison), that receives agriculture
program payments

The public entity

The public entity

7. Sole proprietorship

The business (An EIN or SSN)

The owner, not the business name (The filer may
enter the business name on the second name line.)

For this type
of account-

1Do not furnish the identification number of the personal representative or trustee unless the name of the representative or trustee
is used in the account title.

Sec. 15. Effect on Paper Returns and Statements to Recipients
.01 Magnetic/electronic reporting of information returns eliminates the need to submit paper documents to the IRS. CAUTION!
Do not send Copy A of the paper forms to IRS/MCC in addition to magnetic media and electronic filing. This will result in duplicate filing; therefore, erroneous notices could be generated.

May 26, 1998

22

1998–21 I.R.B.

.02 Payers are responsible for providing statements to the payees as outlined in the 1998 “Instructions for Forms 1099, 1098,
5498, and W–2G.” Refer to these instructions for filing information returns on paper with the IRS and furnishing statements to recipients.
.03 Statements to recipients should be clear and legible. If the official IRS form is not used, the filer must adhere to the specifications and guidelines in Publication 1179, “Rules and Specifications for Private Printing of Substitute Forms 1096, 1098, 1099,
5498, and W–2G.”

Sec. 16. Combined Federal/State Filing Program
.01 The Combined Federal/State Filing Program was established to simplify information returns filing for the taxpayer.
IRS/MCC will forward this information to participating states free of charge for approved filers. Separate reporting to those states is
not necessary. The following information returns may be filed under the Combined Federal/State Filing Program:
Form 1099–DIV _____
Form 1099–G _______
Form 1099–INT _____
Form 1099–MISC____
Form 1099–OID _____
Form 1099–PATR ____
Form 1099–R _______
Form 5498 __________

Dividends and Distributions
Certain Government Payments
Interest Income
Miscellaneous Income
Original Issue Discount
Taxable Distributions Received from Cooperatives
Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans,
Insurance Contracts, etc.
IRA

IRAs,

The following information returns may not be filed under this program:
Form 1098 __________
Form 1098–E ________
Form 1098–T ________
Form 1099–A ________
Form 1099–B ________
Form 1099–C ________
Form 1099–LTC ______
Form 1099–MSA _____
Form 1099–S ________
Form 5498–MSA _____
Form W–2G _________

Mortgage Interest Statement
Student Loan Interest Statement
Tuition Payments Statement
Acquisition or Abandonment of Secured Property
Proceeds From Broker and Barter Exchange Transactions
Cancellation of Debt
Long-Term Care and Accelerated Death Benefits
Distributions From Medical Savings Accounts
Proceeds From Real Estate Transactions
Medical Savings Account Information
Certain Gambling Winnings

.02 To request approval to participate, a magnetic media or electronic test file coded for this program must be submitted to
IRS/MCC between November l and December 15. Hard copy print tests are not acceptable for Combined Federal/State Filing
approval.
.03 Attach a letter to the Form 4804 submitted with the test file to indicate a desire to participate in this program.
.04 A test file is only required for the first year. Each record, both in the test and the actual data file, must conform to this revenue
procedure.
.05 If the test file is acceptable, IRS/MCC will send the filer an approval letter, and a Form 6847, Consent for Internal Revenue
Service to Release Tax Information, which the payer must complete, sign, and return to IRS/MCC before any tax information can be
released to the state. Filers must write their TCC on Form 6847.
.06 If the test file is not acceptable, IRS/MCC will return the media with a letter indicating the problems. The replacement test
file must be returned to IRS/MCC postmarked on or before December 15.
.07 A separate Form 6847 is required for each payer. A transmitter may not combine payers on one Form 6847 even if acting as
Attorney-in-Fact for several payers. Form 6847 may be computer-generated as long as it includes all information that is on the original form or it may be photocopied. If the Form 6847 is signed by an Attorney-in-Fact, the written consent from the payer must
clearly indicate that the Attorney-in-Fact is empowered to authorize release of the information.
.08 Only code the records for participating states and for those payers who have submitted Form 6847.
.09 Some participating states require separate notification that the payer is filing in this manner. Since IRS/MCC acts as a forwarding agent only, it is the payer’s responsibility to contact the appropriate states for further information.
.10 All corrections properly coded for the Combined Federal/State Filing Program will be forwarded to the participating states.
.11 Participating states and corresponding valid state codes are listed in Table 1 of this section. The appropriate state code must
be entered for those documents that meet the state filing requirements; do not use state abbreviations.

1998–21 I.R.B.

