# Bulletin No. 1998–38 > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/agency%3Airs%3Abb4168f7efed32c9 ## Record - **Collection:** Agency decision - **Document type:** Agency decision ## Text IRB 1998-38 9/16/98 11:49 AM Page 1 Internal Revenue bulletin Bulletin No. 1998–38 September 21, 1998 HIGHLIGHTS OF THIS ISSUE These synopses are intended only as aids to the reader in identifying the subject matter covered. They may not be relied upon as authoritative interpretations. INCOME TAX Rev. Rul. 98–45, page 4. Low-income housing credit; satisfactory bond; “bond factor” amounts for the period July through September 1998. This ruling announces the monthly bond factor amounts to be used by taxpayers who dispose of qualified low-income buildings or interests therein during the period July through September 1998. EMPLOYEE PLANS Announcement 98–85, page 30. Forms 5300, 5303, 5307 and 6406, and Schedule Q (Form 5300), used for requesting determination letters for ongoing employee benefit plans, have been revised. The new revision date is July 1998. EXEMPT ORGANIZATIONS Announcement 98–86, page 31. A list is provided of organizations that no longer qualify as organizations to which contributions are deductible under section 170 of the Code. ADMINISTRATIVE Rev. Proc. 98–48, page 7. Qualified small business stock; rollover of gain; election. Procedures are provided for taxpayers to make an election under section 1045 of the Code to defer recognition of gain on the sale of qualified small business stock. Rev. Proc. 98–50, page 8. Form 1040 IRS e-file program. Participants in the Form 1040 IRS e-file program are informed of their obligations to the Service, taxpayers, and other participants. Rev. Proc. 97–60 superseded. Rev. Proc. 98–51, page 20. Form 1040 on-line filing program. Participants in the Form 1040 on-line filing program are informed of their obligations to the Service, taxpayers, and other participants. Rev. Proc. 97–61 superseded. Notice 98–49, page 5. Section 408A; Roth IRAs, reporting requirements. This notice describes certain reporting requirements for Roth IRAs as described in section 408A of the Code and certain changes to IRAs contained in the Internal Revenue Service Restructuring and Reform Act of 1998. Notice 87–13 and Notice 87–16 modified. Announcement 98–84, page 30. The Service announces a delay in changes to Forms W–2 and W–3 until tax year 2000. In Announcement 98–55, 1998–26 I.R.B. 41, the Service requested comments on proposed changes to the 1999 Forms W–2 and W–3. Based on a review of those comments, the Service will postpone making major revisions to Forms W–2 and W–3 until tax year 2000 forms, which will be filed in 2001. Finding Lists begin on page 33. Announcement of Declaratory Judgment Proceedings Under section 7428 begins on page 31. Department of the Treasury Internal Revenue Service IRB 1998-38 9/16/98 11:49 AM Page 2 Mission of the Service ucts and services; and perform in a manner warranting the highest degree of public confidence in our integrity, efficiency, and fairness. The purpose of the Internal Revenue Service is to collect the proper amount of tax revenue at the least cost; serve the public by continually improving the quality of our prod- Statement of Principles of Internal Revenue Tax Administration The Service also has the responsibility of applying and administering the law in a reasonable, practical manner. Issues should only be raised by examining officers when they have merit, never arbitrarily or for trading purposes. At the same time, the examining officer should never hesitate to raise a meritorious issue. It is also important that care be exercised not to raise an issue or to ask a court to adopt a position inconsistent with an established Service position. The function of the Internal Revenue Service is to administer the Internal Revenue Code. Tax policy for raising revenue is determined by Congress. With this in mind, it is the duty of the Service to carry out that policy by correctly applying the laws enacted by Congress; to determine the reasonable meaning of various Code provisions in light of the Congressional purpose in enacting them; and to perform this work in a fair and impartial manner, with neither a government nor a taxpayer point of view. Administration should be both reasonable and vigorous. It should be conducted with as little delay as possible and with great courtesy and considerateness. It should never try to overreach, and should be reasonable within the bounds of law and sound administration. It should, however, be vigorous in requiring compliance with law and it should be relentless in its attack on unreal tax devices and fraud. At the heart of administration is interpretation of the Code. It is the responsibility of each person in the Service, charged with the duty of interpreting the law, to try to find the true meaning of the statutory provision and not to adopt a strained construction in the belief that he or she is “protecting the revenue.” The revenue is properly protected only when we ascertain and apply the true meaning of the statute. 2 IRB 1998-38 9/16/98 11:49 AM Page 3 Introduction The Internal Revenue Bulletin is the authoritative instrument of the Commissioner of Internal Revenue for announcing official rulings and procedures of the Internal Revenue Service and for publishing Treasury Decisions, Executive Orders, Tax Conventions, legislation, court decisions, and other items of general interest. It is published weekly and may be obtained from the Superintendent of Documents on a subscription basis. Bulletin contents of a permanent nature are consolidated semiannually into Cumulative Bulletins, which are sold on a single-copy basis. dures must be considered, and Service personnel and others concerned are cautioned against reaching the same conclusions in other cases unless the facts and circumstances are substantially the same. The Bulletin is divided into four parts as follows: Part I.—1986 Code. This part includes rulings and decisions based on provisions of the Internal Revenue Code of 1986. It is the policy of the Service to publish in the Bulletin all substantive rulings necessary to promote a uniform application of the tax laws, including all rulings that supersede, revoke, modify, or amend any of those previously published in the Bulletin. All published rulings apply retroactively unless otherwise indicated. Procedures relating solely to matters of internal management are not published; however, statements of internal practices and procedures that affect the rights and duties of taxpayers are published. Part II.—Treaties and Tax Legislation. This part is divided into two subparts as follows: Subpart A, Tax Conventions, and Subpart B, Legislation and Related Committee Reports. Part III.—Administrative, Procedural, and Miscellaneous. To the extent practicable, pertinent cross references to these subjects are contained in the other Parts and Subparts. Also included in this part are Bank Secrecy Act Administrative Rulings. Bank Secrecy Act Administrative Rulings are issued by the Department of the Treasury’s Office of the Assistant Secretary (Enforcement). Revenue rulings represent the conclusions of the Service on the application of the law to the pivotal facts stated in the revenue ruling. In those based on positions taken in rulings to taxpayers or technical advice to Service field offices, identifying details and information of a confidential nature are deleted to prevent unwarranted invasions of privacy and to comply with statutory requirements. Part IV.—Items of General Interest. With the exception of the Notice of Proposed Rulemaking and the disbarment and suspension list included in this part, none of these announcements are consolidated in the Cumulative Bulletins. Rulings and procedures reported in the Bulletin do not have the force and effect of Treasury Department Regulations, but they may be used as precedents. Unpublished rulings will not be relied on, used, or cited as precedents by Service personnel in the disposition of other cases. In applying published rulings and procedures, the effect of subsequent legislation, regulations, court decisions, rulings, and proce- The first Bulletin for each month includes a cumulative index for the matters published during the preceding months. These monthly indexes are cumulated on a semiannual basis and are published in the first Bulletin of the succeeding semiannual period, respectively. The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate. For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402. 3 IRB 1998-38 9/16/98 11:49 AM Page 4 Part I. Rulings and Decisions Under the Internal Revenue Code of 1986 Section 42.—Low-Income Housing Credit Rev. Rul. 98–45 Low-income housing credit; satisfactory bond; “bond factor” amounts for the period July through September 1998. This ruling announces the monthly bond factor amounts to be used by taxpayers who dispose of qualified low-income buildings or interests therein during the period July through September 1998. In Rev. Rul. 90–60, 1990–2 C.B. 3, the Internal Revenue Service provided guidance to taxpayers concerning the general methodology used by the Treasury Department in computing the bond factor amounts used in calculating the amount of bond considered satisfactory by the Secretary under § 42(j)(6) of the Internal Revenue Code. It further announced that the Secretary would publish in the Internal Revenue Bulletin a table of “bond factor” amounts for dispositions occurring during each calendar month. This revenue ruling provides in Table 1 the bond factor amounts for calculating the amount of bond considered satisfactory under § 42(j)(6) for dispositions of qualified low-income buildings or interests therein during the period July through September 1998 Table 1 Rev. Rul. 98–45 Monthly Bond Factor Amounts for Dispositions Expressed As a Percentage of Total Credits Calendar Year Building Placed in Service or, if Section 42(f)(1) Election Was Made, the Succeeding Calendar Year Month of Disposition 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Jul ’98 Aug ’98 Sep ’98 61.09 61.09 61.09 75.25 75.25 75.25 75.33 75.13 74.93 77.22 77.01 76.81 79.49 79.27 79.06 82.08 81.85 81.63 84.70 84.47 84.23 87.18 86.93 86.70 89.60 89.35 89.12 92.21 91.97 91.74 94.81 94.61 94.42 97.21 97.21 97.21 For a list of bond factor amounts applicable to dispositions occurring during other calendar years, see the following revenue rulings: Rev. Rul. 95–83, 1995– 2 C.B. 8, for dispositions occurring during calendar year 1995; Rev. Rul. 98–3, 1998–2 I.R.B. 4, for dispositions occurring during the calendar years 1996 and 1997; Rev. Rul. 98–13, 1998–11 I.R.B. 4, for dispositions occurring during the period January through March 1998; and Rev. Rul. 98–31, 1998–25 I.R.B. 4, for dispositions occurring during the period April through June 1998. Special Industries). For further information regarding this revenue ruling, contact Mr. Malgeri at (202) 622-3040 (not a tollfree call). September 21, 1998 Section 6061.—Signing of Returns and Other Documents Section 6012.—Persons Required To Make Returns of Income 26 CFR 1.6061–1: Signing of returns and other documents by individuals. 26 CFR 1.6012–5: Composite return in lieu of specified form. For the requirements for participation in the Form 1040 IRS e-file program, see Rev. Proc. 98–50, page 8. For the requirements for participation in the Form 1040 IRS e-file program, see Rev. Proc. 98–50, page 8. DRAFTING INFORMATION The principal author of this revenue ruling is Jack Malgeri of the Office of Assistant Chief Counsel (Passthroughs and Form 1040 on-line filing program, see Rev. Proc. 98–51, page 20. 26 CFR 1.6012–5: Composite return in lieu of specified form. 26 CFR 1.6061–1: Signing of returns and other documents by individuals. For the requirements for participation in the Form 1040 on-line filing program, see Rev. Proc. 98–51, page 20. For the requirements for participation in the 4 1998–38 I.R.B. IRB 1998-38 9/16/98 11:49 AM Page 5 Part III. Administrative, Procedural, and Miscellaneous Roth IRA Guidance Notice 98–49 PURPOSE AND BACKGROUND This notice provides guidance relating to Service-approved Roth IRA documents and IRA reporting requirements. In addition, this notice summarizes a number of recent changes in the law governing all IRAs, which affect Notice 87–13, 1987–1 C.B. 432, and Notice 87–16, 1987–1 C.B. 446. Roth IRAs are a new type of IRA, described in § 408A of the Internal Revenue Code (“Code”), that individuals can use beginning in 1998. Section 408A was added to the Code by § 302 of the Taxpayer Relief Act of 1997 (“TRA 97”), Pub. L. 105–34, to authorize a new type of individual retirement arrangement (the “Roth IRA”). This notice reflects changes relating to Roth IRAs contained in the Internal Revenue Service Restructuring and Reform Act of 1998 (the “IRS Restructuring Act”), Pub. L. 105–206. The Internal Revenue Service recently issued proposed regulations, §§ 1.408A–1 through 1.408A–9, relating to Roth IRAs, which were published in the Federal Register on September 3, 1998. This notice incorporates definitions and terms that are contained in those proposed regulations. For more information on IRAs, including Roth IRAs, see Publication 590, Individual Retirement Arrangements (IRAs), and Publication 553, Highlights of 1997 Tax Changes. SECTION A. SERVICE-APPROVED ROTH IRA DOCUMENTS Q. A–1. Are there model forms available for establishing a Roth IRA? A. A–1. Yes. The Service has issued three model forms, Form 5305–R, Form 5305–RA and Form 5305–RB, that can be used to establish a Roth IRA as a trust account, a custodial account or an annuity, respectively. In the case of Form 5305– RB, the model form is used as an endorsement to an insurance company’s annuity contract. Model forms issued by the Service contain pre-approved language that, if followed, will satisfy the applicable statutory requirements. 