Bulletin No. 1999–49

Agency decision

Ask Donna

What actually matters in this document.

Text

Internal Revenue

bulletin

Bulletin No. 1999–49

December 6, 1999

HIGHLIGHTS

OF THIS ISSUE

These synopses are intended only as aids to the reader in

identifying the subject matter covered. They may not be

relied upon as authoritative interpretations.

INCOME TAX

Rev. Rul. 99–48, page 600.

Federal rates; adjusted federal rates; adjusted federal

long-term rate, and the long-term exempt rate. For

purposes of sections 1274, 1288, 382, and other sections

of the Code, tables set forth the rates for December 1999.

EMPLOYEE PLANS

Rev. Proc. 99–45, page 603.

Minimum funding standards; change in funding

method. This procedure provides approval to change the

funding method used to determine the minimum funding

standard for defined benefits plans for plan years beginning

on or after January 1, 1999, to any one of the specific methods contained therein. Rev. Proc. 95–51, as clarified and

modified by Rev. Proc. 98–10, modified.

Notice 99–55, page 638.

Retirement plans; 2000 section 415(d) limitations.

Cost-of-living adjustments effective January 1, 2000, applicable to the dollar limits on benefits under qualified defined

benefit pensions plans and to other provisions affecting (1)

certain plans of deferred compensation and (2) “control employees,” are set forth.

ESTATE TAX

REG–103841–99, page 639.

Proposed regulations under section 2601 of the Code relate

to the retention of a trust’s exempt status for generation-skipping transfer tax purposes in the case of modifications, etc.,

to a trust. A public hearing is scheduled for March 15, 2000.

GIFT TAX

REG–103841–99, page 639.

Proposed regulations under section 2601 of the Code relate

Finding Lists begin on page ii.

Index for July through November begins on page iv.

Department of the Treasury

Internal Revenue Service

to the retention of a trust’s exempt status for generationskipping transfer tax purposes in the case of modifications,

etc., to a trust. A public hearing is scheduled for March 15,

2000.

EMPLOYMENT TAX

Rev. Proc. 99–46, page 605.

Electronic filing; magnetic media. Specifications are set

forth for filing Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips, magnetically or electronically. The form may be filed with the Service using

1⁄ inch magnetic tape; IBM 3480/3490 or AS400 compati2

ble tape cartridges; or 5 1⁄4-, 3 1⁄2-inch diskettes.

Rev. Proc. 99–47, page 624.

Specifications are set forth for filing Form W-4, Employee’s

Withholding Allowance Certificate, magnetically or electronically.

ADMINISTRATIVE

REG–104939–99, page 643.

Proposed regulations under section 6212 of the Code relate

to a taxpayer’s last known address.

Announcement 99–112, page 649.

This document corrects certain errors in Rev. Proc. 99–29,

1999–31 I.R.B. 138, which provides specifications for filing

Forms 1098, 1099, 5498, and W-2G. Rev. Proc. 99–29 was

reprinted as Publication 1220, Specifications for Filing Forms

1098, 1099, 5498, and W-2G Magnetically or Electronically.

Corrections to the forms are also included. Rev. Proc. 99–29

corrected.

The IRS Mission

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

and by applying the tax law with integrity and fairness to

all.

Introduction

The Internal Revenue Bulletin is the authoritative instrument

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

and for publishing Treasury Decisions, Executive Orders, Tax

Conventions, legislation, court decisions, and other items of

general interest. It is published weekly and may be obtained

from the Superintendent of Documents on a subscription

basis. Bulletin contents are consolidated semiannually into

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

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

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

modify, or amend any of those previously published in the

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

of internal practices and procedures that affect the rights

and duties of taxpayers are published.

Revenue rulings represent the conclusions of the Service on

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

revenue ruling. In those based on positions taken in rulings

to taxpayers or technical advice to Service field offices,

identifying details and information of a confidential nature

are deleted to prevent unwarranted invasions of privacy and

to comply with statutory requirements.

Rulings and procedures reported in the Bulletin do not have

the force and effect of Treasury Department Regulations,

but they may be used as precedents. Unpublished rulings

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

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

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

are substantially the same.

The Bulletin is divided into four parts as follows:

Part I.—1986 Code.

This part includes rulings and decisions based on provisions

of the Internal Revenue Code of 1986.

Part II.—Treaties and Tax Legislation.

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

Tax Conventions, and Subpart B, Legislation and Related

Committee Reports.

Part III.—Administrative, Procedural, and Miscellaneous.

To the extent practicable, pertinent cross references to

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

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

Assistant Secretary (Enforcement).

Part IV.—Items of General Interest.

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

The first Bulletin for each month includes a cumulative index

for the matters published during the preceding months.

These monthly indexes are cumulated on a semiannual basis,

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

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

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

INS

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

Section 42.—Low-Income

Housing Credit

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month

of December 1999. See Rev. Rul. 99–48 on this

page.

Section 280G.—Golden

Parachute Payments

Federal short-term, mid-term, and long-term

rates are set forth for the month of December 1999.

See Rev. Rul. 99–48 on this page.

Section 382.—Limitation on Net

Operating Loss Carryforwards

and Certain Built-In Losses

Following Ownership Change

Section 468.—Special Rules for

Mining and Solid Waste

Reclamation and Closing Costs

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month

of December 1999. See Rev. Rul. 99–48 on this

page.

Section 482.—Allocation of

Income and Deductions Among

Taxpayers

Federal short-term, mid-term, and long-term

rates are set forth for the month of December 1999.

See Rev. Rul. 99–48 on this page.

Section 483.—Interest on

Certain Deferred Payments

The adjusted applicable federal long-term rate is

set forth for the month of December 1999. See Rev.

Rul. 99–48 on this page.

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month

of December 1999. See Rev. Rul. 99–48 on this

page.

Section 412.—Minimum Funding

Standards

Section 642.—Special Rules for

Credits and Deductions

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month

of December 1999. See Rev. Rul. 99–48 on this

page.

Federal short-term, mid-term, and long-term

rates are set forth for the month of December 1999.

See Rev. Rul. 99–48 on this page.

A revenue procedure describes certain changes to

the funding method used to determine the minimum

funding standard for defined benefit plans for plan

years beginning on or after January 1, 1999. See

Rev. Proc. 99–45, page 603.

Section 807.—Rules for Certain

Reserves

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month

of December 1999. See Rev. Rul. 99–48 on this

page.

Section 467.—Certain Payments

for the Use of Property or

Services

Section 846.—Discounted

Unpaid Losses Defined

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month

of December 1999. See Rev. Rul. 99–48 on this

page.

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month

of December 1999. See Rev. Rul. 99–48 on this

page.

December 6, 1999

600

Section 1274.—Determination

of Issue Price in the Case of

Certain Debt Instruments Issued

for Property

(Also sections 42, 280G, 382, 412, 467, 468, 482,

483, 642, 807, 846, 1288, 7520, 7872.)

Federal rates; adjusted federal rates;

adjusted federal long-term rate, and

the long-term exempt rate. For purposes

of sections 1274, 1288, 382, and other

sections of the Code, tables set forth the

rates for December 1999.

Rev. Rul. 99–48

This revenue ruling provides various

prescribed rates for federal income tax

purposes for December 1999 (the current

month.) Table 1 contains the short-term,

mid-term, and long-term applicable federal rates (AFR) for the current month for

purposes of section 1274(d) of the Internal Revenue Code. Table 2 contains the

short-term, mid-term, and long-term adjusted applicable federal rates (adjusted

AFR) for the current month for purposes

of section 1288(b). Table 3 sets forth the

adjusted federal long-term rate and the

long-term tax-exempt rate described in

section 382(f). Table 4 contains the appropriate percentages for determining the

low-income housing credit described in

section 42(b)(2) for buildings placed in

service during the current month. Table 5

contains the federal rate for determining

the present value of an annuity, an interest

for life or for a term of years, or a remainder or a reversionary interest for purposes

of section 7520. Finally, Table 6 contains

the 2000 interest rate for purposes of sections 846 and 807.

1999–49 I.R.B.

REV. RUL. 99–48 TABLE 1

Applicable Federal Rates (AFR) for December 1999

Period for Compounding

Annual

Semiannual

Quarterly

Monthly

Short-Term

AFR

110% AFR

120% AFR

130% AFR

5.74%

6.33%

6.91%

7.50%

5.66%

6.23%

6.79%

7.36%

5.62%

6.18%

6.73%

7.29%

5.59%

6.15%

6.70%

7.25%

Mid-Term

AFR

110% AFR

120% AFR

130% AFR

150% AFR

175% AFR

6.20%

6.83%

7.46%

8.10%

9.38%

10.98%

6.11%

6.72%

7.33%

7.94%

9.17%

10.69%

6.06%

6.66%

7.26%

7.86%

9.07%

10.55%

6.03%

6.63%

7.22%

7.81%

9.00%

10.46%

Long-Term

AFR

110% AFR

120% AFR

130% AFR

6.47%

7.13%

7.79%

8.45%

6.37%

7.01%

7.64%

8.28%

6.32%

6.95%

7.57%

8.20%

6.29%

6.91%

7.52%

8.14%

REV. RUL. 99–48 TABLE 2

Adjusted AFR for December 1999

Period for Compounding

Annual

Semiannual

Quarterly

Monthly

Short-term

adjusted AFR

4.02%

3.98%

3.96%

3.95%

Mid-term

adjusted AFR

4.76%

4.70%

4.67%

4.65%

Long-term

adjusted AFR

5.72%

5.64%

5.60%

5.57%

REV. RUL. 99–48 TABLE 3

Rates Under Section 382 for December 1999

Adjusted federal long-term rate for the current month

5.72%

Long-term tax-exempt rate for ownership changes during the current month (the highest of the

adjusted federal long-term rates for the current month and the prior two months.)

5.72%

REV. RUL. 99–48 TABLE 4

Appropriate Percentages Under Section 42(b)(2) for December 1999

Appropriate percentage for the 70% present value low-income housing credit

8.49%

Appropriate percentage for the 30% present value low-income housing credit

3.64%

1999–49 I.R.B.

601

December 6, 1999

REV. RUL. 99–48 TABLE 5

Rate Under Section 7520 for December 1999

Applicable federal rate for determining the present value of an annuity, an interest for life or a

term of years, or a remainder or reversionary interest

7.4%

REV. RUL. 99–48 TABLE 6

Rate under Sections 846 and 807

Applicable rate of interest for 2000 for purposes of sections 846 and 807

Section 1288.—Treatment of

Original Issue Discount on

Tax-Exempt Obligations

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month

of December 1999. See Rev. Rul. 99–48, page 600.

Section 7520.—Valuation Tables

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month

of December 1999. See Rev. Rul. 99–48, page 600.

December 6, 1999

602

6.09%

Section 7872.—Treatment of

Loans With Below-Market

Interest Rates

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month

of December 1999. See Rev. Rul. 99–48, page 600.

1999–49 I.R.B.

Part III. Administrative, Procedural, and Miscellaneous

26 CFR 601.201: Rulings and determination

letters.

(Also, Part I, section 412.)

Rev. Proc. 99–45

Section 1. Purpose and Scope

This revenue procedure modifies Rev.

Proc. 95–51, 1995–2 C.B. 431, which

provides approval to change the funding

method (including the asset valuation

method) used for a defined benefit pension plan. This revenue procedure modifies Rev. Proc. 95–51 to provide approval

for a change in funding method in connection with certain mergers; to clarify

that the prohibition of a change in method

where there is a negative unfunded liability applies only in certain circumstances

with respect to a change in funding

method involving a spread gain method;

to provide that the comparison of the results of new valuation software to the results of old valuation software may be

made on the basis of the prior year; and to

provide, in certain situations, that the requirement that the plan administrator approve of the change in funding method

will be satisfied if the plan administrator

is made aware of the change.

Section 2. Background

.01 Section 412(c)(5)(A) of the Internal Revenue Code (“the Code”), as

amended, and section 302(c)(5)(A) of the

Employee Retirement Income Security

Act of 1974 (ERISA), Pub. L. 93-406,

1974–3 C.B. 1, 40, as amended, state that

if the funding method of a plan is

changed, the new funding method shall

become effective only if the change is approved by the Secretary.

.02 Section 1.412(c)(2)–1 of the Income Tax Regulations generally provides

that a change in the actuarial valuation

method used to value the assets of a plan

is a change in funding method that requires approval under § 412(c)(5) of the

Code.

.03 Rev. Proc. 95–51 provides approval for certain changes in funding

method. Section 3 of Rev. Proc. 95–51

provides approval for changes to certain

specific methods including certain asset

valuation methods. Section 4 of Rev.

Proc. 95–51 provides various special ap-

1999–49 I.R.B.

provals for changes. Section 5 of Rev.

Proc. 95–51 provides rules relating to the

establishment and maintenance of amortization bases upon changing methods.

Section 6 of Rev. Proc. 95–51 provides

restrictions under the revenue procedure.

.04 Rev. Proc. 98–10, 1998–2 I.R.B.

35, modified Rev. Proc. 95–51 to provide

approval for additional changes in asset

valuation method and for certain changes

in valuation software. Rev. Proc. 98–10

also clarified and modified other provisions of Rev. Proc. 95–51.

Section 3. Additional Approvals under

Rev. Proc. 95–51

.01 Section 4 of Rev. Proc. 95–51 (Special Approvals) is modified to add a new

section 4.06 as follows:

.06 Approval for De Minimis Mergers

(1) Approval is granted for a change

in method in connection with a

merger described in paragraph (2)

where the procedures set forth in

paragraphs (3) through (5) below are

followed.

(2) The merger involves the merger

of a smaller plan (within the meaning of § 1.414(l)–1(h)(1)) and a

larger plan (within the meaning of

§ 1.414(l)–1(h)(1)). For purposes of

this paragraph (2), the rules of

§§ 1.414(l)–1(h)(2), 1.414(l)–

1(h)(3), and 1.414(l)– 1(h)(4) apply

in determining whether a merger is

de minimis.

(3) For the period from the beginning of the plan year of the smaller

plan to the date of the merger, the

charges and credits to the funding

standard account for the smaller plan

are determined without regard to the

merger. If that period is less than a

full 12-month plan year, the charges

and credits to the funding standard

account for the smaller plan for this

period are ratably adjusted using the

principles of Rev. Rul. 79–237,

1979–2 C.B. 190, in the same manner as if the date of the merger was

the date of plan termination of the

smaller plan. The deductible limit

under § 404 for contributions to the

smaller plan is determined by treating the period from the beginning of

603

the plan year to the date of merger as

a short plan year and following the

procedure set forth in section 5 of

Rev. Proc. 87–27, 1987–1 C.B. 769.

Schedule B of Form 5500 is filed for

the smaller plan for the period from

the beginning of the plan year of the

smaller plan to the date of the

merger. Any contributions made for

the smaller plan after the date of the

merger, but not later than 81⁄2 months

after the date of the merger, are credited to the funding standard account

of the smaller plan for this period.

For purposes of applying § 4971(b)

(but not § 4971(a)) with respect to

the smaller plan, any funding deficiency that existed for the smaller

plan is considered corrected as of the

date of merger.

(4) If the valuation date for the larger

plan for the plan year in which the

merger occurs precedes the date of

the merger, the charges and credits to

the funding standard account for the

larger plan for that plan year are determined without regard to the

merger. Consequently, Schedule B

of Form 5500 for the plan year of the

larger plan in which the merger occurs is filed without regard to the

merger in such a case. Similarly, the

deductible limit determined under

§ 404 with respect to the plan year of

the larger plan in which the merger

occurs is determined without regard

to the merger.

(5) For the actuarial valuation of the

larger plan as of the valuation date

coincident with or next following the

date of the merger, the funding

method (including asset valuation

method) used is that for the larger

plan, and the funding method (including asset valuation method) used

for the smaller plan is disregarded.

The charges and credits to the funding standard account for the larger

plan are determined by treating the

net effect of the change in assets and

liabilities due to the merger in the

same manner as any other gain or

loss experienced by the larger plan.

Consequently, any amortization

bases, credit balances, or funding de-

December 6, 1999

ficiencies with respect to the smaller

plan are disregarded for purposes of

applying § 412 and § 4971 with respect to the larger plan.

.02 Section 4 of Rev. Proc. 95–51 (Special Approvals) is modified to add a new

section 4.07 as follows:

.07 Approval for Mergers Other Than

De Minimis Mergers

(1) Approval is granted for a change

in method that results from a merger

of one plan with another plan in a

given plan year where all the conditions set forth in paragraphs (2)

through (6) are satisfied, and the procedures set forth in paragraphs (7)

through (13) are followed.

(2) The merger is not a de minimis

merger within the meaning of

§ 1.414(l)–(h).

(3) The funding method (without regard to the asset valuation method)

used for each of the plans is a

method described in section 3.

(4) Both plans have the same plan

year and a valuation date that is either the first or last day of the plan

year.

(5) The date of the merger is either

the first day of the plan year or the

last day of the plan year of the two

plans.

(6) In a case in which the date of the

merger is the first day of the plan

year, neither plan has a funding deficiency for the prior plan year. In a

case in which the date of the merger

is the last day of the plan year, neither plan has a funding deficiency

for the plan year of the merger (after

taking into account contributions

made after the date of the merger as

provided in paragraph (13) below).

(7) If the date of the merger is the

first day of the plan year, the minimum funding standard of § 412 and

the deductible limit of § 404 are determined for the merged plan for the

entire plan year in which the merger

occurs in the manner provided in

paragraphs (8), (9), (10), (11), and

(12) below. Consequently, for the

plan year in which the merger occurs, only one Schedule B of Form

5500 is filed for the merged plan in

such a case.