23

May 26, 1998

.12 To simplify filing, some of the participating states have provided their information return reporting requirements (see Table
2). Each state’s filing requirements are subject to change by the state. It is the payer’s responsibility to contact the participating states to verify the criteria provided in this table.
.13 Upon submission of the actual files, the transmitter must be sure of the following:
(a) All records should be coded exactly as required by this revenue procedure.
(b) The “C” Record must be followed by a State Totals “K” Record for each state being reported.
(c) Payment amount totals and the valid participating state code must be included in the State Totals “K” Record.
(d) The last “K” Record must be followed by an “A” Record or an End of Transmission “F” Record (if this is the last record of
the entire file).
Table 1. Participating States And Their Codes
State

Code

State

Code

State

Code

Alabama
Arizona
Arkansas
California
Delaware
District of Columbia
Georgia
Hawaii

01
04
05
06
10
11
13
15

Idaho
Indiana
Iowa
Kansas
Maine
Massachusetts
Mississippi
Missouri

16
18
19
20
23
25
28
29

Montana
New Jersey
New Mexico
North Dakota
Oregon
South Carolina
Tennessee
Wisconsin

30
34
35
38
41
45
47
55

Table 2. Dollar Criteria For State Reporting
STATE

1099–DIV

1099–G

1099–INT

099 MISC

1099–OID

1099–PATR

1099–R

5498

Alabama
Arkansas
District of
Columbiab
Hawaii
Idaho
Iowa
Mississippi
Missouri
Montana
New Jersey
Tennessee
Wisconsin

$1500
100

$ NR
2500

$1500
100

$1500
2500

$1500
2500

$1500
2500

$1500
2500

NR

600
10
NR
10
600
NR
10
1000
100
NR

600

600
10
NR
10
600
NR
10
1000
100
NR

600
600
600
600
600
1200c
600
1000
NR
600

600
10
NR
10
600
NR
10
1000
NR
NR

600
10
NR
10
600
NR
10
1000
NR
NR

600
600

NR

a

a

a

NR
10
600
NR
10
1000
NR
NR

10
600
NR
600
1000
NR
600

a

a
a

NR
NR
a

NR
NR
NR

The preceding list is for information purposes only. The state filing requirements are subject to change by the states. For complete information on state filing requirements, contact the appropriate state tax agencies.
Filing requirements for states in TABLE 1 not shown in TABLE 2 are the same as the federal requirement.
NR = No filing requirement.
Footnotes:
a. All amounts are to be reported.
b. Amounts are for aggregates of several types of income from the same payer.
c. Missouri would prefer those returns filed with respect to non-Missouri residents to be sent directly to its state agency.

Sec. 17. Definition of Terms
Element

Description

Asynchronous Protocols

This type of data transmission is most often used by microcomputers, PCs and some minicomputers. Asynchronous transmissions transfer data at arbitrary time intervals using the
start-stop method. Each character transmitted has its own start bit and stop bit.

ATIN

A temporary taxpayer identification number assigned to a child who has been placed by an
authorized placement agency in the household of a prospective adoptive parent prior to

May 26, 1998

24

1998–21 I.R.B.

Element

Description
adoption. When the adoption becomes final, the adoptive parent must apply for a social
security number for the child.

b

Denotes a blank position. Enter blank(s) when this symbol is used (do not enter the letter
“b”). This appears in numerous areas throughout the record descriptions.

Bisynchronous Protocols

For purposes of this publication, these are electronic transmissions made using IBM 3780
protocols. These transmissions must be in EBCDIC character code and use the Bell 208B
(4800bps), AT&T 2296A (9600bps) or Hayes OPTIMA 288 V.FC Smartmodem
(14400bps) modems. Standard IBM 3780 space compression is acceptable.

Correction

A correction is an information return submitted by the transmitter to correct an information return that was previously submitted to and processed by IRS/MCC, but contained
erroneous information.

☛ Note: A correction should not be confused with a replacement. Only media returned to the filer by IRS/MCC due to processing problems should be marked replacement.
CUSIP Number

A number developed by the Committee on Uniform Security Identification Procedures to
serve as a common denominator in communications among users for security transactions
and security information.

Employer Identification
Number (EIN).

A nine-digit number assigned by IRS for federal tax reporting purposes.

Electronic Filing

Submission of information returns using switched telecommunications network circuits.
These transmissions use modems, dial-up phone lines, and asynchronous or bisynchronous protocols. See Parts A, C, and D of this publication for specific information on electronic filing.

File

For purposes of this revenue procedure, a file consists of one Transmitter “T” Record at
the beginning of the file, followed by a Payer “A” Record, Payee “B” Records, and an End
of Payer “C” Record after each set of “B” Records. The last record on the file will be the
End of Transmission “F” Record. Nothing should be reported after the End of Transmission “F” Record.

Filer

Person (may be payer and/or transmitter) submitting information returns to IRS.

