IRS Revenue Procedure
2002-34

 Code Sec. NONE



<<FULL TEXT>>

REV. PROC. 2002-34

NOTE: This revenue procedure will be reprinted as the next revision of IRS
Publication 1220, Specifications for Filing Forms 1098, 1099, 5498, and
W-2G Electronically or Magnetically.

Use this Revenue Procedure to prepare Tax Year 2002 and prior year
information returns for submission to Internal Revenue Service (IRS) using
any of the following:

-- Electronic Filing

-- Tape Cartridge

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

-- 3 1/2-Inch Diskette


Caution to filers:

Please read this publication carefully. Persons or businesses required to
file information returns electronically or magnetically may be subject to
penalties for failure to file or include correct information if they do
not follow the instructions in this Revenue Procedure.


IMPORTANT NOTES:

IRS/MCC no longer accepts 9 track magnetic tape for submitting Information
Returns to IRS/MCC. See Part A, Sec. 2.02. Beginning in calendar year 2004
for tax year 2003, IRS/MCC will no longer accept 8mm, 4mm, and Quarter
Inch Cartridges (QIC) for filing information returns.


TABLE OF CONTENTS

PART A. GENERAL
Section 1. Purpose
Section 2. Nature of Changes -- Current Year (Tax Year 2002)
Section 3. Where to File and How to Contact the IRS, Martinsburg
Computing Center
Section 4. Filing Requirements
Section 5. Vendor List
Section 6. Form 4419, Application for Filing Information Returns
Electronically/Magnetically
Section 7. Test Files
Section 8. Filing of Information Returns Magnetically and Retention
Requirements
Section 9. Due Dates
Section 10. Replacement Media
Section 11. Corrected Returns
Section 12. Effect on Paper Returns and Statements to Recipients
Section 13. Combined Federal/State Filing Program
Section 14. Penalties Associated With Information Returns
Section 15. State Abbreviations
Section 16. Major Problems Encountered

PART B. ELECTRONIC FILING SPECIFICATIONS
Section 1. General
Section 2. Advantages of Filing Electronically
Section 3. Electronic Filing Approval Procedure
Section 4. Test Files
Section 5. Electronic Submissions
Section 6. PIN Requirements
Section 7. Electronic Filing Specifications
Section 8. Dial-up Network/Browser Specifications (Web Interface)
Section 9. Communication Software Specifications (Text Interface)
Section 10. Modem Configuration
Section 11. Common Problems and Questions Associated with Electronic
Filing

PART C. MAGNETIC MEDIA FILING SPECIFICATIONS
Section 1. Tape Cartridge Specifications
Section 2. 8mm, 4mm, and Quarter-Inch Cartridge Specifications
Section 3. 3 1/2-Inch Diskette Specifications

PART D. RECORD FORMAT SPECIFICATIONS AND RECORD LAYOUTS
Section 1. General
Section 2. Transmitter "T" Record -- General Field Descriptions
Section 3. Transmitter "T" Record -- Record Layout
Section 4. Payer "A" Record -- General Field Descriptions
Section 5. Payer "A" Record -- Record Layout
Section 6. Payee "B" Record -- General Field Descriptions and Record
Layouts
(1) Payee "B" Record -- Record Layout Positions 544-750 for Forms
1098
(2) Payee "B" Record -- Record Layout Positions 544-750 for Form
1098-E
(3) Payee "B" Record -- Record Layout Positions 544-750 for Form
1098-T
(4) Payee "B" Record -- Record Layout Positions 544-750 for Form
1099-A
(5) Payee "B" Record -- Record Layout Positions 544-750 for Form
1099-B
(6) Payee "B" Record -- Record Layout Positions 544-750 for Form
1099-C
(7) Payee "B" Record -- Record Layout Positions 544-750 for Form
1099-DIV
(8) Payee "B" Record -- Record Layout Positions 544-750 for Form
1099-G
(9) Payee "B" Record -- Record Layout Positions 544-750 for Form
1099-INT
(10) Payee "B" Record -- Record Layout Positions 544-750 for Form
1099-LTC
(11) Payee "B" Record -- Record Layout Positions 544-750 for Form
1099-MISC
(12) Payee "B" Record -- Record Layout Positions 544-750 for Form
1099-MSA
(13) Payee "B" Record -- Record Layout Positions 544-750 for Form
1099-OID
(14) Payee "B" Record -- Record Layout Positions 544-750 for Form
1099-PATR
(15) Payee "B" Record -- Record Layout Positions 544-750 for Form
1099-Q
(16) Payee "B" Record -- Record Layout Positions 544-750 for Form
1099-R
(17) Payee "B" Record -- Record Layout Positions 544-750 for Form
1099-S
(18) Payee "B" Record -- Record Layout Positions 544-750 for Form
5498
(19) Payee "B" Record -- Record Layout Positions 544-750 for Form
5498-MSA
(20) Payee "B" Record -- Record Layout Positions 544-750 for Form
W-2G
Section 7. End of Payer "C" Record -- General Field Descriptions and
Record Layout
Section 8. State Totals "K" Record -- General Field Descriptions and
Record Layout
Section 9. End of Transmission "F" Record -- General Field
Descriptions and Record Layout
Section 10. File Layout Diagram

PART E. EXTENSIONS OF TIME AND WAIVERS
Section 1. General -- Extensions
Section 2. Specifications for Electronic Filing or Magnetic Media
Extensions of Time
Section 3. Record Layout -- Extension of Time
Section 4. Extension of Time for Recipient Copies of Information
Returns
Section 5. Form 8508, Request for Waiver From Filing Information
Returns on Magnetic Media


PART A. GENERAL

Revenue Procedures are generally revised annually to reflect
legislative and form changes. Comments concerning this Revenue Procedure,
or suggestions for making it more helpful, can be addressed to:

Internal Revenue Service
Martinsburg Computing Center
Attn: Information Reporting Program
230 Murall Drive
Kearneysville, WV 25430


SEC. 1. PURPOSE

.01 The purpose of this Revenue Procedure is to provide the
specifications for filing Forms 1098, 1099, 5498, and W-2G with IRS
electronically through the IRS FIRE System or magnetically, using IBM
3480, 3490, 3490E, 3590, 3590E, or AS400 compatible tape cartridges
(including 4mm, 8mm & QIC), or 3 1/2-inch diskettes. IRS/MCC no longer
accepts 1/2-inch 9-track magnetic tape for the processing of information
returns. This Revenue Procedure must be used for the preparation of Tax
Year 2002 information returns and information returns for tax years prior
to 2002 filed beginning January 1, 2003, and received by IRS/MCC or
postmarked by December 10, 2003. Specifications for filing the following
forms are contained in this Revenue Procedure.