1998–38 I.R.B. Q. A–2. Can the model forms be amended? A. A–2. Article IX of each of these model forms permits certain amendments to be made to provisions of the Roth IRA in accordance with the instructions to the model forms. For example, under the model forms, a spouse who is the sole designated beneficiary is deemed to have elected to treat the Roth IRA, upon the death of the owner, as his or her own. The model forms can be amended to give a surviving spouse who is the sole designated beneficiary the option of not treating the Roth IRA, upon the death of the owner, as his or her own. Q. A–3. Is the Service currently accepting applications for opinion letters on prototype Roth IRAs? A. A–3. The Service is not currently accepting applications for opinion letters on prototype Roth IRAs. Announcement 97–122, 1997–50 I.R.B. 63, states that transitional relief similar to that provided under Rev. Proc. 97–29, 1997–1 C.B. 698, will be provided to sponsors and their customers who establish Roth IRAs with documents that have not been preapproved by the Service. Thus, for example, if in January 1998 an individual made a contribution to a trust or custodial account or purchased an annuity using documents or associated written material that clearly designates the account or annuity as a Roth IRA, then, provided certain requirements are met, the individual will be deemed to have established a Roth IRA on that date using a document approved by the Service for use as a Roth IRA. SECTION B. IRA REPORTING REQUIREMENTS Q. B–1. What reporting requirements apply to the trustees in the case of a recharacterization of a contribution from a FIRST IRA to a SECOND IRA as described in § 1.408A–5 of the proposed Income Tax Regulations? A. B–1. The general reporting requirements for Roth IRAs are described in proposed regulation § 1.408A–7. In addition, the following reporting requirements apply to the trustees of the FIRST IRA and the SECOND IRA when the IRA owner elects to treat a contribution as having 5 been made to the SECOND IRA and not to the FIRST IRA in accordance with the rules in § 1.408A–5. To the extent that the instructions for the 1998 Forms 1099–R and 5498 are inconsistent with the instructions for completing those forms provided in this Q&A B–1, trustees must follow the guidance provided in this notice. (1) Reporting by the trustee of the FIRST IRA. The trustee of the FIRST IRA reports the contribution on Form 5498 showing the character of the contribution (rollover, conversion amount, or regular). If the recharacterization (i.e., the transfer) occurs in calendar year 1998, the trustee reports the recharacterization as a distribution on Form 1099–R showing Code G for direct rollover and showing the gross amount (contribution and earnings) in Box 1-Gross distribution and 0 (zero) in Box 2a-Taxable amount. For recharacterizations that occur in later years, the trustee reports in accordance with applicable Federal tax forms and instructions. For recharacterizations that occur in 1999, it is anticipated that the instructions to Form 1099–R will indicate that the trustee reports the recharacterization as a distribution on Form 1099–R showing new Code R for recharacterization and showing the gross amount (contribution and earnings) in Box 1-Gross distribution and 0 (zero) in Box 2a-Taxable amount. (2) Reporting by the trustee of the SECOND IRA. For recharacterized amounts received on or before December 31, 1998, that are recharacterized as amounts contributed in calendar year 1998, the trustee of the SECOND IRA reports the contribution as a rollover contribution on a 1998 Form 5498. For recharacterized amounts received after December 31, 1998, the trustee reports in accordance with applicable Federal tax forms and instructions. It is anticipated that the instructions to the 1999 Form 5498 will provide that a recharacterized amount received by the trustee of the SECOND IRA will continue to be reported as a rollover contribution, but that (a) the checkbox entitled “Roth conv.” on the 1998 Form 5498 will be retitled to identify a contribution as a recharacterization, (b) the trustee of the SECOND IRA will check both the box identifying the contribution as a recharac- September 21, 1998 IRB 1998-38 9/16/98 11:49 AM Page 6 terization contribution and the box that identifies the type of IRA involved, and (c) the recharacterization must be reported on a Form 5498 that is separate from any Form 5498 otherwise required for the SECOND IRA. Q. B–2. How does a trustee report on Form 1099–R a distribution from a Roth IRA that contains both regular and 1998 conversion contributions? A. B–2. In the case of a distribution from a Roth IRA that contains both regular and 1998 conversion contributions, the trustee must use Code K in Box 7 of Form 1099–R. SECTION C. OTHER RECENT CHANGES TO IRAS Q. C–1. What effect does the recharacterization of a contribution (as described in § 1.408A–5 of the proposed Income Tax Regulations) have on the rules governing the nontaxable return of basis in the case of traditional IRA distributions? A. C–1. Part III, “Distributions,” of Notice 87–16, sets forth the rules for calculating the nontaxable return of basis in the case of distributions from traditional IRAs. These rules continue to apply except as modified below. The total IRA account balances, the total nondeductible contributions, and the distribution amount (as these terms are used in Notice 87–16) for an individual for a taxable year are each adjusted to reflect recharacterized amounts contributed to, or distributed from, the traditional IRAs. For purposes of making this adjustment, the contribution that is being recharacterized as a contribution to the SECOND IRA is treated as having been originally contributed to the SECOND IRA on the same date and (in the case of a regular contribution) for the same taxable year that the contribution was made to the FIRST IRA. If the recharacterization transaction occurs after the close of the taxable year and if the recharacterization transaction involves a regular contribution for the prior taxable year, the recharacterization is disregarded for the prior taxable year in determining the total IRA account balances. Q. C–2. Are there any new exceptions to the 10-percent additional tax on early distributions from IRAs? A. C–2. Yes. Section 203 of TRA 97 added § 72(t)(2)(E) to the Code, which September 21, 1998 provides that the additional 10-percent tax does not apply to IRA distributions for qualified higher education expenses of the IRA owner, the owner’s spouse, or a child or grandchild of either. Qualified higher education expenses include tuition, supplies, and, for students who are at least half-time, room and board. (See Notice 97–60, 1997–46 I.R.B. 8.) Section 303 of TRA 97 added § 72(t)(2)(F) to the Code, which provides that the additional 10-percent tax does not apply to an IRA distribution to acquire a first-time home for the IRA owner or a member of his or her family. To qualify, the distribution must be used for costs normally associated with acquiring a principal residence and the IRA owner (and if married, the owner’s spouse), generally, must not have had an ownership interest in a principal residence for the previous 2 years. If the distributed money is not used for such purpose, the money can be recontributed by the 120th day after the distribution to the IRA without incurring the 10-percent tax. This exception for a first-time home purchase is subject to a lifetime cap of $10,000 for each IRA owner; thus, an individual and his or her spouse would each be subject to a separate $10,000 lifetime cap. In addition, § 3436 of the IRS Restructuring Act added § 72(t)(2)(A)(vii) to the Code, which provides that the additional 10-percent tax does not apply to a distribution from a qualified retirement plan, including an IRA, that is made on account of a levy under § 6331 on the qualified retirement plan. The provision applies to distributions made after December 31, 1999. Previous guidance relating to § 72(t) was provided in Part D of Notice 87–13. These rules continue to apply except as modified above. Q. C–3. What changes are there in the “active participant” rules? A. C–3. Section 301 of TRA 97 amended § 219 of the Code to provide for increased deductible contributions to traditional IRAs that can be made by active participants in employer-sponsored retirement plans. In 1998, the IRA deduction available to an unmarried active participant is phased out ratably between adjusted gross income of $30,000 and $40,000. This phase-out range is increased annually until 2005 when the phase-out range will be $50,000 to 6 $60,000. In the case of joint returns, the phase-out range is $50,000 to $60,000 for 1998, rising to $80,000 to $100,000 for 2007 and later years. In addition, an individual who is not an active participant but is married to someone who is can make a fully deductible traditional IRA contribution if their combined adjusted gross income is not more than $150,000, or a partially deductible traditional IRA contribution if their combined adjusted gross income is between $150,000 and $160,000. Previous guidance relating to the active participant rules was provided in Part IA of Notice 87–16. These rules continue to apply except as modified above. Q. C–4. Are there any changes to the permissible investments available in an IRA? A. C–4. Yes. Section 304 of TRA 97 amended § 408(m) of the Code to permit IRAs to invest in certain platinum coins and in gold, silver, platinum or palladium bullion, provided the bullion is in the physical possession of an IRA trustee. Previous guidance relating to collectibles was provided in Part V of Notice 87–16. These rules continue to apply except as modified above. EFFECT ON OTHER DOCUMENTS Notice 87–16 and Notice 87–13 are modified. REQUEST FOR COMMENTS The Service and Treasury invite comments and suggestions concerning the guidance provided in this notice. Any correspondence received will be evaluated to determine whether additional guidance on Roth IRAs is necessary. In particular, comments are requested on appropriate reporting of recharacterization transactions described in proposed regulation § 1.408A–5. The Service and Treasury recognize that recharacterization transactions present novel reporting issues for IRA trustees, and this notice provides for reporting such transactions in a manner that most closely approximates reporting for ordinary IRA distributions, contributions and trustee-to-trustee transfers. However, the Service and Treasury are considering other possible reporting alternatives for recharacterization transactions. For example, it might be appropri- 1998–38 I.R.B. IRB 1998-38 9/16/98 11:49 AM Page 7 ate to require that the recharacterized contribution be reported by the trustee of the SECOND IRA on a Form 5498 for the year for which it is treated as having been contributed, even if the recharacterization occurs in the subsequent year. Another possible approach would be to require only the reporting by the trustee of the SECOND IRA involved in the recharacterization transaction that would have been required if the contribution had initially been made to the SECOND IRA and never had been made to the FIRST IRA. Comments can be addressed to CC:DOM:CORP:R (Notice 98–49), room 5228, Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, DC 20044. In the alternative, comments may be hand delivered between the hours of 8 a.m. and 5 p.m. to CC:DOM:CORP: R (Notice 98–49), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue NW, Washington, DC. Alternatively, taxpayers may transmit comments electronically via the IRS Internet site at: http://www.irs.ustreas.gov/prod/tax_regs/ comments.html. This revenue procedure provides procedures for taxpayers to make an election under § 1045 of the Internal Revenue Code (“§ 1045 election”) to defer recognition of certain gain on the sale of qualified small business stock (“QSB stock”). § 313(a) of the Taxpayer Relief Act of 1997, Pub. L. No. 105–34, 111 Stat. 788 (Aug. 5, 1997), and amended by § 6005(f) of the Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L. No. 105–206, 112 Stat. 685 (July 22, 1998), generally allows a taxpayer other than a C corporation to elect not to recognize gain from the sale of QSB stock held by the taxpayer for more than six months. If the taxpayer makes the election under § 1045 and this revenue procedure, gain from such sale is recognized only to the extent that the amount realized on the sale exceeds: (1) the cost of any QSB stock that the taxpayer purchases during the 60-day period beginning on the date of sale, reduced by (2) any portion of the cost of the replacement QSB stock that was previously taken into account under § 1045. However, the election is not available to defer any gain on the sale that is treated as ordinary income for purposes of the Code. .02 Under § 1045(b), “qualified small business stock” has the same meaning as provided in § 1202(c). .03 Section 1045(b)(5) provides that, for QSB stock held through passthrough entities, rules similar to the rules of § 1202(g) apply for purposes of § 1045. For example, a passthrough entity may make a § 1045 election if the entity sells QSB stock held for more than six months and purchases replacement QSB stock during the 60-day period beginning on the date of the sale. The benefit of deferral with respect to a sale of QSB stock by the passthrough entity will flow through to taxpayers (other than C corporations) that held interests in the entity during the entire period in which the entity held the QSB stock. Also, for example, if a passthrough entity sells QSB stock held for more than six months, an individual who has held an interest in the entity during the entire period in which the entity held the QSB stock and who purchases replacement QSB stock during the 60-day period beginning on the date of the sale of the QSB stock may make the § 1045 election with respect to the individual’s share of any gain on the sale that the entity does not defer under § 1045. A § 1045 election must be made on or before the later of December 31, 1998, or the due date (including extensions) for filing the income tax return for the taxable year in which the QSB stock is sold. .02 Manner of Making the Election. (1) In general. Except as provided in section 3.02(2) of this revenue procedure, the election is made by: (a) reporting the entire gain from the sale of QSB stock on Schedule D, Capital Gains and Losses, of the return in accordance with the instructions for Schedule D; (b) writing “section 1045 rollover” directly below the line on which the gain is reported; and (c) entering the amount of the gain deferred under § 1045 on the same line as (b) above, as a loss, in accordance with the instructions for Schedule D. (2) Transition rule. If gain is reportable on a return filed before October 21, 1998, and the return does not satisfy the requirements of section 3.02(1) of this revenue procedure but discloses the gain and includes an affirmative statement to the effect that a § 1045 election applies to the gain, the requirements of section 3.02(1) will be treated as satisfied and an amended return is not required to make the § 1045 election. Otherwise, an original or amended return satisfying the requirements of section 3.02(1) of this revenue procedure is required to make the § 1045 election with respect to such gain. .03 Scope of the Election. If a person has more than one sale of QSB stock in a taxable year that qualifies for the § 1045 election, the person may make a § 1045 election for any one or more of those sales. .04 Revocation. A § 1045 election is revocable only with the prior written consent of the Commissioner. To obtain the Commissioner’s consent, the person who made the § 1045 election must submit a request for a private letter ruling in accordance with the provisions of Rev. Proc. 98–1, 1998–1 I.R.B. 7 (or its successor). SECTION 2. BACKGROUND SECTION 3. PROCEDURE DRAFTING INFORMATION DRAFTING INFORMATION The principal author of this notice is Roger Kuehnle of the Employee Plans Division. For further information regarding this notice, please contact the Employee Plans Division’s taxpayer assistance telephone service at (202) 622-6074/6075 (not toll-free numbers), between the hours of 1:30 and 3:30 p.m. Eastern Time, Monday through Thursday. Section 1045: Rollover of Gain From Qualified Small Business Stock to Another Qualified Small Business Stock Rev. Proc. 98–48 SECTION 1. PURPOSE .01 Section 1045(a), as added by 1998–38 I.R.B. .01 Time for Making the Election. 