# Bulletin No. 2023–43 > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/agency%3Airs%3A7bec9e955f50357f ## Record - **Collection:** Agency decision - **Document type:** Agency decision ## Text HIGHLIGHTS OF THIS ISSUE   Bulletin No. 2023–43 October 23, 2023 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. ADMINISTRATIVE INCOME TAX REG-106203-23, page 1143. REG-113064-23, page 1144. Tax return preparers must use a preparer tax identification number (PTIN) on returns they prepare for compensation. The PTIN must be renewed annually. The IRS charges a user fee on each PTIN application or application for renewal to recover costs for issuing and renewing PTINs. The IRS has recalculated the PTIN user fee and determined the full cost for each application or application for renewal is $11, plus an amount payable directly to a third-party contractor. These regulations therefore propose to decrease the current PTIN user fee of $21 to $11, plus an amount payable directly to the third-party contractor. REG-106203-23. Published October 4, 2023. Rev. Proc. 2023-28, page 1092. General Rules and Specifications for Substitute Forms and Schedules This procedure provides guidelines and general requirements for the development, printing, and approval of the 2023 substitute tax forms. This procedure will be reproduced as the next revision of Publication 1167. Rev. Proc. 2022-31 is superseded. T.D. 9980, page 1087. Tax return preparers must use a preparer tax identification number (PTIN) on returns they prepare for compensation. The PTIN must be renewed annually. The IRS charges a user fee on each PTIN application or application for renewal to recover costs for issuing and renewing PTINs. The IRS has recalculated the PTIN user fee and determined the full cost for each application or application for renewal is $11, plus an amount payable directly to a third-party contractor. These interim final regulations therefore decrease the current PTIN user fee of $21 to $11, plus an amount payable directly to the third-party contractor. TD 9980. Published October 4, 2023. Finding Lists begin on page ii. These proposed regulations would provide guidance for elections to transfer clean vehicle credits under §§ 30D(g) and 25E(f), as established by the Inflation Reduction Act of 2022 (IRA). The proposed regulations provide guidance for taxpayers intending to transfer the previously-owned clean vehicle credit and the new clean vehicle credit to dealers who are entities eligible to receive advance payments of either credit. The proposed regulations also provide guidance for dealers to become eligible entities to receive advance payments of new or previously-owned clean vehicle credits. The proposed regulations also provide guidance for the recapturing of the credit under § 30D and 25E. Finally, proposed § 1.6213-2 defines the omission of a correct VIN for purposes of § 6213. Rev. Proc. 2023-33, page 1135. This revenue procedure sets forth the procedures under §§ 30D(g) and 25E(f) of the Code for the transfer of the clean vehicle credit and previously-owned clean vehicle credit from the taxpayer to an eligible entity, including the procedures for dealer registration with the Internal Revenue Service (IRS), the procedures for the suspension and revocation of that registration, and the establishment of an advance payments program to registered dealers. This revenue procedure also supersedes sections 5.01 and 6.03 of Rev. Proc. 2022-42, 2022-52 I.R.B. 565, providing new information for the timing and manner of submission of seller reports, respectively; as well as sections 6.01 and 6.02 of Rev. Proc. 2022-42, providing updated information on submission of written agreements by manufacturers to the IRS to be considered qualified manufacturers, as well as the method of submission of monthly reports by qualified manufacturers. The IRS Mission Provide America’s taxpayers top-quality service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all. Introduction The Internal Revenue Bulletin is the authoritative instrument of the Commissioner of Internal Revenue for announcing official rulings and procedures of the Internal Revenue Service and for publishing Treasury Decisions, Executive Orders, Tax Conventions, legislation, court decisions, and other items of general interest. It is published weekly. It is the policy of the Service to publish in the Bulletin all substantive rulings necessary to promote a uniform application of the tax laws, including all rulings that supersede, revoke, modify, or amend any of those previously published in the Bulletin. All published rulings apply retroactively unless otherwise indicated. Procedures relating solely to matters of internal management are not published; however, statements of internal practices and procedures that affect the rights and duties of taxpayers are published. Revenue rulings represent the conclusions of the Service on the application of the law to the pivotal facts stated in the revenue ruling. In those based on positions taken in rulings to taxpayers or technical advice to Service field offices, identifying details and information of a confidential nature are deleted to prevent unwarranted invasions of privacy and to comply with statutory requirements. Rulings and procedures reported in the Bulletin do not have the force and effect of Treasury Department Regulations, but they may be used as precedents. Unpublished rulings will not be relied on, used, or cited as precedents by Service personnel in the disposition of other cases. In applying published rulings and procedures, the effect of subsequent legislation, regulations, court decisions, rulings, and procedures must be considered, and Service personnel and others concerned are cautioned against reaching the same conclusions in other cases unless the facts and circumstances are substantially the same. The Bulletin is divided into four parts as follows: Part I.—1986 Code. This part includes rulings and decisions based on provisions of the Internal Revenue Code of 1986. Part II.—Treaties and Tax Legislation. This part is divided into two subparts as follows: Subpart A, Tax Conventions and Other Related Items, and Subpart B, Legislation and Related Committee Reports. Part III.—Administrative, Procedural, and Miscellaneous. To the extent practicable, pertinent cross references to these subjects are contained in the other Parts and Subparts. Also included in this part are Bank Secrecy Act Administrative Rulings. Bank Secrecy Act Administrative Rulings are issued by the Department of the Treasury’s Office of the Assistant Secretary (Enforcement). Part IV.—Items of General Interest. This part includes notices of proposed rulemakings, disbarment and suspension lists, and announcements. The last 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 last Bulletin of each semiannual period. 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. October 23, 2023  Bulletin No. 2023–43 Part I 26 CFR 300.11: Fee for obtaining a preparer tax identification number T.D. 9980 DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 300 Preparer Tax Identification Number (PTIN) User Fee Update AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Interim Final Rule. SUMMARY: This document contains interim final regulations relating to the imposition of certain user fees on tax return preparers. These regulations reduce the amount of the user fee to apply for or renew a preparer tax identification number (PTIN) and affect individuals who apply for or renew a PTIN. The Independent Offices Appropriation Act of 1952 authorizes the charging of user fees. The text of the interim final regulations also serves as the text of the proposed regulations set forth in the notice of proposed rulemaking on this subject in this issue in the Proposed Rules section of this edition of the Federal Register. DATES: Effective date: These regulations are effective on October 19, 2023. Applicability date: For date of applicability, see paragraph (d) of these interim final regulations. FOR FURTHER INFORMATION CONTACT: Concerning the interim final regulations, Jamie Song at (202) 317-6845; concerning cost methodology, Michael A. Weber at (202) 803-9738 (not toll-free numbers). Bulletin No. 2023–43 SUPPLEMENTARY INFORMATION: This document contains interim final amendments to 26 CFR part 300 regarding user fees. other number prescribed by the IRS in forms, instructions, or other appropriate guidance. Those regulations require a tax return preparer who prepares or who assists in preparing all or substantially all of a tax return or claim for refund after December 31, 2010, to have a PTIN. A. User Fee Authority C. PTIN User Fee The Independent Offices Appropriation Act of 1952 (IOAA), which is codified at 31 U.S.C. 9701, authorizes agencies to prescribe regulations that establish user fees for services provided by the agency. The IOAA provides that regulations implementing user fees are subject to policies prescribed by the President; these policies are set forth in the Office of Management and Budget Circular A-25, 58 FR 38142 (July 15, 1993) (OMB Circular A-25). Under OMB Circular A-25, Federal agencies that provide services that confer benefits on identifiable recipients are to establish user fees that recover the full cost of providing the service. An agency that seeks to impose a user fee for government-provided services must calculate the full cost of providing those services. In general, a user fee should be set at an amount that allows the agency to recover the direct and indirect costs of providing the service, unless the Office of Management and Budget (OMB) grants an exception. OMB Circular A-25 provides that agencies are to review user fees biennially and update them as necessary. Final regulations (TD 9503) published in the Federal Register (75 FR 60316) on September 30, 2010, established a $50 user fee to apply for or renew a PTIN, based on a 2010 Cost Model. In addition, a $14.25 fee for a new application and a $13 fee for an application for renewal was payable directly to a third-party contractor. In 2013, the IRS conducted a biennial review of the PTIN user fee and issued a new Cost Model that estimated an increase of the PTIN user fee, to $54. However, the IRS determined to keep the fee at $50 for the next two years. In 2015, the IRS conducted a biennial review of the PTIN user fee and issued a new Cost Model, which determined that the full cost of administering the PTIN program going forward was reduced from $50 to $33 per application or application for renewal, plus a $17 fee per application or application for renewal payable directly to a third-party contractor. Final regulations (TD 9781) published in the Federal Register (81 FR 52766) on August 10, 2016, superseded and adopted temporary regulations (TD 9742) published in the Federal Register (80 FR 66792) on October 30, 2015, and established the $33 annual user fee to apply for or renew a PTIN, plus $17 per application or application for renewal payable directly to a third-party contractor. In 2017, the IRS again conducted a biennial review of the PTIN user fee and issued a new Cost Model, which determined that the amount of the fee going forward should be reduced to $31 per application or application for renewal, plus an amount payable directly to a thirdparty contractor. However, on June 1, 2017, before a notice of proposed rulemaking proposing to reduce the amount of the PTIN user fee was issued, the IRS was enjoined from charging a PTIN user fee. Background B. PTIN Requirement Section 6109(a)(4) of the Internal Revenue Code (Code) authorizes the Secretary of the Treasury or her delegate to prescribe regulations for the inclusion of a tax return preparer’s identifying number on a return, statement, or other document required to be filed with the IRS. On September 30, 2010, the Treasury Department and the IRS published final regulations (TD 9501) under section 6109 in the Federal Register (75 FR 60309) to provide that, for returns or claims for refund filed after December 31, 2010, the identifying number of a tax return preparer is the individual’s PTIN or such 1087 October 23, 2023 In Steele v. United States, 260 F. Supp. 3d 52 (D.D.C. 2017), the United States District Court for the District of Columbia concluded that the Treasury Department and the IRS lacked the statutory authority to charge a PTIN user fee and enjoined the IRS from charging a PTIN user fee. See Steele, 2017 WL 3621747 (D.D.C. July 10, 2017) (final judgment and permanent injunction). The government filed an appeal and on March 1, 2019, the United States Court of Appeals for the District of Columbia Circuit reversed the district court’s decision and lifted the injunction against charging the PTIN user fee. See Montrois v. United States, 916 F.3d 1056 (D.C. Cir. 2019) (holding that a PTIN provides tax return preparers a specific benefit by allowing them to provide an identifying number that is not a social security number on returns they prepare and stating that the permissible amount of the fee would be the same regardless of whether the specific benefit was instead the ability to prepare tax returns for compensation). The case was remanded to the United States District Court for the District of Columbia to determine whether the fee amounts were excessive. Id. at 1068. In 2019, the IRS again conducted a biennial review of the PTIN user fee and issued a new Cost Model, which determined that the amount of the fee going forward should be reduced to $21 per application or application for renewal, plus a $14.95 fee per application or application for renewal payable directly to a thirdparty contractor. Final regulations (TD 9903) published in the Federal Register (85 FR 43433) on July 17, 2020, adopted the proposed regulations (REG-11713817) published in the Federal Register (85 FR 21126) on April 16, 2020, and established the $21 annual user fee to apply for or renew a PTIN, plus $14.95 per application or application for renewal payable directly to a third-party contractor. In Steele v. United States, No. 1:14-cv-1523-RCL, --- F. Supp. 3d ----, 2023 WL 2139722 (Feb. 21, 2023), the United States District Court for the District of Columbia on remand considered whether the fee amounts were excessive under the IOAA. Explaining that while an agency may charge only the reasonable cost incurred to provide a service, or the value of the service to the recipient, whichever is less, the district court allowed that the activities charged for need only be “reasonably related” to the cost to the agency and the value to the recipient, and the amount may include both “direct and indirect costs” associated with the service provided. 