(a) Form 1098, Mortgage Interest Statement

(b) Form 1098-E, Student Loan Interest Statement

(c) Form 1098-T, Tuition Payments Statement

(d) Form 1099-A, Acquisition or Abandonment of Secured Property

(e) Form 1099-B, Proceeds From Broker and Barter Exchange Transactions

(f) Form 1099-C, Cancellation of Debt

(g) Form 1099-DIV, Dividends and Distributions

(h) Form 1099-G, Certain Government Payments

(i) Form 1099-INT, Interest Income

(j) Form 1099-LTC, Long-Term Care and Accelerated Death Benefits

(k) Form 1099-MISC, Miscellaneous Income

(l) Form 1099-MSA, Distributions From an Archer MSA or Medicare+Choice
MSA

(m) Form 1099-OID, Original Issue Discount

(n) Form 1099-PATR, Taxable Distributions Received From Cooperatives

(o) Form 1099-Q, Qualified Tuition Program Payments (Under Section 529)

(p) Form 1099-R, Distributions From Pensions, Annuities, Retirement or
Profit-Sharing Plans, IRAs, Insurance Contracts, etc.

(q) Form 1099-S, Proceeds From Real Estate Transactions

(r) Form 5498, IRA and Coverdell ESA Contribution Information

(s) Form 5498-MSA, Archer MSA or Medicare+Choice MSA Information

(t) Form W-2G, Certain Gambling Winnings


.02 All data received at IRS/MCC for processing will be given the same
protection as individual income tax returns (Form 1040). IRS/MCC will
process the data and determine if the records are formatted and coded
according to this Revenue Procedure.

.03 Specifications for filing Forms W-2, Wage and Tax Statements,
magnetically/electronically are available from the Social Security
Administration (SSA) only. Filers can call 1-800-SSA-6270 to obtain the
telephone number of the SSA Employer Service Liaison Officer for their
area.

.04 IRS/MCC does not process Forms W-2. Paper and/or magnetic media for
Forms W-2 must be sent to SSA. IRS/MCC does, however, process waiver
requests (Form 8508) and extension of time to file requests (Form 8809)
for Forms W-2 and requests for an extension of time to provide the
employee copies of Forms W-2.

.05 Generally, the box numbers on the paper forms correspond with the
amount codes used to file electronically/magnetically; however, if
discrepancies occur, the instructions in this Revenue Procedure govern.

.06 This Revenue Procedure also provides the requirements and
specifications for electronic or magnetic media filing under the Combined
Federal/State Filing Program.

.07 The following Revenue Procedures and publications provide more
detailed filing procedures for certain information returns:

(a) 2002 General Instructions for Forms 1099, 1098, 5498, and W-2G and
individual form instructions

(b) Publication 1179, Rules and Specifications for Private Printing of
Substitute Forms 1096, 1098, 1099, 5498, and W-2G

(c) Publication 1239, Specifications for Filing Form 8027, Employer's
Annual Information Return of Tip Income and Allocated Tips, Magnetically
or Electronically

(d) Publication 1187, Specifications for Filing Form 1042-S, Foreign
Person's U.S. Source Income Subject to Withholding, Magnetically or
Electronically

(e) Publication 1245, Specifications for Filing Form W-4, Employee's
Withholding Allowance Certificate, Magnetically or Electronically


.08 This Revenue Procedure supersedes Rev. Proc. 2001-32 published as
Publication 1220 (Rev. 5-2001), Specifications for Filing Forms 1098,
1099, 5498, and W-2G Magnetically or Electronically.


SEC. 2. NATURE OF CHANGES-CURRENT YEAR (TAX YEAR 2002)

.01 In this publication, all pertinent changes for Tax Year 2002 are
emphasized by the use of italics. Portions of text that require special
attention have been bolded. Filers are always encouraged to read the
publication in its entirety.

.02 PROGRAMMING CHANGES

a. GENERAL

(1) 9-track magnetic tape is no longer an acceptable type of media for
submitting information returns to IRS/MCC.

(2) A new field Record Sequence Number was added to Field Positions
500-507 in all records. The Record Sequence Number will be in Field
Positions 500-507 of the "T" Record, the "A" Record(s), the "B" Record(s),
the "C" Record(s), any applicable "K" Record(s), and the "F" Record.

(3) The title of Form 1099-G was changed from Certain Government
Payment and Qualified State Tuition Program Payments to Certain Government
Payments.

(4) The title of Form 5498 was changed from "IRA Contribution
Information" to "IRA and Coverdell ESA Contribution Information."

(5) All references to Education IRAs have been changed to Coverdell
ESAs.

(6) Colorado, Louisiana, Maryland, Nebraska, North Carolina and
Virginia were added to the Combined Federal/State Filing Program. See Part
A, Sec. 13 for the appropriate state codes.


b. PROGRAMMING CHANGES -- TRANSMITTER "T" RECORD

(1) For all forms, Payment Year, Field Positions 2-5, must be
incremented to update the four-digit report year (2001 to 2002), unless
reporting prior year data.

(2) Contact Email Address was added to Field Positions 359-393.

(3) Cartridge Tape File Indicator was moved to Field Positions 394-395.

(4) Electronic File name for a Replacement File was moved to Field
Positions 396-410.