(8) If the same asset valuation

method (in all respects) is used for

December 6, 1999

each of the two plans, the asset valuation method of the merged plan is

that method. If the same asset valuation method (in all respects) is not

used for each of the two plans (for

example, the smoothing period is

three years for one of the plans, and

five years for the other plan), the

asset valuation method used for the

merged plan must be an asset valuation method described in section 3.

(9) If the funding method (without

regard to the asset valuation method)

used for each of the two plans is the

same, that funding method is continued for the plan after the merger. If

the funding method (without regard

to the asset valuation method) used

for each of the two plans is not the

same, then the funding method used

for the ongoing plan is continued

after the merger. For this purpose,

the ongoing plan is the plan as designated by the plan administrator

(within the meaning of § 414(g)),

whose name and plan number will

continue to be reported on Schedule

B of Form 5500 for years after the

merger. The funding method used

for the plan which is not the ongoing

plan is disregarded.

(10) An experience gain or loss is determined separately for each of the

two plans, for the period prior to the

date of the merger, without regard to

the merger and any associated

change in funding method. The preceding sentence applies only to the

extent that an experience gain or loss

would have been determined under

the methods used for the plans prior

to the merger.

(11) All amortization bases that were

maintained for the two plans continue to be maintained for the

merged plan to the extent they would

be maintained under the funding

method used for the merged plan.

The credit balances, if any, of each

of the two plans from the prior year

are carried forward to the current

plan year, and combined.

(12) If an unfunded liability is determined under the funding method

used for the ongoing plan, it must be

determined after any change in actuarial assumptions and methods (including a change in asset valuation

604

method pursuant to paragraph (8)).

In the case of such a funding method

that is a spread gain method, the unfunded liability is redetermined in

the same manner that the unfunded

liability was originally determined

for the ongoing plan. Therefore, the

amortization base established pursuant to the rules of section 5.01(2)

will reflect any change of actuarial

assumptions and methods. For purposes of this paragraph, a spread

gain method is any method that does

not directly calculate an accrued liability. See Rev. Rul. 81–13, 1981–1

C.B. 229, for whether a funding

method directly calculates an accrued liability.

(13) If the date of the merger is the

last day of the plan year, the minimum funding standard under § 412

and the deductible limit under § 404

for each of the plans for the plan year

in which the merger occurs are determined without regard to the merger.

Consequently, separate Schedules B

of Form 5500 are filed for the plans

for the plan year in which the merger

occurs without regard to the merger

in such a case. Any contribution for

the plan year that is made to the trust

after the date of the merger may be

credited on either of the Schedules B

provided that the contribution is

made for such plan within the period

described in § 412(c)(10). For the

plan year following the plan year in

which the merger occurs, the minimum funding standard and the deductible limit are determined for the

plan after the merger by following

the procedures set forth in paragraphs (8), (9), (10), (11) and (12)

above as if the merger occurred on

the first day of such following plan

year.

Section 4. Clarification and

Modification of Rev. Proc. 95–51

.01 Section 4.05(5) of Rev. Proc. 95–51

(Approval for Change in Valuation Software) is modified to read as follows:

(5) The net charge to the funding

standard account for the year (or for

the prior year) determined using the

new software does not differ from

the net charge to the funding standard determined using the old soft-

1999–49 I.R.B.

ware (all other factors being held

constant) by more than two percent

(2%).

.02 Section 6.01(2) of Rev. Proc. 95–51

is modified to read as follows:

(2) This revenue procedure does not

apply unless the plan administrator

(within the meaning of § 414(g)) or

an authorized representative of the

plan sponsor indicates as part of the

series Form 5500 for the plan year

for which the change is effective that

the plan administrator or plan sponsor agrees to the change in funding

method. In the case of a special approval for a change in funding

method described in § 4, other than

the approval described in § 4.03

(Approval for Change in Funding

Method for Fully Funded Terminated Plans), the requirement that

the plan administrator or authorized

representative of the plan sponsor

agree to the change will be satisfied

if the plan administrator or an authorized representative of the plan sponsor is made aware of the change before the Schedule B is filed.

.03 Section 6.02(6) of Rev. Proc. 95–51

(Non-Applicability if Negative Normal

Cost or Negative Unfunded Liability Results From the Change) is modified to

read as follows:

Approval to change to a method described in section 3 does not apply if,

after the change in method, a negative

normal cost exists. Also, approval to

change to a method described in section 3 does not apply if, after the

change in method, a negative unfunded

liability exists, and the method (a) is a

spread gain method, and (b) uses an unfunded liability in determining the normal cost. For purposes of the preceding sentence, a spread gain method is

any method that does not directly calculate an accrued liability. See Rev.

Rul. 81-13 for whether a funding

method directly calculates an accrued

liability.

.04 Section 6.02(7) of Rev. Proc. 95–51

(Non-Applicability if Change in Method

is Being Made Pursuant to a Spin-off or

Merger) is modified to read as follows:

Approval to change to a method described in section 3 does not apply if

the funding method for a plan year is

being changed in connection with a

plan spin-off or merger, unless the

change is made as provided in § 4.06 or

§ 4.07.

Section 5. Effective Date

This revenue procedure is effective for

plan years commencing on or after January 1, 1999.

Section 6. Effect on Other Revenue

Procedures

Rev. Proc. 95–51, as clarified and modified by Rev. Proc. 98–10, is modified.

Section 7. Drafting Information

The principal author of this revenue

procedure is James E. Holland, Jr. of the

Employee Plans Division. For further information regarding this revenue procedure, call (202) 622-6076 between 2:30

and 3:30 Eastern time (not a toll free

number) Monday through Thursday. Mr.

Holland’s number is (202) 622-6730 (also

not a toll free number).

Publication 1239 (Rev. 8–99)

Specifications for Filing Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips Magnetically/Electronically

Rev. Proc. 99–46

Reprinted from IR Bulletin l999–49

dated December 6, 1999

(Contains copies of Forms 4419, 4804, 4802, 8508 and 8809 for taxpayers’ use.)

NOTE: Use this revenue procedure to prepare Form 8027, Employer’s Annual Information Return of Tip Income and Allocated

Tips, for submission to Internal Revenue Service (IRS) using any of the following:

– Magnetic Tape

– 3 1⁄2-inch Diskette

– Tape Cartridges

– 8mm, 4mm and Quarter Inch Cartridges (QIC)

– Electronic Filing

Please read this publication carefully. Persons required to file may be subject to penalties if they do not follow the instructions in

this revenue procedure.

1999–49 I.R.B.

605

December 6, 1999

TABLE OF CONTENTS

PART A. GENERAL

SECTION 1.

SECTION 2.

SECTION 3.

SECTION 4.

SECTION 5.

SECTION 6.

SECTION 7.

SECTION 8.

SECTION 9.

SECTION 10.

SECTION 11.

SECTION 12.

SECTION 13.

SECTION 14.

PURPOSE

NATURE OF CHANGES

WHERE TO FILE AND HOW TO CONTACT THE IRS MARTINSBURG COMPUTING CENTER

FILING REQUIREMENTS

REQUEST FOR WAIVER FROM FILING INFORMATION RETURNS ON MAGNETIC MEDIA

APPLICATION FOR MAGNETIC/ELECTRONIC REPORTING

FILING OF FORM 8027 MAGNETICALLY/ELECTRONICALLY

FILING DATES

EXTENSIONS OF TIME TO FILE

PROCESSING OF MAGNETIC/ELECTRONIC RETURNS

PENALTIES

CORRECTED RETURNS, SUBSTITUTE FORMS, AND COMPUTER-GENERATED FORMS

EFFECT ON PAPER RETURNS

DEFINITIONS

PART B. MAGNETIC/ELECTRONIC SPECIFICATIONS

SECTION 1.

SECTION 2.

SECTION 3.

SECTION 4.

SECTION 5.

SECTION 6.

SECTION 7.

SECTION 8.

SECTION 9.

GENERAL

TAPE SPECIFICATIONS

DISKETTE SPECIFICATIONS

TAPE CARTRIDGE SPECIFICATIONS

8MM, 4MM, AND QUARTER INCH CARTRIDGE SPECIFICATIONS

ELECTRONIC FILING SPECIFICATIONS

RECORD FORMAT AND LAYOUT

EFFECT ON OTHER DOCUMENTS

EFFECTIVE DATE

26 CFR 601.602: Tax forms and instructions.

PART A. GENERAL

SEC. 1. PURPOSE

.01 Form 8027 is used by large food or beverage establishments when the employer is required to make annual reports to the IRS

on receipts from food or beverage operations and tips reported by employees.

Note: All employees receiving $20.00 or more a month in tips must report 100% of their tips to their employer

.02 The Internal Revenue Service Martinsburg Computing Center (IRS/MCC) has the responsibility of processing Forms 8027

submitted magnetically/electronically. The purpose of this revenue procedure is to provide the specifications for filing Form 8027,

Employer’s Annual Information Return of Tip Income and Allocated Tips, magnetically or electronically. This revenue procedure is

updated when legislative changes occur or reporting procedures are modified. Major changes have been emphasized by italics.

.03 This revenue procedure supersedes the following: Rev. Proc. 98–52 published as Publication 1239 (9–98), Specifications for

Filing Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips, Magnetically or Electronically.

SEC. 2. NATURE OF CHANGES

.01 Numerous editorial changes have been made to the revenue procedure. Please read the publication carefully and in its entirety

before attempting to prepare your magnetic/electronic file for submission. Major changes have been emphasized by using italics.

The changes are as follows:

(a) Updated information on IRS/MCC’s mailing addresses, telephone numbers and the Call Site is provided in Part A, Sec. 3.

(b) Part A, Sec. 7 Test Files has been deleted.

(d) Copies of approved extension letters should be sent with paper filings to Andover Service Center. See Part A, Sec. 9 for

complete instructions.

December 6, 1999

606

1999–49 I.R.B.

(e) The Information Reporting Program-Bulletin Board System (IRP-BBS) is no longer in use. The information in Part B, Sec.

6 Asynchronous (IRP-BBS) electronic filing specifications has been completely revised to provide instructions on the new

electronic filing system known as the Filing Information Returns Electronically (FIRE) system.

(f) The new number for the electronic filing system is 304-262-2400

(g) The following types of media are no longer acceptable by IRS/MCC:

(1) 5 1⁄4 inch diskettes

(2) 3 1⁄2 inch diskettes created on a non-MS-DOS systems

(3) 3 1⁄2 inch diskettes created on a System 36 or AS400.

(h) The following QIC (quarter inch cartridge) sizes has been deleted from Part B, Section 5:

Size

Tracks

Density

Capacity

QIC-11

QIC-320

QIC-1350

4/5

4 (8000 BPI)

17 (16000 BPI)

18 (51667 BPI)

22Mb or 30Mb

320Mb

1.3Gb

SEC. 3. WHERE TO FILE AND HOW TO CONTACT THE IRS MARTINSBURG COMPUTING CENTER

.01 All Forms 8027 filed magnetically or electronically are processed at IRS/MCC and are to be sent to the following address:

IRS-Martinsburg Computing Center

Information Reporting Program

230 Murall Dr

Kearneysville WV 25430

.02 Requests for paper forms and publications should be requested by calling the “Forms Only Number” listed in your local telephone directory or by calling the IRS toll-free number 1-800-TAX-FORM (1-800-829-3676).

.03 Questions pertaining to magnetic media filing of Forms W-2 must be directed to the Social Security Administration (SSA).

Filers can call 1-800-SSA-6270 to obtain the phone number of the SSA Employer Services Liaison Officers for their area.

.04 A taxpayer or authorized representative may request a copy of a tax return or a Form W-2 filed with a return by submitting

Form 4506, Request for Copy or Transcript of Tax Form, to IRS. This form may be obtained by calling 1-800-TAX-FORM (1-800829-3676).

.05 The Information Reporting Program (IRP) Call Site, located at the Martinsburg Computing Center, provides service to the

payer/employer community (financial institutions, employers, and other transmitters of information returns). The IRP Call Site answers questions concerning tax law and magnetic/electronic filing of Forms 8027 and other information returns (Forms 1096, 1098,

1099, 5498, W-2G, W-3, 1042-S), questionable Forms W-4, inquiries dealing with backup withholding due to missing and incorrect

taxpayer identification numbers and questions concerning paper filing of Forms W-2. Recipients of information returns (payees)

should continue to contact 1-800-829-1040 or other numbers specified in the tax return instructions with any questions on how to report tax returns.

The Call Site accepts calls from all areas of the country. The number to call is 304-263-8700 or Telecommunications Device for

the Deaf (TDD) 304-267-3367. These are toll calls. Hours of operation for the Call Site are Monday through Friday, 8:30 a.m. to

4:30 p.m. Eastern Time. The Call Site is in operation throughout the year to handle the questions of payers, transmitters, and employers. Due to the high demand for assistance at the end of January and February, it is advisable to call as soon as possible to avoid

these peak filing seasons.

.06 The telephone numbers for magnetic media inquiries or electronic submissions are:

304-263-8700 - Call Site

304-262-2400 - Electronic Filing

304-267-3367 - TDD (Telecommunication Device for the Deaf)

304-264-5602 - Fax Machine

(These are not toll-free telephone numbers.)

TO OBTAIN FORMS & PUBLICATIONS, CALL:

1-800-TAX-FORM(1-800-829-3676)

TO OBTAIN FORMS & PUBLICATIONS VIA THE INTERNET:

www.irs.gov

1999–49 I.R.B.

607

December 6, 1999

SEC. 4. FILING REQUIREMENTS

.01 Section 6011(e)(2)(A) of the Internal Revenue Code requires that any person, including corporations, partnerships, individuals, estates, and trusts, required to file 250 or more information returns must file such returns on magnetic media.

.02 The filing requirements apply separately to both original and corrected returns.

.03 Filing electronically through the FIRE system with IRS/MCC fulfills the magnetic media filing requirement.

.04 The above requirements do not apply if you establish undue hardship (see Part A, Sec. 5).

SEC. 5. REQUEST FOR WAIVER FROM FILING INFORMATION RETURNS ON MAGNETIC MEDIA

.01 If an employer is required to file on magnetic media but fails to do so (or fails to file electronically, in lieu of magnetic media

filing) and does not have an approved waiver on record, the employer will be subject to a penalty of $50 per return in excess of 250.

.02 If employers are required to file original or corrected returns on magnetic media, but such filing would create a hardship, they

may request a waiver from these filing requirements by submitting Form 8508, Request for Waiver From Filing Information Returns

on Magnetic Media, to IRS/MCC.

.03 Even though an employer may submit as many as 250 corrections on paper, IRS encourages magnetically or electronically

submitted corrections. Once the 250 threshold has been met, filers are required to submit any additional returns magnetically or

electronically. However, if a waiver for an original filing is approved, any corrections for the same type of returns will be covered

under this waiver.

.04 Generally, only the employer may sign the Form 8508. A transmitter may sign if given power of attorney; however, a letter

signed by the employer stating this fact must be attached to the Form 8508.

.05 A transmitter must submit a separate Form 8508 for each employer. Do not submit a list of employers.

.06 All information requested on the Form 8508 must be provided to IRS for the request to be processed.

.07 The waiver, if approved, will provide exemption from magnetic media filing for the current tax year only. Employers may not

apply for a waiver for more than one tax year at a time; application must be made each year a waiver is necessary.

.08 Form 8508 may be photocopied or computer-generated as long as it contains all the information requested on the original

form.

.09 Filers are encouraged to submit Form 8508 to IRS/MCC at least 45 days before the due date of the returns.

.10 File Form 8508 for Forms W-2 with IRS/MCC, not SSA.

.11 Waivers are evaluated on a casebycase basis and are approved or denied based on criteria set forth under section 6011(e) of

the Internal Revenue Code. The transmitter must allow a minimum of 30 days for IRS/MCC to respond to a waiver request.

.12 If a waiver request is approved, the transmitter should keep the approval letter on file.

.13 An approved waiver from filing Forms 8027 on magnetic media does not provide exemption from all filing. The employer

must timely file Form 8027 on acceptable paper forms with the Andover Service Center. The transmitter should also send a copy of

the approved waiver to the Andover Service Center where the paper returns are filed.

SEC. 6. APPLICATION FOR MAGNETIC/ELECTRONIC REPORTING

.01 For the purposes of this revenue procedure, the EMPLOYER is the organization supplying the information and the TRANSMITTER is the organization preparing the magnetic/electronic file and/or sending the file to IRS/MCC. The employer and the transmitter may be the same entity. Employers or their transmitters are required to complete Form 4419, Application for Filing Information Returns Magnetically/Electronically.

.02 Form 4419 can be submitted at any time during the year; however, it should be submitted to IRS/MCC at least 30 days before

the due date of the return(s). IRS will act on an application and notify the applicant, in writing, of authorization to file. A fivecharacter alpha/numeric Transmitter Control Code (TCC) will be assigned and included in an acknowledgment letter within 15 to 45

days of receipt of the application. Magnetic/electronic returns may not be filed with IRS until the application has been approved and

a TCC assigned. Include your TCC in any correspondence with IRS/MCC.

.03 If you file information returns other than Form 8027 on magnetic media, you must obtain a separate TCC for those types of returns. The TCC assigned for Forms 8027 is to be used for the processing of these forms only.

.04 Upon approval, a magnetic media reporting package containing the current revenue procedure, forms, and instructions will be

sent to the attention of the contact person indicated on Form 4419. Annually, thereafter, IRS/MCC will send the transmitter a package containing the current revenue procedure and forms. This package will continue to be sent to the contact person indicated on the

Form 4419 unless IRS/MCC has been notified in writing of any changes or updates. After you have received approval to file magnetically/electronically, you do not need to reapply each year; however, notify IRS in writing if:

(a) You change your name or the name of your organization, so that your files may be updated to reflect the proper name;

(b) You discontinue filing on magnetic media for two years (your TCC may have been reassigned).