2023 WL 2139722, at *7. The court further noted that where an activity produces an independent public benefit, the fee that would otherwise be charged must be reduced by that portion of the costs attributable to the public benefit. Id. The district court concluded that the PTIN fees for fiscal years (FYs) 2011 through 2017 were excessive to the extent they were based on: (1) the activities already conceded by the government in the case;1 (2) any compliance activities other than direct and indirect costs of investigating ghost preparers who do not list their PTINs on returns they prepared for compensation as required by law, handling complaints regarding improper use of a PTIN, use of a compromised PTIN, or use of a PTIN obtained through identity theft, and composing the data to refer to those specific types of complaints to other IRS business units; (3) any suitability activities; (4) any support activities, other than those for the provision of PTINs and maintenance of the PTIN database, that facilitated provision of an independent benefit to the agency and the public; and (5) any activities of the third-party contractor, other than those related to the issuance, renewal, and maintenance of PTINs, that facilitated provision of an independent benefit to the agency and the public. Id. at *19. In accordance with the biennial review requirement in OMB Circular A-25 and taking into account the district court’s February 2023 memorandum opinion in Steele, the IRS has issued a new Cost Model that re-determines costs that the government continues to incur for providing PTINs and administering the PTIN program, and re-calculates the amount of the user fee as $11 per application or application for renewal, plus a $8.75 fee per application or application for renewal payable directly to a third-party contractor. The amount payable directly to the thirdparty contractor also takes into account certain costs that were addressed by the district court’s February 2023 memorandum opinion in Steele. Subsequently, the IRS entered into a modified contract that allows the government to pay those costs rather than the individuals who apply for or renew a PTIN. The government is authorized to charge a PTIN user fee under the IOAA because, in exchange for the fee, it provides a service by issuing and maintaining PTINs, which provide tax return preparers a specific benefit by allowing them to provide an identifying number that is not a social security number on returns and claims for refund and to prepare returns and claims for refund for compensation. OMB Circular A-25 states that user fees should be collected in advance of or simultaneously with the provision of a service. The PTIN user fee is collected when tax return preparers apply for or renew their PTINs during the application season, which begins annually in October. Explanation of Provisions The IRS follows generally accepted accounting principles (GAAP) in calculating the full cost of administering PTIN applications and renewals. The Federal Accounting Standards Advisory Board (FASAB) is the body that establishes GAAP that apply for Federal reporting entities, such as the IRS. FASAB publishes the FASAB Handbook of 1 The government previously conceded $26,576,661, $26,623,420, and $25,685,247 for amounts collected in FY 2011, FY 2012, and FY 2013, respectively, which related to certain communications, compliance, Office of Professional Responsibility (OPR), and operations support activities; $8,737,123 and $9,010,458 for amounts collected in FY 2014 and FY 2015, respectively, which related to certain communications, Office of the Director, Strategy and Finance, suitability, compliance and complaint referrals, competency and standards, continuing education, OPR, enrolled agent and enrolled retirement plan agent department, and contractor processing activities; and $6,904,345 and $6,784,762 for amounts collected in FY 2016 and FY 2017, respectively, which related to certain communications, Office of the Director, Strategy and Finance, suitability, compliance and complaint referrals, OPR, enrolled agent and enrolled retirement plan agent department, and contractor processing activities. October 23, 2023 1088 Bulletin No. 2023–43 2. Overhead The IRS used projections for FYs 2024 through 2026 to determine the direct and indirect costs associated with the PTIN program that are includible in the PTIN user fee calculation taking into account the district court’s February 2023 memorandum opinion in Steele. Direct costs are incurred by the Return Preparer Office and include staffing and contract-related costs for activities, processes, and procedures related to administering the PTIN program. Staffing costs included in the PTIN user fee calculation relate to the compliance activities of investigating ghost preparers; handling complaints regarding the improper use of a PTIN, use of a compromised PTIN, or use of a PTIN obtained through identity theft; and composing the data to refer those specific types of complaints to other IRS business units. The PTIN user fee also takes into account indirect costs for support activities related to the provision of PTINs and maintenance of the PTIN database. In accordance with Steele, the PTIN user fee calculation does not take into account compliance costs other than those described in this paragraph, costs incurred by the Suitability Department, support costs other than those described in this paragraph, and costs previously conceded by the government in Steele, as detailed earlier in this preamble. The labor and benefits for the work performed related to the PTIN program is projected to be $16,536,827 in total over FYs 2024 through 2026. In addition to labor and benefits and overhead expenses, the IRS projects incurring travel, training, and supplies costs of $115,000 in each of FYs 2024 through 2026. The total labor and benefits, travel, training, and supplies, and overhead expenses projected are shown below: Expense Labor and benefits Travel, training, and supplies Overhead (62.5 percent) FY 2024 $5,364,566 $115,000 $3,424,729 FY 2026 $5,661,322 $115,000 $3,610,201 The total cost for FYs 2024 through 2026 are therefore projected to be $27,432,969. The number of users is based on FY 2022 numbers adjusted by a projected increase in applications over the next three FYs. Dividing this total cost by the projected population of users for FYs 2024 through 2026 results in a cost per application of $11 as shown below: Federal Accounting Standards and Other Pronouncements, as Amended (Current Handbook), available at https://files.fasab. gov/pdffiles/2022_%20FASAB_%20 Handbook.pdf. The Current Handbook includes the Statement of Federal Financial Accounting Standards (SFFAS) No. 4: Managerial Cost Accounting Standards and Concepts. SFFAS No. 4 establishes internal costing standards to accurately measure and manage the full cost of Federal programs, and the methodology below is in accordance with SFFAS No. 4. 1. Cost Estimation of Direct Labor The IRS uses various cost-measurement techniques to estimate the cost attributable to the program. These techniques include using various timekeeping systems to measure the time required to accomplish activities, or using information provided by subject-matter experts on the time devoted to a program. To determine the labor and benefits cost incurred to provide the service of providing a PTIN, the IRS estimated the number of full-time employees required to conduct activities related to the costs of issuing and renewing PTINs. The number of full-time employees is based on both current employment numbers and future hiring estimates. When the indirect cost of a service or activity is not specifically identified from the cost accounting system, an overhead rate is added to the identifiable direct cost to arrive at full cost. Bulletin No. 2023–43 Overhead is an indirect cost of operating an organization that is not specifically identifiable with an activity. Overhead includes costs of resources that are jointly or commonly consumed by one or more organizational unit’s activities but are not specifically identifiable to a single activity. These costs can include: • Financial, human resources, information technology, and general management and administrative. • Rent and building. • Procurement, other services, and consulting. • Property, plant, and equipment. • Publication services. • Research, analytical, statistical, library and legal services. To calculate the overhead allocable to a service, the IRS applies an overhead rate to the identified direct labor and benefits and other direct costs. The overhead rate is the ratio of the IRS’s indirect labor, benefits, and non-labor costs of business divisions that do not interact with taxpayers to the labor and benefits costs of business divisions that interact with taxpayers. The IRS calculates an overhead rate annually. For the FY 2023 user fee review, an overhead rate of 62.5 percent was used. 3. Calculation of PTIN User Fee FY 2025 $5,510,939 $115,000 $3,516,212 Total Costs Number of Applications ÷ Cost Per Application 1089 $27,432,969 2,542,665 $10.79 Total $16,536,827 $345,000 $10,551,142 Taking into account the full amount of these costs, the amount of the PTIN user fee per application or application for renewal is $11. Costs related to a third-party contractor’s activities for the issuance, renewal, and maintenance of PTINs, such as October 23, 2023 processing applications and operating a call center, are included in the PTIN user fee calculation, in accordance with Steele, which will be set at $8.75 per application or application for renewal, in addition to the amount charged by the government. The third-party contractor was chosen through a competitive bidding process. The amount of the thirdparty contractor portion may change in 2026 when the contract expires and will be re-computed. Special Analyses I. Regulatory Planning and Review The OMB’s Office of Information and Regulatory Analysis has determined that these regulations are not significant and are not subject to review under section 6(b) of Executive Order 12866. II. Regulatory Flexibility Act Pursuant to the Regulatory Flexibility Act (5 U.S.C. chapter 6), it is hereby certified that these interim final regulations will not have a significant economic impact on a substantial number of small entities. These regulations affect all individuals who prepare or assist in preparing all or substantially all of a tax return or claim for refund for compensation. Only individuals, not businesses, can have a PTIN. Thus, the economic impact of these regulations on any small entity generally will be a result of an individual tax return preparer who is required to have a PTIN owning a small business or a small business otherwise employing an individual tax return preparer who is required to have a PTIN. The Treasury Department and the IRS estimate that approximately 847,555 individuals will apply annually for an initial or renewal PTIN. Although these regulations will likely affect a substantial number of small entities, the economic impact on those entities is not significant. These regulations will establish an $11 fee per application or application for renewal (plus $8.75 payable directly to the third-party October 23, 2023 contractor), which is a reduction from the previously established fee and will not have a significant economic impact on a small entity. Accordingly, the rule is not expected to have a significant economic impact on a substantial number of small entities, and a regulatory flexibility analysis is not required. III. Unfunded Mandates Reform Act Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) requires that agencies assess anticipated costs and benefits and take certain other actions before issuing a final rule that includes any Federal mandate that may result in expenditures in any one year by a State, local, or Tribal government, in the aggregate, or by the private sector, of $100 million in 1995 dollars, updated annually for inflation. This rule does not include any Federal mandate that may result in expenditures by State, local, or Tribal governments, or by the private sector in excess of that threshold. IV. Executive Order 13132: Federalism Executive Order 13132 (Federalism) prohibits an agency from publishing any rule that has federalism implications if the rule either imposes substantial, direct compliance costs on State and local governments, and is not required by statute, or preempts State law, unless the agency meets the consultation and funding requirements of section 6 of the Executive order. These interim final regulations do not have federalism implications and do not impose substantial direct compliance costs on State and local governments or preempt State law within the meaning of the Executive order. V. Good Cause The annual PTIN application and renewal period for the 2024 filing season will begin shortly. It would be unnecessary and contrary to the public interest for the IRS to continue to charge the current, higher user fee pending public comment after the IRS has determined pursuant 1090 to the biennial review conducted under OMB Circular A-25 that the PTIN user fee should be reduced going forward. To enable the reduced fee amount to be in effect for PTINs issued or renewed by tax return preparers preparing returns or claims for refund in 2024, the Treasury Department and the IRS find that there is good cause to dispense with (1) notice and public comment pursuant to 5 U.S.C. 553(b) and (c) and (2) a delayed effective date pursuant to 5 U.S.C. 553(d). The Treasury Department and the IRS will consider public comments submitted in response to the cross-referenced notice of proposed rulemaking published in the Proposed Rules section of this issue of the Federal Register and will promulgate a final rule after considering those comments. VI. Submission to Small Business Administration Pursuant to section 7805(f) of the Code, this Treasury decision has been submitted to the Chief Counsel for the Office of Advocacy of the Small Business Administration for comment on its impact on small business. VII. Congressional Review Act Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), the Office of Information and Regulatory Affairs designated this rule as not a major rule, as defined by 5 U.S.C. 804(2). Drafting Information The principal author of these regulations is Jamie Song, Office of the Associate Chief Counsel (Procedure and Administration). Other personnel from the Treasury Department and the IRS participated in the development of the regulations. List of Subjects in 26 CFR Part 300 Estate taxes, Excise taxes, Fees, Gift taxes, Income taxes, Reporting and recordkeeping requirements. Bulletin No. 2023–43 Adoption of Amendments to the Regulations §300.11 Fee for obtaining a preparer tax identification number. Accordingly, 26 CFR part 300 is amended as follows: ***** (b) Fee. The fee to apply for or renew a preparer tax identification number is $11 per year and is in addition to the fee charged by the contractor. ***** (d) Applicability date. This section applies to applications for or renewal of a preparer tax identification number filed on or after October 19, 2023. PART 300—USER FEES Paragraph 1. The authority citation for part 300 continues to read in part as follows: Authority: 31 U.S.C. 9701. Par. 2. Section 300.11 is amended by revising paragraphs (b) and (d) to read as follows: Bulletin No. 2023–43 1091 Douglas W. O’Donnell, Deputy Commissioner for Services and Enforcement. Approved: September 25, 2023. Lily Batchelder, Assistant Secretary of the Treasury (Tax Policy). (Filed by the Office of the Federal Register September 29, 2023, 4:15 p.m., and published in the issue of the Federal Register for October 4, 2023, 88 FR 68456) October 23, 2023 Part III NOTE. This revenue procedure will be reproduced as the next revision of IRS Publication 1167, General Rules and Specifications for Substitute Forms and Schedules. Rev. Proc. 2023-28 TABLE OF CONTENTS Part 1 – INTRODUCTION TO SUBSTITUTE FORMS Section 1.1 – Overview of Revenue Procedure 2023-28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1093 Section 1.2 – IRS Contacts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1094 Section 1.3 – What’s New. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1095 Section 1.4 – Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1095 Section 1.5 – Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1097 Part 2 – GENERAL GUIDELINES FOR SUBMISSIONS AND APPROVALS Section 2.1 – General Specifications for Approval. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1098 Section 2.2 – Highlights of Permitted Changes and Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1100 Section 2.3 – Vouchers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1100 Section 2.4 – Restrictions on Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1103 Section 2.5 – Guidelines for Obtaining IRS Approval. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1103 Section 2.6 – Office of Management and Budget (OMB) Requirements for All Substitute Forms. . . . . . . . . . . . . . . . . . . . 1106 Part 3 – PHYSICAL ASPECTS AND REQUIREMENTS Section 3.1 – General Guidelines for Substitute Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1107 Section 3.2 – Paper. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1109 Section 3.3 – Printing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1110 Section 3.4 – Margins. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1112 Section 3.5 – Miscellaneous Information for Substitute Forms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1112 Part 4 – ADDITIONAL RESOURCES Section 4.1 – Guidance From Other Revenue Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1113 Section 4.2 – Electronic Tax Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1113 Part 5 – REQUIREMENTS FOR SPECIFIC TAX RETURNS Section 5.1 – Tax Returns (Forms 1040, 1040-SR, 1120, etc.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1114 Section 5.2 – Changes Permitted to Graphics (Form 1040 or 1040-SR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1115 Part 6 – FORMAT AND CONTENT OF SUBSTITUTE RETURNS Section 6.1 – Acceptable Formats for Substitute Forms and Schedules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1117 Section 6.2 – Additional Instructions for All Forms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1118 Part 7 – MISCELLANEOUS FORMS AND PROGRAMS Section 7.1 – Specifications for Substitute Schedules K-1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1120 Section 7.2 – Guidelines for Substitute Forms 8655. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1125 Section 7.3 – Guidelines for Substitute Image Character Recognition (ICR) Forms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1126 Part 8 – ADDITIONAL INFORMATION Section 8.1 – Forms for Electronically Filed Returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1127 Section 8.2 – Effect on Other Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1128 Section 8.3 – Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1128 October 23, 2023 1092 Bulletin No. 2023–43 Part 1 Introduction to Substitute Forms Section 1.1 – Overview of Revenue Procedure 2023-28 1.1.1 Purpose The purpose of this revenue procedure is to provide guidelines and general requirements for the development, printing, and approval of the 2023 substitute tax forms. Approval will be based on these guidelines. After review and approval, submitted forms will be accepted as substitutes for official IRS forms. 1.1.2 Unique Forms Certain unique specialized forms require the use of other publications that supplement this publication. See Part 4. 1.1.3 Scope The IRS accepts quality substitute tax forms that are consistent with the official forms and have no adverse impact on processing. The IRS Substitute Forms Program (the Program) administers the formal acceptance and processing of these forms nationwide. While this Program deals with paper documents, it also reviews for approval other processing and filing forms used in electronic filing. Only those substitute forms that fully comply with these requirements are acceptable. This revenue procedure is updated as required to reflect pertinent tax year form changes and to meet processing and/or legislative requirements. 1.1.4 Forms Covered by This Revenue Procedure 1.1.5 Forms Not Covered by This Revenue Procedure Bulletin No. 2023–43 The following types of forms are covered by this revenue procedure. • IRS tax forms and their related schedules. • Worksheets as they appear in the instructions. • Applications for permission to file returns electronically and forms used as required documentation for electronically filed returns. • Powers of Attorney. • Over-the-counter estimated tax payment vouchers. • Forms and schedules relating to partnerships, exempt organizations, and employee plans. The following types of forms are not covered by this revenue procedure. Refer to the publication for questions. • W-2 and W-3. See Pub. 1141, General Rules and Specifications for Substitute Forms W-2 and W-3. • W-2c and W-3c. See Pub. 1223, General Rules and Specifications for Substitute Forms W-2c and W-3c. 1093 October 23, 2023 1.1.6 Other Information Not Covered by This Revenue Procedure • 941 and attached schedules. See Pub. 4436, General Rules and Specifications for Substitute Form 941, Schedule B (Form 941), Schedule D (Form 941), Schedule R (Form 941), and Form 8974. • 1096, 1097-BTC, 1098 series, 1099 series, 3921, 3922, 5498 series, W-2G, and 1042-S. See Pub. 1179, General Rules and Specifications for Substitute Forms 1096, 1098, 1099, 5498, and Certain Other Information Returns. • 1095-A, 1094-B, 1095-B, 1094-C, and 1095-C. See Pub. 5223, General Rules and Specifications for Affordable Care Act Substitute Forms 1095-A, 1094-B, 1095-B, 1094-C, and 1095-C. • 8027. See Pub. 1239, Specifications for Electronic Filing of Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips. • Forms 1040-ES (OCR) and 1041-ES (OCR), which may not be reproduced. • Form 5500 series (for more information on these forms, go to the Department of Labor website at www.efast.dol.gov). • Form 8717 bar-coded form requiring separate approval. • Forms used internally by the IRS. • State tax forms. • Forms developed outside the IRS. The following information is not covered by this revenue procedure. • Requests for information or documentation initiated by the IRS. • General Instructions and Specific Instructions (these are not reviewed by the Program). Section 1.2 – IRS Contacts 1.2.1 Where To Send Substitute Forms Send your substitute forms for approval to the following offices. Do not send forms with taxpayer data. Form 5500 October 23, 2023 8717 Software developer vouchers (see Sections 2.3.7–2.3.9) Office and Address Check EFAST2 information at the Department of Labor website at www.efast.dol.gov. Robin.M.Joecken@irs.gov Internal Revenue Service Attn: Jason Lane 3211 S. Northpointe Dr. Santa Fe Bldg. Rm 3018 Fresno, CA 93725 Jason.L.Lane@irs.gov 1094 Bulletin No. 2023–43 Form ACA Forms 1094-B, 1095-B, 1094-C, and 1095-C (for more information, see Pub. 5223), and Schedule K-1 forms must be emailed for scannability testing. Schedule K-1 2-D bar-coded forms All others covered by this publication (see Section 1.1.4) Office and Address scrips@irs.gov For mailing addresses for sending Schedule K-1 2-D bar-coded forms for testing, see Section 7.1.6. Internal Revenue Service Attn: Substitute Forms Program SE:W:CAR:MP:P:TP:TP 5000 Ellin Road, Mail Stop C6-110 Lanham, MD 20706 substituteforms@irs.gov Section 1.3 – What’s New 1.3.1 What’s New The following changes have been made to this year’s revenue procedure. • .01 Editorial changes. We made editorial changes as needed and eliminated repetitive information. • .02 Forms 5300 and 5307 can no longer be submitted as substitute forms. Forms 5300 and 5307 must be submitted electronically through Pay.gov. For more information about electronically submitting Forms 5300 and 5307, go to IRS.gov/Form5300 and IRS.gov/ Form5307. • .03 Form 8905 is discontinued. Form 8905 is discontinued and can no longer be filed with Forms 5300 and 5307. • .04 Section 7.3 – Guidelines for Substitute Image Character Recognition Forms added. We added suggestions that may be used as a guideline for creating easily scanned substitute tax forms. If you choose to participate, please use the Form 1040 format provided in the new Exhibit C and Exhibit D. Section 1.4 – Definitions 1.4.1 Substitute Form A tax form (or related schedule) that differs in any way from the official version and is intended to replace the form that is printed and distributed by the IRS. This term also covers those approved substitute forms exhibited in this revenue procedure. 1.4.2 Printed/ Preprinted Form A form produced using conventional printing processes or a printed form which has been reproduced by photocopying or a similar process. Bulletin No. 2023–43 1095 October 23, 2023 1.4.3 Preprinted Pin- Fed Form A printed form that has marginal perforations for use with automated and high-speed printing equipment. 1.4.4 Computer- Prepared Substitute Form A preprinted form in which the taxpayer’s tax entry information has been inserted by a computer, computer printer, or other computer-type equipment. 1.4.5 Computer- Generated Substitute Tax Return or Form A tax return or form that is entirely designed and printed using a computer printer on plain white paper. This return or form must conform to the physical layout of the corresponding IRS form, although the typeface may differ. The text should match the text on the officially printed form as closely as possible. Condensed text and abbreviations will be considered on a case-by-case basis. Exception. All jurats (perjury statements) must be reproduced verbatim. 1.4.6 Manually Prepared Form A preprinted reproduced form in which the taxpayer’s tax entry information is entered by an individual using a pen, a pencil, or other nonautomated equipment. 1.4.7 Graphics Parts of a printed tax form that are not tax amount entries or required text. Examples of graphics are line numbers, captions, shadings, special indicators, borders, rules, and strokes created by typesetting, photographics, photocomposition, etc. 1.4.8 Acceptable Reproduced Form A legible photocopy or an exact replica of an original form. 1.4.9 Supporting Statement (Supplemental Schedule) A document providing detailed information to support a line entry on an official or approved substitute form and filed with (attached to) a tax return. 1.4.10 Specific Form Terms The following specific terms are used throughout this revenue procedure in reference to all substitute forms: format, sequence, line reference, item caption, and data entry field. 1.4.11 Format The overall physical arrangement and general layout of a substitute form. 1.4.12 Sequence Sequence is an integral part of the total format requirement. The substitute form should show the same numeric and logical placement order of data as shown on the official form. October 23, 2023 Note. A supporting statement is not a tax form and does not take the place of an official form. 1096 Bulletin No. 2023–43 1.4.13 Line Reference The line numbers, letters, or alphanumerics used to identify each captioned line on an official form. These line references are printed to the immediate left of each caption and/or data entry field. 1.4.14 Item Caption The text on each line of a form, which identifies the data required. 1.4.15 Data Entry Field Designated areas for the entry of data such as dollar amounts, quantities, responses, and checkboxes. 1.4.16 Advance Draft A draft version of a new or revised form may be posted to the IRS website (IRS.gov/DraftForms) for information purposes. Substitute forms may be submitted based on these advance drafts, but any submitter that receives forms approval based on these early drafts is responsible for monitoring and revising forms to reflect any revisions in the final forms provided by the IRS. 1.4.17 Approval Generally, approval could be in writing or assumed after 20 business days from our receipt for forms that have not been substantially changed by the IRS. This does not apply to newly created or substantially revised IRS forms. However, the Program reserves the right to notify vendors of any inaccuracies even after 20 business days have lapsed. 