(5) Transmitter's Media Number was added to Field Position 411-416.

(6) Vendor Indicator was moved to Field Position 518.

(7) Vendor Name was moved to Field Positions 519-558.

(8) Vendor Mailing Address was moved to Field Positions 559-598.

(9) Vendor City was moved to Field Positions 599-638.

(10) Vendor State was moved to Field Positions 639-640.

(11) Vendor ZIP code was moved to Field Positions 641-649.

(12) Vendor Contact Name was moved to Field Positions 650-689.

(13) Vendor Contact Phone Number and Extension was moved to Field
Positions 690-704.

(14) Vendor Contact Email Address was moved and expanded to 35
positions in Field Positions 705-739.


c. PROGRAMMING CHANGES -- PAYER "A" RECORD

(1) For all forms, Payment Year, Field Positions 2-5, must be
incremented to update the four-digit report year (2001 to 2002), unless
reporting prior year data.

(2) For Form 1099-G, Certain Government Payments, amount code 5,
Qualified State Tuition Program Earnings is no longer valid.

(3) A new Form 1099-Q, Qualified Tuition Program Payments (under
Section 529), was added to list of Type of Return. The code for 1099-Q is
Q.

(4) The Amount Codes, Field Positions 28-39, for 1099-Q are 1 (one),
Gross Distribution, 2 (two), Earnings, and 3 (three), Basis.

(5) For Form 5498, Amount Codes, Field Positions 28-39, code "B" was
changed to Coverdell ESA Contributions.


d. PROGRAMMING CHANGES -- PAYEE "B" RECORD

(1) For all forms, Payment Year, Field Positions 2-5, must be
incremented to update the four-digit report year (2001 to 2002), unless
reporting prior year data.

(2) For 1099-Q, Field Position 547, Trustee to Trustee Rollover, will
have a 1 (one) indicator if the reporting is a trustee to trustee rollover
or a blank if it is not a trustee to trustee rollover.

(3) For 1099-Q, Field Position 548, Type of Tuition Payment, will have
a 1 (one) to indicate a private payment and a 2 (two) to indicate a state
payment.

(4) For 1099-Q, Field Position 549, Designated Beneficiary, will have a
blank or a 1 (one) to indicate if the recipient is not the designated
beneficiary.

(5) For Form 1099-R, the title for Distribution Code M, Field Positions
545-546, was changed to Distribution from a Coverdell ESA.

(6) For Form 5498, Education IRA Indicator, Field Position 552, was
changed to Coverdell ESA Indicator.


e. PROGRAMMING CHANGES -- END OF FILE "F" RECORD

(1) Total Number of Payees was added to Field Positions 50-57.


.03 EDITORIAL CHANGES

a. In an effort to eliminate redundancy and improve clarity and
organization, the Publication 1220 has undergone a major rewrite. Parts
and Sections of the publication have been moved, added, deleted and/or
rearranged. New information or additions to the publication have been
italicized. The title of the publication was changed to Specifications for
Filing Forms 1098, 1099, 5498 and W-2G Electronically or Magnetically.
Actual programming changes are minor and are listed above.

b. The Information Reporting Program (IRP) Call Site was reorganized
and is now the IRP Customer Service Section. The IRP Customer Service
Section continues to assist filers via a toll-free number and email with
information return issues. See Part A, Sec. 3.09.

c. A First Time Filers Quick Reference Guide was added to the inside
cover of the publication.

d. Bullets were added to the beginning of Part A, Sec. 11, Corrected
Returns to emphasize important points. A record layout was added
illustrating both the two step and one step correction process.

e. Bullets were added to the beginning of Part A, Sec. 13, Combined
Federal/State Filing Program to emphasize important points. A record
layout was added to illustrate a file with Combined Federal/State Filing.

f. A 1099-R Distribution Code Chart which shows acceptable combinations
of distribution codes was added to Part D, Sec. 6(16).

g. Part A, Sec. 10, Replacement Media is new.

h. Part A, Sec. 14, Penalties Associated With Information Returns is
new.

i. Part A, Sec. 16, Major Problems Encountered was revised.

j. Part A, Sec. 17, Definition of Terms was deleted.

k. Extension and waiver information is in Part E.

l. Beginning in calendar year 2004 for Tax Year 2003, IRS/MCC will no
longer accept 8mm, 4mm, and Quarter Inch Cartridges (QIC).

<<END RULING>>



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

.01 All information returns filed electronically or magnetically are
processed at IRS/MCC. Files containing information returns and requests
for IRS electronic and magnetic media filing information should be sent to
the following address:

IRS-Martinsburg Computing Center
Information Reporting Program
230 Murall Drive
Kearneysville, WV 25430


.02 All requests for an extension of time to file information returns
with IRS/MCC, or to the recipients and requests for undue hardship waivers
filed on Form 8508 should be sent to the following address:

IRS-Martinsburg Computing Center
Information Reporting Program
Attn: Extension of Time Coordinator
240 Murall Drive
Kearneysville, WV 25430


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

CUSTOMER SERVICE SECTION

TOLL-FREE 1-866-455-7438 or email at mccirp@irs.gov

304-267-3367 -- TDD

(Telecommunication Device for the Deaf) 304-264-5602 -- Fax Machine

Electronic Filing -- FIRE system 304-262-2400

TO OBTAIN FORMS: 1-800-TAX-FORM (1-800-829-3676)

www.irs.gov -- IRS Web Site access to forms (See Note)


Note: Because the IRS processes paper forms by machine (optical character
recognition equipment), you cannot file the IRS Form 1096 or Copy A of
Forms 1098, 1099, 5498 or W-2G printed from the IRS Web Site.

.04 The 2002 General Instructions for Forms 1098, 1099, 5498, and W-2G
and the individual forms instructions have been included in the
Publication 1220 for your convenience. The Form 1096 is used only to
transmit Copy A of paper Forms 1099, 1098, 5498, and W-2G. If filing paper
returns, follow the mailing instructions on Form 1096 and submit the paper
returns to the appropriate IRS Service Center.