.05 For filers who plan to submit for multiple employers, IRS encourages transmitters to submit one application and to use one

TCC for all employers.

December 6, 1999

608

1999–49 I.R.B.

.06 Only employers or transmitters using equipment compatible with IRS equipment will have their application approved.

.07 If your magnetic media files have been prepared for you in the past by a transmitter, and you now have computer equipment

compatible with that of IRS and wish to prepare your own files, you must request your own five-character alpha/numeric TCC by filing an application, Form 4419, as described in Sec. 6.02.

SEC. 7. FILING OF FORM 8027 MAGNETICALLY/ELECTRONICALLY

.01 Form 4804, Transmittal of Information Returns Reported Magnetically/Electronically, must accompany all magnetic media

shipments. If you file for multiple employers and have the authority to sign the affidavit on Form 4804, you should also submit

Form 4802, Transmittal of Information Returns Reported Magnetically/Electronically (Continuation). For electronic transmissions,

the Form 4804 and Form 4802, if applicable, must be mailed or faxed the same day as the electronic transmission.

.02 The employer MUST sign Form 4804; however, an agent (transmitter, service bureau, paying agent, or disbursing agent) may

sign Form 4804 for the employer. To do this, the agent must have the authority to sign for the employer under an agency agreement

(either oral, written, or implied) that is valid under the state law and must add to his or her signature the caption “For: (name of employer)”.

NOTE: Failure to sign the Form 4804 may delay processing or will result in your file being returned to you unprocessed.

.03 Although a duly authorized agent may sign the Form 4804, the employer is responsible for the accuracy of the Form 4804 and

the returns filed. The employer will be liable for penalties for failure to comply with filing requirements.

.04 Be sure to include Form 4804, 4802 or computer-generated substitutes with your magnetic media shipment. DO NOT MAIL

YOUR MAGNETIC MEDIA AND THE TRANSMITTAL DOCUMENTS SEPARATELY.

.05 Indicate on Form 4804, in the block captioned “Combined Total Payee Records,” the total number of establishments being reported in this shipment. This figure should match the total number of records in your magnetic/electronic file.

.06 DO NOT SUBMIT THE SAME INFORMATION ON PAPER FORMS THAT YOU SUBMIT MAGNETICALLY/

ELECTRONICALLY. This does not mean that corrected documents are not to be filed. If a return has been prepared and submitted improperly, you must file a corrected return as soon as possible. Refer to Part A, Sec. 12 for requirements and instructions for filing corrected returns.

.07 If an allocation of tips is based on a good faith agreement, a copy of this agreement must accompany the submission.

.08 If, under Rev. Proc. 86–21, 1986–1 C.B. 560, the District Director granted the establishment a percentage of gross receipts of

less than 8%, a copy of the determination letter must be sent with the submission. Employers with more than one establishment can

receive approval from one district in each Internal Revenue Service region where the establishments are located (See sec.

31.6053–3(h)(4) of the Employment Tax Regulations).

.09 Before submitting your magnetic/electronic file, include the following:

(a) A signed Form 4804, Transmittal of Information Returns Reported Magnetically/Electronically, along with a Form 4802,

Transmittal of Information Returns Reported Magnetically/Electronically(Continuation), if you submit data for multiple employers. These forms must be mailed or faxed the same day electronic files are submitted.

(b) Your media (tape, diskette, or cartridge) with an external identifying label. Notice 210 describes the information which

should be included on this self-prepared label.

(c) On the outside of the shipping container, affix the label, IRB Special Projects. This label is included in this publication.

Note: See Part B, Sec. 6 for electronic submission requirements.

.10 IRS/MCC will not pay or accept “Collect on Delivery” or “Charged to IRS” shipments of reportable tax information that an

individual or organization is legally required to submit.

SEC. 8. FILING DATES

.01 Magnetic/electronic reporting to IRS for Form 8027 must be on a calendar year basis. The due date of either paper or magnetically reported Forms 8027 is the last day of February. However, Forms 8027 filed electronically are due March 31.

.02 If the due date falls on a Saturday, Sunday, or legal holiday, filing Form 8027 on the next day that is not a Saturday, Sunday, or

legal holiday will be considered timely.

SEC. 9. EXTENSIONS OF TIME TO FILE

.01 An extension of time to file may be requested for Forms 8027, 1099, 1098, 5498, W-2G, W-2, and 1042-S.

.02 Form 8809, Request for Extension of Time To File Information Returns, should be submitted to IRS/MCC. This form may be

used to request an extension of time to file information returns submitted on paper, magnetically or electronically.

.03 Requesting an extension of time for multiple employers may be done by submitting Form 8809 and attaching a list of the employer names and their TINs (EIN or SSN). The listing must be attached to ensure the extension is recorded for all employers.

Form 8809 may be computer-generated or photocopied. Be sure that all the pertinent information is included.

1999–49 I.R.B.

609

December 6, 1999

.04 Requests for extensions of time for multiple employers will be responded to with one approval letter, accompanied by a list of

employers covered under that approval.

.05 As soon as it is apparent that an extension of time to file is needed, Form 8809 may be submitted. When granted, the extension will be for 30 days. It will take a minimum of 30 days for IRS/MCC to respond to an extension request. Under certain circumstances, a request for an extension of time could be denied. When a denial letter is received, any additional or necessary information

may be resubmitted within 20 days. When requesting an extension of time, do not hold your files waiting for a response.

.06 While very difficult to obtain, if an additional extension of time is needed, a second Form 8809 must be submitted before the

end of the initial extension period. Line 7 on the form should be checked to indicate that an additional extension is being requested.

A second 30-day extension will be approved only in cases of extreme hardship or catastrophic events.

.07 Form 8809 must be postmarked no later than the due date of the return for which an extension is requested. If requesting an

extension of time to file several types of forms, use one Form 8809, but the Form 8809 must be postmarked no later than the earliest

due date. For example, if requesting an extension of time to file both Forms 8027 and 5498, submit Form 8809 postmarked on or before the last day of February.

.08 If an extension request is approved, the approval letter should be kept on file. The approval letter or copy of the approval letter for extension of time should not be sent to IRS/MCC with the magnetic/electronic file. When submitting Form 8027 on paper

only to the Andover Service Center, attach a copy of the approval letter. If an approval letter has not been received, send a copy of

the timely filed Form 8809.

.09 Request an extension for only one tax year.

.10 The extension request must be signed by the employer or a person who is duly authorized to sign a return, statement or other

document for the employer.

.11 Failure to properly complete and sign the Form 8809 may cause delays in processing the request or result in a denial. Carefully read and follow the instructions on the back of the Form 8809.

.12 Form 8809 may be obtained by calling 1-800-TAX-FORM (1-800-829-3676).

Note: AN EXTENSION OF TIME TO FILE IS NOT AN EXTENSION TO ISSUE FORM W-2 COPY “A” TO THE

EMPLOYEE.

.13 Request an extension of time to furnish the statements to recipients of Forms W-2 by submitting a letter to IRS/MCC containing the following information:

(a) Employer name

(b) TIN

(d) Type of return (W-2)

(e) Specify that the extension request is to provide W-2 statements to recipients.

(f) Reason for delay

(g) Signature of employer or person duly authorized.

Requests for an extension of time to furnish the statements for Forms W-2 to recipients are not automatically approved; however, if

approved, generally an extension will allow a maximum of 30 additional days from the due date to furnish the statements to the recipients. The request must be postmarked no later than the date on which the statements are due to the recipients.

SEC. 10. PROCESSING OF MAGNETIC/ELECTRONIC RETURNS

.01 All data received at IRS/MCC for processing will be given the same protection as individual returns (Form 1040). IRS/MCC

will process your magnetic/electronic files to ensure the records were formatted and coded according to this revenue procedure.

.02 If the data is formatted incorrectly, the file will be returned for replacement accompanied by a letter of explanation along with

a Media Tracking Slip (Form 9267). When media is returned, it is because IRS/MCC encountered errors (not limited to format) and

was unable to process the media; therefore, requiring a replacement. Open all packages immediately.

.03 Files must be corrected and returned with the Media Tracking Slip (Form 9267) to IRS/MCC within 45 days from the date of

the letter IRS/MCC included with the returned media. A penalty for failure to file correct information returns by the due date will be

assessed if the file is not corrected and returned within the 45 days or if the incorrect file is returned by IRS/MCC for replacement more than two times. A penalty for intentional disregard of filing requirements will be assessed if a replacement file is not received.

.04 Files will not be returned to you after successful processing. Therefore, if you want proof that IRS/MCC received your shipment, you may use a carrier that provides proof of delivery.

.05 To distinguish between a correction and a replacement, the following definitions are provided:

(a) A correction is a record submitted by the employer/transmitter to correct a record that was successfully processed by IRS,

but contained erroneous information.

December 6, 1999

610

1999–49 I.R.B.

(b) A replacement is a file that IRS has returned because of format errors or data discrepancies encountered during processing.

After necessary changes have been made, the file must be returned to IRS/MCC for processing.

SEC. 11. PENALTIES

.01 The Revenue Reconciliation Act of 1989 changed the penalty provisions for any documents, including corrections, which are

filed after the original filing date for the return. The penalty for failure to file correct information returns is “time sensitive,” in that

prompt correction of failures to file, or prompt correction of errors on returns that were filed, can lead to reduced penalties.

— The penalty generally is $50 for each information return that is not filed, or is not filed correctly, by the prescribed filing

date, with a maximum penalty of $250,000 per year ($100,000 for certain small businesses with average annual gross receipts, over the most recent 3-year period, not in excess of $5,000,000). The penalty generally is reduced to:

— $30 for each failure to comply if the failure is corrected more than 30 days after the return was due, but on or before August

1 of the calendar year in which the return was due, with a maximum penalty of $150,000 per year ($50,000 for certain small

businesses with average annual gross receipts, over the most recent 3-year period, not in excess of $5,000,000).

— $15 for each failure to comply if the failure is corrected within 30 days after the date the return was due, with a maximum

penalty of $75,000 per year ($25,000 for certain small businesses with average annual gross receipts, over the most recent

3-year period, not in excess of $5,000,000).

.02 Penalties can be waived if failures were due to reasonable cause and not to willful neglect. In addition, section 6721(c) of the

Code provides a de minimis rule that if:

(a) information returns have been filed but were filed with incomplete or incorrect information, and

(b) the failures are corrected on or before August 1 of the calendar year in which the returns were due, then the penalty for

filing incorrect returns (but not the penalty for filing late) will not apply to the greater of 10 returns or one-half of 1 percent

of the total number of information returns you are required to file for the calendar year.

.03 Intentional Disregard of Filing Requirements — If any failure to file a correct information return is due to intentional disregard of the filing and correct information requirements, the penalty is at least $100 per information return with no maximum

penalty.

SEC. 12. CORRECTED RETURNS, SUBSTITUTE FORMS, AND COMPUTERGENERATED FORMS

.01 If returns must be corrected, approved magnetic/electronic filers must provide such corrections magnetically/electronically if

you have 250 or more. If your information is filed magnetically/electronically, corrected returns are identified by using the “Corrected 8027 Indicator” in field position 370 of the employer record. Form 4804 must accompany the shipment, and the box for correction should be marked in Block 1 of the form. (See Part A, Sec. 10.05 for the definition of corrections.)

.02 If corrections are not submitted on magnetic media, employers must submit them on official Forms 8027. Substitute forms

that have been previously approved by IRS, or computergenerated forms that are exact facsimiles of the official form (except for

minor page size or print style deviations), may be submitted without obtaining IRS approval before using the form.

.03 Employers/establishments may send corrected paper Forms 8027 to IRS at the address shown in Part A, Sec. 13.01. Corrected

paper returns are identified by marking the “AMENDED” check box on Form 8027.

SEC. 13. EFFECT ON PAPER RETURNS

.01 If you are filing more than one paper Form 8027, you must attach a completed Form 8027T, Transmittal of Employer’s Annual

Information Return of Tip Income and Allocated Tips, to the Forms 8027 and send to:

Internal Revenue Service Center

Andover, MA 05501

IRS/MCC processes Forms 8027 submitted magnetically/electronically only. Do not send paper Forms 8027 to IRS/MCC.

.02 If part of a submission is filed magnetically/electronically and the rest of the submission is filed on paper Forms 8027, send

the paper forms to the Andover Service Center. For example, you filed your Forms 8027 magnetically/electronically with

IRS/MCC, and later you found that some of the forms you filed need correcting. Because of the low volume of corrections, you submit the corrections on paper Forms 8027. You must send these corrected Forms 8027 along with Form 8027-T to the Andover

Service Center.

1999–49 I.R.B.

611

December 6, 1999

SEC. 14. DEFINITIONS

ELEMENT

DESCRIPTION

EIN

A nine-digit Employer Identification Number which has been assigned by IRS to the reporting entity.

Employer

The organization supplying their information.

Establishment

A large food or beverage establishment that provides food or beverage for consumption on the

premises; where tipping is a customary practice; and where there are normally more than 10 employees who work more than 80 hours on a typical business day during the preceding calendar year.

More than 10

employees

An employer is considered to have more than 10 employees on a typical business day during the

calendar year if half the sum of: the average number of employee hours worked per business day in the

calendar month in which the aggregate gross receipts from food and beverage operations were greatest, plus the average number of employee hours worked per business day in the calendar month in

which the total aggregate gross receipts from food and beverage operations were the least, equals

more than 80 hours.

Employees hours

worked

The average number of employee hours worked per business day during a month is figured by

dividing the total hours worked during the month by all your employees who are employed in a food

or beverage operation by the average number of days in the month that each food or beverage operation at which these employees worked was open for business.

File

For the purpose of this revenue procedure, a file consists of all magnetic/electronic records submitted

by an Employer or Transmitter.

Transmitter

Person or organization preparing magnetic/electronic file(s). May be Employer or agent of Employer.

Transmitter

Control

Code (TCC)

A five-character alpha/numeric code assigned by IRS to the transmitter prior to actual filing magnetically/electronically. This number is inserted in the record and must be present. An application (Form

4419) must be filed with IRS to receive this number.

Replacement

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

Correction

A correction is an information return submitted by the transmitter to correct an information return that

was previously submitted to and processed by IRS/MCC, but contained erroneous information.

PART B. MAGNETIC/ELECTRONIC SPECIFICATIONS

SEC. 1. GENERAL

.01 The magnetic/electronic specifications contained in this part of the revenue procedure define the required format and contents

of the records to be included in the file.

.02 A self-prepared media label must be affixed to each piece of media submitted for processing. Notice 210 provides instructions

on how to complete a self-prepared media label.

.03 The record format in Part B, Sec. 7, applies to both magnetic and electronic files.

SEC. 2. TAPE SPECIFICATIONS

.01 In most instances, IRS/MCC can process any compatible tape files. Compatible tape files must meet any one set of the following:

(a) 9-track EBCDIC (Extended Binary Coded Decimal Interchange Code) with;

(1) Odd Parity and

(2) A density of 1600 or 6250 BPI.

(3) If you use Unisys Series 1100, you must submit an interchange tape.

(b) 9-track ASCII (American Standard Coded Information Interchange) with;

(1) Odd Parity and

(2) A density of 1600 or 6250 BPI.

December 6, 1999

612

1999–49 I.R.B.

Please be consistent in the use of recording codes and density on your files. If files are generated in more than one recording code

and/or density, multiple shipments would be appreciated.

.02 All compatible tape files must have the following characteristics:

(a) 1⁄2 inch mylar base, oxide coated; computer grade magnetic tape on reels up to 2400 feet (731.52 m) within the following

specifications:

(1) Tape thickness: 1.0 or 1.5 mils

(2) Reel diameter: 10.5 inch (26.67 cm), 8.5 inch (21.59 cm), or 7 inch (17.78 cm).

.03 All records have a fixed record length of 372 positions.

.04 The tape record defined in this revenue procedure may be blocked or unblocked, subject to the following:

(a) All records except the header and trailer labels may be blocked.

(b) If records are blocked, the block can not exceed 32,736 tape positions. The block length must be evenly divisible by 372

(c) If the use of blocked records would result in a short block, all remaining positions of the block MUST be filled with 9’s.

DO NOT PAD A BLOCK WITH BLANKS. Padding a block with blanks will result in a short record, which will cause

math computation errors. Your tape will then be returned for replacement.

.05 For the purposes of this revenue procedure, the following conventions must be used:

Header label:

(a) Transmitters may use standard headers provided they begin with 1HDR, HDR1, VOL1, or VOL2.

(b) Consists of a maximum of 80 positions.

(c) Header and trailer labels are optional unless more than one reel is being submitted. If more than one reel is being submitted,

header and trailer labels are required. IRS/MCC PREFERS STANDARD OR ANSI LABELED TAPES. IF YOU SUBMIT

AN UNLABELED TAPE, THIS MUST BE INDICATED ON THE EXTERNAL LABEL AND ON THE FORM 4804 OR

COMPUTERGENERATED SUBSTITUTE.

Trailer label:

(a) Standard trailer labels may be used provided that they begin with 1EOR, 1EOF, EOV1, or EOV2.

(b) Consists of a maximum of 80 positions.

(c) Header and trailer labels are optional unless more than one reel is being submitted. If more than one reel is being submitted, header and trailer labels are required.

Tape Mark:

(a) Used to signify the physical end of the recording on tape.

(b) May follow the header label and precede and/or follow the trailer label.

SEC. 3. DISKETTE SPECIFICATIONS

IRS/MCC has discontinued processing 5 1⁄4 inch diskettes. Filers who use 5 1⁄4 inch diskettes must now use another method

of submitting information returns magnetically/electronically.