7 SECTION 4. EFFECTIVE DATE This revenue procedure is effective for sales of QSB stock occurring after August 5, 1997. The principal author of this revenue September 21, 1998 IRB 1998-38 9/16/98 11:49 AM Page 8 procedure is J. Peter Baumgarten of the office of Assistant Chief Counsel (Income Tax and Accounting). For further information regarding this revenue procedure, contact Mr. Baumgarten on (202) 6224950 (not a toll-free call). 26 CFR 601.602: Tax forms and instructions. (Also Part I, Sections 6012, 6061; 1.6012–5, 1.6061–1.) Rev. Proc. 98–50 CONTENTS PURPOSE BACKGROUND AND CHANGES SECTION 3 FORM 1040 IRS e-file PROGRAM PARTICIPANTS—DEFINITIONS SECTION 4 ACCEPTANCE IN THE FORM 1040 IRS e-file PROGRAM SECTION 5 RESPONSIBILITIES OF AN AUTHORIZED IRS e-file PROVIDER SECTION 6 PENALTIES SECTION 7 FORM 8453, U.S. INDIVIDUAL INCOME TAX DECLARATION FOR AN IRS e-file RETURN SECTION 8 INFORMATION AN AUTHORIZED IRS e-file PROVIDER MUST FURNISH TO THE TAXPAYER SECTION 9 DIRECT DEPOSIT OF REFUNDS SECTION 10 REFUND ANTICIPATION LOANS SECTION 11 BALANCE DUE RETURNS SECTION 12 ADVERTISING STANDARDS FOR AUTHORIZED IRS e-file PROVIDERS AND FINANCIAL INSTITUTIONS SECTION 13 MONITORING AND SUSPENSION OF AN AUTHORIZED IRS e-file PROVIDER SECTION 14 ADMINISTRATIVE REVIEW PROCESS FOR DENIAL OF PARTICIPATION IN THE FORM 1040 IRS e-file PROGRAM SECTION 1 SECTION 2 September 21, 1998 SECTION 15 ADMINISTRATIVE REVIEW PROCESS FOR SUSPENSION FROM THE FORM 1040 IRS efile PROGRAM SECTION 16 VITA AND TCE SPONSORED PARTICIPATION IN THE FORM 1040 IRS e-file PROGRAM SECTION 17 EMPLOYER SPONSORED PARTICIPATION IN THE FORM 1040 IRS e-file PROGRAM SECTION 18 PILOT PROGRAMS SECTION 19 EFFECT ON OTHER DOCUMENTS SECTION 20 EFFECTIVE DATE SECTION 21 INTERNAL REVENUE SERVICE OFFICE CONTACT SECTION 22 PAPERWORK REDUCTION ACT SECTION 1. PURPOSE This revenue procedure informs those who participate in the Form 1040 IRS e-file Program (formerly known as the Form 1040 Electronic Filing (ELF) Program) of their obligations to the Internal Revenue Service, taxpayers, and other participants. The following returns can be filed under the Form 1040 IRS e-file Program: (1) Form 1040 and Form 1040A, U.S. Individual Income Tax Return; and (2) Form 1040EZ, Income Tax Return for Single and Joint Filers With No Dependents. This revenue procedure updates and supersedes Rev. Proc. 97–60, 1997– 52 I.R.B. 38. SECTION 2. BACKGROUND AND CHANGES .01 Section 1.6012–5 of the Income Tax Regulations provides that the Commissioner may authorize the use, at the option of a person required to make a return, of a composite return in lieu of any form specified in 26 CFR Part 1 (Income Tax), subject to the conditions, limitations, and special rules governing the preparation, execution, filing, and correction thereof as the Commissioner may deem appropriate. .02 For purposes of this revenue procedure, an electronically filed Form 1040, 8 Form 1040A, or Form 1040EZ is a composite return consisting of electronically transmitted data and certain paper documents. The paper portion of the return consists of Form 8453, U.S. Individual Income Tax Declaration for an IRS e-file Return, and other paper documents that cannot be electronically transmitted. Form 8453 must be received by the Service before the composite return is considered filed (see section 5.08 of this revenue procedure). The composite return must contain the same information that a return filed completely on paper contains. See section 7 of this revenue procedure for procedures for completing Form 8453. .03 Each year prior to the start of the filing season, the Service will issue Publication 1345A, Filing Season Supplement for Electronic Return Originators, and Publication 1346, Electronic Return File Specifications and Record Layouts for Individual Income Tax Returns. These publications list the forms and schedules associated with the Form 1040 series that can be electronically transmitted during the upcoming filing season. .04 For purposes of the Form 1040 IRS e-file Program, a Form 1040, Form 1040A, or Form 1040EZ for any taxable year cannot be electronically filed after the 15th day of October following the close of that taxable year, notwithstanding the fact that the taxpayer has been granted an extension to file a return beyond that date. If the 15th day of October falls on a Saturday, Sunday, or legal holiday, then the electronically filed return may be filed on the next succeeding day which is not a Saturday, Sunday, or legal holiday. .05 An amended tax return cannot be electronically filed under the Form 1040 IRS e-file Program. A taxpayer must file an amended tax return on paper in accordance with the instructions for Form 1040X, Amended U.S. Individual Income Tax Return. .06 A tax return that has a foreign address for the taxpayer cannot be electronically filed under the Form 1040 IRS e-file Program. Army/Air Force (APO) and Fleet (FPO) post offices are not considered foreign addresses for this purpose. .07 A tax return for a decedent cannot be electronically filed under the Form 1040 IRS e-file Program. The decedent’s spouse or personal representative must file a paper tax return for the decedent. 1998–38 I.R.B. IRB 1998-38 9/16/98 11:49 AM Page 9 .08 Some of the updates and changes to Rev. Proc. 97–60 are as follows: (1) the name of the program has changed to the “Form 1040 IRS e-file Program” and participants in the program are known as “Authorized IRS e-file Providers”; (2) references to specific dates and specific tax years have been replaced with more general references in order to eliminate the need for annual updates to this revenue procedure; (3) the application period for new applicants who intend to participate in the Form 1040 IRS e-file Program for any filing season is extended beyond the beginning of the filing season (section 4.05); and (4) the provisions of this revenue procedure apply to participants in various pilot programs conducted with respect to the Form 1040 IRS e-file Program (section 18). SECTION 3. FORM 1040 IRS e-file PROGRAM PARTICIPANTS— DEFINITIONS .01 After acceptance into the Form 1040 IRS e-file Program, as described in section 4 of this revenue procedure, a participant is referred to as an “Authorized IRS e-file Provider.” .02 The Authorized IRS e-file Provider categories are: (1) ELECTRONIC RETURN ORIGINATOR. An “Electronic Return Originator” (ERO) is: (a) an “Electronic Return Preparer” who prepares tax returns, including Forms 8453, for taxpayers who intend to have their returns electronically filed; and/or (b) an “Electronic Return Collector” who accepts completed tax returns, including Forms 8453, from taxpayers who intend to have their returns electronically filed. (2) SERVICE BUREAU. A “Service Bureau” receives tax return information on any media from an ERO, formats the return information, and either forwards the return information to a Transmitter or sends back the return information to the ERO. A Service Bureau may send Forms 8453 to the appropriate service center. (3) SOFTWARE DEVELOPER. A “Software Developer” develops software for the purposes of (a) formatting the electronic portion of returns according to Publication 1346; and/or (b) transmitting 1998–38 I.R.B. the electronic portion of returns directly to the Service. A Software Developer may also sell its software. (4) TRANSMITTER. A “Transmitter” transmits the electronic portion of a return directly to the Service. An entity that provides a “bump-up” service is a Transmitter. A bump-up service provider increases the transmission rate or line speed of formatted or reformatted information that is being sent to the Service via a public switched telephone network. The Service accepts transmissions using a variety of telecommunications protocols. .03 The Authorized IRS e-file Provider categories are not mutually exclusive. For example, an ERO can, at the same time, be considered a Transmitter, Software Developer, or Service Bureau depending on the function(s) performed. .04 An ERO may have a “Drop-Off Collection Point(s).” The activity at a Drop-Off Collection Point is limited solely to receiving a return or return information that a taxpayer wants to have electronically filed and collecting a fee for electronically filing that return. Return preparation activity may not be conducted at a Drop-Off Collection Point. Return preparation activity includes, but is not limited to, comparing amounts listed on Form 8453 with those on the paper return or return information provided by a taxpayer and verifying routing numbers and account numbers used for direct deposit of refunds. Return preparation activity does not include collecting a fee for electronic filing or ensuring that the taxpayer has signed Form 8453. An ERO need not have an ownership interest in the DropOff Collection Point. SECTION 4. ACCEPTANCE IN THE FORM 1040 IRS e-file PROGRAM .01 Except as provided in sections 4.02 through 4.04 of this revenue procedure, an Electronic Filer or Authorized IRS e-file Provider that participated in the most recent Form 1040 ELF or Form 1040 IRS e-file filing season does not have to reapply to participate in the next Form 1040 IRS e-file filing season. However, an Authorized IRS e-file Provider that intends to participate as a Transmitter or a Software Developer must first successfully complete, for each filing season, the testing referred to in section 4.08 of this revenue procedure. In addition, sec- 9 tion 4.15 of this revenue procedure provides for the Service’s issuance of credentials necessary for participation in the Form 1040 IRS e-file Program. .02 Applicants and Authorized IRS e-file Providers must file a new Form 8633, Application to Participate in the IRS e-file Program, with completed fingerprint cards for the appropriate individuals, if: (1) the applicant has never participated in the Form 1040 ELF Program or the Form 1040 IRS e-file Program; (2) the applicant has previously been denied participation in the Form 1040 ELF Program or the Form 1040 IRS e-file Program; (3) the applicant has been suspended from the Form 1040 ELF Program or the Form 1040 IRS e-file Program; or (4) the Authorized IRS e-file Provider is participating in the Form 1040 IRS e-file Program and wants to operate an IRS e-file business at an additional location (except that an individual listed on the Authorized IRS e-file Provider’s application who has submitted a fingerprint card with a previously accepted application need not submit an additional fingerprint card). .03 An Authorized IRS e-file Provider must submit a revised Form 8633, signed by all “Principals” and the “Responsible Official” (as described in sections 4.09 through 4.12 of this revenue procedure), with completed fingerprint cards for those appropriate individuals who have not submitted a fingerprint card with a previously accepted application, if: (1) the Authorized IRS e-file Provider participated solely as a Software Developer in the most recent Form 1040 ELF or Form 1040 IRS e-file filing season, and intends to participate as an ERO, Service Bureau, or Transmitter; (2) there is an additional Principal, such as a partner or a corporate officer, that must be listed on Form 8633; (3) there is a Principal listed on Form 8633 that should be deleted; or (4) the Responsible Official on Form 8633 changes. .04 Except as provided in section 4.03 of this revenue procedure, an Authorized IRS e-file Provider must submit either a revised Form 8633, or a letter containing the same information contained in a revised Form 8633, if any information on the Au- September 21, 1998 IRB 1998-38 9/16/98 11:49 AM Page 10 thorized IRS e-file Provider’s Form 8633 has changed. A revised Form 8633 or letter submitted under this section should include only the changed information and the following identifying information: (1) the Authorized IRS e-file Provider’s legal name; (2) the Authorized IRS e-file Provider’s employer identification number and/or social security number (EIN/SSN); (3) the Authorized IRS e-file Provider’s “Doing Business As” (DBA) name; (4) whether the Authorized IRS e-file Provider is controlled or owned by another Authorized IRS e-file Provider; (5) the Authorized IRS e-file Provider’s controlling office name; (6) the Electronic Transmitter Identification Number (ETIN) of the Authorized IRS e-file Provider’s controlling office; (7) the Electronic Filing Identification Number (EFIN) of the Authorized IRS e-file Provider’s controlling office; and (8) the business address of the Authorized IRS e-file Provider’s controlling office. A Principal or the Responsible Official must sign the revised Form 8633 or the letter. .05 Applicants and Authorized IRS e-file Providers described in section 4.02 of this revenue procedure must submit new applications within the following time periods: (1) except as provided in section 4.05(2) of this revenue procedure, the application period for new applicants who intend to participate in the Form 1040 IRS e-file Program for any filing season begins on the 1st day of August preceding the filing season and continues into the filing season (see the Form 8633 instructions for the last date to file a new application); however, applications submitted after the 1st day of December preceding the filing season may not be processed in time for the applicant to participate in the Form 1040 IRS e-file Program by the start of the filing season; and (2) if an applicant purchases an existing Authorized IRS e-file Provider’s business, a new application and proof of sale must be submitted during the period beginning 45 days before, and ending 30 days after, the date of the purchase. September 21, 1998 .06 Revised applications described in sections 4.03 and 4.04 of this revenue procedure must be submitted within 30 days of the change(s) reflected on the revised Form 8633 or in the letter. Authorized IRS e-file Providers that fail to submit revised applications may be temporarily dropped from the Form 1040 IRS e-file Program. .07 Applicants and Authorized IRS e-file Providers described in sections 4.02 through 4.04 of this revenue procedure must file Form 8633 (or a letter as provided in section 4.04 of this revenue procedure) with the Application Processing Center at the address listed in the instructions for Form 8633. .08 Applicants and Authorized IRS e-file Providers described in sections 4.01 through 4.04 of this revenue procedure that intend to participate as a Transmitter or a Software Developer in the Form 1040 IRS e-file Program must first successfully complete the necessary testing at the appropriate service center(s). Such testing must be completed for each filing season during which the applicant or Authorized IRS e-file Provider intends to participate as a Transmitter or Software Developer. .09 Each individual listed as a Principal or a Responsible Official on a Form 8633 must: (1) be a United States citizen or an alien lawfully admitted for permanent residence as described in 8 U.S.C. § 1101(a)(20) (1994); (2) have attained the age of 21 as of the date of application; (3) submit with Form 8633 one standard fingerprint card with a full set of fingerprints taken by a law enforcement agency, except as provided in section 4.13 of this revenue procedure; (4) except as provided in section 4.17 of this revenue procedure, pass a suitability check that includes a credit check, a tax compliance check, and a fingerprint check; and (5) meet any applicable state and local licensing and/or bonding requirements in connection with the preparation of tax returns and the collection of prepared returns that taxpayers intend to have electronically filed. However, if the state and local licensing and/or bonding requirements apply to a business entity, the individual(s) must demonstrate that the business entity meets the requirements. 