.05 Make requests for paper Forms 1096, 1098, 1099, 5498, and W-2G, and
publications related to electronic/magnetic filing by calling the IRS
toll-free number 1-800-TAX-FORM (1-800-829-3676) or on the IRS Web Site at
www.irs.gov.

.06 Questions pertaining to magnetic media filing of Forms W-2 must be
directed to the Social Security Administration (SSA). Filers can call
1-800-SSA-6270 to obtain the phone number of the SSA Employer Service
Liaison Officer for their area.

.07 Payers should not contact IRS/MCC if they have received a penalty
notice and need additional information or are requesting an abatement of
the penalty. A penalty notice contains an IRS representative's name and/or
phone number for contact purposes; or the payer may be instructed to
respond in writing to the address provided. IRS/MCC does not issue penalty
notices and does not have the authority to abate penalties. For penalty
information, refer to the Penalty section of the 2002 General Instructions
for Forms 1099, 1098, 5498, and W-2G.

.08 A taxpayer or authorized representative may request a copy of a tax
return, including Form W-2 filed with a return, by submitting Form 4506,
Request for Copy or Transcript of Tax Form, to IRS. This form may be
obtained by calling 1-800-TAX-FORM (1-800-829-3676). For any questions
regarding this form, call 1-800-829-1040.

.09 The Information Returns Program Customer Service Section (IRP/CSS),
located at IRS/MCC, answers electronic/magnetic media, paper filing, and
tax law questions from the payer community relating to the filing of
business information returns (Forms 1096, 1098, 1099, 5498, 8027, W-2G,
and W-4). IRP/CSS also answers questions relating to the
electronic/magnetic media filing of Forms 1042-S and to the tax law
criteria and paper filing instructions for Forms W-2 and W-3. Inquiries
dealing with backup withholding and reasonable cause requirements due to
missing and incorrect taxpayer identification numbers are also addressed
by IRP/CSS. Assistance is available year-round to payers, transmitters,
and employers nationwide, Monday through Friday, 8:30 a.m. to 4:30 p.m.
Eastern time, by calling toll-free 1-866-455-7438 or via email at
mccirp@irs.gov. The Telecommunications Device for the Deaf (TDD) toll
number is 304-267-3367. Call as soon as questions arise to avoid the busy
filing seasons at the end of January and February. Recipients of
information returns (payees) should continue to contact 1-800-829-1040
with any questions on how to report the information returns data on their
tax returns.

.10 Form 4419, Application for Filing Information Returns
Electroncially/Magnetically, Form 8809, Request for Extension of Time to
File Information Returns, and Form 8508, Request for Waiver From Filing
Information Returns on Magnetic Media may be faxed to IRS/MCC at the
number shown above in .03. Form 4804, Transmittal of Information Returns
Filed Magnetically must always be included with media shipments.


SEC. 4. FILING REQUIREMENTS

.01 The regulations under section 6011(e)(2)(A) of the Internal Revenue
Code provide that any person, including a corporation, partnership,
individual, estate, and trust, who is required to file 250 or more
information returns must file such returns electronically/magnetically.
The 250* or more requirement applies separately for each type of return
and separately to each type of corrected return.

* Even though filers may submit up to 249 information returns on paper,
IRS encourages filers to transmit those information returns electronically
or magnetically.


.02 All filing requirements that follow apply individually to each
reporting entity as defined by its separate taxpayer identification number
(TIN), social security number (SSN), employer identification number (EIN),
individual taxpayer identification number (ITIN) or adoption taxpayer
identification number (ATIN). For example, if a corporation with several
branches or locations uses the same EIN, the corporation must aggregate
the total volume of returns to be filed for that EIN and apply the filing
requirements to each type of return accordingly.

.03 Payers who are required to submit their information returns on
magnetic media may choose to submit their documents by electronic filing.
Payers who submit their information returns electronically by March 31,
2003, are considered to have satisfied the magnetic media filing
requirements.

.04 IRS/MCC has one method for filing information returns
electronically; see Part B.

.05 The following requirements apply separately to both originals and
corrections filed electronically/magnetically:


1098 250 or more of any of these forms require magnetic media
1098-E <*> filing with IRS. Filing electronically will also meet
1098-T <*> this requirement. These are stand alone documents and are
1099-A not to be aggregated for purposes of determining the 250
1099-B threshold. For example, if you must file 100 Forms 1099-B
1099-C and 300 Forms 1099-INT, Forms 1099-B need not to be filed
1099-DIV electronically or magnetically since they do not meet the
1099-G threshold of 250. However, Forms 1099-INT must be filed
1099-INT electronically or magnetically since they meet the
1099-LTC threshold of 250.
1099-MISC
1099-MSA
1099-OID
1099-PATR
1099-Q
1099-R
1099-S
5498
5498-MSA
W-2G

----------
*/ For Tax Year 2002, Forms 1098-E and 1098-T may be reported on paper
regardless of the 250 threshold.


.06 The above requirements do not apply if the payer establishes
hardship (see Part E, Sec. 5).


SEC. 5. VENDOR LIST

.01 IRS/MCC prepares a list of vendors who support electronic or
magnetic media filing. The Vendor List (Pub. 1582) contains the names of
service bureaus that will produce files via electronic filing or on the
prescribed types of magnetic media. It also contains the names of vendors
who provide software packages for payers who wish to produce electronic
files or magnetic media on their own computer systems. This list is
compiled as a courtesy and in no way implies IRS/MCC approval or
endorsement.

.02 If filers meeting the filing requirements engage a service bureau
to prepare media on their behalf, the filers should be careful not to
report duplicate data, which may cause penalty notices to be generated.

.03 The Vendor List, Publication 1582, may be updated in print every
other year. The most recently printed copy will be available by contacting
IRS/MCC at our toll-free number 1-866-455-7438 or by letter (see Part A,
Sec. 3). The Vendor List is also available on the IRS Web Site at
www.irs.gov.