.01 To be compatible, a diskette file must meet the following specifications:

(a) 3 1⁄2 inches in diameter.

(b) Data must be recorded in standard ASCII code.

(d) Delimiter character commas (,) must not be used.

(e) Positions 371 and 372 of each record have been reserved for carriage return/line feed (cr/lf) characters.

(f) Filename of ATMTAX must be used. Do not enter any other data in this field. If a file will consist of more than one diskette,

the filename will contain a 3-digit extension. This extension will indicate the sequence of the diskette within the file. For

example, the first diskette will be named ATMTAX.001, the second diskette will be ATMTAX.002, etc.

(g) A file may contain more than one diskette as long as the filename conventions are adhered to.

(h) Diskettes must meet one of the following specifications:

Capacity

Tracks

Sides/Density

Sector Size

1.44 mb

1.2 mb

96tpi

135tpi

96tpi

512

.02 IRS requires that 3 1⁄2 inch diskettes be created using MS/DOS. Diskettes created using other operating systems are not acceptable.

.03 Deviations from the prescribed format are not acceptable.

1999–49 I.R.B.

613

December 6, 1999

SEC. 4. TAPE CARTRIDGE SPECIFICATIONS

.01 In most instances, IRS/MCC can process tape cartridges that meet the following specifications:

(a) Must be IBM 3480, 3490, 3490E, or AS400 compatible.

(b) Must meet American National Standard Institute (ANSI) standards, and have the following characteristics:

(1) Tape cartridges must be 1⁄2-inch tape contained in plastic cartridges which are approximately 4-inches by 5-inches by

1-inch in dimension.

(2) Magnetic tape must be chromium dioxide particle based 1⁄2-inch tape.

(3) Cartridges must be 18-track or 36-track parallel (See Note).

(4) Cartridges must contain 37,871 CPI or 75,742 CPI (characters per inch).

(5) Mode must be full function.

(6) The data may be compressed using EDRC (Memorex) or IDRC (IBM) compression.

(7) Either EBCDIC (Extended Binary Coded Decimal Interchange Code) or ASCII (American Standard Coded Information

Interchange) may be used.

.02 The tape cartridge records defined in this revenue procedure may be blocked subject to the following:

(a) A block must not exceed 32,736 tape positions.

(b) If the use of blocked records would result in a short block, all remaining positions of the block must be filled with 9s; however, the last block of the file may be filled with 9s or truncated. Do not pad a block with blanks.

(c) All records, except the header and trailer labels, may be blocked or unblocked. A record may not contain any control fields

or block descriptor fields which describe the length of the block or the logical records within the block. The number of logical records within a block (the blocking factor) must be constant in every block with the exception of the last block which

may be shorter (see item b above). The block length must be evenly divisible by 372.

(d) Records may not span blocks.

.03 Tape cartridges may be labeled or unlabeled.

.04 For the purposes of this revenue procedure, the following must be used:

Tape Mark:

(a) Used to signify the physical end of the recording on tape.

(b) For even parity, use BCD configuration 001111 (8421).

Note: Filers should indicate on the external media label and transmittal Form 4804 whether the cartridge is 36-track or

8-track.

SEC. 5. 8MM, 4MM, AND QUARTER INCH CARTRIDGE SPECIFICATIONS

.01 In most instances, IRS/MCC can process 8mm tape cartridges that meet the following specifications:

(a) Must meet American National Standard Institute (ANSI) standards, and have the following characteristics.

(b) Created from an AS400 operating system only.

(d) The 8mm tape cartridges must meet the following specifications:

Tracks

Density

Capacity

20 (43245 BPI)

21 (45434 BPI)

2.5 Gb

5 Gb

(e) Mode must be full function.

(f) Compressed data is not acceptable.

(g) Either EBCDIC (Extended Binary Coded Decimal Interchange Code) or ASCII (American Standard Coded Information Interchange) may be used. However, IRS/MCC encourages the use of EBCDIC. This information must appear on the external media label affixed to the cartridge.

(h) A file may consist of more than one cartridge, however, no more than 250,000 documents may be transmitted per file or per

cartridge. The filename, for example; ATMTAX, will contain a three digit extension. The extension will indicate the sequence of the cartridge within the file 1 of 3, 2 of 3, and 3 of 3 and would appear in the header label ATMTAX.001, ATMTAX.002, and ATMTAX.003 on each cartridge of the file.

.02 The 8mm (.315-inch) tape cartridge records defined in this revenue procedure may be blocked subject to the following:

(a) A block must not exceed 32,736 tape positions.

(b) If the use of blocked records would result in a short block, all remaining positions of the block must be filled with 9’s; however, the last block of the file may be filled with 9’s or truncated. Do not pad a block with blanks.

December 6, 1999

614

1999–49 I.R.B.

(c) All records, except the header and trailer labels, may be blocked or unblocked. A record must not contain any control fields

or block descriptor fields which describe the length of the block or the logical records within the block. The number of logical

records within a block (the blocking factor) must be constant in every block with the exception of the last block which may be

shorter (see item (b) above). The block length must be evenly divisible by 372.

(d) Records must not span blocks.

(e) No more than 250,000 documents per cartridge and per file.

.03 Various COPY commands have been successful; however, the SAVE OBJECT COMMAND is not acceptable.

.04 For faster processing, IRS/MCC encourages transmitters to use header labeled cartridges. ATMTAX may be used as a suggested filename.

.05 For the purposes of this revenue procedure, the following must be used:

Tape Mark:

(a) Used to signify the physical end of the recording on tape.

(b) For even parity, use BCD configuration 001111 (8421).

.06 IRS/MCC can only read one data file on a tape. A data file is a group of records which may or may not begin with a tapemark,

but must end with a trailer label. Any data beyond the trailer label cannot be read by IRS programs.

.07 4mm (.157-inch) cassettes are now acceptable with the following specifications:

(a) 4mm cassettes must be 2 1⁄4-inch by 3-inch.

(b) The tracks are 1 (one).

(d) The typical capacity is DDS (DAT data storage) at 1.3 Gb or 2 Gb, or DDS-2 at 4 Gb.

(e) The general specifications for 8mm cartridges will also apply to the 4mm cassettes.

.08 Various Quarter Inch Cartridges (QIC) (1⁄4-inch) are also acceptable.

(a) QIC cartridges must be 4⬙ by 6⬙.

(b) QIC cartridges must meet the following specifications:

Size

Tracks

Density

Capacity

QIC-24

QIC-120

QIC-150

QIC-525

QIC-1000

QIC-2Gb

8/9

5 (8000 BPI)

15 (10000 BPI)

16 (10000 BPI)

17 (16000 BPI)

21 (36000 BPI)

34 (40640 BPI)

45Mb or 60Mb

120Mb or 200Mb

150Mb or 250Mb

525Mb

1Gb

2Gb

SEC. 6. ELECTRONIC FILING SPECIFICATIONS

01. IRS/MCC is in the process of updating all of its hardware and software for electronic filing. As a result, effective October 31,

1999, the Information Reporting Program Bulletin Board System (IRP-BBS) and 3780 bisynchronous electronic filing systems will

be discontinued. Starting November 1, 1999, users will be able to access the new electronic system via analog and ISDN BRI connections. Bisynchronous electronic filing will no longer be supported. The new system is designed to support the electronic filing of

information returns only. The new telephone number for electronic filing is 1-304-262-2400. Publications and forms will no longer

be electronically available from MCC. Users needing the publications and forms that were formerly available on the IRP-BBS will

need to download them from the IRS website at www.irs.gov or by calling 1-800-TAX-FORM (1-800-829-3676).

.02 Electronic filing of Forms 8027, originals’ replacements and corrections, is offered as an alternative to magnetic media (tape,

tape cartridge, or diskette) or paper filing, but is not a requirement. Transmitters filing electronically will fulfill the magnetic media

requirements for those payers who are required to file magnetically. It may also be used by payers who are under the filing threshold

requirement, but would prefer to file their information returns this way. If the original file was sent magnetically, but was returned

for replacement, the replacement may be transmitted electronically.

.03 The electronic filing of Forms 8027 is not affiliated with the Form 1040 electronic filing program. These two programs are

totally independent, and filers must obtain separate approval to participate in each of them. All inquiries concerning the electronic

filing of information returns should be directed to IRS/MCC. IRS/MCC personnel cannot answer questions or assist taxpayers in the

filing of Form 1040 tax returns. Filers with questions of this nature will be directed to the Customer Service toll-free number (1-800829-1040) for assistance.

.04 Filers participating in the electronic filing program for Forms 8027 will submit their returns to IRS/MCC electronically and

not through magnetic media or paper filing. Files submitted in this manner must be in standard ASCII code.

1999–49 I.R.B.

615

December 6, 1999

.05 The format of the record is the same for electronically filed records as they are for 3 1⁄2-inch diskettes, tapes, and tape cartridges and must be in standard ASCII code.

.06 Filers must obtain, or already have, a Transmitter Control Code (TCC) assigned to them prior to submitting their files electronically. (Filers who currently have a TCC for magnetic media filing do not have to request a second TCC for electronic filing.)

Refer to Part A, Sec. 6, for information on how to obtain a TCC.

.07 Once a TCC is obtained, electronic filers assign their own passwords and do not need prior or special approval.

.08 With all passwords, it is the user’s responsibility to remember the password and not allow the password to be compromised.

Passwords are user assigned at first logon and are up to 8 alpha/numerics, which are case sensitive. However, if filers do forget

their password, call 304-263-8700 for assistance.

Note: Passwords are case sensitive.

.09 Electronically filed Forms 8027 may be submitted to IRS/MCC 24 hours a day, 7 days a week. Technical assistance will be

available Monday through Friday between 8:30 a.m. and 4:30 p.m. Eastern Time by calling 304-263-8700.

.10 Do not transmit data electronically from January 1 through January 5. This will allow time for IRS/MCC to update its system

to reflect current year changes.

.11 Data compression is encouraged when submitting Forms 8027 electronically. MCC has the ability to decompress files created

using several popular software compression programs such as ARC, COMPRESS, LHARC, and PKZIP. The time required to transmit Forms 8027 electronically will vary depending on the modem speed and the type of data compression used, if any. The time required to transmit a file can be reduced by as much as 85 percent by using software compression and hardware compression.

The following are actual transmission rates for Forms 1099 achieved in test uploads at MCC using compressed files. The actual

transmission rates will vary depending on the modem speeds.

Transmission Speed

in bps

1000 Records

10,000 Records

100,000 Records

19.2K

34 Sec.

6 Min.

60 Min.

56K

20 Sec.

3 1⁄2 Min.

33 Min.

128K (ISDN)

8 Sec.

1 Min.

10 Min.

.12 Files submitted electronically will be assigned a unique filename by the FIRE system ( users may name the file anything they

choose from their end). The IRS assigned filename will consist of submission type [ORIG (original), CORR (correction), and REPL

(replacement)], the filer’s TCC, and a four digit number sequence. The sequence number will be incremented for every file sent.

For example, if it is your first original file for the calendar year and your TCC is 44444, the IRS assigned filename would be

ORIG.44444.0001. Record the filename. This information will be needed by MCC in order to identify the file if assistance is required and to complete Form 4804.

.13 Filers are advised not to resubmit an entire file if records were omitted from the original transmission. This will result in

duplicate filing. A new file should be sent consisting of the records that had not previously been submitted.

.14 The results of the electronic transmission will be available in the (F)ile Status area of the electronic system within 2 weeks;

however, no further processing will occur until the signed Form 4804 is received. The transmitter must mail or fax the signed Form

4804 the same day the electronic transmission is made. No return is considered filed until a Form 4804 is received by IRS/MCC.

.15 Form 4804 can be ordered by calling the IRS toll-free forms and publication order number 1-800-TAX-FORM, (1-800-8293676), or it may be computer-generated. It may also be obtained from the Internet at www.irs.gov. If a filer chooses to computergenerate Form 4804, all of the information contained on the original form, including the affidavit, must also be contained on the

computer-generated form. This form is also contained in the back of this publication.

.16 Forms 4804 may be mailed to the following address:

If by Postal Service, air or truck freight:

IRS-Martinsburg Computing Center

Information Reporting Program

Attn: Electronic Filing Coordinator

230 Murall Drive

Kearneysville, WV 25430

Please indicate on the envelope the following message:

CONTAINS FORM 4804 INFORMATION – NO MAGNETIC MEDIA

December 6, 1999

616

1999–49 I.R.B.

.17 Contact the Electronic Filing System by dialing 304-262-2400. This number supports analog connections from 1200bps to

56Kbps or ISDN BRI 128Kbps connections. The system can be accessed via Dial-up network/web browser or a communications

software package such as Hyperterminal, Procomm, PCAnywhere, etc. The Dial-up network/web browser will provide an Internetlike look without going through the Internet (point to point). If you do not have this capability, a text interface will be provided that

can be accessed via typical communications software and will perform similar to the former IRP-BBS.

.18 Due to the large number of communication products available, it is impossible to provide specific information on a particular

software package or hardware configuration. Filers should contact their software or hardware supplier for assistance. Your

browser will need to be capable of file uploads (i.e., Internet Explorer 4.0, Netscape Navigator 2.0 or higher). The following are

some general instructions (many of these settings may already be set by default in your software):

(a) Dial-up network settings:

(1) Set dial-up server type to PPP

(2) Set network protocol to TCP/IP

(3) Enable software compression

(4) Enable PPP LCP extensions

(b) Browser settings:

(1) Set to receive “cookies”

(2) Enable JavaScript or Jscript

(3) Browser must be capable of file uploads (i.e. Internet Explorer 4.0, Netscape 2.0 or higher)

(4) Enter the URL Address of http://10.225.224.2

– No parity

– Eight data bits

– One stop bit

– Full duplex

(d) Hardware features

(1) Enable hardware flow control

(2) Enable modem error control

(3) Enable modem compression

.19 The first time you log on to the electronic system, you will need to create a new account. After completing the registration information, you will be prompted for a user name and password. Passwords are assigned by the user at first logon and are up to 8

alpha/numerics which are case sensitive. Remember your exact logon name and password for future reference. If you forget your

logon name and/or password, call IRS/MCC at 304-263-8700 for assistance.

.20 Once you are an established user, select the logon option and then you will be prompted for your logon name and password.

Once you have entered this information, you will be at the Main Menu. Select one of the following options:

(a) Electronic Filing - this option will allow you to send your files and provide us with current mailing address information in

case we need to send any correspondence.

(b) File Status - this option will display the results of your file transfer and will be posted in this area.

Common Problems Associated with Electronic Filing

1. No Form 4804, Transmittal of Information Returns Reported Magnetically/Electronically.

Even though you have sent your Forms 8027 electronically, you still need to fax or mail the Form 4804. See Part B, Sec. 6.16 for the

mailing address. The fax number is 304-264-5602.

2. Transmitter does not dial back to the electronic system to determine file acceptability.

Within 2 weeks the results of your file transmission will be posted under the option called File Status. It is very important that you

check this option because if your file is bad we must receive a replacement within 45 days.

3. Transmitter compresses several files into one.

Only compress one file at a time. For example, if you have 10 uncompressed files to send, compress each file separately and send 10

separate compressed files.

1999–49 I.R.B.

617

December 6, 1999

4. Transmitter sends a file and File Status indicates that the file is good, but the transmitter wants to send a replacement or correction file to replace the original/correction/replacement file.

Once a file has been transmitted, you cannot send a replacement file unless File Status indicates the file is bad. If you do not want

us to process the file, you must first contact us at 304-263-8700 to see if this is a possibility.

5. Transmitter sends an original file that is good, then sends a correction file for the entire file even though there are only a few

changes.

The correction file, containing the proper coding, should only contain the records needing correction, not the entire file.

6. File format is formatted as EBCDIC.

File must be standard ASCII code. All files submitted electronically must be in standard ASCII Code.

SEC. 7. RECORD FORMAT AND LAYOUT

FORM 8027 RECORD FORMAT

Field

Position

Field Title

Length

Description and Remarks

Establishment

Type

REQUIRED. This digit identifies the kind of establishment. Enter the number

which describes the type of establishment, as shown below:

1 for an establishment that serves evening meals only (with or without alcoholic

beverages).

2 for an establishment that serves evening meals and other meals (with or without

alcoholic beverages).

3 for an establishment that serves only meals other than evening meals (with or

without alcoholic beverages).

4 for an establishment that serves food, if at all, only as an incidental part of the

business of serving alcoholic beverages.

2–6

Establishment

Serial Numbers

REQUIRED. These five digit Serial Numbers are for identifying individual

establishments of an employer reporting under the same EIN. The employer shall

assign each establishment a unique number. NUMERICS ONLY.

7–46

Establishment

Name

REQUIRED. Enter the name of the establishment. Left justify and fill unused

positions with blanks. ALLOWABLE CHARACTERS ARE ALPHAS, NUMERICS, BLANKS, HYPHENS, AMPERSANDS, AND SLASHES.

47–86

Establishment

Street Address

REQUIRED. Enter the mailing address of the establishment. Street address should

include number, street, apartment or suite number (or P O Box if mail is not delivered to street address). Left justify and blank fill.

Note: The only allowable characters are alphas, blanks, numerics, ampersands, hyphens and slashes. Punctuation such as

periods and commas are not allowed and will cause your file to be returned. For example, the address 210 N. Queen St.,

Suite #300 must be entered as 210 N Queen St Suite 300.

87–111

Establishment

City

REQUIRED. Enter the city, town, or post office. Left justify and blank fill.

Note: The only allowable characters are alphas, blanks, numerics, ampersands, hyphens and slashes. Punctuation such as

periods and commas are not allowed and will cause your file to be returned. For example, the city St. Louis must be entered

as St Louis.