10 .10 A Principal for a firm or organization includes the following: (1) Sole Proprietorship. The sole proprietor is the Principal for a sole proprietorship. (2) Partnership. Each partner who has a 5 percent or more interest in the partnership is a Principal of the partnership. If no partner has at least a 5 percent or more interest in the partnership, the Principal is an individual authorized to act for the partnership in legal and/or tax matters (at least one such individual must be listed on Form 8633). (3) Corporation. The President, Vice-President, Secretary, and Treasurer of the corporation are each a Principal of the corporation. (4) Other. The Principal for a forprofit entity that is not a sole proprietorship, partnership, or corporation, is an individual authorized to act for the entity in legal and/or tax matters (at least one such individual must be listed on Form 8633). .11 A Responsible Official is the individual who oversees the daily operations of an Authorized IRS e-file Provider’s office. A Responsible Official may also be a Principal. As set forth in section 4.12 of this revenue procedure, a Responsible Official may be responsible for more than one office. .12 The Responsible Official categories are: (1) TIER I RESPONSIBLE OFFICIAL. A “Tier I Responsible Official” is a Responsible Official who does not meet the definition of a “Tier II Responsible Official.” A Tier I Responsible Official should be able to visit on a daily basis each office for which he or she is listed as a Responsible Official. A Tier I Responsible Official may be listed on a maximum of ten applications (Forms 8633). (2) TIER II RESPONSIBLE OFFICIAL. A “Tier II Responsible Official” is an individual who has participated in the Form 1040 ELF Program or Form 1040 IRS e-file Program as a Responsible Official during at least the two most recent filing seasons and who has never been suspended from participation in the Form 1040 ELF Program or Form 1040 IRS efile Program. A Tier II Responsible Official should be able to visit on a daily basis any office for which he or she is listed as a Responsible Official. A Tier II Responsible Official may be listed on a maxi- 1998–38 I.R.B. IRB 1998-38 9/16/98 11:49 AM Page 11 mum of twenty applications (Forms 8633). .13 In lieu of a standard fingerprint card, an individual may choose to submit evidence that the individual is: (1) an attorney in good standing of the bar of the highest court of any State, Commonwealth, possession, territory, or the District of Columbia, and is not currently under suspension or disbarment from practice before the Service or the bar of the highest court of any State, Commonwealth, possession, territory, or the District of Columbia; (2) a certified public accountant who is duly qualified to practice as a certified public accountant in any State, Commonwealth, possession, territory, or the District of Columbia, and is not currently under suspension or disbarment from practice before the Service or whose license to practice is not currently suspended or revoked by any State, Commonwealth, possession, territory, or the District of Columbia; (3) an enrolled agent pursuant to part 10 of 31 C.F.R. Subtitle A; (4) an officer of a publicly held corporation; or (5) a banking official who is bonded and has been fingerprinted within the last two years. .14 If an Authorized IRS e-file Provider has a foreign location, the stateside contact representative will receive all Service correspondence for the foreign location relating to the Form 1040 IRS e-file Program. .15 The Service will issue credentials each year to eligible applicants, Authorized IRS e-file Providers that do not have to reapply pursuant to section 4.01 of this revenue procedure, and Authorized IRS e-file Providers that comply with section 4.03 or 4.04 of this revenue procedure, provided they have first satisfactorily completed the testing described in section 4.08 of this revenue procedure if they intend to participate as a Transmitter or Software Developer. No one may participate in the Form 1040 IRS e-file Program without the following credentials: (1) a letter of acceptance into the Form 1040 IRS e-file Program; (2) an EFIN or a Service Bureau Identification Number (SBIN); (3) if appropriate, an ETIN; and 1998–38 I.R.B. (4) if appropriate, a Collection Point Identification Number (CPIN). .16 The Service will not issue a letter of acceptance to an ERO to participate in any Form 1040 IRS e-file filing season if the Service did not receive and accept during the immediately preceding filing season any electronically filed returns containing the ERO’s EFIN. In addition, an ERO who has been issued a letter of acceptance for any filing season may be dropped from the Form 1040 IRS e-file Program if the Service does not receive and accept, prior to the 15th day of April of that filing season, any electronically filed returns containing the ERO’s EFIN. In either case, the Service will notify the ERO that it has been dropped from the Form 1040 IRS e-file Program and explain what steps the ERO needs to take for future participation in the program. .17 If an Authorized IRS e-file Provider is a Software Developer that performs no other function in the Form 1040 IRS e-file Program but software development, no Principal or Responsible Official needs to pass a suitability check. .18 If an ERO will have a Drop-Off Collection Point(s) (as defined in section 3.04 of this revenue procedure), the ERO must submit a Form 8633 that lists each Drop-Off Collection Point. By listing a Drop-Off Collection Point on Form 8633, an ERO becomes a “parent” in relation to a listed Drop-Off Collection Point. .19 The Service may reject an application to participate in the Form 1040 IRS e-file Program for the following reasons (this list is not all-inclusive). These reasons apply to any firm, organization, Principal, or Responsible Official listed on Form 8633: (1) conviction of any criminal offense under the revenue laws of the United States, or of any offense involving dishonesty or breach of trust; (2) failure to file timely and accurate tax returns, including returns indicating that no tax is due (unless the applicant did not have a legal filing requirement); (3) failure to timely pay any tax liabilities; (4) assessment of any tax penalties; (5) suspension/disbarment from practice before the Service; (6) disreputable conduct or other facts that would reflect adversely on the Form 1040 IRS e-file Program; 11 (7) misrepresentation on an application; (8) suspension or rejection from the program in a prior year; (9) unethical practices in return preparation; (10) assessment against the applicant of a penalty under § 6695(g) of the Internal Revenue Code; (11) stockpiling returns prior to official acceptance into the Form 1040 IRS e-file Program (see section 5.14 of this revenue procedure); (12) knowingly and directly or indirectly employing or accepting assistance from any firm, organization, or individual that is prohibited from applying to participate in the Form 1040 IRS e-file Program (see section 14.09 of this revenue procedure) or that is suspended from participating in the Form 1040 IRS e-file Program (see section 13.11 of this revenue procedure). This includes any individual whose actions resulted in the rejection or suspension of a corporation or a partnership from the Form 1040 ELF Program or the Form 1040 IRS e-file Program; or (13) knowingly and directly or indirectly accepting employment as an associate, correspondent, or as a subagent from, or sharing fees with, any firm, organization, or individual that is prohibited from applying to participate in the Form 1040 IRS e-file Program (see section 14.09 of this revenue procedure) or that is suspended from participating in the Form 1040 IRS e-file Program (see section 13.11 of this revenue procedure). This includes any individual whose actions resulted in the rejection or suspension of a corporation or a partnership from the Form 1040 ELF Program or the Form 1040 IRS e-file Program. SECTION 5. RESPONSIBILITIES OF AN AUTHORIZED IRS e-file PROVIDER .01 To ensure that complete returns are accurately and efficiently filed, an Authorized IRS e-file Provider must comply with all publications and notices of the Service relating to the Form 1040 IRS e-file Program. The Service will from time to time update such publications and notices to reflect changes to the program. It is the responsibility of the Authorized IRS e-file Provider to ensure that it com- September 21, 1998 IRB 1998-38 9/16/98 11:49 AM Page 12 plies with the latest version of all publications and notices. The publications and notices governing the Form 1040 IRS e-file Program include: (1) Publication 1345, Handbook for Electronic Return Originators of Individual Income Tax Returns, and Publication 1345A; (2) Publication 1346; (3) Publication 1436, Test Package for Electronic Filing of Individual Income Tax Returns; and (4) Postings to the Electronic Filing System Bulletin Board (EFS Bulletin Board) and the IRS “Digital Daily” web site at: http://www.irs.ustreas.gov on the Internet; .02 An Authorized IRS e-file Provider must maintain a high degree of integrity, compliance, and accuracy. .03 An Authorized IRS e-file Provider may accept returns for the Form 1040 IRS e-file Program only from the taxpayer filing the return, Drop-Off Collection Points as listed on the ERO’s Form 8633 (see section 4.18 of this revenue procedure), or from another Authorized IRS e-file Provider. .04 If the taxpayer’s address on a Form W–2, Wage and Tax Statement, Form W–2G, Statement for Recipients of Certain Gambling Winnings, Form 1099–R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., Form 1040, Schedule C, Profit or Loss From Business (Sole Proprietorship), or Form 1040, Schedule C-EZ, Profit or Loss From Business - Short Version, or any other tax form is different than the taxpayer’s address in the entity section of the electronic portion of the taxpayer’s Form 1040, the ERO or the Service Bureau must input for transmission to the Service those addresses that differ from the taxpayer’s address on the electronic portion of the taxpayer’s Form 1040. .05 If an Authorized IRS e-file Provider charges a fee for the transmission of the electronic portion of a tax return, the fee may not be based on a percentage of the refund amount or any other amount from the tax return. An Authorized IRS e-file Provider may not charge a separate fee for Direct Deposit. See section 9 of this revenue procedure. .06 An Authorized IRS e-file Provider September 21, 1998 must submit a revised Form 8633 (or a letter as provided in section 4.04 of this revenue procedure) to the Application Processing Center within 30 days of when any of the conditions or changes described in section 4.03 or 4.04 of this revenue procedure occur. See section 4.06 of this revenue procedure. .07 An Authorized IRS e-file Provider must notify the Application Processing Center (at the address listed in the instructions for Form 8633) within 30 days of discontinuing its participation in the Form 1040 IRS e-file Program. This does not preclude reapplication in the future. .08 An Authorized IRS e-file Provider must ensure that it promptly processes returns submitted to it for electronic filing. See sections 5.14, 5.15, 5.16, and 7.01 of this revenue procedure. However, an Authorized IRS e-file Provider that receives a return for electronic filing on or before the due date of the return must ensure that the electronic portion of the return is transmitted on or before that due date (including extensions). An electronically filed return is not considered filed until the electronic portion of the tax return has been acknowledged by the Service as accepted for processing and a completed and signed Form 8453 has been received by the Service. However, if the electronic portion of a return is successfully transmitted on or shortly before the due date and the Authorized IRS e-file Provider complies with section 7.01 of this revenue procedure, the return will be deemed timely filed. If the electronic portion of a return is transmitted on or shortly before the due date and is ultimately rejected, but the Authorized IRS e-file Provider and the taxpayer comply with section 5.13 of this revenue procedure, the return will be deemed timely filed. For a balance due return, see section 11 of this revenue procedure for instructions on how to make a timely payment of tax. .09 An Authorized IRS e-file Provider that functions as an ERO must: (1) comply with the procedures for completing and securing Forms 8453 described in section 7 of this revenue procedure; (2) comply with the procedures described in section 11 of this revenue procedure for handling a balance due return; (3) while returns are being filed by the ERO, retain and make available to the 12 Service upon request the following material at the business address from which a return was accepted for electronic filing: (a) a copy of the signed Form 8453 and paper copies of Forms W–2, W–2G, and 1099-R; (b) a complete copy of the electronic portion of the return (which may be retained on magnetic media) that can be readily