.04 A vendor, who offers a software package, or has the capability to
electronically file information returns, or has the ability to produce
magnetic media for customers, and who would like to be included on the
list must submit a letter or email to IRS/MCC. The request should include:

(a) Company name

(b) Address (include city, state, and ZIP code)

(c) Telephone number (include area code)

(d) Contact person

(e) Type(s) of service provided (e.g., service bureau and/or software)

(f) Type(s) of media offered (e.g., tape cartridge, 3 1/2-inch
diskette, or electronic filing)

(g) Type(s) of return(s)
SEC. 6. FORM 4419, APPLICATION FOR FILING INFORMATION RETURNS
ELECTRONICALLY/MAGNETICALLY

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

Note: EXCEPTIONS -- An additional Form 4419 is required for filing each of
the following types of returns: Form 1042-S, Foreign Person's U.S. Source
Income Subject to Withholding, Form 8027, Employer's Annual Information
Return of Tip Income and Allocated Tips, and Form W-4, Employee's
Withholding Allowance Certificate. See back of Form 4419 for detailed
instructions.

.02 Tape cartridge, diskette, and electronically filed returns may not
be submitted to IRS/MCC until the application has been approved. Please
read the instructions on the back of Form 4419 carefully. A Form 4419 is
included in the Publication 1220 for the filer's use. This form may be
photocopied. Additional forms may be obtained by calling 1-800-TAX-FORM
(1-800-829-3676). The form is also available on the IRS Web Site at
www.irs.gov.

.03 Upon approval, a five-character alpha/numeric Transmitter Control
Code (TCC) will be assigned and included in an approval letter. The TCC
must be coded in the Transmitter "T" Record. IRS/MCC uses the TCC to
identify payer/transmitters and to track their files through the
processing system. The same TCC can be used regardless of the method of
filing. For example, a payer may send their production data on a tape
cartridge and then later file a correction file electronically. The same
TCC can be used for each filing.

.04 IRS/MCC encourages transmitters who file for multiple payers to
submit one application and to use the assigned TCC for all payers. While
not encouraged, multiple TCCs can be issued to payers with multiple TINs.
If a transmitter uses more than one TCC to file, each TCC must be reported
in separate transmissions if filing electronically or on separate media if
filing magnetically.

.05 If a payer's files are prepared by a service bureau, the payer may
not need to submit an application to obtain a TCC. Some service bureaus
will produce files, code their own TCC in the file, and send it to IRS/MCC
for the payer. Other service bureaus will prepare the file and return the
file to the payer for submission to IRS/MCC. These service bureaus may
require the payer to obtain a TCC, which is coded in the Transmitter "T"
Record. Payers should contact their service bureaus for further
information.

.06 Form 4419 may be submitted anytime during the year; however, it
must be submitted to IRS/MCC at least 30 days before the due date of the
return(s) for current year processing. This will allow IRS/MCC the minimum
amount of time necessary to process and respond to applications. In the
event that computer equipment or software is not compatible with IRS/MCC,
a waiver may be requested to file returns on paper documents.

.07 Once a transmitter is approved to file electronically/magnetically,
it is not necessary to reapply unless:

(a) The payer has discontinued filing electronically or magnetically
for two consecutive years; the payer's TCC may have been reassigned by
IRS/MCC. Payers who are aware the TCC assigned will no longer be used are
requested to notify IRS/MCC so these numbers may be reassigned; or

(b) The payer's files were transmitted in the past by a service bureau
using the service bureau's TCC, but now the payer has computer equipment
compatible with that of IRS/MCC and wishes to prepare his or her own
files. The payer must request a TCC by filing Form 4419.


.08 In accordance with Regulations section 1.6041-7(b), payments by
separate departments of a health care carrier to providers of medical and
health care services may be reported on separate returns filed
electronically or magnetically. In this case, the headquarters will be
considered the transmitter, and the individual departments of the company
filing reports will be considered payers. A single Form 4419 covering all
departments filing electronically/magnetically should be submitted. One
TCC may be used for all departments.

.09 Annually, a Publication 1220 containing the current Revenue
Procedure, forms, and instructions will be sent to the attention of the
contact person indicated on Form 4419. Additional copies can be obtained
by downloading from the IRS Web Site at www.irs.gov or by calling
1-800-829-3676.

.10 If any of the information (name, TIN or address) on the Form 4419
changes, please notify IRS/MCC in writing so the IRS/ MCC database can be
updated. You may use our email address (See Sec. 3,.03) for basic name and
address changes. IRS/MCC does not recommend sending TIN information via
email. A change in the method by which information returns are submitted
is not information which needs to be updated (e.g., diskette to
electronic). The transmitter should include the TCC in all correspondence.

.11 Approval to file does not imply endorsement by IRS/MCC of any
computer software or of the quality of tax preparation services provided
by a service bureau or software vendor.


SEC. 7. TEST FILES

.01 IRS/MCC encourages first time electronic or magnetic media filers
to submit a test, however, test files are required for filers wishing to
participate in the Combined Federal/State Filing Program. See Part A, Sec.
13, for further information on the Combined Federal/State Filing Program.

.02 The test file must consist of a sample of each type of record:

(a) Transmitter "T" Record (all fields marked required must include
transmitter information)

(b) Payer "A" Record (must not be fictitious data)

(c) Multiple Payee "B" Records (at least 11 "B" Records per each "A"
Record)

(d) End of Payer "C" Record

(e) State Totals "K" Record, if participating in the Combined
Federal/State Filing Program

(f) End of Transmission "F" Record (See Part D for record formats.)


.03 Use the Test Indicator "T" in Field Position 28 of the "T" Record
to show this is a test file.

.04 IRS/MCC will check the file to ensure it meets the specifications
of this Revenue Procedure. For current filers, sending a test file will
provide the opportunity to ensure their software reflects any programming
changes.