December 6, 1999

618

1999–49 I.R.B.

FORM 8027 RECORD FORMAT

Field

Position

112–113

Field Title

Establishment

State

Length

Description and Remarks

REQUIRED. Enter state code of the establishment; must be one of the following:

STATE

CODE

STATE

CODE

Alabama

Alaska

Arizona

Arkansas

California

Colorado

Connecticut

Delaware

District of Columbia

Florida

Georgia

Hawaii

Idaho

Illinois

Indiana

Iowa

Kansas

Kentucky

Louisiana

Maine

Maryland

Massachusetts

Michigan

Minnesota

Mississippi

Missouri

Montana

Nebraska

Nevada

New Hampshire

New Jersey

New Mexico

New York

North Carolina

North Dakota

Ohio

Oklahoma

Oregon

Pennsylvania

Rhode Island

South Carolina

South Dakota

Tennessee

Texas

Utah

Vermont

Virginia

Washington

West Virginia

Wisconsin

Wyoming

114–122

Establishment

ZIP Code

REQUIRED. Enter the complete nine-digit ZIP Code of the establishment. If using

a five-digit ZIP Code, left justify the five-digit ZIP Code and fill the remaining four

positions with blanks.

Note: MUST BE NINE NUMERICS OR FIVE NUMERICS AND FOUR BLANKS. DO NOT ENTER THE DASH.

123–131

Employer

Identification

Number

REQUIRED. Enter the nine-digit number assigned to the employer by IRS. DO

NOT ENTER HYPHENS, ALPHAS, ALL 9’s, OR ALL ZEROS.

132–171

Employer

Name

REQUIRED. Enter the name of the employer as it appears on your tax forms (e.g.,

Form 941). Any extraneous information must be deleted. Left justify and blank fill.

ALLOWABLE CHARACTERS ARE ALPHAS, BLANKS, NUMERICS, AMPERSANDS, HYPHENS, AND SLASHES.

172–211

Employer

Street Address

REQUIRED. Enter mailing address of employer. Street address should include

number, street, apartment or suite number (or P O Box if mail is not delivered to

street address). Left justify and blank fill.

Note: The only allowable characters are alphas, blanks, numerics, ampersands, hyphens and slashes. Punctuation such as

periods and commas are not allowed and will cause your file to be returned. For example, the address 210 N. Queen St.,

Suite #300 must be entered as 210 N Queen St Suite 300.

1999–49 I.R.B.

619

December 6, 1999

FORM 8027 RECORD FORMAT

Field

Position

Field Title

Length

Description and Remarks

212–236

Employer City

REQUIRED. Enter the city, town, or post office. Left justify and blank fill.

Note: The only allowable characters are alphas, blanks, numerics, ampersands, hyphens and slashes. Punctuation such as

periods and commas are not allowed and will cause your file to be returned. For example, the city St. Louis must be entered

as St Louis.

237–238

Employer State

REQUIRED. Enter state code of employer. Must be one of the abbreviations

shown in the state abbreviation table for Establishment State (field positions

112–113).

239–247

Employer ZIP

Code

REQUIRED. Enter the complete nine-digit ZIP Code of the employer. If using a

five-digit ZIP Code, left justify the five-digit ZIP Code and fill the remaining four

positions with blanks.

Note: MUST BE NINE NUMERICS OR FIVE NUMERICS AND FOUR BLANKS. DO NOT ENTER THE DASH.

248–259

Charged Tips

REQUIRED. Enter the total amount of tips that are shown on charge receipts for

the calendar year. Amount must be entered in U.S. dollars and cents. The right most

two positions represent cents. Right justify and zero fill. If no entry, zero fill. NUMERICS ONLY. DO NOT ENTER DECIMAL POINTS, DOLLAR SIGNS,

OR COMMAS.

260–271

Charged Receipts

REQUIRED. Enter the total sales for the calendar year other than carry-out sales

or sales with an added service charge of 10 percent or more, that are on charge receipts with a charged tip shown. This includes credit card charges, other credit

arrangements, and charges to a hotel room unless the employer’s normal accounting

practice consistently excludes charges to a hotel room. Do not include any state or

local taxes in the amount reported. Amount must be entered in U.S. dollars and

cents. The right-most two positions represent cents. Right justify and zero fill. If no

entry, zero fill. NUMERICS ONLY. DO NOT INCLUDE DOLLAR SIGNS,

DECIMAL POINTS, OR COMMAS.

272–283

Service Charge

Less Than 10

Percent

REQUIRED. Enter the total amount of service charges less than 10 percent added

to customer’s bills and were distributed to your employees for the calendar year. In

general, service charges added to the bill are year. In general, service charges added

to the bill are not tips since the customer does not have a choice. These service

charges are treated as wages and are included on Form W-2. For a more detailed explanation, see Rev. Rul. 1928, 19691 C.B. 270. Amount must be entered in U.S.

dollars and cents. The right-most two positions represent cents. Right justify and

zero fill. If no entry, zero fill. NUMERICS ONLY. DO NOT ENTER DOLLAR

SIGNS, DECIMAL POINTS, OR COMMAS.

284–295

Indirect Tips

Reported

REQUIRED. Enter the total amount of tips reported by indirectly tipped employees (e.g., busboys, service bartenders, cooks) for the calendar year. Do not include

tips received by employees in December of the prior tax year but not reported until

January. Include tips received by employees in December of the tax year being reported, but not reported until January of the subsequent year. Amount must be entered in U.S. dollars and cents. The right-most two positions represent cents. Right

justify and zero fill. If no entry, zero fill. NUMERICS ONLY. DO NOT ENTER

DOLLAR SIGNS, DECIMAL POINTS, OR COMMAS.

December 6, 1999

620

1999–49 I.R.B.

FORM 8027 RECORD FORMAT

Field

Position

Field Title

Length

Description and Remarks

296–307

Direct Tips

Reported

REQUIRED. Enter the total amount of tips reported by directly tipped employees

(e.g., waiters, waitresses, bartenders) for the calendar year. Do not include tips received by employees in December of the prior tax year but not reported until January. Include tips received by employees in December of the tax year being reported,

but not reported until January of the subsequent year. Amount must be entered in

U.S. dollars and cents. The right-most two positions represent cents. Right justify

and zero fill. If no entry, zero fill. NUMERICS ONLY. DO NOT ENTER DOLLAR SIGNS, DECIMAL POINTS, OR COMMAS.

308–319

Total Tips

Reported

REQUIRED. Enter the total amount of tips reported by all employees (both

indirectly tipped and directly tipped) for the calendar year. Do not include tips received in December of the prior tax year but not reported until January. Include tips

received in December of the tax year being reported, but not reported until January

of the subsequent year. Amount must be entered in U.S. dollars and cents. The rightmost two positions represent cents. Right justify and zero fill. If no entry, zero fill.

NUMERICS ONLY. DO NOT ENTER DOLLAR SIGNS, DECIMAL

POINTS, OR COMMAS.

320–331

Gross Receipts

REQUIRED. Enter the total gross receipts from the provision of food and/or beverages for this establishment for the calendar year. Do not include receipts for

carry-out sales or sales with an added service charge of 10 percent or more. Do not

include in gross receipts charged tips (field positions 248–259) shown on charge receipts unless you have reduced the cash sales amount because you have paid cash to

tipped employees for tips they earned that were charged. Do not include state or

local taxes in gross receipts. If you do not charge separately for food or beverages

along with other services (such as a package deal for food and lodging), make a

good faith estimate of the gross receipts attributable to the food or beverages. This

estimate must reflect the cost of providing the food or beverages plus a reasonable

profit factor. Include the retail value of complimentary food or beverages served to

customers if tipping for them is customary and they are provided in connection with

an activity engaged in for profit whose receipts would not be included as gross receipts from the provision of food or beverages (e.g., complimentary drinks served to

customers at a gambling casino). Amount must be entered in U.S. dollars and cents.

The right-most two positions represent cents. Right justify and zero fill. If no entry,

zero fill. NUMERICS ONLY. DO NOT ENTER DOLLAR SIGNS, DECIMAL

POINTS, OR COMMAS.

332–343

Tip Percentage

Rate Times

REQUIRED. Enter the amount determined by multiplying Gross Receipts for the

year (field positions 320–331) by the Tip Percentage Rate (field positions 344–347).

For example, if the value of Gross Receipts is “000045678900” and Tip Percentage

Rate is “0800”, multiply $456,789.00 by .0800 to get $36,543.12 and enter

“000003654312”. If tips are allocated using other than the calendar year, enter

zeros; this may occur if you allocated tips based on the time period for which wages

were paid or allocated on a quarterly basis. Amount must be entered in U.S. dollars

and cents. The right-most two positions represent cents. Right justify and zero fill.

NUMERICS ONLY. DO NOT ENTER DOLLAR SIGNS, DECIMAL

POINTS, OR COMMAS.

344–347

Tip Percentage

Rate

REQUIRED. Enter 8 percent (0800) unless a lower rate has been granted by the

District Director. The determination letter must accompany the magnetic/electronic

submission. NUMERICS ONLY. DO NOT ENTER DECIMAL POINT.

1999–49 I.R.B.

621

December 6, 1999

FORM 8027 RECORD FORMAT

Field

Position

Field Title

Length

Description and Remarks

348–359

Allocated Tips

REQUIRED. If Tip Percentage Rate times Gross Receipts (field positions

332–343) is greater than Total Tips Reported (field positions 308–319), then the difference becomes Allocated Tips. Otherwise, enter all zeros. If tips are allocated

using other than the calendar year, enter the amount of allocated tips from your

records. Amount must be entered in U.S. dollars and cents. The right-most two positions represent cents. Right justify and zero fill. NUMERICS ONLY. DO NOT

ENTER DOLLAR SIGNS, DECIMAL POINTS, OR COMMAS.

360

Allocation

Method

REQUIRED. Enter the allocation method used if Allocated Tips (field positions

348–359) are greater than zero as follows:

1) for allocation based on hours worked.

2) for allocation based on gross receipts.

3) for allocation based on a good faith agreement.

The good faith agreement must accompany the magnetic/electronic submission. If

Allocated Tips are equal to zero, enter 0 (zero).

Note: Under Section 1571 of the Tax Reform Act of 1986, the method of allocation of tips based on the number of hours

worked as described in Section 31.6053–3(f)(1)(iv) may be utilized only by an employer that employs less than the equivalent

of 25 fulltime employees at the establishment during the payroll period. Section 31.6053–3(j)(19) provides that an employer

is considered to employ less than the equivalent of 25 fulltime employees at an establishment during a payroll period if the

average number of employee hours worked per business day during the payroll period is less than 200 hours.

361–364

Number of

Directly Tipped

Employees

REQUIRED. Enter the total number (must be greater than zero) of directly tipped

employees employed by the establishment for the calendar year. Right justify and

zero fill. NUMERICS ONLY.

365–369

Transmitter

Control Code

(TCC)

REQUIRED. Enter the 5-digit Transmitter Control Code assigned by the IRS.

370

Corrected 8027

Indicator

REQUIRED. Enter blank for original return. Enter “G” for corrected return. A

corrected return must be a complete new return replacing the original return.

371–372

Blank or cr/lf

Magnetic/electronic filers are required to enter blanks. Diskette filers may enter

blanks or the carriage line feed characters (cr/lf).

FORM 8027 RECORD LAYOUT

Establishment

Type

Establishment

Serial Number

Establishment

Name

Establishment

Street Address

2–6

7–46

47–86

Establishment

City

Establishment

State

Establishment

ZIP Code

Employer

Identification

Number

87–111

112–113

114–122

123–131

December 6, 1999

622

1999–49 I.R.B.

FORM 8027 RECORD LAYOUT

Employer Name

Employer Street

Address

Employer City

Employer State

132–171

172–211

212–236

237–238

Employer Zip

Code

Charged Tips

Charged Receipts

Service Charge

Less Than 10

Percent

239–247

248–259

260–271

272–283

Indirect Tips

Reported

Direct Tips

Reported

Total Tips

Reported

Gross Receipts

284–295

296–307

308–319

320–331

Tip Percentage

Rate Times Gross

Receipts

Tip Percentage

Rate

Allocated Tips

Allocation Method

332–343

344–347

348–359

360

Number of Directly

Tipped Employees

Transmitter Control

Code (TCC)

Corrected 8027

Indicator

Blank or

cr/lf

361–364

365–369

370

371–372

SEC. 8. EFFECT ON OTHER DOCUMENTS

.01 Rev. Proc. 98–52 is superseded.

SEC. 9. EFFECTIVE DATE

.01 This revenue procedure is effective for Forms 8027 due the last day of February 2000 and any returns filed thereafter.

1999–49 I.R.B.

623

December 6, 1999

26 CFR 601.602: Tax forms and instructions.

Publication 1245 (Rev. 10–99)

Specifications for Filing Form W-4, Employee’s Withholding Allowance Certificate, Magnetically or Electronically

Rev. Proc. 99–47

Reprinted from IR Bulletin l999–49

dated December 6, 1999

(Contains copies of Forms 4419, 6466, 6467, and notice 1027 for taxpayers’ use.)

Rev. Proc. 99–47

TABLE OF CONTENTS

PART A. GENERAL

SECTION 1.

SECTION 2.

SECTION 3.

SECTION 4.

SECTION 5.

SECTION 6.

SECTION 7.

SECTION 8.

SECTION 9.

SECTION 10.

PURPOSE

NATURE OF CHANGES

WHERE TO FILE AND HOW TO CONTACT THE IRS, MARTINSBURG COMPUTING CENTER

FILING REQUIREMENTS

FORM 4419, APPLICATION FOR FILING INFORMATION RETURNS MAGNETICALLY/ELECTRONICALLY

FILING DUE DATES

FILING FORMS W-4 MAGNETICALLY/ELECTRONICALLY

REPLACEMENT FILES

EFFECT ON PAPER DOCUMENTS

DEFINITION OF TERMS

PART B. MAGNETIC MEDIA/ELECTRONIC SPECIFICATIONS

SECTION 1.

SECTION 2.

SECTION 3.

SECTION 4.

SECTION 5

SECTION 6.

SECTION 7.

SECTION 8.

SECTION 9.

GENERAL

TAPE SPECIFICATIONS

3 1⁄2-INCH DISKETTE SPECIFICATIONS

TAPE CARTRIDGE SPECIFICATIONS

8MM, 4MM and QUARTER INCH CARTRIDGE SPECIFICATIONS

ELECTRONIC FILING SPECIFICATIONS

FORM W-4 RECORD FORMAT AND RECORD LAYOUT

EFFECT ON OTHER DOCUMENTS

EFFECTIVE DATE

PART A. GENERAL

SEC. 1. PURPOSE

.01 The purpose of this revenue procedure is to update Rev. Proc. 98-26, March 30, 1998, (IRS Pub. 1245), which outlines the requirements and conditions for submitting certain Forms W4, Employee’s Withholding Allowance Certificate, magnetically or electronically to the Internal Revenue Service (IRS), Martinsburg Computing Center (MCC).

.02 Revenue procedures are generally revised to reflect legislative and form changes. Comments concerning this revenue procedure or suggestions for making it more helpful can be addressed to Internal Revenue Service, Martinsburg Computing Center,

ATTN: IRB Information Support Section, 230 Murall Dr, Kearneysville, WV 25430.

.03 The following revenue procedures and publications provide more detailed filing procedures for certain information returns

and can be obtained by contacting your local IRS office or by calling 1-800-829-3676:

(a) “Instructions for Forms 1099, 1098, 5498, and W-2G” provides specific instructions on completing and submitting information returns to IRS.

(b) Rev. Proc. 84–33, 1984–1 C.B. 502, regarding the optional method for agents to report and deposit backup withholding.

(c) Publication 1179, Rules and Specifications for Private Printing of Substitute Forms 1096, 1098, 1099 Series, 5498, and

W-2G.

December 6, 1999

624

1999–49 I.R.B.

(d) Publication 1220, Specifications for Filing Form 1098, 1099, 5498, and W-2G Magnetically or Electronically.

(e) Publication 1239, Specifications for Filing Form 8027, Employer’s Annual Information Return of Tip Income and

Allocated Tips, Magnetically or Electronically.

(f) Publication 1187, Specifications for Filing Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding,

Magnetically or Electronically

.04 Refer to Part A, Sec. 10, for definitions of terms used in this publication.

SEC. 2. NATURE OF CHANGES

In this publication, major changes have been emphasized by using italics. This has been done to assist filers in identifying new information. Filers are still advised to read the publication in its entirety.

The changes are as follows:

.01 EDITORIAL CHANGES

(a) Under Part A, Sec. 3, “WHERE TO FILE AND HOW TO CONTACT THE IRS, MARTINSBURG COMPUTING CENTER”, the address is now 230 Murall Dr, Kearneysville, WV 24530.

(b) The Information Reporting Program-Bulletin Board System (IRP-BBS) is no longer in use. The information in Part B, Sec.

6 Asynchronous (IRP-BBS) electronic filing specifications has been completely revised to provide instructions for the Filing Information Returns Electronically (FIRE) system.

(d) The following types of media are no longer acceptable by IRS/MCC:

(1) 5 1⁄4 inch diskettes;

(2) 3 1⁄2 inch diskettes created on a non-MS-DOS system;

(3) 3 1⁄2 inch diskettes created on a System 36 or AS400;

(e) The following QIC (quarter inch cartridge) sizes have been deleted from Part B, Sec. 5:

Size

Tracks

Density

Capacity

QIC-11

QIC-320

QIC-1350

4/5

4(8000BPI)

17(16000 BPI)

18(51667 BPI)

22Mb or 30Mb

320Mb

1.3Gb

.02 PROGRAMMING CHANGES

There are no programming changes for tax year 1999. Corrections to Rev. Proc. 98–26 printed in Internal Revenue Bulletin No.