Filing Year

The actual year in which the information returns are being submitted to IRS.

Golden Parachute Payment

A payment made by a corporation to a certain officer, shareholder, or highly compensated
individual when a change in the ownership or control of the corporation occurs or when a
change in the ownership of a substantial part of the corporate assets occurs.

Incorrect Taxpayer
Identification Number
(Incorrect TIN)

A TIN may be incorrect for several reasons:
(a) The payee provided a wrong number or name (e.g., the payee is listed as the only
owner of an account but provided someone else’s TIN).
(b) A processing error (e.g., the number or name was typed incorrectly).
(c) The payee’s status changed (e.g., a payee name change was not conveyed to the IRS or
SSA so they could enter the change in their records).

Individual Taxpayer
Identification Number (ITIN)

A nine digit number issued by IRS to individuals who are required to have a U.S. Taxpayer Identification Number but are not eligible to obtain a Social Security Number (SSN).

Information Return

The vehicle for submitting required information about another person to IRS. Information
returns are filed by financial institutions and by others who make certain types of payments
as part of their trade or business. The information required to be reported on an information
return includes interest, dividends, pensions, nonemployee compensation for personal services, stock transactions, sales of real estate, mortgage interest, and other types of information. For this revenue procedure, an information return is a Form 1098, 1098–E, 1098–T,
1099–A, 1099–B, 1099–C, 1099–DIV, 1099–G, 1099–INT, 1099–LTC, 1099–MISC,
1099–MSA, 1099–OID, 1099–PATR, 1099–R, 1099–S, 5498, 5498–MSA or W–2G.

1998–21 I.R.B.

25

May 26, 1998

Element

Description

Magnetic
Media

For this revenue procedure, the term “magnetic media” refers to 1⁄2-inch magnetic tape;
IBM 3480/3490/3490E or AS400 compatible tape cartridge; 8mm, 4mm, and QIC (Quarter Inch Cartridges) cartridge or 51⁄4- and 31⁄2-inch diskette.

Media Tracking Slip
(Form 9267)

Form 9267 accompanies media that IRS/MCC has returned to the filer for replacement
due to incorrect format or errors encountered when trying to process the media. This
must be returned with the replacement file.

Missing Taxpayer
Identification Number
(Missing TIN)

The payee TIN on an information return is “missing” if:
(a) there is no entry in the TIN field,
(b) includes one or more alpha characters (a character or symbol other than an Arabic
number) as one of the nine digits, OR
(c) payee TIN has less than nine digits.

PS 58 Costs

The current cost of life insurance under a qualified plan taxable under section 72(m) and
section 1.72–16(b) of the Income Tax Regulations. (See Part B, Sec. 10, Payee “B”
Record, Document Specific/Distribution Code, Category of Distribution, Code 9.)

Payee

Person or organization receiving payments from the payer, or for whom an information return must be filed. The payee includes a student (Form 1098–T), borrower (Forms 1098,
1098–E, and 1099–A), a debtor (Form 1099–C), a policyholder or insured (Form 1099–
LTC), any IRA/SEP/SIMPLE plan participant (Form 5498), and a gambling winner (Form
W–2G). For Form 1099–S, the payee is the seller or other transferor.

Payer

Includes the person making payments, a recipient of mortgage interest payments, a recipient of student loan interest payments, a broker, a person reporting a real estate transaction,
a barter exchange, a creditor, a trustee or issuer of any IRA/SEP/SIMPLE, or a lender who
acquires an interest in secured property or who has reason to know that the property has
been abandoned. The payer will be held responsible for the completeness, accuracy, and
timely submission of magnetic media files.

Replacement

A replacement is an information return file that IRS/MCC has returned to the transmitter
due to errors encountered during processing.

☛ Note: Filers should never submit media to IRS/MCC marked “Replacement” unless IRS/MCC returned media to the filers.
When sending “Replacement” media, be sure to include the Media Tracking Slip (Form 9267) which will accompany media returned
by IRS/MCC. Media that has been incorrectly marked as Replacement may result in duplicate filing.
Service Bureau

Person or organization with whom the payer has a contract to prepare and/or submit information return files to IRS/MCC. A parent company submitting data for a subsidiary is not
considered a service bureau.

Social Security Number (SSN)

A nine-digit number assigned by SSA to an individual for wage and tax reporting purposes.

Special Character

Any character that is not a numeric, an alpha, or a blank.

SSA

Social Security Administration.

Taxpayer Identification
Number (TIN)

Refers to either an Employer Identification Number (EIN), Social Security Number (SSN),
Individual Taxpayer Identification Number (ITIN), or Adoption Taxpayer Identification
Number (ATIN).

Tax Year

Generally, the year in which payments were made by a payer to a payee.