1.4.18 National Association of Computerized Tax Processors (NACTP) The National Association of Computerized Tax Processors (NACTP) is a nonprofit association that represents tax processing software and hardware developers, electronic filing processors, tax form publishers, tax processing service bureaus, and payroll processors. The association promotes standards in tax processing to advance efficient and effective tax filing. For more information, see NACTP.org. Section 1.5 – Agreement 1.5.1 Important Stipulation of This Revenue Procedure Bulletin No. 2023–43 Any person or company who uses substitute forms and makes all or part of the changes specified in this revenue procedure agrees to the following stipulations. • The IRS presumes that any required changes are made in accordance with these procedures and will not be disruptive to the processing of the tax return. • Should any of the changes be disruptive to the IRS’s processing of the tax return, the person or company agrees to accept the determination of the IRS as to whether the form may continue to be filed. • The person or company agrees to work with the IRS in correcting noted deficiencies. Notification of deficiencies may be made by any combination of letter, email, or phone contact and may include the request for the resubmission of unacceptable forms. 1097 October 23, 2023 1.5.2 Response Policy and Stipulations The Program will email confirmation of receipt of your forms submission, if possible. Even if you do not receive emailed confirmation of receipt, you will receive an emailed “submission receipt,” which will provide feedback on your submission. If the Program anticipates problems in completing the review of your submission within the 20-business-day period, the Program will send an interim email notifying you of the extended period for review. Once the substitute forms have been approved by the Program, you can release them after the final versions of the forms have been issued by the IRS. Before releasing the forms, you are responsible for updating forms approved as draft and for making form changes requested. The policy has the following stipulations. • This 20-business-day policy applies to electronic submissions only. It does not apply to substitute submissions mailed to the Program. • The policy applies to submissions of 15 (optimal) or fewer items and submissions containing 75 pages or less. Submissions of more than 15 items may require additional review time. • If you send a large number of submissions within a short period of time, processing may be delayed. • Delays in processing could occur if the Program finds significant errors in your submission or has experienced an increase in submissions. The Program will send you an interim email in this case. • Any anticipated problems in processing your submission within the 20-business-day period will generate an interim email on or about the 15th business day. • If any significant inaccuracies are discovered after the 20-business-day period, the Program reserves the right to inform you and will require that changes be made to correct the inaccuracies. • The policy does not apply to substantially revised forms or to new forms created by the IRS for which you have already made an initial submission. Part 2 General Guidelines for Submissions and Approvals Section 2.1 – General Specifications for Approval 2.1.1 Overview October 23, 2023 If you produce any substitute tax forms that fully comply or follow the changes specifically outlined by the Program, then you can generate your own substitute forms without further approval. Also, if your substitutes have received approval in the past, and there are no substantial formatting or text changes for the tax year, then changes can be made without additional approval. If your changes are more extensive, you must get IRS approval before using substitute forms. More extensive changes include different font style, decreasing or increasing the font size of caption titles, adjusting or omitting format/layout elements, changing page orientation, and repositioning line items, tables, and legends. 1098 Bulletin No. 2023–43 2.1.2 Email Submissions The Program accepts submissions of substitute forms for review and approval via email. The email address is substituteforms@irs.gov. Include the term “PDF Submissions” on the subject line. Follow these guidelines. • The emailed submission should include all the forms you wish to submit in one Portable Document Format (PDF) file. Do not email or attach each form individually. • The emailed submission should include a maximum of 3 PDF files to include a checksheet, a cover letter or accompanying statement, and a single PDF file that includes all of the forms listed on your checksheet, cover letter, or accompanying statement. • A submission should contain a maximum of 15 forms. • An approval checksheet listing the forms you are submitting should always be included in the PDF file along with the forms. Excluding the checksheet can slow the reviewing process down, which can result in a delayed response to your submission. See a sample checksheet in Exhibit B. • Optimize PDF files before submitting. • The maximum allowable email attachment is 2.5 megabytes. • The Program accepts zip files. • To alleviate delays during the peak time of September through December, submit advance draft forms as early as possible. If the guidelines are not followed, you may need to resubmit. Emailing PDF submissions will not expedite review and approval. Submitting your substitute forms package via email is the preferred and suggested method for submitting forms for review. If, for some reason, you are not able to email your submission(s), you can mail your submission(s) to: Internal Revenue Service Attn: Substitute Forms Program SE:W:CAR:MP:P:TP:TP 5000 Ellin Road, Mail Stop C6-110 Lanham, MD 20706 2.1.3 Expediting the Process Bulletin No. 2023–43 Follow these basic guidelines for expediting the process. • Always include a checksheet for the Program’s response. • Include an accompanying statement identifying most, if not all, of the deviations your substitute forms may have from the official IRS versions. • Follow the guidance in this publication for general substitute form guidelines. Follow the guidance in specialized publications produced by the Program for other specific forms. • To spread out the workload, send in draft versions of substitute forms when they are posted. Note. Be sure to make any changes to approved drafts before releasing final versions. 1099 October 23, 2023 2.1.4 Schedules Some schedules are considered to be an integral part of a complete tax return and must be submitted as part of the form. Other schedules may be submitted separately and do not need to be included with the tax form. 2.1.5 Examples of Schedules That Must Be Submitted With the Return Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, is an example of this situation. Its Schedules A through U have pages numbered as part of the basic return. For Form 706 to be considered for approval, the entire form, including Schedules A through U, as well as Schedule PC, must be submitted. 2.1.6 Examples of Schedules That Can Be Submitted Separately Schedules C, D, and E for Form 1040 or 1040-SR are examples of schedules that can be submitted separately. Although printed by the IRS as a supplement to Form 1040 or 1040-SR, these schedules are not required to be submitted for approval with Form 1040 or 1040-SR. These schedules may be separated from Form 1040 or 1040-SR and submitted as substitute forms. 2.1.7 Use and Distribution of Unapproved Forms The IRS is continuing a program to identify and contact tax return preparers, forms developers, and software publishers who use or distribute unapproved forms that do not conform to this revenue procedure. The use of unapproved forms hinders the processing of the returns. Section 2.2 – Highlights of Permitted Changes and Requirements 2.2.1 Methods of Reproducing IRS Forms There are methods of reproducing IRS printed tax forms suitable for use as substitutes without prior approval. • You can photocopy most tax forms and use them instead of the official ones. The entire substitute form, including entries, must be legible. • You can reproduce any current tax form as cut sheets, snap sets, and marginally punched, pinfed forms as long as you use an official IRS version as the master copy. • You can reproduce a form that requires a signature as a valid substitute form. Many tax forms (including returns) have a taxpayer signature requirement as part of the form layout. The jurat/ perjury statement/ signature line areas must be retained and worded exactly as on the official form. The requirement for a signature, by itself, does not prohibit a tax form from being properly computer generated. Section 2.3 – Vouchers 2.3.1 Overview October 23, 2023 All payment vouchers (Forms 940-V, 941-V, 943-V, 944-V, 945-V, 1040-ES, 1040-V, 1041-V, and 2290-V) must be reproduced in conjunction with their forms. Substitute vouchers must be the same size as the officially printed vouchers. Vouchers that are prepared for printing on a laser printer may include a scan line. 1100 Bulletin No. 2023–43 2.3.2 Scan Line Specifications NNNNNNNNN AA XXXX NN N NNNNNN NNN Item: A B C D E F G A. Social Security Number/Employer Identification Number/Individual Taxpayer Identification Number/Adoption Taxpayer Identification Number (SSN/EIN/ ITIN/ATIN) has 9 numeric (N) spaces. B. Check Digits have 2 alpha (A) spaces. C. Name Control has 4 alphanumeric (X) spaces. D. Master File Tax (MFT) Code has 2 numeric (N) spaces (see Section 2.3.3). E. Taxpayer Identification Number (TIN) Type has 1 numeric (N) space (see Section 2.3.4). F. Tax Period has 6 numeric (N) spaces in year/month format (YYYYMM). G. Transaction Code has 3 numeric (N) spaces. 2.3.3 MFT Code Code Number for Forms: 2.3.4 TIN Type 2.3.5 Voucher Size Bulletin No. 2023–43 • 1040 (family) – 30, • 940 – 10, • 941 – 01, • 943 – 11, • 944 – 14, • 945 – 16, • 1041-V – 05, • 2290 – 60, and • 4868 – 30. Type Number for: • Form 1040 (family) and Form 4868 – 0; and • Forms 940, 941, 943, 944, 945, 1041-V, and 2290 – 2. The voucher size must be exactly 8.0″ x 3.25″ (Forms 1040-ES and 1041-ES must be 7.625″ x 3.0″). The document scan line must be vertically positioned 0.25 inch from the bottom of the scan line to the bottom of the voucher. The last character on the right of the scan line must be placed 3.5 inches from the right leading edge of the document. The minimum required horizontal clear space between characters is 0.014 inch. The line to be scanned must have a clear band 0.25 inch in height from top to bottom of the scan line, and from border to border of the document. “Clear band” means no printing except for dropout ink. 1101 October 23, 2023 2.3.6 Print and Paper Weight Vouchers must be imaged in black ink using OCR A, OCR B, or Courier 10. These fonts may not be mixed in the scan line. The horizontal character pitch is 10 CPI. The preferred paper weight is 20 to 24 pound OCR bond. 2.3.7 Specifications for Software Developers Certain vouchers may be reproduced for use in the IRS lockbox system. These include the 1040V, 1040-ES, 1041-V, the 94X family, and 2290 vouchers. Software developers must follow these specific guidelines to produce scannable vouchers strictly for lockbox purposes. Also see Exhibit A. • The total depth must be 3.25 inches. • The scan line must be 0.5 inch from the bottom edge and 1.75 inches from the left edge of the voucher and left justified. • Software developers’ vouchers must be 8.5 inches wide (instead of 8 inches with a cut line). Therefore, no vertical cut line is required. • Scan line positioning must be exact. • Do not use the over-the-counter format voucher and add the scan line to it. • All scanned data must be in 12-point OCR A font. • The 4-digit NACTP ID code or IRS source code should be placed under the payment indicator arrow. • Windowed envelopes must not display the scan line in order to avoid disclosure and privacy issues. Note. All software developers must ensure that their software uses OCR A font so taxpayers will be able to print the vouchers in the correct font. 2.3.8 Specific Line Positions Follow these line specifications for entering taxpayer data in the lockbox vouchers. Start Row Start Column Width End Column Line Specifications for Taxpayer Data: Taxpayer Name Taxpayer Address, Apt. Taxpayer City, State, ZIP Foreign Country Name Foreign Province/County Foreign Postal Code 56 57 58 59 60 60 6 6 6 6 6 26 36 36 36 36 17 16 41 41 41 41 22 41 Mail Name Mail Address Mail City, State, ZIP 56 57 58 43 43 43 38 38 38 80 80 80 Line Specifications for: Scan Line 63 26 n/a n/a Line Specifications for Mail To Data: October 23, 2023 1102 Bulletin No. 2023–43 2.3.9 How To Get Approval Send an approval sheet with each form type for IRS signature to Jason Lane at Jason.L.Lane@irs. gov. You should include in the email an example of each type of voucher the site will be testing. Note. Do not mail any test vouchers to Jason Lane. You are required to send 25 voucher samples of each form in PDF format by December 8, 2023. You should email the test vouchers to raul.t.mariduena@jpmorgan.com. You can also print the vouchers and send them to his mailing address at: JP Morgan Chase Attn: Raul Mariduena 830 Tyvola Road, Suite 114 Charlotte, NC 28217 For further information, contact Jason Lane at Jason.L.Lane@irs.gov, or at 559-550-8740 (not toll free). Section 2.4 – Restrictions on Changes 2.4.1 What You Cannot Do to Forms Suitable for Substitute Tax Forms You cannot, without prior IRS approval, change any IRS tax form or use your own (nonapproved) versions including graphics, unless specifically permitted by this revenue procedure. See Sections 2.5.7 through 2.5.11. You cannot adjust any of the graphics on Form 1040 or 1040-SR (except in those areas specified in Part 5 of this revenue procedure) without prior approval from the Program. You cannot rearrange or redistribute data entry fields, and/or allow data entry fields to flow from one page onto the next (that is, each page of a substitute form must contain the exact number of data entry fields as there are on the official IRS form). The order of information on the substitute form must be identical to the IRS version of the form. Publications for specific substitute forms will state allowances for those respective forms. Note. The 20-business-day turnaround policy may not apply to extensive changes. Section 2.5 – Guidelines for Obtaining IRS Approval 2.5.1 Basic Requirements Preparers who submit substitute privately designed, privately printed, computer-generated, or computer-prepared tax forms must develop these substitutes using the guidelines established in this part. These forms, unless there is an exception outlined by this revenue procedure, must be approved by the IRS before being filed. 