1998–24, dated June 15, 1998, Announcement 98–48 have been incorporated into this revision.

SEC. 3. WHERE TO FILE AND HOW TO CONTACT THE IRS, MARTINSBURG COMPUTING CENTER

.01 All Forms W-4 filed magnetically or electronically are processed at IRS/MCC. Magnetic media containing Forms W-4 is to

be sent to the following address:

IRS-Martinsburg Computing Center

Information Reporting Program

230 Murall Dr

Kearneysville WV 25430

.02 Requests for paper forms and publications can be made by calling the “Forms Only Number” listed in your local telephone directory or by calling the IRS toll-free number 1-800-TAX-FORM (1-800-829-3676).

.03 Questions pertaining to magnetic media/electronic filing of Forms W-2 must be directed to the Social Security Administration

(SSA). Filers can call 1-800-SSA-6270 to obtain the phone number of the SSA Employer Service Liaison Officer for their area.

.04 A taxpayer or authorized representative may request a copy of a tax return or a Form W-2 filed with a return by submitting

Form 4506, Request for Copy or Transcript of Tax Form, to IRS. This form may be obtained by calling 1-800-TAX-FORM (1-800829-3676).

.05 The IRS/MCC Call Site, located in Kearneysville, WV, provides service to the payer/employer community (financial institutions, employers, and other transmitters of information returns). The IRS/MCC Call Site answers questions concerning tax law and

the magnetic/electronic filing of questionable Forms W-4 as well as information returns (Forms 1096, 1098, 1099, 5498, 5498-MSA,

8027, W-2G, W-3, and 1042-S), inquiries dealing with backup withholding due to missing and incorrect taxpayer identification numbers and questions concerning paper filing of Forms W-2. Recipients of information returns (payees) should continue to contact

1-800-829-1040 or other numbers specified in the tax return instructions with any questions on how to report information returns.

1999–49 I.R.B.

625

December 6, 1999

The Call Site accepts calls from all areas of the country. The number to call is 304-263-8700 or Telecommunications Device for

the Deaf (TDD) 304-267-3367. These are toll calls. The Call Site is in operation throughout the year to handle the questions of payers, transmitters, and employers. Due to the high demand for assistance at the end of January and February, it is advisable to call as

soon as possible to avoid these peak filing seasons.

.06 Telephone inquiries may be made Monday through Friday between 8:30 a.m. and 4:30 p.m. Eastern time. The telephone

numbers for magnetic media/electronic inquiries or electronic submissions are:

304-263-8700 – Call Site

304-262-2400 – Electronic Filing

304-267-3367 – TDD (Telecommunication Device for the Deaf)

304-264-5602 – Fax Machine

(These are not toll-free telephone numbers.)

TO OBTAIN FORMS & PUBLICATIONS CALL:

1-800-TAX-FORM (1-800-829-3676)

TO OBTAIN FORMS & PUBLICATIONS INTERNET:

www.irs.gov

SEC. 4. FILING REQUIREMENTS

.01 Employers are required to send to IRS quarterly, copies of all Forms W-4 received during the quarter from employees still employed at the end of the quarter who claim the following:

(a) More than 10 withholding allowances, or

(b) Exempt status and are expected to earn more than $200 a week.

.02 Employers are not required to send other Forms W-4 unless notified by IRS in writing to do so.

.03 Employers may submit all information magnetically or electronically; or a combination of magnetic/electronic files and paper

documents is acceptable, provided there are no duplications or omissions of documents. However, magnetic/electronic filing is preferred and strongly encouraged.

.04 A Form W-4 with a written statement attached from the employee must be filed on paper, not on magnetic media. If filing

paper Forms W-4, the employer may send them in each quarter with paper Forms 941. If the employer submits the paper Forms W4 at any time other than quarterly, a cover letter must be submitted giving the employer’s name, address, employer identification

number (EIN), and the number of Forms W-4 included.

NOTE: MCC DOES NOT PROCESS PAPER RETURNS. PAPER RETURNS MUST BE FILED WITH THE APPROPRIATE SERVICE CENTER. SEE FORM 941 INSTRUCTIONS FOR THE APPROPRIATE SERVICE CENTER.

SEC. 5. FORM 4419, APPLICATION FOR FILING INFORMATION RETURNS MAGNETICALLY/

ELECTRONICALLY

.01 Employers, or their transmitters, who wish to file magnetically or electronically, must submit a Form 4419, Application for

Filing Information Returns Magnetically/Electronically. Instructions for its completion are on the reverse of the form.

.02 Magnetic/electronic files may not be filed with IRS/MCC until authorization to file is received. Requests will be approved or

disapproved within 30 days of receipt.

.03 Only applications of employers or transmitters whose equipment meets the specifications in Part B, Sec. 2, 3, 4, 5 or 6 will be

approved.

.04 Once authorization to file has been granted, a five-character alpha/numeric Transmitter Control Code (TCC) will be assigned.

Approval will continue in effect in succeeding years provided the requirements of the current revenue procedure are met and there

are no equipment changes by the employer or transmitter. Although a TCC may have already been assigned to a transmitter for the

filing of information returns, the Form W-4 requires a separate TCC of its own. This TCC must appear on all transmittal forms submitted with magnetic/electronic files, as well as other correspondence. The TCC must also be coded into positions 319-323 of the

Form W-4 record. (See Part B, Sec. 7.)

.05 New applications (Forms 4419) are required whenever

(a) You discontinue filing magnetically/electronically for two years, in which case your TCC may have been reassigned. You

may call IRS/MCC to verify if your TCC is still valid.

(b) You have used a service agency in the past, and they had their own TCC, to prepare your files but you now have computer

equipment compatible with that of IRS, in which case you must request your own TCC.

December 6, 1999

626

1999–49 I.R.B.

SEC. 6. FILING DUE DATES

.01 Magnetic/electronic reporting of Forms W-4 to IRS must be at least quarterly (monthly reporting is encouraged). The following are the quarter end dates:

Period Covered

Due Date

January 1 thru March 31

April 1 thru June 30

July 1 thru September 30

October 1 thru December 31

April 30

July 31

October 31

January 31

.02 If any due date falls on a Saturday, Sunday, or legal holiday, the Forms W-4 are considered timely if they are filed on the next

day that is not a Saturday, Sunday, or legal holiday.

SEC. 7. FILING FORMS W-4 MAGNETICALLY/ELECTRONICALLY

.01 A Magnetic Media/Electronic Reporting Package which includes the current revenue procedure and the necessary transmittal

forms will be mailed to approved filers each year.

.02 If the employer chooses to file magnetically/electronically, then a Form 6466, Transmittal of Forms W-4 Reported Magnetically/Electronically, must be sent to the IRS/MCC as prescribed in Part A, Sec. 3.

.03 Form 6466 MUST be signed by the employer or the transmitter, service bureau, paying agent, or disbursing agent (all hereafter referred to as agent), on behalf of the employer if the agent has the authority to sign the affidavit under an agency agreement

(either oral, written, or implied) that is valid under state law and adds the caption “FOR: (name of employer).”

.04 Although a duly authorized agent signs the affidavit, the employer(s) is held responsible for the accuracy of the Forms W-4

filed magnetically or electronically.

.05 DO NOT REPORT THE SAME INFORMATION ON PAPER DOCUMENTS THAT YOU REPORT MAGNETICALLY/ELECTRONICALLY. If you report part of your returns on paper and part magnetically or electronically, be sure that duplicate returns are not included on both.

.06 Before submitting your magnetic/electronic file, include the following:

(a) A signed Form 6466, Transmittal of Forms W-4 Reported Magnetically/Electronically along with a Form 6467, Transmittal

of Forms W-4 Reported Magnetically/Electronically(Continuation), if you submit data for multiple employers. These

forms must be mailed or faxed the same day electronic files are submitted.

(b) Your media (tape, diskette, or cartridge) with an external identifying label. Notice 1027 describes the information which

should be included on this self-prepared label.

(c) On the outside of the shipping container, affix the label IRB Special Projects. This label is included in the publication.

.07 IRS/MCC will not return filers’ magnetic media after it has been successfully processed. Should filers wish to know if their

media was received by IRS/MCC, a delivery service that provides certification of delivery is recommended.

.08 IRS cannot accept any Cash-On-Delivery (COD) or Charged-to-IRS shipments of reportable tax information that an individual or organization is legally required to file. Because of the high volume of data received and shipping cost involved, special shipping containers will not be returned.

.09 Use this record format and processing capabilities to file Forms W-4 submitted for the quarter ending March 31, 2000 and for

all subsequent filings.

SEC. 8. REPLACEMENT FILES

THE MAGNETIC MEDIA/ELECTRONIC SPECIFICATIONS CONTAINED IN PART B OF THIS REVENUE PROCEDURE MUST BE STRICTLY ADHERED TO. If files are not processable, they will be returned to you for replacement and

resubmission, or submission of paper Forms W-4. Replacement files must be resubmitted to IRS/MCC within 45 days of the date of

the enclosed letter. The media should be identified as replacement data by writing, typing or printing “Magnetic Media Replacement” on the external label used on the magnetic media and marking the replacement box on the Form 6466. If filing electronically,

you should choose replacement when asked for the type of submission to identify a replacement file before transmission begins.

SEC. 9. EFFECT ON PAPER DOCUMENTS

.01 Magnetic/electronic reporting to IRS eliminates the need to submit copies of paper Forms W-4.

.02 If part of the Forms W-4 are reported magnetically/electronically and the remainder are reported on paper forms, the paper

Forms W-4 must be mailed to the appropriate service center.

1999–49 I.R.B.

627

December 6, 1999

SEC. 10. DEFINITION OF TERMS

Employer

Generally, an employer is a person or organization for whom a worker performs a service as an employee.

The employer has the right to direct and control the worker. A person or organization paying wages to a

former employee after the work ends is also considered an employer.

Employee

One who performs services for an employer.

EIN

Employer Identification Number that has been assigned by IRS.

File

For purposes of this procedure, a file consists of all magnetic/electronic records submitted by an employer or transmitter.

Special Character

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

Taxpayer

Identification

Number (TIN)

May be either an Employer Identification Number (EIN); a Social Security Number (SSN); an IRS

Individual Taxpayer Identification Number (ITIN) issued to an alien individual; or an IRS Adoption

Taxpayer Identification Number(ATIN) assigned to children who are in the process of being adopted.

Transmitter

Person or organization preparing and/or submitting magnetic/electronic file(s).

Transmitter

Control Code

(TCC)

A five-character alpha/numeric number assigned by IRS to the transmitter prior to actual filing magnetically/electronically. This number is inserted in Positions 319–323 of your files and must be present before

the file can be processed. An application Form 4419 must be filed with IRS to receive this number.

PART B. MAGNETIC MEDIA/ELECTRONIC SPECIFICATIONS

SEC. 1. GENERAL

.01 The specifications contained in this part of the revenue procedure define the required format and content of the records to be

included in the magnetic/electronic file. Use this revenue procedure to file Forms W-4 submitted for the quarter ending March 31,

2000 and all subsequent filings.

.02 An external label must appear on each tape, tape cartridge and diskette submitted. Notice 1027 details what information must

be on the label. The diskettes used must be MS/DOS compatible.

SEC. 2. TAPE SPECIFICATIONS

.01 IRS/MCC can process most magnetic tape files if the following specifications are followed:

(a) 9-track EBCDIC (Extended Binary Coded Decimal Interchange Code) with

(1) Odd parity

(2) Recording density—1600 or 6250 BPI

(3) If you use UNISYS Series 1100, you must submit an interchange tape.

(b) 9-track ASCII (American Standard Coded Information Interchange) with:

(1) Odd parity

(2) Recording density—1600 or 6250 BPI

.02 All tape files must have the following characteristics:

(a) 0.5 inch (12.7 mm) wide computer grade magnetic tape,

(b) Tape thickness: 1.0 or 1.5 mils,

(d) Reel of tape up to 2400 feet (731.52 m).

.03 All records, including Header and Trailer Labels (if used) must be transmitted using the same density.

.04 The tape records defined in this revenue procedure may be blocked subject to the following:

(a) A block must not exceed 32,550 tape positions.

(c) All records, except the header and trailer labels, may be blocked or unblocked. A record may not contain any control fields

or block descriptor fields which describe the length of the block or the logical records within the block. The number of log-

December 6, 1999

628

1999–49 I.R.B.

ical records within a block (the blocking factor) must be constant in every block with the exception of the last block which

may be shorter (see item (b) above). The block length must be evenly divisible by 350.

(d) All data records are a fixed record length of 350 positions and may not span blocks.

.05 Labeled or unlabeled tapes may be submitted.

.06 For the purposes of this revenue procedure the following must be used:

Tape Mark:

(a) Used to signify the physical end of the recording on tape.

(b) For even parity, use BCD configuration 001111(8421).

.07 Do not submit an employee Form W-4 record without the required employer identification information. Every record must

contain both employee and employer data.

SEC. 3. 3 1⁄2-INCH DISKETTE SPECIFICATIONS

.01 To be compatible, a diskette file must meet the following specifications:

(a) 3 1⁄2-inches in diameter.

(b) Data must be recorded in standard ASCII code.

(d) Delimiter character commas (,) must not be used.

(e) Positions 349 and 350 of each record have been reserved for carriage return/line feed (cr/lf) characters.

(f) Filename of QWFTAX must be used. Do not enter any other data in this field. The extension will indicate the sequence of

the diskettes within the file. For example, the first diskette will be named QWFTAX.001, the second diskette will be

QWFTAX.002, etc.

(g) A diskette file may consist of multiple diskettes as long as the file naming conventions are adhered to.

(h) Diskettes must meet one of the following specifications:

Capacity

Tracks

Sides/Density

Sector Size

1.44 mb

1.2 mb

96tpi

135tpi

96tpi

512

.02 3 1⁄2-inch diskettes are only acceptable if they were created using MS/DOS.

SEC. 4. TAPE CARTRIDGE SPECIFICATIONS

.01 In most instances, IRS/MCC can process tape cartridges that meet the following specifications:

(a) Must be IBM 3480, 3490, 3490E, or AS400 compatible.

(b) Must meet American National Standard Institute (ANSI) standards, and have the following characteristics:

(1) Tape cartridges will be 1⁄2-inch tape contained in plastic cartridges which are approximately 4-inches by 5-inches by

1-inch in dimension.

(2) Magnetic tape will be chromium dioxide particle based 1⁄2-inch tape.

(3) Cartridges must be 18-track or 36-track parallel (See Note).

(4) Cartridges will contain 37,871 CPI (characters per inch ) or 75,742 CPI.

(5) Mode will be full function.

(6) The data may be compressed using EDRC (Memorex) or IDRC (IBM) compression.

(7) Either EBCDIC (Extended Binary Coded Decimal Interchange Code) or ASCII (American Standard Coded Information

Interchange) may be used.

.02 The tape cartridge records defined in this revenue procedure may be blocked subject to the following:

(a) A block must not exceed 32,550 tape positions.

(c) All records, except the header and trailer labels, may be blocked or unblocked. A record may not contain any control fields

may be shorter (see item (b) above). The block length must be evenly divisible by 350.

(d) Records may not span blocks.

.03 Tape cartridges may be labeled or unlabeled.

.04 For the purposes of this revenue procedure, the following must be used:

1999–49 I.R.B.

629

December 6, 1999

Tape Mark:

(a) Used to signify the physical end of the recording on tape.

(b) For even parity, use BCD configuration 001111(8421).

Note: Filers should indicate on the external media label and transmittal Form 6466 whether the cartridge is 36-track or

18-track.

SEC. 5. 8MM, 4MM, AND QUARTER INCH CARTRIDGE SPECIFICATIONS

.01 In most instances, IRS/MCC can process 8mm tape cartridges that meet the following specifications:

(a) Must meet American National Standard Institute (ANSI) standards, and have the following characteristics:

(1) Created from an AS400 operating system only.

(2) 8mm (.315-inch) tape cartridges will be 2 1⁄2-inch by 3 3⁄4-inch.

(3) The 8mm tape cartridges must meet the following specifications:

Tracks

Density

Capacity

20 (43245 BPI)

21 (45434 BPI)

2.3 Gb

5 Gb

(4) Mode will be full function.

(5) Compressed data is not acceptable.

(6) Either EBCDIC (Extended Binary Coded Decimal Interchange Code) or ASCII (American Standard Coded Information Interchange) may be used. However, IRS/MCC encourages the use of EBCDIC. This information must appear on the external media label affixed to the cartridge.

.02 The 8mm (.315-inch) tape cartridge records defined in this revenue procedure may be blocked subject to the following:

(a) A block must not exceed 32,550 tape positions.

(b) If the use of blocked records would result in a short block, all remaining positions of the block must be filled with 9’s;

however, the last block of the file may be filled with 9’s or truncated. Do not pad a block with blanks.

fields or block descriptor fields which describe the length of the block or the logical records within the block. The number of logical records within a block (the blocking factor) must be constant in every block with the exception of the last

block which may be shorter (see item (b) above). The block length must be evenly divisible by 350.

(d) Various COPY commands have been successful, however, the SAVE OBJECT COMMAND is not acceptable.

(e) Records may not span blocks.

.03 For faster processing, IRS/MCC encourages transmitters to use header labeled cartridges. QWFTAX may be used as a suggested filename.

.04 For the purposes of this revenue procedure, the following must be used:

Tape Mark:

(a) Used to signify the physical end of the recording on tape.

(b) For even parity, use BCD configuration 001111(8421).