Transfer Agent

The transfer agent, or paying agent, is the entity who has been contracted or authorized by
the payer to perform the services of paying and reporting backup withholding (Form 945).

Transmitter

Refers to the person or organization submitting file(s) magnetically/electronically. The
transmitter may be the payer or agent of the payer.

Transmitter Control Code
(TCC)

A five character alpha/numeric number assigned by IRS/MCC to the transmitter prior to
actual filing magnetically or electronically. This number is inserted in the “T” Record of
the files and must be present before the file can be processed. An application Form 4419
must be filed with IRS/MCC to receive this number.

May 26, 1998

26

1998–21 I.R.B.

Element

Description

Vendor

Vendors include service bureaus that produce information return files on the prescribed
types of magnetic media or via electronic filing for payers. Vendors also include companies who provide software for payers who wish to produce their own media or electronic
files.

Sec. 18. State Abbreviations
.01 The following state and U.S. territory abbreviations are to be used when developing the state code portion of address fields.
This table provides state and territory abbreviations only, and does not represent those states participating in the Combined Federal/State Filing Program.
State

Code

State

Code

State

Code

Alabama
Alaska
American Samoa
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
District of Columbia
Federated States
of Micronesia
Florida
Georgia
Guam
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas

AL
AK
AS
AZ
AR
CA
CO
CT
DE
DC

Kentucky
Louisiana
Maine
Marshall Islands
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Northern
Mariana Islands

KY
LA
ME
MH
MD
MA
MI
MN
MS
MO
MT
NE
NV
NH
NJ
NM
NY
NC
ND

Ohio
Oklahoma
Oregon
Pennsylvania
Puerto Rico
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Virgin Islands*
Washington
West Virginia
Wisconsin
Wyoming

OH
OK
OR
PA
PR
RI
SC
SD
TN
TX
UT
VT
VA
VI
WA
WV
WI
WY

FM
FL
GA
GU
HI
ID
IL
IN
IA
KS

MP

*This abbreviation applies to the United States Virgin Islands.
.02 Filers must adhere to the city, state, and ZIP Code format for U. S. addresses in the “B” Record. This also includes American
Samoa, Federated States of Micronesia, Guam, Marshall Islands, Northern Mariana Islands, Puerto Rico, and the U. S. Virgin Islands.
.03 For foreign country addresses, filers may use a 51 position free format which should include city, province or state, postal
code, and name of country in this order. This is allowable only if a “1” (one) appears in the Foreign Country Indicator, Field Position
247 of the “B” Record.
.04 When reporting APO/FPO addresses use the following format:
EXAMPLE:
Payee Name
Mailing Address
Payee City
Payee State
Payee ZIP Code

PVT Willard J. Doe
Company F, PSC Box 100
167 Infantry REGT
APO (or FPO)
AE, AA, or AP*
098010100

*AE is the designation for ZIPs beginning with 090–098, AA for ZIP 340, and AP for ZIPs 962- 966.

Sec. 19. Major Problems Encountered
IRS/MCC encourages filers to verify the format and content of each type of record to ensure the accuracy of the data. This may
eliminate the need for IRS/MCC to return files for replacement. This may be important for those payers who have either had their

1998–21 I.R.B.

27

May 26, 1998

files prepared by a service bureau or who have purchased preprogrammed software packages. If a filer purchased a software
package for a previous tax year, it will not be valid for reporting current tax year information returns due to the new record
format.
Filers who engage a service bureau to prepare media on their behalf should be careful not to report duplicate data which
may generate penalty notices.
The Major Problems Encountered lists some of the most frequently encountered problems with magnetic/electronic files submitted to IRS/MCC. These problems may result in media being returned for replacement.
1. No Form 4804, Transmittal of Information Returns Reported Magnetically/Electronically
Each shipment of media sent to IRS/MCC must include a Form 4804. More than one type of media may be sent in the same shipment, (i.e., a tape, a diskette, or a tape cartridge) but must have a separate Form 4804 to accompany each type of media. In this example three separate Forms 4804 would be required in the total shipment However, multiples of one type of media (6 diskettes)
may be covered by one Form 4804. For electronically transmitted information returns, the Form 4804 must be mailed to IRS/MCC
the same day as the transmission.
2. Discrepancy between IRS/MCC totals and totals in Payer “C” Records
The “C” Record is a summary record for a type of return for a given payer as reported in the “B” Records. IRS balances the total
number of payees and payment amounts and compares them with totals in the “C” Records. Filers should verify the accuracy of the
records because imbalances may necessitate return of files for replacement.
3. The Payment Amount Fields in the “B” Record do not correspond to the Amount Codes in the “A” Record
If codes 2, 4, and 7 appear in the Amount Codes Field of the “A” Record, then the “B” Record must show payment amounts in only
Fields 2, 4, and 7, right-justified and unused positions must be zero (0) filled.
EXAMPLE:

“A” RECORD

247 bbbbbbbbb — (‘b’ denotes a blank)
(Pos. 28–39)

“B” RECORD

000000867599 —
(Pos. 67–78)

(Payment Amount 2)

000000709097 —
(Pos. 91–102)

(Payment Amount 4)

000000044985 —
(Pos. 127–138)

(Payment Amount 7)

4. Blanks or invalid characters appear in Payment Amount Fields in the “B” Record
Money amounts must be right-justified and zero (0) filled. Do not use blanks.
5. Incorrect TIN in Payer “A” Record
The Payer’s TIN reported in positions 12–20 of the “A” Record must be nine numeric characters (no alphas or special characters) in
order for IRS/MCC to process the media. The TIN provided in the “A” Record must correspond with the name provided in the first
payer name line.
6. Bad Format
NOTE: Due to major format changes in the record expansion and layout, IRS/MCC strongly encourages transmitters, vendors, and filers to read the Revenue Procedure in its entirety.
IRS/MCC receives data in prior year format. Be sure to use the current revenue procedure (Publication 1220) for formatting
data.
7. Incorrect tax year in the Transmitter “T” Record, Payer “A” Record and the Payee “B” Record
The tax year in the transmitter, payer and payee records should reflect the year of the information being reported. Filers need to
check their files to ensure this information is correct.
Due to Year 2000 compliance changes, the year format has expanded to four (4) positions.
8. Incorrect reporting of Form W–2 information to IRS
Form W–2 information is submitted to SSA, and not to IRS/MCC. SSA has its own magnetic media reporting program and specifications for wage information, and the media containing Forms W–2 is submitted to SSA. Any media received at IRS/MCC that con-

May 26, 1998

28

1998–21 I.R.B.

tains Form W–2 information will be returned to the filer. To inquire about filing Form W–2 information magnetically, call 1-800SSA–1213.
9. Excessive withholding credits
Generally, for most information returns, other than Forms 1099–G, 1099–MISC, 1099–R, and W–2G, Federal withholding amounts
should not exceed 31 percent of the income reported. Validate the total reported in the withholding field against the total income reported.
10. Incorrect format for TINs in the Payee “B” Record
A check of “B” records should be made to ensure the Taxpayer Identification Numbers (TINs) are formatted correctly. There should
be nine numerics, no alphas, hyphens, commas, or blanks. Incorrect formatting of TINs may result in a penalty.
IRS/MCC contacts filers who have submitted payee data with missing TINs in an attempt to prevent errors that could result in penalties. Payers/transmitters who submit data with missing TINs, and have taken the required steps to obtain this information are encouraged to attach a letter of explanation to the required Form 4804. This will prevent unnecessary contact from IRS/MCC. This
letter, however, will not prevent backup withholding notices (CP2100 and CP2100A Notices) or penalties for missing or incorrect
TINs. For penalty information, refer to the Penalty section of the 1998 “Instructions for Forms 1099, 1098, 5498, and W–2G.”
11. Distribution Codes for Form 1099–R reported incorrectly
Distribution codes for Form 1099–R are being reported incorrectly or not being reported. See valid distribution codes for Form
1099–R in the Payee “B” Record layout.
12. Incorrect Record Totals Listed on Form 4804
The Combined Total Payee Records listed on the Form 4804 (Block 9) are used in the verification process of information returns.
The figure in this block should be the total number of Payee “B” Records contained on the media submitted with the Form 4804.
The figures on the Form 4804 are compared against the total number of Payee “B” Records processed on the media. Imbalances
may necessitate the return of the files for replacement.
13. Invalid Use of IRA/SEP/SIMPLE Indicator (Form 1099–R)
The IRA/SEP/SIMPLE Indicator for Form 1099–R should be used only for the reporting of a distribution from a traditional
IRA/SEP/SIMPLE. The total amount distributed from a traditional IRA/SEP/SIMPLE should be reported in Payment Amount Field
A (IRA/SEP/SIMPLE Distribution).
14. Distribution Codes used incorrectly in conjunction with the IRA/SEP/SIMPLE Indicator. (Form 1099–R)
When reporting Form 1099–R information, Distribution Codes G and H MAY NOT be used in positions 545–546 of the”B” Record
if the IRA/SEP/SIMPLE Indicator (1) is present in position 548 of the “B” Record. This will cause media to be returned.
15. Failure to identify the rollover contributions and/or fair market value of the account for Form 5498
Rollover contributions (Amount Code 2 of the “A” Record) and/or fair market value of the account (Amount Code 4 of the “A”
Record) for Form 5498 must be identified as an IRA (position 547 of the “B” Record), SEP (position 548 of the “B” Record), SIMPLE (position 549 of the “B” Record), Roth IRA (position 550 of the “B” Record), Roth Conversion (position 551 of the “B”
Record), or Education IRA (position 552 of the “B” Record).
16. Media received without data
Before media is shipped, transmitters/filers should verify the presence of Form 1099 information returns on the media before sending the shipment to IRS/MCC.