and accurately converted into an electronic transmission that the Service can process; and (c) the acknowledgement file (stating that the Service accepts the electronic portion of the taxpayer’s return for processing) received from the Service or from a third party Transmitter; and (4) retain until the end of the calendar year in which a return was filed, and make available to the Service upon request the materials described in section 5.09(3) of this revenue procedure at either the business address from which a return was electronically filed or from the contact representative named on Form 8633. .10 An ERO who is the paid preparer of an electronic tax return must also retain for the prescribed amount of time the materials described in § 1.6107–1(b) that are required to be kept by an income tax return preparer. .11 An ERO must identify the paid preparer (if any) in the appropriate field of the electronic portion of the return and ensure that the paid preparer signed Form 8453. If Form 8453 is not signed by the paid preparer, the ERO must attach to Form 8453 a copy of pages 1 and 2 of the Form 1040EZ, Form 1040A, or Form 1040 signed by the paid preparer. These copies must be marked “COPY-DO NOT PROCESS” to prevent duplicate filings. .12 An ERO must ensure against the unauthorized use of its EFIN and, if applicable, the CPIN(s) issued to its DropOff Collection Point(s). An ERO must not transfer its EFIN or the CPIN(s) of its Drop-Off Collection Point(s) by sale, merger, loan, gift, or otherwise to another entity. .13 If the Service rejects the electronic portion of a taxpayer’s return (the Service states that it rejects the electronic portion of a taxpayer’s return for processing in the acknowledgment file), and the reason for the rejection cannot be rectified by the actions described in section 6.02(3) of this revenue procedure, the ERO, within 1998–38 I.R.B. IRB 1998-38 9/16/98 11:49 AM Page 13 24 hours of receiving the rejection, must take reasonable steps to inform the taxpayer that the taxpayer’s return has not been filed. When the ERO advises the taxpayer that the taxpayer’s return has not been filed, the ERO must provide the taxpayer with the reject code(s), an explanation of the reject code(s), and the sequence number of each reject code(s) (see Publication 1345A). If the taxpayer chooses not to have the electronic portion of the return corrected and transmitted to the Service, or if the electronic portion of the return cannot be accepted for processing by the Service, the taxpayer must file a paper return by the later of: (1) the due date of the return; or (2) ten calendar days after the date the Service gives notification that the electronic portion of the return is rejected or that the electronic portion of the return cannot be accepted for processing. The paper return should include an explanation of why the return is being filed after the due date. .14 An ERO is responsible for ensuring that stockpiling does not occur at its office(s) or Drop-Off Collection Point(s). Stockpiling means collecting returns from taxpayers or from another Authorized IRS e-file Provider prior to official acceptance into the Form 1040 IRS e-file Program, or, after official acceptance into the Form 1040 IRS e-file Program, waiting more than three calendar days to send a return to the Service after receiving the information necessary for transmission of the electronic portion of a tax return. .15 An Authorized IRS e-file Provider that participates as a Service Bureau must: (1) deliver all electronic returns to a Transmitter or to the ERO who gave the electronic returns to the Service Bureau within three calendar days of receipt; (2) retrieve the acknowledgement file from the Transmitter within one calendar day of receipt by the Transmitter; (3) send the acknowledgement file to the ERO (whether related or not) within one work day of retrieving the acknowledgement file; (4) if the Service Bureau processes Forms 8453, send back to the ERO any return and Form 8453 that needs correction, unless the correction is described in section 6.02(3) of this revenue procedure; 1998–38 I.R.B. (5) accept tax return information only from Authorized IRS e-file Providers; (6) include its SBIN and the ERO’s EFIN with all return information the Service Bureau forwards to a Transmitter or sends back to an ERO; (7) retain each acknowledgement file received from a Transmitter until the end of the calendar year in which the electronic return was filed; (8) if requested, serve as a contact point between its client EROs and the Service; (9) if requested, provide the Service with a list of each client ERO; and (10) ensure against the unauthorized use of its SBIN. A Service Bureau must not transfer its SBIN by sale, merger, loan, gift, or otherwise to another entity. .16 An Authorized IRS e-file Provider that participates as a Transmitter must: (1) send to the Service all electronic portions of returns within three calendar days of receipt; (2) retrieve the acknowledgement file within two work days of transmission; (3) match the acknowledgement file to the original transmission file and send the acknowledgement file to the ERO or the Service Bureau (whether or not the ERO or the Service Bureau are related to the Transmitter) within two work days of retrieving the acknowledgement file; (4) retain an acknowledgement file received from the Service until the end of the calendar year in which the electronic return was filed; (5) immediately contact the appropriate service center for further instructions if an acknowledgement of acceptance for processing has not been received by the Transmitter within two work days of transmission or if a Transmitter receives an acknowledgement for a return that was not transmitted on the designated transmission; (6) promptly correct any transmission error that causes an electronic transmission to be rejected; (7) contact the service center that rejected the electronic portion of the return for assistance if that portion of the return has been rejected after three transmission attempts; (8) ensure the security of all transmitted data; 13 (9) ensure against the unauthorized use of its EFIN or ETIN. A Transmitter must not transfer its EFIN or ETIN by sale, merger, loan, gift, or otherwise to another entity; and (10) not use software that has a Service assigned production password built into the software. .17 A Transmitter must accept electronic returns for transmission to the Service only from Authorized IRS e-file Providers. A Transmitter must include the ERO’s EFIN and if applicable, the CPIN on each return that the Transmitter accepts from an ERO. In addition, a Transmitter must also include a Service Bureau’s SBIN if a Service Bureau formats the return information. .18 An Authorized IRS e-file Provider that participates as a Software Developer must: (1) promptly correct any software error which causes the electronic portion of a return to be rejected; (2) promptly distribute any software correction; (3) ensure that any software package that will be used to transmit electronic portions of returns from multiple Authorized IRS e-file Providers has the capability of combining returns from these Authorized IRS e-file Providers into one Service transmission file taking into account the sorting requirements of the Declaration Control Number (DCN); (4) ensure that no other entity uses the Software Developer’s EFIN or ETIN. A Software Developer must not transfer by sale, merger, loan, gift, or otherwise its EFIN or ETIN to another entity; and (5) not incorporate into its software a Service assigned production password. .19 An ERO with a Drop-Off Collection Point must clearly display its name at each Drop-Off Collection Point. The Service will hold the ERO responsible for any violation of the advertising standards described in section 12 or any other violation of this revenue procedure that occurs at a Drop-Off Collection Point listed on the ERO’s Form 8633. The ERO must also serve as the contact point between the Service and the Drop-Off Collection Point for all correspondence including problem resolution and report evaluation. .20 In addition to the specific responsibilities described in this section, an Au- September 21, 1998 IRB 1998-38 9/16/98 11:49 AM Page 14 thorized IRS e-file Provider must meet all the requirements in this revenue procedure to retain the privilege of participating in the Form 1040 IRS e-file Program. SECTION 6. PENALTIES .01 Penalties for Disclosure or Use of Information. (1) An Authorized IRS e-file Provider, except a Software Developer, is a tax return preparer (Preparer) under the definition of § 301.7216–1(b) of the Regulations on Procedure and Administration. A Preparer is subject to a criminal penalty for unauthorized disclosure or use of tax return information. See § 7216 of the Internal Revenue Code and § 301.7216– 1(a). In addition, § 6713 establishes civil penalties for unauthorized disclosure or use of tax return information. (2) Under § 301.7216–2(h), disclosure of tax return information among Authorized IRS e-file Providers for the purpose of preparing a return is permissible. For example, an ERO may pass on tax return information to a Service Bureau and/or a Transmitter for the purpose of having an electronic return formatted and transmitted to the Service. However, if the tax return information is disclosed or used in any other way, a Service Bureau and/or a Transmitter may be subject to the penalties described in section 6.01(1) of this revenue procedure. .02 Other Preparer Penalties. (1) Preparer penalties may be asserted against an individual or firm meeting the definition of an income tax return preparer under § 7701(a)(36) and § 301.7701–15. Preparer penalties that may be asserted under appropriate circumstances include, but are not limited to, those set forth in §§ 6694, 6695, and 6713. (2) Under § 301.7701–15(d), Electronic Return Collectors, Service Bureaus, Transmitters, and Software Developers are not income tax return preparers for the purpose of assessing most preparer penalties as long as their services are limited to “typing, reproduction, or other mechanical assistance in the preparation of a return or claim for refund.” (3) If an Electronic Return Collector, Service Bureau, Transmitter, or the product of a Software Developer alters the return information in a nonsubstantive way, this alteration will be considered to come September 21, 1998 under the “mechanical assistance” exception described in § 301.7701–15(d)(1). A nonsubstantive change is a correction or change limited to a transposition error, misplaced entry, spelling error, or arithmetic correction that falls within the following tolerances: (a) the amount of “Total tax”, “Federal income tax withheld”, “Refund”, or “Amount you owe” on Form 8453 differs from the corresponding amount on the electronic portion of the tax return by no more than $7; (b) the amount of “Total income” on Form 8453 differs from the corresponding amount on the electronic portion of the tax return by no more than $25; or (c) dropping cents and rounding to whole dollars. (4) If an Electronic Return Collector, Service Bureau, or Transmitter alters the return information in a substantive way, rather than having the taxpayer alter the return, the Electronic Return Collector, Service Bureau, or Transmitter will be considered to be an income tax return preparer for purposes of § 7701(a)(36). (5) If an Electronic Return Collector, Service Bureau, or Transmitter, or the product of a Software Developer, goes beyond mechanical assistance, any of these parties may be held liable for income tax return preparer penalties. See Rev. Rul. 85–189, 1985–2 C.B. 341 (which describes a situation where a Software Developer was determined to be an income tax return preparer and subject to certain preparer penalties). .03 Other Penalties. In addition to the above specified provisions, the Service reserves the right to assert all appropriate preparer, nonpreparer, and disclosure penalties against an Authorized IRS e-file Provider as warranted under the circumstances. SECTION 7. FORM 8453, U.S. INDIVIDUAL INCOME TAX DECLARATION FOR AN IRS e-file RETURN .01 Procedures for Completing Form 8453. (1) Form 8453 must be completed in accordance with the instructions for that form. (2) The taxpayer(s)’s name, address, social security number(s), and tax return 14 information in the electronic transmission must be identical to the information on the Form 8453 that the taxpayer(s) signed and provided for submission to the Service. (3) An Authorized IRS e-file Provider, a financial institution, or any other entity associated with the electronic filing of a taxpayer’s return must not put its address in the section reserved for the taxpayer’s address on Form 8453 or anywhere in the electronic portion of a return. (4) Before the electronic portion of the return is transmitted, the taxpayer must verify the information on the electronic portion of the return and on Form 8453, and must sign Form 8453. Both spouses’ signatures are required on the Form 8453 prior to the electronic transmission of a joint tax return. The taxpayer may verify the information on the electronic portion of the return by viewing this information on a computer display terminal. A taxpayer need not verify the electronic portion of the return prior to its transmission if the taxpayer provided a completed paper return for filing and the information on the electronic portion is identical to the information provided by the taxpayer. (5) An Authorized IRS e-file Provider must submit the taxpayer’s Form 8453 to the service center that acknowledged acceptance of the electronic portion of the return within one work day after the Authorized IRS e-file Provider receives the acknowledgment file. (6) An Authorized IRS e-file Provider functioning as an ERO must sign the “Declaration of ERO” on Form 8453. (7) If the ERO is also the paid preparer, the ERO must check the “Paid Preparer” box and sign the “Declaration of ERO” on Form 8453. .02 Corrections to Form 8453. (1) A new Form 8453 is not required for a nonsubstantive change. A nonsubstantive change is limited to a correction that does not exceed the tolerances described in section 7.02(2) of this revenue procedure for arithmetic errors, a transposition error, a misplaced entry, or a spelling error. The incorrect nonsubstantive information must be neatly lined through on the Form 8453 and the correct data entered next to the lined-through entry. Also, the individual making the correction must initial the correction. 