.05 IRS/MCC can only read one data file on a tape. A data file is a group of records which may or may not begin with a tapemark,

but must end with a trailer label. Any data beyond the trailer label cannot be read by IRS programs.

.06 4mm (.157-inch) cassettes are acceptable with the following specifications:

(a) 4mm cassettes will be 2 1⁄4-inch by 3-inch.

(b) The tracks are 1 (one).

(d) The typical capacity is DDS (DAT data storage) at 1.3 Gb or 2 Gb, or DDS-2 at 4Gb.

(e) The general specifications for 8mm cartridges will also apply to the 4mm cassettes.

.07 Various Quarter Inch Cartridges (QIC) (1⁄4-inch) are also acceptable.

(a) QIC cartridges will be 4⬙ by 6⬙.

(b) QIC cartridges must meet the following specifications:

December 6, 1999

630

1999–49 I.R.B.

Size

Tracks

Density

Capacity

QIC-24

QIC-120

QIC-150

QIC-525

QIC-1000

QIC-2Gb

8/9

5 (8000 BPI)

15 (10000 BPI)

16 (10000 BPI)

17 (16000 BPI)

21 (36000 BPI)

34 (40640 BPI)

45Mb or 60Mb

120Mb or 200Mb

150Mb or 250Mb

525Mb

1Gb

2Gb

SEC. 6. ELECTRONIC FILING SPECIFICATIONS

01. IRS/MCC is in the process of updating all of its hardware and software for electronic filing. Effective October 31, 1999, the

Information Reporting Program Bulletin Board System (IRP-BBS) electronic filing system will be discontinued. Starting November

1, 1999, users will be able to access the new electronic system via analog and ISDN BRI connections. The new system is designed to

support the electronic filing of information returns only. The new telephone number for electronic filing is (1-304-262-2400). Publications and forms will no longer be electronically available from MCC. Users needing the publications and forms that were formerly available on the IRP-BBS will need to download them from the IRS website at www.irs.gov or by calling 1-800-TAX-FORM

(1-800-829-3676).

.02 Electronic filing of Form W-4 originals and replacements is offered as an alternative to magnetic

media (tape, tape cartridge, or diskette) or paper filing, but is not a requirement. If the original file was sent magnetically, but was

returned for replacement, the replacement may be transmitted electronically.

.03 The electronic filing of Forms W-4 is not affiliated with the Form 1040 electronic filing program. These two programs are totally independent, and filers must obtain separate approval to participate in each of them. All inquiries concerning the electronic filing of information returns should be directed to IRS/MCC. IRS/MCC personnel cannot answer questions or assist taxpayers in the

filing of Form 1040 tax returns. Filers with questions of this nature will be directed to the Customer Service toll-free number (1-800829-1040) for assistance.

.04 Filers participating in the electronic filing program for Forms W-4 will submit their returns to IRS/MCC electronically and not

through magnetic media or paper filing. Files submitted in this manner must be in standard ASCII code.

.05 The format of the record is the same for electronically filed records as they are for 3 1⁄2-inch diskettes, tapes, and tape

cartridges and must be in standard ASCII code.

.06 Filers must obtain, or already have, a Transmitter Control Code (TCC) assigned to them prior to submitting their files electronically. (Filers who currently have a TCC for magnetic media filing of Forms W-4 do not have to request a second TCC for electronic filing.) Refer to Part A, Sec. 5, for information on how to obtain a TCC.

.07 Once a TCC is obtained, electronic filers assign their own passwords and do not need prior or special approval.

.08 With all passwords, it is the user’s responsibility to remember the password and not allow the password to be compromised.

Passwords are user assigned at first logon and are up to 8 alpha/numerics, which are case sensitive. However, if filers do forget their

password, call 304-263-8700 for assistance.

Note: Passwords are case sensitive.

.09 Electronically filed Forms W-4 may be submitted to IRS/MCC 24 hours a day, 7 days a week. Technical assistance will be

available Monday through Friday between 8:30 a.m. and 4:30 p.m. Eastern Time by calling 304-263-8700.

.10 Do not transmit data electronically from January 1 through January 5. This will allow time for IRS/MCC to update their

system to reflect current year changes.

.11 Data compression is encouraged when submitting Forms W-4 electronically. MCC has the ability to decompress files created

using several popular software compression programs such as ARC, COMPRESS, LHARC, and PKZIP. The time required to transmit Forms W-4 electronically will vary depending on the modem speed and the type of data compression used, if any. The time required to transmit a file can be reduced by as much as 85 percent by using software compression and hardware compression.

The following are actual transmission rates achieved in test uploads of 1099 information at MCC using compressed files. The actual

transmission rates will vary depending on the modem speeds.

Transmission Speed

in bps

1000 Records

10,000 Records

100,000 Records

19.2K

34 Sec.

6 Min.

60 Min.

56K

20 Sec.

3 1⁄2 Min.

33 Min.

128K (ISDN)

8 Sec.

1 Min.

10 Min.

1999–49 I.R.B.

631

December 6, 1999

.11 Files submitted electronically will be assigned a unique filename by the IRS system (the user can name the file anything they

choose from their end). The IRS assigned filename will consist of the filers TCC, the submission type [ORIG (original), and REPL

(replacement)], and a four digit number sequence. The sequence number will be incremented for every file sent. For example, if it

is your first original file for the calendar year and your TCC is 44444, the IRS assigned filename would be ORIG.44444.0001.

Record the filename. This information will be needed by MCC in order to identify the file, if assistance is required, and to complete

Form 6466.

.12 Filers are advised not to resubmit an entire file if records were omitted from the original transmission. This will result in

duplicate filing. A new file should be sent consisting of the records that had not previously been submitted.

.13 The results of the electronic transmission will be available in the File Status area of the electronic system within two weeks;

however, no further processing will occur until the signed Form 6466 is received. The transmitter must mail or fax the signed Form

6466 the same day the electronic transmission is made. No return is considered filed until a Form 6466 is received by IRS/MCC.

.14 Form 6466 can be ordered by calling the IRS toll-free forms and publications order number 1-800-TAX-FORM, (1-800-8293676), or it may be computer-generated. It may also be obtained from the Internet at www.irs.gov. If a filer chooses to computergenerate Form 6466, all of the information contained on the original form, including the affidavit, must also be contained on the

computer-generated form.

.15 Forms 6466 may be mailed to the following address:

If by Postal Service, air or truck freight:

IRS-Martinsburg Computing Center

Information Reporting Program

Attn: Electronic Filing Coordinator

230 Murall Drive

Kearneysville, WV 25430

Please indicate on the envelope the following message:

CONTAINS FORM 6466 INFORMATION - NO MAGNETIC MEDIA

.16 Contact the Electronic Filing System by dialing 304-262-2400. This number supports analog connections from 1200bps to

56Kbps or ISDN BRI 128Kbps connections. The system can be accessed via Dial-up network/web browser or a communications

can be accessed via typical communications software and will perform similar to the former IRP-BBS.

.17 Due to the large number of communication products available, it is impossible to provide specific information on a particular

software package or hardware configuration. Filers should contact their software or hardware supplier for assistance. Your

browser will need to be capable of file uploads (i.e., Internet Explorer 4.0, Netscape Navigator 2.0 or higher). The following are

some general instructions (many of these settings may already be set by default in your software):

(a) Dial-up network settings:

(1) Set dial-up server type to PPP

(2) Set network protocol to TCP/IP

(3) Enable software compression

(4) Enable PPP LCP extensions

(b) Browser settings:

(1) Set to receive “cookies”

(2) Enable JavaScript or Jscript

(3) Browser must be capable of file uploads (i.e. Internet Explorer 4.0, Netscape 2.0 or higher)

(4) Enter the URL Address of http://10.225.224.2

– No parity

– Eight data bits

– One stop bit

– Full duplex

(d) Hardware features

(1) Enable hardware flow control

(2) Enable modem error control

(3) Enable modem compression

.18 The first time you log on to the electronic system, you will need to create a new account. After completing the registration information, you will be prompted for a user name and password. Passwords are assigned by the user at first logon and are up to 8

alpha/numerics which are case sensitive. Remember your exact logon name and password for future reference. If you forget your

logon name and/or password, call IRS/MCC at 304-263-8700 for assistance.

December 6, 1999

632

1999–49 I.R.B.

.19 Once you are an established user, select the logon option and then you will be prompted for your logon name and password.

Once you have entered this information, you will be at the Main Menu. Select one of the following options:

(a) Electronic Filing - this option will allow you to send your files and provide us with current mailing address information in

case we need to send any correspondence.

(b) File Status - this option will display the results of your file transfer and will be posted in this area within 2 weeks.

Common Problems Associated with Electronic Filing

1. No Form 6466, Transmittal of Forms W-4 Reported Magnetically/Electronically.

Even though you have sent your Forms W-4 electronically, you still need to fax or mail the Form 6466. See Part B, Sec. 6.15 for the

mailing address. The fax number is 304-264-5602.

2. Transmitter does not dial back to the electronic system to determine file acceptability.

Within 2 weeks the results of your file transmission will be posted under the option called File Status. It is very important that you

check this option because if your file is bad we must receive a replacement within 45 days.

3. Transmitter compresses several files into one.

Only compress one file at a time. For example, if you have 10 uncompressed files to send, compress each file separately and send 10

separate compressed files.

4. Transmitter sends a file and File Status indicates that the file is good, but the transmitter wants to send a replacement file to

replace the original/replacement file.

Once a file has been transmitted, you cannot send a replacement file unless File Status indicates the file is bad. If you do not want

us to process the file, you must first contact us at 304-263-8700 to see if this is a possibility.

5. File format is formatted as EBCDIC.

All files submitted electronically must be in standard ASCII Code.

SEC. 7. FORM W-4 RECORD FORMAT AND RECORD LAYOUT

.01 This record is used to identify the employer, the employee, number of allowances, and other information that is reported on

the paper Form W-4.

.02 ALL RECORDS MUST BE A FIXED LENGTH OF 350 POSITIONS.

.03 Do not begin any record at the end of a block or diskette and continue the same record into the next block or diskette.

FORM W-4 RECORD FORMAT

Field

Position

Field Title

Length

Description and Remarks

1–9

Employee Tax

Identification

Number (TIN)

REQUIRED. Enter the 9-digit TIN assigned to the employee. DO NOT ENTER

HYPHENS or ALPHA CHARACTERS. All zeroes, ones, twos, etc. will have the

effect of an incorrect TIN.

10–44

Employee Name

Line 1

REQUIRED. Enter the name of the employee whose TIN appears in field positions

1-9. Enter the name in the following order: first name, middle name (if present),

and surname. (Use initials for the first and middle names where necessary to insure

that the entire employee surname fits in the field.) If fewer than 35 characters are

used, left-justify and fill unused positions with blanks.

1999–49 I.R.B.

633

December 6, 1999

(1) A blank must be surrounded by alphas or continued to the end of the field

(e.g., ab...b, aba).

(2) A hyphen in the first position is to identify an employee with surname only.

Hyphens must be surrounded by alphas or numerics and must never occur in the

first position of a name unless immediately followed by a caret.

(3) A caret is used to define an internal name control. It must immediately precede the employee surname in place of the blank. A second caret is used to separate a suffix from the surname (e.g., JOHN J. <BLACK; BILL<OAK<JR; AMY

FERN<BROWN<MD).

Note: The only allowable characters are alphas, blanks, numerics, ampersands, hyphens and slashes. A minimum of one and

a maximum of two carets (<) can be used. Punctuation, such as, periods and commas are not allowed and will cause your file

to be returned.

45–79

Employee Name

Line 2

Optional. This line is designated for an “in care of” (c/o) situation. Left-justify and

fill unused positions with blanks. Hyphens and slashes must be surrounded by alphas or numerics; ampersands must be surrounded by blanks; blanks must be surrounded by alphas or numerics or continued to the end of the field (e.g., ab...b,

aba).

Note: The same exceptions apply as set forth in “Employee Name Line 1”; also the use of a percent sign (%) is not valid—

use c/o if necessary.

80–114

Employee Street

Address

REQUIRED. Enter mailing address of employee. Street address should include

number, street, apartment or suite number (or P O Box if mail is not delivered to

street address). Left-justify and fill unused positions with blanks. Position 80 must

be an alpha or numeric; hyphens and slashes must be surrounded by alphas or numerics; ampersands must be surrounded by blanks; blanks must be surrounded by

alphas or numerics or continued to the end of the field (e.g., ab...b, aba).

Note: The only allowable characters are alphas, blanks, numerics, ampersands, hyphens and slashes. Punctuation such as

periods and commas are not allowed and will cause your file to be returned. For example, the address 210 N. Queen St.,

Suite #300 must be entered as 210 N Queen St Suite 300.

115–139

Employee City

REQUIRED. Enter the city, town or post office. If a foreign address, see Note 2.

Leftjustify and fill unused positions with blanks. Enter APO or FPO, if applicable.

Do not enter state and ZIP Code information in this field. Position 115 must be an

alpha or numeric; hyphens must be surrounded by alphas or numerics; blanks must

be surrounded by alphas or numerics or continued to the end of the field (e.g., ab...b,

aba).

Note 1: The only allowable characters are alphas, blanks, numerics, ampersands, hyphens and slashes. Punctuation such as

periods and commas are not allowed and will cause your file to be returned. For example, the city St. Louis must be entered

as St Louis.

Note 2: For foreign addresses, you may use the 25 position Employee City field to provide the following information: city

and country name.

140–141

Employee State

REQUIRED. Enter the two character location code of employee address; must be

one of the following:

Note: For foreign addresses, enter XX from table below.

Location

Code

Location

Code

Location

Code

Alabama

Alaska

American Samoa

Arizona

Arkansas

California

Colorado

Kentucky

Louisiana

Maine

Marshall Islands

Maryland

Massachusetts

Michigan

Ohio

Oklahoma

Oregon

Pennsylvania

Puerto Rico

Rhode Island

South Carolina

December 6, 1999

634

1999–49 I.R.B.

FORM W-4 RECORD FORMAT

Field

Position

Field Title

Length

Description and Remarks

Location

Code

Location

Code

Location

Code

Connecticut

Delaware

District of Columbia

Federated States

of Micronesia

Florida

Georgia

Guam

Hawaii

Idaho

Illinois

Indiana

Iowa

Kansas

Minnesota

Mississippi

Missouri

Montana

Nebraska

Nevada

New Hampshire

New Jersey

New Mexico

New York

North Carolina

North Dakota

Northern

Mariana Islands

South Dakota

Tennessee

Texas

Utah

Vermont

Virginia

Virgin Islands

Washington

West Virginia

Wisconsin

Wyoming

Foreign Address,

All Others

142–150

Employee

ZIP Code

REQUIRED. Enter the valid nine-digit ZIP Code of employee. IF YOU ONLY

HAVE FIVE (5) DIGITS AVAILABLE, LEFT-JUSTIFY AND ZERO FILL.

Blank fill only if the employee’s ZIP Code is unavailable.

151

Marital Status

REQUIRED. Enter appropriate code from the table below:

Marital Status

Code

Designated

Single

Married

Married, withhold

at single rate

No marital status

designated

152

Exempt Status

REQUIRED. Enter “E” if employee claims exempt status; otherwise, enter

blank.

153

BLANK

Enter Blank.

154–156

Allowances

REQUIRED. Must be a three (3) digit numeric field corresponding to the

number of allowances claimed by employee. (It is necessary to file this Form W-4

with IRS if the number of allowances is more than ten (10) or exempt status is

claimed.) Field must be right justified and zero filled. If no entry, or employee

claimed exempt status, enter blanks.

157–163

Additional Amount

REQUIRED. Enter any additional amount of withholding the employee wants deducted from each pay. Amount must be entered in U.S. dollars and cents. The rightmost two positions represent cents. Do not enter dollar signs, commas, decimal

points, or negative numbers. Right-justify and zero fill. If no entry, zero fill.

164–169

BLANK

Enter Blanks.

1999–49 I.R.B.

635

December 6, 1999

FORM W-4 RECORD FORMAT

Field

Position

Field Title

Length

Description and Remarks

170–178

Employer

Identification

Number

REQUIRED. The 9-digit EIN assigned to the employer. DO NOT ENTER

HYPHENS, ALPHA CHARACTERS. All zeroes, ones, twos, etc. will have the

effect of an incorrect TIN.

179–213

Employer Name

Line 1

REQUIRED. Enter the name of the employer as it appears on employment tax

forms (e.g., Form 941). Any extraneous information must be deleted from this name

line. Left-justify and fill with blanks. Position 179 must be alpha or numeric; hyphens and slashes must be surrounded by alphas or numerics; blanks must be surrounded by alphas or numerics or continued to the end of the field (e.g., ab...b, aba).

Note: The only allowable characters are alphas, blanks, numerics, ampersands, hyphens and slashes. Punctuation, such as

periods and commas, are not allowed and will cause your file to be returned.

214–247

Employer Name

Line 2

If the employer name requires more space than is available in Employer Name Line

1, enter the remaining portion of the name in this field. Left-justify and fill with

blanks. Position 214 must be alpha or numeric; hyphens must be surrounded by alphas or numerics; blanks must be surrounded by alphas or numerics or continued to

the end of the field (e.g., ab...b, aba).

Note: The same exceptions apply as set forth in “Employer Name Line 1”; also, the use of a percent sign (%) is not valid—

use c/o if necessary.

248–282

Employer Street

REQUIRED. Enter mailing address of employer. Street address should include

number, street, apartment or suite number (or P O Box if mail is not delivered to

street address). Left-justify and fill unused positions with blanks. Position 248 must

be alpha or numeric; hyphens must be surrounded by alphas or numerics; blanks

must be surrounded by alphas or numerics or continued to the end of the field (e.g.,

ab...b, aba).