Part B. Magnetic Media Specifications
Sec. 1. General
.01 The specifications contained in this part of the revenue procedure define the required format and contents of the records to be
included in the magnetic media/electronic file.
.02 A provision is made in the “B” Records for entries which are optional. If the field is not utilized, enter blanks to maintain a
fixed record length of 750 positions. Each field description explains the intended use of specific field positions.
.03 Transmitters should be consistent in the use of recording codes and density on files. If the media does not meet these specifications, it will be returned to the transmitter for replacement. Filers are encouraged to submit a test prior to submitting the actual
file. Contact IRS/MCC for further information at 304-263-8700.

1998–21 I.R.B.

29

May 26, 1998

Sec. 2. Tape Specifications
.01 IRS/MCC can process most magnetic tape files if the following specifications are followed:
(a) 9 track EBCDIC (Extended Binary Coded Decimal Interchange Code) with:
(1) Odd parity.
(2) A density of 1600 or 6250 CPI.
(3) If transmitters use UNISYS Series 1100, they must submit an interchange tape.
(b) 9 track ASCII (American Standard Coded Information Interchange) with:
(1) Odd parity.
(2) A density of 1600 or 6250 CPI.
Transmitters should be consistent in the use of recording codes and density on files.
.02 All compatible tape files must have the following characteristics: Type of tape - 1⁄2-inch (12.7 mm) wide, computer-grade
magnetic tape on reels of up to 2,400 feet (731.52 m) within the following specifications:
(a) Tape thickness: 1.0 or 1.5 mils and
(b) Reel diameter: 10 1⁄2-inch (26.67 cm), 8 1⁄2-inch (21.59 cm), 7-inch (17.78 cm), or 6-inch.
.03 The tape records defined in this revenue procedure may be blocked subject to the following:
(a) A block must not exceed 32,250 tape positions.
(b) If the use of blocked records would result in a short block, all remaining positions of the block must be filled with 9s; however, the last block of the file may be filled with 9s or truncated. Do not pad a block with blanks.
(c) All records, except the header and trailer labels, may be blocked or unblocked. A record may not contain any control fields
or block descriptor fields which describe the length of the block or the logical records within the block. The number of logical records within a block (the blocking factor) must be constant in every block with the exception of the last block which
may be shorter (see item (b) above). The block length must be evenly divisible by 750.
(d) Records may not span blocks.
.04 Labeled or unlabeled tapes may be submitted.
.05 For the purposes of this revenue procedure the following must be used:
Tape Mark:
(a) Signifies the physical end of the recording on tape.
(b) For even parity, use BCD configuration 001111 (8421).
(c) May follow the header label and precede and/or follow the trailer label.
.06 IRS/MCC can only read one data file on a tape. A data file is a group of records which may or may not begin with a tapemark,
but must end with a trailer label. Any data beyond the trailer label cannot be read by IRS programs.

Sec. 3. Tape Cartridge Specifications
.01 In most instances, IRS/MCC can process tape cartridges that meet the following specifications:
(a) Must be IBM 3480, 3490, 3490E, or AS400 compatible.
(b) Must meet American National Standard Institute (ANSI) standards, and have the following characteristics:
(1) Tape cartridges will be 1⁄2-inch tape contained in plastic cartridges which are approximately 4-inches by 5-inches by 1inch in dimension.
(2) Magnetic tape will be chromium dioxide particle based 1⁄2-inch tape.
(3) Cartridges must be 18-track or 36-track parallel (See Note).
(4) Cartridges will contain 37,871 CPI or 75,742 CPI (characters per inch).
(5) Mode will be full function.
(6) The data may be compressed using EDRC (Memorex) or IDRC (IBM) compression.
(7) Either EBCDIC (Extended Binary Coded Decimal Interchange Code) or ASCII (American Standard Coded Information Interchange) may be used.
.02 The tape cartridge records defined in this revenue procedure may be blocked subject to the following:
(a) A block must not exceed 32,250 tape positions.
(b) If the use of blocked records would result in a short block, all remaining positions of the block must be filled with 9s; however, the last block of the file may be filled with 9s or truncated. Do not pad a block with blanks.
(c) All records, except the header and trailer labels, may be blocked or unblocked. A record may not contain any control fields
or block descriptor fields which describe the length of the block or the logical records within the block. The number of logical records within a block (the blocking factor) must be constant in every block with the exception of the last block which
may be shorter (see item (b) above). The block length must be evenly divisible by 750.
(d) Records may not span blocks.
.03 Tape cartridges may be labeled or unlabeled.
.04 For the purposes of this revenue procedure, the following must be used:

May 26, 1998

30

1998–21 I.R.B.