2.5.2 Conditional Approval Based on Advance Drafts The IRS cannot grant final approval of your substitute form until the official form has been published. However, the IRS posts advance draft forms on its website at IRS.gov/DraftForms. Bulletin No. 2023–43 Submission of proposed substitutes of these advance draft forms is encouraged, and conditional approval will be granted based solely on these early drafts. These advance drafts are subject to significant change before forms are finalized. If these advance drafts are used as the basis for your 1103 October 23, 2023 substitute forms, you will be responsible for subsequently updating your final forms to agree with the final official version. These revisions need not be resubmitted for further approval. Note. Approval of forms based on advance drafts will not be granted after the final version of an official form is published. 2.5.3 Submission Procedures Follow these general guidelines when submitting substitute forms for approval. • Any alteration of forms must be within the limits acceptable to the IRS. It is possible that, from one filing period to another, a change in law or a change in internal need (processing, audit, compliance, etc.) may change the allowable limits for the alteration of the official form. • When approval of any substitute form (other than those exceptions specified in Part 1, Section 1.2) is requested, a sample of the proposed substitute form should be emailed for consideration to the Program at the address shown in Section 1.2.1. • Schedules and forms (for example, Forms 3468, 4136, etc.) that can be used with more than one type of return (for example, Forms 1040, 1040-SR, 1041, 1120, etc.) should be submitted only once for approval, without regard to the number of different tax returns with which they may be associated. Also, all pages of multi-page forms or returns should be submitted in the same package. 2.5.4 Approving Offices Because only the Program is authorized to approve substitute forms, unnecessary delays may occur if forms are sent to the wrong office. You may receive an interim letter about the delay. The Program may then coordinate the response with the originator responsible for revising that particular form. Such coordination may include allowing the originator to officially approve the form. No IRS office is authorized to allow deviations from this revenue procedure. 2.5.5 IRS Review of Software Programs, etc. The IRS does not review or approve the logic of specific software programs, nor does the IRS confirm the calculations on the forms produced by these programs. The accuracy of the program remains the responsibility of the software package developer, distributor, or user. The Program is primarily concerned with the pre-filing quality review of the final forms that are expected to be processed by IRS field offices. For this purpose, you should submit forms without including any taxpayer information such as names, addresses, monetary amounts, etc. If the software used is programmed to produce copies with populated fields, then you must use dummy information. This will allow the Program to review and provide feedback or approval. Vendors should use “0” for all number values and “X” for any information that requires alpha characters. 2.5.6 When To Send Proposed Substitutes Proposed substitutes, which are required to be submitted per this revenue procedure, should be sent as much in advance of the filing period as possible. This is to allow adequate time for analysis and response. 2.5.7 Accompanying Statement When submitting sample substitutes, you should include an accompanying statement that lists each form number and its changes from the official form (position, arrangement, appearance, line October 23, 2023 1104 Bulletin No. 2023–43 numbers, additions, deletions, etc.). With each of the items, you should include a detailed reason for the change. When requesting approval, include a checksheet. Checksheets expedite the approval process. The checksheet may look like the example in Exhibit B displayed in the back of this procedure or may be one of your own design. Include your email address on the checksheet. 2.5.8 Approval/ Nonapproval Notice The Program will email the checksheet or an approval letter to the originator, unless: • The requester has asked for a formal letter, or • Significant corrections to the submitted forms are required. Notice of approval may impose qualifications before using the substitutes. Notices of unapproved forms may specify the changes required for approval and require resubmission of the form(s) in question. When appropriate, you will be contacted by telephone. 2.5.9 Duration of Approval Most signature tax returns and many of their schedules and related forms have the tax year printed in the upper right corner. Approvals for these annual forms are usually good for 1 calendar year (January through December of the year of filing). Quarterly tax forms in the 94X series and Form 720 require approval for any quarter in which the form has been revised. Because changes are usually made to an annual form every year, each new filing season generally requires a new submission of a substitute form. Very rarely is updating the preprinted year the only change made to an annual form. However, if no significant content, formatting, or layout changes were made to a tax form, then review and approval received for the prior tax year can be carried over into the current tax year. 2.5.10 Limited Continued Use of an Approved Change Limited changes approved for one tax year may be allowed for the same form in the following tax year. Examples are the use of abbreviated words, revised form spacing, compressed text lines, shortened captions, etc., which do not change the integrity of lines or text on the official forms. If the vendor or filer makes substantial changes to the form, new substitutes must be submitted for approval. If the vendor or filer makes only minor editorial changes to the form, or makes any changes that mirror changes the IRS makes to the form’s official version, the new substitute does not need to be submitted for approval. It is the responsibility of each vendor who has been granted permission to produce substitute forms to monitor and revise forms to mirror any revisions to the official forms made by the IRS. If there are any questions, contact the Program. 2.5.11 When Approval Is Not Required Bulletin No. 2023–43 If you received approval for a specific change on a form last year, you may make the same change this year if the item is still present on the official form. • The new substitute form does not have to be submitted to the IRS and approval based on that change is not required. • However, the new substitute form must conform to the official current year IRS form in other respects, such as date, Office of Management and Budget (OMB) approval number, attachment sequence number, Paperwork Reduction Act Notice statement, arrangement, item caption, line number, line reference, data sequence, etc. 1105 October 23, 2023 • The new substitute form must also comply with changes to the guidelines in this revenue procedure. This procedure may have eliminated, added to, or otherwise changed the guideline(s) that affected the change approved in the prior year. • An approved change is authorized only for the period from a prior tax year substitute form to a current tax year substitute form. Exception. Forms with temporary, limited, or interim approvals (or with approvals that state a change is not allowed in any other tax year) are subject to review in subsequent years. 2.5.12 Required Copies Generally, you must send us one copy of each form being submitted for approval. However, if you are producing forms for different computer platforms (for example, Microsoft vs. Apple), different tax preparation software (for example, TurboTax® vs. TaxSlayer®), or different types of printers (for example, inkjet vs. impact), and these forms differ significantly in appearance, submit one copy for each type of platform, tax preparation software, or printer. 2.5.13 Requestor’s Responsibility Following receipt of an initial approval for a substitute forms package or a software output program to print substitute forms, it is the responsibility of the originator (designer or distributor) to provide client firms or individuals with forms that meet the IRS’s requirements for continuing acceptability. Examples of this responsibility include: 2.5.14 Source Code • Using the prescribed print paper, font size, legibility, state tax data deletion, etc.; and • Informing all users of substitute forms of the legal requirements of the Paperwork Reduction Act Notice, which is generally found in the instructions for the official IRS forms. The Program will assign a unique source code to each firm that submits substitute forms for approval. This source code will be a permanent identifier that must be used on every submission by a particular firm. The source code consists of three alpha characters and should generally be printed under or to the left of the “Paperwork Reduction Act” statement. Vendors must ensure that the source code is not printed too close to or within the left or bottom 0.5 inch margin to avoid the source code from being cut off during printing. Section 2.6 – Office of Management and Budget (OMB) Requirements for All Substitute Forms 2.6.1 OMB Requirements for All Substitute Forms October 23, 2023 There are legal requirements of the Paperwork Reduction Act of 1995 (the Act). Public Law 10413 requires the following. • OMB approves all IRS tax forms that are subject to the Act. • Each IRS form contains (in the upper right corner) the OMB number, if assigned. • Each IRS form (or its instructions) states why the IRS needs the information, how it will be used, and whether or not the information is required to be furnished to the IRS. 1106 Bulletin No. 2023–43 This information must be provided to every user of official or substitute IRS forms or instructions. 2.6.2 Application of the Paperwork Reduction Act 2.6.3 Required Explanation to Users On forms that have been assigned OMB numbers: • All substitute forms must contain in the upper right corner the OMB number that is on the official form, and • The required format is: OMB No. 1545-XXXX (preferred) or OMB # 1545-XXXX (acceptable). You must inform the users of your substitute forms of the IRS use and collection requirements stated in the instructions for official IRS forms. • If you provide your users or customers with the official IRS instructions, each form must retain either the Paperwork Reduction Act Notice (or Disclosure, Privacy Act, and Paperwork Reduction Act Notice), or a reference to it as the IRS does on the official forms (usually in the lower left corner of the forms). • This notice reads, in part, “We ask for tax return information to carry out the tax laws of the United States. . . .” Note. If no IRS instructions are provided to users of your forms, the exact text of the Paperwork Reduction Act Notice (or Disclosure, Privacy Act, and Paperwork Reduction Act Notice) must be furnished separately or on the form. 2.6.4 Finding the OMB Number and Paperwork Reduction Act Notice The OMB number and the Paperwork Reduction Act Notice, or references to it, may be found printed on an official form (or its instructions). The number and the notice are included on the official paper format and in other formats produced by the IRS. Part 3 Physical Aspects and Requirements Section 3.1 – General Guidelines for Substitute Forms 3.1.1 General Information The official form is the standard. Because a substitute form is a variation from the official form, you should know the requirements of the official form for the year of use before you modify it to meet your needs. To obtain the most frequently used tax forms, go to IRS.gov/Forms. 3.1.2 Design Each form must follow the design of the official form as to format arrangement, item caption, line numbers, line references, and sequence. Bulletin No. 2023–43 1107 October 23, 2023 3.1.3 State Tax Information Prohibited Generally, state tax information must not appear on the federal tax return, associated form, or schedule that is filed with the IRS. Exceptions occur when amounts are claimed on, or required by, the federal return (for example, state and local income taxes on Schedule A (Form 1040)). 3.1.4 Vertical Alignment of Amount Fields IF a form is to be... THEN... manually prepared and the official IRS form still has a separate cents entry field 1. 2. 1. computer generated 2. computer prepared 1. 2. 3.1.5 Attachment Sequence Number the entry column must have a vertical line or some type of indicator in the amount field to separate dollars from cents, and the cents column must be at least 0.3 inch wide. vertically align the amount entry fields where possible, and use one of the following amount formats. a) 0,000,000. b) 0,000,000.00. you may remove the vertical line in the amount field that separates dollars from cents, and use one of the following amount formats. a) 0,000,000. b) 0,000,000.00. Many individual income tax forms have a required “attachment sequence number” located just below the year designation in the upper right corner of the form. The IRS uses this number to indicate the order in which forms are to be attached to the tax return for processing. Some of the attachment sequence numbers may change from year to year. The following apply to computer-prepared forms. 3.1.6 Assembly of Forms • The sequence number may be printed in no less than 12-point boldface type and centered below the form’s year designation. • The sequence number may also be placed following the year designation for the tax form and separated with an asterisk. • The actual number may be printed without labeling it the “Attachment Sequence Number.” When developing software or forms for use by others, inform your customers/clients that the order in which the forms are arranged may affect the processing of the package. A return must be arranged in the order indicated below. IF the form is... 1040 or 1040-SR any other tax return (Form 1120, 1120-S, 1065, 1041, etc.) October 23, 2023 THEN the sequence is... • Form 1040 or 1040-SR, and schedules and forms in attachment sequence number order. • the tax returns, directly associated schedules (Schedule D, etc.), directly associated forms, additional schedules in alphabetical order, and additional forms in numerical order. 1108 Bulletin No. 2023–43 Supporting statements should then follow in the same sequence as the forms they support. Additional information required should be attached last. In this way, the forms are received in the order in which they must be processed. If you do not send returns to the IRS in order, processing may be delayed. 