1998–38 I.R.B. IRB 1998-38 9/16/98 11:49 AM Page 15 (2) The tolerances for section 7.02(1) of this revenue procedure are: (a) the amount of “Total income” does not differ from the amount on the electronic portion of the tax return by more than $25; or (b) the amount of “Total tax”, “Federal income tax withheld”, “Refund”, or “Amount you owe” does not differ from the amount on the electronic portion of the tax return by more than $7. (3) If the ERO makes a substantive change to the electronic portion of the return after Form 8453 has been signed by the taxpayer, but before it is transmitted, the ERO must have all the necessary parties described above sign a new Form 8453 that reflects the corrections before the electronic portion of the return is transmitted. (4) Dropping cents or rounding to whole dollars does not constitute a substantive change or alteration to the return unless the amount differs by more than the above tolerances. All rounding should be accomplished in accordance with the instructions in the Form 1040 tax package. .03 Missing Form 8453. If the Service determines that a Form 8453 is missing, the ERO must provide the Service with a replacement. The ERO must also provide a copy of the Form(s) W–2, W–2G, 1099R, and all other attachments to Form 8453. .04 Substitute Form 8453. If a substitute Form 8453 is used, it must be approved by the Service prior to use. SECTION 8. INFORMATION AN AUTHORIZED IRS e-file PROVIDER MUST FURNISH TO THE TAXPAYER .01 The ERO must furnish the taxpayer with a complete paper copy of the taxpayer’s return. However, the copy need not contain the social security number of the paid preparer. See Rev. Rul. 78–317, 1978–2 C.B. 335. A complete copy of a taxpayer’s return includes: (1) Form 8453 and other paper documents that cannot be electronically transmitted; and (2) a printout of the electronic portion of the return. See section 2.02 of this revenue procedure. The electronic portion of the return can be contained on a replica of an official form or on an unofficial form. How- 1998–38 I.R.B. ever, on an unofficial form, data entries must be referenced to the line numbers on an official form. Also, a printout of the electronic portion of the return does not have to be provided to the taxpayer if the taxpayer provided a completed paper return for electronic filing and the information on the electronic portion of the return is identical to the information provided by the taxpayer. .02 The ERO must advise the taxpayer to retain a complete copy of the return and any supporting material. .03 The ERO must advise the taxpayer that an amended return, if needed, must be filed as a paper return and mailed to the service center that would handle the taxpayer’s paper return. .04 The ERO must, upon request, provide the taxpayer with the DCN and the date the Service acknowledged that the electronic portion of the taxpayer’s return was accepted for processing. .05 The ERO must advise taxpayers of the appropriate IRS TeleTax number to inquire about the status of their tax refund. The ERO should also advise taxpayers to wait at least three weeks from the date the Service acknowledged that the electronic portion of the taxpayer’s return was accepted for processing before calling the TeleTax number. .06 If a taxpayer chooses to use an address other than his or her home address on the return, the ERO must inform the taxpayer that the address on the electronic portion of the return, once processed by the Service, will be used to update the taxpayer’s address of record. The Service uses the taxpayer’s address of record for various notices that are required to be sent to a taxpayer’s “last known address” under the Internal Revenue Code, and for refunds of overpayments of tax (unless otherwise specifically directed by the taxpayer, such as by Direct Deposit). SECTION 9. DIRECT DEPOSIT OF REFUNDS .01 The Service will ordinarily process a request for Direct Deposit but reserves the right to issue a paper refund check. .02 The Service does not guarantee a specific date by which a refund will be directly deposited into the taxpayer’s financial institution account. .03 Neither the Service nor Financial Management Service (FMS) is responsi- 15 ble for the misapplication of a Direct Deposit that is caused by error, negligence, or malfeasance on the part of the taxpayer, Authorized IRS e-file Provider, financial institution, or any of their agents. .04 An ERO must: (1) advise taxpayers of the option to receive their refund by paper check or direct deposit; (2) not charge a separate fee for a Direct Deposit; (3) accept any Direct Deposit election to any eligible financial institution designated by the taxpayer; (4) ensure that the taxpayer is eligible to choose Direct Deposit; (5) caution the taxpayer that once the electronic portion of the return has been accepted for processing by the Service: (a) the Direct Deposit election cannot be rescinded; (b) the routing number of the financial institution cannot be changed; and (c) the taxpayer’s account number cannot be changed; and (6) advise the taxpayer that refund information is available by calling the appropriate IRS TeleTax number. See section 8.05 of this revenue procedure. SECTION 10. REFUND ANTICIPATION LOANS .01 A Refund Anticipation Loan (RAL) is money borrowed by a taxpayer that is based on a taxpayer’s anticipated income tax refund. The Service has no involvement in RALs. A RAL is a contract between the taxpayer and the lender. .02 Any entity that is involved in the Form 1040 IRS e-file Program, including a financial institution that accepts direct deposits of income tax refunds, has an obligation to every taxpayer who applies for a RAL to clearly explain to the taxpayer that a RAL is in fact a loan, and not a substitute for, or a quicker way of, receiving an income tax refund. An Authorized IRS e-file Provider must advise the taxpayer that if a Direct Deposit is not timely, the taxpayer may be liable to the lender for additional interest on the RAL. .03 An Authorized IRS e-file Provider may assist a taxpayer in applying for a RAL. .04 An Authorized IRS e-file Provider may charge a flat fee to assist a taxpayer in applying for a RAL. The fee must be identical for all of the Authorized IRS September 21, 1998 IRB 1998-38 9/16/98 11:49 AM Page 16 e-file Provider’s customers and must not be related to the amount of the refund or a RAL. The Authorized IRS e-file Provider must not accept a fee from a financial institution for any service connected with a RAL that is contingent upon the amount of the refund or a RAL. .05 The Service has no responsibility for the payment of any fees associated with the preparation of a return, the transmission of the electronic portion of a return, or a RAL. .06 An Authorized IRS e-file Provider may disclose tax information to the lending financial institution in connection with an application for a RAL only with the taxpayer’s written consent as specified in § 301.7216–3(b). .07 An Authorized IRS e-file Provider that is also the return preparer, and the financial institution or other lender that makes an RAL, may not be related taxpayers within the meaning of § 267 or § 707. .08 Section 6695(f) imposes a $500 penalty on a return preparer who endorses or negotiates a refund check issued to any taxpayer other than the return preparer. However, a bank, as defined in § 581, may accept the full amount of a refund check as a deposit in the taxpayer’s account for the benefit of the taxpayer. Section 1.6695-1(f) clarifies § 6695(f) by explaining that the prohibition on a return preparer negotiating a refund check is limited to a refund check for a return that the return preparer prepared. A preparer that is also a financial institution, but has not made a loan to the taxpayer on the basis of the taxpayer’s anticipated refund, may (1) cash a refund check and remit all of the cash to the taxpayer or accept a refund check for deposit in full to a taxpayer’s account, provided the bank does not initially endorse or negotiate the check; or (2) endorse a refund check for deposit in full to a taxpayer’s account pursuant to a written authorization of the taxpayer. A preparer bank may also subsequently endorse or negotiate a refund check as part of the check-clearing process through the financial system after initial endorsement. Any income tax return preparer that violates this provision may be suspended from the Form 1040 IRS e-file Program. September 21, 1998 SECTION 11. BALANCE DUE RETURNS .01 All service centers that accept electronically filed returns will accept electronically filed balance due returns. .02 Taxpayers who file balance due returns under the Form 1040 IRS e-file Program for any taxable year are responsible for making full and timely payment of any tax that is due. Failure to make full payment on or before the due date of the return (determined without regard to extensions) will result in the imposition of interest and may result in the imposition of penalties. .03 Taxpayers have several options for paying balances due, including the following: (1) DIRECT DEBIT. Taxpayers may authorize the Service to debit their checking or savings account for the amount of the balance due; (2) PAY BY CHECK. Taxpayers may pay any balance due by sending a check, along with Form 1040-V, Payment Voucher, to the Service. The Authorized IRS e-file Provider must furnish Form 1040-V to any taxpayer paying a balance due by check; and (3) INSTALLMENT AGREEMENT. Taxpayers who cannot pay the balance due with the return may request an installment payment arrangement by filing Form 9465, Installment Agreement Request, with their return. SECTION 12. ADVERTISING STANDARDS FOR AUTHORIZED IRS e-file PROVIDERS AND FINANCIAL INSTITUTIONS .01 An Authorized IRS e-file Provider must comply with the advertising and solicitation provisions of 31 C.F.R. Part 10 (Treasury Department Circular No. 230). This circular prohibits the use or participation in the use of any form of public communication containing a false, fraudulent, misleading, deceptive, unduly influencing, coercive, or unfair statement or claim. Any claims concerning faster refunds by virtue of electronic filing must be consistent with the language in official Service publications. .02 An Authorized IRS e-file Provider must adhere to all relevant federal, state, 16 and local consumer protection laws that relate to advertising and soliciting. .03 An Authorized IRS e-file Provider must not use the Service’s name, “Internal Revenue Service” or “IRS”, within a firm’s name. However, once accepted into the Form 1040 IRS e-file Program, a participant may represent itself as an “Authorized IRS e-file Provider.” .04 An Authorized IRS e-file Provider must not use improper or misleading advertising in relation to the Form 1040 IRS e-file Program (including the time frames for refunds and RALs). .05 An Authorized IRS e-file Provider using promotional materials or logos provided by the Service must comply with all Service instructions pertaining to the promotional materials or logos. .06 An Authorized IRS e-file Provider using the Direct Deposit name and logo must comply with the following: (1) The name “Direct Deposit” will be used with initial capital letters or all capital letters; (2) The logo/graphic for Direct Deposit will be used whenever feasible in advertising copy; and (3) The color or size of the Direct Deposit logo/graphic may be changed when used in advertising pieces. .07 Advertising materials must not carry the FMS, IRS, or other Treasury Seals. .08 Advertising for a cooperative electronic return filing project (public/private sector) must clearly state the names of all cooperating parties. .09 In advertising the availability of a RAL, an Authorized IRS e-file Provider and a financial institution must clearly (and, if applicable, in easily readable print) refer to or describe the funds being advanced as a loan, not a refund; that is, it must be made clear in the advertising that the taxpayer is borrowing against the anticipated refund and not obtaining the refund itself from the financial institution. .10 If an Authorized IRS e-file Provider uses radio or television broadcasting to advertise, the broadcast must be prerecorded. The Authorized IRS e-file Provider must keep a copy of the prerecorded advertisement for a period of at least 36 months from the date of the last transmission or use. 1998–38 I.R.B. IRB 1998-38 9/16/98 11:49 AM Page 17 .11 If an Authorized IRS e-file Provider uses direct mail or fax communications to advertise, the Authorized IRS efile Provider must retain a copy of the actual mailing or fax, along with a list or other description of the firms, organizations, or individuals to whom the communication was mailed, faxed, or otherwise distributed for a period of at least 36 months from the date of the last mailing, fax, or distribution. .12 Acceptance to participate in the Form 1040 IRS e-file Program does not imply endorsement by the Service, FMS, or the Treasury Department of the software or quality of services provided. SECTION 13. MONITORING AND SUSPENSION OF AN AUTHORIZED IRS e-file PROVIDER .01 The Service will monitor an Authorized IRS e-file Provider for conformity with this revenue procedure. Before suspending an Authorized IRS e-file Provider, the Service may issue a warning letter that describes specific corrective action for deviations from this revenue procedure. However, the Service can immediately suspend, without notice, an Authorized IRS e-file Provider from the Form 1040 IRS e-file Program. In most circumstances, a suspension from participation in the Form 1040 IRS e-file Program is effective as of the date of the letter informing the Authorized IRS e-file Provider of the suspension. .02 If a Principal or Responsible Official is suspended from the Form 1040 IRS e-file Program, every entity that listed the suspended Principal or Responsible Official on its Form 8633 may also be suspended. .03 The Service will monitor the Authorized e-file Provider’s compliance with the provisions of section 6695(g) (relating to the due diligence requirements for returns claiming the earned income credit). .04 The Service will monitor the timely receipt of Forms 8453, as well as their overall legibility. .05 The Service will monitor the quality of an Authorized IRS e-file Provider’s transmissions throughout the filing season. The Service will also monitor the electronic portion of returns and tabulate rejections, errors, and other defects. If quality deteriorates, the Authorized IRS e-file Provider will receive a warning from the Service. 