Tape Mark:
(a) Signifies the physical end of the recording on tape.
(b) For even parity, use BCD configuration 001111 (8421).
(c) May follow the header label and precede and/or follow the trailer label.
☛ Note: Filers should indicate on the external media label and transmittal Form 4804 whether the cartridge is 36-track or
18-track.

Sec. 4. 8mm, 4mm, and Quarter Inch Cartridge Specifications
.01 In most instances, IRS/MCC can process 8mm tape cartridges that meet the following specifications:
(a) Must meet American National Standard Institute (ANSI) standards, and have the following characteristics:
(1) Created from an AS400 operating system only.
(2) 8mm (.315-inch) tape cartridges will be 2 1⁄2-inch by 3 3⁄4-inch.
(3) The 8mm tape cartridges must meet the following specifications:
Tracks
1
1

Density
20 (43245 BPI)
21 (45434 BPI)

Capacity
2.5 Gb (10Gb)
5 Gb (20 Gb)

(4) Mode will be full function.
(5) Compressed data is not acceptable.
(6) Either EBCDIC (Extended Binary Coded Decimal Interchange Code) or ASCII (American Standard Coded Information Interchange) may be used. However, IRS/MCC encourages the use of EBCDIC. This information must appear on
the external media label affixed to the cartridge.
(7) A file may consist of more than one cartridge; however, no more than 250,000 documents may be transmitted per file or
per cartridge. The filename, for example; IRSTAX, will contain a three digit extension. The extension will indicate the
sequence of the cartridge within the file (e.g., 1 of 3, 2 of 3, and 3 of 3) and would appear in the header label
IRSTAX.001, IRSTAX.002, and IRSTAX.003 on each cartridge of the file. The end of transmission “F” Record
should be placed only on the last cartridge for files containing multiple cartridges.
.02 The 8mm (.315-inch) tape cartridge records defined in this revenue procedure may be blocked subject to the following:
(a) A block must not exceed 32,250 tape positions.
(b) If the use of blocked records would result in a short block, all remaining positions of the block must be filled with 9’s; however, the last block of the file may be filled with 9’s or truncated. Do not pad a block with blanks.
(c) All records, except the header and trailer labels, may be blocked or unblocked. A record may not contain any control fields
or block descriptor fields which describe the length of the block or the logical records within the block. The number of logical records within a block (the blocking factor) must be constant in every block with the exception of the last block which
may be shorter (see item (b) above). The block length must be evenly divisible by 750.
(d) Various COPY commands have been successful; however, the SAVE OBJECT COMMAND is not acceptable.
(e) Extraneous data following the “F” Record will result in media being returned for replacement.
(f) Records may not span blocks.
(g) No more than 250,000 documents per cartridge and per file.
.03 For faster processing, IRS/MCC encourages transmitters to use header labeled cartridges. IRSTAX may be used as a suggested filename.
.04 For the purposes of this revenue procedure, the following must be used:
Tape Mark:
(a) Signifies the physical end of the recording on tape.
(b) For even parity, use BCD configuration 001111 (8421).
(c) May follow the header label and precede and/or follow the trailer label.
.05 If extraneous data follows the End of Transmission “F” Record, the file will be returned for replacement. Therefore,
IRS/MCC encourages transmitters to use blank tape cartridges, rather than cartridges previously used, in the preparation of data
when submitting information returns.
.06 IRS/MCC can only read one data file on a tape. A data file is a group of records which may or may not begin with a tapemark,
but must end with a trailer label. Any data beyond the trailer label cannot be read by IRS programs.
.07 4mm (.157-inch) cassettes are now acceptable with the following specifications:
(a) 4 mm cassettes will be 2 1⁄4-inch by 3-inch.
(b) The tracks are 1 (one).
(c) The density is 19 (61000 BPI).
(d) The typical capacity is DDS (DAT data storage) at 1.3 Gb or 2 Gb, or DDS-2 at 4Gb.

1998–21 I.R.B.