3.1.7 Paid Preparer’s Information and Signature Area On Forms 1040, 1040-SR, and 1120, and any other applicable tax forms, the “Paid Preparer Use Only” area may not be rearranged or relocated. You may, however, add three extra lines to the paid preparer’s address area, and remove the horizontal rules in that area without prior approval. 3.1.8 Some Common Reasons for Requiring Changes to Substitute Forms Some reasons that substitute form submissions may require changes include the following. • Shading areas incorrectly. • Failing to include a reference to the location of the Paperwork Reduction Act Notice. • Not including parentheses for losses. • Not including “Attach Statement” when appropriate. • Including line references or entry spaces that do not match the official form. • Printing text that is different from the official form. • Altering the jurat (perjury statement). • Having an incorrect OMB number. • Including the IRS catalog number (Cat. No.) on the form. • Failing to include preprinted amounts in entry fields. • Missing IRS source code or NACTP software ID. • Missing 3-letter FFF code on paper Form 1040 from tax software companies that participate in the IRS Free File Program. • Incorrect dimensions. Section 3.2 – Paper 3.2.1 Paper Content Bulletin No. 2023–43 The paper must be: • Chemical wood writing paper that is equal to or better than the quality used for the official form, • At least 18 pound (17″ x 22″, 500 sheets), or • At least 50 pound offset book (25″ x 38″, 500 sheets). 1109 October 23, 2023 3.2.2 Paper With Chemical Transfer Properties There are several kinds of paper prohibited for substitute forms. These are: 1. Carbon-bonded paper, and 2. Chemical transfer paper except when the following specifications are met. a. Each ply within the chemical transfer set of forms must be labeled. b. Only the top ply (ply one and white in color), the one that contains chemical on the back only (coated back), may be filed with the IRS. Example. A set containing three plies would be constructed as follows: ply one (coated back), “Federal Return, File with IRS”; ply two (coated front and back), “Taxpayer’s copy”; and ply three (coated front), “Preparer’s copy.” The file designation, “Federal Return, File with IRS” for ply one, must be printed in the bottom right margin (just below the last line of the form) in 12-point boldface type. It is not mandatory, but recommended, that the file designation “Federal Return, File with IRS” be printed in a contrasting ink for visual emphasis. 3.2.3 Paper and Ink Color It is preferred that the color and opacity of paper substantially duplicate that of the original form. This means that your substitute must be printed in black ink and may be on white paper or on the colored paper the IRS form is printed on. Form 1040 or 1040-SR substitute reproductions may be in black ink without the colored shading. The only exception to this rule is Form 1041-ES, which should be printed with a PMS 100 yellow shading in the color-screened area. This is necessary to assist us in expeditiously separating this form from the very similar Form 1040-ES. 3.2.4 Page Size Substitute or reproduced forms and computer-prepared/-generated substitutes may be the same size as the official form or they may be the standard commercial size (8.5″ x 11″). The thickness of the stock cannot be less than 0.003 inch. Section 3.3 – Printing 3.3.1 Printing Medium The private printing of all substitute tax forms must be by conventional printing processes, photocopying, computer graphics, or similar reproduction processes. 3.3.2 Legibility All forms must have a high standard of legibility as to printing, reproduction, and fill-in matter. Entries of taxpayer data may be no smaller than 8 points. The IRS reserves the right to reject those with poor legibility. The ink and printing method used must ensure that no part of a form (including text, graphics, data entries, etc.) develops “smears” or similar quality deterioration. This standard must be followed for any subsequent copies or reproductions made from an approved master substitute form, either during preparation or during IRS processing. October 23, 2023 1110 Bulletin No. 2023–43 3.3.3 Type Font Many federal tax forms are printed using Helvetica as the basic type font. It is preferred that you use this type font when composing substitute forms. 3.3.4 Print Spacing Substitute forms should be printed using a 6 lines/inch vertical print option. They should also be printed horizontally in 10-pitch pica (that is, 10 print characters per inch) or 12-pitch elite (that is, 12 print positions per inch). 3.3.5 Image Size The image size of a printed substitute form should be as close as possible to that of the official form. You may omit any text on both computer-prepared and computer-generated forms that is solely instructional. 3.3.6 Title Area Changes To allow a large top margin for marginal printing and more lines per page, the title line(s) for all substitute forms (not including the form’s year designation and sequence number, when present) may be photographically reduced by 40% or reset as one line of type. When reset as one line, the type size may be no smaller than 14 points. You may omit “Department of the Treasury—Internal Revenue Service” and all references to instructions in the form’s title area. 3.3.7 Remove Government Publishing Office Symbol and IRS Catalog Number When privately printing substitute tax forms, the Government Publishing Office (GPO) symbol and/or jacket number must be removed. In the same place using the same type size, print the EIN of the printer or designer, or the IRS-assigned source code. (Preferably, this last number should be printed in the lower left area of the first page of each form.) Also, remove the IRS catalog number (Cat. No.) and the recycle symbol if the substitute is not produced on recycled paper. 3.3.8 Printing Single- Page Forms Substitute single-page forms should be reproduced the same as IRS single-page forms. Other forms or schedules should not be printed on the back or on blank portions of a single-page form. However, printing instructions on the back or on blank portions of a single-page form is acceptable. 3.3.9 Photocopy Equipment The IRS does not undertake to approve or disapprove the specific equipment or process used in reproducing official forms. Photocopies of forms must be entirely legible and satisfy the conditions stated in this and other revenue procedures. 3.3.10 Reproductions Reproductions of official forms and substitute forms that do not meet the requirements of this revenue procedure may not be filed instead of the official forms. Illegible photocopies are subject to being returned to the filer for resubmission of legible copies. 3.3.11 Removal of Instructions Generally, you may remove references to instructions. No prior approval is needed. However, in some instances, you may be requested to include references to instructions. Exception. The words “For Paperwork Reduction Act Notice, see instructions” must be retained, or a similar statement indicating the location of the Notice must be provided on each form. Bulletin No. 2023–43 1111 October 23, 2023 Section 3.4 – Margins 3.4.1 Margin Size 3.4.2 Marginal Printing The format of a reproduced tax form when printed on the page must have margins on all sides at least as large as the margins on the official form. This allows room for IRS employees to make necessary entries on the form during processing. • A 0.5 inch to 0.25 inch margin must be maintained across the top, bottom, and both sides of all substitute forms. • The marginal, perforated strips containing pin-fed holes must be removed from all forms prior to filing with the IRS. Prior approval is not required for the marginal printing allowed when printed on an official form or on a photocopy of an official form. • With the exception of the actual tax return forms (for example, Forms 1040, 1040-SR, 1120, 940, 941, etc.), you may print in the left vertical margin and in the left half of the bottom margin. • Printing is never allowed in the top right margin of the tax return form (for example, Forms 1040, 1040-SR, 1120, 940, 941, etc.). The IRS uses this area to imprint a Document Locator Number for each return. There are no exceptions to this requirement. Section 3.5 – Miscellaneous Information for Substitute Forms 3.5.1 Filing Substitute Forms To be acceptable for filing, a substitute form must print out in a format that will allow the filer to follow the same instructions that accompany official forms. The form must be legible, must be on the appropriately sized paper, and must include a jurat (perjury statement) where one appears on the published form. 3.5.2 Caution to Software Publishers The IRS has received returns produced by software packages with approved output where either the form heading was altered or the lines were spaced irregularly. This produces an illegible or unrecognizable return or a return with the wrong number of pages. While many of these problems are caused by individual printer differences, they may delay input of return data and, in some cases, generate correspondence to the taxpayer. Therefore, in the instructions to the purchasers of your product, both individual and professional, stress that their returns will be processed more efficiently if they are properly formatted. This includes: October 23, 2023 • Having the correct form numbers, six-digit form identifying numbers, and titles at the top of the return; and • Submitting the same number of pages as if the form were an official IRS form with the line items on the proper pages. 1112 Bulletin No. 2023–43 3.5.3 Caution to Producers of Software Packages If you are producing a software package that generates name and address data onto the tax return, do not, under any circumstances, program either the IRS preprinted check digits or a practitionerderived name control to appear on any return prepared and filed with the IRS. 3.5.4 Programming to Print Forms Whenever applicable: • Use only the following label information format for single filers: JOHN Q. DOE 000 OAK DRIVE HOMETOWN, STATE 00000; • Use only the following label information format for joint filers: JOHN Q. DOE MARY Q. DOE 000 OAK DRIVE HOMETOWN, STATE 00000; and • Use “0” for number values and “X” for alpha characters entered in data entry fields as dummy copy. Part 4 Additional Resources Section 4.1 – Guidance From Other Revenue Procedures 4.1.1 General The IRS publications listed below provide guidance for substitute tax forms not covered in this revenue procedure. These publications are available on the IRS website. Use the publication number listed below to search for the requested document. • Pub. 1141, General Rules and Specifications for Substitute Forms W-2 and W-3. • Pub. 1179, General Rules and Specifications for Substitute Forms 1096, 1098, 1099, 5498, and Certain Other Information Returns. • Pub. 1223, General Rules and Specifications for Substitute Forms W-2c and W-3c. • Pub. 4436, General Rules and Specifications for Substitute Form 941, Schedule B (Form 941), Schedule D (Form 941), Schedule R (Form 941), and Form 8974. • Pub. 5223, General Rules and Specifications for Affordable Care Act Substitute Forms 1095A, 1094-B, 1095-B, 1094-C, and 1095-C. Section 4.2 – Electronic Tax Products 4.2.1 The IRS Website Copies of tax forms and their instructions, publications, fillable forms, and prior year forms and publications may be found on the IRS website at IRS.gov/Forms. Draft forms and instructions may be found at IRS.gov/DraftForms. Other tax-related information may be found at IRS.gov. Bulletin No. 2023–43 1113 October 23, 2023 4.2.2 System Requirements and Ordering Forms and Instructions For system requirements, contact the National Technical Information Service (NTIS) at NTIS. gov. Prices are subject to change. You can order IRS forms and other tax material at IRS.gov/OrderForms. Part 5 Requirements for Specific Tax Returns Section 5.1 – Tax Returns (Forms 1040, 1040-SR, 1120, etc.) 5.1.1 Acceptable Forms 5.1.2 Prohibited Forms Tax return forms (such as Forms 1040, 1040-SR, and 1120) require a signature and establish tax liability. Computer-generated versions are acceptable under the following conditions. • These substitute forms must be printed on plain white paper. • Substitute forms must conform to the physical layout of the corresponding IRS form although the typeface may differ. The text should match the text on the officially published form as closely as possible. Condensed text and abbreviations will be considered on a case-by-case basis. Caution. All jurats (perjury statements) must be reproduced verbatim. No text can be added, deleted, or changed in meaning. • Various computer graphic print media such as laser printing, inkjet printing, etc., may be used to produce the substitute forms. • The substitute form must be the same number of pages and contain the same text on the lines as the official form. • All substitute forms must be submitted for approval prior to their original use. You do not need approval for a substitute form if its only change is the preprinted year and you had received a prior year approval letter. Exception. If the approval letter specifies a one-time exception for your form, the next year’s form must be approved. The following are prohibited. • Computer-generated tax forms (for example, Form 1040, 1040-SR, etc.) on lined or colorbarred paper. • Tax forms that differ from the official IRS forms in a manner that makes them nonstandard or unable to process. 5.1.3 Changes Permitted to Form 1040 Certain changes (listed in Section 5.2) are permitted to the graphics of the form without prior approval, but these changes apply to only acceptable preprinted forms. Changes not requiring prior approval are good only for the annual filing period, which is the current tax year. Such changes are valid in subsequent years only if the official form does not change. 5.1.4 Other Changes Not Listed All changes not listed in Section 5.2 require approval from the IRS before the form can be filed. October 23, 2023 1114 Bulletin No. 2023–43 Section 5.2 – Changes Permitted to Graphics (Form 1040 or 1040-SR) 5.2.1 Adjustments You may make minor vertical and horizontal spacing adjustments to allow for computer or word processing printing. This includes widening the amount columns or tax entry areas if the adjustments comply with other provisions stated in revenue procedures. No prior approval is needed for these changes. Schedules 1–3 cannot be combined for filing purposes. For the client copy of the return, the numbered schedules may be printed two to a page (for example, Schedule 3 below Schedule 2, if both are completed as part of the return). If numbered schedules are combined on the client copy, it must include a statement that it is “Not for Filing.” 