1998–38 I.R.B. .06 The Service will monitor Drop-Off Collection Points and advise a parent of any Form 1040 IRS e-file Program violations the Service has encountered with a parent’s Drop-Off Collection Point. If a parent fails to correct a Drop-Off Collection Point problem, the parent will be required to eliminate that Drop-Off Collection Point. Failure to take corrective action or eliminate a Drop-Off Collection Point may cause the Service to suspend the parent from participating in the Form 1040 IRS e-file Program. .07 The Service will monitor complaints about an Authorized IRS e-file Provider and issue a warning or suspension letter as appropriate. .08 The Service reserves the right to suspend an Authorized IRS e-file Provider from participation in the Form 1040 IRS e-file Program for violating any provision of this revenue procedure. Generally, the Service will advise a suspended Authorized IRS e-file Provider concerning the requirements for reacceptance into the Form 1040 IRS e-file Program. The following reasons may lead to a warning letter and/or suspension of an Authorized IRS e-file Provider from the Form 1040 IRS e-file Program (this list is not all-inclusive): (1) the reasons listed in section 4.19 of this revenue procedure; (2) deterioration in the format of individual transmissions; (3) unacceptable cumulative error or rejection rate; (4) untimely received, illegible, incomplete, missing, or unapproved substitute Forms 8453; (5) stockpiling returns at any time while participating in the Form 1040 IRS e-file Program; (6) failure on the part of a Transmitter to retrieve acknowledgement files within two work days of transmission by the Service; (7) failure on the part of a Transmitter to provide an ERO or Service Bureau with acknowledgement files within two work days after receipt from the Service; (8) significant complaints about an Authorized IRS e-file Provider’s performance in the Form 1040 IRS e-file Program; (9) failure on the part of an Authorized IRS e-file Provider to ensure against the unauthorized use of its EFIN and/or ETIN; 17 (10) having more than one EFIN for the same business entity at the same location (the business entity is generally the entity that reports on its return the income derived from electronic filing), unless the Service has issued more than one EFIN to a business entity at the same location. For example, the Service may issue more than one EFIN to accommodate high volumes of returns; (11) failure on the part of a Transmitter to include a Service Bureau’s SBIN in the transmission of a return submitted by a Service Bureau; (12) failure on the part of an ERO to include a Drop-Off Collection Point’s CPIN as part of a return collected from a Drop-Off Collection Point; (13) failure on the part of an Authorized IRS e-file Provider to cooperate with the Service’s efforts to monitor Authorized IRS e-file Providers and investigate electronic filing abuse; (14) failure on the part of an Authorized IRS e-file Provider to properly use the standard/non-standard W–2 indicator; (15) failure on the part of an Authorized IRS e-file Provider to properly use the refund anticipation loan (RAL) indicator; (16) failure on the part of a Service Bureau or a Transmitter to include the ERO’s EFIN as part of a return that the ERO submits to the Service Bureau or the Transmitter; (17) violation of the advertising standards described in section 12 of this revenue procedure; (18) failure to maintain and make available records as described in section 5.09(4) of this revenue procedure; (19) accepting a tax return for filing through the Form 1040 IRS e-file Program either directly or indirectly from a firm, organization, or individual (other than the taxpayer who is submitting his or her return) that is not an Authorized IRS e-file Provider; (20) submitting the electronic portion of a return with information that is not identical to the information on Form 8453; (21) failure to timely submit a revised Form 8633 (or a letter containing the same information contained in a revised Form 8633) notifying the Service of changes described in section 4.03 or 4.04 of this revenue procedure; or September 21, 1998 IRB 1998-38 9/16/98 11:49 AM Page 18 (22) failure to comply with a provision of an implementing document for any pilot program in which the Authorized IRS e-file Provider is a participant (see section 18 of this revenue procedure). .09 The Service may list in the Internal Revenue Bulletin, district office listings, district office newsletters, and the EFS Bulletin Board the name and owner(s) of any entity suspended from the Form 1040 IRS e-file Program and the effective date of the suspension. .10 A district director may warn Authorized IRS e-file Providers that are using the services of a rejected or a suspended Authorized IRS e-file Provider that sections 4.19(12) and (13) of this revenue procedure prohibit a business relationship with a rejected or a suspended Authorized IRS e-file Provider. However, in appropriate circumstances, the Service may immediately suspend the Authorized IRS e-file Provider without such warning. .11 If an Authorized IRS e-file Provider is suspended from participating in the Form 1040 IRS e-file Program, the period of suspension includes the remainder of the calendar year in which the suspension occurs plus the next two calendar years. A suspended participant may submit a new application for the application period immediately preceding the end of the suspension. SECTION 14. ADMINISTRATIVE REVIEW PROCESS FOR DENIAL OF PARTICIPATION IN THE FORM 1040 IRS e-file PROGRAM .01 An applicant that has been denied participation in the Form 1040 IRS e-file Program has the right to an administrative review. During the administrative review process, the denial of participation remains in effect. .02 In response to the submission of a Form 8633, the Application Processing Center will either (1) accept an applicant into the Form 1040 IRS e-file Program, or (2) issue a proposed letter of denial that explains to the applicant why the Application Processing Center proposes to reject the application to participate in the Form 1040 IRS e-file Program. .03 An applicant that receives a proposed letter of denial may mail or deliver, within 30 calendar days of the date of the proposed letter of denial, a written re- September 21, 1998 sponse to the Application Processing Center. The applicant’s response must address the Application Processing Center’s reason(s) for proposing the denial to participate. .04 Upon receipt of an applicant’s written response, the Application Processing Center will reconsider its proposed letter of denial. The Application Processing Center may either (1) withdraw its proposed letter of denial and accept the applicant into the Form 1040 IRS e-file Program, or (2) finalize the proposed denial letter. .05 If an applicant receives a final denial letter from the Application Processing Center, the applicant is entitled to an appeal, in writing, to the Director of Practice. .06 The appeal must be mailed or delivered to the Application Processing Center within 30 calendar days of the date of the final denial letter. An applicant’s written appeal must contain a detailed explanation, with supporting documentation, of why the denial should be reversed. .07 The Application Processing Center will, upon receipt of a written appeal to the Director of Practice, forward to the Director of Practice its file on the applicant and the material described in section 14.06 of this revenue procedure. The Application Processing Center will forward these materials to the Director of Practice within 15 calendar days of receipt of the applicant’s written appeal. .08 Failure to respond within either of the 30-day periods described in sections 14.03 and 14.06 of this revenue procedure irrevocably terminates an applicant’s right to an administrative review or appeal. .09 If an application for participation in the Form 1040 IRS e-file Program is denied, the applicant is ineligible to submit a new application for two years from the application date of the denied application. SECTION 15. ADMINISTRATIVE REVIEW PROCESS FOR SUSPENSION FROM THE FORM 1040 IRS e-file PROGRAM .01 An Authorized IRS e-file Provider that has been suspended from participation in the Form 1040 IRS e-file Program has the right to an administrative review. During the administrative review process, the suspension remains in effect. 18 .02 If an Authorized IRS e-file Provider receives a suspension letter, the Authorized IRS e-file Provider may mail or deliver, within 30 calendar days of the date of the suspension letter, a detailed written explanation, with supporting documentation, of why the suspension letter should be withdrawn. This written response should be sent to the district office or service center that issued the suspension letter. .03 Upon receipt of the Authorized IRS e-file Provider’s written response, the district office or service center will reconsider its suspension of the Authorized IRS e-file Provider. The district office or service center may either (1) withdraw its suspension letter, or (2) affirm the suspension. .04 If an Authorized IRS e-file Provider receives a letter affirming the suspension, the Authorized IRS e-file Provider is entitled to an appeal, in writing, to the Director of Practice. .05 The appeal must be mailed or delivered to the district office or service center that issued the suspension letter within 30 calendar days of the date of the letter affirming the suspension. The Authorized IRS e-file Provider’s written appeal must contain detailed reasons, with supporting documentation, for reversal of the suspension. .06 The district office or service center whose decision to suspend is being appealed will, upon receipt of a written appeal to the Director of Practice, forward its file on the Authorized IRS e-file Provider to the Director of Practice. The district office or service center will also forward to the Director of Practice the material described in section 15.05 of this revenue procedure. The district office or the service center will forward these materials within 15 calendar days of the receipt of the Authorized IRS e-file Provider’s written request for appeal. .07 Failure to appeal within either of the 30-day periods described in sections 15.02 and 15.05 of this revenue procedure irrevocably terminates an Authorized IRS e-file Provider’s right to an appeal. SECTION 16. VITA AND TCE SPONSORED PARTICIPATION IN THE FORM 1040 IRS e-file PROGRAM .01 This revenue procedure applies to VITA (Volunteer Income Tax Assistance) and TCE (Tax Counseling for the Elderly) 1998–38 I.R.B. IRB 1998-38 9/16/98 11:49 AM Page 19 sponsors, subject to the exceptions and restrictions described in this section. .02 For purposes of this section, the District Director may be represented by an individual designated by the District Director such as a District Office Electronic Tax Administration (ETA) Coordinator or a Taxpayer Education Coordinator. .03 To be accepted in, or to continue participation in, the Form 1040 IRS e-file Program, a VITA or TCE sponsor must: (1) have obtained the District Director’s permission (and, in the case of a TCE sponsor, the permission of the Service office that is funding the TCE program) to provide electronic filing; and (2) have a manual or electronic quality review system for each return to be electronically filed. .04 The District Director will advise the VITA and TCE sponsor how to submit or transmit returns. Some of the options available to the District Director are: (1) having the VITA or TCE sponsor submit returns on paper, magnetic disk, or in an electronic transmission to the District Office ETA Coordinator or other locally designated office; (2) having the VITA or TCE sponsor directly transmit returns to the appropriate service center; or (3) having the VITA or TCE sponsor use a third party Transmitter. .05 A VITA or TCE sponsor is not required to sign Form 8453 as ERO. However, if the VITA or TCE sponsor chooses not to sign Form 8453, the VITA or TCE sponsor must otherwise furnish on Form 8453 its VITA or TCE acronym and, if operating from multiple sites, a site designation number. .06 A VITA or TCE sponsor can only accept a return for electronic filing that is (1) prepared at the VITA or TCE site by a VITA or TCE volunteer, (2) prepared by a taxpayer that meets the criteria for VITA or TCE assistance, or (3) prepared by a paid preparer that meets the criteria for VITA or TCE assistance. .07 Only returns and accompanying forms and schedules included in a district, VITA, or TCE training course may be accepted for electronic filing by a VITA or TCE sponsor. .08 A VITA or TCE sponsor and a District Director may enter into an agreement that provides for the retention of copies of tax returns and Forms 8453 by a District 1998–38 I.R.B. Director. This information must be retained by either the VITA or TCE sponsor or a District Director. This information must not be given to a third party, including a third party Transmitter. .09 A District Director is responsible for ensuring that Form 8453 is sent to the appropriate district office or service center. However, a District Director may delegate to the VITA or TCE sponsor the responsibility for mailing Form 8453 to the appropriate district office or service center. .10 A VITA or TCE sponsor may collect a fee only if it is directly related to defraying the actual cost of electronically transmitting a tax return. A VITA or TCE sponsor may also collect this fee on behalf of a third party Transmitter who electronically transmitted a VITA or TCE return. .11 Before a VITA or TCE sponsor may collect a fee for electronically filing a tax return, the VITA or TCE sponsor must ensure that the taxpayer understands that: (1) the fee is not for the preparation of the return; and (2) the VITA or TCE service is offered without regard to either the electronic filing of a return or the collection of a fee. SECTION 17. EMPLOYER SPONSORED PARTICIPATION IN THE FORM 1040 IRS e-file PROGRAM .01 This revenue procedure applies to an employer who chooses to offer electronic filing as an employee benefit to (1) business owners and spouses, (2) employees and spouses, and/or (3) dependents of business owners and employees, subject to the exceptions and restrictions described in this section. .02 For purposes of this section, the District Director may be represented by an individual designated by the District Director. .03 An employer may choose to transmit the electronic portion of returns or may arrange to have them transmitted through a third party. If an employer chooses to transmit from more than one location, the employer must submit a properly completed Form 8633 for each location. .04 An employer may offer electronic filing as an employee benefit whether the employer chooses to transmit tax returns 19 or contracts with a third party to transmit the tax returns. .05 If an employer contracts with a third party to transmit tax returns, the employer may collect from participating employees a fee that is directly related to defraying the actual cost of transmitting the electronic portion of a tax return. .06 An employer is not required to sign Form 8453 as ERO. However, if the employer chooses not to sign Form 8453, the employer must otherwise furnish on Form 8453 its name, address, and the designation “Employee Benefit,” and if operating from multiple sites, a site designation number. .07 An employer and a District Director may enter into an agreement that provides for the retention of copies of tax returns including Forms 8453. In the absence of such an agreement, this information must be retained by the employer. This information is not to be given to a third party, including a third party Transmitter. SECTION 18. PILOT PROGRAMS .01 The Service regularly conducts pilot programs to introduce new technology into the Form 1040 IRS e-file Program. These pilot programs are usually conducted within a limited geographic area or within a limited taxpayer or practitioner community. The Service establishes rules for participating in these pilot programs and embodies these rules in an implementing document typically referred to as a “Memorandum of Understanding” (MOU) or “Memorandum of Agreement” (MOA). Pilot participants must agree to the provisions of the implementing document in order to participate in the pilot program. .02 An implementing document supplements this revenue procedure, but does not supersede it. Participants in a pilot program remain subject to the provisions of this revenue procedure unless the implementing document specifically provides otherwise. .03 A violation of a provision of an implementing document is considered a violation of this revenue procedure and may subject the participant to penalties and/or suspension as provided in this revenue procedure. See section 13.08(22) of this revenue procedure. September 21, 1998 IRB 1998-38 9/16/98 11:49 AM Page 20 SECTION 19. EFFECT ON OTHER DOCUMENTS Rev. Proc. 97–60, 1997–52 I.R.B. 38, is superseded. SECTION 20. EFFECTIVE DATE This revenue procedure is effective September 21, 1998. SECTION 21. INTERNAL REVENUE SERVICE OFFICE CONTACT All questions regarding this revenue procedure should be directed to the Internal Revenue Service. The telephone number for this purpose is (202) 2830531 (not a toll-free number). SECTION 22. PAPERWORK REDUCTION ACT The collections of information contained in this revenue procedure have been reviewed and approved by the Office of Management and Budget in accordance with the Paperwork Reduction Act (44 U.S.C. 3507) under control number 1545–1512. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid control number. The collections of information in this revenue procedure are in sections 5, 8, 9, and 12. This information is required to implement the Form 1040 IRS e-file Program and to enable taxpayers to file their individual income tax returns electronically. The information will be used to ensure that taxpayers receive accurate and essential information regarding the filing of their electronic returns and to identify the persons involved in the filing of electronic returns. The collections of information are required to retain the benefit of participating in the Form 1040 IRS e-file Program. The likely respondents are business or other for-profit institutions. The estimated total annual reporting and recordkeeping burden is 1,146,272 hours. The estimated annual burden per respondent/recordkeeper varies from six (6) minutes to 15.5 hours, depending on individual circumstances, with an estimated average of 15.28 hours (or approximately six (6) minutes per electronically filed re- September 21, 1998 turn). The estimated number of respondents and recordkeepers is 75,000. The estimated annual frequency of responses is on occasion. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. § 6103. 26 CFR 601.602: Tax forms and instructions. (Also Part I, Sections 6012, 6061; 1.6012–5, 1.6061–1.) Rev. Proc. 98–51 CONTENTS PURPOSE BACKGROUND AND CHANGES SECTION 3 ON-LINE FILING PARTICIPANTS—DEFINITIONS SECTION 4 ACCEPTANCE IN THE FORM 1040 ON-LINE FILING PROGRAM SECTION 5 RESPONSIBILITIES OF AN ON-LINE FILER SECTION 6 PENALTIES SECTION 7 FORM 8453-OL, U.S. INDIVIDUAL TAX DECLARATION FOR ONLINE FILING SECTION 8 INFORMATION AN ONLINE FILER MUST FURNISH TO THE TAXPAYER SECTION 9 DIRECT DEPOSIT OF REFUNDS SECTION 10 BALANCE DUE RETURNS SECTION 11 ADVERTISING STANDARDS FOR ON-LINE FILERS SECTION 12 MONITORING AND SUSPENSION OF AN ON-LINE FILER SECTION 13 ADMINISTRATIVE REVIEW PROCESS FOR DENIAL OF PARTICIPATION IN THE FORM 1040 ON-LINE FILING PROGRAM SECTION 14 ADMINISTRATIVE REVIEW PROCESS FOR SUSPENSION FROM SECTION 1 SECTION 2 20 SECTION 15 SECTION 16 SECTION 17 SECTION 18 SECTION 19 THE FORM 1040 ONLINE FILING PROGRAM PILOT PROGRAMS EFFECT ON OTHER DOCUMENTS EFFECTIVE DATE INTERNAL REVENUE SERVICE OFFICE CONTACT PAPERWORK REDUCTION ACT SECTION 1. PURPOSE This revenue procedure informs those who participate in the Form 1040 OnLine Filing Program of their obligations to the Internal Revenue Service, taxpayers, and other participants. The following returns can be filed under the Form 1040 On-Line Filing Program: (1) Form 1040 and Form 1040A, U.S. Individual Income Tax Return; and (2) Form 1040EZ, Income Tax Return for Single and Joint Filers With No Dependents. This revenue procedure updates and supersedes Rev. Proc. 97–61, 1997–52 I.R.B. 50. SECTION 2. BACKGROUND AND CHANGES .01 Section 1.6012–5 of the Income Tax Regulations provides that the Commissioner may authorize the use, at the option of a person required to make a return, of a composite return in lieu of any form specified in 26 C.F.R. Part 1 (Income Tax), subject to the conditions, limitations, and special rules governing the preparation, execution, filing, and correction thereof as the Commissioner may deem appropriate. .02 For purposes of this revenue procedure, an on-line electronically filed Form 1040, Form 1040A, or Form 1040EZ is a composite return consisting of electronically transmitted data and certain paper documents. The paper portion of the return consists of Form 8453–OL, U.S. Individual Income Tax Declaration for OnLine Filing, and other paper documents that cannot be electronically transmitted. Form 8453–OL must be received by the Service before the composite return is considered filed (see section 5.07 of this revenue procedure). The composite return must contain the same information that a return filed completely on paper 1998–38 I.R.B. IRB 1998-38 9/16/98 11:49 AM Page 21 contains. See section 7 of this revenue procedure for procedures for completing Form 8453–OL. .03 Each year prior to the start of the filing season, the Service will issue Publication 1345A, Filing Season Supplement for Electronic Return Originators, and Publication 1346, Electronic Return File Specifications and Record Layouts for Individual Income Tax Returns. These publications list the forms and schedules associated with the Form 1040 series that can be electronically transmitted during the upcoming filing season. .04 For purposes of the Form 1040 OnLine Filing Program, a Form 1040, Form 1040A, or Form 1040EZ for any taxable year cannot be electronically filed after the 15th day of October following the close of that taxable year, notwithstanding the fact that the taxpayer has been granted an extension to file a return beyond that date. If the 15th day of October falls on a Saturday, Sunday, or legal holiday, then the electronically filed return may be filed on the next succeeding day which is not a Saturday, Sunday, or legal holiday. .05 An amended tax return cannot be electronically filed under the Form 1040 On-Line Filing Program. A taxpayer must file an amended tax return on paper in accordance with the instructions for Form 1040X, Amended U.S. Individual Income Tax Return. .06 A tax return that has a foreign address for the taxpayer cannot be electronically filed under the Form 1040 On-Line Filing Program. Army/Air Force (APO) and Fleet (FPO) post offices are not considered foreign addresses for this purpose. .07 A tax return for a decedent cannot be electronically filed under the Form 1040 On-Line Filing Program. The decedent’s spouse or personal representative must file a paper tax return for the decedent. .08 Some of the updates and changes to Rev. Proc. 97–61 are as follows: (1) references to specific dates and specific tax years have been replaced with more general references in order to eliminate the need for annual updates to this revenue procedure; (2) the application period for new applicants that intend to participate in the Form 1040 On-Line Filing Program for any filing season is extended beyond the beginning of the filing season (section 4.05); 1998–38 I.R.B. (3) On-Line Filers participating as Software Developers must provide the Service with a copy of their software and its accompanying documentation (section 5.10(9)); (4) the number of returns that may be filed from one software package or from one e-mail address has been increased from three returns to five (sections 5.09(2), 5.10(3), 5.10(4), and 5.11(12)); and (5) the provisions of this revenue procedure apply to participants in various pilot programs conducted with respect to the Form 1040 On-Line Filing Program (section 15). SECTION 3. ON-LINE FILING PARTICIPANTS—DEFINITIONS .01 After acceptance into the Form 1040 On-Line Filing Program, as described in section 4 of this revenue procedure, a participant is referred to as an “On-Line Filer.” .02 The On-Line Filer categories are: (1) ON-LINE SERVICE PROVIDER. An “On-Line Service Provider” is an on-line information service organization that provides paying subscribers (individuals who use the various services offered by an On-Line Service Provider) dial-up access to a variety of data bases. For purposes of the Form 1040 On-Line Filing Program, an On-Line Service Provider must also have: (a) an established subscriber or client base to whom the On-Line Service Provider offers services on a continuing basis and about which the On-Line Service Provider maintains certain minimum information identifying the subscriber. Such information could include the subscriber’s name, account number, credit card number, or demand deposit account number; (b) a port capacity of at least 1,000 lines or the ability to simultaneously service 1,000 customers; (c) a network of personal computers that are linked by modems; (d) access to a broad spectrum of information and/or entertainment services; and (e) a client base that has the ability to communicate using electronic mail. (2) SOFTWARE DEVELOPER. A “Software Developer” develops software 21 for the purposes of (a) formatting the electronic portion of returns according to Publication 1346; and/or (b) transmitting the electronic portion of returns directly to the Service. A Software Developer may also sell its software. (3) TRANSMITTER. A “Transmitter” transmits the electronic portion of a return directly to the Service. An entity that provides a “bump-up” service is a Transmitter. A “bump-up” service provider increases the transmission rate or line speed of formatted or reformatted information that is being sent to the Service via a public switched telephone network. The Service accepts transmissions using a variety of telecommunications protocols. .03 The On-Line Filer categories are not mutually exclusive. For example, a Software Developer can, at the same time, be considered a Transmitter or an OnLine Service Provider depending on the function(s) performed. SECTION 4. ACCEPTANCE IN THE FORM 1040 ON-LINE FILING PROGRAM .01 Except as provided in sections 4.02 through 4.04 of this revenue procedure, an On-Line Filer that participated in the most recent Form 1040 On-Line filing season does not have to reapply to participate in the next Form 1040 On-Line filing season. However, an On-Line Filer that intends to participate as a Transmitter or a Software Developer must first successfully complete, for each filing season, the testing referred to in section 4.11 of this revenue procedure. In addition, section 4.14 of this revenue procedure provides for the Service’s issuance of credentials necessary for participation in the Form 1040 On-Line Filing Program. .02 Applicants must file a new Form 8633, Application to Participate in the IRS e-file Program, with completed fingerprint cards for the appropriate individuals, if: (1) the applicant has never participated in the Form 1040 On-Line Filing Program; (2) the applicant has previously been denied participation in the Form 1040 OnLine Filing Program; or (3) the applicant has been suspended from the Form 1040 On-Line Filing Program. September 21, 1998 IRB 1998-38 9/16/98 11:49 AM Page 22 Applicants must designate that the Form 8633 is for the Form 1040 On-Line Filing Program by checking the box titled “ON-LINE FILING.” .03 An On-Line Filer must submit a revised Form 8633 (designated for the Form 1040 On-Line Filing Program as described in section 4.02 of this revenue procedure), signed by all “Principals” and the “Responsible Official” (as described in section 4.12 of this revenue procedure), with completed fingerprint cards for those appropriate individuals who have not submitted a fingerprint card with a previously accepted application, if: (1) the On-Line Filer participated solely as a Software Developer in the most recent Form 1040 On-Line filing season and intends to participate as an On-Line Service Provider or Transmitter; (2) there is an additional Principal, such as a partner or a corporate officer, that must be listed on Form 8633; (3) there is a Principal listed on Form 8633 that should be deleted; or (4) the Responsible Official on Form 8633 changes. .04 Except as provided in section 4.03 of this revenue procedure, an On-Line Filer must submit either a revised Form 8633 (designated for the Form 1040 OnLine Filing Program as described in section 4.02 of this revenue procedure), or a letter containing the same information contained in a revised Form 8633, if any information on the On-Line Filer’s Form 8633 has changed. A revised Form 8633 or letter submitted under this section should include only the changed information and the following identifying information: (1) the On-Line Filer’s legal name; (2) the On-Line Filer’s employer identification number and/or social security number (EIN/SSN); (3) the On-Line Filer’s “Doing Business As” (DBA) name; (4) whether the On-Line Filer is controlled or owned by another On-Line Filer; (5) the On-Line Filer’s controlling office name; (6) the Electronic Transmitter Identification Number (ETIN) of the On-Line Filer’s controlling office; (7) the Electronic Filing Identification Number (EFIN) of the On-Line Filer’s controlling office; and September 21, 1998 (8) the business address of the OnLine Filer’s controlling office. A Principal or the Responsible Official must sign the revised Form 8633 or the letter. .05 For applicants described in section 4.02 of this revenue procedure, the application period begins on the 1st day of August preceding the filing season during which they intend to participate in the Form 1040 On-Line Filing Program. The application [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Airs%3Abb4168f7efed32c9. Public record. Not legal advice.