.05 Electronic tests may be submitted November 1, 2002, through
February 15, 2003. See Part B, Sec. 4.03, for information on electronic
test results.

.06 Tests submitted on magnetic media should be sent to IRS/MCC between
November 1, 2002 and December 16, 2002. Tests must be received at MCC by
December 16 in order to be processed. Magnetic media filers may begin
submitting test cartridges and diskettes after October 1; however, the
data will not be processed until on or after November 1. For tests filed
on tape cartridge, 8mm, 4mm, quarter-inch cartridge, and 3 1/2-inch
diskette, the transmitter must include the signed Form 4804 in the same
package with the corresponding magnetic media. Mark the "TEST" box in
Block 1 on the form. Also, mark "TEST" on the external media label.

.07 IRS/MCC will send a letter of acknowledgment to indicate the
magnetic media test results. Unacceptable magnetic media test files will
receive a letter and/or documentation identifying the errors. Resubmission
of magnetic media test files must be received by IRS/MCC no later than
December 16, 2002.


SEC. 8. FILING OF INFORMATION RETURNS MAGNETICALLY AND RETENTION
REQUIREMENTS

.01 Form 4804, Transmittal of Information Returns Reported
Magnetically, or a computer-generated substitute, must accompany all
magnetic media shipments except for replacements when a 4804 is not always
necessary (See Part A, Sec. 10).

.02 IRS/MCC allows for the use of computer-generated substitutes for
Form 4804. The substitutes must contain all information requested on the
original forms including the affidavit and signature line. Photocopies are
acceptable but an original signature is required. When using
computer-generated forms, be sure to mark very clearly, which tax year is
being reported. This will eliminate a telephone communication from IRS/MCC
to question the tax year.

.03 Form 4804 may be signed by the payer or the transmitter, service
bureau, paying agent, or disbursing agent (all hereafter referred to as
agent) on behalf of the payer. Failure to sign the affidavit on Form 4804
may delay processing or could result in the files being unprocessed. An
agent may sign the Form 4804 if the agent has the authority to sign the
affidavit under an agency agreement (either oral, written, or implied)
that is valid under state law and adds the caption "FOR: (name of payer)."

.04 Although an authorized agent may sign the affidavit, the payer is
responsible for the accuracy of the Form 4804 and the returns filed. The
payer will be liable for penalties for failure to comply with filing
requirements.

.05 Multiple types of media may be submitted in a shipment. However,
submit a separate Form 4804 for each type of media.

.06 Current and prior year data may be submitted in the same shipment;
however, each tax year must be on separate media, and a separate Form 4804
must be prepared to clearly indicate each tax year.

.07 Filers who have prepared their information returns in advance of
the due date are encouraged to submit this information to IRS/MCC no
earlier than January 1 of the year the return is due.

.08 Do not report duplicate information. If a filer submits returns
electronically/magnetically, identical paper documents must not be filed.
This may result in erroneous penalty notices.

.09 A self-adhesive external media label, created by the filer, must be
affixed to each piece of magnetic media. For instructions on how to
prepare an external media label, refer to Notice 210 in the forms section
of this publication. If diskettes are used, be certain that only MS-DOS
compatible operating systems were used to prepare the diskettes. Non
MS-DOS diskettes are no longer acceptable at IRS/MCC.

.10 When submitting files include the following:

(a) A signed Form 4804

(b) External media label (created by filer) affixed to magnetic media

(c) IRB Box of labeled on outside of each package


.11 IRS/MCC will not return media after successful processing.
Therefore, if the transmitter wants proof that IRS/MCC received a
shipment, the transmitter should select a service with tracking
capabilities or one that will provide proof of delivery. Do not use
special shipping containers for mailing media to IRS/MCC. Shipping
containers will not be returned.

.12 IRS/MCC will not pay for or accept "Cash-on-Delivery" or "Charge to
IRS" shipments of tax information that an individual or organization is
legally required to submit.

.13 Payers should retain a copy of the information returns filed with
IRS or have the ability to reconstruct the data for at least 3 years from
the reporting due date, with the exception of Form 1099-C. A financial
entity must retain a copy of Form 1099-C, Cancellation of Debt, or have
the ability to reconstruct the data required to be included on the return,
for at least 4 years from the date such return is required to be filed.
Whenever backup withholding is imposed, a 4-year retention is required.


SEC. 9. DUE DATES

.01 The due dates for filing paper returns with IRS also apply to
magnetic media. Filing of information returns is on a calendar year basis,
except for Forms 5498 and 5498-MSA, which are used to report amounts
contributed during or after the calendar year (but not later than April
15). The following due dates will apply to Tax Year 2002:

DUE DATES

ELECTRONIC FILING MAGNETIC FILING (SEE NOTE)
----------------- --------------------------
Forms 1098, 1099, and W-2G Forms 1098, 1099, and W-2G
Recipient Copy -- January 31, 2003 Recipient Copy -- January 31, 2003
IRS Copy March 31, 2003 IRS Copy -- February 28, 2003

ELECTRONIC/MAGNETIC FILING
--------------------------
Forms 5498 and 5498-MSA
Participant Copy -- June 2, 2003 <*>
IRS Copy June 2, 2003

----------
*/ Participants' copy of Form 5498 for Coverdell ESA and all other
Forms 5498 to furnish fair market value information -- January 31, 2003



.02 If any due date falls on a Saturday, Sunday or legal holiday, the
return or statement is considered timely if filed or furnished on the next
day that is not a Saturday, Sunday or legal holiday.

.03 Magnetic media returns postmarked by the United States Postal
Service (USPS) on or before February 28, 2003, and delivered by United
States mail to the IRS/MCC after the due date, are treated as timely under
the "timely mailing as timely filing" rule. Refer to the 2002 General
Instructions for Forms 1099, 1098, 5498, and W-2G, When to File, located
in the back of this publication for more detailed information. Notice
97-26 1997-1 C.B. 413, provides rules for determining the date that is
treated as the postmark date. For items delivered by a non-designated PDS,
the actual date of receipt by IRS/MCC will be used as the filing date. For
items delivered by a designated PDS, but through a type of service not
designated in Notice 99-41, the actual date of receipt by IRS/MCC will be
used as the filing date. The timely mailing rule also applies to
furnishing statements to recipients and participants.