5.2.2 Name and Address Area The horizontal rules and instructions within the name and address area may be removed and the entire area left blank. No line or instruction can remain in the area. The heavy-ruled border (when present) that outlines the name, address area, and SSN must not be removed, relocated, expanded, or contracted. 5.2.3 Required Format When the name and address area is left blank, the following format must be used when printing the taxpayer’s name and address. 5.2.4 Conventional Name and Address Data • 1st name line (35 characters maximum). • 2nd name line (35 characters maximum). • In-care-of name line (35 characters maximum). • City, state (25 characters maximum), one blank character, and ZIP code. When there is no in-care-of name line, the name and address will consist of only three lines (single filer) or four lines (joint filer). Example of joint filer. Name and address (joint filer) with no in-care-of name line: JOHN Q. DOE MARY Q. DOE 000 ANYWHERE ST., APT. 000 ANYTOWN, STATE 00000 Example of in-care-of name line. Name and address (single filer) with in-care-of name line: JOHN Q. DOE C/O JOHN R. DOE 0000 SOMEWHERE AVE. SAMETOWN, STATE 00000 Bulletin No. 2023–43 1115 October 23, 2023 5.2.5 SSN and EIN Area The broken vertical lines separating the format arrangement of the SSN/EIN may be removed. When the vertical lines are removed, the SSN and EIN formats must be 000-00-0000 or 00-0000000, respectively. 5.2.6 Entering Cents • You may remove the vertical rule that separates the dollars from the cents if it is still included on the official IRS form. • All entries in the amount column should have a decimal point following the whole dollar amounts whether or not the vertical line that separates the dollars from the cents is present. • You may omit printing the cents, but all amounts entered on the form must follow a consistent format. You are strongly urged to round off the figures to whole dollar amounts, following the official form instructions. • When several amounts are added together, the total should be rounded off after addition (that is, individual amounts should not be rounded off for computation purposes). • When printing money amounts, you must use one of the following formats: (a) 0,000,000; or (b) 0,000,000.00. • When there is no entry for a line, leave the line blank. 5.2.7 Changes to Lines No prior approval is needed for the following changes (for use with computer-prepared forms only). Specific line numbers in the following headings may have changed due to tax law changes. 5.2.8 Dependents on Form 1040 The vertical lines separating columns (1) through (4) may be removed. The captions may be shortened to allow a one-line caption for each column. 5.2.9 Other Lines Any other line with text that takes up two or more vertical lines may be compressed to one line by using contractions, etc., and by removing instructional references. 5.2.10 Form 1040 – Tax You may change the line caption to read “Tax” and computer print the words “Total includes tax from” and either “Form(s) 8814” or “Form 4972” or “962 election.” If both forms are used, print both form numbers. This specific line number may have changed. 5.2.11 Color Screening It is not necessary to duplicate the color screening used on the official form. A substitute Form 1040 or 1040-SR may be printed in black and white only with no color screening. 5.2.12 Other Changes Prohibited No other changes to the Form 1040 or 1040-SR graphics are permitted without prior approval except for the removal of instructions and references to instructions. October 23, 2023 1116 Bulletin No. 2023–43 Part 6 Format and Content of Substitute Returns Section 6.1 – Acceptable Formats for Substitute Forms and Schedules 6.1.1 Exhibits and Use of Acceptable Formats Exhibit A is an acceptable format for Form 1040-ES. • If your computer-generated Form 1040-ES appears exactly like Exhibit A, no prior authorization is needed. • You may computer-generate forms not shown here, but you must design them by following the manner and style discussed in Part 3. • Take care to observe the other requirements and conditions in this revenue procedure. The IRS encourages the submission of all proposed forms covered by this revenue procedure. 6.1.2 Instructions The format of each substitute form or schedule must follow the format of the official form or schedule as to item captions, line references, line numbers, sequence, form arrangement and format, etc. Basically, try to make the form look like the official one, with readability and consistency being primary factors. You may use periods and/or other similar special characters to separate the various parts and sections of the form. Do not use alpha or numeric characters for these purposes. All line numbers and items must be printed even though an amount is not entered on the line. 6.1.3 Line Numbers When a line on an official form is designated by a number or a letter, that designation (reference code) must be used on a substitute form. The reference code must be printed to the left of the text of each line and immediately preceding the data entry field, even if no reference code precedes the data entry field on the official form. If an entry field contains multiple lines and shows the line references once on the left and right side of the form, use the same number of line references on the substitute form. In addition, the reference code that is immediately before the data field must either be followed by a period or enclosed in parentheses. There must also be at least two blank spaces between the period or the right parenthesis and the first digit of the data field. (See Section 6.1.4.) 6.1.4 Decimal Points A decimal point (a period) should be used for each money amount regardless of whether the amount is reported in dollars and cents or in whole dollars, or whether or not the vertical line that separates the dollars from the cents is present. The decimal points must be vertically aligned when possible. Example. 5 State and local taxes a State and local income taxes..................... b State and local real estate taxes................ c State and local personal property taxes.... or Bulletin No. 2023–43 1117 5a. 5b. 5c. 000.00 000.00 October 23, 2023 a State and local income taxes..................... b State and local real estate taxes................ c State and local personal property taxes.... 6.1.5 Multi-Page Forms (5a) (5b) (5c) 000.00 000.00 When submitting a multi-page form, send all its pages in the same package. If you will not be producing certain pages, note that in your cover letter. Section 6.2 – Additional Instructions for All Forms 6.2.1 Use of Your Own Internal Control Numbers and Identifying Symbols You may show the computer-prepared internal control numbers and identifying symbols on the substitute if using such numbers or symbols is acceptable to the taxpayer and the taxpayer’s representative. Such information must not be printed in the top 0.5 inch clear area of any form or schedule requiring a signature. Except for the actual tax return form (Forms 1040, 1040-SR, 1120, 940, 941, etc.), you may print in the left vertical and bottom left margins. The bottom left margin you may use extends 3.5 inches from the left edge of the form. You may print internal control numbers in place of the removed IRS catalog number. 6.2.2 Required Software ID Number (Source Code) on Computer- Prepared Substitutes In the February 2009 Government Accountability Office (GAO) report, “Many Taxpayers Rely on Tax Software and IRS Needs to Assess Associated Risks” (GAO-09-297), the GAO recommended that the IRS require a software identification number on all individual returns to specifically identify the software package used to prepare each tax return. The IRS already has this capability for all e-filed returns. In addition, many tax preparation software firms already print an IRS-issued 3-letter source code on paper returns that are generated by their individual tax software. This source code was assigned when the firms were seeking substitute forms approval under this current publication. In order to follow this GAO recommendation, the IRS will require that all tax preparation software firms include the 3-letter source code on all paper tax returns created by their individual tax preparation software. The many firms that currently have and display their source code on paper returns generated from their software should continue to do so, and no change is necessary. We have reviewed all software companies that passed Assurance Testing System (ATS) testing last filing season and have determined that some firms do not currently have a source code. To save you the burden of contacting us and for your convenience, we have assigned source codes to those firms. You should program your source code to be placed in the bottom left-hand corner of page one of each paper form that will be generated by your individual tax return package. You do not need to apply for a new source code annually. If you already use a 3-letter source code and we have issued you one in error, you are unsure if you were ever issued one, or you have other questions or concerns, you may contact Tax Forms and Publications Special Services Section at substituteforms@irs.gov. The IRS requires tax preparation software firms that participate in the IRS Free File Program include the 3-letter FFF code on all paper Form 1040 returns created by their individual tax preparation software. October 23, 2023 1118 Bulletin No. 2023–43 If you participate in the IRS Free File Program, you should program the 3-letter FFF code to be placed in the bottom left-hand corner of the first page of each paper Form 1040 that will be generated by your individual tax return package. The 3-letter FFF code and the 3-letter source code should be placed next to each other for consistency. If placing the 3-letter FFF code and the 3-letter source code next to each other is not possible, then above or below will be acceptable. Example. The 3-letter FFF code and the 3-letter source code could be BCA-FFF or BCA FFF. A dash or a space is needed to separate the 3-letter FFF code and the 3-letter source code. 6.2.3 Descriptions for Captions, Lines, etc. Descriptions for captions, lines, etc., appearing on the substitute forms may be limited to one print line by using abbreviations and contractions, and by omitting articles, prepositions, etc. However, sufficient keywords must be retained to permit ready identification of the caption, line, or item. 6.2.4 Determining Final Totals Explanatory detail and/or intermediate calculations for determining final line totals may be included on the substitute. Preferably, such calculations should be submitted in the form of a supporting statement. If intermediate calculations are included on the substitute, the line on which they appear may not be numbered or lettered. Intermediate calculations may not be printed in the right column.This column is reserved only for official numbered and lettered lines that correspond to the ones on the official form. Generally, you may choose the format for intermediate calculations or subtotals on supporting statements to be submitted. 6.2.5 Instructional Text on the Official Form Text on the official form, which is solely instructional (for example, “See instructions,” etc.), may generally be omitted from the substitute form. 6.2.6 Intermingling Is Prohibited Showing more than one form or schedule on the same printout page is prohibited. Both sides of the paper may be used for multi-page forms, but it is unacceptable to intermingle forms. For instance, Schedule E can be printed on both sides of the paper because the official form is multi-page, with page 2 continued on the back. However, do not print Schedule E on the front page and Schedule SE on the back page, or Schedule A on the front and Form 8615 on the back, etc. Both pages of a substitute form must match the official form. The back page may be left blank if the back page of the official form contains only the instructions. 6.2.7 Identifying Substitutes Identify all computer-prepared substitutes clearly. Print the form designation 0.5 inch from the top margin and 1.5 inches from the left margin. Print the title centered on the first line of print. Print the tax year and, where applicable, the sequence number on the same line 0.5 inch to 1 inch from the right margin. Include the taxpayer’s name and SSN on all forms and attachments. Also, print the OMB number as reflected on the official form. 6.2.8 Negative Amounts Negative (or loss) amount entries should be enclosed in brackets or parentheses or include a minus sign. This assists in accurate computation and input of form data. The IRS preprints parentheses in negative data fields on many official forms. These parentheses should be retained or inserted on printouts of affected substitute forms. Bulletin No. 2023–43 1119 October 23, 2023 Part 7 Miscellaneous Forms and Programs Section 7.1 – Specifications for Substitute Schedules K-1 7.1.1 Requirements for Schedules K-1 That Accompany Forms 1041, 1065, and 1120-S Because of significant changes to improve processing, prior approval is now required for substitute Schedules K-1 that accompany Form 1041 (for estates and trusts), Form 1065 (for partnerships), or Form 1120-S (for S corporations). Substitute Schedules K-1 should be as close as possible to exact replicas of the official IRS schedules and follow the same process for submitting other substitute forms and schedules. Before releasing their substitute forms, software vendors are responsible for making any subsequent changes that have been made to the final official IRS forms after the draft forms have been posted. Submit substitute Schedule K-1 forms, in PDF format, to scrips@irs.gov for scannability acceptance. Schedule K-1 forms that require testing do not need to be mailed to the Program. You must include information on the substitute that can be tested. This information should be dummy information. Use an “X” for alpha characters and “0” for numbers. The IRS will review and provide feedback of any changes needed so that your forms can be recognized correctly. Include the 6-digit form ID code in the upper right of Schedules K-1 of Forms 1041, 1065, and 1120-S. Allow at least 0.25 inch of white space around the 6-digit code. • 661117 for Form 1041. • 651123 for Form 1065. • 671121 for Form 1120-S. Schedules K-1 that accompany Forms 1041, 1065, or 1120-S must meet all specifications. The specifications include, but are not limited to, the following requirements. October 23, 2023 • You will no longer be able to produce Schedules K-1 that contain only those lines or boxes that taxpayers are required to use. All lines must be included. • The words “* See attached statement for additional information.” must be preprinted in the lower right-hand side on Schedules K-1 of Forms 1041, 1065, and 1120-S. • All Schedules K-1 that are filed with the IRS should be printed on commercial standard size (8.5″ x 11″) paper (the international standard (A4) of 8.27″ x 11.69″ may be substituted). • 10-point Helvetica Light Standard is preferred for all entries that are typed or made using a computer. • Submissions should include the IRS source code or NACTP vendor ID code printed on the lower left corner of the form or in place of the IRS catalog number. • Each recipient’s information must be on a separate sheet of paper. Therefore, you must separate all continuously printed substitutes, by recipient, before filing with the IRS. • No carbon copies or pressure-sensitive copies will be accepted. • The Schedule K-1 must contain the name, address, and SSN or EIN of both the entity (estate, trust, partnership, or S corporation) and the recipient (beneficiary, partner, or shareholder). 