31

May 26, 1998

(e) The general specifications for 8mm cartridges will also apply to the 4 mm cassettes.
.08 Various Quarter Inch Cartridges (QIC) (1⁄4-inch) are also acceptable.
(a) QIC cartridges will be 4” by 6”.
(b) QIC cartridges must meet the following specifications:
Size
QIC–11
QIC–24
QIC–120
QIC–150
QIC–320
QIC–525
QIC–1000
QIC–1350
QIC–2Gb

Tracks
4/5
8/9
15
18
26
26
30
30
42

Density
4 (8000 BPI)
5 (8000 BPI)
15 (10000 BPI)
16 (10000 BPI)
17 (16000 BPI)
17 (16000 BPI)
21 (36000 BPI)
18 (51667 BPI)
34 (40640 BPI)

Capacity
22Mb or 30Mb
45Mb or 60Mb
120Mb or 200Mb
150Mb or 250Mb
320Mb
525Mb
1Gb
1.3Gb
2Gb

(c) The general specifications that apply to 8mm cartridges will also apply to QIC cartridges.

Sec. 5. 5 1⁄4-inch and 3 1⁄2-inch Diskette Specifications
IRS/MCC will discontinue processing 5 1⁄4 inch diskettes in the future. Filers who use 5 1⁄4 inch diskettes are encouraged to
explore other methods by which to submit information returns magnetically/electronically.
.01 To be compatible, a diskette file must meet the following specifications:
(a) 5 1⁄4- or 3 1⁄2-inches in diameter.
(b) IRS recommends data be recorded in standard ASCII code. However, if data is recorded using EBCDIC, a 5 1⁄4-inch
diskette must be used and a 1024 byte sector would be valid for System 36 or AS400.
The following command should be used to format the diskette into a 1024 byte sector:
INIT IRSTAX,,FORMAT2
The save commands are as follows:
(1) The save command for System 36 is SAVE.
(2) The save command for AS400 is SAV36F.
(c) Records must be a fixed length of 750 bytes per record.
(d) Delimiter character commas (,) must not be used.
(e) Positions 749 and 750 of each record have been reserved for use as carriage return/line feed (cr/lf) characters, if applicable.
(f) Filename of IRSTAX must be used. Do not enter any other data in this field. If a file will consist of more than one diskette,
the filename IRSTAX will contain a three-digit extension. This extension will indicate the sequence of the diskettes within
the file. For example, if the file consists of three diskettes, the first diskette will be named IRSTAX.001, the second will be
IRSTAX.002, and the third will be IRSTAX.003. The first diskette, IRSTAX.001 will begin with a “T” Record and the
third diskette, IRSTAX.003 will have an “F” Record at the end of the file.
(g) A diskette will not contain multiple files. (See Part A, Section 17 for definition of a file.)
(h) Failure to comply with instructions will result in media being returned for replacement.
(i) Diskettes must meet one of the following specifications:
Capacity
1.44 mb
1.44 mb
1.2 mb

Tracks
96tpi
135tpi
96tpi

Sides/Density
hd
hd
hd

Sector Size
512
512
512

.02 IRS/MCC encourages transmitters to use blank or currently formatted diskettes when preparing files. If extraneous data follows the End of Transmission “F” Record, the file will be returned for replacement.
.03 IRS/MCC prefers that 5 1⁄4- and 3 1⁄2-inch diskettes be created using MS–DOS; however, diskettes created using other operating systems may be acceptable (See Notes). IRS/MCC has equipment that can convert diskettes created under most operating systems to the appropriate MS–DOS format. IRS/MCC strongly recommends that transmitters submit a test file for 5 1⁄4- and 3 1⁄2-inch
diskettes, especially if their data was not created using MS–DOS.
Notes: IRS/MCC will discontinue processing 5 1⁄4-inch diskettes in the future.
IRS will discontinue processing non-MS–DOS compatible diskettes in the future.
3 1⁄2-inch diskettes created on a System 36 or AS400 are not acceptable.
.04 Transmitters should check media for viruses before submitting it to IRS/MCC.

May 26, 1998

32

1998–21 I.R.B.

Sec. 6. Transmitter “T” Record - General Field Descriptions
.01 The Transmitter “T” Record identifies the entity transmitting the magnetic media/electronic file and contains information
which is supplied on the Form 4804, Transmittal of Information Returns Magnetically/Electronically. The “T” Record has been created to facilitate current magnetic/ electronic processing of information returns at IRS/MCC with an eventual goal of paperless filing.
.02 The Transmitter “T” Record is the first record on each file and is followed by a Payer “A” Record. See Part A, Sec. 17, Definition of Terms for the definition of file. A file will be returned to the transmitter for replacement if the “T” Record is not present.
For transmitters with multiple diskettes, refer to Sec. 5. 5 1⁄4 -inch and 3 1⁄2- inch Diskette Specifications.
.03 The Transmitter “T” Record requires the total number of Payees (“B

[Text truncated at 120,000 characters. The full text is on the page linked above.]

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Airs%3A762a403b0b8a8a07. Public record. Not legal advice.