Note: Due to security regulations at MCC, the Internal Revenue police
officers will only accept media from PDSs or couriers from 7:00 a.m. to
5:00 p.m., Monday through Friday.

.04 Use this Revenue Procedure to prepare information returns filed
electronically or magnetically beginning January 1, 2003, and received by
IRS/MCC no later than December 10, 2003.


SEC. 10. REPLACEMENT MEDIA

.01 A replacement is an information return file sent by the filer at
the request of IRS/MCC because of errors encountered while processing the
filer's original file or correction file. After the necessary changes have
been made, the entire file must be returned for processing along with the
Media Tracking Slip (Form 9267) which was included in the correspondence
from IRS/MCC. (See Note.)

Note: Filers should never send anything to IRS/MCC marked "Replacement"
unless IRS/MCC has requested a replacement file in writing or via the FIRE
System.

.02 Magnetic Media filers will receive a Media Tracking Slip (Form
9267), listing, and letter detailing the reason(s) their media could not
be processed. It is imperative that filers maintain backup copies and/or
recreate capabilities for their information return files. Open all
correspondence from IRS/MCC immediately.

.03 When possible, sample records identifying errors encountered will
be provided with the returned information. It is the responsibility of the
transmitter to check the entire file for similar errors.

.04 Before sending replacement media make certain the following items
are in place:

(a) Make the required changes noted in the enclosed correspondence and
check entire file for other errors.

(b) Code Transmitter "T" record, in positions 21-22 for replacement.
See Part D, Sec. 3.

(c) Code Payer "A" record in position 49 with "1" for replacement file.
See Part D, Sec. 4.

(d) Enclose the Form 9267, Media Tracking Slip, with your replacement
media.

(e) Label your Media "Replacement Data" and indicate the appropriate
Tax Year.

(f) Complete a new Form 4804 if any of your information has changed.


.05 Replacement files must be corrected and returned to IRS/MCC within
45 days from the date of the letter. Refer to Part B, Sec. 5.05, for
procedures for files submitted electronically. A penalty for failure to
return a replacement file by the due date will be assessed if the files
are not corrected and returned within the 45 days or if filers are
notified by IRS/MCC of the need for a replacement file more than two
times. A penalty for intentional disregard of filing requirements will be
assessed if a replacement file is not received. (For penalty information,
refer to the Penalty section of the 2002 General Instructions for Forms
1099, 1098, 5498, and W-2G.)


SEC. 11. CORRECTED RETURNS

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

* While we encourage you to file your corrections
electronically/magnetically, you may file up to 249 paper corrections even
though your originals were filed electronically or magnetically.

* DO NOT SEND YOUR ENTIRE FILE AGAIN. Only send the information returns
in need of correction.

* Information returns omitted from the original file must not be coded
as corrections. Submit them under a separate Payer "A" Record as original
returns.

* Before creating your correction file, review the following guidelines
chart carefully.


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

EXAMPLE

If a payer has 100 Forms 1099-A to be corrected, they can be filed on
paper because they fall under the 250 threshold. However, if the payer has
300 Forms 1099-B to be corrected, they must be filed electronically or
magnetically because they meet the 250 threshold. If for some reason a
payer cannot file the 300 corrections electronically or magnetically, to
avoid penalties, a request for a waiver must be submitted before filing on
paper. If a waiver is approved for original documents, any corrections for
the same type of return will be covered under this waiver.


.02 Corrections should be filed as soon as possible. Corrections filed
after August 1 may be subject to the maximum penalty of $50 per return.
Corrections filed by August 1 may be subject to a lesser penalty. (For
information on penalties, refer to the Penalty Section of the 2002 General
Instructions for Forms 1099, 1098, 5498, and W-2G.) However, if payers
discover errors after August 1, they should file corrections, as prompt
correction is a factor considered in determining whether the intentional
disregard penalty should be assessed or whether a waiver of the penalty
for reasonable cause may be granted. All fields must be completed with the
correct information, not just the data fields needing correction. Submit
corrections only for the returns filed in error, not the entire file.
Furnish corrected statements to recipients as soon as possible.

Note: Do NOT resubmit your entire file as corrections. This will result in
duplicate filing and erroneous notices may be sent to payees. Submit only
those returns which need to be corrected.

.03 There are numerous types of errors, and in some cases, more than
one transaction may be required to correct the initial error. If the
original return was filed as an aggregate, the filers must consider this
in filing corrected returns.

.04 Corrected returns may be included on the same media as original
returns; however, separate "A" Records are required. Corrected returns
must be identified on the Form 4804 and the external media label by
indicating "Correction." If filers discover that certain information
returns were omitted on their original file, they must not code these
documents as corrections. The file must be coded and submitted as
originals.

.05 If a payer discovers errors for prior years that affect a large
number of payees, in addition to sending IRS the corrected returns and
notifying the payees, a letter containing the following information should
be sent to IRS/MCC:

(a) Name and address of payer

(b) Type of error (please explain clearly)

(c) Tax year

(d) Payer TIN

(e) TCC

(f) Type of Return

(g) Number of Payees

(h) Filing method, paper, electronic, or magnetic media


This information will be forwarded to the appropriate office in an
attempt to prevent erroneous notices from being sent to the payees. The
corrections must be submitted on actual information return documents or
filed electronically/magnetically. Form 4804 must be submitted with
corrected files submitted magnetically. If filing magnetically, provide
the correct tax year in Block 2 of the Form 4804 and on the external media
label. The Form 4804 is not required for electronic filing through the
FIRE System.

.06 Prior year data, original and corrected, must be filed according to
the requirements of this Revenue Procedure. If submitting prior year
corrections, use the record format for the current year and submit on
separate media. However, use the actual year designation of the correction
in Field Positions 2-5 of the "T", "A", and "B" Records. If filing
electronically, a separate transmission must be made for each tax year.