1120 Bulletin No. 2023–43 • The Schedule K-1 must contain the tax year, the OMB number, the schedule number (K-1), the related form number (1041, 1065, or 1120-S), and the official schedule name in substantially the same position and format as shown on the official IRS schedule. • The Schedule K-1 must contain all the line items as shown on the official form, except for the instructions, if any are printed on the back of the official Schedule K-1. • The line items or boxes must be in the same order and arrangement as those on the official form. • The amount of each recipient’s share of each item must be shown. A partial percent should be reflected as a decimal (for example, 501/2% should be 50.5%). Furnishing a total amount of each item and a percentage (or decimal equivalent) to be applied to such total amount by the recipient does not satisfy the law and the specifications of this revenue procedure. • State or local tax-related information may not be included on the Schedules K-1 filed with the IRS. • The entity may have to pay a penalty if substitute Schedules K-1 are filed that do not conform to specifications. • Additionally, the IRS may consider the Schedules K-1 that do not conform to specifications as not being able to be processed and may return Form 1041, 1065, or 1120-S to the filer to be filed correctly. Schedules K-1 that are 2-D bar-coded will continue to require prior approval from the IRS. (See Sections 7.1.3 through 7.1.5.) 7.1.2 Special Requirements for Recipient Copies of Schedules K-1 Standardization for reporting information is required for recipient copies of substitute Schedules K-1 of Forms 1041, 1065, and 1120-S. Uniform visual standards are provided to increase compliance by allowing recipients and practitioners to more easily recognize a substitute Schedule K-1. The entity must furnish to each recipient a copy of Schedule K-1 that meets the following requirements. • Bulletin No. 2023–43 Include the 6-digit form ID code in the upper right of Schedules K-1 of Forms 1041, 1065, and 1120-S. Allow white space around the 6-digit code. – 661117 for Form 1041. – 651123 for Form 1065. – 671121 for Form 1120-S. • You will no longer be able to produce Schedules K-1 that contain only those lines or boxes that taxpayers are required to use. All lines must be included. • The words “* See attached statement for additional information.” must be preprinted in the lower right-hand side on Schedules K-1 of Forms 1041, 1065, and 1120-S. • The Schedule K-1 must contain the name, address, and SSN or EIN of both the entity and recipient. • The Schedule K-1 must contain the tax year, the OMB number, the schedule number (K-1), the related form number (1041, 1065, or 1120-S), and the official schedule name in substantially the same position and format as shown on the official IRS schedule. 1121 October 23, 2023 7.1.3 Requirements for Schedules K-1 With Two- Dimensional (2- D) Bar Codes • All applicable amounts and information required to be reported must be titled and numbered in the same manner as shown on the official IRS schedule. The line items or boxes must be in the same order and arrangement and must be numbered like those on the official IRS schedule. • The Schedule K-1 must contain all items required for use by the recipient. The instructions for the schedule must identify the line or box number and code, if any, for each item as shown in the official IRS schedule. • The amount of each recipient’s share of each item must be shown. A partial percent should be reflected as a decimal (for example, 501/2% should be 50.5%). Furnishing a total amount of each line item and a percentage (or decimal equivalent) to be applied to such total amount by the recipient does not satisfy the law and the specifications of this revenue procedure. • Instructions to the recipient that are substantially similar to those on or accompanying the official IRS schedule must be provided to aid in the proper reporting of the items on the recipient’s income tax return. Where items are not reported to a recipient because they do not apply, the related instructions may be omitted. • The quality of the ink or other material used to generate recipients’ schedules must produce clearly legible documents. In general, black chemical transfer inks are preferred. • In order to assure uniformity of substitute Schedules K-1, the paper size should be standard commercial (8.5″ x 11″) (the international standard (A4) of 8.27″ x 11.69″ may be substituted). • The paper weight, paper color, font type, font size, font color, and page layout must be such that the average recipient can easily decipher the information on each page. The preferred font is Helvetica and a minimum of 10-point font. • State or local tax-related information may be included on recipient copies of substitute Schedules K-1. All non-tax-related information should be separated from the tax information on the substitute schedule to avoid confusion for the recipient. • The legend “Important Tax Return Document Enclosed” must appear in a bold and conspicuous manner on the outside of the envelope that contains the substitute recipient copy of Schedule K-1. • The entity may have to pay a penalty if a substitute Schedule K-1 furnished to any recipient does not conform to the specifications of this revenue procedure and results in impeding processing. Electronic filing is the preferred method of filing; however, 2-D bar code is the best alternative method for paper processing. In an effort to improve efficiency and increase data accuracy, the IRS partnered with the tax software development community on a 2-D bar code project in 2003. Certain tax software packages have been modified to generate 2-D bar codes on Schedules K-1. As a result, when Schedules K-1 are printed using these programs, a bar code will print on the page. Rather than manually transcribe information from the Schedule K-1, the IRS will scan the bar code and electronically upload the information from the Schedule K-1. This will result in more efficient operations within the IRS and fewer transcription errors for your clients. Note. If software vendors do not want to produce bar-coded Schedules K-1, they may produce the official IRS Schedules K-1 but cannot use the expedited process for approving bar-coded Schedules K-1 and their parent returns as outlined in Section 7.1.6. October 23, 2023 1122 Bulletin No. 2023–43 In addition to the requirements in Sections 7.1.1 and 7.1.2, the bar-coded Schedules K-1 must meet the following specifications. 7.1.4 2-D Bar Code Specifications for Schedules K-1 Bulletin No. 2023–43 • The bar code should print in the space labeled “For IRS Use Only” on each Schedule K-1. The entire bar code must print within the “For IRS Use Only” box surrounded by a white space of at least 0.25 inch. • Bar codes must print in PDF417 format. • The bar codes must always be in the specified format with every field represented by at least a field delimiter (carriage return). Leaving out a field in a bar code will cause every subsequent field to be misread. • Be sure to include the 6-digit form ID code in the upper right of Schedules K-1 of Forms 1041, 1065, and 1120-S. Allow white space around the 6-digit code. – 661117 for Form 1041. – 651123 for Form 1065. – 671121 for Form 1120-S. Follow these general specifications for preparing all 2-D bar-coded Schedules K-1. • Numeric fields. – Do not include leading zeros (except TINs, ZIP codes, and percentages). – If negative value, the minus sign “–” must be present immediately to the left of the number and part of the 12-position field. – Do not use non-numeric characters except that the literal “STMT” can be put in money fields. – All money fields should be rounded to the nearest whole dollar amount—if a money amount ends in 00 to 49 cents, drop the cents; if it ends in 50 to 99 cents, truncate the cents and increment the dollar amount by one. Use the same rounding technique for the bar-coded and the printed Schedules K-1. – All numeric-only fields are right justified (except TINs and ZIP codes). • All field lengths are expressed as maximum lengths. If the value in the field has fewer positions or the software program does not support that many positions, put in the bar code only those positions actually used. • Alpha fields. – Do not include leading blanks (left justified). – Do not include trailing blanks. – Use uppercase alpha characters only. 1123 October 23, 2023 • 7.1.5 Approval Process for BarCoded Schedules K-1 October 23, 2023 Variable fields. – Do not include leading blanks (left justified). – Do not include trailing blanks. – Use uppercase alpha characters, numerics, and special characters as defined in each field. • Delimit each field with a carriage return. • Express percentages as 6-digit numbers without the percent sign. Left justify with a leading zero(s) (for percentages less than 100%) and no decimal point (decimal point is assumed between 3rd and 4th positions). Examples: 25.32% expressed as “025320”; 105% expressed as “105000”; 8.275% expressed as “008275”; 10.24674% expressed as “010247.” • It is vital that the print routine reinitialize the bar code prior to printing each succeeding Schedule K-1. Failure to do this will result in each Schedule K-1 for a parent return having the same bar code as the document before it. Prior to releasing commercially available tax software that creates bar-coded Schedules K-1, the printed schedule and the bar code must both be tested. If your company is creating bar-coded Schedules K-1, you must receive certification for both the printed Schedule K-1, as well as the bar code, before offering your product for sale. Bar-code testing must be done using the final official IRS Schedule K-1. Bar-code approval requests must be resubmitted for any subsequent changes to the official IRS form that would affect the bar code. Below are instructions and a sequence of events that will comprise the testing process. • The IRS has released the final Schedule K-1 bar-code specifications by publishing them on the IRS.gov website (see IRS.gov/E-file-Providers/K-1-Bar-Code-Certification-Process). • The IRS will publish a set of test documents that will be used to test the ability of tax preparation software to create bar codes in the correct format. • Software developers will submit two identical copies of the test documents—one to the IRS and one to a contracted testing vendor. • The IRS will use one set to ensure the printed schedules comply with standard substitute forms specifications. • If the printed forms fail to meet the substitute forms criteria, the IRS will inform the software developer of the reason for noncompliance. • The software developer must resubmit the Schedule(s) K-1 until it passes the substitute forms criteria. • The testing vendor will review the bar codes to ensure they meet the published bar-code specifications. • If the bar code(s) does not meet published specifications, the testing vendor will contact the software developer directly, informing them of the reason for noncompliance. • Software developers must submit new bar-coded schedules until they pass the bar-code test. • When the bar code passes, the testing vendor will inform the IRS that the developer has passed the bar-code test and the IRS will issue an overall approval for both the substitute form and the bar code. 1124 Bulletin No. 2023–43 7.1.6 Procedures for Reducing Testing Time • After receiving this consolidated response, the software vendor is free to release software for tax preparation as long as any subsequent revisions to the schedules do not change the fields. • Find the mailing address for the testing vendor below. Separate and simultaneous mailings to the IRS and the vendor will reduce testing time. In order to help provide incentives to the software development community to participate in the Schedule K-1 2-D project, the IRS has committed to expediting the testing of bar-coded Schedules K-1 and their associated parent returns. To receive this expedited service, follow the instructions below. • Mail the parent returns (Forms 1041, 1065, 1120-S) and associated bar-coded Schedule(s) K-1 to the appropriate address below in a separate package from all other approval requests. Internal Revenue Service Attn: K-1 Substitute Forms Analyst SE:W:CAR:MP:T:T:SP Room 6411 1111 Constitution Ave. NW Washington, DC 20224 • Mail one copy of the parent form(s) and Schedule(s) K-1 to the IRS and another copy to the testing vendor at the address below. Leidos-IRS Paper and Remittance Processing Support (PRPS II) Attn: Dane Hawkins 9737 Washingtonian Blvd. Gaithersburg, MD 20878 • Include multiple email and phone contact points in the packages. • While the IRS can expedite bar-coded Schedules K-1 and their associated parent returns, it cannot expedite the approval of nonassociated tax returns. • Vendors are encouraged [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%3A7bec9e955f50357f. Public record. Not legal advice.