Note: The only allowable characters are alphas, blanks, numerics, ampersands, hyphens and slashes. Punctuation such as

periods and commas are not allowed and will cause your file to be returned. For example, the address 210 N. Queen St.,

Suite #300 must be entered as 210 N Queen St Suite 300.

283–307

Employer City

REQUIRED. Enter the city, town or post office. Enter APO or FPO if applicable.

Do not enter state and ZIP Code information in this field. Position 283 must be

alpha or numerics; hyphens must be surrounded by alphas or numerics; blanks must

be surrounded by alphas or numerics or continued to the end of the field (e.g., ab...b,

aba).

Note: The only allowable characters are alphas, blanks, numerics, ampersands, hyphens and slashes. Punctuation such as

periods and commas are not allowed and will cause your file to be returned. For example, the city St. Louis must be entered

as St Louis.

308–309

Employer State

Code

REQUIRED. Enter location code of employer. Must use abbreviation shown in

the location abbreviation table for Employee Location Code (field positions

140–141).

310–318

Employer ZIP

Code

REQUIRED. Enter the valid nine digit ZIP Code of employer. IF YOU ONLY

HAVE FIVE (5) DIGITS AVAILABLE, LEFT-JUSTIFY AND ZERO FILL.

Blank fill only if employer’s ZIP Code is unavailable.

319–323

Transmitter

Control Code

REQUIRED. Enter 5-character Transmitter Control Code (TCC) assigned by

IRS/MCC.

December 6, 1999

636

1999–49 I.R.B.

FORM W-4 RECORD FORMAT

Field

Position

Field Title

324–331

Form W-4 Date

REQUIRED. Enter date located on signature line Form W-4. If no date entered,

generate current system date. Format as YYYYMMDD (e.g.19981231). Exempt

Status Form W-4 compare “year effective date” on Line 7 to signature date. If year

entered on Line 7 is later than signature date, use Form W-4 date as a 01/01 receipt

for subsequent calendar year (e.g., Line 7 of Form W-4 shows an exempt status date

of 2000 but signature date is 19991031, use 20000101 as Form W-4 date.)

332–348

BLANK

Enter Blanks.

349–350

BLANK

Enter blanks, or carriage return/line feed (CR/LF) characters.

Length

Description and Remarks

FORM W-4 RECORD LAYOUT

Employee Tax

Identification Number

Employee

Name

Line 1

Employee Name

Line 2

Employee Street

Address

Employee City

1–9

10–44

45–79

80–114

115–139

Employee State

140–141

Employee ZIP

Code

Marital

Status

Exempt

Status

BLANK

Allowances

142–150

151

152

153

154–156

Additional Amount

BLANK

Employer

Identification

Number

Employer

Name Line 1

Employer

Name Line 2

157–163

164–169

170–178

179–213

214–247

Employer Street

Employer City

Employer State

Code

Employer ZIP

Code

Transmitter

Control Code

248–282

283–307

308–309

310–318

319–323

Form W-4 Date

BLANK

BLANK or

CR/LF

324–331

332–348

349–350

SEC. 8. EFFECT ON OTHER DOCUMENTS

Revenue Procedure 98–24, Publication 1245 (Rev. 3–98), is superseded.

1999–49 I.R.B.

637

December 6, 1999

SEC. 9. EFFECTIVE DATE

Use the record length and processing

capabilities of this revenue procedure to

file Forms W-4 submitted for the quarter

ending March 31, 2000 and for all subsequent filings.

Limitations on Benefits and

Contributions under Qualified

Plans; Cost-of-Living

Adjustments for 20001

Notice 99–55

Section 415 of the Internal Revenue

Code (the Code) provides for dollar limitations on benefits and contributions

under qualified retirement plans. Section

415 also requires that the Commissioner

annually adjust these limits for cost-ofliving increases. Other limitations applicable to deferred compensation plans are

also affected by these adjustments.

Effective January 1, 2000, the limitation for the annual benefit under § 415(b)(1)(A) for a defined benefit plan is increased from $130,000 to $135,000. For

participants who separated from service

before January 1, 2000, the limitation for

defined benefit plans under § 415(b)1 Based on News Release IR-1999-80, dated October

19, 1999.

December 6, 1999

(1)(B) is computed by multiplying the

participant’s compensation limitation, as

adjusted through 1999 by 1.0235. The

limitation for defined contribution plans

under § 415(c)(1)(A) remains unchanged

at $30,000.

The Code provides that various other

dollar amounts are to be adjusted at the

same time and in the same manner as the

dollar limitation of § 415(b)(1)(A) is adjusted. These dollar amounts and the adjusted amounts are as follows:

The limitation under § 402(g)(1) on the

exclusion for elective deferrals described

in § 402(g)(3) is increased from $10,000

to $10,500.

The dollar amount under § 409(o)(1)(C)(ii) for determining the maximum account balance in an employee stock ownership plan subject to a 5-year distribution

period is increased from $735,000 to

$755,000, while the dollar amount used to

determine the lengthening of the 5-year

distribution period is increased from

$145,000 to $150,000.

The limitation used in the definition of

a highly compensated employee under

§ 414(q)(1)(B) is increased from $80,000

to $85,000.

The annual compensation limit under

§§ 401(a)(17) and 404(l) is increased

from $160,000 to $170,000. The annual

compensation limit under § 401(a)(17) for

eligible participants in certain govern-

638

mental plans that, under the plan as in effect on July 1, 1993, allowed cost-of-living adjustments to the compensation limitation under the plan under § 401(a)(17)

to be taken into account, is increased from

$270,000 to $275,000.

The compensation amount under

§ 408(k)(2)(C) regarding simplified employee pension plans (SEPs) is increased

from $400 to $450. The compensation

amount under § 408(k)(3)(C) for SEPs is

increased from $160,000 to $170,000.

The limitation under § 408(p)(2)(A) regarding simple retirement accounts remains unchanged at $6,000.

The limitation on deferrals under

§ 457(b)(2) and (c)(1) concerning eligible

deferred compensation plans of state and

local governments and of tax-exempt organizations remains unchanged at $8,000.

The compensation amounts under

§ 1.61–21(f)(5)(i) and (iii) of the Income

Tax Regulations concerning the definition

of “control employee” for fringe benefit

valuation purposes are increased from

$70,000 and $145,000, respectively, to

$75,000 and $150,000, respectively.

Administrators of defined benefit or

defined contribution plans that have received favorable determination letters

should not request new determination letters solely because of yearly amendments

to adjust maximum limitations in the

plans.

1999–49 I.R.B.

Part IV. Items of General Interest

Notice of Proposed Rulemaking

and Notice of Public Hearing

Generation-Skipping Transfer

Issues

REG–103841–99

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Notice of proposed rulemaking and notice of public hearing.

SUMMARY: This document contains

proposed regulations relating to the application of the effective date rules of the

generation-skipping transfer (GST) tax

imposed under chapter 13 of the Internal

Revenue Code. The proposed regulations

provide guidance with respect to the type

of trust modifications that will not affect

the exempt status of a trust. In addition,

the proposed regulations clarify the application of the effective date rules in the

case of property transferred pursuant to

the exercise of a general power of appointment. The proposed regulations are

necessary to provide guidance to taxpayers so that they may properly determine if

chapter 13 of the Code is applicable to a

particular trust.

DATES: Written and electronic comments must be received by February 16,

2000. Outlines of topics to be discussed

at the public hearing scheduled for March

15, 2000 at 10:00, must be received by

February 23, 2000.

ADDRESSES: Send submissions to:

CC:DOM:CORP:R (REG–103841–99),

room 5226, Internal Revenue Service,

POB 7604, Ben Franklin Station, Washington, DC 20044. Submissions may also

be hand delivered Monday through Friday

between the hours of 8 a.m. and 5 p.m. to:

CC:DOM:CORP:R (REG–103841–99),

Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, NW,

Washington, DC. Alternatively, taxpayers

may submit comments electronically via

the internet by selecting the “Tax Regs”

option on the IRS Home Page, or by submitting comments directly to the IRS internet site at http://www.irs.gov/tax regs/

reglist.html. The public hearing will be

1999–49 I.R.B.

held in room 2615, Internal Revenue Service Building, 1111 Constitution Avenue,

NW, Washington, DC.

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, James F. Hogan, (202) 622-3090;

concerning submissions of comments, the

hearing, and/or to be placed on the building access list to attend the hearing,

Michael L. Slaughter, (202) 622-7180

(not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

The GST tax provisions were enacted

as part of the Tax Reform Act of 1986

(TRA), Pub. L. 99–514, 1986–3 (Vol. 1)

C.B. 1, 634. Under section 1433(a) of the

TRA, the GST tax generally applies to all

generation-skipping transfers made after

October 22, 1986, the date the TRA was

enacted.

Section 1433(b)(2) of the TRA exempts

transfers from certain trusts from the GST

tax. Hereinafter, a trust that is exempt

under section 1433(b)(2) is referred to as

an “exempt trust.”

First, under section 1433(b)(2)(A) of

the TRA, the GST tax does not apply to

any transfer from a trust that was irrevocable on September 25, 1985, to the extent the transfer is not made out of additions to the trust after September 25, 1985

(the day before the House Ways and

Means Committee began considering the

bill containing the GST provisions).

Under §26.2601–1(b)(1)(ii) of the Generation-skipping Transfer Tax Regulations,

a trust created on or before September 25,

1985, is considered irrevocable on that

date unless: (1) the settlor retained a

power that would cause the trust to be included in the settlor’s gross estate for federal estate tax purposes by reason of section 2038 of the Code, if the settlor had

died on September 25, 1985; or (2) the

property held in the trust is a life insurance policy transferred by the insured and

the insured possessed, on September 25,

1985, any incident of ownership that

would have caused the value of the trust

to be included in the insured’s gross estate

under section 2042 of the Code if the insured had died on September 25, 1985.

639

Second, under section 1433(b)(2)(B) of

the TRA, as amended by the Technical and

Miscellaneous Revenue Act of 1988, the

GST tax does not apply to any generationskipping transfer under a will or revocable

trust executed before October 22, 1986, if

the decedent died before January 1, 1987.

Third, under section 1433(b)(2)(C) of

the TRA, the GST tax does not apply to

any generation-skipping transfer under a

trust to the extent such trust consists of

property included in the gross estate of a

decedent or reinvestments thereof, but

only if the decedent was, on October 22,

1986, under a mental disability to change

the disposition of the decedent’s property

and did not regain competence to dispose

of the property before death.

Numerous taxpayers have requested

private letter rulings regarding the effect

that a proposed modification or construction will have on an exempt trust for GST

tax purposes. In rulings in this area, the

IRS has held that a modification will not

cause the trust to lose its exempt status if

the modification does not result in any

change in the quality, value, or timing of

any beneficial interest under the trust. Although the statute does not specifically address modifications to trusts that are exempt under section 1433(b)(2) of the

TRA, Treasury and the IRS believe that a

trust that is modified such that none of the

beneficial interests change can be viewed

as the same trust that was in existence on

September 25, 1985.

The majority of the ruling requests received by the Service concern proposed

modifications intended to enable the trust

to adapt to changed circumstances or to

enable the trustee to administer the trust

properly. These proposed modifications

often are not inconsistent with the purpose

of the TRA effective date provisions. Accordingly, as discussed below, these proposed regulations adopt a more liberal

standard with respect to changes that may

be made to the trust without the loss of exempt status. Treasury and the IRS intend

that the regulations, when finalized, provide sufficient guidance concerning modifications that the need for private letter

rulings will be greatly diminished. Comments are requested regarding whether

the proposed regulations will achieve this

result.

December 6, 1999

In addition, the proposed regulations

clarify the application of the effective

date provisions when the exercise or lapse

of a general power of appointment over

an otherwise grandfathered trust results in

property passing to a skip person.

Explanation of Provisions

1. Modifications to Trusts

The proposed regulations provide guidance regarding the types of modifications,

constructions, and settlements of controversies that will not cause a trust to lose

its exempt status. However, the rules

contained in these proposed regulations

apply only for GST tax purposes. Thus,

the rules do not apply in determining, for

example, whether a modification will result in a gift for gift tax purposes, or may

cause inclusion of the trust assets in the

gross estate, or may result in the realization of gain for purposes of section 1001

of the Code.

Under the proposed regulations, a court

order in a construction proceeding that resolves an ambiguity in the terms of a trust

instrument will not cause the trust to lose

its exempt status. The judicial action,

however, must involve a bona fide issue

and the court’s decision must be consistent with applicable state law that would

be applied by the highest court of the

state. Commissioner v. Estate of Bosch,

387 U.S. 456 (1967). Construction proceedings determine a settlor’s intent as of

the date the instrument became effective,

and thus, a court order construing an instrument that satisfies these requirements

does not alter or modify the terms of the

instrument.

Similarly, under the proposed regulations, a court-approved settlement of a

bona fide controversy relating to the administration of a trust or the construction

of terms of the governing instrument of a

trust will not cause a trust to lose its exempt status. This will be the case, however, only if the settlement is the product

of arm’s length negotiations, and the settlement is within the range of reasonable

outcomes under the governing instrument

and applicable state law addressing the

issues resolved by the settlement. See

Ahmanson Foundation v. United States,

674 F.2d 761 (9th Cir. 1981); Estate of

Suzuki v. Commissioner, T.C. Memo.

1991–624. For example, A and B are the

December 6, 1999

sole remainder beneficiaries of a trust established by their parent. They disagree

as to the portion of the remainder each is

entitled to under the terms of the trust

when the trust terminates. A settlement

dividing the corpus equally among A, B,

and C, B’s child and the grandchild of the

parent who established the trust, would

not be considered within the range of reasonable outcomes because C is not a potential remainderman under any construction of the trust agreement.

The proposed regulations also address

the situation in which a trustee distributes

trust principal to a new trust for the benefit

of succeeding generations. In some cases,

the governing instrument grants the trustee

broad discretionary powers to distribute

principal to or for the benefit of the trust

beneficiaries, outright or in trust. Under

these circumstances, distributions by the

trustee to trusts for the benefit of trust beneficiaries will not cause the original trust

or the new trusts to lose exempt status provided the vesting of trust principal is not

postponed beyond the perpetuities period

applicable to the original trust.

Finally, under the proposed regulations,

a trust may be modified and remain exempt for GST purposes. The modification, however, must not shift a beneficial

interest in the trust to any beneficiary who

occupies a lower generation (as defined in

section 2651) than the person or persons

who held the beneficial interest prior to

the modification and must not extend the

time for vesting of any beneficial interest

in the trust beyond the period provided for

in the original trust.

2. Exercise of a General Power of

Appointment after September 25,

1985.

In Simpson v. United States, 183 F.3d

812 (8th Cir. 1999), the decedent exercised a testamentary general power of appointment granted under a marital trust

that was created in 1966. Pursuant to the

decedent’s exercise of the general power

of appointment, the property passed to her

grandchildren who were skip persons

under section 2612. The court concluded

that the transfer to the grandchildren was

exempt from the GST tax under section

1433(b)(2)(A) of the TRA, because the

transfer was “under a trust” that was irrevocable on September 25, 1985.

640

The facts in Simpson are similar to

those presented in Peterson Marital Trust

v. Commissioner, 78 F.3d 795 (2nd Cir.

1996). In Peterson, the decedent had a

testamentary general power to appoint

property in a pre-September 25, 1985

marital trust created under her husband’s

will. Rather than appointing the property

outright, the taxpayer allowed the power

to lapse and the property passed to her

husband’s grandchildren, who were skip

persons under section 2612. The court

concluded that the transfer was subject to

the GST tax. The court noted that the effective date provisions in section

1433(b)(2) of the TRA were “designed . .

. to protect those taxpayers who, on the

basis of pre-existing rules, made arrangements from which they could not reasonably escape and which, in retrospect, had

become singularly undesirable.” Peterson Marital Trust, at 801 (footnote omitted). The court concluded that there was

no basis to apply the protection provided

in section 1433(b)(2) to the marital trust

because the arrangement could have been

changed to avoid the GST tax through the

exercise of the decedent’s general power

of appointment.

Treasury and the IRS believe that there

is no substantive difference between the

situation in Simpson where property

passed pursuant to the exercise of a general power of appointment and the situation in Peterson Marital Trust where

property passed pursuant to a lapse of a

general power of appointment. An individual who has a general power of appointment has the equivalent of outright

ownership in the property. Estate of Kruz

v. Commissioner, 101 T.C. 44, 50-51, 5960 (1993). The value of the property subject to the general power is includible in

the powerholder’s gross estate at death

under section 2041(a). In either case, the

powerholder can avoid the consequences

of the GST tax by appointing the property

to nonskip persons. Therefore, as the

court noted in Peterson Marital Trust,

there is no basis for exempting such dispositions from the GST tax under the

TRA effective date provisions.

Accordingly, the proposed regulations

clarify that the transfer of property pursuant to the exercise, release, or lapse of a

general power of appointment created in a

pre-September 25, 1985 trust is not a

transfer under the trust, but rather is a

1999–49 I.R.B.

transfer by the powerholder occurring

when the exercise, release, or lapse of the

power becomes effective, for purposes of

section 1433(b)(2)(A) of the TRA.

Special Analysis

It has been determined that this notice

of proposed rulemaking is not a significant regulatory action as defined in EO

12866. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C.

chapter 5) does not apply to these regulations, and because these regulations do

not impose a collection of information on

small entities, the Regulatory Flexibility

Act (5 U.S.C. chapter 6) does not apply.

Therefore, a Regulatory Flexibility

Analysis is not required. Pursuant to section 78

This text is long and has been trimmed here. Open the source document for the complete record.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.