.07 In general, filers should submit corrections for returns filed
within the last 3 calendar years (4 years if the payment is a reportable
payment subject to backup withholding under section 3406 of the Code and
also for Form 1099-C, Cancellation of Debt).

.08 All paper returns, whether original or corrected, must be filed
with the appropriate service center.

.09 The "B" Record provides a 20-position field for the Payer's Account
Number for the Payee. This number will help identify the appropriate
incorrect return if more than one return is filed for a particular payee.
Do not enter a TIN in this field. A payer's account number for the payee
may be a checking account number, savings account number, serial number,
or any other number assigned to the payee by the payer that will
distinguish the specific account. This number should appear on the initial
return and on the corrected return in order to identify and process the
correction properly.

.10 The record sequence for filing corrections is the same as for
original returns.

.11 Review the chart that follows. Errors normally fall under one of
the two categories listed. Next to each type of error made is a list of
instructions on how to file the corrected return.

Guidelines for Filing Corrected Returns Electronically/Magnetically

Error Made on the Original Return How To File the Corrected Return

Note: References to Form 4804 apply to magnetically filed media only. Form
4804 is not required for files submitted electronically through the FIRE
System.

Two (2) separate transactions are required to make the following
corrections properly. Follow the directions for both Transactions 1 and 2.
(See Note 1.)

1. Original return was filed with one Transaction 1: Identify incorrect
or more of the following errors: returns.

(a) No payee TIN (SSN, ITIN, ATIN A. Prepare a new Form 4804 that
or EIN) includes information related
(b) Incorrect payee TIN to this new file.
(c) Incorrect payee name B. Mark "Correction" in Block 1
(d) Wrong type of indicator of Form 4804.
C. Prepare a new file. The first
record on the file will be the
Transmitter "T" Record.
D. Make a separate "A" Record for
each type of return and each
payer being reported. The
information in the "A" Record
will be exactly the same as it
was in the original submission
with one exception; remove the
"1" from Field Position 48,
and set the Correction File
Indicator (Field Position 50)
to "1".
E. The Payee "B" Records must
contain exactly the same
information as submitted
previously, except, insert a
Corrected Return Indicator
Code of "G" in Field Position
6 of the "B" Records, and
enter "0" (zeros) in all
payment amounts.
F. Corrected returns submitted to
IRS/MCC using "G" coded "B"
Records may be on the same
file as those returns
submitted with a "C" code;
however, separate "A" Records
are required.
G. Prepare a separate "C" Record
for each type of return and
each payer being reported.
H. Continue with Transaction 2 to
complete the correction.

Transaction 2: Report the correct
information.

A. Make a separate "A" Record for
each type of return and each
payer being reported. Remove
the "1" in Field Position 48
and set the Correction File
Indicator (Field Position 50),
to "1" (one).
B. The Payee "B" Records must
show the correct information
as well as a Corrected Return
Indicator Code of "C" in Field
Position 6.
C. Corrected returns submitted to
IRS/MCC using "C" coded "B"
Records may be on the same
file as those returns
submitted with "G" codes;
however, separate "A" Records
are required.
D. Prepare a separate "C" Record
for each type of return and
each payer being reported.
E. The last record on the file
will be the End of
Transmission "F" Record.
G. Indicate "Correction" on the
external media label.

Note 1: See the 2002 General Instructions for Forms 1099, 1098, 5498, and
W-2G for additional information on regulations affecting corrections and
related penalties.


2. Original return was filed with one A. Prepare a new Form 4804 that
or more of the following errors: includes information relating
to this new file.
(a) Incorrect payment amount codes B. Mark "Correction" in Block 1
in the Payer "A" Record of Form 4804.
(b) Incorrect payment amounts in C. Prepare a new file. The first
the Payee "B" Record record on the file will be the
(c) Incorrect code in the Transmitter "T" Record.
distribution code field in D. Make a separate "A" Record for
the Payee "B" Record each type of return and each
(d) Incorrect payee address payer being reported. Infor-
(e) Incorrect Direct sales mation in the "A" Record may
indicator be the same as it was in the
original submission. However,
remove the "1" in Field
Position 48 and set the
Correction File Indicator
(Field Position 50), to "1"
(one).
E. The Payee "B" Records must
show the correct record infor-
mation as well as a Corrected
Return Indicator Code of "G"
in Field Position 6.
F. Corrected returns submitted to
IRS/MCC using "G" coded "B"
Records may be on the same
file as those returns
submitted without the "G"
coded "B" Records; however,
separate "A" Records are
required.
G. Prepare a separate "C" Record
for each type of return and
each payer being reported.
H. The last record on the file
will be the End of
Transmission "F" Record.
I. Indicate "Correction" on the
external media label.


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


<<File layout one and two step corrections are omitted -- Kleinrock
Publishing>>


SEC. 12. EFFECT ON PAPER RETURNS AND STATEMENTS TO RECIPIENTS

.01 Electronic/Magnetic reporting of information returns eliminates the
need to submit paper documents to the IRS. CAUTION: Do not send Copy A of
the paper forms to IRS/MCC for any forms filed electronically or
magnetically. This will result in duplicate filing; therefore, erroneous
notices could be generated.

.02 Payers are responsible for providing statements to the payees as
outlined in the 2002 General Instructions for Forms 1099, 1098, 5498, and
W-2G. Refer to those instructions for filing information returns on paper
with the IRS and furnishing statements to recipients.

.03 Statements to recipients should be clear and legible. If the
official IRS form is not used, the filer must adhere to the specifications
and guidelines in Publication 1179, Rules and Specifications for Private
Printing of Substitute Forms 1096, 1098, 1099, 5498, and W-2G.



SEC. 13. COMBINED FEDERAL/STATE FILING PROGRAM

* Through the Combined Federal/State Filing (CF/SF) Program, IRS/MCC
will forward certai